Criminal prosecution may proceed, bankruptcy judge rules

John O'Brien Apr. 13, 2007, 1:00pm


HARTFORD, Conn. - Connecticut Attorney General Richard Blumenthal recently celebrated a ruling from a bankruptcy judge that will keep possible criminal action against a company's former president.

U.S. Bankruptcy Judge Peter Walsh will not grant Mitchell Heffernan's request for protection, leaving the State's Attorney's office free to pursue criminal charges.

"I am pleased that the bankruptcy court rejected this spurious and specious attempt to block criminal action," Blumenthal said. "The judge rightly ruled that the federal bankruptcy court lacks authority to halt a state criminal prosecution."

Heffernan, the former president and chief executive officer of Mortgage Lenders Network USA, Inc., filed for bankruptcy Feb. 5 in Wilmington, Del. It is alleged that Mortgage Lenders Network still owes $2.5 million in unpaid wages to its employees.

"The court reaffirmed long-standing precedent and practice that bankruptcy courts cannot stop criminal proceedings," Blumenthal said. "Connecticut has the right and responsibility to prosecute employers who break the law by denying employees rightfully earned wages.

"Independent of any criminal prosecution, I will fight to assure that Mortgage Lenders' management meets its legal obligation to pay employees wages and commission they earned."

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