Taxes, tragedy and litigation, the founder of Griffin Security Services Inc. says, have left him with only $158,000 in assets and nearly $18.9 million in liabilities.
Michael E. Smith of Somers founded Griffin Security in 2000 and built it into a $10 million enterprise, according to a Chapter 11 reorganization case filed April 9 in U.S. Bankruptcy Court, White Plains.
In 2006, the state Department of Taxation and Finance audited the Manhattan company’s contract with the Port Authority of New York and New Jersey. Griffin was assessed $1 million for unpaid sales taxes.
In 2015, Smith”™s 18-month-old son died of viral meningitis.
“The loss of my child left me devastated, vacant and unable to function,” Smith states in a declaration explaining why he is seeking bankruptcy protection. “My time and focus shifted away from Griffin Security and the business fell apart, with revenues dropping to $6 million.”
Also in 2015, employees sued Griffin Security over unpaid wages. The dispute was eventually settled, requiring the company to pay $150,000.
From 2015 to 2017, Griffin Security fell behind on federal payroll taxes.
In 2018, employees sued Griffin Security and Con Edison, Smith”™s biggest client, over alleged unpaid wages, in a case that is pending. Then Con Edison did not renew the contract.
“Losing the Con Edison contract equated to a nearly 85% loss of revenue,” Smith said, “so I made the decision to wind down and close Griffin Security.”
At that point, according to his declaration, the company”™s tax liabilities became his personal responsibility.
Now he owes the IRS $2.5 million and the state more than $16 million, including interest and penalties. He still owes $150,000 to former employees, but he lists that debt and the tax debts as disputed.
Smith rents a house in Somers. A 1998 40-foot Sea Ray Sundancer and a 2015 Mercedes-Benz S-550, collectively valued at $150,764, account for 96% of his assets. He owes about $104,000 on the boat and car.
Smith began working for another security company in Westchester in August 2019, according to his LinkedIn profile. A bankruptcy schedule shows him as senior vice president earning $16,482 a month.
Including his spouse”™s wages, the family has monthly net income after taxes of $15,450 and expenses of $14,815.
“I have made efforts to settle and pay my personal obligations on the business debts,” Smith states in the declaration, but “I am unable to pay back these debts while maintaining my normal household expenses. I filed this Chapter 11 case in order to file a repayment plan to pay back my creditors.”
Smith is represented by Eastchester bankruptcy attorney Julie Curley.
