Victory Security founder Arthur J. Bedway has faced probes
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The man behind one of the region's largest private security forces has been both a friend of local law enforcement and a subject of repeated investigations.
Arthur J. Bedway, chairman of Carnegie-based Victory Security, has helped clean up communities such as East Hills and has been a close friend of Pittsburgh Police Chief Nate Harper, even employing the chief's wife for a time.
But he also has been a subject of accusations and probes into bid-rigging and fraud, for which one former associate went to prison and another is likely headed that way. Separately, a grand jury has considered a contract between the Pittsburgh police and another company associated with him, Alpha Outfitters, of Esplen.
His attorney, Marty Dietz, said the scrutiny of Mr. Bedway's dealings is just an outgrowth of his entrepreneurship.
"He's not afraid of developing new businesses," said Mr. Dietz. "A lot of his businesses involve big amounts of money. ... In a lot of businesses, people lose money. And when people lose money, accusations fly."
A former karate champ and bodybuilder who launched his business in 1981, Mr. Bedway quickly built what he calls, on the resume he submits to prospective clients, the nation's 34th-largest provider of security services. The 61-year-old Robinson resident splits his time between Victory Security in Carnegie and an offshoot in Florida.
"We provide quality, well-trained, nicely uniformed security guards," said Kathleen Bowman, chief executive officer of Victory Security Agency, one of the family of companies that grew out of an entity once known as Bedway Security Agency.
Victory Security is now marketing to the Marcellus Shale gas drilling industry. It has also carved out something of a niche in the low-income housing market and has won praise for its work. It got some of the credit for bringing order to Pittsburgh's East Hills neighborhood, which had long been a Wild West of drug dealing and gunfights.
In July, the Pittsburgh Housing Authority picked Victory Security to provide armed and unarmed guards for a dozen of its facilities, a contract that could pay $7.55 million over five years. The branch of Victory Security that won the bid is classified as a women-owned business, with Ms. Bowman as its head. It won on the basis of experience, price, capacity and the involvement of women and minorities, according to the authority.
Victory Security had the same role from 2007 through this year and lowered its prices in its bid to keep the contract. The firm had charged the authority $19 an hour for armed guards and $15 an hour for unarmed guards but lowered its rates to $17.40 and $14 in winning the new contract.
"We're conscious of the economic situation for everybody today, and everybody has been forced to tighten their belts," said Richard Hinch, president of another Victory Security unit.
The belts of Victory Security's employees are also tight. According to a person who has obtained a copy of the firm's payroll, it has paid some unarmed guards barely above the $7.25 minimum wage, while some armed guards got around $10 to $12 an hour.
That's not unusual in the security industry, said Tim Finucan, lead organizer for the Service Employees International Union, which has tried to organize some guards.
"They're basically competing on how little they can pay people," Mr. Finucan said of the bulk of security firms. "Benefits are out of the question. Paid vacation is out of the question."
SEIU has been trying, for two years, to raise the wages in the industry through organizing efforts. The union helped convince the City of Pittsburgh and Allegheny County to pass ordinances setting a wage floor for security guards working on public contracts or at publicly subsidized developments. The ordinances have not been enforced.
In April, two guards, Dora Schwartz and Christine Bryant, sued Victory Security, seeking to represent several hundred current and former employees of the company who, they said, had routinely been forced to do unpaid work before they clocked in, after they clocked out and during breaks.
Victory Security in August responded to the complaint, saying that "at no time did Victory expect its employees to be available for work before the commencement of their shift, during their meal breaks and/or after completion of their shift without being properly compensated."
The case is before U.S. District Judge Arthur J. Schwab.
Victory Security also has a contract to staff checkpoints at the county's Children Youth and Families offices, for which it charges $11.80 an hour for unarmed guards, and $16 for armed guards. It provides security at the Garfield Commons housing development, on land owned by the Pittsburgh Housing Authority but managed by a private firm.
Private security guards typically monitor against trespassing, vandalism and disorderly conduct. If they detect danger, they call the local police.
Victory's marketing team, for a time, included someone with a direct line of communication to the top of the Pittsburgh Police Bureau: Cynthia Harper, a former city officer and the wife of the current chief.
"They weren't afraid to let you know that the chief of police's wife was involved," said a manager of a residential site that hired Victory Security.
Ms. Bowman declined to describe Ms. Harper's role in the company or say when it began or ended. "I don't believe this has anything to do with a story about Victory Security," she said.
Chief Harper said he did not know exactly when his wife worked for the firm and referred a follow-up request for details to the company.
He said his wife worked with Ms. Bowman. "She ended that when [competitors in the security industry] were saying she was a ghost employee," he said, adding that she was a real employee who went to meetings with clients. "We don't need the headaches," he added.
Chief Harper said he was a friend of Mr. Bedway, but the two haven't spoken "in about a year now." That's in part because of fallout from a contract between the city and Alpha Outfitters.
