Arkansas Air Flow Overcomes $1.8M Theft, Rebounds Business

Darren and Kelly Brown, the married owners of Arkansas Air Flow, discovered that their former bookkeeper and employee, Amy Trammell, embezzled from their business over six years. (Karen E. Segrave)

Arkansas Air Flow Inc. of Sherwood hired Amy Trammell in 2012 in part to handle its payroll. Within about six weeks, she was embezzling company money.

By the time her thefts were discovered six years later, they had cost the heating, ventilation and air-conditioning company more than $1.8 million, Kelly Brown, the company’s CFO, said.

The situation left company founder Darren Brown with two choices. He could file for bankruptcy liquidation, closing the business he’d started in 2005, or he could fight to make it profitable again.

“We chose the latter,” Kelly Brown said. “It was just a fundamental approach to banking basics is what I call it. You bill, you collect.”

But it was far from easy. Trammell, who is now in federal prison serving a three-year sentence for bank fraud, left behind a jungle of unpaid bills, including hundreds of thousands of dollars owed to the IRS.

“We called all the vendors, told them what happened,” and slowly started paying the debts off, she told Arkansas Business. “We just kept at it.”

The HVAC installation and service company showed a net loss for the first couple of years. “And then we eventually paid everybody back, including the IRS,” she said.

The company’s revenue has increased 52% since it discovered the theft, and it now has 35 employees.

Trammell, 48, pleaded guilty to one count of bank fraud and was sentenced to prison in November. A judge ordered her to repay $435,539 to AAF and she will be on probation for two years after her release. She reported to begin serving her sentence Jan. 21 in Pekin, Illinois.

Creating Distractions

Trammell had been referred to Arkansas Air Flow to replace an employee who was retiring.

Trammell’s starting pay was $14 an hour, but it didn’t take long for her to start helping herself to the company’s money, according to her indictment.

When Trammell was hired, AAF had about 15 employees. “She was the only person in the office and answered the phone,” Kelly Brown said. “I mean, that’s how small it was at that time.”

Darren Brown had been in the sheet metal and the HVAC industry for more than 40 years and created AAF after his father retired from the industry.

Inside AAF, Trammell was “very possessive of her office,” and wouldn’t let people go in it nor accept help filing paperwork, Kelly Brown said.

The door to her office remained locked. “She just had control of it, and it appeared that she would create distractions so that she could not be discovered,” Brown said.

Darren Brown began wondering why the company’s margins weren’t higher.

Discovery

Kelly Brown worked at Little Rock’s One Bank & Trust and was an authorized signature on Arkansas Air Flow’s account.

On Friday, Feb. 2, 2018, Brown learned that an overdraft had occurred on the company’s account. Overdrafts had happened several times, in fact. “I had just about had it,” said Brown, who had been in banking since 1987. She felt the overdraft reflected poorly on her as the bank’s commercial loan officer and senior vice president.

Brown called her husband’s company and was told that Trammell was out sick.

Brown took a friend with a forensic accounting background and headed to AAF. “We were able to get into the computer,” she said. “My friend looked at the function in QuickBooks that was the audit function, and … you could see where [Trammell] had deleted transactions or changed the name of the vendor when the money was going to her.”

Brown and her friend worked over the weekend to start piecing together what had happened. “Her little wall started crumbling,” Brown said. “We were able to dissect what charges were truly Arkansas Air Flow-related, and what charges were not.”

Darren Brown confronted Trammell on the following Monday with the initial theft findings and fired her.

Trammell didn’t deny the embezzlement, but said she would pay the money back, Kelly Brown said.

Recovery

Brown then used her three weeks’ vacation from the bank to untangle what Trammell did and did not do.

The purchases Trammell made with company funds were staggering. The list included several family beach vacations, a Triton bass boat, the rental of a houseboat and the purchase of a $2,500 softball bat from New York, Brown said.

Trammell also gave herself unauthorized raises and bonuses throughout the years with the amounts ranging from $100 to $5,000.

The damage that Trammell left took “an inordinate amount of time” to repair. For instance, Brown said, customer equipment warranties went unfiled, and employee deductions were wrong or nonexistent.

Thinking about the future of the company, the Browns consulted with their accountant, who told them that the company was viable. “And so he helped us seal the deal,” Brown said. “We would just hunker down and make this work.”

Kelly Brown resigned from the bank and went to work for AAF.

Still, the company was in a crisis. It had $6,000 in the bank to make a $20,000 payroll for about two dozen employees. The Browns transferred their personal money into the company’s account to “make it work,” she said.

The Browns didn’t pay themselves for three months. The couple worked all the time, forgoing vacations and personal purchases.

“We’re trying to be very strategic in what our expenses were,” Brown said. “So obviously ‘efficiency’ couldn’t be the word. ‘Survival’ was the word.”

Meanwhile, Darren Brown aggressively bid for jobs. “We began to properly bill and collect accordingly,” Kelly Brown said.

AAF’s business has grown since 2018 to include serving large strip centers, hotels and medical buildings. The company handles everything from fabrication to installation to follow-up or maintenance. It also has added commercial plumbing services.

Trammell was charged with 29 counts of bank fraud, but 28 of them were dismissed when she pleaded guilty.

Kelly Brown said she was happy with Trammell’s sentence last year, which had been delayed because she was being treated for breast cancer, according to the court file.

She said that if a business owner is going through a crisis like that experienced by AAF, the owner should seek advice from professionals and friends.

“It will be humbling but share your story and listen to their advice,” she said. “Your advisers will sustain you with encouragement, offer realistic advice and graciously cheer you on to financial stability and success.”