By: Tom Joyce Staff Reporter
September 25, 2013
A company owner planning an expansion in the former Bassett Furniture Industries plant here has had a face-to-face meeting with local officials, the first since his recent felony convictions came to light.
“We had a very frank, honest, open discussion,” said Larry Phillips, a member of the Surry County Board of Commissioners who attended the Monday session with L.D. Hardas of Awesome Products Inc., whose local project is linked to 140 new jobs.
“We didn’t pull no punches with each other,” Phillips added Tuesday of the tone of the meeting held in a conference room at Bank of America in Mount Airy, which was not announced to the press.
“He doesn’t want any more publicity,” Paul Johnson, another county commissioner at the meeting, said Tuesday regarding Hardas.
Officials of both the Mount Airy and county governments, along with Surry Economic Development Partnership President Todd Tucker, recently had expressed concern about payroll fraud charges Hardas pleaded guilty to last month in California.
While acknowledging they still supported Hardas and his plans for a $22 million facility here to manufacture and distribute household products such as bleach, degreasers and cleaners, local officials were dismayed that the allegations weren’t disclosed during negotiations with them. Surry County and the N.C. Department of Commerce subsequently approved incentives totaling about $1.5 million for the project.
When Hardas’ court troubles surfaced earlier this month, stemming from his underreporting of Awesome Products’ payroll in California by $8 million to avoid hundreds of thousands of dollars in premiums, local officials said they would seek a meeting with him.
That came Monday, with Mount Airy Mayor Deborah Cochran, City Manager Barbara Jones and Commissioner Jon Cawley also attending the meeting along with Tucker and the two county commissioners.
Phillips, as well as county board Chairman Eddie Harris, had expressed a desire that the session be open to the press, but city leaders who arranged the meeting reportedly decided it should be closed. The mayor could not be reached to elaborate. An attempt to contact Tucker for comment also was unsuccessful.
But Phillips said Tuesday that key questions to Hardas — a resident of Buena Park, Calif., where Awesome Products is headquartered — were addressed to the satisfaction of local officials.
“My question was just simply why didn’t he let us know?” Phillips said of the criminal case against the Awesome Products official, who had been under investigation by the Orange County, Calif., District Attorney’s Office since August 2011. The company’s expansion to Surry was announced in February.
Hardas’ reply Monday, as relayed by Phillips, was “he didn’t feel he had to” disclose the case, which ended in August with the company owner and president pleading guilty to six felony charges related to workers’ compensation fraud. The charges were linked to the insurance claim of an employee injured on the job, who worked out of an Awesome Products facility but was found to be employed through a labor-leasing company owned by Hardas.
The district attorney investigation found that the underreporting of the Awesome Products payroll by more than $8 million occurred from 2008 to 2010 and resulted in an insurance premium loss of nearly $900,000.
In 2001, records show Hardas had applied for and received a State Compensation Insurance Fund (SCIF) policy for Awesome Products, but did not inform SCIF that he leased a majority of his labor from one of three leasing companies he owned. On July 10, 2008, Hardas insured his labor-leasing companies with The Hartford insurance company but failed to disclose his policy with the SCIF.
After pleading guilty last month, Hardas received a five-year prison sentence that was suspended pending 10 years of probation, was fined $250,000 and ordered to pay $898,000 in restitution.
“He felt burned by his CPA (certified public accountant) and he feels that his accounting firm has burned him and done him wrong,” Phillips said of Hardas’ position at Monday’s meeting, which lasted slightly more than an hour.
“Everyone gets burned occasionally,” Phillips said of a prevailing viewpoint that the charges against Hardas represented an isolated incident.
Concerning whether Hardas should have divulged his criminal involvement with officials here, who learned of it only through media reports this month, Phillips said he understands the company owner’s failure to do so from a marketing standpoint. “Something like this lingering out there isn’t good for his business.”
Since the case in California involved workers’ compensation insurance, one question posed to Hardas Monday concerned making sure local workers who are hired will be protected. “He put that to rest pretty quick,” Phillips said. “They will.”
The operation here is expected to launch in late fall.
Overall, the questioning of Hardas during Monday’s meeting was “very forthcoming” and the answers from the Awesome Products owner were the same, Phillips said. “It was really just a lot of listening,” the commissioner said of local officials allowing Hardas — who attended the meeting alone — to explain his position.
“At the end of the day, it’s still his property,” Phillips said of the former Bassett plant that Hardas has bought. “This is his money he’s investing.” That includes paying to have rail service at the plant site rather than waiting for a state grant, said Phillips, who is impressed by how Hardas built his company up from nothing in the 1980s after arriving from India.
Since the incentives from the county are performance-based, no money from local taxpayers has been spent so far, the commissioner mentioned.
Phillips, who had been highly critical of Hardas in recent weeks, said he believes everything now can move forward based on Monday’s session.
That was echoed by Commissioner Johnson, but on a more-limited scale.
“I promised L.D. that I would make no comments, either positively or negatively, with regard to the press,” he said.
“As far as I’m concerned, he answered all of the questions I had and other than that I thought the meeting was very positive.”
Reach Tom Joyce at 719-1924 or firstname.lastname@example.org.