In the Shadow of Woburn
Schlichtmann’s greatest obsession, by far, is the Cadle Company. Bill Crowley refers to it, with a snicker and a shake of the head, as "the Cadle Wars."
It goes back to the time just after Woburn. The firm was still struggling. By 1990 it badly needed money to stay afloat. Over the course of six months it took out three loans with Boston Trade Bank, totaling $235,000. As collateral, the young lawyers offered a security interest in the firm’s assets, in particular the money they were to receive from a case that was about to settle, a polluted-water case in Groton. When the firm got its money, the bank would see its loans repaid.
Schlichtmann then went to Hawaii, returned, put in more time trying to settle the Groton case, and came to hold the majority of the Groton fee because of his work. Meanwhile, Boston Trade Bank went belly up. The debts from the firm were sold to a debt collection agency in Ohio, the Cadle Company.
In 1995 the Groton settlement, worth more than $800,000, went into effect. Schlichtmann received roughly $200,000. But he refused to pay Cadle: He didn’t think that a debt collection agency had the rights to a defunct bank’s interest in his assets. So Cadle sued.
That’s when things turned ugly. Cadle alleged that Schlichtmann had withheld $500,000 in earnings from his bankruptcy filing, meaning he’d committed fraud. The U.S. Trustee’s Office ultimately ruled that he had done nothing wrong, but he felt that the allegation was extortion—a feeling that even today fuels his undying rage.
The lawsuit went to trial in November 1999. Schlichtmann won. Cadle appealed and won, revealing itself to be just as obdurate an opponent as he was.
Schlichtmann fought back. In 2002, he found out that Cadle was selling large chunks of the debt it owned at a public auction in Tarrant County, Texas. A portion of that debt was Schlichtmann’s. So he flew to Fort Worth, and bought his own debt at a steep discount: $52,000.
Schlichtmann now owned the debt that Cadle was trying to get him to repay. Cadle no longer had grounds for a case. The Cadle Wars had gone on for 10 years, and Schlichtmann had won. But Schlichtmann wasn’t done with Cadle.
He had learned from a lawyer in Texas that Cadle hadn’t owned Schlichtmann’s debt outright, but had serviced it on behalf of another company. Schlichtmann filed new motions in Massachusetts alleging that Cadle had fraudulently represented itself in court. Those motions went nowhere. The fight with Cadle should have ended a second time. Once again, Schlichtmann did not stop.
Instead, he spurred the offices of the Massachusetts secretary of state, the Massachusetts Division of Banks, and the Massachusetts attorney general to investigate Cadle, according to a subsequent judge’s ruling. Schlichtmann also started a website, Truth About Cadle, where he slammed the company’s practices and talked often with the press about the firm’s bullying tactics.
Cadle sued Schlichtmann for defamation. "It’s like poking a tiger in the eye," a person close to Cadle says. The suit goes to trial next year, 18 years after it started. But not even this defamation suit has stopped Schlichtmann’s feud with Cadle. Beginning in 2004 and ending last year, he filed three class-action lawsuits against the company, representing 18 debtors who had been treated similarly to him. In a February 2007 hearing for the class-action claim in Massachusetts Superior Court, Judge Ralph Gants made it clear that he was shocked at how far Schlichtmann had taken the matter. Near the end, Judge Gants said, according to a transcript of the hearing, "All right. Enough. You’ve lost your way, Mr. Schlichtmann. I think you need to step back and consider whether or not your judgment in this case is so—has been so affected by your personal vendetta with…Cadle that you have begun to exercise poor judgment."
Two years later, the Cadle lawyers wonder the same thing. The class-action claim is settled. But Cadle’s lawyers now say the company doesn’t have to honor the "so-called" settlement, according to court documents. They say Schlichtmann violated the agreement the lawyers reached by appealing old claims on behalf of the debtors. Like Woburn before it, Cadle is a case in which Schlichtmann is just as interested in making his point as winning. And, as with Woburn, people who have observed Schlichtmann throughout the Cadle Wars believe his obsession hurts his clients. "He had the settlement," one person close to Cadle says.