March 19, 2001

Linuxgruven leaves students and employees in limbo

Author: JT Smith

- by Tina Gasperson -
With all the recent stories about dot com companies closing down, it would be easy simply to toss the news about technical support company Linuxgruven's layoffs and financial woes in the "been there, seen that" file. But this case seems to be different.On March 8, 2001, the same day that then CEO Matthew Porter announced a brand new management team for Linuxgruven, that same CEO and his executive staff resigned their positions and announced their intentions to form a competing company. When students showed up for class at the St. Louis headquarters the next day, they found darkened rooms and empty desks. A news story in the St. Louis Business Journal confirmed the scenario: 100 employees had been asked not to return, and the students were left without teachers.

Linuxgruven described itself as a technical support and services company for Linux and Open Source. The company's strategy purportedly was to help companies migrate to Linux IT by providing engineers to install and configure networks and provide ongoing support.

Linuxgruven recruited potential network engineers by advertising in local papers around the country. A typical ad, like this one posted at the Web site, would read:

"Network Engineer: Entry level position. Responsibilities include installation, administration, and updating system security. Positions available nationwide. Qualifications: 2 yrs minimum IT experience in programming, web development, system administration, hardware or equivalent experience. Must have excellent communication skills as you will be interacting with clients. If you do have Linux experience, we will ask you to take an exam to measure your skills. If most of your experience is on other platforms, we have a variety of training and certification options available."

When job hunters called for more information, it is not clear whether or not they were told that they would have to take the Linuxgruven training courses in order to get the job. The Linuxgruven Web site says that self-study or "third-party" training is also acceptable.

Just before its sudden decline, Linuxgruven, like so many other recent casualties of the tech sector correction, seemed to be doing better than fine. A new management team had just been announced. Employees had just been handed a new and improved insurance plan. Linuxgruven's 106-strong work force was striving to complete a project that would have created a self-study, open version of the training course material that the company used to prepare potential employees for the SAIR certification exams that the company required its network engineers to pass.

But beneath the surface, rumors about Linuxgruven's integrity and stability were rampant. Employees and students alike wanted to know: Where were the customers? "We didn't have any clients," says LG former student, and now former employee, Steve Miller. How could the company stay afloat when it seemed to be simply hiring training graduates without securing more contracts with companies who wanted to migrate to Linux IT?

Yet somehow, Linuxgruven's pitch to prospective future network engineers had a come hither quality that got them to sign on the dotted line, despite the fact that its "Train for Hire" program asked students -- many of whom were unemployed and financially threadbare -- to plop down at least $2,500 and take a risk.

And it was a risk, because there was no guarantee that once the training program was completed, the students would be able to pass the examinations that would qualify them for SAIR certification -- something Linuxgruven said candidates must have in order to get the $45k dream job. One particularly juicy carrot on Linuxgruven's stick was the contract clause that stated students would receive a full refund of course fees after one year of employment.

Yet some Linuxgruven students who had little previous Linux experience were taking the certification exams over and over in desperate attempts to secure the job, and still not passing. "I experienced much better instruction at junior college level. New Horizons Computer Learning Center instructors were by far more informative. I believe the quality of teaching by no means justified the cost," says Lawrence Davis, a former student.

He's not the only student who felt this way. "There was nothing in the texts and material that was on the test," says Harry Harshaw, an enrollee in the Atlanta, Georgia, Linuxgruven training program. Harshaw has taken the tests more than once, and is currently awaiting the latest scores. But his dreams of capturing the network engineering position have turned into nightmares with the passing of Linuxgruven.

Kevin Wilson, who eventually was certified and got a job with Linuxgruven, says he struggled with the tests as well -- and that was only after lengthy uncertainty about signing on the dotted line in the first place. "I was skeptical at first. I discussed the employment agreement with an attorney, checked out the offer with friends in the IT industry, and finally forked over my $2,500." But once involved with the classes Wilson found, like the others, that the quality of the training wasn't what he thought it should be. "The instructor had only passed one test himself," says Wilson.

Harshaw says that he received a promissory note containing a guarantee that he would have a job. Yet, he says, "we started getting suspicious," because a new classroom instructor was a very recent graduate of the training course. "[She] took over the classroom right after she passed the test. As far as I know, she had no experience with Linux," says Harshaw. He and a fellow student went to management with their concerns about the possibility or lack thereof of securing the employment they said they were promised.

