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Should Suzanne Clifton face criminal charges?

Here’s the run down a local story that epitomizes the sheer greed only the worst of business leaders can possess regardless of age or gender. It’s also an argument against staffing agencies and outsourced HR/payroll firms and a testament to why any company considering itself worthy of being an employer of ten or more people should be able to process it’s own payroll and benefits internally.

Back to Suzanne Clifton. Here’s a woman who lives the high life, or so I hear. She’s the former President and sole share holder of The Castleton Group, a HR and payroll “partnering” firm that would handle these two critical pieces of business for smaller, local companies in Raleigh, Cincinnati and Asheville. It sure sounds to me as though Clifton was likely responsible for the most top decisions made for a company she went to great lengths to identify as hers exclusively. She even boasted about her business background and community service on the Castleton website.

In October of 2006 Clifton must have used her ego, reputation, and possibly money, to get named to the North Carolina Professional Employer Organization Advisory Council by the The North Carolina General Assembly. They appointed her to the council through 2009. She’s probably still a member of the council. Why is this important?

Let’s start at the beginning of Clifton’s and The Castleton Group’s bad decisions. Jay McLamb, Castleton’s former CFO, filed false federal payroll tax forms between 2005 and 2007. They didn’t pay almost $8 million in federal payroll taxes as a result. Let’s pretend for a minute that Suzanne Clifton knew nothing about Jay’s naughty behavior. Regardless, she hired Jay and didn’t have an internal audit trail to disclose fraudulent activity of this magnitude in her own company.

So the problems begin compounding. Because of this “clerical error”, which Castleton insists they reported when the problem was discovered, the NC Department of Insurance did not issue the necessary Professional Employer Organization license to Castleton twice between 2005 and 2007. Was this ever disclosed to ANY of the businesses Clifton, er, I mean Castleton handled benefits and payroll for? My guess is that a notice was not sent to their client base emphasizing they were operating illegally(?) at various intervals.

Edit: I am not certain that Castleton ever operated “illegally”.  They operated without the necessary state licenses from the NC Department of Insurance.  So they operated “unlicensed”.

It appears with $6 million currently due in back taxes from apparent fraud and no operating license, the NC board of Insurance deemed The Castleton Group insolvent on Dec. 4, 2007. Immediately Clifton found a PR firm (one that she could afford) and declared “We’re open for business under appeal”. Still no admission of a problem. By December 18th Clifton declared bankruptcy and listed 5000 debtors, most of which are employees of Castleton’s clients.

Many families had to go into Christmas wondering if they would have insurance coverage for which premiums had already been docked from their paychecks or if they would be receiving another paycheck at all while employers scrambled to internalize or change payroll providers. And who can these employers hold responsible? No one because the Castleton is insolvent and Clifton is probably privileged to numerous layers of incorporation protections for her personal assets. Assets which, according to Wake County property records, include a 2004 Mercedes valued over $42K and at least two houses worth just over one million combined. Smells like Clifton’s clients suffered the ramifications of an old woman’s greed, not just her bad business sense.

Two big questions remain in this story: Does Suzanne Clifton deserve to be on the North Carolina Professional Employer Organization Advisory Council based upon her stellar judgment we have seen displayed to date? Second, should there be further investigation to determine if she should face any criminal charges for negligence if nothing else? I’m forwarding these questions to WRAL reporter Cullen Browder to see if the media can do any damage to the matter.

145 comments

145 Comments so far

  1. Observer June 22nd, 2010 6:46 pm

    Sec. of Labor complaint in bankruptcy court dismissed against Suzanne Clifton.

    http://www.leagle.com/unsecure/page.htm?shortname=inbco20100618648

  2. Irish Eyes June 24th, 2010 5:46 am

    And now in simple English, how does this impact everything?

  3. Sonya June 24th, 2010 9:35 am

    Please know it was dismmissed on a technicality…not because she she isn’t guilty of failing to fund the 401Ks and health plan.

  4. Observer June 24th, 2010 10:21 am

    I have to wholeheartedly agree w/Sonya’s comment! Even through the legal speak in the article the case had validity but communications triggered a deadline to be missed enabling Clifton’s defense team to be able to push for the dismissal. How unfair!

  5. Victim June 24th, 2010 5:25 pm

    And these are the federal employees running the country!!! Someone should lose their job! What are the other unresolved issues?

  6. TinkerBell June 25th, 2010 4:59 pm

    WOW!! so she walks away with all the money and Jay stays in jail huh?

  7. sonya June 29th, 2010 8:15 pm

    The adversary proceeding against her was dropped against Ms. Clifton because the DOL missed a filing date. This only pertains to bankruptcy courts, meaning the DOL will not be able to make her pay monetarily for not funding the 401K claims and health benefits after Jay left the company, due to her filing for personal bankruptcy. Both were paid “in full” as long as Jay was employed at Castleton. The shortcomings occurred during Suzanne’s watch and as a result of HER decisions. I am almost certain the DOL can still seek injunction against her.

