Interlink Data’s Gartner Held on Contempt Order
Michael Gartner, former president of an Orange County company accused of defrauding 450 investors of more than $10 million, was arrested in Washington state on contempt charges by the U.S. Customs Service.
Agents arrested Gartner on Wednesday in Blaine, Wash., as he was crossing the Canadian border into the United States, said David Schindler, an assistant U.S. attorney in Los Angeles.
A federal judge in Los Angeles issued an arrest warrant for Gartner last fall after he failed to account for or repay money raised from investors in his Costa Mesa-based company, Interlink Data Network of Los Angeles Inc., Securities and Exchange Commission officials said.
Gartner, who could not be reached for comment Thursday, has denied any wrongdoing in the past and said he has tried to comply with court orders for financial disclosure.
His attorney, Robert C. Rosen of Lewis, d’Amato, Brisbois & Bisgaard in Los Angeles, called the contempt order “overzealous prosecution” that violated Gartner’s Fifth Amendment right against self-incrimination.
The SEC sued Gartner and three companies he controlled last July and won a $12.3-million default judgment. Gartner told investors that his company planned to build a fiber-optic network that would link 140 downtown Los Angeles buildings in a futuristic videophone network. The network was never built, according to the SEC.
“I think it is an illegal and overzealous order,” Rosen said. “He has to choose between putting up $30,000 (in reimbursement) or have his deposition taken even though he has taken the Fifth Amendment.”
“He has filed financial disclosures that show he cannot pay the money,” Rosen said. “There is no such thing as a debtor’s prison in this country.”
SEC officials could not be reached for comment Thursday. No criminal charges have been filed against Gartner.
Gartner was being held Thursday by the U.S. marshal in Seattle until he could be transferred to Los Angeles for a hearing on the contempt of court charges, said Jack Tate, a spokesman for the U.S. marshal’s office.
Judge Manuel Real in Los Angeles held Gartner in contempt in August for violating an order freezing all assets of Interlink Data Network.
Gartner once lived in a $3.8-million home in San Juan Capistrano and was making $20,000 monthly rent payments with investor money, the SEC alleged.
Yet even as U.S. marshals began seizing his assets last fall, Gartner continued to spend money and dispose of assets, the SEC said, and a warrant for his arrest was issued in November.
The judge ordered Gartner to either repay $30,000 in investor funds or provide financial records showing that he was not using money raised from investors and that he could not afford to repay the money.
