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Guests locked out of Residence Inn on North Point Blvd. Hotel closes a week after initial closure scare was reportedly avoided.

The Residence Inn by Marriott on North Point Boulevard shut down Thursday morning, less than a week after guests and employees faced a closure scare that ended with the apparent intervention of a financial “savior.”

Guests were told Tuesday that they had to be out their rooms and the hotel by 11 a.m. Thursday, but as the hour approached, a reporter found the front door to the hotel office locked and no one working inside.

Some guests found their key cards no longer worked. They shivered in the parking lot as they waited for a locksmith to bring in tools and let them into their rooms to retrieve their belongings.

Others found their cards worked and were able to retrieve their belongings. Carole Sherr, here from California for her brother’s brain surgery at Wake Forest Baptist Medical Center, said she spent hours on the phone trying to get the Marriott chain to help.

Sherr said employees were in tears Wednesday and the chain wanted her to ask them to find her a new room. Sherr wouldn’t do it.

“I told them I wasn’t going into the office when those people have just lost their jobs,” she said, adding that Marriott officials told her they were under no legal obligation to help. Marriott officials eventually did make arrangements for Sherr to stay at the other Residence Inn in Winston-Salem, which is under different management.

It wasn’t clear Thursday morning why some guests had been locked out or why last week’s closure reprieve had disappeared. It was clear that the property is in a foreclosure that got underway on Jan. 13, with the filing of a notice with the Forsyth County Clerk of Court. That hearing will take place on Feb. 11.

The Residence Inn, an extended-stay hotel, is a subsidiary of the Marriott chain. The franchise for the hotel on North Point and another in South Bend, Ind., has been held by Portfolio Hotels & Resorts, based in Illinois. The hotel properties are owned by companies managed by Portfolio’s chief financial officer, Graham Hershman.

Both hotels were collateral for loans totaling $10.5 million that were made in 2018. The lender, New York-based Ladder Capital Finance LLC, said in the Jan. 13 court filing that the hotel owners were in default.

All people staying at the hotel in Winston-Salem knew was that they had to spend Wednesday scrambling for a new place to stay.

Sherr and her brother, Robert Henderson of Asheville, checked in Sunday night to be in town for their brother’s surgery.

That surgery was in progress Thursday morning while Henderson and Sherr were trying to get moved out of the Residence Inn and into new quarters.

“Marriott is on the name,” Henderson said. “We all trust Marriott, but how can Marriott not be informed? It seems like the corporation would have something in place. They could float this place until everyone could get out. We got notified two days ago about noon.”

Wednesday morning, at breakfast, Henderson saw lots of sad looks.

“There were a lot of folks in the lobby,” he said. “They were close to tears. The manager here was a total sweetheart. Everyone here was nice. I feel bad for them because they lost their jobs.”

Despite the closure that was less than 24 hours away, Henderson said, the hotel had a social event with grilled chicken Wednesday night for any guests still around.

A request for comment from Marriott’s corporate headquarters received no response Thursday.

WNDU-TV in South Bend reported that Portfolio’s Residence Inn in that city closed Tuesday, and that its employees had not been paid. It could not be determined Thursday whether local employees were similarly affected.

A man who came onto the Winston-Salem property early Thursday afternoon said he was a court-appointed receiver but gave no other information. A woman seen going into the office shortly afterward would not give her name but said she was with a new management company being brought in.

The hotel remained closed Thursday with no indication of a possible reopening.

Matt Elam, a Virginia resident, has been staying weekdays at the Residence Inn going on two years, as his company did work for Reynolds American. Or, at least he did until Thursday morning. He was packing his things into his car to take them to the new hotel room he had lined up. He said his new room didn’t have a kitchen, like the one at the Residence Inn did.

“I like the ability to cook,” Elam said. “It is the closest thing you can get to an apartment when you are traveling.”

Brett Hall of the Collins Aerospace office in Winston-Salem, came to the hotel Thursday morning to help some employees from India who are in town temporarily get into their locked rooms.

“We bring people in all the time,” Hall said. “People stay a few weeks at a time to help us on projects.”

The workers had to wait for a locksmith to bring in equipment to open their room without causing damage. Police officers from the Winston-Salem Police Department stood by as they waited.

The Residence Inn here has 88 rooms. Last week, an employee estimated that half the rooms were occupied by long-term guests.

The hotel’s future seemed secure last week. Guests were told Jan. 17 that the hotel would shut down on Jan. 18. Then, hotel management got word that someone had stepped in to save the hotel.

According to the notice of foreclosure, the owner of the hotel went into default because of “unpermitted transfers and/or a change in control” as defined in the loan agreement.

As well, the lender maintains that South Bend Hotel Owner LLC, a company managed by Hershman and the owner of the South Bend Residence Inn, is in default because it failed to give the lender enough money to pay real-estate taxes on time.

