The Fall of Hammer Communications: How a Georgetown Ad Agency Built on McMansions Ended up in a Pile of Debt
If you were selling McMansions in the heat of the ’00s bubble, you probably came across Hammer Communications, a Georgetown real-estate advertising firm. The company had squadrons of creative talent who specialized in designing brochures and advertisements to make sure your overvalued properties fetched every last dollar. Hammer’s people would get good placements in the New Homes Guide, the Washington Times’ Friday Home Guide, the Washington Post’s real-estate section, and other pricey publications.
They worked with top regional builders including Basheer & Edgemoore, Pulte Homes, and Brookfield Homes.
But even those builders didn’t wow Hammer account executives the way K. Hovnanian Homes did. One of the country’s largest homebuilders, with revenues totaling more than $3 billion and 10,577 homes built in the last fiscal year, K. Hovnanian has colonized large patches of dirt all around the Washington region with its sprawling brick four-bedrooms and other attractive models.
“K. Hov” was a killer account for Hammer, an agency led by President/CEO Jack Shoptaw. Hammer pulled in boatloads of money from the builder, mainly for running advertising campaigns aimed at people looking for garages and grilling space in the suburbs. Duane Nash, a production artist, recalls that the “bulk of our work was coming from K. Hovnanian Homes and Toll Brothers. The thing was not to lose one of those two,” he says.
Toward that end, Hammer staffers received an assignment in spring 2008. They had to visit three communities by K. Hovnanian Homes, fill out a questionnaire, and return their findings to the company brass in three weeks. It was an extreme measure. Under less desperate circumstances, only account executives made in-person visits to clients’ communities, leaving the designers, production artists, and others back at the office.
Nash took time during his weekends to visit two developments—one in suburban Maryland and one in D.C.—and write up his reports. Then he helped assemble information in three-ring binders for executives from K. Hov.
The work did not pay off. Soon after the staff returned from their tours of Hovnanian duty, the builder pulled much of its business, staff say. Afterward, there was a “definite drop” in work, says Trevor Blake, a three-year Hammer employee.
“I was working on a much smaller amount of communities, and most of them were on the Delaware shore,” says Blake.
Thus began Hammer’s bumpy descent from the heights of the Washington bubble.
In its ascent, Hammer knew only good times. Shoptaw broke it off from another firm in 2004—so staffers already knew how to use their fat expense accounts and how to hire new colleagues to handle the mounds of client work coming through the front door.
The enterprise was less skilled in handling one of the steepest real-estate collapses ever. It didn’t know how to satisfy its bigger clients. It didn’t know how to fire people. But, mostly, it didn’t know how to pay its debts after the cash stopped flowing—a management problem that continues to dog Shoptaw.
“A lot of people are still trying to figure out: How is he still in business? That’s the number one question that keeps coming up,”says Nash.
Like any good real-estate executive, Shoptaw knew exactly where to locate his firm. Hammer employees did their designing, ad-placing, and other creative work from offices in Georgetown’s Flour Mill buildings. One of the offices had an ample view of the Potomac River, and they were all within walking distance to Georgetown’s happy-hour scene.
Staffers frequently gathered on the company dime at nearby Papa Razzi or the Ritz-Carlton Georgetown, recalls Paola Zamora, a former designer.
“There was no limit. The boss wasn’t like ‘I’m only paying for a round,’” she says. Roughly 30 people partook early on at the Ritz, but five or 10 people would stay for hours. “We drank all night—on Hammer,” says Zamora, “and we’d get appetizers also.” The next morning, they could work it off at the M Street Washington Sports Club, memberships courtesy of the company.
The free-wheeling corporate generosity was an extension of the boss. Back in 2004, former art director Warren Ellis says Hammer was a “mom and pop agency” of 20 employees where Shoptaw invited certain staff members to his office for margaritas on Friday afternoons.
