It's rainy and hot when Chuck Howard strides to the podium at Wake Tech Community College in Cary, North Carolina, and takes off his black sport jacket. He's been pacing the hallways and his energy is palpable. His blue eyes flash. Some 30 people have braved the driving summer rain and the heavy postwork traffic to hear him speak about what makes small businesses succeed and what makes them fail.

Howard knows both topics. A decade ago, his business, Howard Roofing Systems, was No. 60 on the Inc. 500 list of the fastest-growing private companies. At its peak, with $8.5 million in revenue and 120 people on staff, it was, by Howard's estimation, the largest metal roofing contractor in the United States. Three years later, Howard Roofing was in bankruptcy, mired in litigation over hundreds of thousands of dollars of unpaid payroll taxes. Chuck and his wife, Penny, had filed for personal bankruptcy as well.

Over the past few years, Howard--now 55, refashioned as a consultant--has begun telling his story publicly in an effort to heal himself and to help others avoid his mistakes. He says he was surprised at first that anyone would want to listen to him, but when he speaks on this rainy evening, ad-libbing for two hours and feeding off the laughs and knowing nods, he looks like a man who's found his calling. As he exhorts his audience to find significance in whatever they do, he sounds more like a preacher than a businessman. "I'll talk to you as long as you want me to," Howard tells them. "You may not like what I say, but I'm extremely passionate about what I'm talking about. That's one reason to start a business. If you're not passionate, you're not going to be successful."

That overdose of entrepreneurial spirit helped him sell millions of dollars of pitched metal roofs during his company's heyday, roofs that survived far longer than the business itself. He thrives on adrenaline--and having everything on the line. He personally signed off on the company's bank loans and mortgaged his house multiple times to make a go of it. But he never was as good at operations as he was at starting the business or closing the deal.

As I got to know Howard, I came to understand that his strengths and weaknesses as an entrepreneur were almost stereotypical, and that the rise and fall of Howard Roofing Systems was as classic a cautionary tale as one could find. For it was precisely the traits that helped Howard build his business--optimism, salesmanship, and an unflagging belief in himself and his product--that also blinded him to the company's failings as things turned sour. Howard Roofing didn't tiptoe toward success, and when it failed, it didn't fail quietly: It went spectacularly bust.

The reality hit Howard, he tells the rapt audience at Wake Tech, after he'd begun looking for outside investors in early 1999. "We'd gotten back on track," he says. "My in-house controller says, 'Don't worry, Chuck, we're going to be okay.' He was keeping the books, and I was getting monthly statements. We had suitors looking at us, and at the 11th hour, they said, 'Something doesn't look right."

It was only then, Howard tells the audience, that he confronted his controller in an emotional closed-door meeting and learned that the company--his company--owed hundreds of thousands of dollars to the Internal Revenue Service. "I was devastated," Howard says. "The business was worth $4 million to $5 million. That was my retirement, my kids' education, everything."

Chuck Howard calls himself "a southern Ohio farm boy." He grew up in Sabina, Ohio, a town of 2,800 people in the industrial heartland where there was one manufacturing plant, Mac Tools, and a lot of hog farms. Howard's father was a tool and die maker, his mother a stay-at-home mom. Growing up, Howard worked on the neighboring farms, and at age 12 he started raising and selling pigs. By buying piglets for $20 and fattening them up for sale at $140, he soon accumulated what was for a kid a small fortune of $3,000. He went to Ohio State, where he studied civil engineering because he wanted to build buildings, and he jokes that he was the type of student who made the top half of the class possible, graduating two below the middle.

After college, in 1973, Howard went to work for Modern Sales and Construction in southwestern Ohio. By the late 1970s, the construction industry was in the tank with double-digit interest rates and no one buying or building. In 1979, a friend of his father's called and asked if he could turn a flat metal roof on his warehouse into a pitched one. Pitched roofs leak less and need fewer repairs, which is why, his father's friend told Howard, he'd gotten into the habit of moving materials for his tool and die business from a building with a flat roof into one with a pitched roof whenever it rained. He was tired of that and wanted to convert the flat roof. "I said, 'It's never been done," Howard recalls. "But we didn't have any business and I didn't have any money, so I said, 'I'm going to see if we can do it.' And I started an industry."

