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A Downturned Economy Changes Conditions For Hiring Felons

Merchants Hospitality, a New York City-based property management company, recently filed a lawsuit against one of its former partners, accusing him of running a Ponzi scheme, embezzling investor money, and retaliating against his former associates after he was terminated.

The plaintiff company alleges it attempted to help the former partner get back on his feet after he served a two-year prison sentence for fraud. The plaintiff company further alleges it caught the former partner stealing from the firm and using its name and assets to defraud unsuspecting investors and partners of money, which he then used to pay back victims of his previous fraud schemes.

The partner went to prison in 2010 after pleading guilty to 15 counts of grand larceny and three counts of scheming to defraud his uncle, in-laws, and other investors out of more than $18 million.

The plaintiff company hired him in 2012 prior to his release from prison in order to manage acquisitions and development for the firm. For years, the company had been loyal to the now-former partner, with the CEO, in 2014, calling his hiring "one of the best decisions we ever made."

However, with the filing of the recent lawsuit, the former relationship has now changed. Instead of being the best decision ever made, Merchant now claims the partner was hired "only as a favor". "Adam Hochfelder accused of Ponzi scheme, embezzlement by former firm" (Oct. 05, 2020).



In a survey taken two years ago, when unemployment was low, employers were willing to consider hiring many of the 70 million Americans—or one-in-three adults— who had a criminal record.

Employers were willing to hire someone with a criminal record if that applicant was the best person for the job, according to a study from the Society for Human Resource Management (SHRM) and the Charles Koch Institute (CKI). Employers were willing to consider candidates with criminal histories if they had good references, a solid performance record, and were trained in skills the employer was seeking.

The Equal Employment Opportunity Commission (EEOC), in its Enforcement Guidance on the Consideration of Arrest and Conviction Records, suggests that excluding job applicants who have criminal records may constitute employment discrimination under Title VII of the Civil Rights Act. Employers can maximize their compliance with the law with these suggestions.

Employers should not ask about convictions on job applications, and follow-up inquiries in interviews as to convictions that appear on background checks should be limited to those convictions which disqualify an applicant for a particular position, i.e., a convicted child sex offender working in a child day care or a person convicted of credit card fraud working as a bank teller.

Employers should avoid blanket exclusion policies based on only certain criteria, i.e., criminal status. Consider other factors relative to the conviction, including the facts or circumstances of the offense/conduct; the number of offenses the individual has been convicted of; the age of the convictions; the length and consistency of employment history before and after the offense; rehabilitation efforts; and references.

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