News

A Pattern of Intentional Non-Payment

Ex-employees were severely affected by the reported dubious business practices of Miami's Global Training Solutions, but ex-contract employees and vendors were no less immune.

• By Keith Ward
• 03/19/2003

Vendors often fared no better than MCTs or other employees, according to Scott Lehman, former director of operations for the Jacksonville and Atlanta offices. "It got to the point with vendors where we wouldn't pay the bills. We were four months behind to the coffee person. [In one office] they rented plants, and the [vendor] actually came in one time and took the plants, because [GTS] wasn't paying the bills."

Former Regional Director of Finance and Administration Tanya Prince said it was part of a pattern of intentional non-payment by GTS. "We'd have weekly accounts-payable meetings with the CFO and southern regional vice-president. Basically, we were told that we were only going to pay something if there was a threat of having something shut off or disconnected. Our balances were maxing out with various creditors and office supply companies. When service would stop, we'd move to another company."

Trainers and other employees don't have the option of stopping service, so they've been taking GTS to court. When that happens, the company normally doesn't show up to defend itself. MCT Charles Gardner's tale is typical. In an e-mail sent Feb. 12, he explained, "I too have contracts that have never been paid for training [from May and June of 2002]. There were three separate engagements, so I filed three small claims suits against them in Hillsborough County. Those three suits were dragged out as they had to be corrected and subsequently recalled. Two weeks ago, we had a court-mandated mediation meeting, which they, of course, did not attend. In any case, we'll be getting in line behind everyone else with a judgment, [and] probably kiss our $6,700 goodbye in the end."

Others can't take even that step. Alma Ireta said she worked for GTS for 14 months before being laid off Jan. 31. She's furious with her former employers. "They are so dirty, it's incredible they are loose," Ireta said in an e-mail. "I have not been paid for five weeks, and no W-2s. I did contact an attorney, who is asking for money up front. I wish I had the money to proceed. However, I'm broke and can't afford to dish out $500. GTS owes me over $2,000."

In some cases, trainers made mistakes of their own, which they regret. Michael Bell, for instance, said he taught a three-day IIS 5.0 class for GTS. "I sent in a contract via fax as I was out of town at the time. I never did receive a signed contract back (bad on my part, I know) and subsequently have never been paid," Bell said in an e-mail.

MCP Magazine has tried repeatedly, via phone and e-mail, to contact GTS owner Eric A. Schaer and his lawyer, Kirk DeLeon. The only response was DeLeon's e-mail statement that he'd passed e-mails seeking comment on to Schaer.

Allen Hicks, General Manager of GTS' Northern Region, claimed in an e-mail to MCP Magazine that there were inaccuracies in the first story, which ran in the November 2002 issue, and that GTS' side of the story was ignored. Hicks was sent two e-mails asking for a response to the allegations made in the story. He didn't reply. Hicks, eventually reached at the Orlando office, said he didn't return e-mails seeking comment because "it was a waste of my time." He said that GTS is doing fine, and chalked up negative comments about the company to disgruntled ex-employees. "Any time a company goes through downsizing and people are let go, there's going to be hurt feelings." Asked to respond to the substance of the accusations against Schaer and GTS, Hicks declined.

A spokesperson for the Florida Office of Consumer Services confirmed that they'd received a complaint last year from someone claiming that GTS failed to pay them for services. GTS didn't respond to the office's request for more information and the case was closed unsatisfactorily. The spokesperson said the office has no jurisdiction to act if a company doesn't respond.

The U.S. Department of Labor normally handles situations involving 401(k) retirement savings plans. The bureau within the DOL responsible for 401(k) plans is the Employee Benefits Security Administration (EBSA). Spokesperson Sharon Morrissey said the department doesn't confirm or deny whether an investigation into a particular company is occurring. She explained that if an investigation yields credible evidence of improper handling of funds, the DOL can sue in civil court for lesser offenses like failing to forward pension funds in a timely manner. For more serious lawbreaking, "if we find real malfeasance, real corporate fraud," Morrissey said, criminal charges could be filed.

While not making a judgment on GTS, Morrissey did speak in general terms about deducting money from a 401(k) plan and not depositing it into the proper fund, or not depositing it at all. "Well, it is an illegal act."

MCP Magazine has learned that the EBSA is in the midst of investigating Schaer and GTS about its business practices, in particular the 401(k) issue. One high-level management employee from GTS' Central Florida region said he'd been questioned by an investigator from the DOL about the company. He mentioned that the investigator had expressed frustration about GTS employees not showing up for scheduled meetings and documentation that was supposed to be produced and never was.

As part of the investigation, Schaer has been subpoenaed by the DOL to explain the 401(k) situation. The hearing date is March 14 at 10 a.m. in Plantation, Florida. The subpoena, a copy of which was obtained by MCP Magazine, states that Schaer has been called "to determine whether any person has violated or is about to violate any provision of Title I of ERISA (the Employee Retirement Income Security Act of 1974) or any regulation or order...." The subpoena is dated Feb. 7, 2003.

The alleged 401(k) issues, combined with problems with W-2 forms being late and inaccurate, has turned another ex-employee against GTS. Blaine Johnson worked for the company a total of one-and-a-half years, as director of sales for the Tampa office.

"What do you call it when an employer takes thousands of dollars out of your paycheck and does not deposit it as you directed?," he said in an e-mail. "Pay stubs through the end of the year show the money coming out, yet the 401(k) plan does not show a deposit since July [2002].You can't rob a liquor store on a Friday because you are short on cash, bring the money back the following Tuesday and not go to jail. If I was short on money and helped myself to $500 in petty cash, I would be arrested for theft...What was done with the 401(k) fund is no different."

Johnson said that GTS eventually made good on the 401(k) money -- sort of. The funds were never posted to the proper account, he said, but he did receive a wire transfer for an amount about equal to the missing funds in the second week of last month. But he added, "I still have approximately $3,000 in outstanding expenses and vacation pay they committed to pay upon our separation." Johnson said he said he hasn't seen that money, nor does he expect to.

Next: What's Happening with Training Companies?