By: Tom Joyce Staff Reporter
September 7, 2013
While expressing “shock” and “surprise” over a disclosure that the owner of Awesome Products recently pleaded guilty to multiple felony charges related to workers’ compensation fraud, local officials say this shouldn’t affect plans for a company operation here.
L.D. Hardas, whose February announcement of his cleaning products company’s expansion in the former Bassett Furniture plant was greeted with much fanfare, entered his plea in August to six counts of misrepresenting facts to the California State Compensation Insurance Fund (SCIF).
Hardas also pleaded guilty to three felony counts of misrepresenting facts to a workers’ compensation insurance company, and to committing to what is termed an aggravated white collar crime, according to the Orange County, Calif., District Attorney’s Office.
He was sentenced to five years in the state prison system, which was suspended pending the successful completion of 10 years of formal probation; fined $250,000; and ordered to pay restitution of $898,000.
Hardas, 53, is a native of India now residing in Buena Park in Orange County, where Awesome Products’ main manufacturing and distribution facilities are located. His announcement in Surry County in February involved plans for refurbishing the old Bassett plant on Sheep Farm Road and hiring 140 people — and up to 300 eventually.
The case in California stemmed from the company owner and president underreporting his payroll by more than $8 million and resulting in a premium loss in excess of $898,000, according to the district attorney’s office.
Hardas had bought workers’ compensation insurance for his company in 2001, but failed to include the payroll for a majority of his employees by hiring them through three labor-leasing companies that he also operated.
The State Compensation Insurance Fund began investigating the fraud when an employee working for one of those companies filed an insurance claim after suffering an injury on the job. The SCIF learned that the employee worked out of the same facility as Awesome Products, but was employed through one of the labor-leasing companies owned by Hardas.
This led to a probe by the Orange County District Attorney Bureau of Investigation and the subsequent filing of the multiple felony counts against Hardas.
Local Officials React
Upon learning Thursday night of Hardas’ recent conviction on the fraud charges, Mount Airy and Surry County Economic Development Partnership (EDP) officials reacted with astonishment.
“Holy crap!” were the first words from EDP President Todd Tucker after reading material related to the case. “No idea, no idea,” Tucker said of that disclosure. “I’d say I’m surprised.”
“I was unaware of this,” said another local official, Mount Airy Mayor Deborah Cochran. She had presented a key to the city to the company owner on Feb. 15 and declared it as “L.D. Hardas Day” in Mount Airy when he announced the local expansion. This occurred before a crowd in the Andy Griffith Playhouse which included local and state elected leaders and others.
The Surry County Board of Commissioners had approved a $543,448 incentive package for Awesome Products last November.
Tucker said background research on Awesome Products was done by local officials as part of its expansion here, specifically financial information to determine the company’s viability. A local delegation also journeyed to West Memphis, Ark., where the company has a plant, to gauge its track record there.
“I have seen his Arkansas operation and was blown away,” said Mayor Cochran, who took that trip. She spent a “good deal of time” with the mayor of West Memphis, along with employees of Awesome Products and company vendors.
“They sing his praises,” Cochran said of Hardas. The mayor added that her counterpart in West Memphis expressed a wish for that community to have more operations such as that of Awesome Products.
But the pending court case regarding the labor-fraud charges did not turn up during the inquiries by local officials.
“We were not aware of any of these legal issues — it’s news to me,” the EDP president said.
“Obviously, when you see something like this, I’m shocked, to be honest with you.”
Satisfied By Response
Tucker said Thursday night that he would be contacting Hardas in the wake of the felony disclosure. “I just want to find out what the situation is,” he said.
Mayor Cochran subsequently reported Friday morning that she had talked to the Awesome Products’ owner after learning about the court case and said she was satisfied with his response — and still standing behind him.
“I have spoken with L.D. Hardas and his attorney early this morning, and they are willing to fly to Mount Airy to try to explain what happened,” she said. “And I think this speaks volumes.”
Governmental regulations in general, and particularly those in California, were cited by Cochran after her conversation with Hardas.
“In this day and time with layer upon layer of regulations on the local, state and national levels, there can be a misinterpretation which can lead to an unintended violation,” the mayor said. “Mr. Hardas says the state of California runs differently.”
But, she added, “L.D. Hardas has accepted his responsibility and we are all moving forward.”
That includes the plans for the expansion locally.
“This situation will in no way slow down or delay his operation in Mount Airy,” the mayor said. “He is still committed to creating jobs — his level of commitment is the same.”
In February, it was reported that Hardas’ company would be investing about $22 million in the venture, which included buying the 540,000-square-foot Bassett facility and retooling it for the new use. Initially it will be a distribution center, with manufacturing operations to be added later.
Awesome Products makes a wide range of household, automotive and other cleaning products.
During recent months, efforts have been under way to provide rail service to the site, which is close to completion.
“He’s also been employing a local roofing company and, of course, there’s been some delays due to the record-setting rainfall as far as getting the building up and running,” Cochran said. “We are eager to have Awesome Products in the Bassett Furniture building, and hopefully things will be up and running in October.”
His legal issues aside, Mayor Cochran said she is convinced of L.D. Hardas’ good character, based on her time spent with him.
“I have found L.D. and his family to be genuine — he is a brilliant chemist,” she said.
“I do support him,” the mayor added. “I stand with this man completely.”
Reach Tom Joyce at 719-1924 or email@example.com.