But as the company grew, the bonding time dwindled. Shoptaw, a flamboyant dresser who often reminded his employees that appearance was important in this industry, spent a lot of time out of the office, presumably wheeling and dealing and lunching with clients. He didn’t fuss much with the day-to-day issues or make rounds to check in with staff.
For many years, Shoptaw helped MC the Major Achievements in Marketing Excellence (MAME) Awards, a ceremony that every important business in the Washington homebuilder world attends. His repeated stints played up his theatrical side.
“He was a popular guy with the builders,” says Rick Daniels, whose company Graphic Services, Inc. built signs for Hammer’s clients. When Daniels found out that Shoptaw was taking the reins at Hammer, he thought he would “do really well.”
“I kind of thought, ‘Wow, I definitely want to work for this ad agency,’” he says.
One MAME Awards in particular looms in the memory of many former Hammerites. In the runup to the spring 2007 honors, Hammer was flush with cash and expected to win a lot of awards—and the company wanted all their clients and competitors to remember the moment.
The partying began around midday, when Hammer employees began drinking at the office. At around 5 p.m. the limos arrived, taking everyone from the Georgetown offices to the Hilton Washington.
Despite that year’s Miami Beach theme, Hammer employees all wore black, as they were instructed to do. The show started with six hired male dancers in Hammer T-shirts doing a routine before the crowd. At some point, when the company won a major award, the staff rushed the stage and started dancing.
The evening ended at a downtown club, MCCXXIII, with Hammer managers and employees getting drunk and grinding on the dance floor.
“It was just a spectator sport for me,” says Ben Tolman, a production artist.“The clients weren’t even participating. They were just sitting off to the side watching. I have no idea what they thought.”
That was the high-water mark for Hammer Communications.
Tolman was among the first to be laid off after the K. Hovnanian flop. While his fellow Hammerites were sitting in I-495 traffic visiting the K. Hov houses, he decided to not complete the assignment.
“I thought it was kind of stupid,” he says, and he was sick of the job anyway. “It was fine by me that I got laid off, I was kind of looking forward to it.”
From then on people just kept disappearing. Staff members vaguely remember various rounds of layoffs. But while some people got fired, others just quit. The news wasn’t widely reported: “It wasn’t like everyone got a memo about ‘so-and-so’s gone.’ It was just like they weren’t around,” says Blake.
Employees could never tell who would get the ax—could be someone from management, could be the receptionist, could be an account executive. The only pattern was empty chairs: By the end of 2008, Hammer had lost about 30 to 40 employees.
Hard times, however, didn’t get Shoptaw down. He’d still wax optimistic at the all-staff monthly meetings, an institution known to employees as “Hammer Time.” Shoptaw would “just talk about how great the company was and how he didn’t anticipate any more layoffs,” says Frank Bilotto, a former Hammer senior art director.
People wanted to believe him. And they kept hearing the same mantra from the company leaders, says Nash.
“They were still out trying to generate business,” he says. Employees were told “We’re comfortable at this time. We should be able to operate for a while doing what we’re doing.…When things start building up again, once the economy returns, we should be able to start hiring people back.”
Whenever Hammer didn’t land an important homebuilder account, management blamed it on politics, says Bilotto. The rationale was that one of the executives at the company had a personal friendship or once worked with someone at a competing firm.
Further staff departures often followed the excuse-making. “It got so frequent and just ridiculous that we actually made a bingo game out of it,” says Bilotto. “We’d draw up little…cards and every time someone either quit or got let go, we’d cross their name off and see who got bingo. We actually played two games.”
Then came the Feb. 19, 2009, firings. Throughout the day, people were called in to hear the bad news, while remaining employees left the building or hung out in other offices to give co-workers space to clear out their desks. The next day, the last dozen or so employees boxed up their belongings and emptied the office.
One woman—a production artist—was on vacation at the end of that week, says Bilotto. Hammer brass didn’t bother to e-mail her that she’d been laid off.
“She came back from vacation and the doors were locked,” Bilotto says he heard.
