It’s June 2015, and the human resources director for Alliantgroup, a multimillion-dollar, Houston-based tax consulting firm, is dancing with coworkers on a table in the company’s elegant office building, lip-syncing to DJ Khaled’s “All I Do Is Win.”

Kim Tardy is wearing a gold costume dollar-sign necklace slung low around a San Antonio Spurs jersey, with a cap on her head, cocked to the side. A female employee makes it rain with fake bills while fellow employees hoot and holler under the dimmed lights.

Tonight Tardy’s got stiff competition in the lip-sync battle. Wes Bangerter, the company’s managing director of finance, performs a shirtless shimmy to “I’m Too Sexy.”

Off to the side is the King, the man in charge of these twice-annual late-night office jams he calls “raves,” 44-year-old Dhaval Jadav. He throws these raves after busy tax seasons, as an appreciation for his hardworking minions, a way for them to blow off steam after working around the clock for months straight. Employees are strongly encouraged to attend. It doesn’t matter if an employee is tired or has kids at home. The job comes first, and anyone whom Jadav deems “disloyal” is shunned — ex-employees told the Houston Press they were told by upper management to cut off all contact with anyone who leaves the company. (Ex-employees claim that Jadav scours current and former employees on social media, looking for any evidence of conspiracies.) Jadav takes priority, and employees are expected to revel in his idea of fun, even if it’s forced upon them.

Jadav has made his employees — generally young, smart and, perhaps most important, attractive — very wealthy. In exchange, he has asked for only one thing: slavish devotion. The anointed ones in his inner circle — the ones he calls his “Craigs,” after the main character in one of his favorite movies, Friday — are treated to trips to Las Vegas, where young females are again encouraged to dance on tabletops — and to parties in the corporate condo. The “blue A,” as employees call Alliantgroup, is all about work hard/play hard. That’s how the company is consistently ranked in surveys by the Houston Chronicle, the Houston Business Journal and Entrepreneur as one of the best places to work.

It’s certainly a great place for upper-level males to work — the kind of place where a senior director like Kevin Corley can come to work wearing a T-shirt that says “Ass: The Other Vagina,” or the way Jadav and some of the Craigs can bust each other’s chops with emails that included racist jokes and comments about dick size. That’s the aspect of Alliantgroup’s corporate culture that doesn’t make it into Houston Chronicle pieces about Jadav and Tardy. (Jadav, Tardy and Corley did not respond to multiple requests for comment.)

Also absent from these glowing reviews is the company’s pattern of suing its own clients and former employees, or the fact that IRS agents have been investigating the company since 2016, asking current and former workers for written statements about business operations. But even some ex-employees, who agreed to speak to the Houston Press on the condition that they remain confidential, for fear of incurring Jadav’s litigious wrath, laugh off the IRS investigation, because Alliantgroup’s “strategic advisory board” boasts two former IRS directors, as well as former governors and legislators.

This political pull may be one reason the IRS never followed up on whistleblowers’ claims alleging tax fraud, detailed in a 2012 investigative piece by Bloomberg. Steven Miller, who was then the deputy commissioner for services and enforcement — the division that includes the whistleblower office — later joined Alliantgroup’s board.

In April 2017 Alliantgroup faced allegations of another kind: sexual harassment by Jadav and other Craigs. Filed by an ex-employee who worked out of the company’s California office, the lawsuit alleges that women were encouraged to sleep with CPAs to get their client lists, and that female employees who played along with Jadav’s overtly sexual text messages were more likely to prosper.

Ex-employees who spoke with the Press described a cultlike environment controlled by the moody whims of a narcissistic man-child and condoned by a gallery of aging frat boys. But it was also a place where you could make too much money to easily walk away from. It’s like the lyrics to the song the human resources director and her posse are lip-syncing: “Got twenty bank accounts/accountants count me in/Make millions every year/the South’s champion/Cause all I do/All I do/is win win win.”

***

Founded in 2002, Alliantgroup got big by doing one thing, and doing it well: helping small- to midsize companies identify a kind of tax break called research and development credit.

The credit program was part of a four-year economic stimulus package launched in 1981, originally as a way to spur scientific and technological advancement. Since its initial 1985 expiration date, the tax break has been renewed more than a dozen times and has expanded to include other businesses that at first blush don’t seem to involve much research and development. Alliantgroup’s clients have, for example, included a company that makes fountains, and a purveyor of junk mail.

A significant expansion of R&D credit qualifications that went beyond just science and technology occurred in 2000, creating a niche that the Big Four accounting firms, like KPMG and Deloitte & Touche, were either too slow or just not interested in exploiting.

