Republic Windows CEO Arrested in IL/IA Scandal

Last winter, in North Side Chicago, Republic Windows abruptly closed, leaving its employees in the lurch. The employees, led by their union representatives, refused to leave the premises, demanding that they be paid and saying that they were not given appropriate notice of management’s intent to close the plant. They refused to leave the premises and they refused to let the managers back into their offices.
That last bit of bravado in the case that received national attention is now turning out to be instrumental in what, according to Annie Sweeney and Matthew Walberg of the Chicago Tribune (front page, Friday, September 11, 2009), has turned out to be an unbelievably greedy and self-serving plan by Republic Windows CEO Richard Gillman to take the company’s equipment, transfer it secretly to Red Oak, Iowa, and continue being a window company…just not one that paid its employees for services rendered nor did anything else the “right” way.

Richard Gillman has been arrested and is being held on $10 million bail in the Cook County Jail. Prosecutors say, in a 56-page filing, that Gillman stole the assets of Republic Windows and then secretly trucked the equipment to the rural town of Red Oak, Iowa (population 6,000), where Gillman took over a company that had been in existence since 1986.

Ted Schoonover, the Mayor of Red Oak, whose wife was one of the employees of the window company, said that Gillman and Company then shut plant in Iowa down suddenly in February of 2009, throwing about 100 people in Red Oak out of work, 25% of whom are still unemployed. Said Schoonoever, in the Tribune 9/11 issue, “It was a very viable business. That’s why it was such a shock. It was pretty devastating, especially the way the economy was. To lose 100 some jobs in that economy was pretty tough.”

Gillman had taken over the Red Oak location, which was named Echo, on January 1^st, 2009, and he had promised to keep things running.

If the charges hold up in a court of law, Richard Gillman will not only have defrauded the employees of Republic Windows, but also those of Echo Windows in Red Oak, Iowa. Investigators have credited the Republic Windows employees who occupied the building, drawing national attention to the plight of the workers and those owed money by the company, [which added up to about $10 million to creditors (and employees) and more than $200,000 in cash that management misappropriated] with preventing management from re-entering the building and destroying the evidence that will now be used to (hopefully) convict them.

Management also loaded up 7 trailers and stored them at a secret location on the South Side of Chicago (Republic’s plant is on the North Side). Three of those trailers were driven to Red Oak. (Employees actually followed the trucks removing equipment, to see where it was being taken). Investigators have seized those trailers still at the South Side site as part of a search warrant executed on Wednesday, September 10, 2009.

The lengthy prosecution case rests on internal documents (those that were not able to be destroyed because the workers had taken the plant), including a Power Point presentation entitled, “How do you plug a $4 million hole?”

The sit-in drew national attention. The sit-in had support from politicians and officials from the banks that had lent Republic money to hammer out a solution with its disgruntled (and unpaid) employees. Eventually, the banks agreed to cover the costs of union workers’ severance pay and vacation pay, as well as 2 months’ of insurance for the shafted workers. It is reported that, at those meetings, Richard Gillman asked for a severance package for himself as well as a $90,000 allowance for his automobile.

Gillman’s attorney, Ed Genson, says that Gillman has “nothing to hide” regarding the sudden shuttering of Republic Windows, which makes you wonder how secretly raiding the equipment and till of the now-bankrupt company can be something that will speak in Gillman’s favor? Hiding 7 tractor-trailers of equipment across town and then secretly moving then to a new location to start a similar business (which closed within 2 months) doesn’t seem quite “kosher.” Genes, Gillman’s attorney, maintains, however, that GE (the company that held the plant equipment as collateral) knew the equipment was being removed. Said Genson: “We have the guy who notified GE. They knew the stuff wasn’t being stolen. It wasn’t a diversion of assets. GE knew they were doing it.”

This may be true, but it does not speak to the failure to properly compensate the Republic employees, nor to honor the word given to the city fathers of Red Oak when Gillman launched Echo Windows. Prosecutors have what they refer to as “the smoking gun,” a document that lays out the plan to spirit the equipment away without the knowledge of creditors. The term used by company management in “the smoking gun” plan: “blitz” moves. (Certainly sounds like an up-and-up operation.)

Interestingly enough, Ed Genson, Richard Gillman’s attorney said: “He (former Republic CEO Gillman) gave a statement to the Bankruptcy Court without a lawyer.  He gave a statement to the attorney general without a lawyer, and he gave a statement to state’s attorney without a lawyer. He hasn’t been stonewalling. He did it because he has nothing to hide.” (A cynical reader is tempted to say, “Either that, or he made a very stupid series of statements.”)
(*Stay tuned for further developments as the case moves through the courts. And please feel free to comment.)