Costa Mesa Firm Buys First Assets of Parker Auto : Bankruptcy: CarbonClean International, a unit of International Turbo Center, hopes to revive business of making engine-cleaning machines for cars and trucks.

The first big chunk of assets from Parker Automotive Corp.--once a highflier but now bankrupt--has been sold for $1.5 million to a small, struggling company that makes auto turbochargers.

The buyer, a Costa Mesa-based unit of International Turbo Center, said it fired Parker Auto’s flamboyant founder Michael E. Parker last month. Parker had been consulting for ITC after being forced out of Parker Auto.

ITC, based in Marysville north of Sacramento, plans to revive Parker Auto’s business of making engine-cleaning machines for cars and trucks. It bought Parker Auto’s trademarks and trade names for the machines and inventory in California and Texas.

The $1.5-million purchase price is small compared with what Parker Auto’s creditors say they are owed. When it filed for bankruptcy, the company listed more than $9 million owed to secured creditors alone--those who have first claim on the company’s assets.

Whether the creditors receive all they are owed depends upon how much Parker Auto’s bankruptcy trustee can get for selling engine-cleaning machines. And that depends to some extent on how successful ITC is in reviving the business.

The ITC subsidiary, CarbonClean International, says prospects for its new business are good.

But parent firm ITC, which went public a year ago, has been struggling financially. It reported sales of just $60,000 for its third quarter ended in September and has not shown a profit since it started eight years ago. The turbocharger business--turbochargers improve engine performance and reduce exhaust emissions--requires heavy investment in the early years.

Third-quarter sales were minimal because the company was devoting its resources to buying Parker Auto, said Robert Reese, chief operating officer for ITC and the subsidiary. Reese, a Newport Beach resident and former home-building executive, joined ITC as the subsidiary’s top officer in September.

Parker, who is out of jail on a $1-million bond while awaiting trial on charges of savings and loan fraud, was hired as a consultant for the subsidiary.

Reese, however, said he could not work with the Parker team, which included Parker’s sister and another associate of Parker’s.

“I found that having these people associated with the firm was a giant negative,” he said. “And, as we went through the fall, we were not able to form a good working team.

“So I terminated everybody and started all over again.”

Not so, said Parker, who also said he will file a suit against ITC next week, alleging breach of contract. He contends that ITC broke a two-year contract under which he was supposed to help ITC obtain Parker Auto’s assets.

He asked for a two-year contract, Parker said, so his family would still get paid even if he is sent to jail.

“I won the assets for them in a tremendous deal,” Parker said Tuesday, “and then, I guess, they didn’t want to have to pay me. When you have troubles, people think they can run all over you.”

Although Parker contended that “a number of major customers weren’t very happy with (ITC’s) treatment of me and my sister,” he said ITC can make a go of the engine-cleaning business “if it can raise the capital.”

If the Parker Auto business takes off again, ITC plans to reopen Parker Auto’s local manufacturing business.

Parker Auto operated a plant in Fountain Valley until shortly before it filed for bankruptcy in July. ITC now has the machines made and repaired in Ohio, where a distributor has set up a factory.

Parker Auto listed $6.5 million in assets when it filed for bankruptcy, but accounting for those assets has not been easy, said William C. Starrett II of Newport Beach, attorney for the bankruptcy trustee.

One distributor, TRW International, has told the trustee that it holds up to $1.8 million worth of machines on consignment in Belgium, Starrett said. Another $500,000 is supposed to be in England, and there was up to $2 million in Parker Auto’s accounts receivable.

Some small suppliers of parts say they are owed hundreds of thousands of dollars by Parker Auto.

The biggest creditor is Hamilton Taft & Co. of San Francisco, which bailed out Parker Auto last year with a $3-million loan that could be converted to stock.

Hamilton Taft has its own problems: A bankruptcy trustee said the $3 million may have been part of tens of millions of dollars that Hamilton Taft is suspected of siphoning from clients’ accounts. (An attorney for Hamilton Taft said the company had its clients’ tacit approval to use the money.)

A thicket of lawsuits surrounds Parker Auto. Some of the company’s investors, who say the firm misled them about its financial prospects, have filed suit against Parker Auto and Parker, demanding the return of millions of dollars.

And Parker has filed several lawsuits himself, including one against the creditors’ committee of yet another company he founded that filed for bankruptcy. Parker alleges in the lawsuit that the committee drove Parker Auto into bankruptcy.

Parker was arrested by FBI agents last year after a federal grand jury accused him of racketeering and money-laundering in allegedly stealing more than $11 million from Columbia Savings & Loan in Beverly Hills.

Prosecutors said it was one of the largest cases of thrift fraud in Southern California. A trial is scheduled for federal court in Los Angeles in April.