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Business

A story of hope, and a lopsided deal

A national ministry for addicts has a record of success, but its work program leaves some vulnerable men feeling misused

Jesse Carter’s first job out of homelessness and a crack cocaine addiction took him on an improbable journey, from a Philadelphia ghetto to the top floors of Boston’s Marriott Copley Plaza, where he worked on an $18 million renovation of the towering Back Bay hotel.

Arranged by his church, a Christian drug rehabilitation ministry called Victory Outreach, the job offered Carter hope of a steady wage and a fresh start. But inside the Marriott his optimism quickly faded, displaced by unshakable fatigue and pain from the daily demands of the work. He said he was moving furniture 12 hours a day, six days a week — part of a crew from Victory Outreach working around the clock last winter to remodel the hotel’s 1,100 guest rooms.

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At night, Carter and 11 other laborers packed into a pair of two-bedroom apartments in Chelsea provided by the contractors. His pay for nearly three months of labor worked out to about $4 an hour, half the required minimum wage in Massachusetts.

“For what we got paid,” Carter said, “that job was crazy.”

In searching for a foothold out of poverty, the 50 year old got swept into a little-known corner of America’s underground economy. His job at the Marriott was not an isolated arrangement, but one of many hotel projects that have employed, on short wages, impoverished men affiliated with Victory Outreach, an international evangelical church that operates recovery homes for addicts and former gang members in some of America’s poorest neighborhoods.

Men from Victory Outreach Church in Philadelphia helped renovate the Marriott Copley Plaza in Boston.

DAVID L. RYAN/GLOBE STAFF

Men from Victory Outreach Church in Philadelphia helped renovate the Marriott Copley Plaza in Boston.

Using church labor has allowed a southern California furniture installer to cut costs on the renovation of hotels from Anaheim, Calif., to Boston, where his company has won jobs moving furniture at properties operated under brands such as Embassy Suites, Marriott, and Disney.

The firm, Installations Plus, pays Victory Outreach a fraction of its revenue for each hotel job for supplying the labor, and then appears to keep much of the remainder. The company’s owner, George A. Herrera, defended his use of the church-supplied labor. He said he pays Victory Outreach a lump sum — typically tens of thousands of dollars — and suggested it is the church’s responsibility to ensure the men are adequately paid.

‘For what we got paid, that job was crazy.’

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“I don’t know what the church pays the guys or what it promises them,” said Herrera, who runs his national business with no commercial office space or clerical staff, relying on a cellphone to handle day-to-day operations.

Victory Outreach administrators said the church uses its partnership with Herrera and other business owners to raise money for its ministry, which includes more than 700 churches and recovery homes around the globe. The church was founded in 1967 by pastor Sonny Arguinzoni, a former heroin addict and petty criminal who professed a vision to reach out to disenfranchised people with nowhere else to turn.

New members receive daily religious instruction and are eventually asked to perform jobs such as washing cars, landscaping, or moving furniture. The men, some of whom credit the church with rescuing them from their addictions, are paid little or nothing, with the money they earn instead going to Victory Outreach to pay for their care.

“Part of our mission is to restore a positive work ethic,” said Philip La Crue, the church’s executive director. “We’ve been doing this for over 40 years. We’ve talked to judges and mayors about it — no one has a problem with it.”

Victory Outreach portrays the arrangement as volunteer labor, and said few of its members object to the lighter tasks. But heavy labor, like the Marriott job, is another thing.

“$40 a day is slave wages,” said Matt Dixon, a member of the crew at the Copley Place hotel.

Carlos Garcia, another Victory Outreach member who worked under Herrera at Southern California hotels between 2002 and 2004, said he does not blame Victory Outreach, but he questions the motives of Herrera and his company. “They knew we were guys in recovery,” said Garcia. “And they knew they could take advantage of that.”

The arrangement at the Copley Place Marriott sparked an investigation by Massachusetts authorities. Attorney General Martha Coakley found last month that contractors failed to pay minimum wage to 37 Victory Outreach workers who together were owed more than $31,000 for their work in the hotel.

Still, no one was charged in the case.

SCOTT LEWIS FOR THE BOSTON GLOBE

“For what we got paid, that job was crazy,” said Jesse Carter, who worked on the renovation of the Copley Place Marriott.

Baystate Services Inc., the Woburn-based general contractor in charge of the work, agreed to pay the back wages owed to the men, but did not admit any wrongdoing.

Host Hotels & Resorts Inc., which benefited with newly renovated hotel rooms, said it did not know of the problems until authorities began investigating and did not face punishment.

