Auto-Train Corp. Chairman Eugene Kerik Garfield was fired yesterday by the federal bankruptcy court after a hearing in which it was dislosed the company is under investigation by the FBI.
Bankruptcy Judge M. Whalen upheld a decision by Auto-train trustee Murray Drabkin to cancel Garfield's $125,000-a-year contract as chief executive of the Washington railroad.
Garfield is the founder of Auto-Train and ran the company until after it field a petition for reorganization in bankruptcy last month.
Drabkin, who was appointed by the court, acted within his "business judgment" in removing Garfield, Whalen ruled after a two-hour hearing.
Just before the hearing Drabkin field a document in court saying, "Auto-Train is currently under investigation by the Federal Bureau of Investigation, the Securities and Exchange Commission and the Interstate Commerce Commission for possible violations of federal laws which may have occured under the management of Mr. Garfield."
Garfield last night denied that Auto-Train is the target of an FBI investigation. He said the company had asked the bureau to investigate "somebody else." The trustee said later he could not comment on the direction of the FBI probe, which began last week. The SEC and ICC are known to be studying whether Auto-Train has violated their regulations.
The Washington Post disclosed on Sunday that Auto-Train had sought financial help from the Dunes Casino in Las Vegas, which has been investigated repeatedly because of its links to union pension funds. The Post also revealed Auto-Train had hired as a fundraising consultant a former stockbroker, Robert Keefer Jr., who has a criminal record.
The order signed yesterday by the judge removed Garfield from his post effective immediately and gave him until 5 p.m. today to clean out his office in Auto-Train's headquarters at 1801 K St. NW.
The bankruptcy court yesterday also voided Auto-Train's $65,00-a-year contracts with the No. 2 and 3 men in the company -- Senior Vice Presidents Richard A. Goldstein and Philip C. Cruver. Goldstein has resigned, but Cruver is to remain with the company on a reduced salary.