Able Industries under investigation by USDOL
by Mindy Aguon
Guam - The island's largest employer of people with disabilities is under investigation by the U.S. Department of Labor. Earlier this year we told you about concerns that had been raised by previous board members of Able Industries who alleged management and the current board wasn't acting in the best interest of the employees. While management refuted those claims, details are now revealed about what the federal probe has uncovered so far.
Able Industries has prided itself on being the island's largest employer of individuals with disabilities, providing job opportunities for those who otherwise wouldn't be able to have gainful employment. But an audit conducted by the DOL has revealed that the organization has underpaid its employees. KUAM News contacted the federal agency for an interview, but officials said they can't do so until the case is concluded.
Regional director of public affairs Deanne Amaden could only confirm at this time, that the wage and hour office "does have an open, ongoing investigation involving this employer."
KUAM News was able to obtain letters sent a month ago to Able Industries CEO Joaquin Leon Guerrero from DOL assistant district director Patrick Candoleta, revealing some of the findings of the audit that was conducted on 2010 payroll records. Those findings include the revelation that 172 employees were underpaid by more than $386,000. The five-month long audit also found that 73 employees were underpaid in the amount of more than $201,000.
Former Able consultant and board member Johann Sobredo claims the DOL investigation stems from concerns he brought to the attention of the U.S. Department of labor in Washington, DC months ago. Sobredo stated, "In May the U.S. Department of Labor spent the whole month going through payroll records and taking a look at persons with disabilities and how much they got paid and whether they got paid correctly or not."
Sobredo's allegations included claims that Able had failed to pay retirement benefits to its employees - claims that were confirmed during DOL's five month-long audit. Sobredo believes further scrutiny will result in even more findings against Able as 2009 and current year benefits haven't been tabulated yet, adding, "So we're looking at about a million dollars that Able Industries under the management of Ken Leon Guerrero, Moe Cotton and Jennifer Duffie have mismanaged. They have failed to pay persons with disabilities. I'm just shocked these are people who have difficulty even helping themselves."
When KUAM News first ran the stories about allegations against Able's management, Leon Guerrero said the claims had been investigated and were unsubstantiated. The CEO also said Able had been audited and he was confident about the solvency of the organization. On April 28, 2011 he stated, "They found no evidence that the current board or managers were in any way, shape or form benefiting outside of their compensation and benefit packages…we've posted profits both '09 and '10, so the company is strong and the company is growing."
But there's a different story now as Leon Guerrero, in a declaration filed in the Superior Court of Guam, admits that the labor audit was conducted finding the underpayment of benefits but Able doesn't have the money to pay what is owed. In fact, Leon Guerrero admitted that immediate resolution is a necessary precursor for Able to continue on its contracts, many of which deal with the federal government.
NISH - the organization that oversees Able - has even expressed concerns about the financial solvency of the company due to debts to outside agencies. According to NISH Pacific West executive director David Dubinsky, Able owes more than $200,000 to the U.S. General Services Agency for inventory that was delivered to the organization for sale at the base supply stores. The Navy's contracting officer has also called and requested that NISH "seriously consider issuing a purchase exception and/or to remove from the Procurement List the operation of the stores at the Naval Base and at Andersen AFB due to 'low shelf inventory' at the base supply stores."
Dubinski wrote to Leon Guerrero and Able board chair Elmore Cotton, saying, "These are very serious matters and has prompted NISH to publish a sources sought notice to determine the level of interest among other nonprofit agencies to assume responsibility for the performance of the AbilityOne projects currently on the procurement list and being performed by Able Industries." NISH is working with Able to see if they can protect the jobs for people with significant disabilities.
Sobredo confirms that Dubinski was on island this past week and is expected to return again next month as they are concerned about what's going on with Able. He said, "We're looking at protecting the program and the program is employing persons with disabilities. I believe they're here to find other viable contractors who are willing to take over the program."
Leon Guerrero has asked the superior court to release $800,000 that is currently being held in a pending civil matter with Able to satisfy the USDOL demands. The CEO added that if the money isn't released, Able will be found in violation of its contracts, which Leon Guerrero states would result in irreparable harm to the company's ability to maintain and/or pursue contracts with the federal government to provide employment to people with disabilities.
"The company had millions in its accounts and now they're depleting it. They've depleted it to the point that they're not paying their vendors. They're not paying the government, the USGSA, they're not paying NISH. So that says a lot about their mismanagement," he said.
Sobredo would like to see a receiver take over Able Industries to ensure individuals with disabilities continue to have jobs. Leon Guerrero meanwhile did not respond to multiple phone calls and e-mails since last week regarding this story. Able board chair Moe Cotton referred our inquiries to the Department of Labor and Leon Guerrero only said that Able "settled the matter last week".
Also of note was that because Able Industries initially had refused to pay what was owed to its employees, the U.S. Department of Labor contacted both the Air Force and Navy on Guam, advising them of the violations and the back wages owed. Additionally they requested that the amount of money that is owed be withheld from contract payments due to Able.