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Last updated: February 20. 2013 12:48AM - 358 Views

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A lawsuit cited in a New York Times article about financial problems for the new owners of the MinSec correctional facility in Hazleton was dismissed after two years of legal wrangling.


And the company – Community Education Centers – contends the Times chose to cherry pick isolated assertions in the article to paint a false picture.


In a July 16 article, The Times wrote that paperwork filed in a lawsuit depicted Community Education as having such severe financial difficulties over the last four years that it contemplated filing for bankruptcy in 2010.


A look at the docket for the case in question shows it was originally filed in federal court in Florida in 2010, moved to New Jersey in August of 2011 and dismissed last October. The dismissal order notes both sides consented to the action based upon the parties' amicable resolution of the issues raised herein.


The suit was filed by David Watson, a former chief financial officer at Community Education. In his complaint, Watson claims he left a high position with a Florida company to join Community Education in September of 2009.


According to the complaint, during negotiations about taking the job, Community Education Chief Executive Officer John Clancy made material misrepresentations concerning the financial condition of CEC and its viability as a going concern.


The suit contends problems with a large loan were hidden from Watson prior to being hired, and that after taking the job he learned the company had grossly misstated the true status of its financial affairs, and failed to disclose that its financial situation was dire.


In particular, the suit claims Community Education would not be able to comply with its debt covenant…


The suit claims the company defaulted on that debt shortly after Watson was hired, and that he helped repair the problem before being terminated in 2010, when his contract ran through 2012.


The company's reply brief denies claims of a debt default, and says Watson was fired without notice or opportunity to cure because his misconduct was incurable.


Asked about the lawsuit's allegations of financial problems, Community Education spokesman Christopher Greeder said in a written statement that The New York Times chose to cherry pick isolated assertions made in a pending civil litigation filed by plaintiffs who stood to gain financially by intentionally harming CEC. As is evident by the recent acquisition of MinSec, CEC continues to be a financially sound and strong company.


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