Well, not really an industry, but it was a darn good niche for someone like Howard, who knew engineering but liked marketing too. In April 1981, after a few more retrofits, Howard mailed off 100 typed fliers. "I got 26 responses," he says. "Nobody gets a 26 percent response rate!" Six projects followed, and the nascent metal retrofit roof business was on a roll.

Eventually, Howard tried to start companies with partners, and then he took a job in 1988 with a construction company in North Carolina, where the whole Research Triangle area was expanding rapidly, with developers razing forests for new homes, and all sorts of schools and institutions were being built to serve the burgeoning population. The business was swamped with work, but Howard and his boss soon had differences about how fast to grow. As Howard tells it, his visions for the company were always too big--too grandiose--to fit within the confines of someone else's vision. So every time he worked for someone else, it seemed, he ended up in a disagreement over strategy, as had happened in Ohio, or got himself fired, as occurred in North Carolina. "I'm not a good employee," he says.

In July 1991, he set up Howard Roofing Systems. It was a small operation at first, and his wife (then staying home with two young children) did the bookkeeping at the kitchen table. Howard invested pretty much everything he had and got $50,000 from an investor and a $100,000 loan guaranteed by the Small Business Administration. Going through the construction industry's competitive bidding process can be slow and painstaking, and Howard Roofing spent most of its cash before seeing any income. "Unless I'm risking it all," says Howard, "the adrenaline isn't flowing. I know I should be more disciplined, but that's not what interests me."

At first, that attitude paid off. Local school boards, desperate to find a solution to their perennially leaky roofs, spurred demand. And once he had projects in the pipeline, Howard was able to pay off his investor. Back then, with little or no competition, recalls Bill Bilger, who joined Howard Roofing in 1994 to help with engineering and marketing, "it was easy to sell metal roofs." Annual revenue leapt from $201,000 in 1991 to $5.8 million in 1995 and to a peak of $8.5 million in 1998. That rapid growth rate--a compounded average of 71 percent a year--suited Howard just fine. He liked running a company with 120 people on staff, working from three offices and doing business in 12 states. "I was pretty cocky," Howard says. "We were growing faster than anybody."

In Howard's home office, filled with red-and-white Ohio State University paraphernalia, he keeps the plaque given to him at the Inc. 500 dinner 10 years ago. It's a bit dusty as he pulls it out of the closet, a stark reminder of the days when the company seemed at the top of the world. "I remember that time," he says, wistfully. "We had all these employees and the bankers liked us. Everybody liked us."

By the time the company appeared on the Inc. 500 list in 1996, operational troubles were brewing. By the following year, Howard Roofing had lost control of its cash flow. "We just grew like crazy and couldn't handle it," Howard says. "An entrepreneurial company takes on the personality of the entrepreneur. My perspective was that if we slowed down the growth, then we'd wither and die."

Others weren't so sure. "As sales outpaced the ability of operations to keep up," says Bilger, "there was dissension in the company--mostly over whether to keep growing at all costs." Howard tried to regain control with a management shakeup. First, he brought in Brian Hamilton, a newly minted Duke M.B.A., as a financial consultant. Then, in April 1997, he replaced his operations chief and hired the company's first controller. But the problems seemed to multiply. As competition sprung up, other contractors started putting in low-ball bids to get work. As a result, Howard Roofing got fewer retrofit projects and saw its business shift to new roofing, which it found less profitable. Construction is a notoriously low-margin business to begin with--Howard Roofing typically made just 3 to 5 percent, according to Howard--so there wasn't much room for error. "We weren't creating the money we thought we were," says Kevin Salvagni, who was operations chief from April 1997 until the business closed in 1999. In retrospect, perhaps Howard should have turned down some projects, but that wasn't his nature and, anyway, they were worried that if business slowed, the company's idled workers might defect to the competition. "Entrepreneurs don't want to think we have limits," says Howard. "I know that I am better at sales and marketing than at operations, but it hurts me to have someone say that."

In 1998, there was a series of cost overruns. Since Howard Roofing worked on large projects--a school roof can run $800,000 or more--an unanticipated cost overrun could become a sinkhole. "If we've got eight project managers, and they each lose $100,000, that's some pretty big pocket change," Howard says. "Everyone's feeling euphoric, but we're losing $100,000 a month."

