By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
But if Perez is guilty of anything, the people who are now telling his story in what used to be his office repeatedly insist, it is getting too successful too fast. "A lot of it is that the business grew too quickly," says Keith Williams, the restructuring guy. "I wasn't here then; I don't know what actually happened—but I think it all lends itself back to the growth issue and how quickly the company grew without the correct structure supporting the growth."
When that explanation was presented to the owners of two other temporary-staffing companies in Orange County, each of them laughed—literally—although neither of them wanted their cackling quoted or attributed specifically to them.
"Paying for workman's-compensation insurance isn't just one of the costs of doing business in this industry—it is very nearly the only cost," said one. "This isn't something you forget or put off or don't know about, not any more than people who own factories would forget or put off or don't know about buying the machinery they need to manufacture their products."
CheckMate's problems did not begin on the November morning of the raid. A civil suit filed by the State Fund in May 2003 accused CheckMate of shorting it $5.8 million and refusing to open its payroll records during an audit back in 2001. When it was denied access to CheckMate's books, the State Fund had unilaterally classified a number of associates at the highest rate. That increased CheckMate's workman's-comp debt by $3.3 million above the $1.6 million the company had already paid in 2000. State Fund did the same thing in early 2001, piling another $2.5 million in premiums atop the $350,000 CheckMate had already paid during the first two months of the year. Two years later, CheckMate still had not paid its bill.
"After the raid on Nov. 4, Lou, being an entrepreneur, realized he needed an [accounting] infrastructure put in place," says Holcomb. "Since that time, on Nov. 26—the night before Thanksgiving—CheckMate and State Fund reached a settlement agreement."
But CheckMate's bankruptcy filing on Nov. 29 basically puts State Fund in a waiting room with the company's other major creditor, the IRS. The criminal investigation by the Department of Insurance (DOI) continues.
"We've not heard from the DOI," says Holcomb tersely. "I can't comment on that."
CheckMate continues to do business, although the civil suit and criminal investigation has chipped away at its client base, a dozen offices have been closed and corporate employees have been laid off.
As for the future of CheckMate Entertainment, the film-production company was supposed to debut with a comedy feature called Car Thief, described as a twist on the 1980s comedy Trading Places; Holcomb and Williams simply shake their heads no.
Visitors to Lou E. Perez's home have seen the poster he's owned since he was a teenager. It's titled "Justification For Higher Education," and that justification is made in a fantasy illustration of a big house with a garage filled with a Ferrari, Porsche, Mercedes and Corvette. Perez's bookshelves are lined with biographies of business icons Bill Gates, Jack Welch, Donald Trump and Richard Branson. Perez turned that poster into reality through a life that seemed to be lifting him toward the status of his tycoon idols—from beginnings that made his story the latest retelling of America's always-inspirational parable of immigrant success. But the baby boy born in Culiacan, the hard-ass capital of Mexico's state of Sinaloa, and raised to an early manhood in El Modena, the humble working-class side of the city of Orange, well, Lou E. Perez has become another millionaire unwilling to speak for himself anymore.
"Lou would love to talk to you—he's always had a great relationship with the press—but you know the questions can be pretty rough and the stories pretty negative in situations like this," said Tice, the sweet public-relations woman. "Maybe down the line. At this point, though, Lou wanted Lauri to handle it."