The rise and tragic fall of an entrepreneur
Katherine Henson seemed to have it all: a growing business, strong personal relationships, and the recognition of her peers. So what went wrong?
By Patricia B. Gray, FSB contributor

(FSB Magazine) -- IN THE COMPETITIVE HIVE OF business in Atlanta, Katherine Henson was undoubtedly a queen bee--and for good reason. Daughter of a single mother, raised in the city's notorious housing projects, Henson had shucked a ragged past to become one of the region's most acclaimed--and polished--businesswomen. Avail Workforce, her staffing concern, was among the fastest-growing private companies in the U.S., with revenue that topped $92 million in 2005. Her client roster included more than a few of the Fortune 500. Earlier this year Enterprising Women magazine named her one of the nation's five top female entrepreneurs, one of a dozen national awards she had collected over the past few years for her business savvy. She had a condo in upscale Buckhead, a yacht at Lake Marion, a mansion in the prosperous north end of Atlanta, and a closet full of Armani and Chanel. At 49, Henson was seriously in the game and in the money.

Which is why the tightly knit Atlanta business community was so stunned at the news of her death. On Thursday, May 25, according to police reports, Henson drove to the home of a former boyfriend and shot him twice, in the leg and in the chest, before turning the gun on herself. The bodies were discovered two days later by friends who became alarmed when she didn't show up for work on Friday. Henson's black Mercedes sat in the driveway of her boyfriend's unfinished new home. Takeout for two from her favorite barbecue restaurant lay cold in the backseat.

Local news reports hinted that the murder-suicide may have been a crime of passion, just another example of an older woman enraged at being spurned by a younger man. Henson had told girlfriends that she and her boyfriend, Kevin Friedlander, 40, a replacement-window salesman, had recently broken off their two-year relationship. But a few of her closest friends knew that Henson's love life was only one of her worries and perhaps the least of them.

It is hard to know, experts say, why someone takes her own life. Brain chemistry is often involved, as is depression, and the contributing factors can be many. What only her friends knew at the time of her suicide was this: Despite soaring revenues and a roster of big corporate clients, Henson's company was in dire financial straits. It was growing--but spinning out of control.

Early this year the Internal Revenue Service placed a lien on Avail Workforce, alleging that Henson had failed to pay about $2 million in taxes in 2004 and 2005. When her tax troubles surfaced, Henson's bankers pulled her credit lines. She was forced to borrow from a New York City finance firm that charged 10% a week on the money she needed to meet her $227,000 payroll each Friday. By early May she had worked out a payment schedule with the IRS. Even so, only hours before the murder-suicide, the New York finance company had cut off the funds, apparently impatient that the IRS wasn't allowing it to be first in line to collect any debts.

Without that line of credit, Henson couldn't pay her workers the following day. The company was thinly capitalized; Henson was the sole owner. Her accountant and her lawyer had been urging her for several weeks to seek protection from her creditors under Chapter 11. That would have bought her some time to reorganize her debts, but she was resisting, in part, she told friends, because she would feel humiliated if colleagues and clients knew of her troubles.

"Kathy believed that she would lose herself if she lost her business," says Linda Coughlin, president of Metro-Home in New York City. Coughlin had been a close friend for three years. "She had fought so hard for so many years to build that company, and she was deeply ashamed about her financial problems."

HENSON'S RISE TO POWER AND WEALTH IS AN EXTRAORDINARY tale of hard work and moxie. She was the only child of a single working mother--Henson's father had walked out on the family one afternoon, leaving her when she was about 3 years old. Her mother, Grace Pugh, 72, of Stone Mountain, Ga., says she used to take her daughter with her every weekend to her $80-a-week job at Burger King, where the girl, then 8, would clean the tables. "All we had was each other," her mother says. Henson got her first job at 14, working first as a waitress and then as a cashier at a pharmacy. She may or may not have attended college for a short time; she rarely talked about her early life, even with friends.

