A Westbury home repair company that offered geothermal heating and cooling equipment has lost its licenses to operate in Nassau and Suffolk counties and has filed for bankruptcy court protection amid dozens of consumer complaints of shoddy or incomplete work.
Homeowners who complained to consumer affairs officials in Nassau and Suffolk and to Newsday accuse the company, Sherman Industry Inc., of not completing jobs and doing poor work. Some homeowners also question the whereabouts of hundreds of thousands of dollars they say should have been held in escrow accounts to fund their projects.
The company did not respond to repeated requests for comment.
Complaints pile up
Nassau County spokeswoman Katie Grilli-Robles said the county revoked Sherman's home repair license on June 26 because the company failed to appear for a hearing on 10 consumer complaints against it. The county now has 30 complaints against Sherman. A spokesman for District Attorney Kathleen Rice said her office is investigating the matter.
A spokeswoman for Suffolk County, Vanessa Baird-Streeter, said its consumer affairs office received 16 complaints that went unresolved or unanswered and, as a result, did not renew Sherman's license when it expired May 1.
Sherman filed for protection from creditors June 25 under Chapter 11 of the U.S. bankruptcy code, which allows financially troubled companies to restructure and continue operating.
Sherman is not operating now but said in court papers, "The debtor intends to use the opportunities offered by a Chapter 11 filing to stabilize its finances and meet its contracts with all of its customers."
Court date postponed
A meeting of creditors Friday at U.S. District Court in Central Islip drew an overflow crowd of homeowners, some of their attorneys and Sherman employees, but was adjourned until Aug. 8 because Thomas Sherman Sr., listed in court papers as sole owner of Sherman, did not appear.
Sherman stayed away on advice of counsel, according to a company lawyer present. The lawyer declined to comment.
An attorney listed in the Chapter 11 papers as representing the company did not return repeated telephone calls. There was no response to a message left on the company's telephone answering machine.
More than 100 creditors
A form filed in connection with the bankruptcy filing says Sherman has between 100 and 199 creditors, somewhere between $500,000 and $1 million in assets including vehicles and tools, and between $1 million and $10 million in estimated liabilities. Attached to the papers is a list of 156 creditors, many of whom appear to be vendors.
One creditor listed is school principal Alex Megias, who, with his wife, Jeanine, contracted in August for a $258,000 renovation of their home in Merrick that was to have included a central geothermal heating and cooling system, which extracts heat from deep underground in winter and dumps heat underground in summer.
In April, the couple and their three young children moved out -- first to live with a relative, then into a studio apartment, and the Sherman company began work. In late April, the Megiases claim, work was halted for weeks, then resumed, then was halted again in early June. Since then, they say, nothing has been done, leaving the house gutted and unlivable. They say they have paid Sherman $106,000 so far, but Sherman's list of creditors puts their total claim at $150,000.
"This has been the worst nightmare of my life," said Jeanine Megias.
Another creditor listed is dermatologist Jeffrey Ellis of New Hyde Park, who hired Sherman in October to do about $200,000 worth of work, including installation of a geothermal system, on a house he had purchased in Jericho. He claims he paid more than $128,000 of that -- Sherman's creditor list says his claim is $101,300 -- but that Sherman did only $30,000 to $40,000 worth of work by May when he hired someone else to finish the job. In an email to Nassau County's consumer affairs office, copied to Newsday, he said, "This company was very difficult to work with and communication was horrible."
In its filing, Sherman said seeking Chapter 11 was "in substantial part precipitated by the overwhelming success of its product," apparently referring to the geothermal systems. It said demand surged last year: "Due to the surge in orders [Sherman] began to fall substantially behind on its ability to meet its customers' expectations."