In retrospect, the signs were there that Elite Transit Solutions was in dire financial trouble. However, former employees say that when they raised concerns to CEO Michael D. Johnson about carriers not being paid or suddenly being blocked from posting freight on one of the country’s largest load boards, the entrepreneur “always had an answer for everything.”
While Elite Transit Solutions, headquartered in Pittsburgh, hasn’t officially ceased operations, the company’s latest surety bond insurance through Allegheny Casualty Company is slated to be canceled on Nov. 22. It’s previous policy through Southwest Marine and General Insurance Company was canceled on Nov. 2. In order to operate a freight brokerage in the U.S., the Federal Motor Carrier Safety Administration requires brokers and freight forwarders to maintain a $75,000 surety bond. According to the FMCSA’s SAFER website, it doesn’t show that Elite Transit has obtained a new surety bond policy to continue operating.
An Elite Transit spokesperson wrote in an email to FreightWaves that “there are still employees” working at the freight brokerage. After initially firing the majority of Elite Transit’s remaining workforce via Microsoft Teams on Nov. 3, which ex-employees stated was around 65 employees, Johnson kept on around 10-12 employees. However, most of them have since been laid off. Elite Transit disputes the number of employees who were fired via Teams but failed to provide a different number.
As of publication Friday, Johnson sent out an email to former employees who haven’t received their final paychecks for two weeks’ work and accrued time off, which were due Nov. 10. Johnson’s email, obtained by FreightWaves, said, “At this moment, it is looking like we can get the payroll released in the next couple of weeks. The main variable upcoming is Thanksgiving and Black Friday.”
While Johnson, who founded the logistics company in 2013, initially agreed to speak with FreightWaves about the ongoing financial situation at Elite Transit Solutions, he later declined multiple requests for comment about the company’s operating status. Kushal Dave, who serves as general counsel for Elite Transit, has also declined numerous requests for an interview about what led to the freight brokerage’s precarious financial situation.
Those who stayed on an extra week to help Johnson, as they were reportedly told there was a promising deal in the works but that he couldn’t disclose more details because he was waiting for the papers to be signed, are owed three weeks’ pay after the deal apparently fell through. Elite Transit disagreed with the ex-employees statements that a potential deal fell through but declined to provide additional details about Elite Transit’s next steps.
“We knew things were bad but he strung us all along with the belief that he was signing these contracts, that he was selling a portion of the company to a private-equity firm, which we were told was going to inject the funds into the business so everybody’s jobs will be saved,” said one ex-employee, who spoke to FreightWaves on the condition of anonymity for fear of retaliation.
One source familiar with the situation alleges Johnson couldn’t come up with the funds needed to make the final payroll and is now dodging ex-employees’ questions about when or if they will be paid.
FreightWaves obtained a copy of the Microsoft Teams video call on Nov. 3 in which Johnson fired an unspecified number of staff members but didn’t allow them to submit questions using the chat function and muted their microphones so they weren’t able to ask questions.
After stating that employees who worked in Elite Transit Solutions’ satellite offices in Charlotte, North Carolina, Chicago and Phoenix needed to return their company-owned equipment by Nov. 8, he offered his support and volunteered to reach out to his “rather large network” for ex-employees needing jobs.
“It’s a very tough situation, a very tough time in the industry and in the economy as well,” Johnson said on the video call. “If you need a letter of recommendation or support in obtaining new employment, I want to be personally here to help you. Please feel free to reach out to me directly. If you don’t have my cellphone number, please feel free to message me on LinkedIn.”
Further pouring salt in the open wounds of the employees Johnson had just fired, he closed out the video call by stating, “I hope you guys have a great weekend. I’ll talk to you soon.”
One ex-Elite employee told FreightWaves, “Just do the right thing. Is it that hard to do the right thing in 2023? It really shouldn’t be that difficult — just pay us.”
On Tuesday, one ex-Elite Transit employee asked if the fired workers could expect paychecks soon.
