BOSTON 'Civil Action' lawyer fights Valley company over debt

A Newton Falls company has sued the well-known environmental attorney.
BOSTON (AP) -- For Jan Schlichtmann, a funny thing happened on the way out of bankruptcy court.
For almost eight years, the lawyer -- made famous for fighting on behalf of Woburn, Mass., families whose children drank polluted water -- has battled the company that bought a bank loan tied up when he went bankrupt fighting the celebrated environmental case.
Schlichtmann argues the company that bought his debt, The Cadle Co. of Newton Falls, Ohio, has no rights to income he's earned since he went bankrupt -- and claims it's been playing a fraudulent shellgame with his debt and debts owed by others.
Cadle operates Riverside Square, a business and office complex on Tod Avenue N.W. in Warren's former St. Joseph Riverside Hospital.
A federal appeals court is deciding whether Cadle still has the right to go after income Schlichtmann earned after he went bankrupt. The court did not immediately issue a ruling.
"The case they have been prosecuting against me is a fraud, and the case is a fraud not only against me, but against the court. Hopefully the court will take action so that they will not become party to the fraud," Schlichtmann said.
At issue
The immediate issue before the 1st U.S. Circuit Court of Appeals is whether a partner of Cadle's, Atlanta Joint Venture Co., can intervene in the case and join Cadle's challenge to a decision by a federal judge last year to dismiss their lawsuit against Schlichtmann.
Cadle sued the attorney and his law firm for hundreds of thousands of dollars in an unrelated environmental case that was awarded after he went bankrupt by suing chemical company W.R. Grace & amp; Co. and Beatrice Foods over tainted wells in Woburn. Beatrice was absolved of responsibility, while Grace paid the families $8 million, but never admitted guilt. The litigation was depicted in the book and movie "A Civil Action."
Schlichtmann claimed that money was earned after his bankruptcy case was closed, and was not owed to Cadle.
In 2001, the 1st U.S. Circuit Court of Appeals reversed a federal judge's ruling and ordered him to pay Cadle. The U.S. Supreme Court declined to hear his appeal.
Auction
Then, last year, unrelated litigation in a Texas lawsuit forced Cadle to auction some of the debt it owned, including Schlichtmann's. Schlichtmann bought his own debt back for $52,000, and the U.S. District Court dismissed Cadle's suit last December, saying the matter was resolved.
Cadle appealed. Further complicating the case, Atlanta Joint Venture -- a limited partner of Cadle -- asked to intervene in the case, saying it had rights to proceeds on Schlichtmann's debt, and needed to be part of the litigation.
After years of battling in court to compel Schlichtmann to pay them the money, Cadle attorney Scott Machanic on Wednesday argued that it's Atlanta Joint Venture that has rights to the money and that the Texas sheriff illegally auctioned off the debt.
"The property didn't belong to the Cadle Co.," he said.
Barry Ragsdale, Schlichtmann's attorney, said the question is irrelevant, because Cadle lost its rights to Schlichtmann's debt when he bought it back at the auction last year.
"This is not a trick or a slight of hand by Mr. Schlichtmann," he said.
Investigation
In the meantime, state regulators are pondering Schlichtmann's claims that Cadle transferred loan accounts to separate corporations and partnerships set up to skirt state regulations.
Schlichtmann's complaints over Cadle resulted in state Banks Commissioner Thomas J. Curry ordering the Cadle Co. on April 14 to stop trying to collect debts in Massachusetts, because it isn't licensed to do so.
Daniel Cadle wrote back on April 23, saying that Cadle could not halt debt collection in Massachusetts because it doesn't do any such business here.
"We are not a collection agency," wrote Daniel Cadle. "We do not make any loans in Massachusetts. We do not have any office in Massachusetts and we do not have any telephone numbers in Massachusetts."
Curry has asked the state attorney general to investigate. A spokeswoman declined to comment.