New Lexington Customers May Not Recover Much

The attorney assigned to protect the assets of the defunct New Lexington Fire Equipment Company says it is unlikely fire departments will recoup more than $1 million they spent for apparatus never delivered.

Meanwhile, inquiries about the possibility of renewed criminal charges against Betty Jo Sanner, the former president and owner of the Rockwood, Pa., company, are being referred to the Federal Bureau of Investigation.

Matthew Zatko, a Somerset, Pa., attorney acting as the court-appointed receiver to protect New Lexington assets on behalf of the bank that held a $539,000 mortgage on the property, said the financial numbers are not looking good for the fire departments.

“Based on what I’m seeing on the assets side and the amount being sought, I think it is highly, highly, highly unlikely the fire departments will see any more than pennies on the dollar in settlements, if that.”

Liquidation Of Assets

Zatko was asked to “secure the assets” of New Lexington for the PNC Bank of Pittsburgh, which led to a liquidation of the company’s assets in November.

That sale netted about $150,000, and auctioneer’s fees were taken from that, Zatko said. Personal property belonging to Sanner was sold at auction on March 27, according to Zatko, who said items sold included pickup trucks, campers and other equipment.

No real estate has been sold to date, he said, noting that the PNC bank is foreclosing on the physical plant in Rockwood, Pa., to gain title to the property. In the meantime, the buildings and land are for sale through Zatko.

Closed Since June 2006

The business, which was founded in the early 1990s, at one time had 45 employees, many of them volunteer firefighters. It has been closed since June 2006.

Dozens of charges filed last year against Sanner alleging theft, receiving stolen property, theft by deception and theft of services were withdrawn by the Somerset County District Attorney, according to the court clerk’s office.

A spokeswoman at the local district attorney’s office said her office was no longer involved with the case, and she referred questions involving New Lexington to the FBI in Pittsburgh. Calls to the agency were not returned.

Legal problems for New Lexington began in December 2005 with a bad check complaint. As Somerset County authorities began investigating the case, they learned there were numerous allegations of theft because New Lexington Fire Equipment failed to deliver apparatus to at least 20 fire departments in 14 states that had contracted with the company and paid money.

The Somerset’s district attorney’s office pegged the total value of the missing money at $1.3 million. Fire departments from Virginia to New Hampshire and Michigan to Maryland, as well as six vendors lost money in their dealings with New Lexington.

Portions of the money came from federal grants received by the departments from the federal Department Of Homeland Security, one possible reason for the interest of federal investigators.

As of mid-March, there were no federal charges filed in the United States District Court for the Western District of Pennsylvania, the federal court with jurisdiction over Sanner and New Lexington.

No Comments On Cases

Assistant U.S. Attorney John J. Valkovci Jr., the person reportedly in charge of the Sanner/New Lexington Fire Equipment Company investigation, did not return phone calls seeking comment.

A spokesman with the U. S. Attorney’s office in Pittsburgh said its policy is not to comment on cases under investigation, neither confirming nor denying their existence.

In the meantime several civil cases seeking damages from New Lexington continue to wind their way through the Court of Common Pleas of Somerset County.

One fire department, the Toms Brook (Va.) Volunteer Fire Department, received a judgment from the court in January for $101,000 for money paid to New Lexington for a tanker it never received.

Tax Lien Filed

Also in January, the Pennsylvania Department of Revenue filed a lean against the assets of New Lexington in the amount of $1,683.28 for non-payment of taxes.

Last fall, an auction was held at the New Lexington Fire Equipment Company plant, per a receivership order filed by the PNC Bank. The bank took action against Sanner in March 2006 seeking $539,000 in unpaid loans. According to those who attended the auction, loose equipment, inventory, supplies and tools were sold, much of it to other apparatus dealers and manufacturers in the area.

Zatko said it’s frustrating and disappointing that firefighters “who bust their butts to try to protect their communities” may end up losing lots of money.

“The bank is doing everything it can to protect and preserve assets, but doesn’t look like there’s enough assets to cover the losses,” he said.

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