Businessman John Vratsinas, who recently cleared more than $3 million in unpaid taxes from his to-do list, has been ordered to pay another $1.5 million plus interest in a shareholders lawsuit that claimed he unilaterally transferred funds from a construction firm he founded to other companies in which he had a direct or indirect interest.
Polk County Judge Robert Hanson issued the order last week. He also ordered that a receiver be appointed to oversee the liquidation of John Vratsinas Commercial Construction Inc. (JVC) and the distribution of its assets to shareholders and creditors. The company filed for bankruptcy protection in 2009, but the case was later dismissed.
Hanson wrote that cash transfers to another Vratsinas company, Iowa Construction Logistics Inc. and a limited liability company that he managed indicated that “Vratsinas had concluded that that JVC’s business was tanking and that he was simply draining the corporation of as much cash as possible.
The lawsuit was tied to a series of operating advances from John Vratsinas Commercial Construction to another Vratsinas company, Iowa Construction Logistics Inc., which was founded in 2001 and functioned as the employment arm of the construction company.
Darren Schlapkohl and George Reese, former JVC officials and shareholders, claimed in July 2009 that Vratsinas, who was the majority shareholder and founder of the construction and employment companies, improperly transferred funds to the detriment of the construction company.
Schlapkohl and Reese said that Vratsinas did not tell other directors or shareholders about the transfers.
JVC filed to reorganize its finances under federal bankruptcy laws in January 2009. The case was dismissed that June, after a bankruptcy trustee said the company should be liquidated and noted that Vratsinas demonstrated “a great deal of unfamiliarity with the day-to-day operations” of the company.
Schlapkohl said in court documents that while preparing for the bankruptcy filing, he learned that slightly more than $1.1 million in advances had been made from the construction company to Iowa Construction Logisitics. Those advances were later secured by a promissory note. An additional $468,850 was advanced to Flatiron Aviation LLC, which Vratsinas managed and held an indirect ownership interest, according to court records.
In court documents, Vratsinas said he had no idea why Iowa Construction Logistics needed the money or how it was used. He did note that he approved both the payments and the promissory note, saying that he was on “both sides” of the table on the loan.
Vratsinas’ attorneys argued in the case that Schlapkohl had “unclean hands” -- meaning that he at least was a co-signer of various checks that flowed from the construction company to other entities that Vratsinas controlled, at least two of them in partnership with Schlapkohl.
Schlapkohl resigned from the construction company in 2009 and was given $1 for his minority ownership stake, according to court records.
In a separate case, the Internal Revenue Service has released $3.1 million in tax liens against payroll processing and human resources companies controlled by Vratsinas.
According to records on the Iowa Secretary of State's website, the majority of the tax liens, filed after the companies failed to pay payroll taxes they had collected from other businesses, were released in late January.
Vratsinas' tax woes came to light last year after the IRS contacted clients of Vratsinas' professional employer organization, InFocus Partners, and said they could be liable for taxes that had not been paid on their behalf.
InFocus Partners provides a variety of services for businesses, including paying payroll taxes and handling workers' compensation claims.
InFocus Partners' parent company is Iowa Construction Logistics. In 2008, Iowa Construction Logistics spun off a company called ICL Staffing LLC, and expanded services from leasing employees to the construction industry to handling human resources for a broad range of businesses.
In December 2011, Vratsinas created ICL Staffing Inc. and registered it in the state of Delaware. At the time, InFocus Partners experienced a division of labor of sorts, with its payroll services handled by ICL Staffing LLC and ICL Staffing Inc. acting as a professional employer organization that offered a full range of human resources services.
According to the secretary of state records, Iowa Construction Logistics paid $271,178 in tax liabilities on Jan. 30. ICL Staffing LLC paid a total of nearly $2.9 million on Jan. 23 and Jan. 30.
Vratsinas also was ordered to pay $171,616 in attorney fees and court costs in the Polk County lawsuit.