Jadav, a graduate of the South Texas College of Law who went on to earn a master of laws specialization in tax law from Georgetown University, pounced on the opportunity. After stints in accounting firms and the IRS counsel’s office in Houston, Jadav formed Alliantgroup with accountant Jim Jacobsen and corporate attorney Shane Frank, who is currently the company’s chief operating officer. (Jacobsen sold his stake in the company and later formed one that manufactures coolers.)

With the expansion of the R&D credits, Jadav and his partners made millions seemingly overnight. By 2008 the company had sold a stake to a New York investment firm called Evercore, which then sold a minority stake to a company called Accretive Exit Capital Partners. Because Alliantgroup isn’t public, it’s difficult to tell the extent of outside investment.

As of the first week of June, the company’s advisory board included an Evercore senior director, Philippe Camus, former chairman of the board of Alcatel-Lucent. An Evercore representative referred us to a New York-based “strategic communications firm,” Abernathy MacGregor, for any questions about Alliantgroup. That company’s executive director, Dana Gorman, said he’d get back to us about Evercore’s relationship, if any, with Alliantgroup. He didn’t, but days after our call, Philippe Camus was subsequently scrubbed from Alliantgroup’s website. (Also removed was John T. Dillon, former president and CEO of International Paper.)

We were similarly ignored by Boston-based private equity firm ABRY Partners, which has listed Alliantgroup in its portfolio since 2013. Tyler Wick, a partner in ABRY, who is listed as overseeing Alliantgroup investments, did not respond to multiple requests for comment. Finley John, principal in New York-based Quilvest Equity Partners, a New York-based private equity firm, also declined to comment on Alliantgroup, which has also been listed in its portfolio since December 2013.

In December 2013 a fund called J.P. Morgan Private Equity Limited, managed by J.P. Morgan Chase’s asset management division, invested $14 million in Alliantgroup, according to the fund’s shareholder reports. Listed on the London Stock Exchange, the fund noted in 2014 shareholder reports that Alliantgroup was the fund’s fifth-largest investment. In March 2016 J.P. Morgan transferred its management of the fund to an affiliate of New York-based Fortress Investment Group. According to a November 2016 shareholder presentation, the fund has nearly $517 million in assets, and the management has “board observer rights” for Alliantgroup.

Nationally, the R&D credit (and related tax breaks) have saved businesses more than $12 billion a year, according to the Washington Post. With characteristic enthusiasm — the company’s publicity arm is fond of exclamation points — Alliantgroup claims to have helped “over 20,000 businesses claim more than $5 billion in tax incentives!”

On paper it seems dry, but ex-employees said they loved the work. In some cases, these ex-workers were fresh out of school, and didn’t come from accounting or other financial backgrounds, but learned an incredible amount of specialized material in a very short time.

After Alliantgroup won second place in the Houston Chronicle’s 2016 annual survey of best midsize companies to work for, Jadav said his philosophy was “about investing in people and making them great. That’s 1,000 percent what I come to work for every day.”

In 2013 Jadav and chief operating officer Shane Frank obtained an $84.9 million loan to purchase what the lender, Mesa West Capital, called a “20-story glass curtain wall” building at the corner of Post Oak and Hidalgo, in the heart of the Galleria area. The Chron’s story about this included gorgeous interior photos showing a sleek design accented by glowing blue wall panels and an upper-floor gym. Employees are treated to free yoga classes, lunch deliveries and alcohol. The idea, ex-employees told the Press, was to make it to where an employee would never want to leave.

Jadav, described by several ex-employees as someone who apparently requires little to no sleep, demanded long hours from employees. For several years, according to internal emails obtained by the Press, upper management incentivized employees’ billable hours through contests in which the highest biller could win hundreds or even thousands of dollars. In one email, Alliantgroup’s senior managing director of operations, Jeremy Fingeret, offered a $500 bonus to project managers who submitted 90 billable hours. Employees who billed a mere 40 hours or so were sent to “billing training.”

Some seemed to have a sense of humor about it; one of the Craigs passed out Post-its with cartoons he’d drawn bearing captions referencing tax fraud and lying to the quality control department. Another simply showed a stick figure astride a giant dong.

Others seemed more troubled.

Kim Tardy, Alliantgroup's human resources director, likes to have fun with her staff. Instagram

When Alliantgroup sued a former managing director in 2010, accusing him of stealing trade secrets and violating a non-compete agreement, the former employee countersued, claiming he left after discovering a pattern of fraudulent billing practices.