Herrera and Victory Outreach have not paid any of the back wages or faced penalties. Herrera has cut off communication with investigators, while Victory Outreach said it did not have any money to pay the men. Under state law, only direct employers can be held accountable for wage violations.

“It’s a real problem,” said Joanne Goldstein, secretary of the state Labor Department, which is still investigating the Marriott renovation. “The weakness in the law often insulates companies from liability.’’

Division of labor

Victory Outreach pastors often compare their recovery homes to boot camps where drug addicts and gang members face a stark choice: They can study the Bible and devote their daily lives to the ministry, or they can go back on the streets.

The rehabilitation program is free and, because it is affiliated with a religious organization, not funded or regulated by public authorities, although it often receives referrals of new residents from state probation departments in California, Pennsylvania, and elsewhere. Many of the homes are run by former addicts who graduated from the program and now preach its blend of strict discipline and loyalty to the church.

“What they essentially say to men in the rehab homes is, ‘We took you out of a much worse place, so you’re working for us now,’ ” said Arlene Sanchez Walsh, a theology professor at Southern Methodist University’s Perkins School who wrote a book on Victory Outreach.

Showing their devotion invariably involves work, though the church does not view it that way.

“We really don’t call it work; we call it fund-raising,” said La Crue, who works out of a small headquarters office in San Dimas, Calif. He added that the church’s primary goal is to help the men build their relationships with God. Part of that, he said, is keeping them removed from temptations that could trigger a drug-buying relapse.

“The people that we reach,” La Crue said, “it’s not good for them to have a lot of money.”

The church preaches that money will come in time, through hard work and devotion to God and the church.

Arguinzoni, its founder, is a perfect example of that hard road up.

He was a recovering heroin addict when he founded Victory Outreach in his East Los Angeles home in 1967. Since starting the church, he and his wife have accumulated considerable wealth, including a waterfront home in Newport Beach valued at $2.5 million and another in Chula Vista valued at $1.5 million, according to California property records. He travels the world spreading the church’s message.

Arguinzoni, 72, has authored several church-related books and also owns California property used for church operations. His son, Sonny Arguinzoni Jr., now is the day-to-day head of operations for Victory Outreach.

Church administrators said money from its programs and churches is not used to enrich Arguinzoni or other administrators. The elder Arguinzoni did not respond to multiple phone messages.

Massachusetts is not the only state in which the church’s labor arrangements have come under scrutiny.

In Oregon, Mark Hopkins, a resident of Victory Outreach home, filed a workers’ compensation claim with the state in 1999 after being injured moving boxes on a loading dock for Kobos Co., a coffee roaster.

His claim was denied because the state determined that he was a volunteer and therefore not covered under Kobos’s insurance policy. But the board noted that the work arrangement benefited everyone except Hopkins.

“Victory profits because it receives money for its programs using people who expect no remuneration and Kobos profits because it receives labor without having to use its own employees,” the board wrote. “Individuals such as the claimant, however, who become injured when performing work, are losers from this arrangement.”

Jesse Carter and Eric Diggs walked through their North Philadelphia neighborhood. Themen say they were paid little for their work in Boston.

SCOTT LAPIERRE/GLOBE STAFF

Jesse Carter and Eric Diggs walked through their North Philadelphia neighborhood. Themen say they were paid little for their work in Boston.

States treat the volunteer labor differently, but work performed in the hotels appears to run afoul of laws in California, where many of the renovation jobs occurred.

A 1988 opinion currently posted on the state Division of Labor Enforcement’s website states that if a person is performing work of a “commercial nature,” then they must be paid according to the state’s minimum wage law.

Victory Outreach officials said they have solicited input from California labor officials to ensure the legality of their operations, but a spokeswoman for the Division of Labor Enforcement there said it has no record of any contact with the church.

Boston labor attorney Shannon Liss-Riordan said Massachusetts offers an exemption for volunteer work done by people being rehabilitated or trained in charitable or religious orders, but moving furniture in a large for-profit hotel would not be considered an exempted activity.

“Even if you’re providing workers with a residence and other services, that can’t be a substitute for wages,” she said. “There are extremely limited exceptions to this. Our Legislature has said very clearly that you can’t take advantage of people who because of various circumstances are willing to work for little or nothing.”

A way out for addicts

Jesse Carter’s life hit a low point two years ago, when he was evicted from his North Philadelphia home and began sleeping in his 1985 Lincoln Town Car. He was unemployed, penniless, and panhandling to feed a daily cocaine habit.

“I was spaced out of my mind,” Carter said. “I wanted to commit suicide.”

