Posted 08/2000
Posted 08/2000
Warta's Paper Trail
By Ken Branson
John Warta, co-founder and former CEO of both Electric Lightwave Inc. (www.eli.net) and GST Telecommunications Inc. (www.gstcorp.com), brings with him to PF.Net a reputation as an enthusiastic, creative entrepreneur. But following him is a trail of litigation from his GST days.
The senior Warta departed from GST in June 1998 after what GST insiders say was a bitter fight with GST's financial backers over the direction of the company, and became involved in a series of lawsuits and countersuits with GST's board in California, the state of Washington, and British Columbia. (Warta declined to be interviewed for this story and the PF.Net profile.)
In October of 1998, GST filed a suit against Warta and other former directors alleging fraud, negligent misrepresentation, unjust enrichment, unfair competition, and fraudulent and deceptive business practices relating to Global Light Telecommunications Inc. (www.ggbtelecom.com). Started by GST, Global Light at the time was developing a fiber optic network in Mexico. When Warta was asked to leave GST, the connection with Global Light was severed. So GST alleged that Warta had taken that opportunity with him. Warta countersued.
In a separate suit, Warta filed a breach of contract complaint against GST when they asked him to leave. In February 1999, the company countersued.
And in October last year, several class actions were brought against GST after its stock dropped. Warta was named a codefendant in those suits. There were other suits as well.
Most of these suits still are pending, though stayed for now by GST's bankruptcy (see "What Went Wrong?"). GST filed for protection under Chapter 11 of the Bankruptcy Act on May 17. Bidding on its assets was to end on July 31, and the federal judge overseeing the bankruptcy has scheduled an auction of the company's assets for Aug. 4.
