SALT ROCK — Kenneth Ray Parsons doesn't have a state auto dealer's license. He doesn't pay workers' compensation or unemployment coverage for his employees.He's been arrested twice in the past two years: once on charges that he accepted a stolen Pontiac Grand Am and smashed it with a sledgehammer shortly before West Virginia State Police came to seize the car; the second time after he allegedly refused to give State Police a video of a fight he had with a female ex-employee.Several years ago, a Montana trucking company alleged in a lawsuit that Parsons charged the company for truck-trailer repairs that he never did, and sawed off a steel support on a trailer and claimed it was damaged in an accident.But that didn't stop the Human Resources Development Foundation from doing business with Parsons, who owns a small repair shop called K&K Auto in Cabell County."They were in business. They had signs," said Susan Paterno, who directs the nonprofit foundation's welfare car program. "We don't police all the businesses we work with."With federal money administered by the state, the Morgantown-based nonprofit group bought at least 47 used cars from Parsons since 2001, records show. The vehicles cost more than $130,000.State law prohibits individuals from selling more than five cars a year without a license.The foundation also later sold cars to Parsons for as little as $100 each. And it paid Parsons to repair, tow and repossess cars as part of the state's Wheels-to-Work program, which leases cars to welfare recipients so they can drive to work or job training programs.Parsons' friend, Larry Richards, managed the foundation's Wheels operation in central West Virginia, bought cars from Parsons and directed customers to K&K for vehicle repairs. Parsons said he didn't get special treatment.The foundation's executive director, Homer Kincaid, pledged last week that his agency would immediately sever ties with Parsons."We just assumed he was a dealer," Kincaid said. "We didn't know he was in violation of state law. It was something that slipped through the cracks."The state Commission on Special Investigations and the legislative auditor are investigating the Wheels-to-Work program.The Sunday Gazette-Mail reported last month that nonprofit groups sold clunkers to welfare recipients, while used-car dealers and mechanics reaped millions. Some agencies had questionable relationships with used-car dealers and garages.State officials quietly decided to scrap the lease program last summer after doling out $23.7 million in federal welfare money to four nonprofit groups over the past three years. The program ends Dec. 31.West Virginia recently awarded a $1 million contract to the Human Resources Development Foundation to run a new donated-vehicle program. The organization takes donated cars and gives them to welfare recipients.The foundation, an offshoot of the AFL-CIO, secured the grant with help from Parsons.Parsons was one of six business owners who promised to donate cars to the foundation's new program. He also signed an agreement to repair, inspect and provide tires for the cars, and to make sure they were "safe for our clients." The documents were submitted in the foundation's grant application.Parsons denied the lawsuit allegations and criminal charges. Both criminal complaints were eventually dismissed, one after Parsons entered a plea agreement, the other because the arresting officer failed to appear at a hearing.Parsons said he was the one cutting ties with the Wheels program. He said welfare recipients "tore up" the cars, and left marijuana and Oxycontin in them.One disgruntled Wheels participant threw a cup of urine into Parsons' car, and another burned down his house, he said, but the police "won't do anything about it.""You try to do what's right, and they stab you in the back," Parsons said. "I want them to investigate this. What I've seen is disgusting."Sledgehammers, sawsand videotapesLast New Year's Eve, state Trooper Sally Hatten acted on a tip — an informant said Parsons spent $800 for a 1999 Pontiac Grand Am worth $9,400. The car had been stolen from the Charleston Town Center parking lot.She found the Grand Am at Parsons' garage, but he moved another car in front of it, blocking it in. The trooper left, and, by the time she returned, Parsons had destroyed the car with a sledgehammer, according to court documents."He totaled it," Hatten recalled.Parsons was charged with possession of a stolen vehicle, a felony, and misdemeanor destruction of property. He was bailed out by Russell and Teresa Fry, who operate Faith Motors, another Salt Rock dealer that recently pledged to donate cars to the foundation under the state's new donated-car program.The charges were later dismissed, with prejudice, after Parsons entered a plea agreement, according to court documents. Hatten said Parsons promised to repay the car's insurer, Grange Insurance of Cincinnati.Parsons denied buying the stolen car. He said an unidentified caller from Winfield told him to tow it from Interstate 64. He said he never entered a plea agreement or paid Grange for the car.He said he's still upset that police haven't paid him for recovering and storing the stolen car.In August 2002, a K&K Auto employee, Crystal Napier of Ranger, videotaped a fight between herself and Parsons, according to a criminal complaint in Cabell County court. Parsons jerked the camera away and removed the tape. State Police arrived a short time later and demanded the video."It's gone," said Parsons, according to the trooper who made the arrest.The trooper arrested Parsons on an obstruction of justice charge. The charge was dismissed, however, after the officer failed to appear at Parsons' court hearing.Five years earlier, Sammons Trucking filed a lawsuit in Lincoln County Circuit Court claiming a former business owned by Parsons and his wife, Cynthia — Salt Rock Auto — ripped them off.According to the lawsuit, Parsons charged the company $2,369 for repairs to a truck trailer's steel support leg.But later, workers found that "no repairs were made to the trailer," and "it appeared a landing-gear leg had been deliberately cut off," costing the company $4,056 to repair, according to the lawsuit.The Parsonses denied the charges and filed a counter-suit. The lawsuits went into mediation and never went to trial, according to a court official.Ford Motor Credit Co. filed another lawsuit against Parsons in August, trying to recover about $7,000 he allegedly owes on his personal 2000 Ford F-350 pickup.Hefty profit made on car sales,ex-workers sayParsons said he does not pay workers' compensation or unemployment insurance. He said his employees were "contract workers" and are exempt from such payments. Former employees say they were always paid in cash.Parsons also said he didn't need a dealers' license, even though he bought and sold dozens of cars last year.He paid for the cars at auto auctions, then resold them to the foundation after making sure they were safe and roadworthy, he said."They actually bought the cars," he said. "I just fronted the money."Parsons said he sometimes went to auctions in Kentucky and Charleston with Richards, the foundation's Wheels manager in central West Virginia.Parsons said he met Richards through the program two years ago, and they've become good friends. Richards often "hung out" at the garage, Parsons said, but did no special favors for K&K Auto."He came down on me harder than all the other garages put together," Parsons said. "That's business. He makes it rough."Richards could not be reached for comment.Two former employees say Parsons made a hefty profit on car sales to the foundation.Napier, a Wheels-to-Work participant hired by Parsons to work at the garage, said she accompanied Parsons to several auto auctions, mostly in Ashland, Ky. He bought the cars for as little as $800, then sold them to the foundation, sometimes at twice the price he paid for them, Napier said.Napier quit her job at K&K after about five months, citing health reasons. Parsons said he fired her.Another former employee, Bud Jones, said Parsons made an average of $500 to $1,000 on each car sold to the foundation. Jones, who helped Parsons keep the garage's books, is suing Parsons because, he says, his former boss refuses to return equipment that belongs to him.Parsons said he made $200 to $300 per car, plus he received extra money to rehabilitate the vehicles.When the foundation decided to get rid of some cars, Parsons bought at least 160 for as little as $100 each, he said.He recently offered to sell those same cars for more than $1,000 each to a Sunday Gazette-Mail reporter.In addition to car sales and repairs, Parsons repossessed cars for the program — about 100 by his own estimation. He got his license to repossess and tow cars after a foundation employee asked him to do it, he said."I got every car they sent me after," Parsons said.MONDAY IN THE CHARLESTON GAZETTE: Complaints mount over the Wheels-to-Work program.To contact staff writers Eric Eyre and Scott Finn, use e-mail or call 348-4869 or 357-4323.