By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
The story now is that Lou E. Perez became so astonishingly successful so incredibly fast that not even he—not behind the wheel of the Ferraris, Porsches, Corvettes or Lamborghinis he bought, nor astraddle the 24-volt eBike that actor Andy Garcia gave him—was able to keep up with himself.
That's the story now. But that wasn't the story Perez told in the days when he used to tell his own story. The story back then—oh, pick any time before the morning of Nov. 4, 2003—was that nobody got anything past Lou E. Perez. That's how Perez explained his instant success in the outsource-staffing (read: temp-worker) industry, which made him a millionaire at 19. That's how Perez accounted for the empire he built and consolidated into a company called CheckMate, which by the time he was 33 was clocking revenues of $200 million per year through nearly 100,000 temp employees working out of 60 offices in seven states.
The story back then—right up to the moment of the predawn raid last autumn—was that Lou E. Perez was a classic "big-picture guy." That's the way Perez described himself to an interviewer from Bentley Magazine, anyway. Yeah, Bentley, as in the car . . . or cars, in Perez's case. The article in Bentley said Perez owns two of them—an Arnage Red Label hardtop and an Azure Mulliner edition convertible.
Actually, the article said Perez owns two dozen cars with all kinds of luxury pedigrees. But it emphasized his special love for the Bentleys by pointing out that he tagged them with personal license plates bearing the names of his sons: KRISS 1 for the Arnage, GREGG 1 for the Azure. The Bentley Magazine profile overflowed with examples of Perez's voracious appetites and the lavish ways he satisfies them—the Rolex Submariner that heads his watch collection, his bespoke suits, Cohiba cigars, baby grand piano, designer warm-ups, and the basketball court where he shoots hoops and brainstorms in the middle of the night in the back yard of his 10,000-square-foot mansion in the Anaheim Hills.
The notation of each possession was underscored by Perez's explanation of the man-with-a-hands-on-plan he applied to the company that was rewarding him so munificently. "Our clients pay us to handle their problems, so we have to stay on top of ever-changing state and local laws," said Perez. "We simply cannot fall short."
That was Lou E. Perez's story, and he was sticking to it. Why not? People were buying it, experienced business people. In 2002, Ernst & Young named Perez Entrepreneur of the Year—the youngest ever to win the award. Hispanic Magazine listed CheckMate on its 2002 "Entrepreneur 100" list. Perez began moving in celebrity circles, too—thus that eBike from Andy Garcia. Perez bought courtside seats for Lakers games at the Staples Center and bragged he was friends with fellow Bentley owner Shaquille O'Neal. He invested in the Conga Room nightclub on Wilshire Boulevard's Miracle Mile, where his partners included Jennifer Lopez, Jimmy Smits and Sheila E. Last August, Perez was an executive producer of The Original Latin Kings of Comedyspecial on Showtime, which was hosted by Cheech Marin and starred Paul Rodriguez, George Lopez, Joey Medina and Alex Reymundo. In October, Perez launched his own film-production company—CheckMate Entertainment—and he expressed confidence that the "big picture" approach that had worked for him in the staffing business was going to pay off in show business. "I'm just moving my philosophy into a different arena," Perez told The Hollywood Reporter.
Then very early on the morning of Nov. 4, 2003, more than 100 law-enforcement officers and investigators swarmed CheckMate's 22 offices throughout California. The raid was a coordinated effort among the state Department of Insurance, the San Bernardino County district attorney and the San Bernardino County Sheriff. They brought search warrants. They left with just about every document they could get their hands on.
Suddenly, Lou E. Perez is at the center of a massive investigation into workers'-compensation fraud. Law-enforcement officials are scrutinizing CheckMate's records to determine whether the company misrepresented itself to insurance carriers in an alleged attempt to qualify for lower premiums.
On Nov. 29, CheckMate filed for bankruptcy.
CheckMate World Headquarters—that's what it's called on the business cards—is in a shiny office building in an Orange business park. The company logo hangs over the Costa Mesa Freeway. We went to the ample corner office of the CEO. We wanted to ask Lou E. Perez: What happened?
But Perez wasn't there anymore to tell his story. The people who were there were telling a new one.
"Basically, what happened is that the infrastructure of the company didn't grow alongside its revenues," explains Lauri Holcomb. She's blond with a firm handshake and a friendly smile. She's wearing an all-business suit, but the sharp creases in the pants and jacket are softened by a blouse with a scooping neckline. She's CheckMate's new Chief Executive Officer.
"Lou is an excellent entrepreneur who grew the company from the ground up based on his sales ability and his presence," Holcomb continues. "He has his master's degree in street knowledge, so to speak.
"But since Lou consolidated into CheckMate in 1999, the company basically grew year over year at a rate of 70 percent—going from $20 million revenue to $200 million revenue. The hard part comes in keeping up with that. If processes and procedures aren't replaced as you grow, well, you have vast challenges for an individual owner without experience in such things."