For Immediate Release:	Contact:
December 4, 2007	Chrissy Pearson
	Kristin Milam
	(919) 733-5238
Professional Employer Organization Determined to be Insolvent
License Denial Could Affect Approximately 3,000 North Carolina Employees
RALEIGH -- Insurance Commissioner Jim Long today announced a decision in the licensure case of the Castleton Group, Inc., a professional employer organization based in Raleigh. The Department, in dispute with Castleton since mid-2005, has repeatedly denied Castleton's application due to its hazardous financial condition. Now those financials have dipped to the point of insolvency, the hearing officer in the case ruled.
Department officials say all 89 of Castleton's client companies, including approximately 3,000 employees, could be affected by this ruling. The decision comes as many client companies see a flurry of end-of-year activity, including processing holiday pay checks and preparing W-2 tax forms.
"We want Castleton's client companies to be fully aware of this decision so they can review their situations," said Commissioner Long.
Professional employer organizations, or PEOs, are also known as employee leasing agencies. They provide employees to other companies through contract agreements. These contracted employees provide human resource services for the client companies, typically handling payroll, taxes, and/or benefit management. PEOs are licensed by the Department of Insurance under a law passed in 2005.
Castleton Group has never been licensed under the 2005 law; however, that law allowed Castleton Group to keep operating pending the resolution of the licensing dispute.
The decision from the hearing officer in this case determined that the Castleton Group's liabilities exceed its assets by some $6 million. In addition, evidence showed that the company's former chief financial officer admitted to filing false federal payroll tax reports, resulting in an estimated $8 million in unpaid federal payroll taxes.
The Department recommends that any client companies of Castleton Group immediately review their human resources needs in light of this decision. Companies that choose to seek services from a new PEO have 90 licensed organizations in North Carolina from which to choose. A list of licensed PEOs can be found at this Web site.
Castleton Group has filed an appeal with the Superior Court of Wake County, and has been granted a temporary stay of the license denial pending a full hearing on the merits of the stay motion that has been scheduled for Dec. 11.
Castleton Group Order
-- NCDOI --