"I asked, what will I be doing when I graduate. He said, right now, I can't tell you about any employment contracts. So I asked for my money back." Harshaw says his concerns were passed to several people in the Linuxgruven organization. They were never satisfactorily dealt with, and he never got his money back.

There are other students in limbo, with training course money out and hopes dashed. Davis showed up for the third week of class on March 12, only to discover that it had been canceled. "Linuxgruven has $1,500 that my family sacrificed," he says.

Miller is one of the many students who was hired by Linuxgruven after finally passing the exams. But at this point, he hasn't received his course fees back and doesn't see any way that will ever happen. "We want to go to small claims court and get a quick judgment," he says. But he believes that the chances are slim that he or anyone else will receive any compensation from Linuxgruven. "We just want to make sure that they can't do this to anyone else."

Miller's grievances don't end there. As an employee of Linuxgruven, he's been left out in the cold, literally. "I came back from vacation and found out the offices were empty." The company was supposed to be sending out a letter to all employees, but he says he hasn't received anything. The only notification he's had about Linuxgruven's woes is the notification at the company's Web site. There, the company insists that no one has been officially laid off yet. "I'm on salary," he says. "So as a salaried employee who hasn't been laid off, I'm still charging them."

Some might say that Miller is one of the lucky ones. After all, at least none of his paychecks have been returned by the bank. There are numbers of other employees who are suffering from negative balances in their bank accounts because of bounced payroll checks issued by Linuxgruven. NewsForge made many attempts to contact Linuxgruven officials to discuss plans to remedy employees losses, but executives have not made themselves available for interviews.

Linuxgruven founders, James Hibbits and Michael Lebb, blame the company's problems on poor performances by their hired management team, according to the company's Web site. In a note posted recently, they said the company is still in business. "We're currently taking inventory of our current resources, assets and equipment," they wrote. "As soon as we
get a clearer picture of what we have, we'll know when you can expect to get your money. We are
doing everything we can to get you your money as quickly as possible. Please check back at this
Web-site for updates. As soon as we have more specific information, we'll post it."

Former Linuxgruven CEO Matthew Porter, (one of the executives to whom NewsForge has extended several opportunities to comment) hasn't shied away from getting involved in online discussions about employee woes: "I received my bounced payroll check and expense checks today," he allegedly posted. "The total damage is roughly $15,000. It's a great day."

While Porter may think it's a great day, Wilson wouldn't agree. He also posted on one of the Linuxgruven gripe boards. "I racked up service fees for checks paid even though the account was empty, service fees for checks returned, and even a fee for the Linuxgruven check bouncing. The total was about $70," he says. "I've got bills due that I can't cover unless and until I get some money out of Linuxgruven. I've learned that if [my] account stays overdrawn for 30 days, they will close it and it will be nearly impossible to open another checking account anywhere."

And the problems for employees go beyond bounced paychecks. Kara Pritchard was hired by Linuxgruven as a Linux evangelist because of her experience with user groups. She is the site manager for LinuxUsersGroups.org, and is also the director of exam development for the Linux Professional Institute (LPI). She and her husband are expecting their first child. "I'm halfway through our pregnancy. The stressful parts of this situation are the backlog of owed money [by Linuxgruven], my budget, and the insurance coverage that I was dependent on for my prenatal care."

Linuxgruven hasn't officially canceled the employee insurance policies yet, but that's not necessarily good news because it effectively leaves employees in limbo. There's no guarantee that they won't can the policy or simply leave the premiums unpaid -- but since there have been no official layoffs, says Pritchard, she cannot sign up for full coverage under her husband's insurance policy -- and his employer allows changes to policies only during certain times of the year.

Pritchard also says she has forwarded three months worth of accrued business and travel expenses, "but the executives wouldn't address [them]. I still have $1,500 pending in expenses and at least $2,000 gross in pending salary, that between expecting a baby and needing to pay my [year] 2000 taxes, I could really use."

Even with all that, Pritchard doesn't hold a grudge against Linuxgruven's founders. "It's just James' and Mike's dumb luck that as co-founders, they're the ones left responsible for their business decisions and results -- including those of the executives that they appointed -- and they can't just resign and announce a new plan."

She's not the only one with a generous attitude. Wilson says, "I have been accused by some of being naive, but I don't believe at this point that Mike Lebb and Jim Hibbits did anything deliberately, maliciously criminal or dishonest."

Pritchard, speaking for herself, probably speaks as well for most of the former employees and students of Linuxgruven when she says, "I hope something works out for everyone involved. It's really not an easy road for anyone in this situation."

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