Bilotto decided he couldn’t take another day at the company, and soon resigned—as did longtime account executive Sara Badr. But both still had plenty of unfinished business with Jack Shoptaw.
Though Hammer’s Georgetown offices were dark and locked, the company wasn’t yet dissolved.On a conference call the day after the firings, Shoptaw announced the company had found a new office space.
“Everyone was all excited about it. Well, not everyone. But Jack was all excited about it,” says Bilotto.
Not long after announcing his resignation, Bilotto ran into trouble with his employer. In his final days working for Hammer, his e-mail account was shut down, and the remaining company managers rarely returned his phone calls or e-mails. He didn’t get his last paycheck, either.
He eventually went to Shoptaw’s Arlington condo, where the company had taken up temporary lodging, to demand his payment—roughly $6,000 for three weeks of pay and two weeks of vacation time, he says.
He wasn’t successful. After a few minutes waiting around with another employee, Shoptaw walked out of a bedroom and proceeded to berate Bilotto.
“He accused me of being in collusion” with a Hammer executive who’d resigned before the company went under, says Bilotto. “This was our big plan. To screw him somehow, I guess. I was like ‘Uh, no—I just want to be paid for the hours I worked.’”
That wasn’t going to happen, said Shoptaw, who passed on his lawyer’s number. Bilotto soon left. Badr also claims she’s owed back pay by Hammer—more than $8,500—though she’s not exactly surprised by the stiffing. Outstanding payments were a constant issue during her two years at the company, she says.
Badr arrived at Hammer in early 2007; within months after she started, she began hearing from vendors who’d completed Hammer contracts but never got paid. The vendors were businesses who made products, ran advertisements, or executed various services for Hammer’s clients, including those huge banners at development sales centers you can’t miss when passing by. Rather than pay Hammer and the various vendors separately, most clients paid everything to Hammer directly. Hammer was supposed to make sure all vendors were paid.
Whenever someone reported an outstanding payment, Badr would always do her “homework,” checking that her client’s money had been paid to Hammer, so Hammer had the funds to pay for what she’d ordered. Somehow the money made it to Hammer but never left, she says.
The complaints were relentless: “It wasn’t like one or two,” says Badr. “Every week, I was getting a ton of phone calls, saying you know, you can’t run this ad because your account’s on hold.”
With trust eroding, Badr worried she was ruining long-term relationships she needed to do her job. “The business is strained if there’s money overdue,” she says.
Today, there are at least three vendors who say Hammer owes them more than $30,000. United Bank, Inc., also has sued Hammer Communications, Jack Shoptaw, his wife, Theresa Shoptaw (they are now going through a divorce), and two of Shoptaw’s former business partners for $605,000. In mid-May, United Bank filed an involuntary petition to place a Hammer LLC in Chapter 7 bankruptcy.
By all accounts, tracking down Shoptaw is an agonizing experience. Rick Daniels’ sign-making company is owed roughly $35,000, he says. After talking with Shoptaw repeatedly during the fall of 2007, Daniels finally caught up with him at the Spring 2008 MAME Awards. For a while, Shoptaw was surrounded by a coterie of women. But, “once his school of female body guards [got] away from him,” Daniels decided to approach Shoptaw.
“I go to him. I shake his hand—we’re at a black-tie event together—and I say to him…‘Listen, Jack, you’re going to need me in this area of expertise, you’re going to need my product,’” recalls Daniels. Shoptaw was apologetic in public. But that didn’t matter in the end. “At some point, he just decided he wasn’t going to pay.”
Howard Owen, head of Stafford Printing, also has a money beef with Shoptaw. In April 2008, Owen’s company received a $70,000 order for a new Pulte Homes development in Fredericksburg. The contract called for “a complete marketing campaign” of special-made products for the sales staff: business cards, letterheads, envelopes, brochures, pocket folders—about a dozen items total.
Owen had worked with Pulte for 20 years. So when he got the order, he started to work right away, rather than wait for the full payment. He trusted that compensation would arrive by the time he finished.