The court filing says that the hotel here will be sold at the Fosyth County Courthouse at some future date if the indebtedness is not satisfied in the meantime.

Last Business 40 bridges to open soon

The final two closed motor-vehicle bridges over Business 40 should be open in early February, highway officials said this week, along with the bridge that will carry the new downtown freeway over Brookstown Avenue.

No one is predicting when Business 40 downtown might reopen to traffic, but officials say work on the project remains ahead of schedule, despite the recent spate of rainy weather.

“Trying to predict something now would be throwing a dart at a dartboard,” said Larry Shaver, resident engineer for the N.C. Department of Transportation here. “The worst thing that could happen would be a huge snow event.”

The bridges at Cherry and Marshall streets are the only two crossings for motorists that remain unfinished, but both are getting very close: Both bridges have their shiny new green guardrails in place and a fresh concrete surface, although work is still needed to pave the approaches from the existing pavement.

“There’s not much left to do other than the paving and the striping,” Shaver said. “It’s got to be 40 degrees to pave and 50 degrees to put the markings down.”

Look down below the bridges, and you might notice something else:

All of Business 40 downtown has at least its first layer of asphalt.

“Getting that dirt covered up is a huge benefit for paving,” Shaver said. “If you get caught in wintertime with dirt, it can take a long time to dry out.”

Still, precipitation of any sort slows things down.

“One of the things going on is paving, and you can’t pave in the rain,” Shaver said.

The Cherry Street bridge closed last May 5, while the Marshall Street one closed on May 28.

Both bridges are getting finished about the same time, Shaver said, adding that the general contractor and not a subcontractor took on the replacement of those two bridges.

Workers are also busy constructing ramps near the two bridges as well: When the work is done, Cherry and Marshall streets will be the main interchange between downtown streets and Business 40.

Westbound, drivers going downtown will exit onto Cherry Street, where they can continue north. Eastbound, drivers will exit onto High Street and continue east to Cherry Street if they want to go north. Eastbound drivers heading south can take either Marshall or Cherry streets.

Meanwhile, drivers wanting to go west on Business 40 from downtown can take the ramp that will lead from Marshall Street to the freeway. Downtown drivers heading east on Business 40 can use Marshall and High streets to get to Cherry Street, where they can drive north a short distance to reach to the ramp leading to eastbound freeway lanes.

Although some of the ramp connections at Cherry-Marshall work the same way as they did pre-construction, the ramps themselves are more streamlined and make it easier for drivers to merge onto the freeway.

The place where Brookstown Avenue passes under Business 40 is also almost ready to reopen. Work there was slowed by an unexpected sewer-line problem, but that’s been fixed and the road should reopen soon as well.

The reopening of Business 40 to traffic is still officially scheduled for sometime in April, when the road will have been closed for 17 months. But incentives in place give the contractors extra money for delivering the road early, and when announced, had officials suggesting the highway could reopen in 14 to 15 months.

Contractors have already missed their maximum payday, which would have come if they had put cars back on the road before the end of 2019.

Winston-Salem Mayor Allen Joines famously declared last year that it was possible for Business 40 to reopen as “good Christmas present” — a statement the N.C. Department of Transportation was quick to walk back.

Joines said recently that he was joking with a state highway official that he would call a news conference, after he found out about the timetable for reopening the remaining bridges.

“I will be delighted to get Cherry-Marshall and Brookstown downtown opened up and provide better access to those businesses,” Joines said, noting that the impact has been hardest on the businesses south of the work zone.

Highway workers have been doing more than building bridges and putting down asphalt: They’ve installed lighting and have been putting up new highway signs that feature the redesignated exit numbers for the freeway.

Workers are putting in the concrete barrier that will divide the east- and westbound lanes. There is still brickwork to do, and other tasks to accomplish before the cars can roll, Shaver said.

Even after Business 40 reopens — under the new name of Salem Parkway — the work won’t really be done until later in 2020. That’s because workers will be building noise walls, constructing the multi-use path beside the freeway, and putting the final touches on the pedestrian bridges.

The prime focus has been getting the cars going again, Shaver said.

Joines and Shaver both said that a discussion has come up about when to celebrate:

“Do you do it when they reopen the road, or wait until the whole project is finished?” Joines said.

Former Wells Fargo CEO fined $17.5M

Federal banking regulators ordered Thursday a $17.5 million fine against former Wells Fargo chairman and chief executive John Stumpf for his role in the 2016 fraudulent customer accounts scandal.

Stumpf agreed to a prohibition order, which includes a lifetime ban from the banking industry.

The largest fine of $25 million was assessed to Carrie Tolstedt, the head of Wells Fargo’s community bank, who was retroactively fired with cause shortly after the scandal surfaced in September 2016.