A friend told Carter about Victory Outreach, which operated a recovery home for men in Philadelphia’s Kensington district, one of the poorest urban neighborhoods in the country.

There was no cost for living in the home; Carter just had to commit to staying there, and to staying clean. He moved in soon after.

The recovery program’s daily regimen of prayer and Bible study quickly changed Carter’s perspective. He said he was moved by the church’s mission of reaching out to people like him.

“God is using me and our church to go out to where other churches don’t go,” he said. “When Jesus Christ walked the earth, he didn’t go to the rich. He went to the sick. He went to the poor. He went to the sinners . . . That’s what we’ve got to do — go out to the people that society has turned away.”

Carter spends several hours a week at the church, which is housed in a large brick building that shares a block with a TV repair business and the Coconut Ranch bar.

On a recent Wednesday evening, Pastor Titus Buelna bounded onto the altar wearing a bright blue T-shirt with the words “Winning is an Attitude.” On a large projection screen he showed about 80 worshipers a picture of a boy running on prosthetic limbs, a wide smile on his face.

“This is the kind of kid I want to hang out with,” Buelna declared, telling the crowd that struggles in life must be overcome through hard work, perseverance, and faith.

Sitting among the worshipers that night was Joseph Bishop, an associate pastor who handles a different side of the church’s business. He was the church official who made arrangements for Carter and the other men from the church to go to the Marriott Copley Plaza and work under Herrera.

Bishop declined to comment when asked how much money the church received from the job at the hotel, saying only that Victory Outreach has been working with Herrera for more than 15 years.

Conflicts of payment

For Herrera, Victory Outreach has been an ideal business partner.

In the early 2000s, the church’s recovery homes offered an army of cheap laborers to his company, Installations Plus, which has removed and installed furniture at dozens of hotels nationwide in recent years. According to its website, its clients have included the biggest names in the hospitality business, from Marriott to Westin to Hilton.

Herrera latches onto projects as part of a general contractor’s bid to renovate hotels. On large projects, his subcontracts installing and removing furniture are worth hundreds of thousands of dollars, according to contractors who perform the work in Massachusetts.

The men of Victory Outreach did the work, and Herrera’s only cost for their labor was a donation to the church to help pay for their care.

The amount depended on the size and duration of the job, ranging between several thousand dollars and $45,000, according to pastors and home administrators.

Although that would leave Herrera with a substantial profit, some home administrators said he sometimes failed to pay the agreed-upon amount.

“There was always an excuse,” recalled Mario Morales, director of a recovery home in Santa Ana, Calif. “He’d say our guys were sitting around or come up with some other reason not to pay.”

Morales said he supplied men from the recovery home for hotel jobs between 2002 and 2004; the largest was the Disneyland Hotel in Anaheim — part of the massive entertainment park — where his men moved furniture and ripped out carpets for four months.

After chasing Herrera to get payments — which sometimes would come in the form of used hotel furniture instead of cash — Morales said he stopped working with him. “We trust people, but sometimes we end up getting burned,” he said.

Herrera said he has used Victory Outreach for multiple hotel jobs, but said he does not remember Morales and could not respond to his allegations.

A spokeswoman for Disneyland Hotel said it requires its contractors to comply with state labor laws and could find no record of Herrera’s company working on the hotel.

Such records typically do not exist, however, because hotels do not deal directly with his company, instead hiring a general contractor which then subcontracts the furniture installation to Herrera.

Other California hotels where men from Victory Outreach recalled working said they had no record of Herrera’s company or that the renovation work was done under a prior owner.

“It was crazy in there. Everything was rush, rush, rush.” said Eric Diggs, a member of the Victory Outreach crew.

SCOTT LEWIS FOR THE BOSTON GLOBE

“It was crazy in there. Everything was rush, rush, rush.” said Eric Diggs, a member of the Victory Outreach crew.

But Morales and others said they renovated several hotels with Herrera, who at the time was working alongside his brother, Richard. Carlos Garcia, now a pastor in San Diego, said he worked under both Herreras while staying in a recovery home in Santa Ana.

“It was much more of a blessing for them than it was for us,” said Garcia, who recalled moving furniture in a Marriott Residence Inn in Costa Mesa and making furniture deliveries to the luxury Hotel del Coronado near San Diego.

Despite the complaints, Herrera was able to continue to move through the network of Victory Outreach churches, which operate independently of one another in cities on opposite coasts.

In Connecticut, Herrera recruited men from Pivot Ministries in Bridgeport, after being referred to that mission by the neighboring Victory Outreach church. Pivot’s pastor also said he came to regret the deal he struck with Herrera.