Ultimately, that didn’t happen.
“Hammer essentially paid us a very small portion,” says Owen, “and has avoided us for the most part.”
Pulte stepped in and helped cover some costs—although the company had already paid Hammer, he says. He says he’s been left to beg for the remainder: $34,000.
Owen forwarded an e-mail exchange with Jack Shoptaw, lasting from early January to February 2009
Subject: Re: PAYMENT
Owen: “Jack, when can I expect payment?” (1/15/09)
Shoptaw: “Our office is closed today but we will be in touch before the week is out. I need to ask you however who you are working on resolving this with? Us or [Pulte]? Please advise.” (1/20/09)
Shoptaw: [Writes he’s occupied with clients.] “I can call later this evening or ask Tina and Jodi to call you. Let me know.” (1/22/09)
Owen: “Call” (1/22/09)
Shoptaw: [Accuses Owen of maligning his company and acting cruelly.] “Howard, We have been challenged like the rest of the world to deal with challenging financial situations due to the world economy,” he writes, adding that three of his clients went “defunct” in the last year. “If and when you are eager to resolve amicably I am more than willing to talk again. Otherwise we will be in touch next week.” (1/23/09)
Owen: “Next week is not acceptable! You have delayed, made excuses, done everything possible except pay your bill. Your behavior is reprehensible. How can you even meet with Pulte Homes and keep a straight face?” (1/23/09)
For roughly the next week, Owen and Shoptaw haggle over exactly how much money Hammer has already paid. Shoptaw wants to “show good faith” on his promises “by turning some printing work your way.” Owen wants to schedule an in-person meeting, and then promises Shoptaw that he’s very nice and not to be scared.
Shoptaw then again implores that the meeting “must be handled in a professional manner.”
“Let me know what time is convenient,” responds Owen as part of a final e-mail exchange on Feb. 2.
No meeting was ever scheduled.
As rumored and promised, Shoptaw’s remaining employees did move into a smaller office in Georgetown—but not as Hammer Communications.
In early April, the Shoptaw Group launched. On its Web site, Shoptaw, as president/CEO of the company, writes this personal statement:
“I believe that a company’s success is a direct reflection of the results it brings to its clients and partners. I started The Shoptaw Group with a vision to offer our clients the outstanding creative services of a small advertising boutique, while providing them with strategic account management, and forward-thinking media strategies.”
The office is roughly a block west of Hammer’s old Flour Mill offices. When former Hammer employees and stiffed vendors found out about the new company’s launch party, they decided to attend—sort of.
They stood outside the building, below the Whitehurst Freeway, with yellow signs that said “How Much Does Jack Shoptaw Owe You???!!!” Right below that question was a little line for people to fill in.
Among the handful of protestors to show up was vendor Roy Kupersmith, who wrote in “$31,000+” on the line.
Kupersmith works for New Home Media, which creates outdoor and indoor signage for new developments.
He says the group was standing outside for 20 minutes before any new Shoptaw employees or party guests noticed them. Eventually, he became fed up with the lack of attention and texted an old Hammer employee. One person came to the window, and slowly the others drifted over to gawk. Kupersmith eventually spotted Jack Shoptaw himself.
“I think there was a hand gesture from me at that point,” he says.
If the protest has helped in any way, it’s to spread the word about Shoptaw’s past, says Kupersmith.
At some point, a party guest left the event and took a picture of the crowd. It was forwarded around to various people in the local homebuilder world, say Kupersmith.
“Literally within a week or so after that date, I got six or seven phone calls, and eight or 10 e-mails from people, some of whom I haven’t spoken to for years,” he says. “They wanted to know more. They wanted all the gory details.”
Shoptaw did not respond to phone messages on his work voicemail or requests for an interview through his lawyer, Michael S. Fried. When a Washington City Paper reporter visited his office, two employees came out to the waiting room to say he was too busy to talk.