June 20--PORTLAND, Maine -- Cate Street Capital CEO John Halle testified in court Thursday that he has no personal bank account and no financial stake in Cate Street or the companies it was formed to manage, like Thermogen Industries and Great Northern Paper Co.
On Thursday, GNP auctioned off its No. 11 paper machine and other assets in part to settle property tax debt with the town of Millinocket.
Halle took the stand Thursday in Maine District Court for the second session of ongoing questioning about what assets he owns that could satisfy a $2.4 million judgment against him won against him by a former business associate, Richard Davimos Jr., in a New York lawsuit.
The lawsuit against Halle in Maine, along with other lawsuits against the company, are providing a new window into the complex web of corporate holdings that surrounds Cate Street Capital.
Cate Street manages the Great Northern Paper mill in East Millinocket, which shut down in January and laid off 212 of 256 workers in February to retool its business plan, and Thermogen, which plans a high-tech wood pellet mill at the former Katahdin Avenue mill site in Millinocket.
Officials for Cate Street Capital have declined to comment on the case, saying it was a personal matter between Halle and Davimos.
"We cannot comment on the lawsuit as it is pending, but it is important to note it does not involve Cate Street Capital," the company has said.
Davimos' attorney Lee Bals contends, however, that Cate Street's assets should be a part of the collections case to absolve his client's debt and has filed motions with the court to that effect.
Halle testified during his 1 1/2 hours on the stand Thursday that he owns three guns but does not have a personal bank account or hold ownership of any land, property or corporate entities.
"As long as I can remember, I've always turned my paycheck over to [Sharon Halle]," John Halle said, indicating his wife then deposits those checks into a TD Bank account in her name.
Those paychecks amount to $360,000 a year from Cate Street, he said. Halle said he's asked the company's five-member board of directors this year for a $100,000 raise, a salary amount that would not include bonuses, the last of which he received in 2010.
"If I remember, it was $200,000," Halle said.
Last December, Halle testified in another deposition that his wife owns Cate Street Capital through another company, Jenis Investment Co.
"Cate Street is owned by Sharon [Halle] at the end of the day and she can do what she wants to do with the -- with the employees that she has," Halle said, according to court records.
The company's website, however, identifies John Halle as its founder.
"At Cate Street, Mr. Halle is responsible for strategic planning, business assets and overall corporate growth, including staff development and management," the website indicates.
In a December deposition, Sharon Halle said her husband was the CEO, or chief operating officer, which was corrected by an attorney, saying CEO stands for chief executive officer.
"OK, OK. There you go. That's why I've been home with the kids for a while," she said.
The details of Halle's paycheck deposits led newly appointed District Court Judge Barbara Raimondi to order that Halle's attorney give opposing attorneys the last two years of bank statements for the account into which Sharon Halle deposits her husband's paychecks. That's in addition to joint tax returns and any joint bank account records already ordered as part of the case.
In May, Bals issued subpoenas seeking to question Sharon Halle and Robert Desrosiers, Cate Street's manager of compliance, in the case. John Halle's attorney, Brian Champion, filed motions opposing that effort earlier this month.
In a deposition last July, Robert Desrosiers, Cate Street's manager of compliance, testified that the company's bylaws list Jenis Investment Co. as its shareholder. Corporate disclosures in a defamation lawsuit Cate Street filed in Bangor also state the company is wholly owned by Jenis Investments. That company, in turn, belongs to Halle's wife, Sharon, according to sworn testimony by executives.
According to records with the Maine Secretary of State, Jenis Investment Co. was registered in 2005. It was formerly called Plymouth Wharf Holdings LLC and Suitelink Acceptance Co. LLC. A separate entity, Jenis Holding Co., was formed in 2007 in New Hampshire and also lists Sharon Halle as its manager.
According to a document submitted to the Finance Authority of Maine in January, Cate Street Capital Inc. has a 1 percent ownership stake in Thermogen I LLC, which is in line for a $16 million loan from the state financing authority.
It is 99 percent owned by Thermogen Holdings LLC, which is in turn 53 percent owned by CSC Group Holdings LLC. A $5 million equity offering filed with the U.S. Securities and Exchange Commission in 2009 lists Desrosiers, Cate Street's manager of compliance, as an executive officer of CSC Group Holdings, located at 1 Cate St., Suite 100, Portsmouth, N.H.
CSC Group Holdings is, in turn, also owned by Sharon Halle'sJenis Investment Co. and other investors, according to disclosures filed in the Wyoming lawsuit. Disclosures in the Maine defamation case also show CSC is one of many parents of GNP Maine Holdings, which does business as Great Northern Paper Co.
Records show CSC shares an office address with Cate Street Capital Inc. as well as Jenis Holding Co. and Jenis Investment Co.
In April, Cate Street clarified with the Bangor Daily News that it does not own Thermogen as a subsidiary but manages it, a clarification that followed more than two years of public references to Thermogen as a subsidiary in this newspaper and other news reports. In April, FAME referred to Thermogen as a Cate Street subsidiary in a news release announcing the company's $16 million financing deal.
In the July 2013 deposition, Halle said estate planning guided some decisions about how his and his wife's assets are managed and structured.
"You know, I'm a cancer survivor," Halle said in response to Bals. "I have the right to ... estate planning."
Questioned about his personal holdings, Halle said Thursday that he also owns no land and that the house at 7 Prosperity Lane in Windham, where he and his wife live, is owned by HFR Holdings I LLC, a company registered in Delaware. The $650,000 mortgage for that property is signed by Cate Street's Desrosiers, who is listed therein as HFR's president.
The questioning Thursday afternoon came as attorneys for both sides jockey over how far the case can dig into Sharon Halle's personal finances in the effort to collect against her husband's debt.
Whether Sharon Halle's testimony will become part of the collections case now depends on a ruling by Justice Joyce Wheeler in Cumberland County Superior Court. That decision is before Wheeler because that judge is presiding over a separate complaint Davimos initially filed in U.S. District Court in Maine, alleging Halle fraudulently transferred assets to his wife to evade payment.
The collections case in District Court results from a $1 million award, plus interest, granted to Davimos by New York's highest appellate court in 2009 for a loan Halle arranged to finance the 2001 film "My First Mister." Seeking to collect, Davimos' attorneys moved the case to Maine last year.
At the end of Thursday's hearing, attorney Bals also introduced into evidence two defamation lawsuits in which Halle is named a plaintiff. One lawsuit was filed in Bangor against paper industry newsletter Reel Time Report for an allegedly defamatory article and another defamation complaint was filed against Davimos in New Hampshire, according to Bals, who said he will ask that any damages awarded in that case be directed to his client, Davimos.
While most of Thursday's hearing revealed what assets Halle does not personally own, he said he did have a 50 percent stake in an entity called N70KC LLC that owned an airplane, but that was transferred to his wife after receiving legal advice that he, as a Canadian citizen, can't own an airplane registered in the United States.
He also said he owns three guns -- a semi-automatic AR-15 rifle and two Smith and Wesson handguns -- that he valued at around $1,000. Raimondi asked that serial numbers of those guns be presented to the court to identify those assets.
Halle's testimony Thursday ended at 4 p.m. because of time restrictions. Both sides are expected to file additional motions in the coming weeks and agreed to hold a conference hearing in 30 days. A date to continue Thursday's hearing was not set.
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