A group of unidentified investors is negotiating to take control of Pyrotronics Corp., one of the nation's leading manufacturers of so-called "safe-and-sane" fireworks, from W. Patrick Moriarty, who earlier this week pleaded guilty to a variety of corruption charges and agreed to testify against local and state politicians.
Moriarty, the 53-year-old founder of Pyrotronics and owner of about 30% of its stock, would not be involved in the ownership or management of the newly constituted company, James C. Auld, Pyrotronics' vice president of sales, said in a statement.
Auld said he was hopeful that an agreement on the transfer of Moriarty's stock would be struck by April 1. Neither the identity of the investors nor the amount of any money involved in the proposed transaction was disclosed. Auld said in the statement, however, that as requested by the current board of directors, the investors may include some company employees.
"When the board first authorized the transfer of Mr. Moriarty's stock to a new group of investors, it was agreed that current employees would be allowed to participate if at all possible," Auld said. He added that negotiations to transfer the controlling interest in Pyrotronics, which manufactures and distributes Red Devil fireworks, had been in progress since Feb. 6 when Moriarty resigned as chairman of the board.
According to a member of Auld's staff, he was out of the office most of Thursday and could not be reached for comment.
Moriarty has declared bankruptcy, claiming debts of more than $11.5 million. He therefore cannot divest himself of any assets, including his Pyrotronics stock, without bankruptcy court approval. Most of his Pyrotronics shares are being held by Community Bank and California Canadian Bank as collateral for unrepaid loans.
Michael Wachtell, attorney for the Century City law firm of Rosen, Wachtell & Gilbert, which represents Community Bank, said the bank currently holds 140,000 shares of Pyrotronics Corp. that are owned by Moriarty and Moriarty family members. For the corporate board to sell the stock, he said, it would have to obtain approval from the bank as well as the bankruptcy court.
Announcement of the plan to remove Moriarty's financial stake in Pyrotronics follows Moriarty's guilty plea Tuesday to seven counts of mail fraud. As part of the plea bargain, he also agreed to testify against politicians who allegedly accepted bribes from him in the form of money, prostitutes, vehicles, vacation housing and the hiring of relatives.
Moriarty, who has been the subject of a two-year racketeering investigation, admitted to participating in a scheme to bribe City of Commerce officials to obtain a poker parlor license.
Edgar E. Pankey, who resigned from the Pyrotronics board in September, 1983, in protest that Moriarty had failed to repay loans he had received from Pyrotronics, said Thursday that the announcement of the pending sale of Moriarty's stock came as a surprise to him.