The Palumbo IDOT settlement, finalized in late March 2026, ended both a lawsuit and a year-long state investigation by letting the Builders Companies resume bidding on Illinois road contracts. The Illinois Department of Transportation concluded there was “insufficient evidence at this time to support the conclusion that the Builders Companies were not responsible bidders under the Illinois Procurement Code.” In the same document, IDOT recorded its position that the companies “did not fully or accurately disclose their relationship with Sebastian Palumbo” in prequalification filings or during the investigation itself.1Chicago Sun-Times. Sebastian Sam Palumbo Builders Orange Crush Hillside Contract Debarment Gandy
Why IDOT Was Investigating
Sebastian “Sam” Palumbo pleaded guilty in 1999 to racketeering and fraud tied to Palumbo Brothers Inc. and Monarch Asphalt Co. As part of that plea, he, his brother, his father, and their companies were permanently banned from public road construction projects. The agreement barred any company in which any Palumbo held more than a five percent stake from accepting state or federal funds.2Chicago Tribune. After Jail, Palumbos Find Road to Success
The Builders Companies — Builders Paving LLC, Builders Asphalt LLC, Builders Concrete Services LLC, and Arrow Road Construction LLC — operate from the same Hillside, Illinois complex the Palumbo firms once used. They are led by Kaitlyn Palumbo Gandy, one of Sebastian’s five daughters, and her husband Ryan Gandy. Builders Paving collected more than $80 million in IDOT contracts in the five years before the investigation, including over $30 million in 2024 alone.3Chicago Sun-Times. Road Construction Builders Paving Asphalt Sam Palumbo Brothers Debarred Illinois
In late 2024, IDOT received information suggesting Palumbo may have violated his debarment and plea agreement by participating in Builders Companies work. The agency paused roughly two dozen pending contracts worth more than $50 million while it looked at whether the firms qualified as responsible bidders. The freeze covered more than 40 miles of roadway across about 20 projects in Chicago and its suburbs.4Chicago Sun-Times. Illinois Department of Transportation Road Construction Pritzker Palumbo Builders Paving
What the Settlement Says
The settlement carries two findings that sit uneasily together. IDOT agreed it lacked sufficient evidence to bar the companies as nonresponsible bidders under the Illinois Procurement Code, and it agreed to let them return to state work. It also stated that the companies had not fully or accurately disclosed their Palumbo ties in their prequalification applications or in correspondence during the investigation.1Chicago Sun-Times. Sebastian Sam Palumbo Builders Orange Crush Hillside Contract Debarment Gandy
As part of the resolution, the Builders Companies provided four certifications signed under penalty of perjury. Each stated that Sebastian Palumbo had not participated with the companies in any capacity — contractor, subcontractor, supplier, employee, or consultant — on any IDOT contract.5Chicago Sun-Times. Builders Companies Palumbo Illinois Department of Transportation JB Pritzker Gandy
The agreement was framed as a way to “avoid the delay, uncertainty, inconvenience, and expense of further litigation” and to keep state road projects moving. Notably, the phrase “insufficient evidence at this time” does not clear the companies. It leaves room for further action if new facts appear.
What the Investigation Uncovered
Corporate documents produced during the inquiry filled in the picture IDOT had been working with. A 2019 “borrowed employee agreement” showed that Builders Asphalt and Builders Paving borrowed workers from Orange Crush LLC and Builders Concrete Services while those entities were still owned and controlled by Sebastian Palumbo. The agreement expressly stated that Orange Crush would “in no instance” provide a loaned employee for work on any project funded by the federal government or IDOT.5Chicago Sun-Times. Builders Companies Palumbo Illinois Department of Transportation JB Pritzker Gandy
The same document stated that the Builders Companies and their affiliates “were established pursuant to Sebastian’s intention and plan to transfer his assets, including the assets and operations of the Crush Companies, over time to his children.” The settlement confirmed that the Builders Companies are currently “beneficially owned and controlled” by Kaitlyn Palumbo Gandy and her four sisters. Through Five Sisters Management LLC, the daughters also own the Hillside property where both Orange Crush and the Builders Companies have operated.1Chicago Sun-Times. Sebastian Sam Palumbo Builders Orange Crush Hillside Contract Debarment Gandy
IDOT determined that Sebastian Palumbo held “an ownership interest” in at least one affiliated company until mid-2022. He also owned and controlled Orange Crush, which was managed by Five Sisters Management. The Builders Companies and Orange Crush shared a construction yard in Hillside and some administrative functions, and equipment from both operations was observed at the same complex, which still displayed the old Palumbo Brothers emblem. According to the Chicago Sun-Times, Palumbo personally oversaw Builders Concrete until 2022 and Orange Crush until the company shut down at the end of 2024, during the investigation.6Chicago Sun-Times. Palumbo Road Construction Orange Crush Builders Paving Illinois Department of Transportation Contracts
William Dwyer, the attorney for the Builders Companies, disputed the characterization that Palumbo created the firms. He said all intra-family transfers and the terms of the borrowed employee agreement were fully disclosed to IDOT during the investigation, and that Palumbo “has fully complied in all respects” with his debarment for 26 years. Dwyer said any ties between Palumbo and the Builders Companies did not involve IDOT-funded work.1Chicago Sun-Times. Sebastian Sam Palumbo Builders Orange Crush Hillside Contract Debarment Gandy
What Happens to the Paused Contracts
As of mid-2026, the Builders Companies have returned to state road work. IDOT awarded and executed nine of the contracts the companies had won as the lowest bidder before the freeze, at the original bid prices. Work has begun on a $2.6 million resurfacing job on Illinois Route 47 near Huntley and a project on Busse Road in Bensenville totaling more than $2 million. Additional contracts are in place for projects in or near Bloomingdale, Des Plaines, Lockport, Park Ridge, Riverwoods, Rosemont, Skokie, and Sugar Grove.5Chicago Sun-Times. Builders Companies Palumbo Illinois Department of Transportation JB Pritzker Gandy
IDOT said it was “satisfied with the Builders Companies’ performance of past contracts.” That statement sits alongside the agency’s finding, in the same settlement, that the companies had failed to fully disclose their Palumbo ties. The qualifier “at this time” is doing real work in the agreement. It preserves IDOT’s ability to reopen the question if new information about Sebastian Palumbo’s role in the companies emerges.
The Boundary of What the Settlement Decides
The settlement resolves a state contracting question, not a criminal one. It does not lift Sebastian Palumbo’s permanent debarment, does not amend his 1999 plea agreement, and does not adjudicate whether he participated in IDOT-funded work in violation of either. What it decides is narrower: whether, on the evidence IDOT had gathered by March 2026, the Builders Companies could be blocked as nonresponsible bidders. IDOT concluded it could not make that finding stick, took the certifications, and reopened the bidding door — while putting its concerns about disclosure on the record.