Panametrics Sues General Electric
NEW YORK (AP) _ The former principal shareholders of Panametrics Inc. filed a federal lawsuit Tuesday against General Electric Co., alleging securities fraud and deceptive business practices in its acquisition of Panametrics last year.
The plaintiffs, David Chleck and Edmund Carnevale, are seeking at least $25 million in compensatory damages from GE.
The suit, filed in the U.S. District Court for the Southern District of New York, alleges that GE released false statements, manipulated accounts receivable, and engaged in other accounting tactics to avoid paying the agreed upon purchase price.
General Electric agreed to acquire closely held Panametrics last July for about $220 million plus assumed liabilities from Chleck and Carnevale.
When GE’s acquisition of the ultrasonic testing equipment and process-control instrumentation company was announced, no financial terms were disclosed.
GE Power Systems, the division which purchased Panametrics, declined to comment on the lawsuit, noting the company’s policy to not discuss ongoing or pending litigation.
The suit alleges that General Electric ignored its obligation under the agreement to use agreed upon generally accepted accounting principles and engaged in other manipulations to justify a large post-closing adjustment relating to items it had examined and accepted before the closing.
The suit further claims GE violated contractual agreements regarding certain accounts receivable, the proceeds of which were to be paid to the Panametrics shareholders.