PORTLAND, Maine — Lawyers seeking to collect about $2.4 million from Cate Street Capital CEO John Halle will be allowed to question Halle’s wife, Sharon, for up to six hours about assets she may hold for her husband that could pay the legal award, according to a Superior Court order filed earlier this month.
But details of questioning and other investigations into the couple’s personal finances likely will remain secret in the complex disclosure case, which won’t head to trial until at least March 2015.
Both parties in the case agreed July 15 on a confidentiality agreement that will allow either party to mark as confidential certain evidence, such as bank records, as the case proceeds along a schedule set out by the court earlier this month. The confidential designation then can be challenged and the court may order disclosure of such documents during a period of discovery, which will establish the evidence to use in the case or a trial.
The order allowing attorneys to question Sharon Halle comes after John Halle testified in June that he gives his paychecks directly to his wife to deposit into a TD Bank account, has no personal bank account and no financial stake in companies that Cate Street manages, including Thermogen Industries and Great Northern Paper Co.
Great Northern recently auctioned papermaking equipment at its Millinocket mill on June 17 as part of its plan to pay back taxes owed to the Internal Revenue Service and the town. It says it hopes to restart the East Millinocket mill. Thermogen Industries is working to finance a $140 million wood pellet plant project in Millinocket, from which investors recently withdrew at least $30 million in investment through the state’s New Markets Tax Credit program.
Thermogen is in line to get a $16 million bond from the Finance Authority of Maine for its project if it pays taxes owed to the IRS and town.
Attorneys seeking to collect in the personal lawsuit against Halle see Cate Street as one possible source for satisfying the debt, but company officials have said the case is a personal matter unrelated to its business and the court order prevents attorneys from asking Sharon Halle about Cate Street’s holding company, Jenis Investment Co., because it is the subject of a related federal lawsuit.
Both cases stem from a court award of $1 million plus interest Richard Davimos Jr. won in New York in 2009, related to a loan from Davimos that John Halle arranged to finance the 2001 film “My First Mister.” Davimos also has filed a federal lawsuit alleging Halle purposely transferred assets to his wife, including an interest in Jenis Investment Co., to avoid payment.
In a December deposition, John Halle said that his wife owns Jenis and thereby owns Cate Street. Jenis is also the sole corporate parent of CSC Group Holdings, which owns 53 percent of Thermogen Holdings and is the sole parent company of the company Clean Runner, which is the subject of a lawsuit filed by a Wyoming company.
The court ordered that Davimos’ attorneys may make general inquiry about the assets Sharon owns that she may be holding for her husband, but that order does not include the three assets that are the subject of the federal lawsuit, including Jenis Investment Co. and another entity, Jenis Holding Co.
While disclosures in recent lawsuits tie Jenis Investment Co. to ownership of Thermogen and other entities, the assets of privately held Jenis Holding Co. are not clear. In a December deposition, John Halle implied that his wife was owner of the Jenis companies for the purposes of estate planning.
Brian Champion, Halle’s attorney who in May told the Bangor Daily News he could not comment on the lawsuit, in June filed a motion arguing that John Halle never had an interest in Jenis Holding Co. and therefore could not transfer it to his wife.
Davimos’ attorneys argue that a 2006 corporate registration form identifying John Halle as a member prove he had some ownership of the company, though Halle’s attorneys argue those documents do not indicate ownership.
As evidence-gathering in the collections case moves ahead through the end of this year, rulings are pending on the recent motions asking the court to dismiss some of the fraudulent transfer claims.