CHARLESTON – Confrontation and intimidation ruled at Better Foods Inc., owner of Tudor's Biscuit World and Gino's Pizza restaurants, according to former state finance commissioner Arnie Margolin.
In a Nov. 15 deposition for a sexual harassment suit, Margolin said he had no idea of the depth of dysfunctionality when Better Foods owner Oshel Craigo hired him in 2002.
"There were very significant financial problems and substantive areas that were either not addressed or were handled very improperly in terms of what professional standards would dictate," Margolin said.
He said he considered Better Foods controller Paul Niedbalski an accident waiting to happen.
Niedbalski and Better Foods now defend themselves in Kanawha Circuit Court against a harassment claim of former employee Anna Reynolds.
Circuit Judge Louis Bloom set trial Feb. 5, but both sides agreed to a delay. As of Feb. 28, they had not agreed on a new trial date.
According to Margolin, Niedbalski developed his supervisory style in an environment Craigo helped create.
"God bless him, Craigo has an explosive kind of personality, in my view, and he can threaten to fire you without necessarily literally meaning it," Margolin said.
Margolin said he heard Craigo threaten to fire Niedbalski at least six times, and he said Niedbalski was no more confrontational than Craigo and three other managers.
"His lack of professional manner – not to condone it or to defend it or to justify it or to rationalize it, but to try to share with you and observe why – it was what he dealt with," Margolin said.
He said Niedbalski cursed employees and made them feel like they were nobody over insignificant mistakes.
"But it wasn't any different than what I observed, how management at times communicated to Paul. And so I guess he thought that's the way you do it," Margolin said.
Craigo hired Margolin as a consultant in 2002. They knew each other from Craigo's years as a state legislator.
Margolin said Better Foods employed about 800 workers and reported annual revenues of about $20 million.
"Just one store had grown to over 80 stores, multiple companies, and he was trying to find somebody that had my kind of skill set, I guess, to help him take it to the next level," Margolin said. "Before you can take something to the next level, you have got to get it where things are stabilized."
He said he found that Better Foods never paid use tax, that an audit showed the company owed more than $100,000, that Better Foods had not complied with federal audit requirements in its retirement plan or its stock option plan and that the company lacked a human resources department.
"To the day I left, we never had an employee manual," Margolin said.
He said Anna Reynolds complained to him about Niedbalski. He said that many times he offered to help her find another job.
"I never understood why she put up with it," Margolin said, noting that Reynolds had an excellent worth ethic. "She was loyal. She was conscientious. She was honest to a fault. She was eager to learn."
He said he thought things would go reasonably well between Niedbalski and Reynolds if they communicated only about work.
"I obviously – obviously – was dead wrong" Margolin said.
Margolin said that on Feb. 25, 2004, he heard a commotion in Niedbalski's office. He said he talked to Niedbalski while others attended to Reynolds and that Niedbalski told him he discussed errors with Reynolds and that Niedbalski told him she tried to leave his office and he blocked her.
"He made a point to tell me that he never raised a hand, never touched her, that it was her movement that caused the contact," Margolin said. "When I reflect on it, he was near his breaking point emotionally – not again to defend him at all or to judge him, but he was at a state of mind, when I reflect back on it, to where he was an accident waiting to happen in terms of behavior manifesting itself in a negative way."
Five days later, Craigo demoted Niedbalski and switched Margolin from consultant to staff as chief financial officer.
Reynolds never returned to her job. She stated in a Nov. 8 deposition that she receives supplemental social security benefits.
Margolin left Better Foods in 2005 after getting back less currency than he passed around in a demonstration on counterfeiting.
Arthur Chmiel, of Bell & Bands in Charleston, represents Reynolds. John Tinney of Charleston represents Better Foods. Paul Frampton Jr., of Atkinson & Polak in Charleston, represents Niedbalski.