Former workers and investors say Plant City firm that got federal bailout owes them hundreds of thou - Tampa Bay Times

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PLANT CITY — Alan Warmbier jumped at the chance when in late 2018 he was offered a $180,000 job at a new startup company in Plant City.

Omega Water Sciences chief executive officer Steve Sherman was a friend, and Warmbier, a former lieutenant colonel in the U.S. Army, was looking for a new career after serving his country for 20 years, including tours in Afghanistan and Iraq.

The firm claimed it had developed a way to clean up algae blooms and had attracted investors. Warmbier’s offer letter, which was reviewed by the Tampa Bay Times, stated that the firm had secured $500 million in project funding. He also was persuaded to invest a significant chunk of his retirement savings in the company for a 5 percent ownership stake, he said.

Omega Water didn’t act like a fledgling company operating out of a nondescript, single-story building in Plant City. Like Warmbier, several other employees were hired with six-figure salaries. Sherman also operated a sister company, Omega Petroleum Sciences, out of the same site and boasted to investors it could build a system to refine up to 12,000 barrels per day of low grade crude oil.

But neither company lived up to those lofty ambitions.

Five months into his his new job, the startup stopped paying Warmbier, saying it had run out of money, he said. He was told that more investment money was imminent, so he agreed to work for free for two months before giving up on the company.

Four other former Omega Water employees confirmed to the Times that they also are owed thousands of dollars in unpaid wages from the summer and fall of 2019.

And in March, a group of investors filed suit against Omega Petroleum, saying the $620,000 they gave the company to build a crude oil refining system was used to pay down debts run up by Omega Water. The lawsuit also states that Omega Petroleum used its headquarters as collateral for the investment agreement, even though the firm does not own the property.

Despite its problems, Omega Water recently was awarded between $150,000 and $350,000 in Paycheck Protection Program funds, a federal bailout program intended to help small businesses retain employees during the coronavirus pandemic.

That has outraged former employees, who are questioning whether the company listed them as still on the payroll in its application to the U.S. Small Business Administration. They said the company should be forced to use the money to make good on their unpaid salary.

“I’m still not in a good place financially because of them,” said Kathryn Cyr, who was hired in July 2019 as a human resources coordinator for Omega Water on a salary of $75,000. “To find out they’re still in business and receiving money — I would hate them to do this to other people.”

On a recent visit to the company headquarters, the premises was locked and there was no sign of activity. A “For sale” sign was posted outside.

Sherman, the CEO, said in an email that three of the company’s workers have COVID-19 and that its premises are closed while they recover.

He acknowledged that Omega had received bailout funds. He said it meant the company was able to retain eight employees.

Steve Sherman, chief executive officer of Omega Water Sciences [ Alan Warmbier ]

The program loans small businesses up to $10 million. Interest is charged at 1 percent, and the loan can be forgiven if most of the money is used for payroll. The Times and its related companies received $8.5 million through the program.

In a separate email, Sherman declined to answer questions about his company’s failure to pay its employees, the lawsuit against Omega Petroleum and how it would spend the bailout money.

“I am reluctantly following the advice of counsel and will not be replying further to your email with this exception. I have observed over the years most coins really do have two sides,” he wrote.

Related: Here are the eyebrow-raising Paycheck Protection Program loans in Florida

Sherman hired Warmbier, 43, to be his chief operating officer. The two had been friends for years and their kids swam competitively for the same swim team in Brandon. Warmbier liked the idea of working for a company whose mission was to devise ways to clean the nation’s waterways.

But their relationship became strained after Omega stopped paying its staff around the end of July 2019. A few weeks later, employees received a single paycheck, but the company withdrew that payment from their bank accounts two days later, Warmbier said.

Despite this, Sherman was still trying to hire more workers, Warmbier said. He also doubted that the firm’s algae bloom remediation system could handle the volume of water needed to clear lakes and rivers as the company was claiming to potential investors.