  8. Irish Eyes June 30th, 2010 11:23 am

    Thank you for the info Sonya. What is the standing of the other legal issues. I know in previous blogs you said Jay would be testifying against Suzanne, or finally able to tell the truth about everything that went on. At what point will that take place? This has just gone on for too long!!

  9. Sonya June 30th, 2010 8:00 pm

    Amen, Irish Eyes! July 20th at 9:30am here in Raleigh should prove to be a fairly interesting day. Lots of creditors putting up a fight in her bankruptcy case. Let’s all cross our fingers for Ms. Clifton having to convert to Chapter 7.

  10. TinkerBell July 8th, 2010 4:58 pm

    I wonder what will happen to her other company ESG? Will any of the others have to pay for there part in this? Doesn’t seem fair that people can do what they want and let others take the fall for there actions.

  11. Victim July 9th, 2010 11:08 am

    Please keep us posted. Prayers go out for all those who have been hurt in this act of greed! It is time for justice to prevail for all.

  12. How Is It . . . July 19th, 2010 3:35 pm

    IRS civil case tomorrow…

  13. Irish Eyes July 22nd, 2010 7:40 am

    Is the trial still on, there is nothing in the papers? Is Jay testifying against Suzanne at this trial?

  14. Sonya July 22nd, 2010 7:47 am

    Didn’t happen. She has attempted to settle with the IRS – it will be at least 5 weeks for the US Attorney to review her settlement offer to decide whether to accept or deny. In the meantime, her attorneys had the courts move out the hearing until late August, just in case the IRS doesn’t take her settlements.

    What did happen on the 20th was her hearing with the DOL. She is fighting their claim against her in Bankruptcy court in an attempt to avoid having to pay monetarily for the 401Ks and health premiums that were never forwarded. This was the hearing for the Secretary of Labor’s response to Suzanne’s recent dismissal from the suit in Bankruptcy Court based on a technicality (the DOL not filing timely). And not only that, Ms. Clifton is also asking for sanctions to be imposed against the Secretary of Labor AND for her legal fees to be paid by the DOL because they have continued to pursue her even though the Bankruptcy Courts dismissed her on a technical matter!

    The DOL is still pursuing her because that may very well be the only way any of those victims will have their 401Ks restored. They also want Ms. Clifton’s 401K. The judge is taking 30 days to rule on the issues. On a side note….Ms. Clifton’s attorney all but said they don’t care if the DOL seeks injunction against Ms. Clifton in civil district court, they just don’t want to pay anything. (An injunction in civil court only bars Ms. Clifton form ever managing a benefits plan for a company again).

    For those of you who do not know…they DOL has officially dropped Jay from the DOL suit. Their investigation has fully exonerated him from any mishandling or mismanagement of the 401K or health plan.

    And finally, many of you know Ms. Clifton is suing Jay over all this as well. Surprise! Surprise! The suit she has against him is to be heard on August 17th in bankruptcy courts. Her argument is that Jay, of course, caused everything that happened in the Castleton downfall. She says if she is made to pay anything…the IRS, the DOL, the group of former clients that is suing her, etc…then Jay will have to repay her. Well, Jay is in prison, and we do not have the funds to put up the fight that she so deserves to be made public. Jay will never get to speak in all of this because she so far has avoided any trials by either settlement or lawyering her way out of things on technicalities. As it seems to always be….those with the most money…whether earned honestly or stolen…always win.

  15. Todd July 22nd, 2010 9:52 am

    “the DOL has officially dropped Jay from the DOL suit. Their investigation has fully exonerated him from any mishandling or mismanagement of the 401K or health plan.”

    “She says if she is made to pay anything…the IRS, the DOL, the group of former clients that is suing her, etc…then Jay will have to repay her.”

    From these two statements it could be surmised that she has no grounds for suit against Jay for the 401K or health plan funding if the DOL investigation exonerated him. She owns it.

  16. TinkerBell July 22nd, 2010 10:29 am

    Thank you Sonya for the update. I hope they go after her with everything and include the “family”. Just because she is not physically running a company, doesn’t mean that she has ties with a certain company (ESG). She keeps her puppets, the sons, on a string to bounce them around in order to make sure her gut is full. AKA Paying under the table.

    Now the question is this. Is that $3 Million dollar house in FL for sale so that she can pay back the $3 Million dollars she took? Funny how the numbers match up.

    Jay should have kept notes or documents to prove what he was doing was by her demand. Documents are power in court.

  17. TinkerBell July 22nd, 2010 10:31 am

    I wonder if the “Family” will comment on here? Brooks where are you son? Christy we know you are reading this, what do you have to say?

