Investor Sues Costa Mesa Videophone Company : Courts: A Santa Ana man who put $200,000 into Interlink Data Network of Los Angeles accuses the firm and its officers of fraud and false claims.


An Orange County investor who put his life savings into Interlink Data Network of Los Angeles Inc. has sued the videophone company and its officers for alleged fraud and false advertising.

Ronald C. Townsend of Santa Ana, a machinist who put $200,000 from his savings and an inheritance into an Interlink limited partnership, filed the lawsuit in Orange County Superior Court. He also names the broker-dealer firm that solicited investors for Interlink, Portfolio Asset Management/USA Financial Group in El Paso.

The lawsuit alleges that Interlink, which said it has raised millions of dollars to build a videophone network in downtown Los Angeles, and brokers representing the Costa Mesa company made false claims when promoting the investment.


The suit alleges that Interlink raised money for the purpose of hiring a subcontractor to build a fiber-optic network, yet did not inform investors that it had changed its plans to lease existing fiber-optic lines and has not begun the project, which was supposed to be completed by the end of 1992.

Michael Gartner, Interlink president, denied the allegations and blamed the dispute on published reports.

“The whole document is based on the initial Los Angeles Times article,” he said this week. “We view that (story) as misrepresentation.”

The suit was filed April 23, several days after The Times published a story about Interlink’s marketing practices and an ongoing investigation of the company by the state Department of Corporations.

In the suit, Townsend said he heard about Interlink last fall while listening to a radio advertisement in which a broker representing Interlink raved about the company’s videophone technology. Townsend said he contacted the broker and subsequently invested $200,000. The suit says Townsend makes less than $40,000 a year at machine shop in Westminster.

Larry Curran, Townsend’s lawyer, said that he had obtained a temporary restraining order freezing an Interlink bank account at Bank of America. Gartner said the company was contesting the order.


Gartner said that Townsend received all of his promised monthly distributions in a timely manner and Interlink therefore had not violated the terms and conditions of the investment contract. Townsend said he received $10,875 in interest payments from his investment in Interlink, but he alleged in the suit that the payments were part of a scheme to placate investors. He said the last two payments have been late.

The lawsuit names a number of individuals who are no longer employed by Interlink or Portfolio, which recently broke off relations with Interlink. Ronald S. Combs, chairman of Portfolio, said Tuesday his company would defend itself against any lawsuit.

He said that Portfolio’s liability in the case is limited under law because Interlink never paid his company for underwriting services. Gartner disputes the accusation.

The suit names Bank of America, where Interlink has a bank account, and 13 other defendants, including Interlink Executive Vice President Tony Lollis and Chief Engineer Delbert A. Wolverton.

Gartner said in earlier interviews that his privately held company has raised $2.4 million in equity through the sale of stock and an additional $7.5 million from limited partners to build a 21-mile fiber-optic network in downtown Los Angeles and along Wilshire Boulevard.

Interlink has said it wants to market the videophones, which cost $3,995, to businesses in about 140 office buildings along the proposed route.