BRATTLEBORO — A co-owner of Long Falls Paperboard has filed a whistleblower complaint with the Vermont Attorney General’s Office, alleging another co-owner has committed fraud and deceit at the Brattleboro plant to profit himself.
However, stated Richard Normandin, managing partner at Long Falls, those allegations filed by Mike Cammenga “could not be more wrong.”
“Long Falls Paper Products strenuously denies allegations made by Michael Cammenga of wrongdoing or deceit in its operations at the Long Falls paper products plant,” states a document sent to the Reformer by Normandin’s legal counsel, Tristram Coffin of Downs Rachlin Martin. “We are doing everything we can to keep this business as a surviving entity employing a dedicated workforce during extremely challenging times.”
Long Falls owes $2 million to the Vermont Economic Development Authority, nearly $1 million to the Brattleboro Development Credit Corp., and nearly $4 million to MidCap Financial. Other documents received by the Reformer indicate Long Falls has lost $15 million over the past three years.
According to the response from Normandin, the paper plant is being supported by his Canadian company, Northrich, through additional collateral and guarantees to ensure ongoing support from VEDA and the Windham County Economic Development Program.
“[Long Falls Paperboard] is on the advent of releasing a structured repayment plan where all creditors will be offered payment in full over time,” states the document, adding “[T]here will also be a lump sum discounted option. ... Meanwhile we are working with our employees, our suppliers, local contractors, the state and local development agencies on a comprehensive restructuring plan in order to secure the future of the Brattleboro mill and serve customers.”
“Owing to privacy considerations of our customers MidCap respectfully has no comment,” wrote Peter Rutigliano, executive vice president and risk manager at MidCap, in an email to the Reformer.
Cammenga, the plant manager at Long Falls and a one-third owner, said he filed the complaint with the Attorney General’s Office about two weeks ago.
In the complaint, he writes not only about fraud and deceit, but also states that Normandin hasn’t been paying union dues and medical and dental premiums, has been selling Long Falls product at below-cost, so his Canadian operation can benefit, and has received “inappropriate management fees.”
The Attorney General’s Office confirmed receipt of the complaint, but said because it refers to a private company, the AG would be forwarding it to the appropriate agencies or entities.
“Most of the current employees at the facility are union employees who went above and beyond during the pandemic working 84 hours per week or more to do the right thing for well over a year in duration, risking their own health and sacrificing valuable time with their loved ones,” Cammenga wrote in the complaint. “In spite of their dedication to the Company, Richard and the financial team have decided to allow employee benefit programs to lapse like vision, dental, disability, and life insurance through our insurance carrier.”
The complaint further states that the insurer Guardian is taking legal action against employees for any payments that were made in January 2021 to medical providers, claiming the employees have had no insurance for the entire year.
On Jan. 10, Allen Smith, union representative, sent an email to Normandin, alleging theft of union dues, which Normandin’s attorneys identify as merely a lapse in payments.
“LFP fell behind in union payments during the earlier stages of the COVID economic crisis, but has resumed payments in accordance with a plan supported by the union,” states the document. “Certain payments were late as a result of the economic impacts of the fallout from COVID, but there are agreements with all but one healthcare provider (who we are currently working with).”
Cammenga also alleges that Normandin owes him more than $100,000 in expenses and wages.
“[We] strongly deny that Mr. Cammenga has been treated improperly or is owed anything,” states the response.
Cammenga claims that Long Falls owes another $200,000 to Emerald Brand, a company that hoped to conduct a trial run of tree-free paperboard at the plant late last year.
Ralph Bianculli, chief executive officer for Emerald Brand, said he had an agreement with Normandin to conduct a test run with tree-free pulp to determine if producing compostable paperboard was viable at Long Falls.
“We made a deal, we moved stuff around the country, and brought in engineers from as far away as California,” he said.
Instead, the pulp sat in trucks at the Brattleboro plant until it was no longer usable.
“Due to your refusal to permit Long Falls to perform the test that you represented would be performed during the week of November 29, 2021, the pulp is now worthless, and Emerald has been damaged in the sum of $195,600,” wrote Samuel E. Kramer, an attorney for Paradigm Marketing Consortium, Emerald Brand’s parent company, in a letter to demand payment.
When asked if this issue has been resolved, Normandin’s response was “This is false.”
Bianculli told the Reformer, adding he was interested in eventually buying the plant to help meet an unprecedented demand for tree-free products.
“I am still confident we can get into that plant and be partners moving forward,” said Bianculli, “but we have no interest in working with Richard at this point.”
In his complaint, Cammenga also asks authorities to look into the use of funds from the COVID-19 Payment Protection Program administered by the Small Business Administration.
In April 2020, Long Falls received more than $1.9 million in paycheck protection funds to support 103 jobs. That loan, according to an online database, has been forgiven. In January 2021, Long Falls received another $1.9 million to support those jobs. The status of the loan is listed as “not disclosed.”
To qualify for the money, a company has to spend 60 percent on payroll and must commit to maintaining an average monthly number of full-time employees.
“PPP funds along with further advances from Northrich supported losses during the difficult COVID stretch, including an outbreak that closed the facility and resulted in two deaths,” states Normandin’s response.
In his complaint, Cammenga writes that staffing at the Brattleboro plant has been cut from 126 to 58.
“Unfortunately, staffing has been cut while the business transitions from paper office products to its new product line,” states Normandin’s response; the new product is not specified. “It would be a significant understatement to say that these have been extremely challenging times for manufacturing in northern New England generally, and for manufacturers of paper products in particular. That was true before the pandemic, and the situation has only been severely impacted by the unprecedented, global impacts of COVID-19 on commerce and trade for facilities like Long Falls.”
Nevertheless, Normandin believes his plan for the plant “is a solid one.”
“The Long Falls plant is in a necessary period of transition, moving away from its traditional line of cardboard and paper office products and toward a new product line that has a more sustainable future in an era of increasingly electronic office operations. ... [W]ith a great deal of effort and ingenuity on the part of our management and employees and other partners, the future of the Long Falls Brattleboro plant is bright.”
The SBA takes fraud seriously, wrote Shannon Giles, public affairs officer, but it does not comment on individual borrowers.
“[A]ll applicants are required to provide certification of their eligibility upon application,” wrote Giles. “Misrepresentation of eligibility is unlawful, and, when appropriate, these cases are referred to the Office of the Inspector General.”
Anyone who suspects fraud or misuse of relief programs can file a complaint at sba.gov/fraud.
Long Falls is one of the last operating paper mills in Vermont.
Three years ago, Normandin, Ben Rankin, Phillip Farmer and Cammenga purchased the plant from Georgia-based Neenah Paper.
In 1960, Case Brothers opened the plant in Brattleboro, which was purchased by Boise Cascade in 1967. In 1989, the facility broke away from Boise Cascade and was renamed Specialty Paperboard. In 1997 it was renamed Fibermark. In 2015, it was purchased by Neenah, which sold the plant to Long Falls in late 2018. The county development corporation bought the building and the property in a tax sale earlier this year, but Long Falls still owns the equipment housed in the building.
Adam Grinold, executive director of Brattleboro Development Credit Corp., said he’s aware of the complaint, but had no comment at this time about the allegations contained within.
Grinold said Long Falls has injected nearly $14 million in payroll into the region since the partners bought the facility.
“This is a business that would have been shuttered. We are super excited to continue to work with Richard and the partners to help them get through a restructuring process so they can continue to operate and be a strong contributor to the region. We have confidence in the leadership at Long Falls and appreciate the good work they’ve been doing to maintain operations throughout a really tough time of COVID and decreased demand for their office products.”