“Like many others who need these final paychecks to buy Christmas presents for their families, Michael Johnson fed me and others a line of BS. … ‘I got great news but the papers aren’t signed yet. Blah, blah, blah.’”
Ex-employees describe ‘crisis mode’ in final months
A common theme among ex-employees at Elite Transit’s four offices was that the freight brokerage was in crisis mode during the final months of operation. Some former employees claim Elite Transit’s financial problems started back in 2021.
“We received calls from potential customers wanting to do business with us but we had to turn them away and were told to call them back in 60 days because our finances were in such terrible shape we couldn’t service any new accounts,” a former employee, who didn’t want to be named for fear of retaliation, told FreightWaves.
The death knell for Elite Transit was when former brokers allege DAT Freight & Analytics, one of the trucking industry’s largest load boards in North America, blocked the company’s ability to post freight on its load board because so many carriers had filed complaints about the company’s failure to pay them.
An Elite Transit representative denied claims by ex-employees that DAT blocked Elite Solutions from being able to post freight on the Oregon-based company’s load board.
While a DAT spokesperson said the company doesn’t comment on specific customers, it said in a statement to FreightWaves that it does “take the responsibility of providing DAT business services to our customers who rely on us to run their business very seriously and require strict adherence to our network governance policies.”
DAT continues “to make substantial investments in our Network Integrity Unit, which sets compliance policy and responds to every customer concern, as well as deploying our AI-powered technology to help keep bad actors off our network,” the statement said.
Prior to the layoffs, former Elite Transit employees said the majority of the inbound calls were from countless carriers owed thousands of dollars for loads they delivered but were never paid.
Former employees claim they were instructed to transfer the calls to the billing department. They claim few people answered the phones or responded to emails from carriers requesting payment.
“We were cut off by almost every factoring company you can think of,” the ex-Elite Transit employee told FreightWaves. “It got so bad that the factoring companies were taking money back from the carriers because the contract was between the factoring company and the carrier, not with Elite. We heard from carriers that were forced to close their trucking companies, including one that had to sell his business and his home because we hadn’t paid him. We received an email from the wife of a carrier owner whose husband attempted suicide and blamed Elite for not paying him.”
One trucking company owner with eight trucks is owed for loads his small trucking company hauled in May and June. While Irhad Kapidzija, owner of Aquida Trans LLC of Manchester, New Hampshire, had an agreement with Elite Transit to be paid within a 45-day time frame, it didn’t happen.
“We initiated numerous communications with Elite Transit Solutions to request updates on the outstanding payments,” Kapidzija wrote in an email to FreightWaves. “However, our inquiries were met with a lack of transparency and misleading statements as they were unwilling to provide concrete payment dates.”
Kapidzija alleges he then tried to file on Elite Transit’s bond, but his company’s efforts were unsuccessful.
“They [surety bond company] were instructing us to contact Elite Transit for payment resolution. Our response to this directive was to reiterate that our pursuit of payment from Elite Transit was met with repeated failures and it was the responsibility of the surety bond provider to ensure payment to carriers in the event of non-payment by the broker. However, their response was disheartening, as they asserted that according to the policy listed on their claim form, they would only consider payment in the case of Elite Transit’s insolvency or a legal judgment and advised us to be patient,” Kapidzija said.
The Aquida Trans owner said he reached out to Elite Transit Solutions one more time via email on Sept. 23 and was advised there were no updates regarding the payment status.
A former Elite Transit employee said when irate carriers called or emailed about when they could expect to be paid, they were to tell the carriers that their “payment was in the queue,” when in fact no payments to trucking companies were being processed. Carriers still owed money claim they received “payment is in the queue” emails from Elite Transit.
“What drew me to want to work for Elite Transit was a slogan that Michael [Johnson] used all of the time. … ‘F—k ordinary, be legendary,’” one former employee told FreightWaves. “Oh, he’s going to be legendary by the time this is all over but in a different way.”
Read related article here: Pennsylvania brokerage lays off nearly 65 employees, sources say
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FreightWaves’ Grace Sharkey contributed to this report.
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