Alpha Outfitters was created in 2006, according to state records, and the president and owner was Lois Kolarik. According to her 2005 bankruptcy filing, she was an employee of Victory Security.
Chief Harper described Alpha Outfitters as Mr. Bedway's undertaking, noting that it's "supposed to be his ... female employee" at the head.
In 2007, Alpha Outfitters beat out another firm for a contract installing, servicing and maintaining the computers in city police cars. The chief said that because of his friendship with Mr. Bedway, he avoided any involvement in the contracting process.
Mr. Dietz said that Mr. Bedway had no involvement either.
The city's Computer Information Systems department analyzed the bids and concluded that Alpha Outfitters was, overall, several thousand dollars cheaper than the competitor. The city has paid $334,497 under the contract, according to the Controller's Office.
A statement Ms. Kolarik submitted to the city indicated that she had also installed computers "in approximately 30 Pittsburgh police vehicles through Victory Security" for $11,791.
Mr. Dietz said that Victory Security never did that work. He said Victory Security allowed Ms. Kolarik to submit her first few invoices under the more established firm's vendor number while she completed paperwork required by the city.
A grand jury probe of the contract, first reported a year ago, has "been quiet for so long that I think it is over," said Mr. Dietz.
A spokesman for District Attorney Stephen A. Zappala Jr. would not comment. Neither would Ms. Kolarik nor her attorney, Stephen S. Stallings.
In March, a federal prosecutor in a Pittsburgh courtroom dropped Mr. Bedway's name at another man's guilty plea hearing. Assistant U.S. Attorney James R. Wilson called Mr. Bedway a "confederate ... though not charged" in a scam involving the resale of repossessed mobile homes that never actually existed.
Pleading guilty to charges of transporting property taken by fraud, and money laundering, was Jason P. Unangst, now of Arizona. He persuaded others to invest nearly $3 million in a plan to buy used mobile homes and sell them in areas hit by hurricanes. But he blew nearly $2 million of that and never bought a mobile home. He is scheduled to be sentenced Jan. 12 by Judge Schwab.
Two of the wire fraud counts against Mr. Unangst involve 2004 transfers of $24,500 and $310,000 to a man identified as AB, who federal agents confirmed was Mr. Bedway.
Mr. Bedway said he was a victim, not a confederate.
"Friends of Art also invested, and Art was the one who turned them on to it," said Mr. Dietz, explaining why his client was named, but never charged. "Art lost $800,000 in that deal."
It was not the first time Mr. Bedway faced federal scrutiny but was not charged, according to court papers in North Carolina that detail the collapse, a decade ago, of a deal to develop strip malls in Florida.
The developer, Zimmer Development Co. of Wilmington, N.C., hired as its construction manager a former Pittsburgher named Frank T. Grzandziel, according to the court papers. It did not know at the time that Mr. Grzandziel had just finished three years' probation for theft by deception. While working as security director for South Hills Health System, he had steered contracts for heating and air conditioning equipment to a company he secretly controlled and then inflated the bills.
At Zimmer Development, Mr. Grzandziel persuaded his new employer to give the general contracting work needed for a series of Florida strip malls to The Arlen Group Inc., a company created in 1996 by Mr. Bedway and Ms. Bowman. According to a civil lawsuit filed by Zimmer Development in 2000, The Arlen Group consisted solely of the two founders.
Zimmer Development ac-cused Mr. Grzandziel of sharing confidential information with The Arlen Group, while sending incomplete and inaccurate information to other bidders. When, as a result, The Arlen Group won the contracts, the firm with "Grzandziel's assistance, submitted unjustified and unreasonable requests for change orders" to gain increased payments, according to the complaint.
Mr. Grzandziel in 2000 signed a statement requested by Zimmer Development's auditors that said: "I confess to receiving over Six Hundred Thousand and No/100 Dollars ($600,000) from The Arlen Group." In a 2004 court filing, he claimed that he signed the confession under pressure.
Zimmer Development characterized the arrangement as fraudulent and negligent misrepresentation, bid rigging and corruption.
In a statement filed in Mr. Bedway's 2006 bankruptcy filing, his bankruptcy attorney wrote that he and Ms. Bowman paid $950,000 to settle the civil case, but that he "wholly denies" allegations of kickbacks and misappropriated funds.
Ms. Bowman declined to discuss the matter, other than to say, "It has nothing to do with Victory Security."
Mr. Grzandziel was charged by federal prosecutors with wire fraud. He pleaded guilty and was sentenced to four years and nine months in prison.
In a 2004 motion to set aside that sentence, Mr. Grzandziel wrote that a federal prosecutor in North Carolina "was more interested in prosecuting Mr. Bedway" but then lost interest. Mr. Grzandziel wrote that he sent the prosecutor a letter asking for a meeting "to further discuss Mr. Bedway and Ms. Bowman as he promised me," but got no response.
"They declined all prosecution on that case," said Mr. Dietz.
"He's doing a lot of good with Victory," Mr. Dietz said. "They're a big company. They're a legitimate company."
First Published September 25, 2011 12:00 am