USProtect funds diverted to 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-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.”

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 e-mails, which detail numerous six-figure 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.

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