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Bieber's troubled ride was years in making despite attempts to stay in business

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Bieber Transportation Group abruptly went out of business on Feb. 8. But for decades before that, the bus line was associated with reliable service from Reading and the Lehigh Valley to New York and other area destinations. (Melissa Krycia / THE MORNING CALL)

Over the past decade, Bieber Transportation Group broke down — gradually at first and then, suddenly.

On Feb. 8, unpaid employees driving uninsured buses were told to abandon customers who had given the company the benefit of the doubt. Among those left scrambling were the Easton Area Middle School ski club that a Bieber driver had dropped off on Blue Mountain and Muhlenberg College wrestlers who used Bieber to get to a meet on Long Island. And commuters such as Donna Ross of Coopersburg were left holding hundreds of dollars in worthless tickets.

While riders were caught off-guard by the broken promises, Bieber’s financial troubles pointed to an inevitable crash. A Morning Call review of hundreds of public records reveals company president Steven G. Haddad has repeatedly reneged on obligations to creditors, tax collectors and the people he has employed at multiple businesses. Financial problems surfaced more than a decade ago, and a protracted reckoning unfolded over the past 18 months.


Since August 2017, Kutztown-based Bieber has been sued for at least $7 million in loan defaults, health care and pension obligations, taxes and more, according to federal, state and county court records. Over the same period, Haddad’s other businesses, including a trucking company called Lehigh Valley Lines that shut down in late January, have been sued for nearly $4 million. Some of Bieber’s recent defaults are on loans it originally obtained following defaults on lines of credit tapped from 2006 to 2009.

To the end, Haddad bought time and sold hope. Over and over, he asked creditors for time to overcome “temporary cash flow issues” or to finalize “imminent” refinancing, records show. On the day before Bieber shut down, one of its longest-tenured drivers — who’d seen three consecutive paychecks bounce — said Haddad assured him that everything was going to be OK.

Two days before the shutdown, the bus company’s primary vehicle insurance policy had been canceled for the ninth time in 14 months, according to federal records.

Berks County District Attorney John Adams said Thursday his office is investigating at least one complaint filed by a Lehigh Valley Lines employee regarding multiple paychecks bouncing.

Haddad declined to answer questions or to comment for this story. In a company statement Feb. 8, Bieber blamed reduced ridership and rising expenses for its abrupt shutdown, and thanked customers and employees for their support over the past 72 years. It also told riders seeking reimbursements to email the company.

Cycle of loans and defaults

For many years, Bieber was a respected and reliable company. It started in 1928 when Carl R. Bieber Sr. launched a trucking company in Kutztown, adding a bus and then multiple buses to meet demand. The company expanded to include charter bus service from the Lehigh Valley in 1946, and began daily trips to New York City in 1971.

Bieber’s son, Carl Jr., took over the company in 1976, and commenced daily runs to Philadelphia two years later. Bieber built a reputation on its dependable commuter service and broad options of tour destinations. The company once offered three-day “Mystery Tours,” in which the destination remained a secret until the motorcoach drew to a halt the first evening.

Haddad, who had been general manager, took over the bus company in 2001 from Bieber Jr. and his wife, Victoria, who offered seller financing.

Bieber Jr. died in 2005, and Haddad and wife, Eileen, paid off the debt in 2006, two years ahead of a scheduled balloon payment and a month after the company and the Haddads borrowed a combined $8.8 million from Sovereign Bank, court records show. The loans were secured with mortgages on real estate and a suretyship agreement from Steven Haddad.

The company began exploring an acquisition of competitor Capitol Trailways in 2007. Capitol’s parent company declared bankruptcy the following summer, and in December 2008 Bieber acquired Capitol’s assets for $2.65 million, expanding its service in central and southeastern Pennsylvania.

Around that time, the Lehman Brothers investment bank collapsed, marking the unofficial start of the international financial crisis. Bieber Transportation was apparently affected. Records show that in 2008 the company first fell behind on gate fees at the Port Authority of New York and New Jersey’s Manhattan Bus Terminal. Then as now, the Port Authority debt was indicative of more serious financial difficulties. By October 2008, both the company and the Haddads were in default of their obligations to Sovereign Bank, according to court records.

To avoid paying in full, Haddad’s wife in 2008 signed a suretyship agreement and they mortgaged their Weisenberg Township home, last assessed at $534,000, Lehigh County records show. One of Haddad’s relatives also signed a suretyship and mortgaged a property in Avalon, N.J., last assessed at $2.7 million, according to Cape May County records. The collateral also helped secure an additional $270,000 loan — $120,000 of which Sovereign advanced directly to the Port Authority for delinquent gate fees.

