Monitoring the economic pulse of the Triad | by Jordan Green
Bank denies abetting fraud by staffing executive
A South Carolina bank denies involvement in a scheme by Greensboro staffing agent executive and convicted tax cheat Greg Harrison to swindle a New York investment fund out of $7.5 million.
GrandSouth Bank, based in Greenville, SC, acknowledged in a court filing last week with the NC Business Court that it entered into factoring, or lending, agreements with licensees of Global Labor, a company set up by Harrison, that it sent out notices to debtors of accounts receivable that were purchased by the bank and that it made UCC filings to cover the assets of the licensees.
BHC Interim Funding II, which is suing Harrison and related business entities to recover its $7.5 million investment, is also asking the court to appoint a receiver for Global Labor. Meanwhile, Harrison faces sentencing on July 10 for 63 counts of failing to pay payroll taxes and individual income taxes, and for corrupt endeavor to obstruct internal revenue laws. GrandSouth Bank, in turn, has requested a court judgment declaring that it, rather than Global Labor, has the first priority security interest in the assets of the licensees, which include Strategic Insource Solutions in Greensboro; Hire Alternatives in Atlanta; Integrated Staffing Solutions in Gastonia; Temporary Personnel Solutions in Jacksonville, Fla.; and Innovative Hiring in Richmond, Va.
Harrison reacquired staffing company assets that were secured by the BHC loan from former business partners in 2008, closed down the company and then restructured the business using a licensee arrangement. Under the licensing agreements, Global Labor controls 100 percent of the licensees’ stock and the licensees are contractually committed to transition their business back to Global Labor in the event of a termination, according to the complaint by BHC.
BHC alleges GrandSouth Bank was aware of BHC in its complaint, citing an e-mail from bank President Ron Earnest to Doug Corriher, vice president of the bank’s factoring division: “Doug: Attached is an asset purchase agreement between Global and the licensee companies. This will document the flow of assets and funds between Global and the licensee companies. I would suggest that you contact both BHC and US Funding (you may want to make sure Greg is OK with this first) and make sure they are in agreement that they will either subordinate or satisfy any liens they may have on Global assets with respect to the specific accounts being purchased. If they are in agreement, we can prepare a simple letter agreement that documents the accounts being sold and the amount of funds being sent to US Funding via Global.”
BHC alleges that “after speaking with Harrison, GrandSouth made the conscious decision not to contact BHC. In so doing, GrandSouth provided the necessary assistance to Harrison to carry out the fraud. In so doing, GrandSouth was aiding and abetting the conspiracy to defraud BHC.”
The bank denied the allegation. GrandSouth Bank also denied allegations that it failed to follow standard lending processes or its internal procedures in financing the companies.
BHC alleges that GrandSouth Bank knew the assets were controlled by Harrison, but requested a customer roster to be broken down by licensee. The purpose of the exercise, BHC alleges, was “to satisfy the lending limits imposed by state and federal regulators.”
GrandSouth Bank acknowledged requesting the customer rosters, and also “admitted that there are regulatory limits imposed upon the amounts of accounts that can be purchased at any one time by GrandSouth Bank from each of its factoring customers.”
After-work social in Winston-Salem on Wednesday
Triad Business Networking hosts at Triad After-Work Social at the Piedmont Club on the 19th floor of the BB&T Building, located at 200 W. 2nd St. in Winston-Salem, on Wednesday from 6 to 8 p.m. The first 200 people receive two free drink tickets.