A Utah enterprise that is seeking to develop nuclear-powered space tugs for use in Earth's orbit has lost a lawsuit against three former associates accused of misusing company secrets.
Remaining, however, are two counterclaims against Iostar Corp. Chairman and CEO Robert D'Ausilio. A new lawsuit also seeks the return of about $330,000 that D'Ausilio allegedly misappropriated.
The lawsuits and counterclaims revolve around an ambitious plan by the North Salt Lake company to develop nuclear-powered tugs to haul satellites or power them in space.
But D'Ausilio's efforts to find millions of dollars in private investment to qualify for $1.5 billion in federal funds did not pan out after a potential investor discovered financial irregularities at the company, according to court documents.
In 2007, Iostar sued former company board member and president James Stuart, potential investor George French and former client Richard Busch. The lawsuit alleged that after French terminated his agreement to invest, the three conspired to plan a competing company using Iostar's trade secrets.
U.S. District Judge Dee Benson recently dismissed all of Iostar's claims after saying during a hearing that he had read D'Ausilio's arguments thoroughly.
"I got this great story, and you could sell it as a screenplay," Benson said, according to a transcript, "but I got to the end of it and said, 'Well, there are no facts here. There is nothing to support this.' "
John Mackay, French's attorney, said Tuesday his client feels vindicated. "We don't think Iostar should have sued George French in the first place."
French, Stuart and Busch filed counterclaims in which they alleged D'Ausilio misappropriated millions of dollars and violated tax and securities law. Benson left in place Stuart's demand for repayment of legal bills he incurred as Iostar president, while French can still pursue claims he was misled by D'Ausilio.
Busch is involved in a new lawsuit in federal court against Iostar as the former manager of Xigix. That suit alleges D'Ausilio improperly borrowed nearly $330,000 of $500,000 Xigix deposited with Iostar to develop a nuclear-powered satellite.
In a twist, attorneys at Parr Brown Gee & Loveless who had represented Iostar have withdrawn from the case. They detailed their reasons in a Dec. 8 hearing that was closed to the public and to attorneys for the defendants. Court documents mentioned only a pay dispute. Robert Lochhead of Parr Brown declined comment on Tuesday.
Iostar's new attorney, Gregory C. Petersen of Costa Mesa, Calif., referred to Benson's remarks at the hearing as a reason for the change in attorneys.
"I listened to Judge Benson as the new general counsel and his comments… and decided that I needed to study those comments and the matter in which he framed questions to Iostar's lawyers," said Petersen. "I did that and Iostar's lawyers quit."
D'Ausilio said Tuesday that Iostar remained a viable business and said he expected a new investor by the end of the month.
