North Dakota lawyers are trying to prevent WebSmart's three principal owners from having any fraud liability the state might prove in bankruptcy court from being discharged.
WebSmart, based in Minot, closed last year, throwing 368 telemarketing workers out of work; 200 of the firm's North Dakota employees have filed back-wage claims totaling more than $250,000.
Last week, a U.S. bankruptcy judge signed an order discharging certain personal debts of the three owners: Robert Lamont and John Skowronek, law partners in Minot, and Marius "Buzz" Stitzer, now living in the Scottsdale, Ariz., area.
But North Dakota Attorney General Wayne Stenehjem filed a complaint in U.S. Bankruptcy Court trying to block the discharge of its civil fraud claim.
The state filed suit last year contending that WebSmart's owners committed fraud in telemarketing bogus "stored value" credit cards. The cards were sold on behalf of two firms in the Atlanta area, Global Financial and Lenox Capital, that are the subjects of numerous consumer fraud complaints.
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The fraud case and bankruptcy complaint are part of an effort by the state to "pierce the corporate veil" and hold WebSmart's owners personally liable for back wages owed to the firm's former employees.
"In a nutshell, we preserved our right at this time to seek a judgment against them," said Douglas Anderson, an assistant attorney general. The state is asking for a jury to decide whether the owners have a liability for the state's fraud claim.
So far, none of WebSmart's owners have answered the state's bankruptcy complaint. They have until July 6 to file answers. Efforts to contact the owners Friday afternoon, in phone calls left with their bankruptcy lawyers, weren't successful.
In the past, the owners have vehemently denied they were part of any scheme to defraud consumers. They blamed the business's collapse on payments they never received from Global Financial, after Georgia authorities froze that company's assets.
In interviews, some of WebSmart's employees in Minot and Saskatoon, Sask., told reporters that they thought the sales representations to sell the prepaid bank cards were fraudulent. The debit cards were targeted at consumers with bad credit ratings, employees said.
In their bankruptcy petitions, which seek liquidation of their debts, the owners listed debts and assets as follow:
E Robert Lamont: assets of $371,439, including a $120,000 beach resort home in Panama City, Fla., and debts of $3,067,733.
E John Skowronek: assets of $388,006, liabilities of $3,432,663.
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E Marius "Buzz" Stitzer: assets of $664,000, liabilities of $794,585.
If found to have committed fraud, each of the owners is subject to civil fines of up to $5,000 for each count of deception that is proven.
Readers can reach Forum reporter Patrick Springer at (701) 241-5522
