PORTLAND, Maine — The Cate Street Capital CEO who swore under oath that he does not have a personal bank account in December crafted a deal to pay a former business partner $1.9 million to settle a bundle of lawsuits between them.
But then came the hitch for the former manager of the bankrupt Great Northern Paper Co.: the corporate plane.
Brian Champion, attorney for Cate Street Capital CEO John Halle, filed a motion in the case Friday, asking the court to step in and force Halle’s former business partner, Richard Davimos, to accept a settlement agreement the parties negotiated after closing arguments in a federal bench trial in November.
The latest dispute prolongs the nearly 13-year-old legal battle, wherein Davimos seeks to collect the judgment he won in New York and also alleges that Halle fraudulently transferred to his wife certain assets — including an ownership stake in a Mitsubishi turboprop plane — to avoid paying.
The plane is owned by a corporation called N70KC, owned partly by JH North Hampton Group, in which Halle had an interest at one time. Halle said during the trial that he had no corporate holdings and that his wife was the ultimate owner of the investment company he runs, through the entity Jenis Investment Co.
The proposed settlement agreement would have Halle pay Davimos a total of $1.9 million and allow Davimos to arrange three round trips per year until 2021 in the plane used, at times, for travel by Cate Street Capital executives.
But the question of who would pay fuel costs for Davimos’ trips in the plane has held up a resolution in the case.
“Your client said he would eat the fuel costs,” said Jennie Clegg, an attorney with the law firm representing Davimos in Maine, in an email to Champion. “This was a major point of contention, and Mr. Davimos was not prepared to do the deal if he had to pay the fuel costs.”
On Friday, Champion submitted that email conversation and the terms of the settlement agreement as evidence in the case, in which he wants a judge to enforce a term sheet both parties signed.
But Champion wrote that Davimos has not signed the settlement agreement that resolves a batch of lawsuits between the two parties, including allegations against Davimos for defamation and actions against Citizens Bank, which froze a New York account of Halle’s wife, Sharon, in response to actions filed in that state by Davimos’ attorneys.
As of Dec. 31, neither party had taken action to exchange money or promises made in the term sheet.
The fraud lawsuit stems from a fight that began in New York in 2002, related to a loan Halle arranged for Davimos to help finance the film “My First Mister.” The dispute in 2009 made it to New York’s highest court, which ruled in Davimos’ favor and granted him $1.6 million.
With interest, that judgment equaled about $2.5 million as of December 2014.
On Dec. 31, Champion wrote to Davimos’ attorneys that Halle and his wife secured $550,000 to serve as the initial payment on the $1.9 million total.
The New York judgment was transferred to Maine in mid-2013 and continued as the Cate Street-managed Great Northern Paper entered financial hardship and ultimately filed for bankruptcy in September 2104, listing more than 1,000 creditors.
The case revealed Halle was making $360,000 per year and that he had requested a $100,000 raise from the board of directors of the company that also manages a biomass plant in Berlin, New Hampshire, and invests in forest products, renewable energy and recycled products.
In Maine, the company also had announced plans for high-tech wood pellet manufacturing facilities in Millinocket and Eastport, through the company Thermogen Industries. Some investors seeking state and federal tax credits backed out of that project in July, and its status remains unclear.
Halle’s company had lined up a total of $142 million in tax credits connected with that project and the restart of the Great Northern Paper mill in East Millinocket, including tax breaks on real estate and personal property from the towns. Not all of those tax credits were paid out, but investors were due to get at least $15.9 million from Maine taxpayers, despite Great Northern Paper’s bankruptcy.
In the personal lawsuit, the parties have a deadline of Jan. 15 to file new motions or notification that they have reached a settlement.