Woman accuses Putnam company of violating state, federal laws

WINFIELD – A woman says she was fired from a Poca-based company in retaliation for reporting various violations of state and federal laws, including possible tax evasion and Social Security fraud.

Cathy J. Chapman filed he complaint against Clark Truck Parts Inc. on July 7 in Putnam Circuit Court. She seeks monetary damages as well as injunctive and other relief.

Chapman, who lives in Belle, started working at Clark Truck Parts on Sept. 26, 2005, as office manager.

Soon after, she began to suspect problems.

Upon starting the job, Chapman says she was told to meet with health insurance carrier about medical benefits. And she was told her hire date would be backdated three months so her benefits immediately would be put in effect.

Thinking this might be insurance fraud, Chapman says she mentioned it to Clark Truck Parts president Eric Clark, who she says told her "he was aware that the hire dates were being manipulated, but that the insurance premiums were cheaper with a three-month waiting period."

Because she wasn't sure if the actions constituted fraud, Chapman says she didn't push the issue further "out of fear that she might lose her new job."

Shortly thereafter, Chapman says she became aware that personal purchases wer being made with corporate funds and being designated as company purchases.

"Specifically, corporate credit cards were being used by non-employee family members to purchase items ranging from gasoline and vehicle repairs to dirt bikes and family vacations," her complain states. "Additionally, vehicles were purchased in the company's name, with company funds, and driven by non-employee wives and children."

Suspecting violations of state and federal tax laws, Chapman again brought it up with Clark.

"Clark informed plaintiff that he was aware that the charges were being made but that the individual making the charges was Richard Casdorph who would be leaving the company," the complaint states.

Still, Chapman claims officers continued to use corporate funds for personal items and then designating them as corporate purchases.

"Realizing that the President of the company was involved in the use and abuse of company funds for personal purchases, plaintiff felt she should not question the charges further out of fear of losing her job," the complaint, filed by attorney Matthew S. Criswell, states.

Despite her silence, Chapman says she would not code the personal purchases herself. Any purchase she suspected was personal in nature were taken to Clark, who she says coded all of these personal purchases as corporate purchases.

In December 2005 while preparing employee w-2 forms, Chapman says she became aware that sometime in June 2005 (before her employment), money had been withheld from employee paychecks but had not been applied to the employees' 401(k) accounts.

Realizing that might be violation of Employee Retirement Income Security Act (ERISA), Chapman told Clark, who by then had become president of the company.

"Clark acknowledged the error and told the plaintiff to contact the administrator of the plan to correct the error," Chapman's complaint states. "After considerable effort by the plaintiff, the funds were properly applied to each employee's 401(k)."

Still, Chapman says employees never were told of the error.

Chapman says the alleged questionable business practices continued into the new year.

In February 2006, she says Brett Chandler asked her to cut two separate checks to him. The first was a paycheck that reflected an increase in his annual salary from $60,000 to $90,000. The second was for back pay from Chandler's date of hire.

"This money represented the difference between what Mr. Chandler was making and his new salary," Chapman says in the complaint. "Chandler informed plaintiff that he was actually hired on at the $90,000 a year salary, but due to a pending divorce, he only wanted to disclose that he was making $60,000. Now that the divorce was final, he felt that he could compensate himself for the difference."

Suspecting this was a violation of West Virginia divorce law, Chapman says she again took the issue to Clark.

"Clark indicated that he was aware of the arrangement and that plaintiff should go ahead and cut the checks," the complaint states. Fearful of losing her job, Chapman says she didn't inquire further.

And finally, a week before her discharge, Chapman says she became aware that Social Security withholdings for all employees' paychecks for 2005 had been done improperly and that the wrong info was reported to the Internal Revenue Service.

Chapman says she immediately reported it to Chandler and suggested that IRS be informed.

"Chandler told plaintiff that 'we won't worry about it unless they check it out,'" the complaint states.

She was fired the following week.

Chapman says she "was not told whether she was fired for reporting the Social Security fraud/tax evasion or whether it was the culmination of all of her reporting which led to her discharge," the complaint states.

She says she has suffered lost wages, lost benefits, out-of-pocket losses, substantial emotional and mental distress, humiliation, anxiety, embarrassment, depression, aggravation, annoyance and inconvenience.

Additionally, Chapman says she didn't get her final check within 72 hours of termination, which is a violation of the West Virginia Wage Payment and Collection Act.

In her four-count complaint, Chapman seeks compensatory damages for what she says was a retaliatory discharge, which is a violation of public policy. She also seeks compensatory damages for severe emotional distress and punitive damages. For the violation of the Wage Payment and Collection Act, she also says she is entitled to unpaid wages and liquidated damages in an amount equal to her regular rate of pay for 30 days.

Chapman seeks a permanent injunction against Clark Truck Parts ordering it to cease and desist from engaging in the unlawful conduct mentioned in the complaint.

She also seeks back pay and front pay including benefits, out-of-pocket losses, pre- and post-judgment interest, court costs, attorney fees and other relief.

Chapman requests a jury trial. The case has been assigned to Circuit Judge O.C. "Hobby" Spaulding.

Putnam Circuit Court case number: 06-C-230