The city man who previously owned several Capital Region businesses and professional sports teams is folding his government and school financial consulting firm, leaving behind $14.2 million in debts.
Strategic Government Solutions filed Monday for Chapter 7 liquidation. That move stymies a costly and almost crippling federal lawsuit a rival firm filed in Lincoln, Neb.
But SGS owner Joseph O’Hara is continuing his consulting practice. In July, he rolled SGS’ assets into a new entity called Educational Services and Products, which remains based on Dove Street in Albany.
“The best [option] was to file a Chapter 7 and be done with it,” said O’Hara, who previously owned the Albany Firebirds arena football team and the Albany Patroons basketball team.
SGS helped schools and governments maximize their federal funding. The firm had 40 employees in 11 states, and they now work for ESP. Although ESP does no consulting work for schools in New York, it employs six in Albany. ESP has 1,200 school district clients in 10 states.
The firm is looking to expand into three more states as it shrugs off debts in an Albany bankruptcy court. SGS’ Chapter 7 petition cites five other lawsuits in Texas, Florida and Wisconsin county courthouses.
“I don’t see anything holding us back,” said O’Hara, who also owned the Broadway Joe’s sports bar on South Pearl Street in Albany.
MeccaTech attorney Marcia Washkuhn did not immediately return a call Tuesday seeking comment.
In 1986, O’Hara co-founded the consulting business, which was originally known as the Institute for Health and Human Services. IHHS primarily worked with state agencies.
O’Hara bought out his IHHS partners in 2000 and renamed the firm Strategical Government Services. At ESP, O’Hara is no longer the business’ sole owner, nor even the majority stakeholder. SGS’ Web site states it had generated about $650 million in additional financial resources for its clients.
SGS’ woes date back to its expansion into Nebraska. In 2005, a Lansing, Mich., consulting firm called MeccaTech sued SGS and the Nebraska Association of School Boards. The NASB is a Lincoln organization that represents 270 school boards in the Cornhusker State.
For six years, MeccaTech had helped Nebraska school districts recover money through Medicaid reimbursements. But when MeccaTech’s Medicaid reimbursement services contract expired, the new contract went to a newly created consortium, which had allegedly agreed to make SGS its exclusive vendor, according to court documents.
Some MeccaTech workers allegedly resigned and went to SGS. MeccaTech accused SGS of unjustifiably interfering with its business, according to court documents.
Throughout the court proceedings, O’Hara said SGS stood beside NASB and even paid its legal fees. But the association recently settled with MeccaTech, freeing SGS to file for bankruptcy protection. The filing stays MeccaTech’s suit, O’Hara said.
SGS listed $54 in assets. In July, the firm transferred $1.5 million in assets to ESP, according to court documents. Had SGS not filed for Chapter 7, it would have “died a natural death,” said O’Hara.
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