Novatek creditors resettle

Florida businessman, his kin recommit to paying off balance

$2.8 million total unchanged

But creditors are given a right to seize assets in the event of default

November 23, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

A Florida businessmen, accused of defrauding investors in a bankrupt Columbia medical test company, and members of his family have agreed to pay creditors the balance of a $2.8 million settlement of an $8 million lawsuit.

The new settlement terms, filed Friday in U.S. District Court in Baltimore, represent a second attempt to secure payment by targeting assets of family members and avert a trial that had been slated for this month, a lawyer for the creditors said.

The original suit had sought the return of more than $8 million that William P. Trainor and a Florida business associate, Vincent Celentano, allegedly siphoned off from Novatek International Inc. of Columbia.

"We were fully prepared to go to trial," said Edward Meehan, an attorney with Skadden, Arps, Slate, Meagher, & Flom LLP, the Washington law firm representing the creditors.

"The settlement makes sense because we are able to get confessed judgments against a lot of parties in the case. This is a strong incentive for them to pay."

Trainor agreed to pay the $2.8 million as part of an earlier settlement of the suit last year. But he paid only $700,000, prompting the creditors, including the British investment house Wood Gundy London Ltd., to revive their suit. Celentano reached a separate settlement.

The confessed judgments contained in the new settlement give creditors the right to begin seizing, without further court action, $16.1 million in assets belonging to Trainor, members of his family, and New England Diagnostics Ltd., a company he controls, should they fail to make payments under the new terms.

Trainor, who has a history of avoiding payment of judgments as well as fraud, already has missed a $250,000 payment due Nov. 5 under the settlement that was reached in late October, U.S. Bankruptcy Court records show. That payment deadline has been extended until Dec. 10.

"If we do not receive the payment, we will move fairly quickly to begin seizing people's assets," said Meehan, the creditors' lawyer.

Trainor, who has been representing himself in the proceedings, could not be reached for comment. Michael Seward, a Miami attorney representing Trainor family members, did not return phones calls. The members are Trainor's wife, Geraldine; his son, Daniel J. Trainor; and his three daughters, Karen Losordo, Diane Trainor and Geraldine Couture.

Novatek filed for bankruptcy in 1996, shortly after the Securities and Exchange Commission halted trading in the publicly held company and launched a stock fraud investigation.

Novatek had claimed it held contracts to sell and distribute kits for tests that rapidly diagnose a variety of diseases. The kits were made by Universal Healthwatch Inc. of Columbia, a company co-founded by Trainor and Celentano.

The SEC subsequently filed a civil suit in Washington against Trainor and Celentano for defrauding investors. That case is expected to go to trial early next year, SEC investigators said.

Under terms of the settlement, Trainor and his family members must pay the creditors a total of $1.6 million in four installments, ending Sept. 30, 2000.

Trainor also agreed to turn over to creditors $500,000 in royalty payments from the sale of Universal Healthwatch kits.

Default penalties range from $5 million from New England Diagnostics to $750,000 from Trainor's daughter Diane Trainor, a Miami lawyer, and $350,000 from daughter Geraldine Couture, a socialite in Hillsboro Beach, Fla., court records show.

The creditors had also named Universal Healthwatch in their suit.

Ira Wolpert, a Bethesda attorney representing Universal Healthwatch, hopes the company can reach a settlement with the creditors in the case. "We are still in negotiations. The issues are not that complicated," he said.

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.