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Family business places its trust in worker, gets deceit in return


MEMBERS OF THE Pitts family saw something they liked in Islam "Sam" Abu Alrub.

He showed smarts, initiative and drive - enough that the family business's trusted chief financial officer groomed him as his eventual successor.

The company paid for most of Alrub's M.B.A. and refresher courses in accounting. It hired Alrub's father, brother and friends who had come to Baltimore from the Middle East.

"He showed signs that he really wanted to learn and to grow," said David Pitts, president of the David Edward Co., a family-owned Baltimore company that makes high-end office furniture. "He had drive ... and seemed to want to be part of the family."

In 1997, six years after he joined the firm, Alrub was named CFO, giving him complete control of the company's money.

It was the biggest mistake the family could have made.

Starting in 2000, according to a statement-of-facts from the U.S. Attorney's office and a civil lawsuit, Alrub began embezzling. He forged signatures to siphon money from a line of credit. He tapped a payroll account that he had been instructed to close. He drained money from an account that collected customer payments. The money went into investment properties, a day spa in Parkton, restaurants in Federal Hill and on Pulaski Highway, a sports bar on Liberty Road.

The family, of course, knew none of this - until last year.

Vendors began complaining of late payments. To David Pitts, that made no sense. Business, after all, was good. An outside accounting firm, relying on data provided by Alrub, found nothing amiss. Pitts, still concerned, ordered up a more specific audit of parts of the company's financial operation.

On Sunday, Aug. 15, 2004, Alrub came into his office and began destroying documents and altering financial records, according to a lawsuit filed by the company. "In a final act of theft, Alrub took the company computer with him as he walked out of the door, leaving a letter of resignation behind," the lawsuit alleges.

Only after Alrub was gone, according to prosecutors, did Pitts learn how much money had disappeared: $4.5 million.

Alrub pleaded guilty to wire fraud last week and faces up 20 years in prison under his plea agreement. "He has accepted full responsibility for his actions and looks forward to putting this behind him," said his attorney, Joseph Murtha.

Alrub, 39, wouldn't say why he did what he did, saying he didn't want to "rock the boat before sentencing." When asked him about a specific investment he was alleged in court documents to have made, he threatened to sue and ended the conversation with an expletive.

David Edward has been in business since 1963. It was founded by Edward Pitts and is now run by three of his sons - David, Kevin and Gregory Pitts. It makes sleek chairs, tables, study carrels and other products found in luxury suites at Oriole Park, the Cleveland Symphony's Severance Hall, Delmonico's Steak House in New York and the Federal Reserve in Washington.

David Pitts said the company is recovering because business has been strong. About 80 percent of the debt Alrub amassed has been paid off, he said. Alrub and his wife returned about $410,000 to the company, the lawsuit said.

But Pitts has had to make tough decisions. Profits from operations, which might have spent on capital expenses, have been poured into paying off Alrub's debts. The company was on the verge of breaking ground on a $2 million plant expansion. That's been put on hold.

This year it delayed wage and salary increases by two months. Instead of receiving an 8 percent or 9 percent wage bump employees got 3 percent.

David Pitts says he was swallowed early on by the fiasco, spending time in depositions and at creditors meetings. The company had to look at every check written over four years.

"It has been a difficult year," Pitts said.

The Pittses are victims of greed, deceit and maybe their own naivete. They, like some other small businesses, have learned a painful lesson: Trust no one completely with money, especially when more than 300 employees rely on you for their livelihoods.

David Pitts said he will be in the courtroom when Alrub is sentenced on Oct. 5.

"I have tried to continually not lose faith in mankind," Pitts said. "You feel absolutely betrayed. He [Alrub] has never said, 'I'm sorry, what I did was wrong. I want to pay you back.'"

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