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Head of Black Uniform Supply Company Prepares to Don Prison Outfit
By: George E. Curry
NNPA Editor-in-Chief
Originally posted 9/6/2006
WASHINGTON (NNPA) – The brothers that controlled Terry Manufacturing Co. in tiny Roanoke, Ala., near the Georgia border, seemed to have it all. They had millions of dollars in federal contracts to supply uniforms for U.S. soldiers and outfit the U.S. Forest Service. They were one of only two companies that made uniforms for McDonald’s Corp. The National Hockey League awarded them a contract to make fan gear and the 1996 Olympics gave them a contract as well. With $50 million in annual sales, Black Enterprise magazine listed Terry Manufacturing as one of the largest Black-owned businesses in the United States.
For years, Roy and Rudolph Terry, both graduates of Morehouse College in Atlanta, seemed to have taken the company founded by their late father in 1963 – the same year Gov. George C. Wallace stood in the schoolhouse door at the University of Alabama in an unsuccessful attempt to prevent desegregation – to new heights. But when cash flow problems developed, they sunk to new lows, defrauding banks, obtaining money under false pretense from longtime friends, associates, and a string of celebrities, including Hall of Fame quarterback Warren Moon, basketball great Lenny Wilkens and actors Samuel L. Jackson and Will Smith. Prosecutors said more than $20 million was fraudulently obtained by Terry.
On Sept. 11, when the nation will be reflecting on the anniversary of the 2001 terrorist attacks on the World Trade Center in New York and the Pentagon in suburban Washington, D.C., Roy Terry is scheduled to be sentenced in a federal court in Montgomery, Ala.
According to the U.S. Attorney’s office, Terry has pleaded guilty to 13 counts of fraud, crimes punishable of up to 30 years in prison and a $1 million fine. However, under a plea agreement, Terry is expected to be sentenced to 11.3 years, roughly a third of the maximum term he could have received had he gone to trial.
Speaking to reporters shortly after Terry agreed to the plea deal, George Beck, the defendant’s attorney, said: “Any mistakes that Roy made were due to his extreme dedication to keeping his company going and his people employed while other apparel companies abandoned the United States and went overseas.”
Roy Terry’s younger brother, Rudolph, served eight months at a federal facility in Montgomery for fraud and paid $800,000 in restitution.
In announcing Roy Terry’s plea agreement, Leura Garrett Canary, U.S. Attorney for the Middle District of Alabama, said Terry pled guilty to six counts of bank fraud, one count of misuse of pension plan funds, four counts of wire fraud, one count of mail fraud and one count of transporting the proceeds of fraud across state lines.
Several principals in Swanson Funeral Home – the Detroit company that handled the burial of Rosa Parks – loaned money to Terry. One of them, O’Neil Swanson, is still owed $350,000, according to court records.
Many of the people loaned Terry money after he said he wanted a make a special puchase of low-cost fabric or was waiting on payment from federal agencies, court records show. Terry also falsely claimed that he was starting a new business venture with radio personality Tom Joyner, though no entity was ever launched by them.
In addition to submitting false documents to banks, the U.S. Attorney stated, “Mr. Terry further acknowledged that, at least from January 1, 2003, through February 18, 2003, he engaged in a pattern of check kiting during which he would deposit Terry Mfg. checks written on an account at Bank of Wedowee into another Terry Mfg. account at First Bank of Roanoke, and then do the same thing in reverse between the accounts to maintain the appearance of an inflated account balance. During this period, he fraudulently obtained over $2 million in additional funds belonging to First Bank of Roanoke and the Bank of Wedowee for his own use at Terry Mgt. based on the over $8.5 million in checks written between the two accounts.”
At a time Terry was fleecing banks and friends, he was also misusing employees’ pension funds.
Canary, the U.S. Attorney, said Roy Terry “knowingly and intentionally misused employee and employer contributions to the Terry Mfg. company pension plan. Specifically, he failed to deposit or arrange for the deposit of employee payroll withholdings and Terry Mfg. employer contributions pledged to the Terry Mfg. company pension plan.
“No deposits were made to the Terry Mfg. plan after Feb. 28, 2001, despite the continued withholding of employee payroll amounts from over 200 employees and statements in Terry Mfg.’s 2001 and 2002 annual financial statements that ‘Terry Manufacturing has no unfounded pension costs.’”
Because banks secured their loans with first liens, J. Less Alexander, the bankruptcy trustee, has awarded more than $5 million to financial institutions. Alexander’s appointment as trustee was shrouded in controversy.
U.S. Bankruptcy Judge Dwight H. Williams Jr. appointed Alexander trustee, even though he had a potential conflict of interest. Initially, two of the banks with claims against Terry Manufacturing hired AEA Group to track Terry’s dealings. Alexander is the managing principal of AEA Group. Still, the judge appointed Alexander, saying his accumulated knowledge of the case would be an asset in untangling Terry’s financial records.
That’s not the only twist in the case.
The Cintas Corp., the largest uniform supplier in the U.S., was unable to obtain a contract to supply uniforms to McDonalds. So it formed a new joint-venture, Terry Uniforms, and went after the McDonald’s business in Canada. A lawsuit alleges that Cintas Corp. collaborated with Terry officials to drain millions to the company and drive it into bankruptcy. To some, Terry seemed like nothing but a front company for Cintas. To others, Terry Uniforms was treated as a division of Cintas.
However, Cintas dismisses both depictions as inaccurate.
Not all of Terry’s acquaintances fell for his schemes.
In a Jan. 27, 2006 deposition, Roy Terry said his company has shared a skybox at the Georgia Dome with Tommy Dortch, a prominent Atlanta businessman. Yet, Dortch never loaned Terry money or urge others to assist him.
A lawyer asked Terry: Why didn’t Mr. Dortch invest in either Series A or Series B of the Preferred Stock Offering? Terry: “I don’t know.”
U.S. Attorney Canary wants the public to know that fraud will not be tolerated.
“Corporate officials need to know that if they lie to investors, they will face prosecution and the stiff penalties of federal law,” she said.
“Corporate fraud threatens the very integrity of banking and investment transactions, and shifts the financial burden of corporate misconduct to the general public...The United States Attorney’s Office, the Federal Bureau of Investigation, and the Department of Labor will investigate and prosecute those who profit through corporate fraud and wrongdoing.”
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