At some point in her 20s, Henson got a job in a temporary-staffing agency, and that's where she learned the business. She was a dynamo: hard-working and charming but also headstrong and impulsive. At 36, she launched her company out of her apartment. Her mother pitched in to help at times, handing out fliers to recruit workers at shopping malls and grocery stores.

Friends and colleagues say Henson was obsessed with achieving success. "Kathy had a big appetite for expensive clothes and antiques and things," her mother recalls. "She was always figuring out a better way to make a buck." She hired a publicist to garner favorable coverage of her and her company. She joined a score of organizations, pouring her energies into volunteer work, in part to build a network of contacts. She hired a coach to polish her public-speaking skills. She confided in friends that she intended someday to run for Congress. "Everything she knew she had taught herself," says Buddy Allen, a turnaround artist and family friend and now the temporary administrator of Avail. "She had hundreds of books on business in her library. Once I gave her a list of motivational quotations to encourage her, and she had memorized them all in a day or so."

Starting in 2000, Henson's company began to reel in prestigious clients that included BellSouth, Cingular Wireless, and Coca-Cola Enterprises. Eventually Avail grew to five offices in Atlanta and employed as many as 1,500 people. She was masterful at building relationships, especially with powerful women in the city's corporate community. "No one could work a room like Kathy," Allen recalls. Kay Tyson, a manager at bottling giant Coca-Cola Enterprises, remembers a call several years ago from Henson, whom she didn't know at the time. "Kathy introduced herself and said a friend had told her we should meet," Tyson recalls. "I apologized and said I had no time to talk because I was leaving for an Orlando conference to promote business for Native Americans. Kathy told me she was Native American. In Orlando I was walking through the conference center when I heard someone say, "Kay, it's Kathy!" I don't know how in the world she recognized me, but soon we were sitting in a restaurant talking and laughing as if we'd been girlfriends for years."

Tyson invited Henson to join the Georgia Women's Business Council, a nonprofit organization to promote women entrepreneurs. Appointed to the fundraising committee, Henson impressed members with her energy and drive. She recruited Tipper Gore as keynote speaker for the group's annual awards luncheon; tickets were sold out. In all, Henson and her committee raised a record $500,000. "She was a phenomenon," says Beverly Wesley, a former diversity manager at BellSouth and a member of the council. (Gore and Henson became friendly at the event; Gore later invited Henson to spend a weekend with her and her husband at their home in Tennessee.)

Henson's claim of Native American blood proved a big asset, allowing her to sell her company's services to corporations eager to promote diversity among their suppliers. (She told clients that her father was a Cherokee. However, her application for official recognition was rejected by the Cherokee tribe of North Carolina in September 2003.) Soon Avail became a successful go-between, winning deals to provide staffing services to corporate giants and then arranging for smaller temp firms to supply the workers. "We got smart about the business," says David L. Rocker, 44, who joined Avail as chief operating officer in 2001. "Staffing is an expensive business. Cash flow is hard to manage. You have to pay your workers on Friday, but you may not collect your money from the client for 60 days. Under our new business model, we were the primary vendor to the corporate client, collecting a fee for our services. We were moving up the food chain."

Things started to unravel a year or so ago. Avail's growth was increasingly hard to manage. "Kathy had the skills to run a $10 million company," Allen says, "but she was struggling to manage a company that was going to do ten times that amount of business." She was increasingly plagued with health problems. In late 2004, Henson had minor surgery and developed complications; her recovery was painful and slow. She suffered from bouts of depression as well. Much of the day-to-day management of the firm was left to Rocker.

The two were an odd pair: Henson, a sleek and well-groomed size two, and Rocker, an effusive, good ol' boy of substantial girth. In the mid-1990s, Rocker says, the two had been engaged but had split up. After forging their business relationship in 2001, they had agreed never to divulge their personal relationship because it was "complicated," he says.