The pastor, David B. Smith, said he provided Herrera with about a dozen men to move furniture at the Quincy Marriott and Waltham Embassy Suites in early 2011, where Baystate Services was the general contractor. The job lasted nearly three months, with work often stretching beyond 40 hours a week. Herrera paid the church $42,080 — about $7.30 an hour per person, still below minimum wage.

“It’s not right, and the reason they do this is cheap labor,” Smith said. “My men were overworked and not treated properly.”

Herrera, who said he supports Victory Outreach’s mission to rehabilitate addicts, said he negotiated lump sum payments with all the churches and recovery homes that supplied him with labor.

But he said his arrangements with church leaders did not address the amount ultimately paid to the workers. “We never discussed any type of compensation paid to the men,” he said.

Despite a steady flow of jobs at major hotels, Herrera does not appear to be living an extravagant lifestyle. He rents a 2,200-square-foot home in a Corona and the only vehicle registered under his name is a 2006 Ford pickup truck, according to motor vehicle records. County property records indicate he owes more than $116,000 in back taxes to the state of California and the Internal Revenue Service.

Herrera said he is in a dispute with Baystate Services over the Marriott Copley renovation, saying the company has refused to pay him for his work.

A lawyer for Baystate said the firm does not owe Herrera money because it backcharged him for the $31,000 it agreed to pay to the workers from Victory Outreach. The lawyer, Tom Elkind, said Herrera had initially told Baystate, a nonunion contractor, that he planned to hire from around Boston, but switched to Victory Outreach when he could not find locals to do that job.

“He explained that they were more reliable than the transitory workers he could pick up otherwise,” Elkind said.

Rushing, then the end

The Victory Outreach workers arrived in Boston in early November, after making a six-hour drive from Philadelphia to the pair of apartments in Chelsea where they would stay.

Each morning, the men woke up at about 6 a.m., ate breakfast, and made the 20-minute drive through early morning darkness to the hotel, where work started at 8 a.m.

The job was fast-paced and demanding. The men removed mattresses, headboards, chairs, and ottomans.

Their first day lasted 12 hours, Jesse Carter and other workers recalled, and the shifts would continue that way over the following weeks. They only had Sundays off.

They worked among painters, drywallers, demolition men, and flooring crews — more than 100 of them crowding onto a couple of floors, sharing one elevator. Tempers flared constantly.

“It was crazy in there,” said Eric Diggs, another member of the Victory Outreach crew “Everything was rush, rush, rush.”

Nights were hardly restful.

Each apartment had two bedrooms to be split by 12 men, sometimes more. Some slept on a couch or found a spot on the floor.

For some, the pace and the hours on the job got to be too much. Chatting with other laborers in the Marriott elevator, Diggs said he learned that others were making two to three times the $200 in cash per week Victory paid its workers.

“We were working harder than anyone there, but we were getting paid the least,” said Diggs, a former drug dealer.

By December, he said, some of the men from Victory Outreach started walking off the job or started slacking off and were fired. More men were sent from Philadelphia to fill the gap. Diggs, Carter, and several others slogged on, trying to finish the work.

The end would come quicker than they thought.

On Jan. 20, State Police investigators coursed through the Marriott’s hallways on behalf of the attorney general’s Fair Labor Division. The officers halted work and started pulling the men aside to be questioned. The officers wanted to know who they were working for, how much they were getting paid, and where they were staying.

“They were asking all kinds of questions,” Carter said. “I just told them we were trying to make some money for us and our church.”

The next day, Victory Outreach administrators decided to pull their men off the job. Once they returned home, the workers learned that a temporary crew was brought in for $8 an hour, double the wages earned by the Victory Outreach workers.

It’s the kind of money Diggs wished he could have made. He is now bouncing between odd jobs, struggling to make ends meet, and unable to even pay his phone bill. “Myself and a lot of others were really set back by this,” he said.

The attorney general’s agreement with Baystate will help, but the $31,000 will be divided among 37 men. The size of their checks depends on how many hours they worked, with some to get as little as $100; the biggest payout will be $2,332.

Carter said he is trying to put the messy memory of the Marriott behind him. On a recent evening, he stood outside the Victory Outreach church in Philadelphia and greeted worshipers gathering for a service. He said he knew he and the other men had been taken advantage of in Boston, but he did not want to dwell on it.

“Our focus is on God,” he said. “We can’t just get worldly now and go start hiring lawyers. We’ve got to live in the path of the Lord.”

Casey Ross can be reached at cross@globe.com.
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