The Rise & Fall of
Inside the Company’s Demise as Outlined in the
Charges Against Former CEO Richard Gillman
by Penny Stacey
When Richard Gillman, former president and
owner of Republic Windows, purchased the company with a business partner
in October 2005, the economy and the housing market were booming. And
so was the door and window industry.
But even as early as 2006, the vinyl door and window company started to
see losses occurring in its books. Court documents filed when Gillman
was arrested in mid-September for charges related to the company’s demise—and
his alleged efforts to start another business by laundering money from
Republic and stealing machinery and funds from the company—provide an
interesting look into the company.
It seems the company, which was founded in 1965 by William Spielman, experienced
a net loss of $8.2 million in 2006 and a smaller loss—but still a loss—of
$688,685 in 2007, according to prosecutors. The company perhaps hit bottom
when its closure made national news, and again when Gillman was arrested
nine months after the infamous sit-in at the plant.
Employees who engaged in the sit-in, refusing to leave on Friday, December
5, 2008, when the plant was supposed to have closed, probably had no idea
the national toll their actions would take. At the time, even the President
weighed in, applauding the actions of the protestors. Illinois Gov. Rod
Blagodevich was on-scene at the facility demanding that the state cease
doing business with the Bank of America in light of the rumors that its
pulled funding had caused the plant to close. National news networks across
the country featured photos and video footage of the workers there. Even
today, the plight of the employees who demanded their pay—having been
told just days earlier that the plant would close—is the subject of a
number of documentaries about unions and labor issues.
But what these employees didn’t know was that their sit-in efforts allowed
bankruptcy and state officials access to the plant to uncover many of
the documents cited in the recently filed case.
“The employee occupation of the factory, while apparently peaceful and
orderly in nature, effectively prevented Gillman, Individual A, Individual
B, Employee B and others from re-entering Republic’s offices or the manufacturing
floor,” reads court documents filed in the case. “As a result, Bankruptcy
Consultant and other agents of the bankruptcy trustee were able to recover
many of the documents referred to herein.”
(Editor’s Note: The “proffer in support of setting bond” filed against
Gillman cites several others as involved in the alleged scheme; they are
known as Individual A (chief operating officer) and Individual B (director
of manufacturing). Though neither had been named officially by the courts
involved in the case at press time, Republic officials Barry Dubin and
Tim Widner are referenced as COO and director of manufacturing, respectively,
in various sources, including a business networking site on which they
both have profiles, LinkedIn®. Neither Dubin nor Widner could be reached
for comment at press time.)
“Viable, Legal and
The state alleges that the company’s downfall became imminent as early
as mid-2008, as the company “was seriously in arrears on payments to creditors
and it was nearly certain that insolvency was imminent,” according to
court documents, authored by John Mahoney, assistant Illinois state’s
attorney deputy supervisor. Mahoney works in the state’s attorney office’s
public corruption and financial crimes unit.
But first, Republic officials looked at “viable, legal and ethical options,”
including a possible merger, acquisition or relocation, according to court
documents. Prosecutors reference several PowerPoint presentations that
were found in the Republic offices about how to come through the financial
Documents found show that the company hired a consultant, Larry Pointelin,
“to conduct an operations review.” According to court documents, he pointed
out the following in April 2008:
• Republic’s computer system needed to be replaced;
• The company’s union contract would be up in May 2008; and
• He believed “Republic could not realize a profit … in Chicago.”
On the last point, Pointelin allegedly advised the board that “the cost
of worker wages and benefits were too high in Chicago and would be lower
elsewhere.” He estimated re-location costs at $3.5 million, according
to court documents.
The State Attorney’s Office also points out that the company signed a
draft agreement with Jordan Knauff and Co. (JKC), an investment banking
firm that specializes in the door and window industry, to obtain “‘buy
side’ only acquisition advisory services” in early 2008.
One presentation found on-site showed that JKC located 60 suitable candidates
for merger and acquisition negotiations, Mahoney reports. “Of these, 50
companies were considered by Republic to be unattractive candidates for
strategic partnership,” he adds.
JKC’s Michael Collins told DWM magazine about the firm’s work for Republic,
but advised its involvement with the company ended prior to the purchase
of TRACO’s facility.
“We conducted a standard acquisition advisory assignment for Republic
Windows,” Collins said. “Our work for Republic had stopped by the time
Rich Gillman purchased the TRACO facility and by the time any of the alleged
wrongdoing had taken place. Needless to say, we weren’t involved in any
“The first half of 2008 had seen Republic’s management considering viable,
legal and ethical options to avoid insolvency,” writes Mahoney. “Had any
of those options become a reality, there was a possibility that Republic
could have continued as an ongoing concern. By mid-2008 … Republic’s insolvency
seemed to be imminent.”