WHAT HAPPENED DURING 2005 EVENTUALLY BECAME a matter of bitter dispute between the two. In December, after the company's accountants had completed the year-end audit, Henson confided to friends that the company's federal taxes hadn't been paid, and she blamed Rocker. In phone interviews with FSB, Rocker claimed that Henson's accusations against him, which he said she had been making publicly and repeatedly at the time, were unfounded. He said Henson was using the money set aside for taxes to finance the company's growth and her lavish lifestyle. Besides, he argued, he lacked the authority to sign any company checks, and it wasn't his responsibility to pay the IRS. In late December, Rocker left the company. Henson told friends she had fired him; he says he left because she reneged on a promise to give him equity in the company. Rocker said that the two had threatened to file lawsuits against each other but that he had decided not to because he felt Henson was already under tremendous stress from her business. "I celebrate her and I curse her every day," Rocker says. "She was a remarkable woman, but she struggled with her own demons too."

Rocker had encountered major tax troubles just before joining Avail. In 1999 he was convicted of income tax fraud and sentenced to 14 months in prison. Rocker also was ordered by the court to pay $272,639 to the IRS and $61,337 to the state of Georgia. "I was wrong not to pay the taxes," he says now, "but Kathy knew everything."

Henson threw herself into her work in early 2006, toiling 12 to 14 hours a day to save the business. At the same time, Henson's relationship with her boyfriend, Friedlander, soured. "He told her she wasn't any fun anymore," Wesley recalls. (The two girlfriends spoke on the phone every morning.) Henson's friends and her mother were worried about her. "Kathy was fragile," recalls Coughlin, another close friend. Henson's mother was so worried about her daughter she recruited her old friend Allen. "My baby girl is in trouble," he recalls Henson's mother saying to him. "You've got to help her."

Still, by March, Henson seemed to be making progress at work. Allen says she was handling the heavy debt payments to her New York bank. UPS was about to approve Avail as a staffing supplier under its diversity program. By mid-May, Henson was assuring her friends the business was stable and she was optimistic.

Only days before her death, Henson was getting up each morning at four to visit a client, a food-processing factory, just as shifts were changing. "She wanted to make sure that the client was happy," Allen recalls. Avail was busy as ever. Henson's mother again helped by distributing hundreds of help-wanted fliers to prospective workers in malls and parking lots. Henson had recruited a new president, whom she hoped would lighten her workload. One of her last calls was to her mother. "She told me, 'Mommy, it's going to be all right,' " her mother recalls. "She said that over and over."

No one knows exactly what happened after she left her office that Thursday. Rocker says he had gotten a call earlier that day from Henson, asking him to meet with her. He says he consulted his lawyer, who advised him not to go. Shortly after learning the bad news from her New York City lender at mid-day, Henson left her office, telling her secretary she would be back in the morning for a day packed, as usual, with meetings. Her body and that of her boyfriend were not found until Saturday.

Today the company is no longer operating. Allen, who is liquidating Henson's personal assets, has sold her 46-foot yacht and her condo in Buckhead to help pay the IRS bill. Now he's packing up her trophies and plaques to deliver to her mother.

A Helping Hand

WHEN AN entrepreneur faces personal or business problems, often there's no place to turn. One solution: Join one of the nation's 20,000 Employee Assistance Programs, which for a fee help business owners and their workers with family issues, financial difficulties, depression, stress, and substance abuse. The four below have divisions that cater to small businesses and offer 24-hour hotlines, personal counseling, and networks of professionals such as psychiatrists, financial advisors, and lawyers:

" YOUR ADVOCATE, Rockville, Md. (youradvocate.com)

" EMPLOYEE SERVICES, Wellsville, N.Y. (theeap.com)

" MINES & ASSOCIATES, Littleton, Colo. (minesandassociates.com)

" SOUTHWEST, Little Rock (southwesteap.com)

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.