Axium trustee seeks 'tens of millions' of dollars in damages from former executives

By Caroline Salls

Pittsburgh, April 6 - Axium International, Inc.'s Chapter 7 trustee filed a lawsuit Monday against former chairman and chief executive officer John Visconti and former vice chairman and chief operating officer Ronald Garber, asking the court to award "tens of millions of dollars in damages caused by years of mismanagement and misappropriation of corporate assets," according to a news release.

Chapter 7 trustee Howard Ehrenberg said in the lawsuit that under the direction of Visconti and Garber, Axium suffered from profound financial and corporate mismanagement, punctuated by wasteful spending that was "perhaps the worst I have seen in my experience."

According to the release, "Axium's books and records outline a pattern of alleged reckless corporate spending that supported lavish lifestyles for Visconti and Garber including luxury cars, corporate jets, travel and entertainment and other forms of corporate waste, all of which caused significant financial injury to the company."

Ehrenberg is also alleging that Axium underpaid federal payroll taxes. According to claims filed by the IRS in the bankruptcy cases, Axium still owes more than $80 million in unpaid taxes, according to the release.

In addition, the lawsuit alleges that more than 1,000 Axium employees worldwide lost their jobs and creditors are owed more than $500 million because of the company's bankruptcy.

"John Visconti and Ronald Garber simply did not know how to operate a global, multi-billion-dollar payroll operation," Ehrenberg said in the release.

"They should be held accountable by the courts for their actions which resulted in so many people losing their jobs and for the debt they owe Axium's creditors."

Specifically, the complaint, which was filed in the U.S. Bankruptcy Court for the Central District of California, seeks damages from Visconti, Garber and various shell companies they controlled, as well as from Axium's tax consultants.

The complaint also seeks return/repayment of property and other assets that the complaint alleges were improperly funneled out of the Axium companies.

Axium, a Los Angeles-based provider of payroll and human resources services, filed for bankruptcy on Jan. 8, 2008. Its Chapter 7 case number is 08-10277.

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