Bankrupt federal contractor’s funds tied to Florida firm with same owner
Months before one of the country’s largest federal security contractors went broke, leaving hundreds of officers with worthless paychecks, company officials emptied bank accounts in a money trail that recently led to a Florida venture run by the firm’s owner, court records say.
Officers at USProtect, which held hundreds of millions of dollars in contracts to guard military installations and federal courthouses since 2004, say they face lawsuits from creditors because the company gave them worthless checks before it was forced into bankruptcy earlier this year.
Newly disclosed bankruptcy filings show that e-mails sent between company officials in the year before the collapse arranged for hundreds of thousands of dollars to be sent as often as every few weeks to company owner Lisa Hudec.
“I need a check grossed up so the end result is 250K for Lisa,” said one e-mail, referring to Mrs. Hudec, who was in charge of the Silver Spring, Md.-based company until its March collapse. “I need a check for Lisa ASAP. Gross up 300K,” another says. “I need a check for Lisa that is grossed up for taxes that will payout 150K.”
The bankruptcy litigation also has spawned lawsuits to recoup corporate funds spent for a Porsche and Cadillac Escalade for executives, according to court records.
Telephone messages for Mrs. Hudec and her attorneys were not returned. When The Washington Times first questioned the company about its operations in December, the attorneys said, USProtect had not been charged with any wrongdoing.
They said the company has “consistently provided superior security services to a broad array of federal agencies, and the company’s outstanding performance has been repeatedly acknowledged by agency contracting officers both formally and informally.” ‘Paycheck to paycheck’
Meanwhile, the former officers mostly have found work with new government contractors taking over USProtect job sites, which include federal courthouses, Social Security Administration (SSA) buildings and other federal sites nationwide. But they say they’re struggling to break even as they deal with weeks of missing paychecks, trouble accessing retirement accounts and unpaid child support that was supposed to have been disbursed by the company from withheld funds.
“Most of the people work from paycheck to paycheck,” said Jim Turner, a former USProtect guard at SSA buildings in Maryland.
James Culbreth, a steward for the United Union of Security Guards, said more than 1,000 officers lost wages because of the company’s collapse. He said employees weren’t paid in March, were blocked from getting their retirement money and lost vacation and personal leave.
What’s more, dozens of employees who cashed their checks at check-cashing stores or credit unions are being threatened with civil and criminal proceedings after the paychecks bounced, Mr. Culbreth said. Florida funding
The newly disclosed internal emails, which detail numerous sixfigure payments to Mrs. Hudec, were in court documents in Maryland filed by a trustee overseeing the USProtect’s estate. The trustee, Janet Nesse, also is seeking a court-appointed receiver to monitor the finances of Tu-Co-Peat Inc., a Florida company purportedly controlled by Mrs. Hudec.
According to the documents, Mrs. Hudec received $5.8 million in “excess salary” and nearly $4.4 million in unpaid loans from USProtect. Ms. Nesse said in court filings that some of the money may have gone to Tu-Co-Peat, a Florida landscaping and soil supply company. In addition, a Porsche and Cadillac purchased with more than $100,000 in USProtect funds were transferred later to Tu-Co-Peat for less than $1,000 each, according to bankruptcy filings.
USProtect was forced into bankruptcy in March by Wachovia Bank and other creditors who cited millions of dollars in unpaid debts owed by the security company. Ms. Nesse said a bankruptcy judge’s recent ruling will soon give former employees access to their retirement accounts, but she also warned of likely shortfalls from missed contributions by USProtect.
A person who answered the phone at Tu-Co-Peat in Florida this week said she would leave a message for Mrs. Hudec. Attorneys for Mrs. Hudec in the bankruptcy case did not return phone messages. Family affair
Mrs. Hudec’s husband, Richard, is set to return to Maryland next month to face sentencing in a criminal tax case. In the same matter, he also pleaded guilty to failing to disclose various fraud judgments when brokering millions of dollars in government contracts for USProtect.
He began working at the company in 2001 while on probation after pleading guilty to felony fraud charges in New Jersey. Later, his wife bought the company, and he became chief operating officer. At first, he worked under company founder Michael Holiday, a former Montgomery County, Md. police officer who pleaded guilty to giving bribes to a former General Services Administration (GSA) contracting official for security contracts.
A memo filed in federal court in Maryland by Hudec’s defense team recently sought a split sentence involving incarceration and home confinement. In a memo, the defense said he “has fully accepted responsibility for his conduct and has cooperated extensively with the United States.” It also said he was a person with a “good heart” who “often makes sacrifices for others.”
The U.S. Attorney’s Office in Maryland referred to Hudec as a “career criminal,” noting in a recent court filing that he has four felony fraud convictions dating back to 1990 and that his record went undetected for years while he helped run USProtect.
Although Hudec was not charged in the bribery scheme, an FBI affidavit said Hudec may have been aware of the activities, according to prosecutors. The affidavit also included a 2002 e-mail in which Holiday updated Hudec on the status of a GSA contract brokered by former GSA official Dessie Ruth Nelson, who later admitted taking bribes from Holiday.
According to the court documents, Hudec responded to Holiday in another e-mail, writing: “Sounds great! Before you know it, we will be in all 50 states with thousands of guards. Then again, knowing you, you will have ‘A Friend’ in each state. That will take some cash to accomplish.”