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Ousted President : Mann Sues 7 Insiders at Helionetics

September 03, 1986|ROBERT HANLEY | Times Staff Writer

Less than a month after he was discharged as Helionetics Inc.'s president following the company's bankruptcy filing, Michael Mann has filed a $30-million lawsuit charging company insiders with fraud, racketeering, breach of contract, wrongful termination and defamation.

Named in the suit, filed in U.S. District Court in Los Angeles, were Helionetics' chairman, John Shelton; its newly installed president, William Duke, and Bernard Katz, the company's largest single shareholder and a former director. Also named were Franklin Desser, the company's legal counsel; directors Raymond Freed and H. Alfred Sklar, and former director Rodger Molvar.

Company officials would not comment Tuesday, saying that they had not yet been served with the suit. Mann also declined to comment.

So-called racketeering suits have become fairly common, largely because a successful plaintiff can collect treble damages but also because of the stigma attached to an allegation of racketeering--which is defined as an organized effort to violate the law.

Racketeering Alleged

Mann's suit alleges, among other things, that the defendants used income from their other companies, including a competitor of Helionetics, to acquire "substantial interests in Helionetics . . . through a pattern of racketeering." The suit claims that the defendants forced Helionetics into financial difficulties by pursuing a policy of excessive growth.

Moreover, the suit alleges that the defendants transferred "substantially all their personal assets" to Helionetics' Lazer division and that they planned to spin it off into a separate public company while reducing their investments in financially troubled Helionetics. The suit claims that Katz and the other defendants sought to protect the Lazer division from the "legitimate claims of creditors and shareholders" through "undue influence and extortion" upon Mann.

Mann was fired by the Helionetics board early last month after the company filed on July 31 for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. At the time, Sklar was quoted as saying that the company's directors "didn't think (Mann) was up to the job."

The suit claims that such statements, by Sklar and other company officials, were "completely groundless, false, unpriviledged and maliciously made and motivated to cause injury" to Mann.

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