CHARLOTTE, NC (WBTV) - Investigators from the Internal Revenue Service and the Department of Homeland Security are looking into a Charlotte payroll company.
Centercede Services, Inc. collected millions of dollars in payroll taxes for its clients and employees. Much of the money was never sent to the IRS.
Tracy Allen found out what was happening innocently enough. She went to the mailbox.
"I got an IRS letter," said Allen.
Allen keeps the books for the company her husband started, Allen Industrial Services in Clayton, NC. The IRS say Allen owes more than $40,000.
"This has left a lot of sleepless nights," said Allen.
It was all quite a shock given Centercede was pulling money from the Allen Industrial Services bank account and cutting the employees paychecks. Centercede just didn't send the withholdings to the IRS.
"We weren't investing in this company." said Allen. "We hired this company to perform a service."
Centercede is run by Frank Moody II and Jerry Overcash. WBTV placed phone calls, stopped by offices and homes, but neither got back to us.
Chief Financial Officer John Thigpen didn't want to talk either. We found him walking out of a bankruptcy meeting. Centercede Services, Inc is going belly up.
"We have no comment," said Centercede attorney Richard Wright as he walked alongside Thigpen.
Court records show Centercede not only had a long list of creditors, but had failed to pay $2 Million in taxes collected for various businesses.
Lawyers for some of those companies and also a representative from the IRS wanted to know what happened to the money. They got a chance to ask Thigpen and his attorney at another bankruptcy meeting held just before Christmas.
Thigpen was asked how the company decided what got paid?
"Don't answer that," advised attorney Wright.
The company's books showed Centercede was insolvent, yet Moody and Overcash were paying themselves more than $200,000 a year.
"The funding of payroll was treated as a higher priority than delivering the funds to the IRS?" asked a lawyer for one of the companies out money.
"That's correct," said Thigpen.
The attorney then asked if Overcash had continued to be paid even after the bankruptcy filing.
"He reduced his salary to $120,000 a year," said Thigpen.
"That was awfully sporting of him," replied the attorney.
Brian August was not only a Centercede customer. He was also an investor to the tune of $300,000.
"The money is gone," said August.
He says he "hoodwinked." August says the business plans and models shared with him by Moody and Overcash weren't real. He said a few small investors picked up on it early and backed away.
"I guess you could say I was the only idiot to stay in there long enough to put that much money in," said August.
August also said there was a pattern to what happened. Before Frank Moody started Centercede he ran a company called The Resourcing Solutions Group, Inc, or TRSG. Thigpen told the Centercede bankruptcy trustee TRSG also had problems with the IRS. He said it had run up $8-9 Million in tax liabilities. August says Moody cut a deal.
"He billed himself as the fixer to the TRSG problem," said August.
Centercede was created out of the ashes. It would pay a fraction of the tax bill and it would get TRSG's old customers. August says what happened to TRSG happened to Centercede.
"Identical," said August.
Moody and Overcash tried to reconstitute the company again by taking Centercede to Chapter 11 bankruptcy. The court said no, it's forced Centercede into Chapter 7. The company will be liquidated. It's hard to tell if anyone will get their money back.
Left in the wake of it all, small business owners like Tracy Allen, who are left to stress over what the IRS could do to them.
"They have the right to force a lien on our business which would shut us down," said Allen.
The Allen's have been told their tax bill has for now been set aside while this is being sorted out. It could be awhile. Those familiar with the Centercede case say the IRS and the Department of Homeland Security are both investigating. Neither agency would comment.