Judge says no payments to Wittig, Lake

? A federal judge has told Westar Energy Inc. not to make any payments to David Wittig, its former chairman, president and CEO, and Douglas Lake, who was the company’s executive vice president of corporate strategy.

The two men face trial in federal court in September on 40 counts including conspiracy, wire fraud, submitting false statements, circumventing internal accounting controls and falsifying books and records. Both claim they are owed money by their former employer, $110 million for Wittig and $70 million for Lake, and the matter is the subject of arbitration.

In a motion filed with U.S. District Judge Julie Robinson, the U.S. attorney’s office said that arbitrators have “apparently ordered Westar Energy to pay to Lake compensation, including Westar stock, Guardian International stock and dividends.”

The prosecutors think the compensation order would extend to Wittig as well, but don’t have specific information because the arbitration proceedings aren’t public, Richard Hathaway, the U.S. attorney’s senior litigation counsel, wrote in the motion asking that Westar not be allowed to make any payments.

The judge issued a one-page restraining order on Monday.

Last year, Westar filed a written demand for arbitration with the American Arbitration Association, hoping to avoid paying Wittig and Lake under past employment agreements. Association spokeswoman Katherine Burton said Tuesday the process is confidential and the association cannot confirm whether it is even handling a case.

Attorneys for Wittig and Lake were not available for comment Tuesday.

When asked whether arbitrators had ordered Westar to pay compensation to Lake and Wittig, Westar spokesman Jim Ludwig acknowledged to the Topeka Capital-Journal that the arbitration wasn’t finished.

Westar will “resist” paying Wittig and Lake, but the company doesn’t have “absolute control” over what occurs in litigation, Ludwig said.

He said the company “obviously will comply” with Robinson’s order.

In the federal case against the two men, they could be required to forfeit money to the government if convicted of certain charges, including money-laundering and bank fraud. Wittig could be required to forfeit up to $25.5 million in assets obtained from Westar, Lake $7.5 million.

In February, Robinson ordered Wittig, Lake and their families not to sell property or stock that could be forfeited to the government.

Witting resigned from Westar in November 2002. A month later, Westar’s directors placed Lake on an indefinite and unpaid leave.

In another case, Wittig was convicted in July of conspiracy, money laundering and making false bank entries, for which he was sentenced to four years and three months in prison. He remains free on $5,000 bond while appealing.

Wittig and former Topeka banker Clinton Odell Weidner II were convicted of hiding a $1.5 million loan from federal regulators. Prosecutors said Weidner increased Wittig’s line of credit at Capital City Bank by $1.5 million and then received that amount in a personal loan from Wittig. Weidner, former president of the bank, used the money to invest in a residential development in Scottsdale, Ariz.

Weidner, who got a sentence of six years and six months, is also appealing but was not allowed to remain free during the appeal.