Long Chains of Recovery Subcontractors Make For Kafkaesque Nightmare

A damaged St. Thomas home with a blue tarp roof in March of 2018. (Bill Kossler photo)
A damaged St. Thomas home with a blue tarp roof in March of 2018. (Bill Kossler photo)

With complaints and protests piling up about slow pay for emergency post-hurricane V.I. roof and home repairs, long chains of contractors and subcontractors complicate disputes by blurring lines of responsibility. Not all nonpayment is due to misbehavior and maybe not all claims of nonpayment have merit. But ferreting out what is what is like untying the Gordian Knot.

It is clear many payments have been delayed. Officials at FEMA, V.I. Housing Authority and primary contractor AECOM have all said payment flows down after work is audited and verified, so contractors are responsible for paying their employees until they receive the funding.

Many of the stories about nonpayment and maltreatment of contract workers are not verified: So and so “estimates he was 80 percent completed.” “I know a guy” who was ripped off.

One worker, Michael Sterns of Alabama, contacted the Source about a pay dispute. He said he and a group of coworkers he brought down were being ripped off and unpaid. He took part in street protests on St. Thomas and was featured in a local news broadcast and articles in other local news outlets.

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His former employers say it was Sterns scamming fellow employees and contractors. Some of his coworkers – the people Sterns brought to the territory for roofing work – also say Sterns is the scammer.

The truth may be more complicated. Finding out the truth certainly is.

The Meeting

On Jan. 27, Michael Sterns sent a text to the Source saying, in part, “contractors defraud government contracts, leave guys barely eating, wont hold to contract.”

Sterns named JVC roofing, Patriot and Aptim. There have been several instances of contractors not paying workers while awaiting payment themselves, so the Source tried to find out more. In a phone call, he said JVC was having him and one other person removed from a house in Estate Contentment. Later that day he was on St. Thomas at the Ramsey Guest House.

On the evening of Jan. 28, the Source called Sterns, who at the time refused to give his full name, saying he will discuss everything when the reporter meets with him in person. When the reporter asked for the time of the meeting on Jan. 29, “Michael” became evasive, refusing to give a time but saying he knew “how to play the game.” In later conversations Sterns claimed it was not him on the Jan. 28 phone call but an associate named Larry Lewis, however which man was on the phone is unclear.

More conflicting stories, allegations and counter-allegations ensued.

At around 1 p.m. on Jan. 29, Sterns called a Source reporter and said he could meet at El Meson, a restaurant at Petrus Plaza on St. Thomas. Over the phone, Sterns said, “We’re doing your work in many respects and we’ve got a lot of work. You guys make money out of this story, we’ll provide you the story and everything reasonable.”

“I’ll give you a whole bunch of information and I’m going to give you more than you normally get. I’ll give you an expose,” he added.

The reporter arrived at the meeting place around 2:30 p.m. and found two men sitting in a corner, with documents visible on the table. One man identified himself as Larry, later identified as Larry Lewis, the other said he was Michael, later identified as Michael Sterns, the man the reporter spoke to on the phone. The reporter explained that she was working for the V.I. Source and sat down to listen, but within a few minutes, Lewis said they wanted compensation for the story.

The reporter told Lewis they might want to try contacting national outlets instead, and Lewis responded they were already doing that. The reporter told the men that the only way her news outlet could help was printing their story; Lewis responded he was sure they would get their money anyway.

Finally, Lewis said if the Source could come back with an offer of $1,000, the Source would have the story. Throughout the conversation, which lasted less than 10 minutes, the man named Michael stayed silent, except to comment on the reporter’s necklace, asking her if it was the eastern star, and asking her what perfume she was wearing.

The reporter left the restaurant, began calling other contractors having problems with nonpayment, and uncovered more about the two men demanding payment for a story.

Fraud or Confusion?

An executive at JVC Roofing said that the company struck an agreement with a South Carolina company called Team Alpha and another called RFL through a man they knew only as “Dan.” JVC Roofing paid for 24 plane tickets for six crews of four persons each, totaling roughly $6,000, said the executive, but only 12 people flew down and out of that group emerged Michael Sterns.

