Bankruptcy petition is filed by Computron

Software firm's problems spark political extremist infighting

Our Town, April 5, 1981

This article from over a quarter century ago reflected my plague-on-both-your-houses attitude at that moment. Having endured a year and a half of harassment (including the usual tactics: creation of a controlled aversive environment, death threats, and suggestions that I commit suicide) from individuals who ended up on different sides from each other in the Computron dispute, I was not in a charitable mood. (Also, I was not yet aware of the full extent of LaRouche's looting of Computron.) I am posting this article in 2007 because it sheds light on what would become a pattern with LaRouche: encouraging his followers to launch successful businesses (and/or political initiatives) and then, when they threaten to outshine him, pulling the rug out from under them. This has happened again and again, and I must say it bears an eery resemblance to how Hitler treated his best generals during World War Two.--DK

NEW YORK--Computron Technologies Corporation, a multimillion dollar computer software firm linked for many years to the ultrarightist National Caucus of Labor Committees (NCLC), has filed for reorganization under the Chapter 11 provisions of the Bankruptcy Act.

In a debtor's petition filed on March 3 in the United States District Court for the Southern District of New York, Computron lists assets of $2,139,000 and liabilities of $2,955,000. The petition seeks protection from creditors while the Manhattan-based corporation, which also operates in Europe and the Persian Gulf, reorganizes its affairs under court supervision.

Computron rose to prominence among New York systems houses in the late 1970s as a result of its cooperation with Wang Laboratories, a rapidly expanding computer hardware firm which does high security work for the U.S. intelligence community, the State Department and leading defense contractors.

Thanks in part to referrals from Wang, Computron developed a software vendor business with revenues of over $5 million per year. As of last fall, Computron claimed installation of over 200 systems for a list of clients which included Mobil Oil, AT&T, Colgate Palmolive, and the Institute of International Education.

The link between Computron and the NCLC was first uncovered by Our Town in a Sept. 9, 1979 article. The following month, the New York Times noted the connection in a frontpage expose of NCLC. Both articles reported allegations by NCLC defectors that Computron revenues had been channelled into the party's political activities.

Since then, defectors have released a report on NCLC finances estimating that 20 percent of the party's annual budget (as of 1979) came from its "business ventures, principally Computron," and that the total amount skimmed from Computron was "certainly in excess of $750,000." The report quotes a party leader as saying the amount ranged from $5,000 to $10,000 per week.

"These funds were directly paid from the Computron accounts into the [NCLC] accounts, with money being recorded as wage payments in Computron tax records," the report says.

Computron has officially denied any skimming, but the firm's Chapter 11 petition is rather vague about the current financial crisis, merely stating that "the debtor incurred substantial operating a result of expansion and diversification which proved to be nonprofitable as well as an undue burden on its operating budget."

Our Town has obtained a detailed picture of Computron's crisis via confidential NCLC internal documents and interviews with former NCLC members.

According to the documents, Computron suffered heavy sales losses in late 1979 and early 1980 as a result of the Our Town and New York Times articles. This problem was aggravated, the documents say, by an attempt of Computron president Andy Typaldos, backed by NCLC chief of staff Costas Kalimtgis, to expand into nonsoftware products and overseas ventures without obtaining adequate financial backing.

When the cash-flow crunch came, Kalimtgis and Typaldos argued within the party for an all-out effort to save Computron. (The two had founded the firm in 1973, and over the years had added to their staff dozens of highly educated NCLC members who were willing to work for wages substantially below industry standards.)

NCLC chairman Lyndon H. LaRouche, Jr. was not enthusiastic about the proposed salvage operation. In his eyes, NCLC's financial situation in 1980 was quite different from that in 1978 (when, he recalled ironically, Typaldos had "returned with a bag of gold from the Persian Gulf"). In the intervening period, NCLC had strengthened its other businesses and fundraising operations to where party income was now well in excess of $100,000 per week. In other words, LaRouche no longer needed Computron--at least, not enough to justify diverting major resources away from NCLC's political mission.

Several clashes took place between LaRouche and Kalimtgis over Computron and related issues during the fall of 1980. Finally, on Dec. 15, LaRouche issued a memorandum suspending Kalimtgis, who had been his closest political associate for ten years, from executive duties in the party.

