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HMC receiver seeks $925,000 -- News Roundup

HMC receiver seeks $925,000

Court-appointed receiver Michael Grassmueck has applied for almost $925,000 in payment, for work that he and a number of professionals performed through June 30 to sort out the affairs of the now-defunct Health Maintenance Centers and Znetix.

Grassmueck asked a federal court judge for almost $300,000 in fees and costs for work performed by his company. He seeks an additional $155,000 for the work of a forensic accounting firm, and over $450,000 for the work of two law firms.

The application says that the work at issue involved preparing an accounting of Znetix and associated entities, which raised some $90 million from more than 5,000 investors; recovering property; some of which was sold at auction; and preparing legal actions against entities that might be liable to the corporations, including officers, directors and law firms.

Final tallies showed that the auctions of company property on Bainbridge Island and in Kenmore brought in a total of $1.726 million, according to information posted on the Znetix website, which Grassmueck controls.

Some $547,000 came from two days of Bainbridge auctions, which involved property at the former Znetix offices on Parfitt Way, a storage facility on Miller Road and equipment in the Madison Avenue gymnasium formerly operated by HMC.

The Kenmore auctions at the home base of auctioneer James G. Murphy Co. brought in $1.178 million. That auction involved cars, jewelry and watercraft that founder Kevin Lawrence allegedly purchased with money from investors. The top-dollar item was a 7-carat engagement ring that sold for $152,000.

Grassmueck said at the time of the auction that he did not expect the auction proceeds to cover much more than the accrued expenses. Any recovery to repay creditors and investors will have to come from the ongoing legal actions, he said.

Lawrence remains in federal custody awaiting trial on a 64-count fraud indictment. Federal prosecutors say that Lawrence used investor funds not to develop a business concept, but to finance a “grossly lavish lifestyle.” Investigators have recovered less than $50,000 in cash.

Attorneys for both sides have agreed to a continuance that would push the trial back to next spring, but there has been no ruling from the bench.

– John Waldo

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***Court rejects wetland suit

City Hearing Examiner Robin Baker properly considered the possible existence of wetlands when she approved construction by the Kitsap County Consolidated Housing Authority of affordable homes on four Fort Ward lots, Kitsap County Superior Court Judge Karlynn Haberly has ruled.

Haberly dismissed a suit filed against the KCCHA and the city by Fort Ward residents Portia and Mark Nadler, who claimed that the housing authority was encroaching on wetlands with one of four homes it plans to build on Soundview Drive.

The Nadlers challenged the accuracy of information the the city used to grant KCCHA a building permit, but did not affirmatively show that the information was incorrect, Judge Haberly said.

She ruled, therefore, that the Nadlers did not meet their burden of showing that the city’s decision was erroneous.

The Nadlers have filed a motion for reconsideration, on which Haberly has not yet acted.

“We think the housing authority is as concerned about the environment as anyone else, including the Nadlers,” KCCHA attorney Ed Wolfe said.

– John Waldo

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***Island shellfish closure grows

Port Orchard Bay on the south and west side of Bainbridge Island has been closed to the harvesting of all species of shellfish due to the presence of Paralytic Shellfish Poisoning (PSP), the Kitsap County Health District has announced.

Samples of shellfish taken from the Brownsville Marine in mid-September showed PSP toxin levels of 129 micrograms per 100 grams of shellfish tissue, which exceeds the permissible limit of 80 micrograms of poison.

Most of the rest of the island’s waters had been the subject of previous closures.

The only areas not closed are the island’s south side, from South Beach to Point White.

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