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I-Team: Local coupon company offers discounted paychecks

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LOVELAND, Ohio - Top salespeople at localgreatcoupons.com make $70,000 - $90,000 a year, according to a recent job posting on the company's website. The base salary was $40,000 plus commission.

So why did several workers who answered that ad end up getting paid minimum wage?

"They hoped I was going to work for them for free," said Kelcie Neville, a working mom who left a job of two years to take a position at Local Great Coupons last May.

Neville said she started worrying on her second day as a salesperson at the Loveland-based coupon website when her coworkers started disappearing.

"That's really scary, when you see someone get fired the second day that they're there," Neville said.

The young mother planned on a long career with the company, putting down a large deposit for her daughter at the day care across the street.

The company and its affiliates have gone by several names in the last three years, including Local Great Coupons, Local Great Deals, and Deals That Give Back. Business filings and domain registrations show other related company names such as Synermatrix, Bailey Media Group and Harvest Info.

Now listed as LGcoupons.com, the website charges small businesses to post their free coupons online. Salespeople "cold call" dozens of businesses a day in an effort to sell them advertising packages.

The entire 80-city operation is now run from offices at 424 Wards Corner in Loveland.

Neville said the work environment gave her second thoughts.

"Very intimidating, and I think the point of those morning meetings was to make you feel like a pathetic human being," she said.

She quit after eight days, and expected a paycheck for the hours she worked. Month after month, there was no check in her mailbox.

"I was crazy about it," Neville said. "I probably called three or four times a day, saying 'hey who can I talk to about my paycheck?'"

POLICE REPORTS

The I-Team obtained government documents showing police officers from Loveland and Miami Township were called 14 times to the company's offices because of issues with former employees. On two occasions, Scott Bailey, the CEO and founder of Local Great Coupons, tried to get former employees arrested.

Bailey accused one former employee of extortion because the worker asked for $3,500 he said he was owed. Bailey told police the man would be getting less than $1,000, so the employee allegedly threatened to reveal "the company's wrongdoings" if he didn't get his full paycheck.

The investigating officer tried to set up a "controlled call" to record the former employee making threats, but the police report shows Bailey canceled an appointment with the investigator and then didn't return four phone calls the officer placed to reschedule. The case was closed because the alleged victim, Scott Bailey, wouldn't cooperate with the investigation.

Former employees called police so many times for help getting their paychecks, Bob Glass, the general manager of Local Great Coupons, asked officers if they could just call him in the future instead of showing up in person.

One argument in the hallway over a missing paycheck grew so loud, a third party called police. The responding officer wrote in his report, "apparently this is a common occurrence with the company not paying employees..."

In other cases, former employees told police that Bailey's company, "said they were mailing the check, which never arrives,"  "voicemail messages are just ignored," and the company told police the payroll clerk was on vacation.

We asked Scott Bailey and Bob Glass for interviews. Sources say Glass resigned soon after our email, and Bailey declined our request for an interview.

When we caught up with the CEO in the parking lot of the company's headquarters, he had no comment and promised a statement. You can read the whole statement at http://goo.gl/sSzIE.

In that statement Bailey said, "due to privacy considerations, the company will not address any issues with regard to specific individuals. All of our compensation policies are set forth very clearly in the employment agreement that is provided to all incoming employees prior to their employment."



THE CONTRACT

The I-Team obtained a copy of a recent employment contract from another former employee, one of 11 we talked with during our investigation. You can read that contract at http://goo.gl/ERUWo.

Under "compensation," the contract calls for a base salary of $40,000 per year. But on the second page, it describes a "probationary period" of 150 days. "During the probationary period, if for any reason employment of employee is discontinued, final pay will be adjusted to current minimum wage for the state of Ohio," the contract states.

From $40,000 a year down to minimum wage -- that's a nearly 60 percent reduction in pay if an employee leaves for any reason in the first five months, or if the employee fails to give 14 days notice.

Kelcie Neville said she finally got her check three months after she left Local Great Coupons.

"It wasn't even minimum wage what they paid me," she said.

Neville and other former employees who received final paychecks said they were paid for fewer hours than they actually worked. They said employees were not paid for attending mandatory morning meetings before 8 a.m., or for working late and missing lunch.

Sources say an investigator with the U.S. Department of Labor has visited the office to interview employees about unpaid overtime hours.

We showed the contract to employment lawyer Carrie Barron at the firm of Freking & Betz. Barron and her colleagues said the contract is one-sided but not illegal, if employees are paid at least minimum wage.

However, Barron does question whether the delayed payment violates Ohio law, which requires final payment to an employee within 30 days of the last scheduled payday.

Mike Dennis has been waiting six months for his paycheck.

Dennis said Local Great Coupons, "cheated my family, cheated me out of being able to support my family."

Like Kelcie Neville, Dennis already had a job when he was lured by the prospect of earning more money at Local Great Coupons.

He said he began to worry when coworkers from his training group didn't come back from lunch on the third day.

"They just kind of disappeared. You didn't hear what happened," Dennis said.

After working as a salesperson at the company for two and a half weeks, Dennis said he got a voicemail from general manager Bob Glass telling him not to come into work the next day.

A month later, he showed up in person at the company's Wards Corner headquarters and demanded to speak with the general manager. Bob Glass came out, and the discussion between them is the one that caused a third party to call Miami Township police.

"'Are you saying I have no class?'" Dennis said quoting the general manager. "Yeah, that's what I'm saying. Take it for what you want to, but you're the one who has to look yourself in the mirror every day," Dennis said he told Glass.

Mike Dennis left that September day without his paycheck. He said Glass promised it would be mailed by Oct. 15, and showed him a copy of the contract he signed but had never seen again until that day.

