LIVE OAK, Fla. — A former employee of Klausner Lumber One is suing the lumber company for submitting false statements to the federal, state and local governments to receive public grants and funding.
According to court documents, Emma Tirella, Klausner’s former human resources generalist, witnessed systemic fraud within the Austrian company.
After notifying management, Klausner allegedly terminated her employment in response to her complaints, the court documents claim.
The fraud is related to false statements Klausner made to various governmental entities, including Suwannee County School Board and Suwannee County Commissioners, specifically regarding job creation and training expectations, the court documents claim.
These expectations must be met and maintained to receive public funding and financing.
According to court documents, in 2012, Klausner was on the brink of bankruptcy. Forced to sell three mills in Europe, the company proposed to construct a lumber production facility at a rural catalyst site in Suwannee County, about eight miles from the center of Live Oak.
The project was their first investment into U.S. based production, documents state. They claimed it would directly create about 350 full-time jobs at the mill during operation.
In 2013, the county, in reliance upon Klausner’s promised job growth, sold 155 acres at the catalyst site to Klausner for $1, according to court documents. The county paid around $1 million for the land, documents state.
Construction of the project began in December of 2013 after years of delay due to the lack of available capital.
To raise money, Klausner turned to foreign investment, primarily from China, according to court documents. Under the EB-5 program, established by Congress in 1990 to encourage foreigners to invest in the U.S. in exchange for green cards, Klausner was able to raise $49.5 million in financing.
Klausner entered into an agreement with Suwannee County School Board in 2014 for $971,250 in federal and state grant funds, according to court documents. This was later increased to $1.3 million by 2015.
Florida Department of Transportation also agreed to provide funds of around $1.75 million to Suwannee County to improve roads leading to and from the site, according to court documents.
Suwannee County invested $3.5 million from the county revenue surplus to purchase property and clear mill site. Court documents state, this money came from various state and federal grants.
All of this was on the condition of promised job growth, which, court documents claim, Klausner had no intention of fulfilling.
To qualify for the funding, the company conducted mass hirings in the first quarter of 2015 to have a record of hitting the 300 employee mark, the documents state. The sole purpose was to temporarily maximize the employee count to receive grant funds and EB-5 financing, according to court documents.
“Indeed, on one occasion, [Tirella] was told to just call people and hire them over the phone (12 in one day) regardless of qualifications,” the lawsuit states.
Once the 300 employee mark was hit and the funds were received, the company needed massive layoffs, as the mill was not productive, according to court documents.
However, to avoid notification of a mass layoff, Klaunser ranked employees from a scale of one to three, according to court documents. Anyone rated a “three” was fired under the “at will” employment doctrine. Within the first week, 87 employees were laid off.
These layoffs, according to the documents, dropped Klausner’s employment totals below those required under the federal, state and local grant agreements and EB-5 financing requirements.
Under the county requirements, Klausner needed to have 86 full-time jobs by 2014, 150 by 2015 and 350 by 2016. Instead, in 2014, it had about 80 and by 2015 only 110, according to court documents.
Furthermore, instead of reinvesting money into county facilities, it was “funneled back to Klausner Holz Thüringen GMBH in Europe, in part to prevent bankruptcy,” the suit states.
The suit is a Qui Tam case, which is when a private person brings a lawsuit on behalf of the United States, where the person has information of false or fraudulent claims to the United States.
Randy Harris, Suwannee County administrator, said the lawsuit had nothing to do with the county. He also said that no money from the Community Development Block Grant program went to Klausner like the suit claims.
“No funds were turned over to Klausner from a CDBG grant,” he said.
County commissioners Jason Bashaw declined to comment, saying he didn’t know enough about the case.
Commissioner Ricky Gamble declined to be quoted for the story.
The Suwannee Democrat reached out to Klausner for comment. As of press time, there has been no response.