In subsequent memos, LaRouche explained his action by saying that Kalimtgis had instigated a party policy via which hundreds of thousands of dollars allegedly had been diverted from NCLC into Computron, to prop up the ailing firm. In addition, the memos attacked Typaldos as a baleful ideological influence on Kalimtgis.

Our sources say the two Greeks "hunkered down," hoping the Chairman would relent. But LaRouche's action had sent shock waves through the organization, and friends of Kalimtgis and Typaldos began to raise questions.

LaRouche responded by sharpening his attack, accusing Kalimtgis of "willful deceit" and of having his "hand in the till."

The suspended chief of staff could no longer remain silent. In an "Open Letter" to LaRouche, dated Jan. 26, he denied the charges and claimed that, far from using NCLC funds to subsidize party-linked businesses, he had actually attempted to do the opposite.

"You lie," he told LaRouche, "when you charge that I chased business ventures and used the organization to that end when you possess all necessary knowledge of how I repeatedly tried to sell off future business assets and business ventures to meet our immediate political and security needs."

Kalimtgis declined, however, to "make a public presentation of material that could irrefutably clear me of all your malicious charges, but would ultimately be used to bring harm to many members and to the organization" (he also referred to LaRouche's own possible "legal jeopardy").

Nevertheless, Kalimtgis left open the option of going public at a later date: "Unlike you, Lyn, I do not say to myself that 'even if I were put before ten grand juries I would tell them that I knew nothing...' You have rejected every appropriate forum within which I could have presented every sensitive fact."

Kalimtgis was not the only NCLC member to see that LaRouche had opened a can of worms. In a Feb. 1 "NCLC Internal Discussion Document," a top officer of Computron complained:

"When has the enemy ever been handed so many weapons to use against us as he has through Lyn's memos over the last two months? Massive divergence of funds from the campaign [he means LaRouche's 1980 Presidential campaign--ed.] into a private business? Among other things. Isn't that just a little more illegal than any number of scandals that have destroyed political careers and movements in recent memory?"

The writer hastily added that no divergence of campaign funds had actually taken place. Yet previous statements by LaRouche had been quite explicit about "massive" payments from NCLC to Computron (if not from the official LaRouche campaign committee to Computron) during a period which overlapped with the campaign and with LaRouche's expenditure of over $500,000 in Federal matching funds.

"Over the past months," LaRouche wrote in a Jan. 12 memo, "Computron has survived because of massive financial assistance from the Labor Committees, both direct aid and massive infusions of credit. This amounts to hundreds of thousands of dollars of direct and indirect aid out of the pocket of the organization, and has been the only significant source, directly and indirect, of assistance to cover massive Computron losses..."

LaRouche then stated in a Jan. 20 memo that "The total payments from the organization and its vendors to Computron over a twelve-month period from November 1979 onward was just under SI millions, most conservatively, of which at least a half-million was unjustified. This involves payments and accruals in excess of payments. Contrary to Costas' and Andy's lying, at no point was there a net position accrued in favor of Computron in the balance of such flows."

LaRouche went on, in the Jan. 20 memo, to describe the payments as "interest-free banking for Computron by the organization and its vendors."

Careful reading of the documents of the LaRouche/Kalimtgis dispute reveals that both factions are in tacit agreement that a large cash flow took place both ways over an extended period between NCLC and Computron. The difference between the factions is over who benefited the most from this two-way flow during the past year.

In a sense, it doesn't matter which side is telling the truth, since either way the results may be devastating to both.

If LaRouche's version is true, then Computron must explain in Bankruptcy Court why the so-called interest-free bankers (NCLC and its vendors) were not listed among Computron's creditors in the March 3 debtor's petition, and why the alleged massive loans were not listed among the firm's liabilities. In addition, LaRouche himself may have to answer to the Federal Election Commission (FEC) about possible diversion of his Presidential campaign funds (see above).

If Kalimtgis' version is true, then both Computron and LaRouche may face an FEC investigation into the possibility of illegal and unreported corporate donations to LaRouche's campaign.