“How Do We Plug
a $4 Million Hole?”
One document allegedly recovered from the chief operating officer’s office
was a document called “How do we plug a $4 million hole?”
In the document, “Individual A” suggested the company “suspend interest
and principal payments on debt owed to Veka, suspend or limit capital
expenditures, block relief from LaSalle and temporarily defer payments
to GE Capital,” for a savings “of only $1,539,000.”
Several consultants also reviewed the company’s financial situation in
mid-2008, including Fort Dearborn Partners Inc. and Silverman Consulting,
which suggested that the company should start thinking of its creditors.
“At this point, the company was nearing the zone of insolvency and management’s
… fiduciary obligations should have started to shift to what was in the
best interest of the company’s creditors,” reads the proffer.
The State Attorney’s office claims that instead of following the advice
of the consultants and “fulfilling their legal obligations to their employees
and creditors, Gillman, Individual A and Individual B formulated a scheme
to defraud them.”
The Alleged Echo Plan
And it was at this point that Mahoney says Gillman and his associates
launched a conspiracy to abandon the company’s debts and secretly relocate
the company’s “collateralized manufacturing equipment” to an existing
window factory in Red Oak, Iowa (also known as Echo Windows).
“The ultimate goal of the conspiracy was to use the stolen property to
create a successor window manufacturing company to Republic that Gillman
would operate, free of responsibility of the staggering debt that his
mismanagement created,” writes Mahoney.
According to court documents, Republic had been in discussions with TRACO,
based in Cranberry Township, Pa., as early as March 28, 2008, about its
offer to sell its existing vinyl replacement window manufacturing division
in Red Oak.
“The acquisition of TRACO’s plant and the relocation of its manufacturing
operations to Red Oak would have possibly been legal had certain conditions
been met,” writes Mahoney in the complaint. “Among those conditions were
full and total disclosure obtaining the prior permission of the owners
of the company and its assets—Chase, Bank of America and [GE Capital Corp.].
These conditions were ignored and instead the conspirators concealed the
true nature of their scheme to defraud.”
The State’s Attorney’s Office say they found an easel board in Gillman’s
former office in Chicago with plans about when items and machinery would
be moved, what would be moved, by who, etc. Though it allegedly noted
that Republic’s Sienna P-2, Contour and Allure lines definitely would
be moved, “the option was left open to steal other manufacturing lines,”
reads documents filed in the case.
Prosecutors also say they found a document dated October 31, 2008, which
appears to be a fourth revision of the plan, outlining that in Phase I
they would “renegade Contour immediately,” and in Phase II, “they would
remove ‘Allure, Patio Door, Minor Casement, Glass and Complete Contour.’”
“This is evidence of the plan to steal additional manufacturing equipment
from other lines,” writes Mahoney. The court says the document also references
a “Phase II and III forced blitz move.”
Echo was incorporated in November in both Illinois and Iowa, according
to court documents, and Richard Gillman’s wife, Sharon, and Lawrence Gritton
were listed as its principal agents.
The court alleges that Gillman sought the assistance of William H. Smith
(the partner with whom he originally purchased Republic through a company
they co-owned) to finance the purchase of Echo. Prosecutors allege that
the two set up a new company, Smithfield Windows, “to use as the vehicle
with which to [purchase the TRACO facility].” Smithfield Windows was set
up on September 9, 2008, and Gillman, Smith and “Individual B” traveled
to Red Oak to visit the future Echo facility on September 11, according
to court documents.
Then, in October, “Smithfield Windows … wrote letters of intent to the
Board of Directors of Republic offering to execute a purchase agreement
covering the sale of all its furniture, equipment, computer systems, intellectual
property and pending purchase orders for the sum of $100,000,” reads the
At that time, Smithfield also is alleged to have also started negotiations
with Veka to utilize its vinyl extrusions. Republic also had used Veka,
but the company had cancelled its credit to Republic due to a large outstanding
debt, according to court documents.
On November 18, Smithfield changed its name to Red Oak Real Estate LLC,
with Gritton named as its principal agent, according to court documents.
(TRACO announced that it had sold its vinyl replacement window facility
to Red Oak Real Estate the same week that Republic announced it was closing
Carrying Out the
As Gillman and his associates were finalizing the plans of the move, prosecutors
allege they also were setting up other companies to complete “the theft
of $202,000 from Republic.”
