Court cases mount for SIST: Civil suits claim $4M plus owed

Shawano Leader, Wisconsin/March 8, 2009

Samanta Roy Institute of Science and Technology, Inc. and its subsidiaries are in the midst of several court cases alleging unpaid debts of more than $4 million. A foreclosure sale is scheduled next week in one of those cases.

Three gas stations owned by SIST subsidiary Midwest Oil of Wisconsin - at 1206 E. Green Bay St., 1381 E. Green Bay St., and 716 S. Main St. - are scheduled for a sheriff’s sale on March 18.

According to a civil suit filed by Integrity First Bank, of Wausau, Midwest Oil secured a total of $1.3 million in financing from the bank in August and September 2006 by mortgaging the three properties. According to the suit, $1.2 million is remaining on the debt.

Attorney Alan Eisenberg, who is representing SIST in several other legal matters, said SIST is still confident it will retain ownership of the gas stations.

"The gas stations are not necessarily affected by the sheriff’s sale, anyway, because any sale has to be confirmed," he said. "And there has to be a right of redemption."

An April 2 court date has been set for the confirmation of sale in Shawano County Circuit Court.

"The fat lady has not yet sung," Eisenberg said.

According to the Shawano County Clerk of Court’s office, the last opportunity for a property owner to retain a property after a sheriff’s sale would be the confirmation of sale hearing.

However, the property owner could bid on the property - or have an agent do so - at the foreclosure sale. If it was the winning bid, the property owner could put a down payment on the property.

Any person who successfully bids on a property at the sheriff’s sale and makes the down payment would then have 10 days after the confirmation of sale hearing to pay the balance.

Meanwhile, a civil suit was filed in December requesting a receiver be appointed for Midwest Amusement Park’s USA International Raceway over an allegedly defaulted $2.2 million mortgage. The suit was filed Dec. 8 by Southwest Guaranty, Ltd., of Houston.

Also pending are two civil suits filed by Draeger Oil Co. of Antigo. One claims more than $206,000 is owed for fuel products provided to the three gas stations. The other is a foreclosure action on three residential properties, which the suit contends were mortgaged to Draeger for $225,000. The first case is scheduled for a jury trial in April.

Later this month, SIST and subsidiary U.S. Acquisitions and Oil, Inc. are due in U.S. District Court in Green Bay for a civil claim alleging fraudulent transfer of the racetrack property. The claim stems from a $190,000 judgment against SIST subsidiary Midwest Amusement Park last September that is being appealed.

SIST is also scheduled to appear beginning March 31 for a two-day court trial in a civil suit filed by Zien Service, Inc. of Milwaukee. Zien alleges $17,921 in payments are due for mechanical, plumbing and heating work done at several SIST properties.

A separate civil suit filed by Zien is also seeking another $22,832 for payments due is scheduled for trial in September.

Meanwhile, SIST and its subsidiaries owe the city of Shawano a total of more than $319,000, including personal and property taxes, room taxes and interest on the unpaid debt through February, according to the city clerk’s office.

As of March 1, the clerk’s office said SIST owed the city $54,590; Midwest Hotels and Motels of Shawano owed $175,260; Midwest Oil of Wisconsin owed $18,045; and Midwest Properties of Shawano owed $71,222.

However, fourth quarter 2008 room taxes for the Kiryat and AmericInn were recently paid, according to the city, amounting to $1,396.90 for the Kiryat and $1,978.47 for the AmericInn.

The city recently received applications for beer and liquor, soda and amusements licenses for the two hotels submitted by two previously unknown corporate entities - Dagul Kishron Corp. of USA, Inc. and Marom Golan Corp. of USA.

The fourth quarter 2008 room taxes that were paid would have been the first quarter due since these new entities were involved.

However, city attorney Tim Schmid said the new corporate entities can not be issued licenses for the Kiryat or AmericInn while there is still outstanding debts on those properties. He said city ordinances prevent licenses being issued to any premise where there are outstanding debts, regardless of whether there is a change of ownership or management.

It is not known what relationship the new corporate entities have with the properties, SIST or its subsidiaries. SIST has declined to comment for this story.

Eisenberg said SIST CEO Naomi Isaacson is in the process of reorganizing the corporation and is determined to continue its operation.

"Rumors of the demise of SIST are greatly exaggerated. SIST lives," he said. "She has no intention of folding her tent or walking silently into the night. There are much bigger companies than SIST that have folded. She hasn’t and they haven’t and my prediction is they will not. They will not fold."

SIST financial issues

Creditor Amount Status
Civil Suits:
Integrity First Bank
$1.2 million Sheriff’s sale of gas stations scheduled for March 18. Confirmation of sale scheduled for April 2.
MMG Financial $190,000 Judgment awarded vs. Midwest Amusement Park. Court trial scheduled March 27 vs. SIST and U.S. Acquisitions and Oil, Inc.
Southwest Guaranty $2.2 million Motion for Receivership of race track filed. Pending - No court activity currently scheduled.
Draeger Oil Co $206,378
Jury trial scheduled April 13. Pending.
Zien Service, Inc. $17,921
Court trial scheduled for March 31-April 1. Court trial scheduled for Sept. 15.
City of Shawano
$319,000 Personal, property and room taxes.

Sources: U.S. District Court and Shawano County Circuit Court documents,
City of Shawano clerk’s office.

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