Court lets lawsuit proceed against Novatek insiders Wood Gundy complaint accuses pair of fraud

November 11, 1997|By Mark Guidera | Mark Guidera,SUN STAFF

A federal bankruptcy court judge yesterday paved the way for Wood Gundy London Ltd., of London, to pursue its multimillion-dollar fraud lawsuit against two principal insiders behind Novatek International, the bankrupt Columbia-based company under federal investigation for stock fraud.

Wood Gundy and other creditors in the lawsuit are seeking the return of $8 million paid out by Novatek.

Judge James F. Schneider set deadlines for lawyers to complete the gathering of evidence and filing motions in the case.

He said the earliest the case would go to trial would be next summer.

Schneider also said he would wait until early January to rule on dismissal motions, including one filed by Universal Healthwatch Inc.

Universal, also based in Columbia, was founded by Florida residents William Trainor and Vincent Celentano, two of the principals behind Novatek. Universal was to produce the medical diagnostic test kits for which Novatek claimed it had sales agreements with several parties in Latin America.

The U.S. Securities and Exchange Commission is investigating whether those claims were misrepresented.

Andrew D. Levy, a Baltimore attorney representing Universal Healthwatch, requested yesterday that the judge consider the company's dismissal request earlier, saying that the lawsuit is a financial burden and could prevent the company from attracting capital and business. Schneider denied the request.

The complaint filed by Wood Gundy, the investment arm of the Canadian Imperial Bank of Commerce in Toronto, accuses Trainor, Celentano, family trusts connected to the men, as well as others connected to Novatek, of violations of SEC regulations, fraud, filing false and misleading public documents, fraudulently transferring property of the company, wasting company assets, and breach of fiduciary duty.

Pub Date: 11/11/97

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