WAGES WAR: Fund opened for Holbrooke Hotel employees waiting for payday
Holbrooke Hotel employees are still waiting for two weeks’ pay due them from Atlantic First Holdings, the New Jersey-based property management firm that allegedly defaulted on its contract at the end of December.
“He said the checks were in the mail,” said housekeeping manager Tiresias Dooly. “I check my mailbox every day. I’ve never gotten a check.”
Now, the hotel owners are considering civil and criminal action against the company – once seen as the hotel’s savior – and calling the head of the group “some kind of scammer.”
Atlantic First Holdings had been leasing the historic hotel in downtown Grass Valley with an option to buy it. But CEO Randolph Hudson left Grass Valley suddenly on Dec. 28, and allegedly left behind a stack of unpaid bills.
On Jan. 5, the partners who own the property – including Jim O’Brien, Mike Nudelman and local Realtor Cheryl Rellstab – resumed running the hotel.
But employees who ran the business in Hudson’s absence were “left high and dry,” O’Brien said. “We’re in the same boat as the employees, but we’re soldiering on.”
Unfortunately, O’Brien said, the partnership doesn’t have the funds to pay the employees for those two weeks, an amount he estimated at $15,000 to $20,000.
“I’ve opened an account at Citizens Bank, a Holbrooke Hotel employee fund, to help those left in really tough shape,” he said. “Most are minimum wage and really struggling from week to week.”
Dooly, who often can be found at the front desk, is a single mother who has had to negotiate with bill collectors and borrow money from her friends and family to stay afloat. She estimated she is owed about $1,200, a little more than two weeks’ pay. And that doesn’t include overtime and holiday pay she is owed.
“I had to go and get an advance on my taxes and borrow money,” she said.
“Everybody’s been understanding, but you can only wait for so long to pay them back … If it weren’t for my family and friends, my kids would go hungry.”
Before Hudson left, Dooly said, “He was a week behind, and then when we did get (our checks), it would be a big if, if they would clear, if we could cash them. He got us caught up, and then he left.”
In a telephone interview this week, Hudson said he had sent money via Western Union to employees who called him and asked for an advance – but none of the employees contacted by The Union had received such a payment, or had heard of another employee receiving any payment.
Hudson also said he was sending out checks on Thursday.
“I tried to contact him,” Dooly said. “He never, to this day, has returned my phone calls.”
In a lengthy e-mail, Hudson said he intended to clear up “this payroll debacle.”
“We have no problem in releasing a payroll that’s due,” Hudson said. “We’ve asked for our records. The books and records are still at the hotel, but because of ongoing hostilities, we don’t have access.”
Both O’Brien and General Manager Randi Freeman disputed that statement, saying they had provided Hudson with everything he needed, including payroll sheets, time cards and checks ready for his signature.
Hudson said the employees had received partial payment for the first week, e-mailing a payroll roster prepared by Freeman. He said the document showed that some money had been paid out.
Freeman disagreed, saying the roster represented money she had planned on paying to employees – until Hudson stopped payment on the check. She added that any cash remaining in the hotel accounts was used to pay off vendors.
Several of the employees listed on the sheet were contacted by The Union and confirmed they did not receive any payment for that time period.
“Ever seeing the money is hardly likely, unless he grows a heart,” Dooly said.
Hudson also claims he is not liable for the payroll after he physically left the property and the partners took it back – a statement O’Brien called “absurd.”
“They were entitled to be paid for the period they worked for him,” he said. “He hasn’t paid anything.”
“What he did to the employees was reprehensible,” Freeman said.
The local investment group bought the historic lodge in 2005 from DMW Hospitality Group. The Holbrooke Hotel LLC paid close to $2.8 million for the property – intending a passive investment that was to be managed professionally.
After an earlier management contract fell apart, Atlantic First Holdings signed a lease agreement, with first right of refusal and an option to buy within three years, and started operating the hotel and bar in August 2009.
“We were going to close (down), and (Hudson) came to the rescue, so to speak,” O’Brien said. “He knew all our liabilities. He said, because of his other resources, he could raise the capital to put into the operation.
“But it was all bravado.”
Atlantic principals agreed to pay a monthly lease, plus an option payment that the partnership was going to use to pay down its debt.
But from the beginning, Hudson barely made his rent and was frequently late when he did make a payment, O’Brien said.
“We kept hanging on because he kept promising his deals were imminent,” he said.
“We were getting deeper in the hole.”
Among obligations left unpaid was the liquor bill, to the tune of $15,000, O’Brien said.
Another unpaid bill was the transient occupancy tax to the city of Grass Valley, which was paid once, in August 2009.
The outstanding debt to the city is a little more than $30,000, said City Administrator Dan Holler. If the city is unsuccessful in recouping the money from First Atlantic, it will place a lien against the property.
The partnership is looking into the possibility of filing a civil suit or, possibly, a criminal complaint against First Atlantic.
“He damaged us substantially, financially,” O’Brien said. “We are exploring ways to pursue him – but we can’t find any assets we can go after. Atlantic and the other companies appear to be shell companies. I am thinking he’s a scammer, at this point – but he’s very good at it.”
For his part, Hudson claims Atlantic First incurred numerous liabilities during its tenancy of the hotel, adding that corporate wages and expenses of more than $70,000 have gone unpaid.
“It has been suggested by a certain few that Atlantic First perpetrated some type of scam at the Holbrooke,” Hudson wrote in an e-mail. “It has been my understanding that one party needs to profit in a scam. This is not the case in this matter.”
O’Brien said his primary concern now is “getting the Holbrooke back to where it used to be. … When this hit, a lot of people said the Holbrooke was going to close – but we’re alive and well. We intend to stay open, and we need all the support we can get.”
O’Brien said he remains “pretty confident” about lining up new investors.
“Nobody wants this place to close,” he said.
To contact Staff Writer Liz Kellar, e-mail firstname.lastname@example.org or call (530) 477-4229.
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