When he openly questioned the firm’s ethics, he said he was fired for not having a “blue sky attitude and not being positive enough.”

“I believed in a friend and an idea,” he said. “They took that money and walked, and they still owe me tens of thousands of dollars in back pay.”

Going several months without an income left Warmbier, who is married and has three school-aged children, in “enormous financial trouble.” After he hired an attorney, he said Omega Water offered to pay him $500,000 in missed salary and to buy out his ownership stake. He agreed, but after almost a year without any payment, he is planning to sue the company.

Before the company stopped paying him, Warmbier told Mike Bovan, his roommate at the U.S. Military Academy at West Point, that there was a job opening at Omega Water. After an interview, the company offered Bovan a $165,000-a-year job as director of projects and engineering. In June 2019, he sold his home in Fredericksburg, Va., and moved to Florida with his wife and three children.

Bovan said that Sherman told him the company had an “angel investor,” a term for a high net worth individual who provides seed money for startups. But after three weeks with the firm, his paychecks stopped.

“To tell someone they had an angel investor with $500 million they could tap into turned out to be a real big lie,” Bovan said. “It put stress on my relationship with my wife with not knowing what we were going to do next.”

Bovan said he is owed about $22,000. The company offered to pay him back over five years with no interest on the debt, he said, provided he sign an agreement releasing them from liability. He refused, and his attorney is still in talks with Omega, Bovan said.

Both Bovan and Cyr filed complaints against Omega Water with Hillsborough County’s Consumer Protection Services office, county records show. Bovan was told his claim is above the $8,000 threshold that the office handles and to pursue the case in civil court.

Cyr, who also made a complaint to the U.S. Department of Labor, is seeking just under $13,000 in unpaid wages. The county office has written to Jim Doucher, Omega Water’s chief financial officer, to see if the claim can be settled without beginning a legal pursuit of lost wages. It gives Omega until Aug. 7 to respond.

Containers of chemicals stored at Omega Water Sciences in Plant CIty. The firm recently received federal bailout money, angering former employees who left last year after it stopped paying them. [ Christopher O'Donnell ]

Not every Omega employee who lost out on salary blames the company.

Brandy Seong, 29, had worked with Sherman at Project Vision Dynamics, a firm that operated at the same Plant City location and provides consulting services for glazing companies. She was hired as a business manager for Omega Water on a $125,000 salary, she said, and her husband also accepted a job as a warehouse manager.

She said employees knew it was a startup company. When it could not make its payroll, they were told the company was waiting for further investment and that workers could continue unpaid or leave, she said.

“It was a calculated risk, and it didn’t pay off unfortunately,” she said. “I believe Steve (Sherman) and James Doucher are ultimately good people. When the opportunity comes and they can repay us, they will.”

The lawsuit against Omega Petroleum was filed by Clearwater firm Amortized Energy Solutions, investor Beau Burke and Jump 1, a firm based in Virginia.

It includes a copy of a memorandum of understanding signed by the investors and Omega Petroleum’s chief science officer, Keith Ervin. The lawsuit states they paid $620,000 to fund the development of a system to refine so-called “sour” or low-grade crude oil. A fourth investor, Poco Energy Holdings, had agreed to invest a further $2.5 million once the system was proven to work.

Omega agreed to use its headquarters at 901 W Martin Luther King Jr. Blvd. as collateral for the deal, the lawsuit states. But the site is owned by Andrew F. Knotts and Jeanne Knotts, according to property appraiser records. The Knotts could not be reached for comment.

The investors frequently sought information on how their money was being spent, but received only vague emails that led them to believe their funds were being spent to pay Omega’s employees, the lawsuit states.

“We empathize with the former employees,” said Patrick Causey, an attorney with Trenam Law who is representing the investors. “Their allegations line up with our experience and further demonstrate the fraud and deception that we have alleged in our lawsuit against Omega Petroleum Services.”

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Former workers and investors say Plant City firm that got federal bailout owes them hundreds of thou - Tampa Bay Times
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