DATE: Wednesday, August 13, 1997            TAG: 9708131051

SECTION: LOCAL                   PAGE: B5   EDITION: FINAL 
SOURCE: BY JOHN-HENRY DOUCETTE, STAFF WRITER 

DATELINE: NEWPORT NEWS                      LENGTH:   38 lines

BUSINESSMAN PLEADS NOT GUILTY TO FILING FOR BANKRUPTCY FRAUDULENTLY

A month after a federal grand jury indicted him on fraud charges, the elusive David J. Merritt surrendered at this city's federal courthouse Monday.

Now a publisher in Orlando, Fla., the 38-year-old Merritt has a host of unpaid creditors who are glad to see him back in town.

One of them is Donna M. Harrah.

She is part-owner of Melvin Peters Cabinet Shop Inc. of Hampton. The company lost money when Merritt filed for bankruptcy protection less than two weeks after opening his restaurant.

``All of us were hit hard,'' she said. ``It's left a bad taste in our mouths. It's taken several years . . . to recover from this.''

Merritt is charged with fraudulently claiming bankruptcy in 1992 after getting credit from contractors he hired to renovate Hampton's former post office building into an upscale eatery.

The 77-count indictment says he intended to use the protection of the bankruptcy court to avoid paying these creditors.

Monday, Merritt pleaded not guilty to each charge and was released on a secured $25,000 bond. He will be able to go back to Florida, but he will be monitored until the case goes to trial in Norfolk Federal Court Nov. 12.

Melvin Peters took a big loss when Merritt, within weeks of the shop obtaining a ruling against him that said he must pay his tab, declared bankruptcy.

While the cabinet company lost about $40,000 when Merritt could no longer pay his bills, Harrah said she also felt for smaller companies, because, comparatively, many of their losses were sizeable.

The Harrahs had only had the shop a few years when they worked on the old post office. Darrell Harrah, according to Donna Harrah, was excited about doing the job. In retrospect, Harrah said, they were taken in.

Five years later, the old post office is a restaurant known as the Second Street. Some of Harrah's cabinets are still there.

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