A trustee for Towers Financial Corp. brought suit last week against Steven Hoffenberg, Towers' former chairman, to recover $400 million of creditors' and investors' funds that allegedly were "stolen or squandered" by Mr. Hoffenberg and other co-defendants who have been connected with the New York-based healthcare receivables company.
The complaint was brought in U.S. Bankruptcy Court in New York, where Towers Financial and some of its subsidiaries filed for relief last spring under Chapter 11 of the U.S. Bankruptcy Code.
Towers filed for protection from creditors after the Securities and Exchange Commission brought suit against Mr. Hoffenberg and the company for allegedly selling unregistered securities and overstating the company's assets.
Alan Cohen, the trustee for Towers, brought the complaint after "a 10-month investigation involving scores of interviews and a review of tens of thousands of pages of documents not destroyed by (Mr.) Hoffenberg prior to his departure."
The 26-count suit includes charges of fraud, conspiracy, breach of fiduciary duty, corporate waste and racketeering. It seeks $400 million in compensatory damages, $800 million in punitive damages and $1.2 million in triple damages.
A spokesman for Mr. Hoffenberg said the charges have no merit and that his attorneys intend to fight the charges.
The spokesman declined to describe Mr. Hoffenberg's latest business dealings, but in an interview last summer, Mr. Hoffenberg told MODERN HEALTHCARE that he continues to provide receivables financing to hospitals and other healthcare facilities (Aug. 9, 1993, p. 128).
Mr. Hoffenberg apparently has an office at Stratford & Haley Capital in New York, where his spokesman was reached.