Sterns initially told a Source editor that he paid for the plane tickets, contradicting JVC Roofing’s statement. JVC Roofing executives said they can produce receipts for the airfare, adding they lost $6,000 from the 12 unused plane tickets. In a later phone call, Sterns said he “never took payments for any tickets” and simply gave JVC names of people he signed up to come and work.

The 12 people who eventually came to St. Croix included Sterns and 11 others, JVC officials said. One, crew leader Ricky Hymes, said Sterns reached out to him about a contracting job in the Virgin Islands. According to Hymes, Sterns promised him $3,500 to $4,000 a week to make sure the job site is up to specifications. Sterns also promised him $500 upon arrival and $110 per diem, none of which he received, and neither did the others in their group, he said.

Sterns denied most of this, putting the onus on JVC.

“I didn’t promise anyone $500,” he said. “I did tell them they were supposed to get a per diem,” but that money was to come from JVC, he said.

Troy Barrows, who works for JVC Roofing, said Team Alpha promised that a representative by the name of General Lee was on a plane to St. Croix. According to Barrows, when he first met Sterns, Sterns initially said he was General Lee, but after 30 minutes of conversation, denied that he knew General Lee.

Sterns gave conflicting accounts to the Source, too.

“General Lee, I have no clue who he is,” Sterns said in a Feb. 12 phone call. A few minutes later, he said he was subcontracted by a “General Lee Bowles,” giving a last name for “General Lee” for the first time.

As Sterns described the contracts, Aptim contracted a company called Patriot, which then contracted JVC roofing, which then contracted General Lee Bowles and an entity called Team Alpha and a company called Real Freight Logistics, which in turn contracted him, Sterns, to bring employees to the territory for roofing work.

Sterns said his contract with RFL bound all the contractors above that, in a master service agreement, so that even though “General Lee Bowles” and the entities JVC contracted with never appeared, he believed JVC still owed him the full amount. He also said the contract gave “General Lee Bowles” a generous cut of the pay. Why he was privy to those third-party contracts is not clear.

Barrows said he is not certain all these entities exist and several may just be Sterns.

Sterns gave numbers for people with Real Freight Logistics. He said the two principals are based in New York and provided two phone numbers, both of which had Atlanta, Georgia area codes. In a Feb. 14 phone call, one of those two RFL principals defended Sterns, giving a similar description of the chain of contracts as Sterns did. He too said “Lee Bowles” helped put together the deal. But he too said he had no idea who Bowles was or how to contact him, despite apparently being business partners with Bowles.

All 12 men lived in the same house in Estate Contentment, paid for by JVC Roofing, according to Hymes, Sterns and Barrows.

Wesley Allen Northcutt of North Carolina left a job paving the runway for Air Force One at Andrew Air Force Base after Sterns promised him a job as a roofer. According to Northcutt, Sterns said he would earn between $2,500 and $4,500 a week and get $110 per diem, on top of the $500 upon arrival at the airport. Northcutt said he received none of the money promised by Sterns, who kept telling the group that JVC Roofing would not give Sterns the bag money to get them started on roofing jobs.

JVC executives, meanwhile, say they were not clear on Sterns’ connection to Team Alpha. They did say JVC officials insisted on paying a Team Alpha representative who was physically in the territory instead of paying money to a stateside company whose representatives they have never met, and run the risk of the payments not reaching the workers on St. Croix.

But no “General Lee” or other Team Alpha representative ever appeared.

The situation devolved within a week, with 10 men out of the group of 12, including Hymes, insisting on starting the jobs they were guaranteed, and JVC Roofing needing workers they were promised. Standing between them are Sterns, and another man, Lawrence Lewis who, according to Hymes, was Sterns’ sidekick.

“[Sterns] told them, ‘My guys aren’t going to work until you give us this amount of money,’ or this and that. We didn’t know that,” said Northcutt. “[Sterns and Lewis] were coming to us to us, telling us that [JVC Roofing] wouldn’t let us go to work. But [JVC Roofing] wanted us to go to work and do these houses.”

“He used us as a wager to get them to give him money,” added Northcutt.

