Newport Entrepreneur’s Death Baffles Community : Crime: Police are investigating victim’s dealings. Neighbors believe the shooting was not a random act.

Just 12 years ago, William Francis McLaughlin, a hotshot entrepreneur in the medical device industry, hit the jackpot.

His neophyte company, operating out of a Santa Ana garage, had created a prototype blood-filtering device for collecting plasma that was soon to be used by blood banks worldwide.

“We were very excited and broke out the champagne and had a little celebration in the garage,” recalled Bill Miller, one of McLaughlin’s partners in the highly successful enterprise.

In 1986, the partners sold the company McLaughlin had founded and its innovative technology for tens of millions of dollars to Baxter Healthcare Corp.

But in the next few years, he would endure a rapid-fire series of business hardships and personal heartbreaks.

Finally, on Friday, McLaughlin’s 24-year-old son, Kevin, found his father’s body on the first floor of the family’s six-bedroom Balboa Island home where they had lived for some 20 years. Police said the 55-year-old multimillionaire had been shot repeatedly in the chest.

The homicide has baffled residents in the gated, waterfront community of Balboa Coves. Neighbors recalled him as a devoted father, a fitness zealot who frequently jogged with his golden retriever and a generous contributor to alma mater Loyola Marymount University, where he endowed two scholarships for needy students.

On Wednesday, the day after McLaughlin’s burial, police had little comment about the murder, and declined to discuss evidence or possible suspects. Sgt. Andy Gonis said investigators are “involved in compiling extensive background information on the deceased,” including his business dealings.

McLaughlin’s neighbors, many of whom attended a memorial service for him Wednesday morning at Our Lady of Mount Carmel Catholic Church in Newport Beach, said the murder that jarred their quiet enclave has caused them to worry about their security. They want police to provide some answers.

“No information is available, so everybody is guessing,” said Stan Love, vice president of the community association’s board of directors. “We are of the opinion it was not a random shooting. It sounds like somebody was mad at him.”

Business associates similarly are dumbstruck. They describe McLaughlin as a charming friend with a warm smile. The kind of guy who always asked about their families.

However, some who worked with McLaughlin said he could be overbearing and sometimes cold-shouldered employees who didn’t meet his standards. “He could be a nice, charming guy or a mean son of a gun,” said a businessman who worked with McLaughlin two decades ago.

McLaughlin always did well in business. After a stint in the Marines and armed with a biology degree from Loyola Marymount, he entered the medical industry in 1964, where his aggressiveness as a salesman led to success.

“He was one of the best salesmen I ever met,” said Dave Burke of Costa Mesa, who worked for McLaughlin in the late 1960s when the latter was national sales manager for Extracorporeal, a dialysis products company later acquired by Johnson & Johnson.

“He knew his products inside out,” Burke said, “and could discuss them with a doctor on the same level.”

After working as a salesman and marketing executive for a string of medical device companies, including Shiley, the Irvine-based manufacturer of heart valves, McLaughlin in 1977 turned to medical-product development. His greatest success would come as an entrepreneur.

First, he developed a new dialysis catheter with a firm he founded, called Medical Device Laboratories, which he sold to C.R. Bard, a New Jersey-based medical device manufacturer, in 1977.

Then, he and others heard that the Red Cross was looking for a swifter and less risky method for collecting plasma from blood donors. In 1978, he joined forces with Hughes Aircraft scientist Halbert Fischel to work on the project; in 1981 the pair formed a company called HemaScience Laboratories Inc.

“Fischel came up with this brilliant idea,” recalled Don Schoendorfer, who was part of the HemaScience team. Fischel’s invention, called Autophoresis-C, enabled blood to be extracted from a donor, the plasma removed, and the remaining blood returned to the donor in one continuous, automated process.

Previously, plasma was separated from blood in a laboratory centrifuge, a much longer process that runs the risk of causing death if a donor’s blood is mistakenly switched with another’s before it is returned.

HemaScience began small.

“We started in my garage in Santa Ana,” Miller said. After the prototype blood separator was developed, he said, Hillman Co., a capital venture firm in Pittsburgh, pumped in the money to help the company seek approval from the Food and Drug Administration to market the product in the United States.

By mid-1986, the FDA gave marketing approval and Baxter was ready to buy the technology. Schoendorfer said only about 100,000 blood separators had been sold before the Baxter acquisition, but within two years annual sales had reached 2 million units, soaring now to about 9 million.

In the last four years of his life, however, McLaughlin’s glory was tarnished by mounting troubles.

In 1990, Susan McLaughlin, his wife of 24 years, filed for divorce, triggering a lengthy legal battle over the family assets.

In court records, Susan McLaughlin described her husband as “very controlling and domineering,” and accused him of trying to bully her into accepting a $1-million settlement before a full accounting of the community property.

In the final divorce settlement, court records show, she received assets worth about $4.5 million, including the family’s second home in Hawaii and future annual payments of $300,000.

William McLaughlin got the two-story house in Balboa Coves, a 21-acre avocado ranch in Fallbrook, a Piper Malibu airplane, two Mercedes-Benzes and the right to all future earnings and royalties from HemaScience Laboratories Inc., the company that merged with Baxter. Court records show he was earning $100,000 a month.

Also in 1990, Fischel sued McLaughlin and Baxter, contending he had been cheated out of his fair share of royalties. At stake in the pending lawsuit, according to McLaughlin’s attorney, Paul Gale, are millions of dollars.

For four years, the lawsuit has been in arbitration in San Francisco. The hearings, which ended in May, were “extremely contentious and extended,” Gale said, and consumed much of William McLaughlin’s life.

Now awaiting the arbitration panel’s decision, Gale said he is pleased by a preliminary statement the panel issued last month that seems to favor William McLaughlin’s position.

Fischel could not be reached for comment and his attorney declined to discuss details of the case.

The high-stakes royalty litigation coincided with yet another family crisis for McLaughlin. In October, 1991, just five days into the hearings, he was called home from San Francisco because his son--he also has two grown daughters--had been struck by an automobile while skateboarding.

Kevin McLaughlin, initially in a coma, was hospitalized for many months.

Brian Ringler, William McLaughlin’s accountant, recalled that McLaughlin visited the hospital as often as possible, talking to his son to draw him back to consciousness and rejoicing with every sign of progress.

“He never gave up,” Ringler said.

At the time of William McLaughlin’s murder, his son, still struggling with his speech and motor skills, was living with him.

Ringler recalled a conversation he had with William McLaughlin shortly before the murder. He was “very upbeat and relaxed,” Ringler said, and sent “a hug and a kiss” to Ringler’s three small children.

“How could it be that someone who appears so nice and so giving could have something like this happen to him?” he said. “It does not make any sense.”