Altogether, the Office of the Comptroller of the Currency issued fines totaling $58.5 million to eight former Wells Fargo executives.

Stumpf and two other executives agreed to settlements with the OCC, while the other five, including Tolstedt, received notices of charges. It is the first time federal regulators have issued individuals fines related to the scandal.

The bank said the scandal has affected at least 3.53 million checking and credit-card accounts.

“The root cause of the sales practices misconduct problem was the Community Bank’s business model, which imposed intentionally unreasonable sales goals and unreasonable pressure on its employees to meet those goals and fostered an atmosphere that perpetuated improper and illegal conduct,” the OCC said in its complaint.

“The Community Bank’s business model was highly profitable because it resulted in a greater number of legitimate sales than would have been possible without the unreasonable sales goals and sales pressure.

“Community Bank management intimidated and badgered employees to meet unattainable sales goals year after year, including by monitoring employees daily or hourly and reporting their sales performance to their managers, subjecting employees to hazing-like abuse, and threatening to terminate and actually terminating employees for failure to meet the goals."

"The Community Bank’s business model and the senior leaders of the bank presented a stark dilemma to employees every day for 14 years: they could engage in sales practices misconduct — much of which was illegal — to meet their goals, or they could struggle to meet their goals and face adverse consequences, including losing their jobs."

The bank fired as many as 5,300 of those lower-level employees over five years.

Bank spokeswoman Mary Eshet told The Charlotte Observer in September 2016 that the rank-and-file workers were terminated between January 2011 and March 2016, with the number of firings declining since 2013. The bank declined to provide specific details on where employees were fired.

Sen. Elizabeth Warren, D-Mass., and a 2020 Democratic presidential candidate, has been one of Wells Fargo's leading political critics since the scandal surfaced.

On Thursday, Warren issued a statement in which she said some of the eight Wells Fargo executives fined by the OCC should face criminal charges as well.

"Giant banks like Wells Fargo will only clean up their act when their executives know they'll face handcuffs when they preside over massive fraud," Warren said.

"(Friday) morning, former Wells Fargo CEO John Stumpf will wake up to his cushy retirement while the thousands of low-level branch employees who took the fall for him — and the hundreds of thousands of consumers who were cheated on his watch — continue to deal with the repercussions of his scams.”

A Wells Fargo workers’ advocacy group, Committee for Better Banks, said the fines are “a step toward accountability at the company.”

“But these charges on their own will not bring justice for employees who were unfairly scapegoated,” committee member Patrick Creaven said. He worked for the bank for five years in Concord, Calif.

“Frontline bank workers were the first to sound the alarm on the company’s widespread fraud, yet Wells Fargo continues to lay off thousands of these employees as part of a broader strategy to cut costs.”

Stumpf’s role

Stumpf was allowed to retire by the bank in October 2016, shortly after an appearance before a U.S. Senate financial services committee in which he was lambasted for his lax oversight over the scandal. He served nearly seven years as chairman and nine years as chief executive.

The OCC said that in filing the notice of charges and entering into settlements, it considered “the culpability of these individuals and their financial resources, including compensation previously clawed back by the bank.”

Altogether, the bank clawed back $69 million in compensation from Stumpf and $67 million from Tolstedt.

“The actions announced by the OCC ... reinforce the agency’s expectations that management and employees of national banks and federal savings associations provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations,” Joseph Otting, head of the OCC, said in a statement.

The scandal erupted publicly in September 2016 when Wells Fargo agreed to pay a combined $185 million in fines to resolve regulatory complaints.

Overall, Wells Fargo has agreed to pay more than $4 billion to date to settle various regulatory and legal disputes since the fall of 2016.

The OCC accused Stumpf of providing lax oversight of Tolstedt and the Community Bank division, saying he failed to challenge the division’s sales practices and “neglected to adequately inform himself about the reasonableness of the sales goals and the pressure in the Community Bank.”

“(Stumpf) failed to respond to numerous warning signs, including many team member complaints submitted directly to his office regarding sales pressure, fear of termination for not meeting unreasonable sales goals, and illegal and unethical sales activity across the Community Bank.”

In testimony to the OCC, Stump "admitted, based on the information presented to him during his testimony, that the Community Bank had a systemic sales practices misconduct problem from the early 2000s until sales goals were eliminated in October 2016."

"He further testified that respondents Tolstedt and Russ Anderson bore 'significant responsibility' for the existence and continuation of this problem."

Claudia Russ Anderson is the former community bank group risk officer who was assessed a $5 million fine by the OCC.

Meanwhile, Tolstedt and Russ Anderson "asserted their Fifth Amendment right against self-incrimination and accordingly refused to answer all substantive questions about sales practices misconduct."

