19910325b Wsj Article - Ht Bankruptcy

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Bankruptcy Judge Appoints Trustee _.:: For Hamilton Tah ..,...

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By RALPH T. K~c JR. , , StG.frRf!ptJrtf!' oj T H"1;: \II' AU.. STI\. £I!:T J QIJ'R ",.u.

SAN FRANCISCO ruptcy court judge

A federaJ bank· 8. trust~ to SUperv1S~ HamUlil!1 &: Co., 11 processor of payroll \..aXes accused of diverting as much as $100 million of customer funds in an allegedly fraudulent scheme. The decisIon Judgi' Lloyd King is un·

usual since

Ta.ft has not $Ought

bankrlJplcy protection, and the judge

hasn't ruled

011

a matlon filed by

!omers for an

ells-

Chapter 11 teor-

ganlz.a!lon. The remedy" was

the "extreme hecayse of "inromp€tence and mismanagc-ment" at Hamilton Taft and because "lh(' for mls. chief is gF'ea t." A former Hamilton Taft otrlcer in mid· . March told some ollilf' company's

cuslomers of the dh;ersion. Sioce raft of lawsuits have be!"n rued in

vesUg.a!ton said II is

and other

LIIe mac-

ter. Once

II

trustee takes over within tbe

flext (f'1,\' days. the big qUfstlon will be

whether Hamilton Taft's asst'ts. which include 1Gil mUllan In notes to Mr_ Arm-

strong's with holdings in dis· tressed real estate and oU and fa5 operating leases, can mal<e on the taxes and related penalties that Hamilton Tall contracted to pay. The customer with the eJqlOsure Is Federal mUllan has provided for Other customers that have ldem:lfled tentlal losses mclude Tatldern

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L:IIrnOU!i!1"§

Inc. (14.2 mlUlon). Stanford and Stanford University ($3.8 Neiman Mucus Group (SSOO.OOO). Olher customers facing losses of more than $1 million, according to CDurt docu· ments, include Sun MJC11lsystems Inc., Sony Scon Co., Clarls CDrp.• S & S Sboe Corp., CommercIal Cred.ll R. R. Donnelly &. Sons. Blue Cross & ShIeld of Texas, Verbatim, and Sandia Labs,

Mark Macl)onaJd, a.n senUng Hamilton Taft, suggested

cus· tomers are partly to blame for /J'I.e mess

bf.<:ause

. 'Fra.nclsco rederaJ court agai.n.st Hamilton Taft.. Its owner, Connie C. "Chip" Arm, ,strong Jr .• and var10us afrmale companies owned or controlle-d Mr. Armstrong. The- suits Influenced .and Corrupt Act vtoJalions, breach of contract,

charges, Also, the Federal Bureau of In-

had nOt insIsted on

tual

contrac~

.'

"Where was the polkMacl)onald said. "They were

to a valua.ble service for as cheap a cost as could," Replied Judge : "One thing l100k for In casE'S like this is and that appears to be absent."

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ummll'rrioi, fl'ridcllIial.

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Seteer 17..3 Acres-

twd rC.Hal/rant. include:

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