THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, April 20, 1996 TAG: 9604200325
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARC DAVIS, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 79 lines
Robert Starer has struck back.
The owner of defunct Computer Dynamics Inc. is asking a bankruptcy judge to fine his accusers for making unfounded and damaging criminal charges against him.
Starer made his request Thursday, one month after a judge ruled that the accusers did not prove Starer committed fraud and other misdeeds as head of the Virginia Beach computer company.
The three creditors who accused Starer, and their lawyer, could be fined more than $100,000 - the amount that Starer spent in legal fees defending himself.
Starer seeks sanctions against creditors First Hospital Corp., The Whitlock Group and Phoenix Capital Corp., and their attorney, Stephen Merrill of Norfolk.
In a separate motion, Starer asked that R. Alan Fuentes be cited for contempt of court. Starer says that Fuentes, the company's founder, faxed confidential and libelous material about Starer and the company to others. He claims that Merrill and Fuentes did this to try to influence witnesses' testimony.
He claims that Merrill and the creditors filed frivolous charges to smear his reputation and to further Fuentes' vendetta against him.
``The creditors and Merrill chose to vigorously prosecute (the charges against Starer) not because they believed it had merit, but because they wanted to harm Starer's reputation and business,'' wrote Starer's attorney, Paul K. Campsen.
Merrill, however, said Starer's action is groundless. ``There was no indication in the court's opinion that this was a frivolous lawsuit,'' Merrill said Friday. ``We did produce evidence on each and every point.''
Fuentes said Starer's motions unnecessarily prolong the case.
``The fat lady sang, as far as I was concerned, when the judge made his decision,'' Fuentes said Friday. ``It was over and I was moving on with my life. Apparently Bob Starer is so vindictive that he has filed this motion. I'll defend it as vigorously as I can.''
Officials at the three creditor companies could not be reached for comment.
A request for sanctions is very unusual in Bankruptcy Court, but so was the length and vehemence of the creditors' accusations against Starer.
Computer Dynamics, a once-thriving government contractor, is now in Chapter 11 reorganization. It has no employees and no ongoing business. It owes about $14 million to more than 600 creditors.
Some creditors forced the company into bankruptcy last year, then filed a series of accusations against Starer. They claimed Starer wrecked the company for personal gain. They said Starer ran up lavish personal expenses, failed to pay employees' taxes, bounced checks, kept government overpayments on contracts, then picked up parts of the company at foreclosure.
In November, the creditors asked the judge to appoint a trustee to take over the company.
For seven days, former employees testified about Starer's management style and actions. The hearing was extraordinary for its length and the virulence of the charges, Campsen said.
``That's the longest hearing or trial I've ever been in in Bankruptcy Court,'' Campsen said.
In the end, Judge David H. Adams ruled that Merrill and the creditors did not prove the accusations. ``The allegations remain just that, with little persuasive evidence presented that any of the allegations are true,'' Adams wrote.
The judge found that Starer did stay at expensive hotels and ate at fancy restaurants, did not pay his employees' taxes and bounced checks, perhaps unwittingly - but that did not prove malfeasance.
In particular, Adams wrote, the creditors did not prove that Starer got chunks of the company at foreclosure without adequate compensation. But he added that those transactions merit further study.
Starer now claims the accusations never had a factual basis. He claims the creditors were ``stooges'' for Fuentes and they never investigated the charges they made. by CNB