Novatek officers targets of fraud suit Majority shareholder sued by cousin

others allege RICO breaches

February 21, 1997|By Mark Guidera | Mark Guidera,SUN STAFF

Three shareholders have filed a $55 million fraud lawsuit in U.S. District Court in Baltimore against the chairman and former officers and directors of Novatek International Inc., the Columbia-based company under federal investigation for stock fraud.

Meanwhile, Joseph E. "Chick" Celentano, a Connecticut businessman, has filed a separate $3 million civil suit claiming he was defrauded by his cousin, Vincent D. Celentano, a Florida businessman who is one of Novatek's major shareholders.

In a suit filed in U.S. District Court in Connecticut, Joseph Celentano charges his cousin induced him to invest in Novatek and a related venture in Russia, Health Care, Ltd., using false and misleading information.

The two shareholder lawsuits are the latest in a series of problems for former and present officers and directors of the company, and the principals behind Novatek. The publicly held company has filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, and its stock, which now trades for pennies, has been delisted by the National Association of Securities Dealers.

Vincent Celentano and William P. Trainor, a neighbor and business associate of Celentano's who has a long history of fraud, are under investigation by the Securities and Exchange Commission for their role in claims the company made about multimillion-dollar contracts in Latin America that an investigation The Sun found did not exist.

In the $55 million lawsuit, three Colorado residents, Jim Kuenning, Barry Stewart and John Stevenson, charge they bought and held Novatek stock based on inaccurate and misleading financial and other information supplied by Novatek last year in news releases and filed by the company with the SEC.

The lawsuit does not specify what information the shareholders contend was false and misleading.

The suit also does not disclose when the shareholders bought the stock or how many shares they purchased, but it says their losses total at least $1 million.

The lawsuit also charges Novatek Chairman Jamie Puccio, its two former presidents, Frank Cooney and Gaston Oxman, its current treasurer, Anthony Sebro, six of its former and current directors, including Erick Gray of Columbia, and others with conspiracy to commit fraud under the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

David R. Kuney, an attorney with David Hagner Kuney & Davison in Washington, who is representing Novatek and its holding company in the bankruptcy actions, said he had no comment on the lawsuit.

The attorneys representing the shareholders, Edward Longosz and Amy Owen of Miles & Stockbridge in McLean, Va., did not return phone calls.

Novatek's phone at its headquarters in Columbia has been disconnected.

Bernard Green, an attorney with Moss & Green of Connecticut, who is representing Vincent Celentano in the suit filed by his cousin, declined to comment, as did James Stedronsky, a Connecticut attorney representing Joseph Celentano.

In the lawsuit, filed in U.S. District Court in Bridgeport, Conn., Joseph Celentano says that he made investments through his family company, One Up Investments Inc., based on information supplied directly by his cousin.

Celentano says in the lawsuit that he initially bought 520,000 unregistered shares of Novatek for $1.3 million and later bought another 17,500 shares for an average price of $8.

The 520,000 unregistered shares were purchased from Pickeral Cove Trust, a Trainor family trust, and the transaction was made through Vincent Celentano, the lawsuit states.

Celentano also says that he gave his cousin more than $450,000 for shares in a related Celentano venture in Russia, Health Care, Ltd. and lent Novatek $200,000.

Among the misrepresentations Celentano says that his Florida cousin made to him before the investments are that Health Care Ltd. was a publicly traded company in Russia and that its share price would rise to nearly $120, and that Novatek had struck definitive contracts in Latin America and would announce a merger with a Japanese company.

The lawsuit charges that Vincent Celentano was aware that those statements were not true.

Novatek, a former residential steel company based in Florida, merged with Celentano and Trainor's shell company, Medical Products, Inc., last year.

It subsequently made a series of announcements about multimillion-dollar deals in Latin America for diagnostic test kits which the company said could detect the presence of bacteria and disease quickly.

Pub Date: 2/21/97

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