He tried to get a handle on operations by tracking everything from how many people worked on each crew to whether equipment sat idle. "When your margins go down, your faults jump right out at you," says Salvagni. And by the end of 1998, things seemed to be improving operationally: The money-losing projects were ending, and newer projects were expected to be profitable. But even with revenue soaring to $8.5 million, the company reported a loss of $700,000, the first year it had failed to turn a profit. Unpaid vendors were calling Howard at home to ask about their checks. Short on cash but still wanting to expand, he began talking to outside investors.

As it turned out, though, Howard Roofing was in a lot more than just operational trouble. In August 1997, the company had begun skipping payments on its payroll taxes, which companies are required to deduct from employee paychecks and send to the government. Precisely whose decision this was remains a matter of dispute, but it gave Howard Roofing some $15,000 to $20,000 a week in extra cash. The IRS can be slow to catch nonpayments, and for some time nothing happened. But the debt grew, peaking at some $650,000 in late 1998. That put Howard Roofing among the nearly two million businesses (most small and closely held) that owed a total of $49 billion in unpaid payroll taxes as of September 1998, according to a General Accounting Office report. Failing to pay employment taxes is considered more serious than not paying income taxes because the money has already been deducted from salaries and employees receive credit toward Social Security and Medicare regardless of whether that money is sent in; the multiple penalties and interest assessed on these delinquencies can quickly destroy a business. "Everybody knew that we were having financial problems," Bilger says, "but nobody knew that the company had done anything [wrong]."

In cases like this, people tend to point fingers, and that's exactly what happened at Howard Roofing. In Chuck Howard's version of the story, it was the fault of Karl Beyer, his young controller. Howard says Beyer stopped sending payments to the IRS without telling him, and then tried to fix the problem by forwarding handwritten checks to the IRS signed with a signature stamp kept in another executive's drawer. Eight handwritten checks totaling some $600,000 were sent to the IRS. Howard claims he was kept in the dark about the tax troubles. He says the financial statements showed the tax debt as part of the company's overall payables, and he couldn't read them well enough to see any discrepancies. "He'd give me this mumbo jumbo," Howard fumes. "He physically gave me fake statements for 18 months. I gave them to the banks and the bonding companies and didn't know anything was wrong at all.…It just makes me want to go outside and vomit."

By the spring of 1999--as Howard tells the story--with the company deep in its cash crunch, he was closing in on a deal to sell the company. Two roofing companies were interested. Then, in April, one would-be investor pulled out after signing a letter of intent, citing unexplained fluctuations in the financials. Within the hour the other nixed its deal too, saying it had seen Howard Roofing's name in a list of companies with federal tax liens.

As Howard tells the story, it was 4:15 p.m. when he went down the hall to his controller's office with a sinking feeling and closed the door. "I said, 'Can you tell me, did we pay our payroll taxes?" Howard recalls. "He looked down. I knew that was bad. He said, 'Well, we owe a little bit." Then, in Howard's telling, Beyer crumpled to the floor and started shaking uncontrollably. "As God strike me dead, the man completely fell out of his chair and curled up in a fetal position and started shaking," Howard says. "I was worried about him. But I was also like, 'Tell me what's going on here. Is it $40,000, or what?' He says, 'It's $250,000 to $300,000.' I'm on the floor with him. He's crying. This is the first that I knew of it."

When Howard went home that night, he says he knew he had no choice but to declare bankruptcy. By the time he saw Beyer the next morning, he says, his controller had hired a lawyer and refused to speak with him further. "He attorneyed up real quickly," says Howard. "I said, 'You need to pack your sorry ass and get out of here." Then, Howard says, he called the IRS to find out if there was anything he could do. "In hindsight," he says, "the red flags should have gone up, but I was extremely busy."

Beyer tells it differently. He declined to comment for this story, but in a September 2003 bankruptcy court hearing about who was responsible for $355,008.23 in unpaid taxes, he testified that Howard not only knew the payroll taxes were unpaid but that he had directed that they not be paid and had dictated how to adjust the financial statements to disguise the tax deficiency. Bankruptcy Judge A. Thomas Small ruled that the tax debt was Howard's responsibility because he either knew or should have known about the nonpayment. "It was simply not credible that he [Howard] did not know that the payroll taxes were not being paid," the judge ruled. "At the very least, he recklessly disregarded whether the taxes were being paid."

