By Anne Valente
By Lindsay Toler
By Ray Downs
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By RFT Staff
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Weeding out the "front"companies -- companies headed by minorities or women but actually controlled by white men -- has been a recurring theme for Green and his staff and was a factor, he says, in why some of the Hispanic businessmen were refused certification.
In Angel's case, certification specialist Valentine had recommended approval of Angel's application, but she expressed some uneasiness about his relations with other companies. She was concerned that Angel rented storage space and maintenance from a competitor, Jones Grading and Excavating. She was concerned about the terms under which he leased trucks. And she was concerned that at the time of her investigation, Angel was vice president of Nunn's Hauling, a company that Angel himself identifies as one of his competitors. Angel resigned that position within weeks of Valentine's investigation.
Green says the certification board questioned Valentine about her concerns and decided to not to certify the Gonzalez Cos. as a bona fide minority-owned business enterprise. "The board has a right to turn down an application even if the staff approved it," he says. "That's my checks and balances."
When it comes to two common types of fronts that somehow get around the scrutiny of other government agencies, Green says he's especially vigilant: husband-and-wife partnerships that, although they're really the husband's business, put the majority of the ownership in the wife's name; and partnerships between a white man and a minority that list the minority as the main owner even though the white man put up all the money.
Green says, "We get a lot of man-and-wife companies where, for example, his plumbing company is suddenly a WBE. They swear it is her company, even though she doesn't have any plumbing experience. We ask where the startup money came from and find out it came from a joint account, that she doesn't have any independent money. So she doesn't have any experience in the business, and she doesn't have any independent money, but they'll argue she can fire her husband. We know that is superficial.
"Another one is no startup money. The nonminority will say to the minority, 'I'm going to value your being with me as equal to a certain amount of capital,' and give him 51 percent ownership, so the minority is not actually putting any money in. A lot of minorities don't understand. They think they really are owners, but when you look at the fine print and things like the bylaws, they aren't."
Pinela's business, the Greenery Plant Co., is a case in point, Green says. According to the case file, Michael Stephan, a white man, founded the company in the early nineties and was the sole proprietor until 1995, when he decided to give Pinela 51 percent ownership in the company in recognition of his "sweat equity."
"He has no right to tell you that," Pinela says angrily. "The fact that I didn't put any money into the business is a personal issue, not a business issue. Michael and I got an agreement that I would be 51 percent owner because I brought in a lot of business that he would not have gotten otherwise. Prior to incorporating, I said I would work hard, put a lot of promotional stuff in -- a lot of networking and contacts -- so I needed to be the leader. It was not for 'sweat equity.'
"What [Green] is saying is bullshit. He is trying to make us look like sleazebags. I don't have to put in capital to be the boss of the business. I can work my way up. I don't have to put in capital in order to become the business owner. It is at the decision of the partners."
Besides, even if a white man is trying to use a minority as a front, it doesn't matter, Pinela argues: "The minority still has to work on the business to make it grow. Even if you are certified, it will not grow if you are not involved with it. The Greenery Plant Co. has grown because of the involvement that Michael and I had in the business. I worked very hard. At 6 in the morning I was watering plants, and at 6 in the afternoon I was still there, watering stock."
As for the Hispanic Chamber's other examples, Green has explanations for those, too. The applications from Cuevas and Gonzalez weren't denied, he says. Their files were closed after the companies failed to submit requested information. Once a company files for certification, the certification investigator has 30 days to act on the application. If the investigator needs more information and can't get it, he or she closes the file.
Cuevas, a Chilean immigrant, remembers things a little differently. He says he got certification for Clean-Tek, his cleaning-supply-distribution company, but was then decertified because he didn't send in information the certification specialist requested. Why didn't he? He already had, he says. "It was already in their hands. A small company [he has four employees] can't afford to get caught up in red tape fulfilling bureaucratic needs."
Since then, Clean-Tek has received MBE certification from the state and the SBA. On March 22, Cuevas applied for recertification with St. Louis. Keri Kugler, a certification specialist in the MBE/WBE certification department, says she will have to return the application and tell him to start all over again because he used the wrong form. Clean-Tek never was certified in the city, she says, so Cuevas must use a certification form, not a recertification form.