CHARLESTON, W.Va. -- An Eastern Panhandle company partly owned by West Virginia's venture capital fund has been thrust into a federal bankruptcy case because the firm's former vice president had financial ties to a convicted money launderer, Osama M. El-Atari.
Last week, a federal bankruptcy trustee overseeing the recovery and liquidation of El-Atari's assets asked STaSIS Engineering Inc. whether the Jefferson County auto parts maker would buy back 101,647 shares in company stock -- valued at about $250,000 -- once owned by Mike Firetti, STaSIS' former vice president of business development. Firetti was a business associate of El-Atari and managed El-Atari's investments, according to court records.
Firetti invested in STaSIS and went to work for the company in December 2010, three months after El-Atari was sentenced to 12 years in federal prison. El-Atari's bankruptcy filing does not say whether Firetti used any of the convicted felon's money to buy STaSIS stock.
"We had no knowledge of Mike's connection to El-Atari until after he was gone [from STaSIS]," said Todd Cope, STaSIS's chief financial officer. "We knew nothing about this El-Atari guy. The court negotiated that deal with Mike. It had nothing to do with us."
The West Virginia Jobs Investment Trust, the state's venture capital fund, has invested $1.25 million in STaSIS and owns 10 percent of the company's stock. Andy Zulauf, executive director at the JIT, serves on STaSIS' board of directors.
The state Jobs Investment Trust board invests state tax dollars in small companies that plan to expand.
The company also has $2.5 million in low-interest loans outstanding with the West Virginia Economic Development Authority and Infrastructure & Jobs Development Council.
STaSIS Engineering, a privately held company based in Summit Point, designs and sells after-market high-performance packages and parts for Audis and Volkswagens.
El-Atari, a former Virginia restaurateur who is serving a 12-year prison sentence for bank fraud and money laundering, wired $3.1 million to Firetti in 2008 and 2009, according to federal bankruptcy records.
El-Atari asked Firetti to invest the money in Qtrax Inc., a digital music service that never began commercial operations, according to the filing. The bankruptcy trustee has sought to recover the $3.1 million El-Atari gave to Firetti.
As part of a settlement in bankruptcy court in March, Firetti agreed to turn over his shares of STaSIS stock, court records show.
Firetti paid $250,000 in cash to purchase his STaSIS shares in late 2010. The bankruptcy trustee for El-Atari's estate now owns Firetti's STaSIS shares, and has asked STaSIS to buy them back.
"The bankruptcy trustee has contacted our attorneys to see if STaSIS was interested in buying those shares," Cope said. "We're still reviewing it. They've reached out to us, and we're considering their offer."