Banks continued to accommodate the company. Less than a year after Bieber defaulted on its Sovereign loan, First National Bank agreed to lend the company $1.5 million. That, too, would end with Bieber defaulting.

Bieber and the Haddads for a second time defaulted on their Sovereign debt in 2012, and in April 2013, Lehigh County Judge Carol K. McGinley approved a stipulated judgment of $10.2 million.

Haddad then sought a new source of credit — and found one that was mostly guaranteed by public money.

On the last day of 2013, Newtek Small Business Finance loaned Bieber $2.85 million through the U.S. Small Business Administration’s 7(a) loan program, which entices lenders to extend financing to small businesses with weak or callow credit profiles. The SBA, backed by taxpayer money, guaranteed to repay Newtek 75 percent of the loan in the event of a Bieber default. That loan also was secured with mortgages on Bieber’s real estate and personal guarantees from Haddad and his wife.

The bus company used the majority of the proceeds — $2.4 million — to pay back Sovereign.

A few months later, in April 2014, Bieber also obtained a $5.5 million line of credit from Veritas Financial Partners. This loan was secured with liens on Bieber’s vehicle fleet, its accounts receivable, and first dibs on all corporate stock. That May, Bieber satisfied the Sovereign judgment and entered into a settlement to repay First National.

Meanwhile, the Lehigh Valley was becoming a distribution and e-commerce hub, and in early 2014 Haddad tapped into that market, launching Lehigh Valley Lines, a for-hire freight carrier. Then in May 2015, he bought a truck parts and repair business, Schumaker’s Sales & Service, and adjoining real estate for a combined price of $2.5 million. The Greenwich Township, Berks County, property along Interstate 78 became the home of Lehigh Valley Lines.

Melvin and Elaine Schumaker, like the Biebers, agreed to seller financing with a mortgage but no down payment on the real estate and a security agreement on the parts and repair shop, court records show. The Schumakers also lent the Haddads $200,000 that was secured with a mortgage on the Haddads’ Weisenberg home.

Pensions and health insurance ignored

In 2016, Bieber’s financial troubles reached drivers, mechanics and wash crew employees represented by Teamsters Local 429 in Wyomissing. That March, the company began missing deadlines for mandated contributions to the employees’ pension and health care funds, according to a federal lawsuit. Citing temporary cash flow issues, Haddad told the funds’ attorney that he “saw the light at the end of the tunnel” and a payment plan was set up.

By February 2017, the company had violated the payback arrangement, and the Central Pennsylvania Teamsters Health and Welfare and Pension Funds sued Bieber in federal court, seeking more than $50,000 in delinquent contributions.

Federal Judge Edward G. Smith approved a settlement in October 2017, but Bieber began missing payments the next month, according to court records, compelling the Teamsters to expel the company from the health care fund and suspend it from the pension fund in 2018.

“The company has consistently tried to make a mockery of the Funds’ attempts to recover the delinquent contributions,” Teamsters attorney Frank C. Sabatino wrote in a February 2018 brief asking the court to hold Bieber in contempt.

Retirees continued to get pension benefits, but Bieber employees stopped accruing benefits and had to deal with one headache after another related to their health insurance, records show.

Every time Bieber missed a deadline, the Teamsters health care fund administrators were forced to send COBRA notices to Bieber employees and their dependents. Some months the company paid so late that employees and their families actually had their coverage suspended for weeks, according to court records.

Bieber employees or their dependents called the health fund at least 10 times from March to July 2017 alone, wondering why they could not get prescriptions filled, according to court records. During that period, the health fund received at least 20 other calls from Bieber employees, health care providers and case management companies about suspended coverage and unexpected COBRA notices.

For example, one health care provider called the Teamsters health fund three times in one week in July 2017 to see if it had resumed coverage for Bieber members because the office didn’t want to cancel a patient’s upcoming appointment. But the fund couldn’t guarantee Bieber would pay, so the provider was forced to cancel the appointment, according to a declaration by Teamsters funds controller Kevin McTish,

For Arthur Tankalavage, a Bieber driver for 23 years, health coverage was one of the job’s big perks. But by the time he retired in November 2017, he had “enough COBRA notices to wallpaper the inside of my house,” he said last fall.

Tankalavage said he occasionally had to pay out of pocket to fill prescriptions.

“I was always reimbursed,” he said. “But for a person who had stayed on as long as I did, it was a slap in the face. I felt sorry for everyone I left behind.”

