Tennessee Sommet Group Signaled Financial Stress Before FBI Raid

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A payroll services company that had naming rights to Nashville’s arena gave off signs of financial trouble for several months before FBI agents raided it July 6.

Sommet Group of Franklin, Tenn., is embroiled in a federal criminal probe for allegedly misspending clients’ medical insurance and retirement funds.

The company had its name on the downtown arena from 2006 until 2009 when the Nashville Predators of the National Hockey League sued for nonpayment. The Predators control use of the arena.

According to The Tennessean newspaper, Sommet bounced checks and paid some clients’ health care bills with credit cards in recent months.

As far back as 2007, it failed to submit required paperwork to the Tennessee Department of Commerce and Insurance. And it was booted out of North Carolina for failing to have a license to operate in that state last year.

Despite that, Sommet continued to do business in Tennessee, handling corporate clients’ medical claims, employees’ 401(k) accounts and payroll taxes.

Federal investigators are looking into whether Sommet executives misappropriated client funds, leaving customers responsible for several million dollars in unpaid bills. No one has been arrested.

Fifty-two clients of Sommet have unpaid employment taxes, according to the state Department of Labor and Workforce Development. Those customers are wondering how much in taxes Sommet collected but never paid.

Additionally, Sommet has not paid about $2.1 million of insurance claims, a federal search warrant revealed.

This year two separate third-party health claims administrators that Sommet hired, Health First Solutions and HCH, canceled their contracts with Sommet because Sommet wasn’t paying legitimate health care claims, according to the federal search warrant.

The company Mailer’s Choice hired Sommet to process payroll checks, pay taxes and provide health insurance.

The state Department of Labor and Workforce Development has informed co-owner Terri Hedges she owes $4,500 in state unemployment taxes that Sommet Group didn’t pay. And Hedges, who recently broke her wrist, learned that her physical therapist wasn’t being paid by Sommet even though she was covered by an insurance policy.

“Who knows what taxes haven’t been paid?” Hedges said a few days after the FBI raid. “If it’s my federal taxes, good Lord….”