Austin Master owner closes doors of three subsidiaries

American Environmental Partners halts operations, lays off dozens of employees

Editor’s note: This article is being reprinted in The Times Leader with permission from the Pittsburgh Post-Gazette, which published this piece on Monday.

THE COMPANY that for the past six months has been known as American Environmental Partners — and, before that, American Energy Partners, and Converde Energy, W2 Energy, and World Wise Technologies before that — closed its doors last month, laying off dozens of employees at its subsidiaries and leaving behind more than a few question marks.

Among the subsidiaries is Austin Master Services, a Pottstown-based waste handler that was sued by the Ohio Attorney General on March 25 for having too much low-level radioactive waste simply sitting in mounds on the ground of its wastewater treatment facility in Martins Ferry, Ohio.

Calling it an “environmental and public health emergency,” Attorney General Dave Yost secured an injunction against the company and a judge ordered the waste to be removed and disposed of by April 17.

But the reason it was sitting there in the first place, leaching liquids onto the floor, was because American Environmental Partners wasn’t paying its vendors — the truckers and railroads that would haul the waste and the landfills that would accept it.

The money had run out, and just a few months before Canonsburg-based American Environmental Partners was set to become a Nasdaq-listed public company.

The employees were gone too. Workers across the three subsidiaries — Austin Master Services, Apex Energy Services and Unlimited Energy Services — were laid off last month.

But American Environmental Partners’ annual report, filed on March 25, made no mention of the fact that it no longer had any employees, or that it vacated its headquarters in Canonsburg and simply stopped operating.

Instead, the document said that “management estimates the likelihood of positive cash flow to occur in 2024.

“Favorable environmental service markets and acquisition synergies have contributed to the Company’s improved cash flow, and are projected to do so in 2024,” the document reads.

The financials weren’t audited. They were signed by CEO Brad Domitrovitsch who, at that point, may have been the sole remaining employee of the company.

Big buying spree

Mr. Domitrovitsch did not respond to numerous attempts to contact him. Neither did American Environmental Partners’ former COO, Kurtis Hoffman, who resigned around the end of March. American Environmental Partners’ chief strategy officer, John Pippy, said he was out of the country and could not talk when reached last week. He had left the position in January, according to a company filing.

In December, American Environmental Partners announced that it signed an agreement to merge with SCWorx, a medical software company that trades on the Nasdaq. Once the deal closed, American Environmental Partners would take over, occupying four of five board seats. It would pay for the acquisition with company stock, as it usually did. It would also be required to raise $6 million as a condition of the close.

As American Environmental Partners explained in a legal filing in December: “The purpose of a reverse merger is to gain control of a publicly listed, SEC reporting company so that the acquiring company, American Energy in this instance, can become Nasdaq Markets listed and have access to capital it otherwise would not have access to thus increasing the long-term viability of the company.”

Three months later, on March 26, the day that Ohio’s attorney general revealed his action against the company, the merger agreement was terminated, SCWorx disclosed in a public filing. No explanation was given.

Former employees and business associates of American Environmental Partners described a pattern of troubling business practices. Some asked not to be identified because they are involved in litigation against American Environmental Partners and Mr. Domitrovitsch or don’t want to jeopardize whatever final payment might be coming to them from whatever is left of the firm.

American Environmental Partners, according to its public filings, was determined to become a conglomerate that specialized in serving the energy business. Mr. Domitrovitsch wanted to build up the firm in order to list it on a major stock exchange. In 2017, his Hydration Company of Pennsylvania — a firm that aimed to collect, treat, and distribute water in large volumes — executed a reverse merger into a Colorado-based penny stock company that traded on the over the counter exchange — colloquially known as the pink sheets. He renamed the reinvented public company American Energy Partners and began to bulk it up. The company acquired a geological consulting firm, a company that made videos for oilfield education, and a few small oil and gas interests.

American Environmental Partners paid for the majority of the acquisitions in company stock. But by the end of 2022, all of those previous acquisitions had soured — Mr. Domitrovitsch sued some of the sellers for fraud, claiming they withheld material information during the due diligence process. Those lawsuits were accompanied by countersuits by the sellers, who claimed they weren’t paid what was promised.

But 2022 was also the year of American Environmental Partners’ big buying spree.

In January, it acquired an oilfield services firm called Apex Energy in Washington County, Pennsylvania. The company did roustabout work, cleaning well sites and other oil and gas facilities and hauling materials.

In May, it added Unlimited Energy, a well plugging contractor in West Virginia. The following month, it signed a purchase agreement with Austin Master Services.

Pat Horkman, one of the former owners of Austin Master Services, said he and his partner Joe Bement, who co-founded the company a decade ago, got an unsolicited query from Mr. Domitrovitsch. “Apparently, he was looking to build this environmental conglomerate related to energy, oil and gas,” Mr. Horkman said.

Mr. Domitrovitsch said American Environmental Partners had made two other acquisitions that year and encouraged the Austin Master owners to call the sellers of those firms as references.

Mr. Horkman said they did.

