The Virginia Department of Labor and Industry is investigating AirCable, a Salem-based provider of digital wireless television, for the company's alleged failure to pay employees.

Spokeswoman Patti Bell said the department has fielded wage claim inquiries from about half a dozen employees and has received one claim.

Chris Brooks of Bassett has worked for five months as an installer for AirCable, a subsidiary of Delaware-based Digital Broadcast Corp.

"I haven't been paid for a month," Brooks said Monday. "This is bad. It's right before Christmas. I don't have kids and I feel for people who do. Nobody returns my phone calls. I'm fed up."

Sheldon Gopstein, a New York City-based lawyer who represents Digital, said AirCable and Digital have about 20 employees.

Gopstein said Gary Nerlinger, chief executive for AirCable and Digital, told him Wednesday that only a few employees haven't been paid and that Nerlinger "is making arrangements to pay them right away."

Repeated attempts to reach Nerlinger for comment were unsuccessful.

The Virginia Department of Taxation padlocked AirCable's doors Dec. 5 for its alleged failure to pay taxes of at least $62,000 -- an amount that includes sales and withholding taxes collected by the company but not paid to the state. Department spokesman Joel Davison said Wednesday that no payment had been received.

The department also padlocked a building used by AirCable on Poor Mountain, from which a tower sends the company's signal to subscribers. Tax officials are investigating the circumstances of the unpaid taxes and attempting to collect what's owed, Davison said.

Gopstein described the tax troubles with the state as "an unfortunate bump on DBC's long road to recovery." He repeatedly emphasized that AirCable will continue to provide an alternative to cable TV.

"They are not going to close their doors," he said. Gopstein said he believes customers are still receiving a signal. He said he did not know how many subscribers AirCable has. Those numbers fluctuate, he said.

AirCable's short history includes fines, lawsuits

AirCable formed in February 1998 as a limited liability company in Virginia. Four years later, Digital and AirCable agreed to pay a fine of $100,000 to the Virginia State Corporation Commission related to allegations the company had violated terms of the Virginia Securities Act while attempting to raise money.

Ultimately, without admitting wrongdoing, Digital agreed to pay the fine plus an additional $2,500 to cover investigation costs. Ken Schrad, a commission spokesman, said the $102,500 has been paid.

In 2003, Bellagio Insurance sued Digital, charging that it had failed to pay back two loans totaling $75,000. In March 2005, U.S. District Court Judge Samuel Wilson ordered Digital to repay the loans, along with interest, other fees and costs. The sum was then $128,142. Matthew Huebschman, a lawyer with the Shenandoah Legal Group in Roanoke, represented Bellagio Insurance. He said Wednesday that Bellagio has never been paid.

"We have attempted to collect it in various ways but have not been able to," Huebschman said.

Digital and AirCable's financial and legal problems are long-standing and have affected people and businesses both regionally and nationally.

According to court records and other sources, Nerlinger was convicted in 1987 in federal court in New York City of conspiracy and mail fraud.

Court records show that Nerlinger, while an account executive at a commodities futures trading firm, participated in a scheme to switch profits from trades in legitimate customer accounts to accounts held in the names of friends and relatives. Nerlinger was sentenced to six months in federal prison and was released in June 1989, according to court and prison records.

"That's all public record," said John Nimmer, a Nebraska-based lawyer who has represented Digital and is a company stockholder. Nimmer questioned the current relevance of Nerlinger's criminal history.

Gopstein offered a similar observation.

"Events that transpired more than 20 years ago with respect to Mr. Nerlinger personally could not be more irrelevant in what is taking place today," he said.

There have been no allegations that Nerlinger has committed any fraudulent act while an executive for AirCable and Digital.

Company's attorney says trouble started with investment firm

Gopstein represents Digital in a lawsuit the company filed in December 2005 in the Supreme Court of New York against Ladenburg Thalmann and Co., an investment banking and brokerage firm.

Digital alleges Ladenburg Thalmann committed "civil fraud and breach of contract" after agreeing to assist Digital's efforts to obtain financing through a private placement of its securities.

In an annual report filed in March, parent company Ladenburg Thalmann Financial Services said it "believes that the plaintiff's claims are without merit and intends vigorously to defend against them."

Digital's lawsuit seeks $200 million in damages. Gopstein alleges that Digital's financial difficulties "can be traced directly to the doorstep of Ladenburg Thalmann."

Meanwhile, AirCable employee Brooks said a co-worker has missed mortgage and car payments and has other bills piling up. Brooks said past paychecks have been issued late, too.

"It's been like pulling teeth with these people to get paid," he said.

AirCable's history has included at least one other incident, seven years ago, of employees not getting paid around the holidays.

Bell said the Virginia Department of Labor and Industry determined then that seven employees who had filed claims should be paid. AirCable eventually paid those claims, she said.

In a March lawsuit Digital filed against the Salem City School Board, Digital tried to stop the school board from taking to arbitration disputes about Digital's lease from the schools of four FCC-licensed channels Digital used for broadcast.

In court filings, John Fishwick, attorney for the school board, alleged that Digital had repeatedly breached the terms of its contract with the board. The parties settled the case, according to court records.

Alan Seibert, superintendent of Salem schools, said Tuesday that he could not comment about the settlement terms. He added, however, that the school system issued this fall a request for proposals from other companies interested in leasing the schools' channels.

"We are reviewing them now," Seibert said.

Gopstein said AirCable will not be affected if the channels are leased to another company because of access to other channels.

Previously, also in March, Clearwire Spectrum Holdings, a subsidiary of Clearwire Corp., sued Digital, alleging that Digital had failed to follow through with selling to Clearwire Spectrum, for $500,000, its lease of the Salem broadcast channels. Clearwire alleged that its down payment of $200,000 for the lease had not been refunded. In November, U.S. District Court Judge Glen Conrad referred the case to U.S. Magistrate Judge Michael Urbanski for mediation.

Clearwire Corp., a publicly traded corporation based in Kirkland, Wash., is a provider of wireless high-speed Internet service.

Spokeswoman Holly Chung said the company does not comment on pending litigation.

Closer to home, Brooks' faith in AirCable is fading fast.

"I don't think I'm going to get paid. They've broken a lot of promises."

News researcher Belinda Harris contributed to this report.