CEDAR RAPIDS — The U.S. Department of Labor has resolved wage-related investigations into a Cedar Rapids hotel, but the hotel’s owner now faces legal action from a business partner.
Last November, employees at the Clarion Hotel and Convention Center, 525 33rd Ave. SW, complained the hotel’s owner had stopped paying them on time or in the correct amounts. Some employees said they went weeks without a paycheck right around the time they should have been celebrating Thanksgiving and Christmas.
The employees’ complaints prompted the Labor Department’s Wage and Hour Division to open an investigation into the owner, HRDMM Hospitality Services. HRDMM, run by Virginia-resident Hassan Hussain, purchased the Clarion in March 2017.
On Monday, a spokesman for the Labor Department said the agency had resolved two investigations at the hotel into violations of the federal Fair Labor Standards Act. The investigations resulted in $129,073 in recovered back wages, he said.
Investigators found HRDMM failed to comply with minimum wage, overtime and record-keeping provisions in the FLSA. One investigation found HRDMM “failed to meet its payroll obligations” for four, biweekly pay periods in late 2017 — meaning 67 employees did not receive pay during that time.
The second investigation found 37 employees were paid incorrectly for pay periods between Dec. 24, 2017, and Jan. 20, 2018.
HRDMM has paid the back wages, the division spokesman said.
Even so, HRDMM and Hussain now face a lawsuit from a business partner who says he invested $1.5 million with Hussain to acquire the hotel.
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In a lawsuit filed in Linn County District Court, business partner Ashok Kalra and his family claim they provided Hussain and two members of his family with the money. In exchange, Kalra claims the Hussains agreed to give the Kalras 100 percent ownership over the hotel until a portion of their investment was paid back.
The Kalras “learned of the mismanagement” of the hotel by the Hussains in late 2017, according to the lawsuit. While meeting in Cedar Rapids, Hassan Hussein “acknowledged that he had misappropriated approximately $500,000.00 and agreed to repay the money within 30 to 45 days,” the suit reads.
Since then, the Kalras claim Hussain has made no payments, has forged checks using Ashok Kalra’s signature, and has left the hotel, taking computers and financial records.
Hassan Hussain did not respond to emails sent Monday.
The Kalras say they have taken over management of the hotel and have asked a judge to determine their ownership rights.
NEW NAME COMING?
The six-story Clarion Hotel first opened on 33rd Avenue as a Sheraton in 1976.
In 2014, the hotel’s then-owner, Synergy Hotel Group, filed for bankruptcy and the hotel was sold during a sheriff’s auction to Citizens Bank in Tennessee in 2015. The bank sold it to HRDMM in early 2017 for about $4 million, according to assessor records.
After last year’s wage complaints, Choice Hotels, which franchises hotels under the Clarion brand, terminated the hotel from its system and said it no longer could use the name.
As of Monday, however, exterior hotel decor still read “Clarion” including a large sign on the hotel’s roof.
A sign at the hotel’s entrance did indicate the building could soon operate under the Ramada brand. Wyndham Hotel Group, which owns the Ramada name, confirmed it has an agreement with the hotel to use the name.
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