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Claims for millions of dollars resume against ex-owners of bankrupt Erie telemarketerOct 13, 2012 (Erie Times-News - McClatchy-Tribune Information Services via COMTEX) -- The fortunes of two Erie-based businesses -- telemarketer Telatron Marketing Group Inc. and debt collector Unicredit America Inc. -- have unraveled in court over the past several years. Still left unresolved is whether or how the businesses were linked. A judge in U.S. Bankruptcy Court in Erie could make the determination soon. The trustee who is overseeing the bankruptcy estate of Telatron's parent company has resumed his push to pursue more than $4 million in claims against Telatron's former owners, Alfred D. Covatto, 73, who had been the company's chief executive, and his wife, Joyce M. Covatto, 61, who had been the company's president. In his latest complaint against the Covattos, the trustee, Erie lawyer John Melaragno, said the amount due is $4.1 million, and that amount includes $715,000 that Telatron improperly transferred to help operate Unicredit, which ran a fake courtroom until an Erie County judge ordered it closed in November 2010. Melaragno is claiming Telatron transferred the $715,000 between 2008 and the fall of 2010 by having 19 of its employees work for Unicredit, which the state Attorney General's Office said used the fake courtroom to intimidate debtors into paying. That money, Melaragno wrote in a court filing on Oct. 1, should have gone to the creditors of Telatron's parent company, Creditron Financial Corp., which filed for bankruptcy in July 2008, listing debts of $4.8 million. Unicredit's president was Michael J. Covatto, 51, Alfred Covatto's son and Joyce Covatto's stepson; and its vice president was Anthony D. Covatto, 26, Michael Covatto's half brother. Telatron operated at 1545 W. 38th St., just north of Unicredit's offices at 1537 W. 39th St. Alfred and Joyce Covatto own those properties. Melaragno wants Chief U.S. Bankruptcy Judge Thomas P. Agresti to order the Covattos to pay the $715,000 -- as well as other claims that bring the total request to $4.1 million -- to Telatron's bankruptcy estate, with that money to be distributed to Telatron's creditors, including the Internal Revenue Service, which is owed $2.4 million in unpaid taxes. The complaint continues a similar claim, for $4.5 million, that Melaragno filed against the Covattos in January. The Covattos offered to settle that claim by paying 5 percent of the amount -- or $223,469 over five years -- but Melaragno has said the offer is unacceptable. With that claim unresolved, Melaragno filed the complaint for $4.1 million, which takes into account the most recent financial information and supersedes the $4.5 million claim. Regarding the $715,000 he said is due Telatron, Melaragno wrote on Oct. 1 that the Covattos must pay the money because they, Unicredit and Telatron were connected. "All of the Unicredit transfers were made to or for the benefit of Unicredit, Alfred Covatto, Joyce Covatto and Alfred Covatto's and Joyce Covatto's children," and the Unicredit transfers "were made to the detriment of the actual creditors of Telatron and Telatron's bankruptcy estate," Melaragno wrote. Alfred Covatto was a "consultant" for Unicredit, he wrote. "It would be unjust, against public policy and would promote fraud to recognize Unicredit as a separate corporate entity from Alfred Covatto and Joyce Covatto," Melaragno wrote. Melaragno is also claiming Telatron made $2.5 million in fraudulent transfers to companies called Teletron Marketing Group -- whose name differs from Telatron's by one letter -- and the Academic Learning Center. The lawyer for Alfred and Joyce Covatto, Guy Fustine, wants Agresti to dismiss Melaragno's complaint. Fustine denied Melaragno's allegations in a court filing on Monday, in which Fustine wrote that employees of Telatron "performed tasks for Unicredit pursuant to a contract." "Many of the allegations made by the trustee were not fully investigated before the complaint was filed," Fustine wrote. "Some are based upon the conjecture of third parties without follow-up investigation." Alfred and Joyce Covatto filed for bankruptcy in May 2011. Michael Covatto filed for bankruptcy in June 2011. Agresti is on course to resolve Melaragno's complaint, most likely through a nonjury trial in Bankruptcy Court at the federal courthouse in Erie. The bankruptcy of Creditron, Telatron's parent company, remains open as Melaragno tries to collect money for creditors. A New York City company, Y & Y Holdings LLC, bought Telatron's assets for $600,000 in Bankruptcy Court in January, renamed the business Agility Marketing Inc. and moved it from Telatron's former offices to Millcreek Township. The former offices of Telatron and Unicredit are for sale for $2.7 million. The Attorney General's Office, claiming unfair trade practices and other consumer-law violations, sued Unicredit in October 2010, which led Erie County Judge Michael E. Dunlavey to shut down the fake courtroom the next month. The Attorney General's Office has continued to seek damages against Michael Covatto, Unicredit's president; and Anthony Covatto, the vice president. The Attorney General's Office won a default judgment against Michael Covatto -- who did not challenge its case -- and has asked Senior Erie County Judge John A. Bozza to order him to pay $1.2 million in fines and costs. Anthony Covatto is fighting the attorney general's request for a judgment against him. ED PALATTELLA can be reached at 870-1813 or by e-mail. Follow him on Twitter at twitter.com/ETNpalattella. ___ (c)2012 the Erie Times-News (Erie, Pa.) Visit the Erie Times-News (Erie, Pa.) at www.GoErie.com Distributed by MCT Information Services |