“They had nothing but good things to say about him at the time,” he recalled.

(The former owners of Apex Energy and American Environmental Partners are involved in several lawsuits over the purchase, with American Environmental Partners claiming they misrepresented their tax liabilities during their due diligence period, and the sellers saying they were shorted on negotiated payments.)

Mr. Horkman said the deal looked attractive: “I’m not getting any younger. We had an offer on the table. Sounds good.”

He said things began to go south within a year. He said his vendors would call and complain they weren’t being paid. He learned about the factoring companies that were brought in.

According to its financial filings, American Environmental Partners was selling its future revenue to a lender at a 20% discount. That means American Environmental Partners got a lump sum payment worth 80% of its future receivables from the financing company, which then collected customer payments as they came in. It also paid nearly half a million dollars in factoring fees last year, according to its annual report.

Mr. Horkman said he didn’t deal with oil and gas waste processing — he handled the field services side of business. But he’d heard from Mr. Bement that the contractors that served Martins Ferry — those that transported the oil and gas waste and the landfills that took the solids after the waste was processed — weren’t being paid either.

Judging by the various court filings across several states, the problem wasn’t limited to Austin Master Services.

Dave Cepika, who leads a group of companies including AccountStaff Inc., said he kept calling American Environmental Partners for overdue bills — Accounstaff placed a contract employee at the firm for a few months — but would get the runaround.

“They paid a couple of weeks,” then let the payments lapse, he said. “Then they went dark.”

Mr. Cepika said he recovered the money after he filed a lawsuit against American Environmental Partners.

Chris Vani, a former Apex employee who started his own oilfield services firm ELV Energy Services Inc. in the spring of 2022, thought he was getting a boost for his new business when American Environmental Partners hired him as a contractor. But he described a struggle to get paid.

“They’d pay me just enough to keep doing it for them and then they just quit paying me all together,” Mr. Vani said. The payments stopped in mid-2023.

Mr. Vani has sued the company and has a judgment against American Environmental Partners in Belmont County, but he’s still waiting.

According to company filings, American Environmental Partners paid many of its service providers in company stock. Even its securities advisor, a New York law firm, was compensated in stock.

It has not filed audited financial statements since 2020, for the 2018-2019 financial years, during which the auditor raised “substantial doubt about its ability to continue as a going concern,” due to recurring losses and growing deficits.

In the latest annual report, American Environmental Partners said it had a net loss of $22.7 million in 2023 and $421,000 in cash at the end of the year.

‘We’re all getting laid off’

The mayor of Martins Ferry (John Davies) has been on alert for flooding near the Austin Master Services facility where environmental officials worried that wastewater might be swept up in the rains and flow to a nearby drinking water well or the Ohio River, just 500 feet from the facility.

The waste that comes out of shale wells — both the drill cuttings and the brine that flows out of the wellbore — has radioactive elements in it. Trucks carrying this waste must be scanned to ensure the loads aren’t too “hot” for certain facilities. Pennsylvania and Ohio landfills allow some very low-level radioactive waste to be disposed there, but if it’s above a certain threshold, the loads have to be taken to special disposal sites, in Texas or Utah, for example.

Radiological services has been a growing market in the Appalachian oil and gas industry. The more wells that are drilled and producing, the more waste there is to handle.

American Environmental Partners had described Austin Master Services as a promising growth opportunity because of this dynamic.

The place has been on the radar of local environmental groups for years and has not had an unblemished record over the years, according to state inspection reports posted by DeSmog.com.

In a 2017 inspection report, an official from the Ohio Department of Natural Resources, said that waste and filter socks, which are used to filter wastewater and therefore concentrate contaminants, were being stored on the floor.

“The potential exists for radioactive and other wastes to be tracked out of the warehouse by trucks entering the warehouse building,” the report said.

Dave Kovalski, a project manager with ERB Electric Co., had visited the Martins Ferry facility in March 2023 to give an estimate on some work and recalled the waste piles on the floor. He described it as a “dark and dirty” place.

“I guess it got darker and dirtier,” he said last week.

Mr. Kovalski’s company ended up putting in new electrical panels for Austin Master Services. And then, it ended up suing the firm to get paid.

“They said that they were bought out and the new company that was taking over just needed a little bit of time to get the paperwork in order to get paid,” Mr. Kovalski recalled.

ERB eventually took the company to court for the debt of $37,000.

Mr. Bement, who ran the Martins Ferry facility, did not respond to requests for comment. Mr. Horkman said his former business partner was trying to arrange a sale of Austin Master Services to someone who could clean up the mess and get the business back up and running in order to save the 30 or so jobs that were lost last month.

Austin Master Services employees got laid off on March 18 — Mr. Horkman said he remembers because it was his birthday. He’s tried to get in touch with Mr. Domitrovitsch, to inquire about his paid time off and severance, but said he hasn’t gotten a response.

“I just want to know how it happened so rapidly,” Mr. Horkman said. “One day, (they’re telling me) everything is going to be OK, and the next day I’m getting a call on my birthday stating we’re all getting laid off.”


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