Charter creditors seek Fla. land

April 07, 1995|By Alec Matthew Klein | Alec Matthew Klein,Sun Staff Writer

Creditors of bankrupt Charter Group Inc. are investigating whether former CEO Hamilton A. Schmidt bought land in Captiva Island, Fla., for about $40,000.

Mr. Schmidt, who vanished 18 months ago, surrendered to police March 27 on charges of theft and embezzlement.

James A. Vidmar Jr., attorney for Charter's creditors, disclosed the land deal in U.S. Bankruptcy Court yesterday as Judge James F. Schneider approved a plan to liquidate Charter's remaining assets.

"We've discovered recently that [Mr. Schmidt] bought a piece of property in Captiva Island, Fla.," said Mr. Vidmar, representing more than 300 creditors. "We're investigating that now."

After the hearing, Mr. Vidmar said there are still some questions about the undeveloped property's ownership. The lot is up for sale because the owner failed to pay real estate taxes, Mr. Vidmar said.

In one travel brochure, Captiva Island, a narrow barrier island off the west coast of Florida near Fort Myers, is described as a place "for those who always dreamed of running away but never dared," and as a "true nature lover's paradise."

Previously, creditors had been unsuccessful in determining Mr. Schmidt's assets. He had lived in the homes of his mother, Florence Odell Hack, and sister, Susan Schlegel, and he had leased a car.

"From what we can tell, he had everything in a bank and investment accounts outside of Baltimore," Mr. Vidmar said previously. "We could never find out."

Since Mr. Schmidt's sudden reappearance, creditors have reactivated a suit against him in U.S. Bankruptcy Court, seeking $649,000, plus interest, which Mr. Schmidt had taken out as a personal loan from the company to buy Charter stock, but didn't pay back.

Creditors are also suing to recover $45,000 in company-financed softball expenses, including a team trip to Disney World, and any additional claims arising from his criminal case.

Mr. Schmidt, who had served as Charter's president, chief executive and chairman, was indicted in Oct. 1994 on charges of stealing more than $200,000 from the company and its employee stock ownership plan and misusing more than $600,000 from insurance companies and policyholders. A date has yet to be set for trial in Baltimore County Circuit Court.

If convicted, he could face 105 years in prison on two counts of felony theft and 15 counts of embezzlement, or fraudulent misappropriation by a fiduciary.

When Mr. Schmidt vanished Sept. 14, 1993, only he knew then that Charter, once one of region's largest independent insurance agencies, was running out of cash to pay its bills. In a letter to Charter sent the day he disappeared, he wrote, "I have tried to carry the financial burdens on my back for several years but the enormous rent and debt service . . . was too much."

Less than a month after his disappearance, Charter stopped operating at noon Oct. 5, 1993. ITT Hartford Insurance Group., which had a lien on most of Charter's assets, repossessed them and sold them the same day to Oak Insurance Inc. in Baltimore.

Oak Insurance assumed Charter's employees -- about 50 at the time -- and its customer policies. The Charter name was also purchased, but determined to have no value.

ALater in October 1993, Charter filed for Chapter 11 bankruptcy to liquidate the few remaining assets not subject to Hartford's lien -- what amounted to several legal claims to recoup money.

The court-approved plan includes a $1.7 million claim by creditors against The Travelers Cos., The Fidelity and Deposit Co. of Maryland and The Charter Oak Fire Insurance Co. to collect on a policy protecting Charter against employee dishonesty and theft and for losses in the employee stock ownership plan, once worth millions and now virtually wiped out. The suit is being litigated in Howard County Circuit Court.

Steven A. Allen, Schmidt's attorney, could not be reached for comment yesterday, but he has said repeatedly that his client was not in hiding, that he was living under his real identity and that he did not know he was a fugitive until he called a relative on March 22.

Records, however, based on telephone calls, credit cards and his Social Security number have turned up nothing about Mr. Schmidt's whereabouts while he was missing.

On his attorney's advice, Mr. Schmidt is not speaking publicly about his case, but sources said he was living a desultory life in Arizona and Nevada, including Las Vegas, holding odd jobs, moving from hotel to hotel.

The 40-year-old executive has posted bail. His mother, Ms. Hack, pledged property assessed at $138,000 and posted a cash bond of $50,000, according to court records. Mr. Schmidt and his family also secured a $20,000 corporate bond.

Mr. Schmidt has agreed to be placed under the supervision of pretrial services and to report no fewer than three times week, or as otherwise directed, court records show. He has also agreed to live with his mother in Baltimore County, remain in-state pending trial and not to apply for a passport.

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