Dennis said he called several times a week through December, but no one would return his calls, and the check never arrived.

Within 90 minutes of the I-Team sending an email about his case to the company, Mike Dennis said he got a call from the sales manager informing him his check must have been lost in the mail. Dennis said the company promised on Feb. 5 to send him a new paycheck.

Dennis finally received his paycheck Monday, Feb. 11, hours after this I-Team report was published on WCPO.com.

CONSTANTLY HIRING?

Kelcie Neville said, "a week from when I started, they brought in a new training group."

Several former employees described a near-constant flow of new sales trainees starting on most Mondays. A former executive told the I-Team that out of a class of 10 new hires, on average two or fewer would still be employed at the company within a month.

The company's "careers" page was active on its website with the same posting that lured Mike Dennis and Kelcie Neville until the I-Team started asking the company questions. Bailey said his company has "discontinued all active recruiting efforts, and have had to eliminate most key management and staff positions as a result of the negative market conditions."

The "careers" page has been replaced with a "testimonials" page featuring positive reviews attributed to consumers and businesses.

Similarly, former employees have posted multiple negative reviews of their experience at Local Great Coupons on the career website glassdoor.com, but some positive reviews have been posted, removed, and re-posted repeatedly without explanation.

CUSTOMER COMPLAINTS

The I-Team talked with small businesses that had trouble getting refunds. The Ohio Attorney General's office reports four complaints against the company under the name Local Great Deals.

One of those complaints was filed by Lea Richards, owner of Dayton-based online sauce and ribs retailer Pig of The Month BBQ.

She said a salesperson from Local Great Coupons sold her a package that would display Pig of The Month coupons in several cities.

"They offered a guarantee that if after three days it wasn't producing sales, that they would just refund my money," Richards said.

Richards said she watched her website's statistics over three days, but she saw only one click, received no calls from customers, and no one tried to redeem her coupon.

She asked for a refund from Local Great Coupons.

Richards said the customer service representative tried to convince her that her website analytics were wrong.

"'It shows that you've had 17 hits in the last hour, five people have gotten your phone number, you should have gotten the calls, is your phone working?'" she quoted the salesperson, who no longer works at the company.

"I mean outrageous stuff, and I'd be like, 'none of this is true. This is all lies.' And that's when they would get all flustered, hang up the phone, and then the entire company would stop answering any of the phones," Richards added.

Richards said she finally got a response from Bob Glass, the general manager at the time.

"He informed me that the company does not believe in giving any sort of refunds for any reason," Richards said.

Not satisfied with that answer, Richards created a blog to share her story, in hopes of getting a refund after all.

Instead she got a cease and desist letter from lawyers representing Local Great Coupons. She posted that too.

AFFILIATED WITH TV WEBSITES

Richards said she believed the company was reputable because the salesperson told her, "we're affiliated with 'such and such news station' in Cincinnati."

Until recently, there was a "Local Coupons" link at the top of WCPO.com, which was a paid advertisement for Local Great Coupons. Richards said the link, "made it seem like it was a little more high-brow and legitimate than it was."

Former salesperson Kelcie Neville said customers, "would ask us, 'well how do I know you're legitimate?' We would always refer to the WCPO website."

In its promotional materials, Local Great Coupons executives said they, "partner with the most recognized media companies worldwide."

Until recently, the company advertised on TV, radio and newspaper websites in most of the 80 cities where it does business. One of the complaints to the Ohio Attorney General is from a Louisiana customer who believed she was advertising with the local Fox television station in New Orleans, instead of Local Great Coupons.

In his statement to the I-Team, CEO Scott Bailey said, "you raised some specific allegations that our sales employees are instructed to 'blur the lines' and make it appear as though they are calling businesses on behalf of media companies. This is false. We have very strict instructions that employees are not to make any such representations. Indeed, we have previously taken action against employees who violated these rules."

So it is not company policy, according to Bailey, but employees have done it, and they have been punished for misrepresenting the website's relationship with media companies.

9 On Your Side took the link off WCPO.com because of late payment from Local Great Coupons, and after we received multiple complaints from workers and small businesses.

THE SALES PITCH

Neville said she quit in part because of the sales techniques and scripts she was asked to use. The I-Team obtained some sales-call scripts which can be seen at http://goo.gl/mvShs.

"I would pitch, say, you know, a '29-99' deal, and they'd be like, 'oh that sounds great. $29.99?' And we weren't ever allowed to say two-thousand-nine-hundred-and-ninety-five-dollars. We would say, 'yes, 29-95!' And they're like, 'that's awesome!'," Neville said.

Richards said her salesperson used a similar pitch. "He said it '24-99' but I didn't really think it was going to be $2,500," Richards said.

Another former employee said that he was nearly fired for trying a similar tactic, and that such techniques were not tolerated.

The I-Team asked Bailey about these allegations, and he responded with this:

"You seem to have a very distorted view of how our company transacts business. First, we follow many checks and balances to avoid any misunderstandings when selling to a business over the phone. During the initial sale, the price is covered in detail with the business. There is also a confirmation statement which is read in detail, confirming that the business is giving specific authorization for the payment over the phone. The business then receives a receipt which is immediately emailed to them. Additionally, there is a follow-up call by our company welcoming them to the program. That call is actually scheduled for a specific day and time during the initial transaction. All businesses have the option to continue with the program at the same rate, or they can opt out of the program at any time."

Bailey added, "while we decline to comment on individual employee or customer complaints, we encourage them to contact us directly to resolve any concerns that they may have."

No one answers the company's phone. Callers are directed to leave voicemail messages, and according to police reports and complaints from customers and former employees, those calls are not returned.

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