Alliantgroup sued not only Tom Nally, but his new employers (another tax consulting firm), and demanded that Nally and his employers disclose all of their investments, something the defendants believed was done strictly for harassment purposes.

In his countersuit, Nally claimed that he left after discovering that the billing department used a fraudulent “auto-populate” feature on invoices.

“Every first year law student has seen The Client and knows well that sending a bill for work that has not been performed constitutes mail fraud,” Nally’s lawyers, James Evans and Victoria Woo, wrote. “…Mr. Nally became aware that it was AlliantGroup’s general practice to ‘auto-populate’ invoices for work and to bill clients for work without any regard to whether or not the work had actually been performed.”

The attorneys noted for the court, “It is a part of AlliantGroup’s overall litigation strategy to bury those who disagree with them in litigation costs…In the year preceding the filing of this suit, AlliantGroup filed 47 other lawsuits against various parties for breach of contract. This evidences AlliantGroup’s overly litigious nature.”

In a separate response, Nally’s new company, Timber Ridge Consulting Group, claimed that Nally was already familiar with Alliantgroup’s “litigation strategy, which generally consisted of gaining business intelligence on opposing companies and simply burying others in attorney’s fees. That is what appears to be happening here.”

The Harris County District County Clerk’s site shows that Alliantgroup sued more than 90 clients and former employees between 2007 and 2016, the former for supposed nonpayment, the latter for supposed theft of trade secrets and non-compete violations. (Theft of trade secrets is also a common allegation in Alliantgroup’s arbitration complaints. In fact, so many former employees are alleged to have stolen trade secrets that it’s difficult to imagine how they are still secret.)

Like the lawsuit against Nally, nearly all of Alliantgroup’s lawsuits result in an agreed, confidential settlement, mostly within a month of the initial filing, before the client has even filed a response. Other cases are dismissed “for want of prosecution” — meaning Alliantgroup didn’t bother following up. The clients the Press reached out to either declined comment or did not respond, but one lawsuit sheds more light on the Alliantgroup playbook.

After Alliantgroup sued a New Hampshire-based “laser micro-manufacturer” called Resonetics in 2009, the company’s Houston attorney successfully moved to dismiss the case because Alliantgroup’s attorneys didn’t even show up to a pre-trial hearing.

Resonetics’ attorney, David Jones, noted that it was the second lawsuit in two months in which Alliantgroup sued a client and missed a hearing, blaming it on a scheduling error.

Jones wrote that Alliantgroup “files a lot of lawsuits….However, despite its eagerness to initiate [it] has shown a remarkable distaste for actually prosecuting its cases.”

Alliantgroup Senior Managing Director Kevin Corley showed his sartorial sense of humor with fellow employees. Anonymous

***

After an attorney for a former employee in California sent Alliantgroup’s in-house counsel a demand letter in 2016 that outlined alleged sexual harassment by Jadav, the company responded by claiming that employee had stolen trade secrets as well.

The ex-employee, Angela Torres, responded by filing suit in April 2017.

The lawsuit contains examples of the alleged texts, including a February 2015 missive about Torres’s vagina: “Hunnnn u seem really tight,” which is why an “average and thin” penis would be “just about right.” Facebook

Twitter

Torres, who worked for Alliantgroup from 2014 to 2016, said Jadav sent her sexually suggestive texts almost immediately, “which [she] entertained because doing so result[ed] in her receiving better territories, lists, the ability to attend events, and travel for work.”

The lawsuit contains examples of the alleged texts, including a February 2015 missive about Torres’s vagina: “Hunnnn u seem really tight,” which is why an “average and thin” penis would be “just about right.”

A few months later, Torres claimed, Jadav grabbed Torres’s crotch “with one hand and with the other, he grabbed her breast, and caressed her legs and butt. Torres felt intimidated, molested, and dominated by Mr. Jadav.”

After Torres told a coworker about some of the texts, the suit alleges, Jadav “sent Torres text messages that she got him in trouble.”

Although the Houston Chronicle reported that John Simpson, Alliantgroup’s in-house counsel, claimed that the company was unaware of Torres’s concerns about sexual harassment while she was there, copies of texts between Jadav and Torres refute that. In the texts obtained by the Press, Jadav, referring to Torres as “Craig,” wrote on September 29, 2014: “crraigggg—ure getting me into trouble by not keeping quiett.”

“I’m sorry if I got you in trouble,” Torres replied. “This is truly like a secret society!!”

