As prosecutors describe it, the abrupt shutdown and looting of Republic Windows and Doors — which put 200 people out of work last December — was in fact part of a scheme nearly a year in the making.
But when the laid-off workers staged a sit-in at the factory for their lost wages, they also threw a wrench in those plans.
Richard Gillman, the former president of the company, was arrested in early September on a slew of felony charges and is slated to be formally arraigned later this month.
Gillman and several other company officers succeeded in taking hundreds of thousands of dollars from Republic before it shut down, prosecutors say. Recently released court documents provide a more detailed account of where that money went and how it was spent.
Ed Genson, who is Gillman’s attorney, declined to comment for this story.
At Gillman’s initial appearance in September, Genson blasted the charges as a publicity attempt by State’s Attorney Anita Alvarez.
He noted that some of the issues raised in the indictment were the same ones Republic was seeking to address in its federal bankruptcy case.
Financial Troubles
Republic’s executives started talking as early as March 2008 about how to square the company’s mounting debts with its shrinking revenues.
Low on cash, the company had stopped paying its suppliers for raw materials like window panes and vinyl, according to court records.
Suppliers stopped extending credit, and banks that had loaned Republic money were starting to clamp down. Officials discussed selling the company or merging it with another manufacturer.
Between mid-March and mid-April 2008, managers also talked about buying a plant from Traco, a company that owned a similar window factory in rural Red Oak, Iowa, about two hours southeast of Omaha, Neb.
At a meeting at the end of April 2008, managers sketched a timeline that included closing Republic’s Goose Island plant by early 2009.
Prosecutors note that the options on the table in early 2008 were all “viable, legal and ethical” — even buying the Iowa factory, assuming that Republic’s creditors had been notified.
A ‘conspiracy’
By the summer of 2008, Republic’s managers turned from legitimate ways to sell or close the company to fraudulent options, prosecutors say.
Soon, Gillman was looking for a way to escape Republic’s debts and keep the company going in another form.
Throughout 2008, prosecutors say, Gillman started laundering money from Republic through shell corporations created at his behest.
In all, Republic paid a company called International Fenestration Partners more than $202,000.
While IFP produced invoices for things like chemicals and extrusion equipment, Republic never got those items.
Prosecutors called the invoices “phony” and IFP’s checking account a “slush fund” for Gillman. Quite simply, court documents say, the plans were a “conspiracy” to defraud the company’s employees, creditors and suppliers.
Echo Windows
By September 2008, Gillman and Bill Smith, a friend who had also once owned a stake in Republic, were setting up a series of companies to buy the Red Oak plant and rename it Echo Windows.
As Smith set into motion the property side of the deal, other employees at Republic were directed to order specialized machine parts.
The supplier was paid nearly $27,000 for the work in the form of checks from the IFP account, even as Republic had an unpaid debt to that supplier of about $8,000.
With the parts in hand, prosecutors say, Gillman would have been able to retool the machinery and make a different line of windows.
In early November 2008, a month before Republic shut down, Gillman directed employees to start packing up some of the machinery in the Goose Island plant.
The union caught on and tried to stop the relocation, but to no avail. In all, the equipment filled 10 semi-truck trailers.
Three of them got to the Red Oak plant the day before Republic shut down.
The other seven trailers full of equipment only made it as far as a storage yard west of Midway Airport. IFP, the Ohio-based “slush fund,” paid the trucking company, court records say.
What’s next
Some of Republic’s workers got rehired when a California company, Serious Materials, bought the Goose Island factory and started retooling it earlier this year to make energy-efficient windows.
In Red Oak, many of Echo’s employees left the small town because there were no other jobs in the area, Mayor Ted Schoonover says.
A small manufacturer moved in near Traco’s plant in Red Oak earlier this year, bringing its 115 employees from Omaha. That’s giving the town an economic boost, Schoonover says.
Gillman is scheduled to be arraigned later this month. His trial likely won’t start until sometime in early 2010. Several former Echo employees are expected to testify.
For Echo’s employees in Red Oak, Gillman’s arrest and unusually high $10 million bail provided a sense of justice and closure, says Schoonover.
“I’m glad that it was so high, that he couldn’t get out, that he had to do some time.”