The Man Who Would Be Bling

The rags-to-riches story of Lou E. Perez, Orange County millionaire

So the story now is that Lou E. Perez is the victim of his own boundless energy and guileless wide-eyed naivetť—of the cruel and complicated realities that lurk like land mines along the road to the American Dream. "I guess you could say that Lou got a real wake-up call," offers Holcomb, smiling as though she hopes you might say it. Actually, though, it sounds better coming out of her mouth, since she is such a crucial part of Perez's wake-up call. She's the one who's imbued with Perez's former powers as CEO, while he's been figuratively kicked upstairs and slapped with the face-saving title of chairman of the board.

"I'm acting CEO," Holcomb corrects you gently—then introduces Keith Williams of Crossroads LLC, who was retained as Chief Restructuring Officer when CheckMate filed for bankruptcy. Meanwhile, executive assistant Lois Tice sits quietly to the side taking notes and periodically interrupting the conversation politely to suggest what she calls "ummm, I guess you could say, perspectives."

These are things Tice definitely hopes you will say—or better yet, write—which is her job as company flack. "It's important to note," writes Tice in an e-mail she sends later, "that besides running a large corporation, Lou has always committed himself to devoting both time and resources to philanthropic, charitable and community benefit programs."

Even when Perez was telling his own story, he never left out the community work. A nice chunk of the article in Bentley Magazine chronicled Perez's generosity. But now that his name is being mentioned in the same sentence with words like "insurance fraud," Tice recognizes the added public-relations value of emphasizing Perez's association with scholarship awards, prenatal-care programs, gifts of food and toys to poor families, and his own Lou E. Perez Foundation, which assists families with catastrophically ill children. That's part of what Tice meant by "important."

Holcomb, on the other hand, makes a case for the good that Perez has done simply by creating CheckMate: connecting employers who need workers with employees who need jobs.

"We don't call them 'employees'; we call them 'associates,'" clarifies Holcomb, utilizing a semantic made famous by the loudspeakers in Wal-Mart stores. "The associates are the foundation of this company, the people who actually do the work in the field. In any given week, we have between 8,000 and 13,000 associates—so that's a lot of people given the chance to support themselves and their families. Lou really values the associates."

CheckMate pays most of them minimum wage. "Also, if they are on payroll with us for a consistent amount of time—I think it's 580 hours—then they are able to apply for benefits that the company pays for," Holcomb points out. "That's unusual. The benefits only cover the employee, and they have to pay for their dependents. But Lou shows what kind of man he is by doing that for them—and 95 percent of them are minorities, and the vast majority of the minorities are Hispanic—and by treating the associates, literally, as family members."

That theme is carried through in profiles elsewhere. In July 2000, an Orange County Business Journal reporter backgrounding CheckMate found this tale of brotherly love: when Monorovia-based Burnett & Sons Meat Co. created a bonus system for its full-time workers, Perez's temps working in the same company complained that they were unfairly excluded. It's a classic example of the dark side of the temp industry—with a happy ending: Perez himself paid the temp workers' bonuses.

"His own people got to take advantage of the bonus system, and I didn't have to pay twice for it," president Don Burnett told the Business Journal. "That's part of what he's been able to provide us in the ways of service."

And that's what CheckMate's clients want: cheap labor without the hassles of hiring and negotiating compensation and monitoring productivity and weeding out those who aren't productive enough. CheckMate does it all.

"That's where Lou's expertise is," says Holcomb. "From recruiting the associates to getting the client accounts—the wholesales arm, really. He's got the ability to match the right associates with the right work sites and to get them there."

Perez also has the responsibility to pay for workman's-compensation insurance—a policy that covers employees in case they are injured at work or suffer an occupational disease. Workman's comp is mandatory in California. There are more than 300 private insurers authorized to sell it in the state, as well as the State Compensation Insurance Fund (also known as "SCIF" or "State Fund"). Premiums for workman's-comp policies have skyrocketed, but an employer's failure to have it is a criminal offense. This is where Perez ran into trouble.

"The raid basically occurred due to the worker's-comp issues with the state of California," said Holcomb. "The worker's-comp challenge is big in any business, but for staffing companies, it's the highest burden."

The focus of the raid on CheckMate is to determine whether the company did anything illegal to qualify for lower workman's-comp premiums. Typical schemes by employers include underreporting the size of their staffs or payrolls, classifying workers in high-risk jobs in lower-risk categories, and hiding the accurate number of workplace injuries.

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