A former employee of Peregrine Financial Group, the Cedar Falls, Iowa-based commodities firm that moved to liquidate on Tuesday, filed a WARN (Worker Adjustment and Retraining Notification) class-action suit against the company after being laid off on Tuesday.
The suit, filed Tuesday evening in the U.S. Bankruptcy Court for the Northern District of Illinois, alleges that PFG failed to provide 60 days notice of layoffs as required under federal law. The suit comes after regulators said they were investigating the company for alleging misusing customer funds and falsifying bank statements. PFG's founder, Russell Wasendorf, Sr., was found Monday outside company headquarters in the midst of a suicide attempt, according to the Wall Street Journal. The company has filed to be liquidated under Chapter 7 of the U.S. bankruptcy laws.
According to the lawsuit, Ron Kotulak, a former back office operations clerk at the Chicago outpost of the company, is asking for 60 days wages and benefits, which can include salary, commissions, bonuses, accrued holiday pay, pension, healthcare and other benefits.
I'm out on the street and I didn't even get my last check”
"I'm out on the street after coming in for three years and I didn't even get my last check," Kotulak, 48, said in a phone interview. Kotulak has a wife and two children, aged 18 and 20.
According to an email sent to PFG's 200 employees yesterday by Janice Meintzer, head of human resources, payroll has been frozen and the company has not been authorized to send out paychecks from the week of July 13. Employees will continue to receive dental, life and health insurance through July 31, according to a copy of the email reviewed by FINS.
A spokeswoman for PFG did not return requests for comment.
Kotulak said he was shocked to hear of the company's liquidation. Employees had recently celebrated the company's decision to reverse a planned 10% pay cut for July. A similar pay cut had been implemented for all employees in June.
Russ Wasendorf Jr., president and chief operating officer, last Friday sent employees an email saying that "based off the financials for May, and projected June P&L data, the Executive Committee of PFGBEST has decided that the second temporary salary cut will not be done." The pay cut was being rolled back because PFG would be able to "run at break even" due to "current cost cuts" and "projections for increases in income in particular from International business done through BEST Direct Australia," according to a copy of the email reviewed by FINS.
The salary cut enacted in June would also be rolled back, the email said.
To celebrate the pay cut rollback last Friday, Kotulak bought a new leash, harness and doggie bed for Apple, his terrier mix, as a well as a lamp, he said. As of Tuesday, he was out of a job.
Write to Julie Steinberg at email@example.com