Satellite Tracking Firm Founder Leaves Trail of Lawsuits

Richard A. Halavais, founder of a Laguna Niguel firm that is trying to raise millions of dollars to get a satellite tracking venture off the ground, has a history of legal entanglements involving past and present business activities.

Halavais is the subject of several recent lawsuits filed in connection with his 2-year-old company, Starfind Inc., which is marketing a satellite location and navigation system for tracking people and objects such as automobiles, trucks and ships.

Halavais, 50, a San Juan Capistrano resident, was interviewed in late March and again in early April in connection with an April 5 article in The Times about Starfind and its satellite technology.

Halavais did not respond to repeated requests for a subsequent interview about his legal problems and Starfind’s business activities. This week, however, Phoenix attorney F. Michael Carroll responded in writing on Halavais’ behalf to several questions asked by The Times.

“Suffice it to say that there are few businesses or businessmen in this country who have not been involved to one degree or another in some form of litigation,” Carroll wrote.

Libel, Slander Suit

Included in the litigation in which Halavais is involved is a pending $1-million libel and slander lawsuit filed by two former Starfind vice presidents, Steven P. Chadima and Jeffrey D. Brody. As part of that suit, Chadima and Brody accuse Halavais of engaging in “illegal and improper business practices in the management and solicitation of investment funds in Starfind.”

In court documents, Halavais has denied any wrongdoing. He has filed a $12-million counterclaim against Chadima and Brody, accusing them of plotting to ruin Starfind’s business after they left the company. Chadima and Brody, both fired by Halavais last October, have denied Halavais’ allegations.

The Costa Mesa office of Regis McKenna, a Silicon Valley public relations firm, sued Starfind last year for an undisclosed amount of unpaid consulting fees, said Melvin F. Cohen, a Laguna Hills attorney representing Regis McKenna. Cohen said his client has won a default judgment against Halavais.

In a separate suit, Nynex Business Information Systems, a nationwide computer retail chain, has sued Halavais for $39,000 it claims he owes for computer equipment he purchased during the past four years, said Cohen, who also represents Nynex. Halavais has not filed a response to the Nynex suit.

Chadima, 37, a marketing consultant, and Brody, 28, an engineer, have also filed claims with the California Labor Board, seeking roughly $210,000 for back wages and business-related expenses. Halavais has paid about $16,000 of the amount claimed by Brody and Chadima but is contesting most of the balance, said Steven C. Haas, an Irvine attorney representing Halavais.

Settled Another Suit

Halavais has settled another lawsuit brought by Chadima and his father, Jack Chadima, by agreeing to repay $30,000 in loans that the Chadimas made to Starfind, according to attorneys for both sides. Halavais so far has made $14,500 in settlement payments and is to make monthly payments on the remainder, said Sandra Nelson-Wetzler, an Irvine attorney representing the Chadimas.

In his response, Halavais’ attorney noted that “it is more than common for disgruntled or otherwise motivated former employees to sue their former employer.” Carroll declined to discuss specific allegations made by Chadima and Brody.

In addition to the recent lawsuits, Halavais’ statements about the progress of Starfind’s efforts to secure financing, arrange a satellite launch and build a computer center conflict with the comments of others involved with the firm.

For example, Halavais said in March that his company was negotiating a loan with a group of U.S. banks led by Baltimore-based Maryland National Bank to finance the launch of five satellites. According to Halavais, Starfind has been seeking $150 million to build and launch the satellites, which would enable the company to provide worldwide tracking service.

But earlier this week, a spokesman for MNC Financial, the Baltimore parent company of Maryland National Bank, said there were no ongoing discussions between MNC and Starfind. Officials from Maryland National Bank and an MNC-affiliated leasing company met on several occasions with Halavais earlier this year for “exploratory discussions,” MNC spokesman Daniel G. Finney said. “We don’t have any firm plans to extend credit or any other services (to Starfind) at this time,” Finney said.

Lawyer’s Written Response

In his written response, Carroll said Maryland National “is one of a number of financial institutions Starfind has contacted with a view toward obtaining financing for all or part of the costs of the satellite launches and operations.”

