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.