Employees at Wismer Martin Corp. have been asked to defer salary or write checks in order to “contribute to the future success” of the struggling Spokane company.
But some employees have complained to the state’s securities administrator, saying they feel the fund-raising campaign is a coercive effort on the part of Wismer Martin management to solicit subscriptions to a proposed company stock offering that has not yet been registered.
And after an inquiry by The Spokesman-Review Thursday, company officials returned checks that had been written to the company by employees.
“The checks were returned,” Larry Small, Wismer Martin’s corporate attorney, said Friday. “They were not solicited in the first place. They were a result of employee enthusiasm, and I advised the company to return the checks.”
Earlier this month, the securities division of the state Department of Financial Institutions made inquiries into Wismer Martin’s solicitation of funds from employees.
“We sent the company a letter that said we’d had some anonymous information that they were raising money through their employees,” said Deborah Bortner, securities administrator for the division.
“We wanted to make sure they understood they were not to do that in any sort of coercive manner,” Bortner said Thursday. “We kind of left it at that, although I think we will probably be talking to them further.”
Wismer Martin officials said the employees’ allegations are not true.
“There isn’t any ongoing effort to get employees to buy stock,” Small said Thursday. “This is really a bum rap, and I think it’s very unfair of you to come out with an article about this.”
Bortner said attorneys for Wismer Martin who contacted her office in response to the letter also said the company was not raising money from employees.
Ronald Holden, Wismer Martin’s chief executive officer, said earlier this week that to his knowledge “there hasn’t been any money collected or deposited from anybody.”
All the company has done, Holden said, is respond to employees who have come forward voluntarily and asked to be included as purchasers of future stock offerings by the company.
But several Wismer Martin employees, who asked to remain anonymous for fear of reprisals by the company, have contacted The Spokesman-Review complaining of an aggressive effort on the part of Wismer Martin management to solicit money from employees.
Employees were asked, they say, to donate one month’s salary that would ultimately go to the purchase of shares in a proposed stock offering.
The company gave each employee a form through which they could defer salary.
The form was to be returned to Pat Bushnell, Wismer Martin vice president of human resources.
The form, a copy of which was acquired by The Spokesman-Review, states: “Dear Pat, In an effort to contribute to the future success of Wismer Martin, I hereby elect to:
Defer receipt of my April compensation.
Defer receipt of $__________ out of my next four paychecks, starting April 15, 1995, ending May 31, 1995.
Enclosed is a check in the amount of $__________.”
The form adds, “I am aware of our proposed stock offering and would like to preserve the ability to convert my deferred compensation into stock if the opportunity presents itself and if I so elect.”
The form concludes with a space for the employee’s signature.
And on Thursday, employee sources say, Bushnell returned the checks, asking employees to hang onto them until a later date.
Any funds that were deferred from salaries, though, are apparently still being held. Small said he doesn’t know how the funds are being held. He said he doesn’t think any escrow accounts have been set up to hold them, and he emphasized that “no funds are being held for any stock offering.”
The possibility of a stock offering was raised at Wismer Martin’s annual meeting in March, where Holden told shareholders he was preparing to register a stock offering of $2 million to infuse cash into the company.
He implied that registration of the offering was imminent, saying that “on a fast track” the income from the offering could be available in 60 to 90 days.
Only a week after the shareholders meeting, though, Wismer Martin’s longtime independent auditing firm, Coopers & Lybrand, terminated its relationship with the company.
In a filing with the federal Securities and Exchange Commission, the auditing firm indicated it wasn’t sure it could certify Wismer Martin as a going concern if it had to restate its 1994 audit for the purposes of the stock offering.
Without an auditing firm, Wismer Martin has been unable to go ahead with the stock offering. As of Thursday, nothing related to the offering had been filed with the SEC. The company announced Wednesday that it has retained BDO Seidman as its new auditing firm, and said Seidman will assist the company in the offering.
According to both state securities and SEC officials, the solicitation of funds for stock offerings that haven’t been registered and approved by one of those agencies is prohibited, except in cases involving very specific exemptions.
Small said he is aware of the form sent to employees, and said he doesn’t feel that form violates either state or federal regulations.
“The form did not say ‘issue stock to me tomorrow,”’ Small said. “It was responsive to some cash flow concerns that the company had at that time. But things have evolved very fast in this company and I don’t believe there’s any current use of that form.”
Bortner says she has not seen the form, and said her agency would have to examine it and “the circumstances surrounding it” to evaluate whether it represents any violations.
Employees who contacted the newspaper, though, say the effort to raise money has been vigorous. They say management was divided into team leaders and given quotas to fill. Frequent E Mail messages informed employees of the percentage of employees who had signed up, they say, and urged 100 percent participation.
Because the company has been in trouble, the employees say they fear that if layoffs occur, the first to go will be those who didn’t contribute to the program.
Some employees, though, don’t feel that the program is coercive.
Vorris Dee Justesen, Wismer Martin’s director of health care information networks, brought a letter to The Spokesman Review Thursday which indicated he deferred some of his salary to the company. He indicated his participation was voluntary, and “no one got upset” if you didn’t participate.
Holden says he is not aware of the events some employees regard as coercive. He said he has chosen to defer some of his salary, and said others may have done so as well.
Holden told shareholders in March that the Scottish investment firm of Ivory & Sime had agreed to participate in the company’s proposed stock offering.
Raymond Abbott, senior investment manager for Ivory & Sime said earlier this month from his Edinborough, Scotland, office that his company “is currently looking at the offering.”
“Until due diligence and a formal presentation to our board,” Abbott said, “we will not be committed to it, but we are interested in doing something.”
He said his company would not subscribe to the entire offering.
“Others will have to step up as well,” he said.