Jadav: “Nooo — not secret society — if you mention to people that you and I are talking/texting, theres going to be territoriality — youre smarter than that crraiggg — dont be a gossip :).”

Torres: “Yes you are right. What are you doing to these girls they all are like fighting for your attention lol.”

These “girls” — the female Craigs — were encouraged to dress provocatively to woo potential clients, and, in at least one case, an upper-level employee was asked to sleep with a CPA in order to get his firm’s client list, the suit alleges.

Torres also claimed that, during late-night meetings, she “witnessed other male employees asking female employees to lean against their chairs to show their breasts.” This allegedly included Alliantgroup Executive Director Sonny Grover asking one female employee to lean over so he could get a better view of her cleavage.

After Torres confided in another coworker about Jadav’s behavior, Brad Mols, who reported the complaint to the company’s senior managing director, Lynn Hedlund, Hedlund allegedly chastised Torres for confiding in Mols, who was not a superior. The suit claims that Hedlund “told Torres that if she told Mr. Mols about anything that happened in the office or about anything that happened directly to Torres without upper management’s permission, that she would be terminated.”

Jadav later told Torres, the suit claims, that she needed “to prove her loyalty by gathering negative information about Mr. Mols.”

Instead, both Torres and Mols resigned. In June 2016 Alliantgroup sued Mols, accusing him of conspiring with Torres to steal trade secrets and form a new company to poach Alliantgroup’s clients. The suit is pending in a Houston federal court.

After the Press and the Chronicle reported on Torres’s suit, Jadav emailed employees to “set the record straight.” The May 31 email, obtained by the Press, says Torres’s claims are “absolutely false” and that her lawsuit is a “blatant attempt to pressure alliantgroup into a financial settlement by damaging the excellent reputation we have built over the past 15 years. At no time did the former employee raise any of these allegations when she worked here.”

However, Jadav apologized for “a handful of instances in which unfortunate language was used,” without making it clear what exactly he was talking about.

Jadav did not respond to multiple requests for this story. The company’s spokesman, David Rosen, responded to only one question before blowing us off, and his reply was astonishing. We asked Rosen to confirm or deny that a senior director named Kevin Corley once came to work in a shirt that said “Ass: The Other Vagina,” and that Jadav included the word “nigger” in at least one email. It took Rosen a few hours, but he eventually emailed with “These allegations stem from a lawsuit alliantgroup brought against former employees who stole proprietary information from the company, and we do not comment on matters related to pending litigation.”

Rarely has a single sentence contained so much bullshit.

These were not “allegations,” as former employees provided a photo of Corley wearing the shirt in front of female employees, as well as the following email between Jadav and a handful of Craigs, including David Ji, a senior managing director who in August 2007 shared the following attempt at a limerick about the company’s executive director: “Have you met Sonny Grover the Director? Who has the biggest bush in the world ever? Wait, I rescind like a nigger/Jadav’s is way bigger/But both are so huge they make civilized folks shiver.” (Corley, Ji and Grover did not respond to requests for comment.)

Jadav countered with his own poem: “There once was an Asian namedDong/Who was hung like David Ji after a swim in the pond/When it came time to name his heir/He dropped a bunch of pots and pans down the stair [sic]/And came up with the name ‘DING DONG TING TONG TANG TONG TING DONG TONG.’”

Neither of these incidents relates to a lawsuit; moreover, Rosen and Jadav did not respond to requests by the Press to identify the litigation Rosen mentioned in his reply.

The company instead attacked on another public relations front, by issuing press releases announcing Alliantgroup’s latest good deeds, like a new “STEM scholarship program,” and a vague partnership with Emory University.

Additionally, long-dormant Twitter accounts were reactivated. According to ex-employees with friends on the inside, workers were ordered to write positive statements on Glassdoor, an online resource for employees who want to post anonymously about their workplace environment.

In his May 31 email to employees, Jadav insisted that he’s “worked tirelessly to create a culture that is supportive, fun and respectful of our team.”

Jadav also announced a new “employee hotline…for anonymously reporting any diversity or work environment concerns.” Employees who call the number reach a recording in which they’re told their complaint will be shared with a compliance officer and Alliantgroup’s attorneys — the same attorneys who sue ex-employees. Callers are also told that “a more thorough follow-up is possible” if they leave contact information.

After notifying employees that “there will be misleading information intended to damage alliantgroup’s reputation,” Jadav wrote: “My door is always open, and I appreciate any comments, questions, or suggestions.”

