British seeking Trainor assets

Wood Gundy London files here for summary judgment

April 28, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

A British investment bank is seeking court permission to begin seizing assets of William P. Trainor, one of the alleged masterminds behind bankrupt Columbia-based Novatek International Inc., as well as the assets of six of his family members.

In papers filed yesterday in U.S. Bankruptcy Court in Baltimore, London-based Wood Gundy London Ltd. is seeking a summary judgment in an $8 million lawsuit it has rekindled against the Trainor family. If granted, the order would allow Wood Gundy and other creditors to seize assets of the Trainors and companies connected to them without a trial.

"We believe this case is ripe for a decision in favor of the creditors," said Edward Meehan, a lawyer with Skadden, Arps, Slate, Meagher & Flom in Washington, which is representing Wood Gundy and other creditors in the suit.

Vincent Celentano, a wealthy Hillsboro Beach, Fla., businessman and a principal in Novatek, is in settlement talks on the case, Meehan said.

Trainor, a Hillsboro Beach resident with a history of being sued for fraud, could not be reached for comment. He no longer has a lawyer representing him in the case.

Michael Seward, a Fort Lauderdale, Fla., attorney representing several Trainor family members, did not return a phone call yesterday seeking comment.

Trainor and his wife asserted their Fifth Amendment right against self-incrimination and refused to be deposed or to turn over documents as part of the discovery process, court documents show.

Wood Gundy and other creditors filed suit in 1997 against Trainor and Celentano for the return of $8 million that the bank claimed was siphoned from the company for the benefit of Trainor and Celentano.

Trainor and Celentano had agreed to a settlement last year, but that agreement hinged on Trainor paying $2.8 million. Trainor paid only $700,000, however, prompting Wood Gundy to revive the suit.

The bank, an investment arm of the Canadian Imperial Bank of Commerce in Toronto, lent Novatek more than $4 million in 1995 to distribute and sell a new line of medical test kits that Trainor and Celentano claimed that Novatek had licensed from New England Diagnostics Inc. (NED), a shell company set up by Trainor.

New England, in turn, claimed that it had acquired rights to the kits from Columbia-based Universal Healthwatch, another company set up by Celentano and Trainor. The test kits and the licenses were "bogus," Wood Gundy alleges in court records.

In court papers filed yesterday, Wood Gundy contends that NED and Novatek were used by Trainor to funnel money to himself and family members.

Wood Gundy says in court documents that a forensic accountant it hired to trace the money found that more than $8 million was transferred from Novatek to New England Diagnostics between March 1, 1996, and Oct. 25, 1996.

The accountant, Charles R. Goldstein, determined that bank records showed that $6.3 million in Novatek money went from NED to Trainor or his family members in a span of eight months; $1.8 million was found in an NED bank account in Boston, which has since been closed.

Some of the money, Wood Gundy alleges in court documents, was used by Trainor to buy a $1 million oceanfront mansion in Hillsboro Beach and a Cadillac.

Diane M. Trainor, Trainor's daughter and a Florida lawyer, admitted in a deposition to receiving a transfer of $1 million from NED into her law firm's trust account in 1996, and then using that money to purchase the Hillsboro Beach home in her mother's name.

The lawyer said in the deposition that she made the transaction at the request of her father. She also said she handled the sale of the home within a year, turning a profit of $650,000.

The Trainors also used the money to pay for trips to Russia, according to deposition testimony by another Trainor daughter, Karen Losordo. She testified as president of NED, which had no employees and was based at her home in Massachusetts.

Wood Gundy says bank records show Losordo distributed money to herself, her sisters Diane M. Trainor and Geraldine Couture, her brother Daniel J. Trainor and a shell company under his name, and to her mother, Geraldine A. Trainor.

Wood Gundy said in court documents that Losordo could not provide any justification of why the money transfers were made or what services her mother, brother and sisters had provided to Novatek.

"Losordo could only say her father directed the transfers," Wood Gundy says in court documents.

"These defendants conspired to defraud the company's creditors through a series of fraudulent transfers," Wood Gundy contended in its request yesterday.

Pub Date: 4/28/99

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.