10/2/2014Bankrupt Traffic Camera Company Sends Ohio Town To Collections
Federal court orders East Cleveland, Ohio to pay bankrupt speed camera vendor Nestor Traffic Systems $683,093.
Cities that sign up for speed cameras and red light cameras sometimes wind up with greater expenses than they bargained for. American Traffic Solutions (ATS) sued the city of Houston, Texas and won a $4.8 million settlement two years ago, an amount the 4th largest city in America could readily pay. The $638,093 judgment defunct traffic camera company Nestor Traffic Systems won on Wednesday against East Cleveland, Ohio, on the other hand, represents about three-quarters of the cash-strapped town's entire property tax revenue for the year.
Nestor Traffic Systems went bankrupt in 2009, and its contracts were acquired by ATS. A bankruptcy judge appointed Jonathan N. Savage to manage the assets of the failed entity. After reviewing the books, Savage realized East Cleveland failed to pay Nestor's bills between October 2007 and 2009. He decided to file a lawsuit to collect.
Rhode Island Superior Court Judge Michael Silverstein last year authorized Savage to go after East Cleveland so that the funds could be re-distributed to Nestor's creditors. The suit was filed on June 28, 2013, but East Cleveland did not respond. The federal court gave East Cleveland until January 22 to hire a lawyer who lives in Rhode Island, where Nestor was based, to appear in the Providence courtroom to dispute the charges. No lawyer appeared.
"I have made several attempts to reach out to defendant to discuss a resolution of this matter, but have not heard any response," Nestor attorney James G. Atchison told the court.
US District Judge William E. Smith had a quick hearing Wednesday to enter a judgment against East Cleveland for the full amount requested. This was the biggest windfall for Nestor since Al Gore sent the bankrupt firm's stock soaring by urging people to invest in Nest, the thermostat company, which some mistook for NEST, the over-the-counter symbol for Nestor's worthless stock. It is no longer traded.
East Cleveland's financial position is not much better than Nestor's. In 2012, the state auditor declared the city was in a fiscal emergency, requiring it to come up with a plan to shore up an ongoing $5 million deficit.
A copy of the default judgment is available in a 20k PDF file at the source link below.