Because the commercialization of space is in its infancy, Starfind “probably falls within the category of a speculative business enterprise,” Carroll wrote. “As such, conventional financial markets are not readily available” as a source of financing.

In March, Halavais said that Starfind hoped to contract with Houston-based Space Services America to launch its first satellite in early 1989 from a NASA facility at Wallop’s Island, Va.

But Donald K. (Deke) Slayton, president of Space Services and a former Mercury astronaut, said that a Starfind launch couldn’t take place until November, 1989, at the earliest. Preparations for a launch would take “at least 18 months,” he said.

No preparations have begun for a Starfind satellite because the company hasn’t signed a formal contract for the launch, Slayton said. He said Space Services has entered into a memo of understanding with the firm, and Starfind has made a “small” down payment for the launch, expected to cost about $20 million. Slayton declined to divulge the amount of the payment.

In his letter, Carroll said the changes in the launch date are “necessary due to the nature of the launch business and, accordingly, the actual launch date can vary.” Starfind’s goal is “to achieve the earliest possible launch date,” he said, adding that “mid-1989” is now the earliest date.

Colorado Project

Last November, officials in Colorado Springs, Colo., were delighted when Starfind announced plans to build a $35-million computer center in that city, a project that the company said would create 300 new jobs.

Halavais, who has worked as an engineer and aerospace industry consultant, said last month that the company planned to begin construction in June. To undertake the $35-million project, he said the company was counting on approval of industrial revenue-bond financing from the state of Colorado.

Starfind’s plans for a June ground breaking appear shaky.

Economic development officials in Colorado Springs and Denver said Starfind has not applied for revenue-bond financing. Approval of such applications requires a minimum of 90 days, officials said.

Moreover, it is questionable if Starfind’s project would qualify for bond financing because such funds are usually reserved for companies that plan manufacturing operations, said Linda Martin, an administrative officer for Colorado’s Department of Local Affairs.

In his letter, Carroll acknowledged that there are no ongoing discussions concerning revenue bonds with state or local officials in Colorado. However, he said that revenue bond financing “remains a viable possibility” for building the computer center.

Financing Possibilities

Carroll said Starfind “has had discussions with various companies which are interested in developing and constructing the center” and that there are “other private sources with whom Starfind has been discussing various possibilities for the financing of the construction and development of the center.” Those plans are in the discussion stage and are not yet final, he said.

Starfind has agreed to pay $5.6 million for a 66-acre site in Colorado Springs for the computer center. The company has made a down payment on the land, said Kevin J. Walker, development manager for the Olive Co., a Colorado Springs real estate developer. “They are current on their contract, and I have no knowledge other than the fact that they are proceeding with closing” in June, Walker said.

Since 1976, Halavais has been named in at least a dozen civil suits in courts in Arizona and California. Most of the suits were filed by former employers and suppliers of companies for whom Halavais has worked.

One of those cases involved a civil suit filed against Halavais in 1984 by a former employer, General Pneumatics Corp. of Orange, N.J., alleging fraud, embezzlement, failure to repay loans and unlawful transfer of property out of the company for his personal use.

In court documents, Halavais denied doing anything illegal and filed a counterclaim against General Pneumatics, saying that the company owned him $460,000 for unpaid back wages, loans and business expenses.

In 1986, an Arizona Superior Court judge ruled in favor of General Pneumatics and ordered Halavais to pay about $1.6 million in damages for fraud, illegal transfer of property and failure to repay loans. The ruling was later set aside because the court had failed to permit Halavais’ request for another judge. Both sides agreed to dismiss their claims against each other in December, 1987.

“The company finally decided that, from a business standpoint, enough was enough,” said Steven Zylstra, general manager of the General Pneumatics’ Scottsdale, Ariz., facility. “We had spent hundreds of thousands of dollars on the case . . . and the company almost went bankrupt because of him.”

The General Pneumatics case was based on Halavais’ management of a research project at the Scottsdale facility from May, 1983, to September, 1984.