Even in the middle of this fiasco, Northcutt said Sterns was on the phone with other V.I. contractors, promising them 40 crews of at least four people each.

“I heard him on the phone asking for $40,000 and $50,000 cash upfront,” Northcutt said.

According to Barrows, Sterns also pulled him aside one day, telling Barrows that he was on the phone with the head of a Texas gang who wanted Barrows to “make it happen or else.”

Asked about this, Sterns said he was talking about a cousin who was an attorney, not a gang member.

A JVC Roofing executive also said Sterns has been calling him from four different phone numbers.

Barrows added that Dan of Team Alpha has also been sending him threatening text messages.

Eight of the men Sterns recruited eventually decided to work directly for JVC Roofing, said Hymes, starting on Jan. 28, after going for more than a week without work. Two decided to fly back to the mainland. Sterns himself did not work any hours or days for JVC Roofing, according to JVC executives.

Sterns also told a Source editor that he wanted $1,000 per worker who was taken from him, but Hymes said they never had a contract with Sterns.

“We didn’t sign no contract,” Hymes said. “All we signed was that we wouldn’t disclose what’s going on in this island, and we do that with everybody, and that’s the policy of the government not to disclose what kind of work was going on. That was all we signed. Everything else was added by him.”

The men also began feeling uncomfortable around Sterns and Lewis, said Hymes. Northcutt claimed that Sterns used cocaine in the house and invited him to join in. Sterns and Lewis were evicted from the property on Jan. 25, according to Barrows, and were offered plane tickets out of the territory, but the two men declined and opted for cash instead.

Asked to respond to these allegations, Sterns said he and Lewis tried to get all the workers to stand together and demand full pay but Barrows “turned them” and they decided to accept an offer to work directly for JVC, cutting Sterns and Lewis out. He insisted everyone’s NDA also had a contract laying out their pay and what payments he was to get. Sterns said he would email a copy of the contract but never did, despite repeated reminders.

Regarding drug use: Sterns said Northcutt and others were the ones doing cocaine.

“Northcutt, I saw his nose in a bag. I had no money at all. I would have provided money for food for my guys if I did,” Sterns said.

Lewis, or someone with Lewis’ phone, meanwhile responded to a text, saying “Hymes and Barrows are both using cocaine heavily and openly … and they were not the only ones.”

Taken together, everyone saw everyone else do cocaine heavily and openly but no one did it themselves.

The Protest

By Jan. 27, Sterns and Lewis were on St. Thomas, staying at Ramsey’s Guest House.

Sterns again contacted the V.I. Source on Jan. 28 and asked the Source reporter for a $1,000 compensation in exchange for their story.

Sterns texted Jan. 29 that news crews would be covering him and other workers protesting. “No charge, just a story,” Sterns texted.

“I have 100 angry employees about to march on AECOM headquarters,” he texted.

The protest occurred the next day, Jan. 30. Sterns was shown on CBS Virgin Islands and quoted in the Daily News saying his employers had cut off water at the Ramsey Guest House on St. Thomas.

Although the protest targeted AECCOM, nothing Sterns said to the Source in any way implicates AECOM in his dispute.

On Jan. 31, a Puerto Rico number used by Sterns to call the Source reporter sent text messages to the Source, asking, “Why don’t you want to $?”

Sterns confirmed he left the territory Feb. 2. He said he was only on St. Thomas for a few days due to a problem with his luggage.

Someone with a Puerto Rico-based cell phone that both Lewis and Stern had used and Sterns said belonged to Lewis, also kept trying to charge for a “big story.”

“Why don’t you want to $?” Lewis or Sterns or whoever was using that phone said.

They also forgot mid-text that they were trying to shake down a newspaper for money for a story and began trying to shake down a contractor for payments, texting: “and tell the guy who called back with 3 days per diem and the ticket: the number stands at $1380 apiece. We’ll buy our plane tickets.” That person repeatedly refused to identify themselves but did say they were not Sterns.

A System Ripe for Abuse But How to Fix It?

