However, the better practice is to put the building and real estate in the name of one business entity, or held personally, and the trucks in the name of a second business entity—both of which should be separate from the construction entity. Consequently, the real estate entity would lease space to both the construction and trucking entities, and the trucking entity would lease its trucks (or charge per trip) to the construction entity. The purpose of such an arrangement is to prevent liability relating to, for instance, a horrific trucking accident from also exposing the construction entity and the real estate entity to a judgement.

While this is a perfectly legal arrangement, a court, in the recent case of State Insurance Fund v Capcon Construction Industries, reminds us of the importance of keeping separate business entities separate—and not commingling funds—to preserve liability shields.

Background – In March of 2015, A&A Masonry Corp. obtained workers compensation insurance from the State Insurance Fund. Alexander Shvartzberg signed the application as A&A’s president. Nine months later, Maryann Furman incorporated Agra Masonry, and listed Mr. Shvartzberg as its manager. Agra had an address on 14th Street in Brooklyn. Agra subsequently obtained workers compensation insurance from the SIF, two months after A&A’s policy was canceled for non-payment. The SIF ultimately sued A&A to recover the unpaid premiums, and was awarded a $330,000 judgment.

In March of 2020, the SIF audited Agra’s policy and, as a result, demanded more than $3 million in unpaid premiums. Agra immediately ceased paying all premiums. Two months later, Furman incorporated Agra Industries (a very similar name), also at the same address. At the time, Mr. Shvartzberg started diverting Agra jobs and contracts to Agra Industries. The SIF subsequently sued Agra and obtained a judgment of more than $5 million. A year after the judgment was entered, Agra received more than $500,000 and deposited the check into its bank account. A week later, Agra gave a $100,000 check to Mr. Shvartzberg, who later signed a document in an unrelated lawsuit as an officer of Agra Industries.

In September of 2024, the SIF sued numerous entities and people, including A&A, Agra Masonry, Ms. Furman, Agra Industries, and Mr. Shvartzberg, alleging alter ego and successor liability, and violations of the Debtor and Creditor Law, all relating to the Agra judgment. Agra and Ms. Furman moved to dismiss the complaint, arguing that the allegations of relationship and inadequate capitalization were insufficient to impose liability. In opposition, the SIF argued that the transfer of assets between related entities placed the burden of proof on the transferee to rebut the presumption of a fraudulent insider transfer.

Decision – The court denied the motion and permitted the lawsuit to proceed. In doing so, the court cited the transfers undertaken to deplete Agra’s assets, including its money, contracts and job opportunities. The court also cited the time between the wrap up of Agra and the formation of Agra Industries in relation to the liabilities incurred, and the interrelation of the principals, coupled with the transfer of monies, in finding that there were sufficient allegations to potentially permit successor liability to be imposed. Finally, as to the fraudulent transfer, the transfers and diversions alleged after the entry of the Agra judgment were sufficient to survive the motion to dismiss and put the burden on the defendants to explain them away.

Comment – This case reminds us of the importance of undertaking proper steps to insulate yourself and your other business entities from alter ego liability. Again, the legitimate purpose of having multiple business entities is to stem the bleeding if something happens and preserve the majority of its assets. Importantly, however, the time to do that is before the blood is shed—not after. Attempts to transfer assets away once a claim has arisen will be looked upon very dimly, and will ultimately have to be explained away in detail to show that the monies were legitimately owed elsewhere, and not simply diverted in order to insulate them from the judgment creditor—an uphill battle. It is a mistake to think you are smarter than everyone else.

Consultation with experienced counsel is important to not only determine how your operation should be set up, but also how to properly operate all of its parts. Crucially, that counsel can advise you as to what to do after something happens to prevent the Capcon situation from happening to you. While you may not be able to prevent a judgment creditor from grabbing the assets, which happened to be owned by the target defendant at the time the liability was incurred, you can prevent them reaching into your own pocket on an alter ego theory for additional monies.

About the authors: Thomas H. Welby, an attorney and licensed professional engineer, is General Counsel to the CIC and the BCA, and is the Founder of, and Senior Counsel to the law firm of Welby, Brady & Greenblatt, LLP, with offices located throughout the Tri-State Region. Gregory J. Spaun, General Counsel to the Queens and Bronx Building Association, and an attorney and a partner with the firm, co-authors this series.

Published: September 15, 2025.