Unicredit's Former President Invokes Fifth Amendment

Michael J. Covatto, president of Unicredit America Inc. when the Erie, Pa. collection agency was accused of using a fake courtroom to intimidate debtors, is declining to answer questions about Unicredit's operations by invoking the Fifth Amendment.

At a creditors meeting in U.S. Bankruptcy Court in Erie last week, Covatto's silence was not limited to his direct involvement with Unicredit, which an Erie County (Pa.) judge closed in November 2010 (see story). He also refused to discuss the internal operations of Unicredit, including whether his father or anyone else supervised him.

At the meeting, attorney John Melaragno, a bankruptcy trustee, had asked Covatto, 50, whether his father, Alfred D. Covatto, 72, had any control over Unicredit.

Melaragno asked how Covatto could invoke the Fifth Amendment - which guards against self-incrimination - in a discussion about the activities of someone else, Alfred Covatto, rather than Michael Covatto himself.

"A truthful answer may tend to incriminate my client," said Thomas Patton, an assistant federal public defender assigned to Covatto.

The defunct company is the target of a consumer-protection suit by the Pennsylvania Attorney General's Office.

No criminal charges have been filed against anyone connected with Unicredit. With Michael Covatto as its president, it operated from January 2008 to November 2010.

The Attorney General's Office sued in October 2010 to shut down Unicredit, claiming the fake courtroom violated consumer-protection laws. The attorney general's Bureau of Consumer Protection is continuing to pursue fines and civil penalties in Erie County Court against Covatto, and his half-brother, Anthony D. Covatto, 25, Unicredit's vice president.

Michael Covatto filed for Chapter 13 personal bankruptcy in June. Filing for bankruptcy generally prevents creditors from suing a debtor and thus the move had complicated the attorney general's suit against Unicredit. But Chief U.S. Bankruptcy Judge Thomas P. Agresti ruled in November that the Attorney General's Office is not subject to that restriction in its case against Unicredit.

The Attorney General's Office suit remains on the docket in Erie County Court. The Attorney General's Office, as a creditor, also filed a claim against Michael Covatto in Bankruptcy Court. The Attorney General's Office wants to ensure Covatto's bankruptcy would not preclude him from paying fines or costs if he loses the civil suit.