  18. Victim July 22nd, 2010 11:10 am

    All very interesting. What did happen to Brookes after filing bankruptcy?? Still working forother dearest? Hopefully everything is coming to light. If this is her 3rd tangle with the IRS, maybe she has run out of time with them!

    Sonya, whatever it takes, Jay should get the truth out!!

  19. Victim July 22nd, 2010 11:17 am

    This really is maddening! Let’s see, Jay is in jail for not paying taxes. It was proven that he was not involved in the other “theft”, and Suzanne is fighting like a cat. What is wrong with this picture!!!

  20. Sonya July 22nd, 2010 11:57 am

    Victim,

    It’s called “lawyering” and having the money to fight like a cat.

    And Todd, the grounds of her suit ARE at question here, but…you have to have money for a lawyer to do all the research, etc to prove that. Jay has already admitted to his role in the payroll tax part and is serving prison time. Because Jay has admitted his role and is serving time, and because she has somehow managed to dodge the bullet criminally, the biggest portion of her lawsuit would come from payroll taxes. We would have to spend a LOT of money to prove what she knew about payroll tax issues. (And believe me there is a lot of proof out there, but bringing it in the forefront is expensive – we were hoping the US Government would bring it forward rather than us having to do it). There is a lot more regarding the strategy her lawyers have used in backing Jay into a corner: timing , his being in prison with limited ability to fight, knowing we are out of resources, AND making sure the hearing on this matter is heard BEFORE we know the details of all her other lawsuits (the DOL, the IRS, the DOI (if one ever comes, that is…).

    And finally, in the grand scheme of things…it’s now been proven Suzanne was the one who did not pay the 401Ks and the health premiums – not Jay. We are only talking about less than $500,000 total needed to make those victims whole on those. She has surely spent more than that with her lawyers. If she were a real “lady” she would have used that money to make everyone whole, instead of making them be in limbo for 3 years, then sue Jay for the money back if she really thought Jay was to blame for it. But we all know that’s just not the the way it is. She has known all along she, and only she, was responsible for those horrible decisions she made.

  21. Victim July 22nd, 2010 1:24 pm

    Death is the equalizer. Truth is a bight light that you cannot hide from. Money is just not worth it Sonya, know that everyone lifts all of you in prayer. I know life will be different for you and Jay, but God does bring good out of all things! Only God knows what is in store for Suzanne. Offer a prayer of thanksgiving that Jay got out when he did.

  22. How Is It . . . August 2nd, 2010 8:09 am

    Bankruptcy hearing tomorrow . . .

  23. How Is It . . . August 2nd, 2010 2:30 pm

    Bankruptcy hearing scheduled for tomorrow has ONCE AGAIN been postponed . . .

  24. TinkerBell August 3rd, 2010 4:52 pm

    Brooks is still working for mother at ESG. Trying to run it into the ground too. I do not think they are doing too good as they have laid off almost everyone there. Hired some smuck to work for about half and another sales person that is just commission only. So the least money they have to pay out the better. As long as Brooks can still make his 6 figure income, which I am sure he is, he isn’t wanting to go no where. If you look at there sight they have the same lame jobs that have been there for over 2 years. They just update the date on them and post fake jobs to make it look like they have a lot of opportunity when they do not have crap.

    Sad to see the Bankruptcy hearing is postponed again. Would love to see the outcome and hopefully someone spending time in jail for there wrong doing. Better yet, they seize everything that she has touched and turn it over to the victims.

  25. How Is It . . . August 4th, 2010 1:15 pm

    Bankruptcy hearing was continued until September 21 – hearing is for confirmation of amended Chapter 11 plan. Absolutely amazing how this continues to drag out.

  26. anon August 4th, 2010 4:19 pm

    It is really interesting to read about Jay crying uncle about getting sued by Suzanne.

    Why interesting? Jay willingly participated with Suzanne in putting the legal screws on anyone who stepped in Castleton’s way. I witnessed the gleeful look on his face as a first hand participant in one of these events.

    Sure, I’m sorry for Jay’s family, who was not a willing participant in these ventures. It’s only appropriate, to some degree, that Jay is experiencing the return Karma from all of the bad things he helped with.

  27. TinkerBell August 24th, 2010 2:59 pm

    I wonder how much this is costing the old woman?>

  28. Irish Eyes October 11th, 2010 2:49 pm

    What is the latest? The last I read, it looked like DOL had a good issue against Castleton.

  29. no name October 20th, 2010 9:05 pm

    Clifton v. United States Department of Labor
    Share|
    Appellant: Suzanne S. Clifton
    Appellee: United States Department of Labor

    Case Number: 5:2010cv00426
    Filed: October 8, 2010

    Court: North Carolina Eastern District Court
    Office: Western Division Office [ Court Info ]
    County: WAKE
    : James C. Dever

    Nature of Suit: Bankruptcy – Appeal
    Cause: 28:0158
    Jurisdiction: Federal Question
    Jury Demanded By: None

  30. TinkerBell October 26th, 2010 1:04 pm

    So when is the witch burning going to begin?

