Lawyer: Mass. firm tied to outbreak paid out $70M

Attorney David Molton made the disclosure at a U.S. Bankruptcy Court hearing in Springfield as he argued that creditors should be allowed to seek to freeze the assets of the New England Compounding Center's owners.

Molton said the company had paid its four owners, or companies they owned, $37 million over the last two years, $68 million over the last four years and $70.5 million over the last six years. He argued the company's history of big payouts indicated there was a "grave, grave, grave risk" that what remained of those payments would be further depleted before creditors get paid.

"When money came in, it went out," Molton said.

Judge Henry Boroff granted the motion and scheduled a hearing Friday on arguments about tying up the defendants' assets.

A tainted steroid produced by the Framingham-based compounding pharmacy has been linked to a fungal meningitis outbreak that's killed 44 people and sickened more than 600. The outbreak was discovered in Tennessee in September, and subsequent inspections turned up unsanitary conditions and lax sterility testing at the firm's Framingham office.

The pharmacy filed for Chapter 11 bankruptcy in December, saying it wanted to set up a compensation fund for victims. About 150 claims have been filed.

The firm listed $32 million in net sales last year but just $1.3 million in total assets, versus $885,000 in liabilities, not counting any judgments against it. Plaintiffs' attorneys say what's left isn't nearly enough to adequately compensate victims.

Molton's disclosure Thursday of large payments to company owners comes days after NECC reported in court filings that in its final 11 months it paid out more than $16 million to its four owners, Barry Cadden, Lisa Cadden, Greg Conigliaro and Carla Conigliaro. The firm also disclosed about $90,000 in American Express card purchases by three of the owners, largely for routine expenses such as gas and groceries, including some after the company shut down in October.