Nearly two years after a court-appointed receiver filed a racketeering suit against the buyers of the now-defunct Toledo Pickling and Steel Sales Inc., the case is nearing trial.
"We're starting to gear up to do things like massive depositions," Toledo attorney Ralph DeNune, the firm's receiver, said this week.
The case, which involves allegations that the 52-year-old steel processing firm was looted by buyer Consolidated Capital of North America Inc., is scheduled to be heard Aug. 17 by a jury in U.S. District Court in Toledo.
Mr. DeNune won a $2.6 million judgment last fall against Carl Casareto, of La Habra Heights, Calif., who was finance chief at the former Consolidated Capital, of Denver.
Before Mr. Casareto agreed to the judgment, the receiver agreed to drop the most serious allegations. Remaining charges included negligent misrepresentation and breach of fiduciary duty. Additionally, Mr. Casareto won't be required to pay.
Instead, under terms of the deal, the receiver must collect from an insurance firm that provided professional liability coverage to the officers of Consolidated Capital.
"Carl is adamant that he has done absolutely nothing wrong," said Toledo attorney Jeffrey Creamer, who represented Mr. Casareto. He contended that Toledo Pickling collapsed because it could not obtain financing to continue operations.
Judge James Carr, who is overseeing the case, dismissed certain allegations regarding the defendants' removal of steel belonging to a supplier. He said the matter had been dealt with in a separate lawsuit. However, he refused to dismiss other allegations, including the civil racketeering claims.
Contacted yesterday, Timothy
Kincaid, a lawyer in Plain City, Ohio representing remaining defendants, declined to comment.
Besides Consolidated Capital, defendants include Paul Bagley, of Princeton, N.J., who was chairman and chief executive of that firm, and Richard Bailey, of Rhode Island, who was chief operating officer.
Toledo Pickling thrived in the nation's post-World War II boom but encountered financial difficulties in the late 1990s. In July, 1999, Consolidated Capital became owner and promised to reinvigorate the firm.
But seven months later, business ceased at its complex on Campbell Street in Toledo's central city.
In the suit filed in May, 2002, the firm's receiver described the publicly traded Consolidated Capital as a corporate shell used by the chief executive and others to loot Toledo Pickling, Angeles Metal Trim Co., of Los Angeles, and Capital Metals Co., of Torrance, Calif.
In comments to The Blade in 2002, Mr. Bagley, Consolidated's former chief executive, denied the allegations.
He said executives of that firm didn't recognize the severity of Toledo Pickling's financial trouble at the time of the acquisition.
The lawsuit seeks $30 million in actual damages and $10 million in punitive damages on behalf of the firm's creditors.