Placing blame

In April 2017, Wells Fargo’s board of directors officially placed the bulk of the blame for its customer fraud account scandal on Tolstedt and Stumpf.

It determined a decentralized “run it like you own it” attitude toward its community banking unit was the root cause behind a fraudulent customer account scandal that significantly stained the bank’s once-sterling reputation.

The board said “the investigation identifies cultural, structural and leadership issues as root causes of improper sales practices.”

Tolstedt and other community bank leaders “were unwilling to change the sales model or recognize it as the root cause of the problem.”

The OCC said the eight executives “failed to adequately perform their duties and responsibilities, which contributed to the bank’s systemic problems with sales practices misconduct from 2002 until October 2016.

“The misconduct of these individuals allowed the practices to continue for years, affecting millions of bank customers and thousands of lower-level bank employees.”

The OCC is requesting permission to apply a prohibition order and industry ban to Anderson and Tolstedt.

“Throughout her career, Ms. Tolstedt acted with the utmost integrity and concern for doing the right thing,” said Enu Mainigi, a lawyer who represents Tolstedt told The Associated Press. “A full and fair examination of the facts will vindicate Carrie.”

The respondents may request a hearing challenging the allegations and relief sought by the OCC.

Wells Fargo response

Wells Fargo CEO Charles Scharf said in a statement sent to employees Thursday that the “OCC’s actions are consistent with my belief that we should hold ourselves and individuals accountable.”

Scharf took over as chief executive Oct. 21, coming over from Bank of New York Mellon as the fourth executive to serve in that Wells Fargo role since September 2016.

“They also are consistent with our belief that significant parts of the operating model of our community bank were flawed,” Scharf said. “At the time of the sales practices issues, the company did not have in place the appropriate people, structure, processes, controls or culture to prevent the inappropriate conduct.

“This was inexcusable. Our customers and you all deserved more from the leadership of this company.”

The biggest shadow hanging over Wells Fargo is the Fed’s order, issued Feb. 3, 2018, that prohibits the bank from increasing its total assets beyond the $1.93 trillion it had on Dec. 31, 2017.

Among legal and regulatory entities investigating the bank’s overall sales practices are U.S. Justice Department, Securities and Exchange Commission, the Consumer Bureau of Financial Protection, U.S. Labor Department, various state attorneys general and several congressional committees.

Scharf said the bank is “reviewing today’s filings and will determine what, if any, further action by the company is appropriate with respect to any of the named individuals.”

“Wells Fargo will not make any remaining compensation payments that may be owed to these individuals while we review the filings.”

Tony Plath, a retired finance professor at UNC Charlotte, said the OCC's fines represent "a slap on the wrist" given the fact the executives "knowingly harmed their customers, to whom they held a fiduciary responsibility, in a variety of creative ways, for their own personal and professional gain."

Plath said the executives' actions created "cultural damage they caused to a fine financial institution, turning a great bi-coastal bank franchise into a dumpster fire of repeated strategic customer abuse, and the billions in lost shareholder value, and the reputation damage they caused the entire banking industry."

"Tolstedt and Stumpf are emblematic of everything that’s wrong with crony capitalism, and history needs to judge, and treat, them accordingly if our system of free markets and free enterprise is to survive into the next generation."

Elkin pastor faces 116 felony-sex charges involving three victims, authorities say

A Wilkes County man, who is a pastor of an Elkin church, has been arrested and charged with more 100 sex offenses that span 15 years, authorities said.

Rodney Dean Luffman, 58, of Pleasant Ridge Road in State Road faces 116 felony-sex charges — 84 counts of taking indecent liberties with a child, 18 counts of statutory rape against a child between the ages of 13 and 15, 13 counts of first-degree sexual offense and one count of sexual offense, The Elkin Tribune reported.

Wilkes County sheriff’s deputies arrested Luffman on Jan. 16, the newspaper reported. Luffman was taken to the Wilkes County Jail with his bond set at $1 million.

Luffman is scheduled to appear in Wilkes District Court on Wednesday, court records show.

The charges against Luffman involve two male victims and one female victim, the sheriff’s office told the Wilkes Journal-Patriot. One of the victims was as young as age 4 and another as old as 16 when the offenses happened, the Journal-Patriot reported.

The alleged offenses happened between 2000 and 2015.

Luffman is depicted as “Pastor Rodney” for the Open Arms Outreach Ministries, a non-denominational church on N.C. 268 in Elkin, according to church’s website. The church opened in January 2008.

As of Thursday, a Facebook page for “Evangelist Rodney Luffman” had 2,270 followers.

Luffman writes on that page, “My one and only goal in life is sharing the Gospel of Jesus Christ. Biblical Fact, no sugar coating, nothing held back. Believe it all or none at all.”