Both Surry County officials and the N.C. Department of Commerce are re-examining their support of Awesome Products Inc. in the wake of its owner pleading guilty to felony charges.
But whether this will affect plans by the company to open a plant in the former Bassett Furniture facility here and the hiring of 140 people remains to be seen. Both state and local officials have approved funding for the project of about $1.5 million.
Eddie Harris, the chairman of the Surry County Board of Commissioners, said Wednesday the state Department of Commerce is looking into the legal situation regarding L.D. Hardas, the Awesome Products owner and president.
Hardas pleaded guilty in August to six felony charges related to workers’ compensation fraud occurring in his home state of California, linked to the insurance claim of an Awesome Products employee injured on the job. That individual worked out of the same facility as Awesome Products, but was found to be employed through a labor-leasing company owned by Hardas.
Local leaders including Surry County, Mount Airy and economic-development officials — as well as the N.C. Department of Commerce — were unaware of the case against Hardas until it surfaced in news reports.
Harris said Wednesday he had been in contact with the state agency, which was trying to sort through the matter and determine its stance going forward. “They indicated there was going to be a meeting with Secretary Decker,” he said in reference to Sharon Allred Decker, who heads the Department of Commerce.
“I don’t know what their response will be,” Harris said.
Breach Of Contract?
The state agency has earmarked about $1 million for the Awesome Products project in Surry County, with the N.C. Department of Transportation also funding a railway connection to the former Bassett site on Sheep Farm Road.
In addition, the Surry County Board of Commissioners approved a $543,448 incentive package last November for Awesome Products, which makes a wide range of household, automotive and other cleaning products.
Local officials, who visited another Awesome Products operation in Arkansas before the incentives were approved, believe Hardas should have been forthcoming about his legal entanglements in those early stages.
The company owner, a resident of Buena Park, Calif., was aware of the pending litigation for nearly two years before pleading guilty to the charges last month, a prosecutor said.
A search warrant had been served on Hardas in August 2011 for company records showing he had underreported his payroll by more than $8 million from 2008 to 2010 to a California state insurance fund and a private insurance company. This resulted in a premium loss of nearly $900,000.
In 2001, Hardas had applied and received a State Compensation Insurance Fund (SCIF) policy for Awesome Products, but the defendant 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.
In addition to being served with the search warrant in August 2011, he was interviewed then by an investigator for the Orange County, Calif., District Attorney’s Office, according to Deputy District Attorney Debbie Jackson of its Insurance Fraud Unit, who prosecuted the case.
But this was never disclosed to officials in North Carolina during the negotiation process for the Surry expansion.
“I just wonder if it constituted breach of contract,” Larry Phillips, another member of the county board of commissioners, said Wednesday of that omission by Hardas.
“The guy knew what was going on and prided himself and sold himself to us as being a man of his word,” Phillips said. “And he’s got this pending (court case).”
Hardas received a five-year suspended prison sentence, was fined $250,000 and ordered to pay $898,000 in restitution.
Phillips added that he was concerned for the welfare of local residents who might be employed by Awesome Products, given the company’s track record regarding on-the-job insurance coverage. “This is workmen’s compensation insurance, which is the most basic protection they have,” he said of employees. “And they deserve better than that, in my opinion.”
Surry officials say no incentive money from local taxpayers has actually been given to Awesome Products, but Commissioner Paul Johnson, the county board’s vice chairman, doubts the county’s support will be rescinded.
“We may not be able to do anything at the end of the day,” Phillips agreed concerning such a move.
The same goes for the Department of Commerce, Johnson said.
“I haven’t heard where they’re going to do anything different from what they’ve done,” he said Wednesday of that agency. “The information we’re getting from Commerce is that they’re just analyzing the situation.”
The commissioners say the matter involving Hardas has been problematic, particularly with Surry residents in need of jobs and the county government pressured to increase its tax base.
However, Johnson is hopeful the local expansion will occur as planned.
“Obviously, I’m disappointed that we weren’t told about this situation up front,” he said. “I think he (Hardas) should have been honest with us.”
Yet Johnson thinks Awesome Products “is going to be able to work their situation out” with the expansion plans here. “I still believe they’re a good company.”
Johnson pointed out that Awesome Products has already bought the old Bassett facility, as part of a $22 million investment in the local venture. “They have done an amazing amount of work,” he said of refurbishing efforts to convert the former furniture plant for its new role of distributing, and later manufacturing, the new occupant’s products.
Phillips said he hopes Hardas will come to Surry County and openly discuss the situation regarding his court case, indicating that this could provide some assurance that a similar scenario won’t unfold in North Carolina.
Reach Tom Joyce at 719-1924 or email@example.com.