Illinois courts to determine overseer of Travnick estate

As Illinois officials hunt for defrauded investors in the business of the late Randall Travnick, the courts are engaged in administrative details.

A Nov. 3 hearing at the circuit court of McHenry County in Illinois was rescheduled to settle who would oversee the estate of Travnick, who committed suicide May 30. The owner of Equine Data Management Software and its related investment program allegedly pilfered more than $1 million in funds from at least 80 investors and abandoned support of what could be numerous software users.

At presstime, administration of Travnick's estate still rested on the shoulders of one Illinois judge.

At stake in the hearing was who will serve as general administrator. Janice Travnick, wife of the deceased and defendant in the securities fraud case, has declared her right to the nomination; the state, conversely, is pushing for a public administrator. Secondly, the judge will appoint a special administrator to represent the interests of defrauded investors in the estate matter. Lastly, there's a proposal to appoint a conservator for the software, who would run the business.

The hearing was rescheduled, apparently, because the judge in the probate case decided to transfer the case back to the judge presiding over the separate ongoing securities fraud case, according to an attorney representing the state in the matter.

Why the delay

Settlement of the administration was expected by Nov. 13.

"It's a fascinating case," says Jonathan Clark Green, special assistant to the attorney general for the state of Illinois who is representing the state in the cases. "We are getting calls from around the country from defrauded investors."

What concerns state officials are the investors who haven't turned in claims. State officials believe they haven't even "scratched the surface" on the total number of victims of the alleged scheme but hope to retain the majority within six months.

Investors wanted

"Because of the nature of the claims of the creditors and defrauded investors, we still want to identify as many people as possible who may have invested," Green says.

The Illinois Securities Department (ISD) asks remaining defrauded investors and software users to contact Lauren McAfee at (312) 793-2403 or Green at (312) 494-1000.

Despite legal hang-ups, the state continues to troubleshoot software-related problems on an emergency ad hoc basis. If users have software glitches, independent contractors are assisting them, according to Green. He's also received a number of calls from suitors "lined up to assume the business."

Business still running

Green says: "It's an ongoing business. So we want to make sure the business is up and running. We also want to ensure investors get fair market value for the product."

Since the trial court judge has granted a preliminary injunction against Travnick's estate, which includes EDMS and other assets, ultimately, Green says the judge will determine how the software business will continue to run.

Green, a former attorney general who's worked previous securities fraud cases for the state, was called onto the Travnick case because it is "rather complicated."

Cases intertwined

"We have a number of competing interests, but hopefully the people's interest will prevail in the courts," Green says.

Aside from the probate and securities fraud cases, both in the hands of McHenry County courthouse, there's an appeal pending in the Illinois Appellate Court Second District in Elgin, Ill., which involves insurance proceeds. The surviving spouse possesses six insurance policies for $1.9 million.

"Some investors originally told us that supports the business - 'Don't worry about it.' Now Ms. Travnick is claiming it is hers," Green says.

He notes that the insurance case brings up an "interesting point" in the law, which apparently splits the states on how it is handled and has "wide implications" across the country.

The question, according to Green is: "When some of the defrauded money may have been paid for the policies, do investors get back premiums in interest or do they get a share of the proceeds that are distributed? That's a big issue."

To date, the state won a freeze order in appellate court to stay distribution of all proceeds, pending a resolution legally. No further action was taken at presstime.

Another twist in the Travnick case is a coincidental fire that killed six people and ravaged parts of the building where the securities department, which is investigating the fraud case, is housed.

Compounding matters

On the day of the fire, Oct. 18, Green was scheduled to meet with securities department officials in a conference room adjoining the storage room that burnt. The meeting never occurred.

"The fire threw a little wrench in the works for a little while," Green says. "The securities department - thank God - didn't get burned up, but there's a lot of water damage."

As a result, officials are encouraging investors to resend their claims notices.