I-4 construction dump-truck owners reeling after subcontractor bankruptcy
Small and minority-owner companies hired for reconstruction of Interstate 4 in Orlando are reeling from the financial collapse of a Tampa trucking firm.
That company, Jason’s Hauling, filed last week for bankruptcy protection. The firm operates as a broker, employing as many as 90 small companies that typically own one to several dump trucks. As a subcontractor on the I-4 job, Jason’s was paid by the state and its contractor to employ and pay many of those small firms for the interstate work.
Owners of 15 companies with a combined 25 trucks provided details to the Orlando Sentinel of payments withheld by Jason’s since last fall. According those companies, there are likely to be many other small companies in similar circumstances. In holding back payments to the dumptruck owners and operators through last year and into February, Jason’s Hauling owner Jason Freyre cited a series of hardships, including COVID.
However, according to bankruptcy records filed last week, Jason’s had lost a key project, which coupled with the stress of high-interest loans, triggered the company’s Chapter 11 filing for reorganization. Jason’s went through a previous bankruptcy case nearly a decade ago.
Dump-truck owners responding to the Sentinel said they are owed by Jason’s a combined amount of nearly $250,000 for work already performed, which has left them at risk of losing trucks and even their companies. In bankruptcy documents, Jason’s Hauling states that it owes independent operators of dump trucks nearly $900,000, and has total debts of $5.5 million and assets of $5 million.
Whether any cash is left for I-4 dump truck owner-operators remains unclear, said Scott Stichter, the Jason’s Hauling bankruptcy lawyer. “I need to get a better handle on the I-4 project and contract, what’s owed in the contract and what’s left owed to the subcontractors.” Having come to the case recently, Stichter said that I-4 appraisal will start this week.
The company owner, Freyre, did not respond to a request for comment.
The I-4 project, rebuilding and adding toll lanes to 21 miles of interstate in Orange and Seminole counties, is a huge transportation upgrade with a collateral benefit of injecting broad economic support for the region. The current price is more than $2.4 billion.
Although providing a backbone service for the I-4 job hauling in sand, asphalt and other new materials and carting away demolition rubble and mucky soils
independent, owner-operators of dump trucks are widely known in the industry as having to endure tough conditions for thin profits with little outside support. A large share of the owners have Cuban, Mexican and Puerto Rican backgrounds.
They often buy used trucks, with some decades old, and have little cushions for economic setbacks.
Along with truck payments, the companies have had to cover the cost of fuel, insurance, tires and maintenance for the work that has not been compensated for by Jason’s.
Several of the owner-operators of the small dumptruck firms said that from their desperation they have considered a blockade of I-4 in Orlando with dozens of dump trucks coming to a simultaneous halt on all lanes in downtown. That notion was put aside as their money troubles have become increasingly uncertain with Jason’s bankruptcy filing.
The state awarded the project to an international partnership, I-4 Mobility Partners, which created a construction team called SGL Constructors.
“SGL and DOT say they are investigating but we aren’t getting anywhere,” said Andres Orozco, who with his brother owns two dump trucks. “For us, it looks like SGL doesn’t care too much.”
With a two-year-old son and expecting the birth of a daughter soon, Orozco had worked as a carpenter foreman for SGL for several years, building forms for the concrete, high-rise bridges at downtown Orlando.
He saved enough from his paychecks to buy a pair of used trucks and hired drivers to operate them during the day. But now owed $75,000 by Jason’s, Orozco had quit his SGL job two weeks ago to drive his dump trucks at night to maximize their incomes.
Orozco was proud of his work on the I-4 bridges and respected SGL as an employer, but the financial distress has meant, among other struggles, a Christmas without gifts in his family.
On a recent night, he drove his 1996 Mack truck as gently as possible. “I try to take as much care as I can,” Orozco said. “With this situation, I don’t want this baby to break down.”
Road projects typically include procedures for continual verification that subcontractors several layers, or tiers below the prime contractor are being paid correct amounts on time.
Both the Florida Department of Transportation and SGL Constructors said they have begun to probe the payment history of Jason’s Trucking.
“We can confirm that Jason’s Hauling has a contract with SGL Constructors to provide trucking services for the I-4 Ultimate project,” said SGL Constructors spokesman Russ Handler. “We were recently notified that Jason’s Hauling has not been paying its own subcontractors.”
“SGL has paid all invoices owed to Jason’s Hauling for the documented completion of work up until we were notified of this issue, at which time further payments were suspended,” Handler said. “Jason’s Hauling is not actively working on the project as we investigate this matter.”
At Orozco’s urging, the state Department of Transportation notified I-4 Mobility Partners of its concern over reported nonpayments to subcontractors by Jason’s Hauling, and directed the road builder to investigate and provide an explanation.
“FDOT takes claims for nonpayment seriously,” said department spokeswoman Jessica Ottaviano. “At this time, the department is reviewing payment documentation between I-4 Mobility Partners, SGL Constructors and their subcontractors.”
In 2005, the owner of Jason’s Hauling, Freyre, was recognized as small business entrepreneur of the year by the Tampa Bay Hispanic Chamber of Commerce, according to a report in the Tampa Tribune newspaper.
After emerging from bankruptcy proceedings in 2013, Jason’s Hauling “steadily expanded its operations,” according to current bankruptcy documents.
But the company “lost a significant portion of one of its largest contracts when the customer located an alternative source of materials,” according to the documents. Jason’s “turned to high-interest merchant cash advance funding, which only served to exacerbate … problems as merchant cash advance funders began siphoning” cash flow.
As Jason’s began providing partial payments to dump-truck firms last fall, Freyre told owners that he was not being paid by SGL, that his bank account had been hacked and that the pandemic was reducing cash flow.
“I told him, ‘Come on man, I’m not a child,’ ” Orozco said.
Of other owners speaking to the Sentinel, the owner of three dump trucks, Gerardo Hurtado, said he has fallen behind in truck payments as a result of not being paid $25,000 by Jason’s and worries the vehicles may be repossessed.
Each owning and driving a dump truck, Lazaro Gil is owed nearly $13,000 and his brother, Ricardo, is owed about $18,000.
“So far, I’m OK but I’m using up all the money I’ve saved,” said Lazaro Gil, who can recall that when the seriousness of Jason’s holding back paychecks was becoming apparent, he told his brother, “I think we are working for free.”
According to bankruptcy documents, Jason’s Hauling wants permission to pay some owner-operators of dump trucks — those who previously agreed to continue to work for Jason’s during bankruptcy proceedings.
Jason’s Hauling also is seeking continued payment of Freyre’s annual salary of $222,301.