THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, February 17, 1996 TAG: 9602170296
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: NORFOLK LENGTH: Long : 122 lines
For three years, R. Alan Fuentes has promised to make life miserable for his rival, Robert L. Starer, the man he accuses of stealing his Virginia Beach company, Computer Dynamics Inc.
For three years, Fuentes has tried to force a showdown with Starer, to win back the company that was one of the fastest-growing small businesses in America in the 1980s.
Now he's got it - the showdown, but not the company.
On Friday, a bankruptcy judge began a four-day hearing to decide if he should boot Starer from the defunct company and appoint a trustee to try to put the company back together again.
It is a nasty, bruising affair. On Friday, accusations flew in both directions from the first minute of opening statements.
``The moving creditors are going to prove that Robert Starer is the racketeer that he is,'' the creditors' attorney, Stephen Merrill, said in his opening. ``Robert Starer portrays himself as a corporate doctor. In fact, he is a corporate vampire.''
Starer's attorney attacked Merrill's motive for bringing the matter.
``We are here today,'' attorney Paul K. Campsen said, ``because Mr. Fuentes, through Mr. Merrill, has a bone to pick with Mr. Starer. It's a vendetta. . . . Mr. Fuentes hates Mr. Starer.''
The company once employed 800 people, but is now just a paper shell. It has no employees. It conducts no business.
Over the past two years, Computer Dynamics - a company built on minority set-aside defense contracts, then expanded into adult education - has suffered a series of fatal setbacks.
The company lost contracts. It stopped paying vendors and taxes and health insurance premiums. Eventually it lost everything to foreclosure, including its Pembroke headquarters and all its subsidiaries.
Starer, the chief executive officer, scooped up the subsidiaries, including the schools. Then some creditors forced the company last year into Chapter 11 reorganization in Bankruptcy Court.
Now, some creditors charge that Starer intentionally wrecked the company for personal gain.
On Friday, Starer's attorney accused Fuentes of instigating the affair. And Fuentes, both on the witness stand and outside court, readily agreed.
``It's not a vendetta,'' Fuentes said after the hearing. ``It's a crusade. I have nothing to gain from it at this point. The only thing I'm looking to do is keep this from happening again. The only thing I'm looking for is for Bob Starer to be held accountable for his dealings.''
Technically, Fuentes is not a party to this case, although he did testify Friday for an hour. He is not a creditor and no longer owns any part of the company. His stock was sold back Computer Dynamics as part of his personal bankruptcy.
But Fuentes openly acknowledges he is behind the bankruptcy matter. He testified that he was instrumental in filing the creditors' involuntary Chapter 11 petition, and that he did much of the spade work for the case.
In court Friday, two former Computer Dynamics employees testified that Starer ran the company into the ground by intentionally not paying vendors.
Joseph Corcoran, the company's former executive director, said Computer Dynamics had no trouble paying bills until Starer joined in 1991. Then Starer delayed payments on purpose until, eventually, the company's reputation was stained.
``I think it got progressively worse,'' Corcoran testified. ``There were companies that wouldn't do business with us. The financial people probably spent half of their time holding off irate vendors.''
Another former employee, secretary Roberta Phipps, said Starer told her in February last year that it was his plan since joining the company in 1991 to liquidate the company.
Starer was hired by Fuentes in 1991 to make the company more profitable, but he wound up majority owner when Fuentes was forced out after a criminal conviction.
Meanwhile, Phipps testified, Starer spent lavishly on travel, hotels and restaurants.
For example, the company's former finance director, Robert Bobulinski, said in an affidavit that Starer spent $10,000 for a company Christmas party in 1994 at Le Chambord, a Virginia Beach restaurant, at a time when employees were having trouble cashing paychecks.
To win their case, the creditors must prove fraud, dishonesty, incompetence or gross mismanagement by Starer. The hearing is scheduled to continue Feb. 28 for three more days. ILLUSTRATION: Color photos
Alan Fuentes
Robert Starer
Side Bar
SIDE BAR
What is Computer Dynamics Inc.?
Once one of the top minority-owned firms in America. The Virginia
Beach company started in 1979 with defense contracts, then branched
into computer schools and adult education. At its peak, it had 800
employees.
Who is Alan Fuentes?
Founded the company in his home, then built it up with minority
set-aside government contracts. Forced out in 1992 after pleading
guilty to illegal campaign contributions.
Who is Robert Starer?
Brought into the company by Fuentes in 1991 as a ``corporate
doctor'' to fix the flagging company. Immediately fired 25 top
managers, then became majority owner soon after Fuentes left. Has
been feuding with Fuentes since 1992.
What's alleged?
Some creditors accuse Starer of wrecking the company for personal
gain. Starer says the case is just a vendetta by Fuentes.
What's at stake?
The company filed for Chapter 11 reorganization last year. Now
defunct; no employees or business. Starer personally owns the
remaining pieces. Some creditors want a bankruptcy judge to boot
Starer and appoint a trustee to pull the company back together
again.
KEYWORDS: LAWSUIT COMPUTER DYNAMICS INC.
by CNB