Charges shatter dashing persona of Michael Carlow
In the summer of 2008, a phone call came from the Internal Revenue Service office in Pittsburgh.
Employees at tiny Cumberland Valley Fabricators in Hagerstown, Md., initially didn't know what to do. An investigator asked about Michael P. Carlow, a convicted Upper St. Clair swindler.
Company officials didn't know who the IRS was talking about until the agency filled them in about Carlow -- a man most of them knew as Mike Zampaglione.
"I'll never forget the minute I learned his real name," said Gary Broseker, 40, Cumberland Valley Fabricator's manager before it went bust three days after Christmas 2008. "He said, 'Oh, I thought you knew!' It wigged me out. I thought, 'Who is this guy?'"
A federal grand jury indicted Carlow, 60, and his housemate, Elizabeth Jones, 50, on April 13 on charges of fraud and tax evasion, accusing him of hatching a conspiracy while in prison to shuffle oil and gas royalties into an illegal slush fund. Those dollars let Carlow buy control of Hampton's Roediger Inc., a wastewater processing parts manufacturer, then a dozen other companies across five states, each listed under Jones' name, according to the indictment and Carlow's internal corporate documents leaked to the Tribune-Review.
Prosecutors, business associates and Jones' relatives claim she was merely a figurehead for Carlow, a tycoon who had orchestrated a $31 million check-kiting heist from PNC Bank and drove Iron City beer, Clark Candy Co. and City Pride bakery into financial disaster. He pleaded guilty in 1996 to fraud, embezzlement, wire fraud and tax evasion, and stayed in prison until 2002.
Cumberland Valley Fabricators' workers, however, knew him as Zampaglione, a dashing man who roared into town in an "opulent" Land Rover after the company was sold in 2007 to Gilet Holdings Inc.
Back then the metal shop had sales of $4 million, owed creditors nothing and offered its 20 workers a health insurance plan. Helen L. Cook, the widow of Cumberland Valley's founder, was pleased with the sale of the company he started in 1975.
"She told me that she was glad her husband's legacy would live on," Broseker said.
When they last saw Carlow in late 2008, Cumberland Valley had gone bust after gushing $2 million in red ink, according to Broseker and two other former executives there.
During good times at Cumberland Valley, Carlow was the guy who stayed overnight in an above-shop apartment they outfitted with a couch and TV. The former executives said they wondered when he slept because he yapped constantly on his cell phone, talking loudly with supposed bigwigs in Europe and South America. He bragged about his apartment in Rome.
"I saw a picture of it," said Broseker. "He told me I could take my mother and kid there. Before then, the company went bankrupt. I was only a few months of going out there to see it."
Broseker said he was wooed to Carlow's empire in 2004. That was about two years after Carlow left prison and shortly after he bought Ohio-based Cardinal Home Products, a steel beam shop, and founded a subsidiary in Maryland called Matrix Steel and Building Supply.
"He promised me that I would be the president" of Matrix, Broseker said, "but he really treated me like a glorified personal manager."
Broseker said Carlow forged his name on Matrix Steel documents, obligating him personally to pay Maryland $68,000 in fees and taxes after that company failed in 2006.
"I put my heart and soul into working for him, and I was abused," said Broseker. "He would say, 'That's part of the perils of working as a corporate executive,' but it really was the perils of working for him."
As Roediger, Cardinal and Matrix tumbled, Broseker and federal prosecutors say Carlow was using Jones' name to acquire Ohio-based auto parts maker Griswold Manufacturing, Virginia's Waddell Construction and Cumberland Valley Fabricators.
"Michael kept five or six companies going at a time," said Broseker. "The old ones were the losers. They were losing money. The new ones were the winners. They made money. It got ridiculous."
Broseker and other Cumberland Valley executives said the company paid Jones about $2,000 weekly -- the same sum Matrix sent her -- even though no one saw her. They made "consulting" payments to her that federal prosecutors allege were flipped to Carlow, who was supposed to use any earnings to repay the IRS and investors fleeced in the 1990s.
Carlow had Cumberland Valley spend $11,000 on Steelers tickets for him and Jones. The company paid for Carlow's Range Rover, an Audi for Jones and a Mercedes for one of Carlow's sons, then-college student Anthony Michael Carlow, who went on the payroll as an outside salesman, the former executives said.
Carlow's son, Anthony, told the Trib last night that he worked hard for his money and he paid for the car out of his own pocket.
Broseker said he saw Carlow's checkbook for Endura Corp., a company federal agents allege he used to hide Ohio gas and oil well royalties worth about $10,000 per month. But he said the crown jewel of Carlow's operations was the mysterious "Diamond-Rock," a company prosecutors claim paid Carlow $20,000 over eight weeks in late 2008.
"Diamond Rock was always his thing," said Broseker, who said he gave federal agents and the U.S. Attorney's Office paperwork from Carlow in early 2009.
Court documents say the collapse of Griswold Manufacturing -- part of Gilet Holdings -- cost the family that sold it to Jones $1.37 million and Cumberland Valley's Cook a loss in the "six figures" after a land sale. Richard Waddell, owner of Virginia-based Waddell Construction, told the Trib he's out $1.5 million.
Jones declared personal bankruptcy on Jan. 14, 2010, claiming nearly $5.8 million in business debts. She didn't return calls and an email.
When the Trib tried to ask Carlow about these allegations at Gilet's Neville Island headquarters, he yelled at and pushed a reporter three times before locking himself in his office. He didn't return later calls.
Outside, a gas-powered electrical generator hummed, providing the officer with power. A white Volkswagen Jetta he drove to work was parked nearby, with his clothes stacked in the back seat.