James Willing, a Michigan state trooper who has launched an investigation of his own, confirmed the federal probe, saying that he has heard from citizens and law enforcement authorities in Wisconsin, California, Arkansas and Ohio who say that THR has written scores of bad checks, both to consumers who sold valuables and employees who are owed wages.
“This is a big fraud case,” said Willing, who estimated losses in his jurisdiction at $4,000. “Here I am, just a trooper working with the Michigan State Police working two counties. Now, I’m being bombarded by phone calls from everywhere. … The FBI in Illinois is investigating this, and they are seeking federal charges. If other states want to join in, they can submit their information to the FBI in Illinois.”
The FBI in Springfield would neither confirm nor deny the existence of an investigation, which is standard practice for the agency when asked about pending investigations. The company last spring acknowledged bouncing as many as 4,000 checks and blamed a bank for closing an account unexpectedly, but rubber checks have continued.
Seventeen people who sold valuables to THR at a July buying event at a Bay City hotel received bad checks, Willing said. THR employees left the hotel without paying a bill of between $800 and $900, he said. It took THR at least three months to settle a debt at a different hotel in Saginaw where THR employees left without paying the bill, he said.
Willing said that THR employees have told him that hotel bills were supposed to be paid by company headquarters in Springfield. They also acknowledged that they were told that checks written to consumers in Michigan would bounce.
“Employees said they were called by headquarters, told that the checks were no good and to pack up and get out of there,” Willing said. “Even though it’s supposed to be paid by the company, they should not have snuck out.”
Willing said he tried calling the company, but THR’s phones had been disconnected. After newspapers published stories about Willing’s investigation, the trooper said he received a call from a man who identified himself as a THR employee named Frank Ross, who promised that the company would make good on the checks. Willing said that Ross asked him for the names of consumers who had complained so that the company could send them money. Willing declined.
“You already got the list, why don’t you call these people up and say ‘Did your check bounce?’” Willing said. “They wanted me to do the work and supply them with information. … I know they want to make things right, but they’re also trying to make things right to avoid prosecution. They already did the crime.”
Via email, Ross said that THR will make good on all bad checks, plus send consumers who received the bad checks $25 for their inconvenience. In a brief interview, Ross said that he did not know how many bad checks exist and how much the company will have to pay to make them good. He said he could not answer any questions about any other aspect of the company.
“I’m just a small cog on the wheel here,” Ross said. “I really don’t know anything else. This (handling bad checks) is taking up every single second of my day and my brain.”
It’s not clear where THR will get money to make good on hotel bills and bad checks. The IRS, which is owed millions of dollars in taxes, has frozen the company’s bank accounts, and the company has hired a bankruptcy attorney, according to recent testimony in the divorce case of company president Jeffrey Parsons.
Parsons, who owes $3.2 million in income taxes for 2010 and has not yet filed a return for 2011, testified last month that he has $360 in his bank account and that the company is using safes instead of bank accounts to conduct business at its retail outlets, including three stores dubbed Buy Sell Trade in Springfield, Jacksonville and Urbana and J. Parsons, a store in west Springfield that is holding a going-out-of-business sale, with all proceeds due the IRS. A liquidation sale is also underway at the company’s warehouse on Clear Lake Avenue, with the IRS due all monies.
THR is facing more than two dozen lawsuits, most for non-payment of debt, including one filed a week ago by Freedom Investments, which says that is owed nearly $54,000 in delinquent rent for the retail space occupied by J. Parsons.
The going-out-of-business sale was scheduled to end on July 30, but THR obtained a 30-day permit to extend the sale until the end of August. Under terms of the state Fraudulent Sales Act, no further extensions are possible.
Contact Bruce Rushton at firstname.lastname@example.org.