Following expulsion from the health fund last March, multiple Bieber employees said they had to pay more for less coverage through new plans the company secured with other insurers.

According to court records, Haddad repeatedly assured the Teamsters and Judge Smith that the company would pay its debt to the health care and pension funds as soon as it refinanced. “I believe we have turned the corner,” he said in a December 2017 email to Teamsters fund administrator Joseph Samolewicz. “… We simply need more time for us to get the arrears on pension paid.”

Six months later, Smith approved yet another settlement. Bieber agreed to pay the $161,000 it owed the two Teamsters funds by October and an additional $75,000 in attorney fees by 2021. In return, the pension fund trustees agreed to not assess a withdrawal penalty exceeding $1 million and agreed to reinstate the company once it had paid its debts.

The company made payments well into the summer, said Jeff Strause, vice president of Local 429. But the payments stopped after the Port Authority evicted Bieber from its Manhattan bus terminal in late July.

Since the eviction, Bieber has also stopped remitting membership dues to Local 429, Strause said. A review of an employee’s pay stubs shows the company continued to deduct union dues through December. And several Bieber employees told the union that when the company closed, they were owed two or three paychecks, Strause said.

Local 429 filed an unfair labor practice charge Tuesday with the Federal Labor Relations Board.

“Most of these guys are living paycheck to paycheck,” Strause said. “Imagine what it’s like to continue working through that.”

Truckers also frustrated

Matthew Shuman, a truck driver for Lehigh Valley Lines, said he spent the week between Christmas and New Year’s picking up trailers in other states and returning them to Hale Trailer Brake & Wheel of Allentown, which had leased them to Haddad’s company. Before Christmas, Hale sued LVL and Haddad for more than $40,000 in unpaid rent.

Shortly after the holiday runs, Shuman’s paycheck bounced. He said Haddad expressed surprise and said he’d work it out with the bank.

Then the next paycheck bounced, Shuman said. And the one after that.

On Jan. 25, two weeks before Haddad shutdown the bus company, LVL stopped operations. Employees received two days’ notice.

Shuman, who said he was one of four drivers left in the end, said this week that he still hasn't been paid for four weeks of work in late December and January. What emergency savings he had are all but gone, and his credit card balance is growing uncomfortably big, he said. Unemployment compensation helps a little but doesn’t make up for the lost paychecks.

“I’m a dedicated employee,” Shuman said, “so for us four drivers to stick around to get him through a rough spot, and then have him turn around and burn us the way he did? That’s ugly.”

Jennifer Mackiewicz, whose wife was an LVL driver, said the shutdown is hard on families. Her wife, Mackiewicz said, is owed $3,300 after her paychecks bounced. With two young children, Mackiewicz said her earnings as a teacher’s aide isn’t enough to cover the bills.

“With the kids, there’s been a lot of, ‘I can’t right now, you’re going to have to wait,’” she said. “This has caused a lot of financial hardship and stress.”

Mackiewicz said she and her wife filed a complaint with the Berks district attorney’s office.

The Schumakers, meanwhile, are trying to reclaim their Greenwich Township property, which the Haddads stopped making payments on in June 2017, court records show. They stopped making payments on the personal line of credit last August. The Schumakers sued in December for almost $2.8 million.

A default judgment was entered Feb. 5 after the Haddads did not file a response to the complaint.

Taxes and other unpaid bills

Delinquent tax bills have also stacked up for Haddad’s businesses over the last two years.

Since April 2017, state and local tax agencies have entered $775,000 in liens against Haddad, his companies and his property. The IRS entered a federal tax lien against Bieber last April for $915,000. Most of the tax debt hasn’t been satisfied.

The state Department of Labor and Industry has recouped some of what Bieber owed under four unemployment compensation liens worth more than $150,000 through garnished funds from Bieber bank accounts.

The state Revenue Department has been more forgiving. In March 2014, after multiple warnings about unpaid tax obligations, the department revoked Bieber’s sales, use and hotel occupancy tax license. Selling services without a license is illegal and could have exposed Haddad to fines of up to $1,500 or imprisonment up to 30 days.

It wasn’t until October 2018, more than four years later, the department cited Haddad for operating a business without a sales license. A hearing in Berks County last Monday was postponed for a third time, to Feb. 25.

At its headquarters on Fair Street in Kutztown, Bieber faced a host of other problems. In September, after months of prodding by residents, Kutztown gave Bieber 30 days to remove out-of-service buses parked in a lot by a public lane, violating the zoning code. When Bieber missed the deadline, the borough filed a civil complaint in district court.