The Sterns/JVC story occurred against the backdrop of $200 million in Federal Emergency Management money paid out for post-hurricane home repairs. According to FEMA, the money is channeled through the Virgin Islands Housing Finance Authority, the “applicant,” through the V.I. Territorial Emergency Management Agency, the “grantee.”

VIHFA, which administers what is locally known as Emergency Home Repairs VI, contracted AECOM to manage all work done under this FEMA-funded program.

AECOM then hires subcontractors, which hire other subcontractors, and the farther down the pyramid of contractors, the greater the potential for abuse. One source said workers sign up under lower-rung companies purely on handshake agreements based on the promise of thousands of dollars of pay per week, only to end up going weeks, sometimes months without pay because the contractors do not have the money to front the workers’ payments.

The multitudes of companies with a spiderweb of contractual arrangements covering hundreds of newly arrived employees has led to real suffering and delays in pay. But who is at fault is not always clear. Contractors have an obligation to pay workers while they await payment from higher up the chain. While some plead poverty, it is usual practice for contractors to pay workers before the customer pays them.

The bidding and contracting process has gone awry if contractors unable to meet payroll have won the contracts for work. Tighter oversight may have prevented some of these issues. But that may be at odds with the need to bring lots of roofers to the territory in a very short time frame.

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2 COMMENTS

  1. This is a very familiar story. I worked for a company called D.E.L. Enterprise. They came down for recovery work, subcontracted by CMS. D.E.L. Brought a bunch of people down, put them up in villas, bought tools, rented vehicles, the lot. By now it’s an all-too familiar story.

    They stopped paying their people, claiming they weren’t getting paid from up the chain (CMS, SMS and all the way up to AECOM). They stiffed their employees, leaving many of them stranded here, jeopardizing their mortgages, car payments and family life. They didn’t pay their vendors – not for their housing, their rental vehicles or the vehicles they tried to purchase.

    They claimed non-payment from up the chain which was later proven to be untrue. CMS ultimately paid a portion of D.E.L.’s employees’ wages and bought them tickets home, even though they were not responsible for the payments. Some employees were left with a significant amount of back wages owed. The vendors were left holding the bag for the services they offered the company. Some of them extended themselves significantly. D.E.L.’s leaving them with large unpaid bills that could have been crippling. It is a testament to their fortitude and resilience that they are still in business. It later came out that this was repeat behavior by D.E.L.; that it was essentially their MO as storm chasers.

    The lack of oversight on the part of FEMA enables grifters like D.E.L. Enterprise – both companies and individuals – to prey on disaster stricken places and people. The subcontractors all have responsibility as well, but the ultimate responsibility belongs to FEMA. Disaster, like death, brings out the best and the worst in people. the lure of money tips the scales towards the “worst” end of the scale. Like many places before us, the USVI has been made a victim of the grifters and vultures who circle above looking for easy pickings. It is the responsibikity of FEMA and the agencies it works with (VI Housing Authority, et al) to protect the territory and its people from such corruption. It is, therefore, their responsibility to resolve the situations created by their lack of due diligence and checks and balances.

  2. You paint an ugly picture but you are absolutely correct. Most people think that the poor, needy, and immigrant consume most of our federal dollar but there are companies that sit and wait for a disasters to happen so they can prey on the victims and the helpless. The so called “consultants” know how to play the FEMA game. It’s like going to the ER but instead of giving the victims an IV they give them an Exsanguination (blood drain). Weaking them just enough so that they can’t realize that they are being drained of money and sustainability. Finally when they regain some sense of consciousness they realized that they are worst off than when they started. That is what happens when leaders don’t plan, curb spending and deal with the diseases in these island. They spend and spend and spend never thinking tomorrow will come. Is there a financial reserve for disasters, a capital improvement fund to build a governmental complex so we won’t have to feed the hungry landlords and a MAINTENANCE division with crews to make sure our islands are clean and government building are not delapidated and decaying? Tourist are coming to these island in the millions but what are they seeing? As fast as Tourism is advertising for tourists,there are people are coming and going with reports of what they are seeing and experiencing. People Wake up! Social media is bigger than the VI tourism department. Just s mater of time.

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