Novatek settlement funds sought Plaintiffs' lawyer says Trainor faces more legal action

$2.1 million allegedly due

Of $2.8 million owed, $700,000 reportedly paid

August 20, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

A Florida man accused by federal authorities of being one of the masterminds behind a stock-rigging scheme involving Columbia-based Novatek International Inc. has failed to pay more than $2 million due under the agreement to settle a fraud suit, according to a lawyer representing the plaintiffs.

The lawyer, Edward Meehan, said the group he represents might seek to seize assets of William P. Trainor and his company, New England Diagnostics Inc., or to rekindle its $8 million suit against him and others.

"Unless he lives up to the settlement agreement very soon, all bets are off," said Meehan, an attorney with Skadden, Arps, Slate, Meagher, & Flom LLP in Washington.

The firm represents a group of unsecured creditors, including the investment house Wood Gundy London Ltd., which sued Trainor and his business partner, Vincent D. Celentano, both of Hillsboro Beach, Fla., alleging fraud.

The suit, filed in U.S. District Court in Baltimore as part of a bankruptcy case, sought the return of more than $8 million that the creditors allege the two siphoned off from Novatek, which is in bankruptcy proceedings.

The suit preceded a Securities and Exchange Commission civil complaint filed in June against the two men and family members. The SEC alleged that Trainor and Celentano took over Novatek by merging it with a shell operation they created expressly for that purpose and then manipulated the stock price.

Trainor, who has a long history of fraud and theft, has failed to pay most of the $2.8 million due under the agreement he signed in July, said Meehan.

Howard Shiffman, a Washington lawyer representing Trainor, did not return phone calls yesterday.

Under the agreement, Celentano and his wife, Mary Celentano, signed over rights to $280,000 they were due from the sale of a Novatek property in Florida and $100,000 due from a business loan, Meehan said.

Trainor had until July 31 to pay Wood Gundy and other unsecured creditors.

Meehan said Trainor made an initial payment of $700,000 but nothing since, leaving a balance of $2.1 million.

Meehan said his firm is attempting to secure the remaining money without further legal action first.

But, he said, "our patience is running thin with [Trainor]."

Meehan said that because Trainor signed a confessed judgment in the settlement, his clients can seek immediately to seize his assets and those of New England Diagnostics, which also was a party to the settlement.

Creditors also could restart legal proceedings in the fraud suit against Trainor and Celentano, Meehan said.

The creditors group probably would name new parties in that suit if it was rekindled, including Universal Healthwatch Inc., the lawyer said.

Trainor is believed by bankruptcy and creditors' lawyers to partly own and control that Columbia-based company, which was to have supplied Novatek with medical diagnostic test kits.

This is not the first time that Trainor, 62, has defaulted on a settlement agreement in a lawsuit.

According to Florida court records, in 1996 Trainor failed to pay a $2 million settlement to which he had agreed in 1995 after Unibank of Ohio filed a civil suit against him alleging that he had failed to repay a loan.

Trainor had received the loan to pay his part of a settlement agreement with Credit Francais, which sued Trainor and others for swindling the bank out of $14 million in a land deal.

Unibank ended up foreclosing on Trainor's $2 million Hillsboro Beach home in October 1996.

His daughter, Dianne Trainor, a Florida lawyer, had represented him in the case and signed papers acknowledging that a payment plan had been agreed upon.

Trainor and his wife immediately moved into a beachfront mansion valued at more than $3 million, a residence considered one of the most opulent in Hillsboro Beach. Neighbors say he still lives there.

Pub Date: 8/20/98

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