“This stolen money was laundered through
a bank account of a corporation formed solely to facilitate the scheme
to defraud,” reads the proffer. “The laundered money was then used to
purchase equipment and transport stolen assets.”
Prosecutors allege two shell corporations, International Fenestration
Partners (IFP) and TKDO Inc., were set up for this purpose. The State
Attorney’s office alleges that money was funneled from Republic to these
two companies in order to pay to relocate Republic’s assets to Red Oak.
“Concealment of their scheme required Republic’s money could not directly,
or at least easily traceably, be used for that purpose,” writes Mahoney.
The state says that over five months—starting in June 2008—checks were
written from Republic’s bank account to IFP’s account, which was set up
in Barberton, Ohio, for a total of $202,103.
The court says that when a bankruptcy consultant was reviewing Republic’s
books and purchase order list, it showed that the invoice items associated
with the money Republic paid IFP were never received.
The State’s Attorney’s office notes that IFP’s bank records also were
reviewed as part of the investigation, and that it had made several checks
to TKDO LLC—with an address of 3630 S. Canal St., Chicago, “the address
of Individual B’s home,” for a total of $57,122.30. Several public records
located by DWM link the address to Widner and his wife, Kasha.
IFP also had made payments to several industry suppliers, including Sturtz
Machinery and Product Design and Development (PDD), according to court
“PDD shipped an order for machine tools,
dies and presses ordered by Employee A and Individual B, which were necessary
to re-tool soon-to-be stolen manufacturing equipment that would be required
to support Echo’s operations in Red Oak, Iowa,” reads the proffer.
In September 2008 Republic officials allegedly realized that to move one
particular line of machinery, it would need to be re-tooled and new dies
would need to be fabricated for it to be used in a new facility.
“Individual B told Employee A to use the company name ‘TKDO’ when he placed
the order for the purchase of equipment [from PDD],” writes Mahoney. “Individual
B explained to Employee A that he could not use Republic’s name when he
placed orders because nobody would ship to Republic anymore because of
its very poor payment history and lack of credit.”
The employee provided his own home address for the order, according to
court documents, and was told by “Individual B” that TKDO were the first
initials of all his family members.
The equipment move allegedly began during the second week of November
2008, and “Individual B” is said to have told employees it was being “liquidated
to pay employees’ wages,” according to court documents. “Employee A” told
investigators that those who moved the lines into trailers were paid with
cash, according to court documents—which came from Republic’s account
for alleged “electric work to be performed” at the request of “Individual
B,” who said that the work could only be paid for with cash, according
to documents filed in the case.
During the Republic bankruptcy case, which was filed shortly after the
company closed its doors, prosecutors say Gillman provided a testimony
saying he authorized the removal of the equipment, but was not present
for the move. The trucking company provided invoices to investigators
showing that three of the trucks of equipment went to the Red Oak facility
in early December, and seven were removed to a Republic storage yard in
Chicago, according to court documents. The trucking company advised it
was paid by IFP, according to prosecutors, and the checks were signed
by Jason Petrie, the only name referenced in the court documents as associated
The Final Days
Shortly after the equipment was moved, announcements that Republic was
closing its doors began. Some employees were told on December 2 by “Individual
A” that the company was closing the following Friday and all the manufacturing
employees learned the same on Thursday, December 4, according to court
documents. Prosecutors say all employees were told they “would be expected
to leave the plant by 10:30 a.m.” on December 5.
Company officials claimed it was closing “because its credit
was pulled,” according to court documents.
The employees stayed at the plant several days, drawing national attention
to the company and its owners.
Echo did receive three of the seven trailers of equipment, but soon also
closed on February 23, 2009, as shipments of materials needed ceased arriving
at the plant.
The Story Continues
At press time, Gillman remained in custody at Cook County Correctional
Facility in Chicago. In the charges, prosecutors allege that he and his
alleged co-conspirators “formulated and executed a scheme to defraud Republic’s
debtors by abandoning Republic’s debt, hijacking its collateralized assets,
and transporting them to Red Oak, Iowa, with the intent of using the stolen
property to create a successor to Republic.”
None of the others associated with Gillman had been named nor arrested
at press time.
State’s Attorney’s Office deputy communications director Tandra Simonton
advised DWM magazine the investigation is ongoing.
Stay tuned to www.dwmmag.com
as this case unfolds.
Penny Stacey is the assistant editor of DWM magazine. With additional
reporting by DWM editor Tara Taffera.
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No reproduction of any type without expressed written permission.