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BetterBone Inc. leased part of the old Homestead Woolen Mill complex in West Swanzey but never received its certificate of occupancy to start production.

After a June hearing on alleged labor law violations, a state agency has decided against a man who claims he never hired anyone at his business in Swanzey last year.

The N.H. Department of Labor’s Friday ruling also finds Angelo Nastovski, owner of BetterBone Inc., personally liable for the violations — making him responsible for paying $2,300 in civil penalties and $28,653.89 in back wages.

The money is due to the department within 30 days of the decision, or by Aug. 5. The ruling notes that state law allows the department to take action to collect the civil penalties, including placing a lien on real estate or personal property.

Back wages are different, according to the labor department’s deputy commissioner, Rudolph W. Ogden III. While the penalties are owed to the state, he explained, the wages are due to the employees, who can use the department’s decision to individually pursue collection of their money in court.

Late Wednesday morning, Nastovski told The Sentinel he hadn’t seen the decision, but he planned to appeal any ruling not in his favor.

Nastovski has 15 business days, through July 26, to challenge the civil penalties through the labor department’s appeal board. Disputing the back wages requires a petition to Superior Court within 20 calendar days, or by July 25.

Big plans

Nearly a year ago, Nastovski told The Sentinel he was moving his business into the old Homestead Woolen Mill complex on South Winchester Street in Swanzey to manufacture edible dog chews. He announced plans to hire 224 people by December and pay at least $19 an hour, and drew more than 150 applicants to a job fair in September.

But the business never received its certificate of occupancy from town officials to start production in the facility. Nastovski left Swanzey and removed the mill’s address from BetterBone’s online corporate filings in April.

Nastovski says he founded BetterBone in New York, but as detailed in a report published last October, The Sentinel found no record of BetterBone in the state’s corporate filings. Nastovski has also said he has a patent for his manufacturing process, which The Sentinel couldn’t verify, and at least two photos on the company’s website are from other businesses or publications.

In 2002, a court in Massachusetts ordered Nastovski to repay nearly $13,000 for a business loan. When asked by The Sentinel about this, he said he’d expected a larger loan for a start-up. By the time he received the money, he said, the business was already in debt, and he used the loan to repay employees who had been working without compensation.

“We took the (loan money) to pay off the people we hired, because they worked for us just on my word saying, ‘Hey, as soon as we get paid, you’ll get paid,’ ” Nastovski told The Sentinel in October. “We were not lying to anybody, not trying to deceive anybody.”

At the end of October, the N.H. Department of Labor launched an inspection of BetterBone after receiving complaints from people who said they had worked for the company without pay. The department’s inspector concluded in January that BetterBone owes back wages to three employees:

$4,903.86 to Lora George, who says she worked under contract as the marketing director for three weeks.

$15,576.93 to Holly Morin, who says she worked for eight or nine weeks last summer as the national sales manager.

$8,173.10 to Christy Whitcomb, who says she was hired as the human resources manager and worked for five weeks.

Hearing, decision

When the labor department issues its findings after an inspection, a business can pay the back wages and assessed fines; try to solve the matter informally with the department; or settle it with a formal hearing.

BetterBone’s hearing in Concord was originally scheduled in March, but Nastovski was arrested by N.H. State Police less than an hour into the proceedings on a warrant out of Massachusetts for theft charges, accused of failing to return marine equipment he said he’d repair, according to court documents. Nastovski was released on his own recognizance and has a status review hearing in Plymouth (Mass.) District Court today.

At the rescheduled hearing in Concord June 6, George, Morin and Whitcomb testified as witnesses for the state, along with inspector Rob Campbell.

Nastovski dismissed any claims that the three women were employees and said he never hired anyone. Though he insisted several times that they were not volunteers, Nastovski argued that people asked him “if they could just clean things up around the place,” so they swept and vacuumed. No one performed any sales, marketing or HR duties, he said, and they were never promised payment in return.

During his cross-examination of Whitcomb, Nastovski also suggested that, if “she wasn’t gonna get paid within the first minute, first day, first week, she coulda absolutely have left.”

In his ruling, hearing officer David Zygmont wrote that inspector Campbell “answered questions in a straightforward manner” and that the witnesses all provided documentation to verify their claims that they were employed by Nastovski, including text messages and emails.

On the other hand, he wrote, Nastovski had no documentation to support his position.

Nastovski represented himself and did not bring any witnesses, though he submitted some affidavits for the record. But Zygmont wrote in his decision that the affidavits weren’t considered because Nastovski submitted them one day before the hearing, and there is a two-business-day cutoff for documents.

“The employer’s only defense was to try to discredit paperwork and witnesses,” Zygmont wrote. “However, the volume of evidence to support the Department’s case outweighs any technical paperwork issue identified.”

In his decision on personal liability, Zygmont asserted that Nastovski “was aware of the people that were working for him and he chose not to pay them.”

Sierra Hubbard can be reached at 355-8546 or at shubbard@keenesentinel.com. Follow her on Twitter at @SierraHubbardKS.