Alliantgroup’s sleek office building in the Galleria is home to some awesome “raves.” Daniel Kramer

***

Now it’s September 2016, and Kathy Petronchak, Alliantgroup’s director of “IRS Practice and Procedure,” is speaking to the U.S. House of Representatives’ Committee on Small Business. The committee is holding a hearing about how the IRS “puts small businesses through [the] audit wringer.”

Petronchak, who after 29 years left the IRS for the private sector, is there to deliver a statement on how to make the audit process “more fair, efficient and transparent.”

At the time of her statement, IRS agents had been seeking statements from current and former employees for at least three months. According to a letter from the IRS obtained by the Press, the agency was conducting a “federal tax investigation.” Alliantgroup itself is not identified in the letter.

When asked about the letters, some ex-employees chuckled and said “the investigation” was a long-running joke that wouldn’t lead anywhere. One former employee ducked the letter and follow-up calls, fearing that Jadav would find out.

Because Alliantgroup’s advisory board is stacked with former IRS officials, it’s easy to see why employees might feel the company is bulletproof.

These officials include former IRS commissioner Mark Everson, who ran the agency from 2003 to 2007, when he left to become the president and CEO of the American Red Cross. Everson quit after seven months, after it was discovered that he was having an affair with a subordinate. He joined Alliantgroup in 2009.

Everson’s name turned up in a 32-page whistleblower report submitted to the IRS in 2009 by two Alliantgroup employees. The whistleblowers’ saga was detailed in a 2012 Bloomberg investigation of the IRS’s upgraded whistleblower program, in which informants could receive as much as 30 percent of funds collected by the government.

According to Bloomberg, the (now) former employees “alleged Alliantgroup inflated research expenses by saying top managers spent large portions of their time working on such projects. That enabled more of the salaries to count as costs eligible for the credit.” They estimated that Alliantgroup could owe the government “as much as $712.5 million in refunds over wrongly claimed tax credits.” (Alliantgroup denied any wrongdoing.)

Agency investigators requested that a grand jury look into the matter, but “the request was denied after discussions between the criminal division and the IRS chief counsel’s office,” according to Bloomberg, citing an internal memorandum.

In May 2010 Everson and another key Alliantgroup fixer, Dean Zerbe, arranged for a meeting “with five top officials of the IRS.”

Zerbe, former senior counsel to the U.S. Senate Finance Committee, had himself represented whistleblowers in the past. He knew the law as well as he knew those who enforced it. In April 2011 the IRS formally rejected the whistleblowers’ claims — without IRS auditors ever once speaking with them.

The board’s heavy hitters also include former Missouri governor and U.S. Senator Kit Bond; former U.S. congressman from Minnesota Jim Ramstad, who also sat on the IRS Oversight Committee; and former U.S. congressman Rick Lazio of New York, who is now Alliantgroup’s senior vice president. None of them responded to multiple requests for comment.



***

From left to right: Former U.S. Senator and Missouri Governor Kit Bond; former U.S. Representative Rick Lazio; and former U.S. Representative Jim Ramstad serve on Alliantgroup’s “Strategic Advisory Board.” Bond photo by America’s Power via flickr; Lazio photo by Marc Nozell via flickr; Ramstad by Keith Ellison via flickr (images have been cropped); source image by Getty Images

On May 18 the Houston Press published a story about Angela Torres’s lawsuit. Following that, Jadav took a new interest in tweeting, and at least three new Twitter accounts were launched to spread the gospel of Alliantgroup. On May 24, three months after the fact, Jadav tweeted about the company taking 22nd place in its category for Entrepreneur’s “Top Company Cultures List.”

Alliantgroup employees and executives praised Jadav in response. Executive Vice President Sonny Grover wrote, “Dhaval is the most amazing CEO/leader in the world!” Others wrote about Jadav’s “investment” in employees — the word that Jadav used in his 2016 Chronicle interview. It’s a word that shows up a lot on positive Glassdoor reviews, along with another buzzword, “meritocracy.” Besides an affinity for certain words, these random employees all coincidentally seem to have a fondness for exclamation points, like their leader.

On June 4 Jadav tweeted that Alliantgroup “is growing and looking to hire 100+ people! Are you the best of the best?”

Applicants were told to send résumés to Kim Tardy, who tweeted a few days later that Alliantgroup is “an #elite team of individuals so dedicated to helping American businesses stay strong!”

With any luck, one of these applicants could one day find him or herself on a table, dancing along with Tardy at an Alliantgroup rave, while Jadav looks on, smiling and untouchable.

craigmalisow@houstonpress.com

