THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, November 23, 1995 TAG: 9511230756
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
LENGTH: Long : 103 lines
Five creditors of Computer Dynamics Inc. accused majority owner Robert L. Starer on Wednesday of ``ransacking the company'' and committing other criminal acts against the Virginia Beach firm for his personal advantage.
The accusations are in a motion filed in Bankruptcy Court, where the computer company is going through Chapter 11 reorganization.
The creditors' motion accuses Starer of taking taxes and health insurance premiums from employees' paychecks for his personal use, ``stealing'' a $150,000 overpayment on a federal contract, and transferring to himself profitable parts of the company without compensation, among other things.
``Mr. Starer willfully sabotaged the company for over a year's time, recklessly diverting cash and other benefits to a maze of entities he created for his sole benefit,'' wrote the creditors' attorney, Stephen Merrill. ``Much of Mr. Starer's conduct was criminal as well as reprehensible.''
The creditors, who include Virginia Beach City Treasurer John T. Atkinson and First Hospital Corp., asked that Starer be removed as chief executive officer and a trustee be appointed to run Computer Dynamics while it is in Bankruptcy Court.
Starer angrily denied the accusations. He said he consulted several lawyers Wednesday and they all thought the creditors' motion ``was one of the most outrageous pleadings they've ever heard of.''
Starer, who owns 68 percent of the company, said he will sue the five creditors for libel for making false accusations, and will file a complaint against Merrill with the State Bar.
``This is the most outrageous thing I've ever seen. It's absolutely not true. We are going to react to this,'' Starer said.
In recent weeks, Starer has gone through several days of hostile questioning by creditors' lawyers in connection with the bankruptcy. They have asked Starer to explain how the once-thriving company went broke and how profitable divisions were transferred to Starer's personal ownership as Computer Dynamics sold its assets.
Starer said he was exonerated in those depositions.
``We went through every line item of every transaction, and guess what? The U.S. trustee's office didn't have a problem,'' Starer said.
An attorney for the trustee's office, Robert Van Arsdale, declined to comment Wednesday. ``Whatever is in there (the creditor's motion) will be looked into,'' he said.
Starer has never been criminally charged and there is no known criminal investigation. The U.S. attorney's office declined to comment Wednesday.
R. Alan Fuentes, who founded Computer Dynamics in 1979 and owns 32 percent of the company, said he wants to see Starer brought to justice.
Fuentes hired Starer to run Computer Dynamics in 1991, then left the company in 1992 after pleading guilty to making illegal campaign contributions. Fuentes and Starer have been feuding since. Fuentes has spent the past three years trying to regain control of the company.
``It's time that Bob Starer is held accountable for his actions,'' Fuentes said Wednesday. ``We have witnesses who can come in and verify everything.''
Starer was dubious. ``Alan and his attorneys are making absolutely outrageous and unsupported allegations,'' he said.
Technically, Fuentes is not a party to the charges. But Merrill, the creditors' attorney, was also Fuentes' attorney during Fuentes' recent personal bankruptcy.
In its prime, Computer Dynamics was one of the area's biggest minority-owned businesses. In the 1980s, the company had 600 employees and 89 government contracts.
In recent years, the company branched out into adult education and teleconferencing while scaling back its defense work.
In May, four creditors filed a petition in Bankruptcy Court to force Computer Dynamics into Chapter 11. A month later, Starer voluntarily agreed to it.
At the time, Starer said the company was essentially dead after a foreclosure in April, when Computer Dynamics could not pay $9.5 million in debts.
Over the previous year, the company's profitable divisions were sold to Starer and his wife as Computer Dynamics raised cash to pay bills. The company now lists 539 creditors owed $13.5 million.
One of the biggest creditors is the Internal Revenue Service - not a party to Wednesday's motion - which claims that Computer Dynamics withheld $1.3 million in taxes from employees' paychecks but never sent the money to the government.
Starer, in turn, claims the federal government owes the company millions of dollars for unpaid work.
The city of Virginia Beach is owed less than $50,000 for business license taxes and personal property taxes, Atkinson said Wednesday. He added that he personally had no knowledge of any wrongdoing at Computer Dynamics.
The city of Norfolk, which was not a party to Wednesday's motion, also claims that Computer Dynamics owes $15,784 in personal property taxes for two company airplanes kept at Norfolk International Airport, including a Lear jet worth $429,000. The jet is not listed as a company asset in Bankruptcy Court.
In recent months, creditors hinted that they suspected improprieties by Starer, but did not say so outright until Wednesday.
Starer added Wednesday, ``I am absolutely certain Alan Fuentes is behind this.''
Fuentes did not deny it. ``I am the driving force behind most everything that's happened,'' he said, ``because I'm not giving up until justice is served.'' ILLUSTRATION: Color photo
Robert L. Starer of Computer Dynamics denied the accusations against
him and said he will sue the creditors.
by CNB