  31. Victim November 6th, 2010 9:42 am

    Is this an appeal on her personal bankruptcy? What habout the reversal of her Dept of Labor lawsuit?

  32. no name November 8th, 2010 5:40 pm

    It’s only a matter of time now.

  33. How Is It . . . January 13th, 2011 4:14 pm

    What’s the latest?

  34. curious January 24th, 2011 10:29 am

    Anyone have an update on what the status is?

  35. How Is It . . . January 27th, 2011 11:58 am

    Apparently Executive Staffing (Brooks, Matt & Suzanne) has folded — website no longer up, phones disconnected, no forwarding address.

  36. ESG??? January 31st, 2011 12:36 pm

    Heard there was a lien placed against them for not paying $19K in unemployment taxes with the state of nc. Supposedly it was published in last Friday’s Triangle Business Journal. Also, Brooks’ facebook page lists his employer as Savage Ventures. Not sure what they’re up to now.

  37. anonymous February 1st, 2011 4:40 am

    There seems to be a real problem/pattern with misappropriation of funds with these people.

  38. How Is It . . . February 1st, 2011 2:53 pm

    Appears an LLC has been set up for Savage Ventures and was effective 1/19/11 with NC Secretary of State. There are no officers listed for the LLC and the agent is Brooks’ attorney, Terry Carlton. Don’t know if Matt is in on this or if it’s just Brooks. I don’t understand how a new entity can be set up if one entity (with the same officer) has a lien against it for not paying state unemployment taxes — and it’s the state that is involved in assessing the lien and approving a new entity. How is it that this family continues to be allowed to function as if nothing has happened in this whole Castleton / Executive Staffing debacle? Where is the justice in all this?

  39. Wondering February 18th, 2011 3:56 pm

    It never seems to amaze me that people, ESG Clan, will do everything they can to rip people off and think of ways on how not pay there fair share in taxes, payroll, 401K, etc. If they spent that time working and doing what is right, then they would not be in the trouble they are in now. Another disfunctional family that should be shipped off to another country. Brooks will start something just so he doesn’t have to work for someone else. What a total waste of a human life form!

  40. Victim July 19th, 2011 7:38 am

    What is going on now?

  41. Todd July 19th, 2011 9:30 am

    Nothing’s going on. I suppose she’s working on discharging her bankruptcy. Hasn’t anyone learned anything from this? Crime does pay. As long as it’s white collar crime. Look no further than Washington. Suzanne’s behavior is now condoned. With enough money you can steal more, find a scape goat and live happily ever after. The frat boys will award you.

    America is of the money, by the money, for the money. Sorry folks, obviously none of the “victims” had enough money or connections to take on Suzanne or her kids. Therefore they won, you lost. Get over it and move on. Far as I know this issue is as dead as this thread.

    Oh and…vote Republican. The wealthy crooks need as many tax breaks as they can get to keep creating all these jobs we can’t find enough people to fill. If it wasn’t for all those darn liberals pandering in the free market the Suzanne and her Savages would still be free to rip you off. The shear apathy is begging for it.

  42. A victim October 21st, 2012 4:40 pm

    Well crime does pay. It seems she got to pull out her money from Castletons 401k

    http://erisafile.com/blog/tag/suzanne-clifton/

  43. How Is It August 12th, 2013 1:38 pm

    Been awhile . . . has there been any update since October 2012?

  44. A victim August 22nd, 2013 8:31 am

    All her homes were sold by order of the bankruptcy court. Maybe she’s living in a homeless shelter

  45. Todd August 22nd, 2013 8:47 am

    We can only hope. Wow. That is great news. Now when will her victims be reimbursed and get their lost 401K accrual during the time the funds were frozen from 2008 to 2011?

    Check this out, isn’t this nice…. Suzanne rolled her 401K funds over to a Northwestern Mutual IRA and because “North Carolina law provides bankruptcy debtors with a separate set of exemptions” because “exemptions provided in (federal) “11 U.S.C. § 522(d) are not applicable to the residents of North Carolina”. “[I]f an account qualifies as an IRA under 26 U.S.C. § 408, an account holder has ‘a nonforfeitable right to the balance held in those accounts”.

    http://www.gpo.gov/fdsys/pkg/USCOURTS-nceb-8_09-bk-02379/pdf/USCOURTS-nceb-8_09-bk-02379-2.pdf

    So basically NC bankruptcy law protects retirement accounts from bankruptcy even if the account holder has put the retirement accounts of thousands of others at risk.

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