Legal Clash Over Frozen Road Contracts
Builders Paving LLC, a Hillside-based road construction firm tied to relatives of convicted developer Sebastian “Sam” Palumbo, is suing the Illinois Department of Transportation (IDOT) over the agency’s refusal to award nine roadwork contracts totaling more than $21 million — despite the company being the lowest bidder.
According to court filings, Builders alleges that IDOT has “unjustifiably and unlawfully” withheld the awards, jeopardizing the company’s operations and industry standing.
“Awarding over $21 million in contracts to another bidder… will likely lead to the departure of some employees… and cause Builders Paving and its affiliates to be in technical violation of lender covenants,” the lawsuit states.
IDOT’s ‘Pause’ Tied to Past Controversies
IDOT confirmed it has paused all awards to Builders Paving while it conducts a review of whether the firm properly met prequalification requirements.
The review was reportedly prompted by a Chicago Sun-Times investigation that raised concerns about the company’s potential ties to Sebastian Palumbo, whose prior companies — Palumbo Brothers Inc. and Monarch Asphalt Company — were permanently banned from federal and state projects after a 1999 fraud conviction involving union benefit scams and taxpayer overbilling.
The Palumbo family’s current construction ties remain under scrutiny. Though Builders Paving denies any involvement by Sebastian Palumbo, court records show top executives of the firm include his daughter, Kaitlyn Palumbo Gandy, and her husband, Ryan Gandy. Kaitlyn has also been connected to Orange Crush LLC, a company that had Palumbo as a part owner and was similarly blacklisted under contractor debarment terms.
A spokesperson for IDOT said:
“The department is diligently examining whether all rules and regulations concerning firms prohibited from working with IDOT are being met and followed.”
Court Halts IDOT From Reassigning Projects
To prevent further harm, Builders Paving successfully petitioned for a temporary restraining order last week. The order bars IDOT from awarding the contracts to other firms while the case proceeds on an expedited schedule.
The company argues that reassignment of the contracts would:
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Cause severe financial strain
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Lead to employee losses
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Damage industry reputation
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Risk cancellation of existing contracts
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Impede future bidding ability
Builders Paving warns of “irreparable harm” if these projects — planned in Chicago, Aurora, Des Plaines, Elgin, Maywood, and the North Shore — are diverted elsewhere.
More Contracts May Be in Jeopardy
In addition to the nine frozen contracts, the company says five more projects worth over $13 million could be withheld. While these are not yet part of the lawsuit, Builders has reserved the right to amend the complaint or pursue additional legal action if delays continue.
Background on Palumbo & Legal Strategy
The lawsuit was filed by Chico & Nunes PC, a prominent law firm whose partners include Gery Chico, former aide to Mayor Richard M. Daley and ex-Alderman Edward M. Burke.
The legal team maintains that Sebastian Palumbo:
“Has never owned any interest, direct or indirect, or invested in either of the Builders Companies… and has never received compensation from them.”
Orange Crush’s current status is unclear — the website is offline and incorporation records have changed.
IDOT, which reports to Gov. JB Pritzker, has not publicly disclosed a timeline for completing the ongoing compliance review.
Do you believe Builders Paving is being unfairly targeted due to family ties, or is IDOT right to investigate before awarding contracts? Share your thoughts in the comments on ChicagoSuburbanFamily.com.
