Defunct firm’s guards to get back payments

Superior Protection has a history of debts and unpaid wages

Thousands of dollars in back payments will be made to security guards deserted last year by a Nevada-based company with a history of unpaid wages and multimillion-dollar debts.

For the last year, state labor investigators searched for Superior Protection, a Nevada-based security firm and local government contractor whose owners are "nowhere to be found," said state Department of Labor spokesman James Hardway.

Last week, two Circuit Court orders allowed the remaining funds -- about $97,000 total -- left from the company's government contracts to be paid to the 55 employees. The settlement is the first of its kind for the state Labor Department.

In 2005, Superior Protection won contracts with the city, University of Hawaii-Hilo, the federal Defense Reuse Material Office at Barbers Point and Valley View condominiums in Mililani.

Texas-based Safeguard Security Holdings purchased Superior Protection from Jack Heard of Nevada in 2004, assuming a debt the company was never able to get rid of.

In June 2006, Safeguard dumped Superior Protection and its debt by selling the company back to Heard. During that period, from May 29 through July, the 55 local guards were not being paid.

"The demands on our liquidity were substantially reduced after we no longer owned Superior," the company stated in its July 2006 filing with the U.S. Securities and Exchange Commission.

Safeguard officials called Superior Protection a "low-margin business that had substantial short-term requirements."

By dumping Superior Protection, Safeguard relieved itself of about $8.8 million in debt. This included a $5 million debt to the Internal Revenue Service that ballooned after it did not remit payment of federal taxes withheld from payroll from 2001 to 2004.

The company also owed Washington Mutual $1.5 million, and has been cited and fined four times for wage violations. Last year the company owed about 60 Florida guards five weeks of back pay for federal contracts.

The city and university system had money left over for the security contracts. The Labor Department fought to garnish those funds to pay the security guards.

The city will pay $44,761.66 from the leftover funds, and the university will pay $52,612.96. All 55 guards will be paid, and any leftover money will be divided among the 55.

The money was left unused because the company was to be paid on a month-to-month basis for the security contracts.

Hardway said the state tried to hunt down the owner to force payment of the wages. When investigators tracked down the owner's address in Nevada, it was only a post office box listing that had been closed.

"Once it became obvious we weren't going to get anything from the employer, that's when we started to look at whether there were funds still available," Hardway said. "Once we receive those checks, we'll pay the affected employees."

Former Superior Protection employee Nancy Makanui worked at the Hilo campus for a year before the company skipped town, and even before then she smelled trouble.

"They didn't want to provide us with medical and dental insurance," Makanui said. "And our paychecks were bouncing left and right."

Makanui said hard times fell on all the employees during the three months they were not paid. She is owed about $1,700 from the company.

"One of us got evicted because her paycheck for her rent bounced," she said. "She had family to save her, but she eventually had to move back to the mainland to survive."