Workers Still Reeling From Sen. Brent Waltz' Failed Business

State Sen. Brent Waltz' (R) personal affairs are becoming a public issue for him again. Problems surfacing from a failed business he founded in 2003 with four other men continue to work its way through the legal system, and it doesn't paint a pretty picture for Waltz, who stands accused of defrauding former workers of the company out of hundreds of thousands of dollars of wages owed to them when the business closed in 2009. The litigation is the subject of a front-page story in today's Indianapolis Star titled, "Did Sen. Brent Waltz fail to pay his workers?"

The company in question is Indianapolis Diversified Machining, which occupied space at the former United Airlines maintenance hub at the Indianapolis International Airport. Records obtained by the Indianapolis Star show that Waltz formed the company with four former United Airlines employees--Carl Jacobson, Paul Schnulle, Tim Tosh and Tony Shevchenko. Each owned a 20% stake as shareholders of the company. Records showed Waltz served as a director and its chief financial officer. Despite corporate records showing otherwise, Waltz told the Star's Tony Cook that he only had an option to purchase shares through his investment firm, The Baron Group, was not a director or officer and only acted as a business advisor to the company. He was paid $68,000 a year for his services.

What is clear is that when IDM closed its doors in 2009, more than 40 employees were owed more than $220,000 in unpaid wages. Marion Superior Court Judge Tim Oakes has already entered a partial summary judgment against IDM for the unpaid wages, double that amount in liquidated damages and $50,000 in attorney's fees, or a total judgment of more than $720,000. It's interesting that Sen. Waltz, who is the ranking member of the Senate Pensions and Labor Committee, and some of his Senate colleagues supported legislation this year that would have gutted that very statute--the Wage Payment Law--that allows employees to recover treble damages and attorney's fees from their former employer for unpaid wages. The Senate later killed the bill after it passed the House only after this blog began sounding the alarm bell about the harmful effect it would have on employees who are beat out of their wages by unscrupulous employers.

What's disturbing is the claim that IDM made payments to Waltz of at least $148,000 after it told the employees it didn't have money to pay them when it shut its doors. IDM also failed to pay withholding taxes to the federal government despite withholding the money from the employees paychecks according to the Star. Waltz claimed the money paid to him was for investment banking services and ongoing services related to the company's closure and efforts to sale it. Waltz told the Star it was not his decision to prioritize payments to him over payment of the workers' unpaid wages and taxes owed to the federal government. Issues yet to be resolved in the ongoing litigation include fraud and RICO charges against Waltz and the Baron Group since it will be next to impossible to collect any of their judgment from the failed IDM.

The Star's story today neglects to mention the earlier problem detected years ago when former employees of IDM attempted to apply for unemployment benefits. WRTV's Rafael Sanchez reported back in April, 2009 that the former employees learned IDM had never paid into the state's unemployment insurance trust fund and were ineligible to draw unemployment benefits. When Sanchez contacted Waltz at that time, he told him much the same he is now telling the Star's Cook--that he was only a financial advisor who helped start the company. He insisted he had nothing to do with the day-to-day operations of the company. "I am absolutely appalled that the company did not pay these employees," Waltz told Sanchez. "I am doing everything I can to make sure people get paid the money they deserve."