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This Article: Hazleton Standard-Speaker, July 20, 1994, at pg. 5

Valley of Lakes RICO Class Action against PNCBANK, et al.
ripped edge: news articles

Valley of Lakes property owners seek state help

Standard-Speaker Staff Writer

Frustrated property owners at the Valley of Lakes have turned to state officials for help in resolving water and sewer problems that have plagued them for years.

Formal complaints have been filed with the Public Utility Commission naming the Oneida Water Co., which provides water service to the housing development, and Valley Utilities Co., which provides sewage treatment. Both companies are affiliates of CBG Limited, which assumed ownership of the 4,000-acre complex in the mid-1980's.

Some residents have experienced low water pressure and water service interruptions for the past two years. They also claim the sewage treatment system hasn't been completed and deficiencnes haven't been addressed.

Meanwhile, a spokesman for the state attorney general's office said about 50 complaints have been lodged with the Bureau of Consumer Protection in Scranton. They allege that water and sewage systems and roadways have not been completed in some sections of the Valley of Lakes, which spans portions of four townships in Luzerne and Schuylkill counties.


'Look you really have a gripe here.'

"They're hiding under Chapter 11. That's what it comes to."

Frank M. Cedrone, managing general partner of the development for CBG Limited, has blamed his financial problems partly on VOLCA's campaign to have residents withhold their maintenance fees.

He wouldn't discuss figures, but another source indicated the shortfall was $500,000.

Dongelewicz denied that any such campaign took place.

He said VOLCA has estimated that CBG collected $40 million through bank loans and the sale of 1,100 lots, but now can't learn where the money has gone.

"We want to know. We want to have an accounting for that," he said. "The state has stonewalled that."

Lewis sympathizes with the residents, but said nothing can be done right now. "It's definitely a difficult situation for the property owners, no doubt about it," he said.

The property owners have demanded that various amenities they have been promised, including an 18-hole golf course and man-made lake be completed. And they want CBG Limited held accountable for the money it collected through lot sales and other fees to build those facilities.

A class-action lawsuit filed in U.S. District Court claims that CBG Limited and its affiliated companies collected fees of 8 percent on the construction of all new homes, plus maintenance, sewer and water fees, but failed to deliver the services.

The legal action, filed in Newark, N.J., also names First Eastern (now PNC) Bank as a defendant.

On Thursday, a hearing will be held in U.S. Bankruptcy Court, Wilkes-Barre, on the protection CBG Limited has enjoyed from its creditors for the past 27 months. The court has been asked to convert the case to Chapter 7, under which the U.S. trustee would take over the companies' assets.

Jack Lewis, the attorney general's spokesman, said Tuesday that its hands are tied pending the outcome of the federal court proceeding.

"Because of that, the only role we really can play is monitor what is happening in these legal actions. If we see any good that can be done by us intervening, we would do that," he said.

A property owners' group, the Valley of Lakes Civic Organization, polled residents through its spring newsletter on whether they wanted an accounting of the fees paid to CBG.

Ray Dongelewicz, the group's president, said about 100 coupons were returned, and the names were forwarded to the attorney general's office in Harrisburg.

In an interview last week, he expressed disgust that VOLCA hasn't received a response.

"Nothing has really happened," Dongelewicz said. After so many months, and trying so hard to get people to help you, it's really criminal because nobody wants to sit down with us and say, [***]

The PUC, however, has acted on the water and sewer complaints.

Attorney Christine Hoover of the state consumer advocate's office said a favorable ruling was issued June 10 in relation to the Oneida Water Co.

"Generally, he sustained the complaints of the customers and recommended some steps to be taken by the company that should result in improved service," Hoover said.

PUC Administrative Law Judge Richard M. Lovenwirth dismissed a complaint filed in May 1992 by Dongelewicz, but sustained a complaint filed two months later by Samuel Rizzo.

He ordered that hydropneumatic pressure tanks systems be installed at the Rizzo and George Morris properties within 30 days, and that Oneida Water reimburse each property owner $36 a year for the cost of electricity to operate them.

Lovenwirth also instructed the company to replace the manual feeding of water into its Huron system with an automatic feed, and to file a report from a water-works engineer. "outlining the causes for low water pressure and frequent cessations of water service" throughout the system.

In addition, he told the PUC's legal staff to intervene in the bankruptcy proceeding "to seek implementation of these ordering paragraphs and any future orders" pertaining to the water company."

Oneida Water was given until last Thursday to file exceptions to the decision, Hoover said, and both parties must reply to the exceptions by July 25.

A hearing on the complaints against Valley Utilities will be held at 10 a.m. Aug. 29 in the Scranton State Office Building, before Administrative Law Judge George Kashi.

PUC spokeswoman Sharon Wilmarth said "quite a few" complaints have been filed against Valley Utilities.

A "caption sheet" attached to each complaint says connections were made to an unfinished collection system "which goes nowhere," requiring that raw sewage be trucked at considerable cost to a treatment facility.

The complaints also allege substandard installation of new equipment and the failure of Valley Utilities to address deficiencies.

Valley of Lakes RICO Class Action against PNCBANK, et al.

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