Factory was site of sit-in by union workers fired just before Christmas
By Annie Sweeney and Matthew Walberg
September 11, 2009
After Republic Windows and Doors abruptly shuttered its North Side plant last winter, some of the 200 union workers who lost their jobs peacefully refused to leave for several days, demanding wages they'd earned and becoming a national symbol of the economic crisis.
On Thursday Cook County prosecutors made a startling allegation: The sudden plant closing was all part of a monthslong plot by the head of Republic Windows to loot the business, steal key manufacturing equipment and set up a new operation in Iowa.
After a judge hit former chief executive officer Richard Gillman with a whopping $10 million bail, he was led away to Cook County Jail while wearing a pin-striped suit, white collared-shirt and a dazed expression.
Prosecutors laid out their case in an unusually detailed 56-page filing. Gillman and two other undisclosed executives abandoned Republic Windows' crushing debt, stole its assets and secretly trucked the equipment from the plant to the new operation in Red Oak, Iowa, the charges alleged.
But that operation failed, too, just a month and a half after it started, leaving hundreds of employees from both Chicago and Iowa out of work and devastated.
All told, Gillman and the others defrauded company creditors who were owed at least $10 million and stole more than $200,000 cash from Republic Windows, prosecutors alleged.
Mahoney said Gillman and the others laundered stolen company funds through shell corporations and also removed 10 semitrailers full of window manufacturing equipment from the Goose Island factory. They also paid off luxury car leases for themselves, charges alleged.
"And just two weeks before Christmas, in a dire economy, the company shut the doors of their business and deserted their workers and all of their families," State's Atty. Anita Alvarez said at a news conference at the Criminal Courts Building. " ... That makes the selfish actions of Mr. Gillman and others at his company even more reprehensible."
Seven trailers were stored at a location on the South Side and were seized as part of a search warrant executed Wednesday, Mahoney said. Three of the trailers were transported to Red Oak, where Gillman began a new window manufacturing company, Echo.
Gillman took over a Red Oak window company that had been operating since 1985, said Ted Schoonover, town mayor. Some 120 people were employed at the plant, including the mayor's wife.
Gillman took over Jan. 1 with promises to keep things running, Schoonover said, but work soon slowed and Gillman announced the stunning closing in February. The closing hit the town of 6,000 residents hard, the mayor said. Some employees left Red Oak to find work, but about one-fourth are still looking for new jobs.
"It was a very viable business," Schoonover said. "That's why it was such a shock. ... It was pretty devastating especially the way the economy was. To lose 100 and some jobs in that economy was pretty tough."
Republic employees knew the criminal investigation of company management was under way. Prosecutors credited them in court documents with not only drawing national attention to their cause by occupying the factory but also preventing Gillman and others from getting back into the plant.
That enabled investigators to later recover many internal company documents that form the backbone of the state case, prosecutors said.
Employees also followed trucks removing Republic equipment to learn where they were being taken.
The lengthy prosecution filing indicated that the state case relies on internal company documents, PowerPoint presentations and one document titled "How do we plug a $4 million hole?"
Prosecutors referred to one document as the "smoking gun," saying it laid out the plan to spirit away equipment without the knowledge of creditors, referring to "blitz" moves.
After the sit-in drew national attention and support from politicians, officials from the banks that had lent Republic money met to hammer out a solution. The banks agreed to cover the costs of union workers' severance and vacation pay as well as two month's insurance.
At the meetings, Gillman asked for a severance package for himself as well as a $90,000 allowance for his automobile, according to the prosecution.