“We don’t have a choice,” Councilman Richard Diehm said at an October meeting. “How much time have we given this guy?”

In January, a Berks district judge ruled in favor of the borough and ordered Bieber to pay $3,600.

The company did make good on a debt to the borough’s electric company, which in November had given Bieber two weeks to pay an outstanding $8,000 electric tab that at times exceeded $10,000, according to emails between borough officials reviewed by The Morning Call.


In New York, where Bieber’s problems first came to light, the Port Authority has sued for the remaining $120,625 in unpaid gate fees.

Entering February, the bus company still owed the city’s Finance Department about $87,000 from tickets and penalties accrued after Bieber lost its Port Authority berth and was picking up passengers at unauthorized curbside stops, according to city records.

Despite the company’s violations, the New York City Transportation Department issued Bieber a temporary curbside permit in November and then a one-year permit in late January — a week before Bieber went out of business.

Out of time

The final straw for Bieber was the cancellation of its primary bodily injury and property damage insurance policy on Feb. 6 by Falls Lake National Insurance Co., which did not respond to The Morning Call’s request for more information about why the policy was canceled.

The Federal Motor Carrier Safety Administration requires carriers to have insurance to maintain their interstate operating authorities. Bieber's licenses were officially revoked Tuesday. LVL’s were revoked Feb. 4.

Donovan Shupp, a Bieber driver who left the company in July after three years, said that while Bieber was borrowing and trying to stay afloat, its bus fleet was deteriorating.

“The money certainly wasn’t going back into the vehicles,” Shupp said.

Riders noticed it, too.

Donna Ross, who relied on Bieber to get from Quakertown to her job in Philadelphia, said she resorted to carrying a blanket because she couldn’t be sure if the bus would have heat and once had to call an Uber when the bus broke down on the Schuylkill Expressway.

“It’s been getting worse and worse,” she said last weekend, as she scrambled to find an alternative.

But federal inspectors raised no major red flags about the fleet. Of the 71 vehicle inspections in 2018, few significant maintenance issued were identified, with the most serious being an inoperable turn signal, a power steering issue and defective axle positioning parts. Its overall maintenance record was above average compared to all nationwide carriers.

While the courts sort through Bieber’s debts, taxpayers may end up covering up to $2 million of it, as Bieber stopped making payments last March on its SBA-guaranteed loan, according to court records. The lender, Newtek, sued Bieber for $2.7 in November. A twice-postponed hearing is scheduled for March 6.

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Ex-Bieber bus drivers win ruling for back wages and benefits, but will they ever collect?


Former bus drivers and other union workers of shuttered Carl R. Bieber Inc. have won a legal victory granting them back wages, nearly one year after the Berks County company abruptly stopped carrying passengers.

The ruling appears to be hollow, however, given Bieber’s beleaguered finances and sudden closing.

A total of 45 workers represented by Teamsters Local 429 filed a federal complaint on Feb. 12, 2019, with the National Labor Relations Board seeking unpaid wages, vacation benefits and union dues.

In a ruling released Tuesday, the three-member NLRB ordered Bieber President Steven G. Haddad to give workers back pay and benefits, and compensate them for any “adverse tax consequences” of receiving a lump sum.

The board denied a union request to find Bieber in default for failing to remit union dues dating to about Oct. 1, 2018, according to the decision. The decision did not spell out specifics such as how many employees were affected or the monetary award.

When Haddad abruptly closed Kutztown-based Bieber, ending bus runs on Feb. 8, 2019, he cited a drop in ridership and rising expenses. But financial problems at the more than 70-year-old business extended back at least a decade. Bieber had been sued for at least $7 million in loan defaults, health care and pension obligations and more, according to court records.

A Morning Call report revealed Haddad repeatedly reneged on obligations to creditors, tax collectors and people he employed at Bieber and other businesses.

Haddad did not return a telephone message seeking comment.

“Most of these guys are living paycheck to paycheck, Jeff Strause, then vice president of Local 429, said last February. “Imagine what it’s like to continue working through that.”

Strause is no longer with Local 429, according to a woman who answered the phone at its Wyomissing headquarters. Other union officials and an attorney representing Local 429, Joseph D. Richardson, did not return messages seeking comment.

Besides bus drivers, the union represented mechanics and a wash crew.

Ciocca wins sheriff’s sale auction for former Charcoal Drive-In, Bieber stop with $1.16 million bid »

Bieber had offered charter bus service from the Lehigh Valley since 1946, including daily commuter runs from the Lehigh Valley to New York City. Haddad acquired the company from Carl R. Bieber Jr. in 2001.





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