Howard says he has refused to read the judge's opinion. "I was honest and I was true with the judge," says Howard, "and I cried on the stand because it was very emotional for me to be on the stand for hours telling this story. [Beyer] was on the stand for 15 to 20 minutes and said, 'This is the way it went: Mr. Howard told me to do this.' He swore in front of God that this was the truth. I know the truth, and he knows the truth."

When Howard tells his story to audiences like the one at Wake Tech, he simplifies this part of the story, leaving out the litigation over who would be held responsible for the nonpayment. He says he understands the judge's reasoning but still feels wronged by the decision. He's also angry that, although he ended up being held personally responsible for the unpaid payroll taxes, the IRS never personally notified him of that growing debt while it might have been manageable, instead sending notices to the company that he says he never saw. "The government says that as the owner, you are the most responsible, but I'd been held in the dark," Howard says. "In my opinion, I still don't think I was the responsible party."

As in most cases of payroll tax delinquency, which the IRS terms nonpayment rather than fraud, no one appears to have gained personally from the deception; it merely postponed--and exacerbated--the company's failure. As the sole owner of the business, Howard had the most to lose from the nonpayment, especially since he was negotiating with investors who could have sued him for fraud had the deal gone through without disclosure of a six-figure tax liability. But Beyer doesn't appear to have had any motivation either, something the judge pointed out in his ruling.

Brian Hamilton, the financial consultant, believes Howard. "But Chuck didn't ask, 'Hey, Karl, are you paying the payroll taxes?" says Hamilton, now CEO of a financial information company where he has hired Howard as a consultant. "It would take a lot of guts to volunteer that, to give Chuck bad news." Bill Bilger, who still plays golf with Howard from time to time, calls his old boss "an excellent speaker, a salesman, and an honest man" but admits that finances weren't Howard's area and that he never had the time or inclination to figure out what was going on.

As word spread, employees began to focus on how to get out unscathed. Hamilton describes what happened like this: "When the s--- hit the fan, the rats started jumping off the ship. When you're winning you're popular, but when you're losing no one wants to be around you. What happened to Chuck really bothered me a lot." Adds Salvagni, who, with Howard's blessing, took a large portion of the operations team and moved to another company: "People didn't want to be in too deep in this any which way. They were more scared than anything else. There was no reviving the business--it was dead."

Through the spring of 1999, Howard tried to keep up appearances, continuing to work on projects and using incoming receivables to pay the IRS. That seemed like a logical plan for wrapping up a business and dealing with its debt, but as Howard learned the hard way, it also put him on the wrong end of the tax rules. The bankruptcy judge faulted him for ignoring his obligations to the bank and the bonding company, both of which had rights to those receivables, and for paying others (payroll, rent, etc.) before paying the IRS. "It's not intuitive," says GJ Stillson MacDonnell, a tax attorney in San Francisco.

As with many entrepreneurs, Howard's personal finances and those of his business were inextricably intertwined. Even with the company on the brink of folding, he continued to receive a salary, yet he also transferred $33,000 of his own money to cover payroll and personally paid the company's portion of the health insurance benefits for its (now dwindling) employees. Howard says he wanted to keep paying his employees as long as possible and to finish projects he had promised to do. He also hoped to keep money coming in for as long as possible to pay down the tax debt, and he sent the IRS $74,000 in the company's final days. "I did everything I could possibly do to minimize the loss to everybody," Howard says. "I did everything as legal as I possibly could."

But with Howard Roofing not paying all of its bills, the local sheriff eventually came, changed the locks, and repossessed the company car that Howard had been driving. On June 3, 1999, Howard filed bankruptcy for the company and for himself and his wife. By the time of the corporate filing, in U.S. Bankruptcy Court for the Eastern District of North Carolina, Howard Roofing's listed assets of $1.4 million were dwarfed by liabilities of $2.6 million. His personal bankruptcy filing showed liabilities four times greater than assets. "I sat around and cried for a week or two," he says. "I couldn't function, couldn't eat, couldn't sleep."

One of the worst moments involved a $1,748 check to a Virginia hotel where some of his workers had stayed. The check bounced, and a warrant was issued for Howard's arrest for not showing up in court in Virginia. Two days before the bankruptcy filing, two cops approached him in the company parking lot. "They handcuffed me and put me in the back of the police car," he says. "They took me downtown, took my wallet, my belt, and my shoelaces. It was a horrible, awful, humiliating experience."

