Investors Petition to Force Bankruptcy on Executive

Ten investors who claim they are owed more than $685,000 by Newport Interstate Properties Inc. filed a petition Friday to force the personal bankruptcy of company Vice President Michael Joyce.

The petition, filed in U.S. Bankruptcy Court in Santa Ana, is a tactical move to guard against potential diversion of assets of the troubled company. The company itself agreed last month to voluntary bankruptcy reorganization after a group of investors sued to force it into liquidation. The investors also sued to force Newport Interstate’s president, Richard J. Lorenat, into personal bankruptcy. Action on that matter is pending.

Subsequently, the Securities and Exchange Commission filed a civil suit against Joyce, Lorenat and Newport Interstate’s controller, Kenneth L. Shattuck, alleging violations of federal securities laws.

Worried investors believe that up to $20 million placed by as many as 1,200 investors to pay for projects and syndications is missing.

The company officers could not be reached for comment, but Lorenat has denied any wrongdoing.

Jeffrey M. Howard, attorney for the investors, said Joyce and Lorenat had been negotiating the sale of some Arizona land that his clients believe was bought with investor funds. “Joyce (and Lorenat) maintain the properties were bought with their money, not investor money.”

If granted, the bankruptcy petition would freeze Joyce’s personal assets and stop the sales, putting the parcels under control of a bankruptcy court. It is not known whether Joyce will oppose the petitions.