After declaring bankruptcy, Howard went to work for a friend with a siding business and tried to process what had happened. "People look at you differently," he says. "People treat you differently, and you're a leper to the banking community. The people that aren't your friends are like, 'Poor Chuck, he went"--he adopts a loud whisper--"bankrupt." Along with losing the business, Howard also lost the house that he had custom-designed and built in Cary just a few years earlier. In North Carolina, you can keep a maximum of $10,000 in equity per person in your residence in bankruptcy, so at the advice of his attorney, Howard and his wife and kids moved out of the house. With the help of his parents, they moved into a new house in nearby Apex. When he talks about how his wife, Penny, stood by him, Howard starts to cry. "She's an angel," he says.

As it happened, Howard was able to reclaim his dream house. He figures it was worth about $500,000 then, but there were multiple liens on it because he'd kept pulling money out to put into the business. According to bankruptcy documents, Bank United had a $272,000 claim on the house, while Centura Bank held multiple secured loans totaling $341,600--a grand total of $613,600 in debt on a house estimated to be worth much less. Based on those numbers, the banks could never be made whole.

Perhaps for that reason, the lenders never put the house up for sale. Ever the dealmaker, Howard approached the banks and asked what it would take for him to get the place back. "The guy at the bank said, 'Make me an offer.' I didn't have any money, so I said, 'If I can refinance, I'll give you $10,000," Howard says. The bank agreed. So one year after moving out, the Howard family moved back in--essentially by promising to pay the main mortgage he already held. "On Mother's Day 2000, I gave my wife the house back," Howard says. "I'm a stoic businessman, but I get real emotional talking about this."

While his friends stood by him and he remained a member of the church he'd been attending for years, the personal bankruptcy would mean continuing financial troubles. Even today, the car Howard drives is officially owned by his aged father, and he cannot even buy a television set on credit. "Here I am, 55 years old, and I can't get credit to buy a damn TV," he says, a day after attempting to do so and storming out of the store in disgust. "I've never paid anything late in my life except this one corporate thing."

As the bankruptcy wound its way through court, there remained a problem: the unpaid taxes. It is popularly understood that bankruptcy extinguishes all debts and allows a debtor a fresh start. But payroll-tax debts to the IRS don't go away in bankruptcy, and if you're found personally responsible for Social Security and Medicare delinquencies (as Howard was) those debts can dog you for years after the bankruptcy wraps up. In Howard's case, the personal bankruptcy was discharged quickly, in September 1999, but it took him nearly seven more years to come to terms with the lingering tax debt of more than $300,000. After failing to wiggle out of the obligation with his suit that claimed he shouldn't be held responsible, he did what so many people do when faced with tax trouble: He tried to ignore it. "It was like it was insurmountable," Howard says. "I didn't have that kind of money, and I didn't have any way to make that kind of money."

Finally, two years ago, he looked into the IRS's Offer in Compromise program for those who have tax debts too big to pay off. It's a complex program, one that's been a perennial issue partly because of how few offers are accepted. But in Howard's case, it was a godsend. He filed the paperwork in September 2004, offering $16,000, which he could cover from his meager retirement funds. The IRS rejected it. He offered a higher number. Last January, Howard and the IRS reached an agreement. He would pay $34,470 and the tax debt would be wiped out. And that $34,470? It came, he says, from refinancing his custom-built house--yet again. He pulls out a copy of the check that he sent to the IRS this April, final proof that the saga is over. "It's done," he says, "and I'm still here."

Because Howard is such an entrepreneurial type, you might think he would just start another business. But he surprised everyone, including himself, by deciding that he prefers consulting to being a chief executive. Consulting lets him leave the nitty-gritty of operations to someone else and have a hand in lots of different projects, such as marketing metal roofs and consulting with the Kennedy Center and the Raleigh-Durham International Airport on major roofing projects. He likes doing his lectures so much that he does them for free. At Wake Tech, that rainy evening, he passed out his card to every person there and urged all 30 of them to call him. As he tells the audience, "I've made a lot and I've lost a lot, but I love the ride and that's why I will always do this. As Vince Lombardi said, 'It doesn't matter if you get knocked down. It only matters if you get back up."

Amy Feldman wrote about how the Web is transforming commercial real estate in the November Inc.