By Lou Bertin
Computer Systems News, May 4, 1981
NEW YORK — Computron Technologies Corp., generally regarded as a successful OEM/systems house, has filed for protection under Chapter XI of the Federal Bankruptcy Code as a direct result of the firm's former close ties and affiliations with the U.S. Labor Party, a reputed radical fringe group accused of neo-Nazi and anti-Semitic beliefs.
As told by several Computron executives last week, the firm—from top management down—was deeply infiltrated by members of the party, which has been accused of acting as an informant to the South African government on U.S.-based anti-apartheid groups, providing information to the late Shah of Iran's Savak secret police and monitoring anti-nuclear activists on behalf of utility companies.
Computron co-founder and vice-president Gennaro Vendome, who was not a party member, said six of the firm's eight executive board members at one point were party loyalists, with 12 to 14 of its remaining 65 employees also affiliated with the party.
The infiltration by U.S. Labor Party loyalists was as much by design as by accident. When Computron needed executive talent or entry-level programmers, it almost always turned first to the party, company officials said.
Not only were many of Computron's executives and employees dedicated party loyalists, some reportedly were high-ranking party officials. Chairman, president and co-founder Andreas Typaldos, for example, was an economic advisor to party founder Lyndon H. LaRouche Jr. in his unsuccessful 1980 presidential campaign, it was learned.
While Typaldos would neither confirm nor deny his party involvement, company officials asserted that Computron's troubIes began when Typaldos renounced his party membership and severed his ties with LaRouche last year.
LaRouche reportedly then gave Cornputron's Labor Party employees an ultimatum—either quit Computron or quit the party. Most quit Computron.
The losses were devasting, depriving the growing firm of most of its top management and most of its best programming talent. After those losses, it was a short path to Bankruptcy Court for Computron. Its sales plummeted, costly projects had to be abandoned and chaos reigned. It finally filed for Chapter XI protection on March 3.
How Computron wound up in a position where its corporate fortunes and activities were so closely intertwined with those of a political party is a story of naivete, inexperienced management and, perhaps, political intrigue. As Vendome said, "Never mix politics with business."
Computron was formed in late 1973 when then-New York Telephone Co. programmers Vendome and Typaldos decided to branch out on their own and form a systems house. But Typaldos' ties to the party go back to the late 1960s when he was a student at Columbia University, where the U.S. Labor Party and its parent organization, the National Caucus of Labor Committees, were formed by LaRouche during the student uprisings in 1968.
During that time, the party espoused Marxist ideals, including the establishment of a worker's state. Typaldos, according to some accounts, initially wasn't interested in the party, but later began to express an interest in its policies, particularly its pro-technology stance.
By the time Typaldos and Vendome formed the firm—along with Konstandinos Kalimtgis, a third founder whose interest in Computron was acquired by Typaldos and Vendome shortly thereafter—Typaldos was a dedicated party loyalist.
The first move made by the fledgling firm was to establish a working relationship with Wang Laboratories, which allowed Typaldos and Vendome to use its equipment and facilities here for their initial applications programming efforts.
Vendome said he and Typaldos supplied all of Computron's working capital while it was in its infancy and did most of the firm's programming work while moonlighting from their telephone company jobs.
By early 1974, Computron had established itself as a viable enterprise, and the firm began to experience the growing pains characteristic of all OEM/systems houses: it needed more employees (particularly programmers), more working capital and an expanded executive structure to manage its steady growth, which saw its sales climb from zero to more than $300,000 by the end of 1974.
But while Computron's problems were similar to those of most OEM/systems houses, its solutions were far different. Rather than relying on traditional channels for beefing up its work force—such as hiring established computer professionals or trained programmers—Typaldos began turning to acquaintances, many of whom shared his affiliation with the U.S. Labor Party.
Among the executives who joined the firm during its first five years of operation were vice-presidents Paul Teitelbaum, Antony Papert, Fletcher James, Mark Stahlman and Typaldos' brother Elias and controller Edward Spannaus, all of whom—except for Elias Typaldos—were party members, Vendome said. None could be reached for comment.
Computron also established an in-house training program for its programmer force, with the firm preferring to hire untrained individuals and school them in Computron's software development techniques, which were devised by Typaldos and Vendome.
The bulk of the firm's entry-level programming force came from Columbia University, and subsequent additions to the programming staff came from referrals from previous members of the programming team, many of whom were party members and recommended other party members for positions.
One Computron executive, when asked if it was unusual to have such a preponderance of U.S. Labor Party members at one firm, likened Computron's hiring practices to "looking within one's club" for potential employees.
And while Computron was undergoing a metamorphosis in the early '70s from a small, startup systems house to a well-established force in the retail and apparel manufacturing marketplaces through its vertical-market software, a metamorphosis also was taking place within the Labor Party's hierarchy.
During that period, LaRouche made several fundamental changes in the party's charter which took it from being a small group of socialist thinkers into what now is an extreme far-right organization.
Among those shifts was a growing undercurrent of anti-Semitism, with LaRouche making statement to the effect that the illicit drug trade in the U.S. is led by "Zionist drug runners" whose operations are funded by Jewish bankers.
The party also began sponsoring organizations that ostensibly were aimed at advocating nuclear power and stamping out drug use but became forums for LaRouche's inflammatory rhetoric, which charged, among other things, that he and the party were the targets of elimination from such diverse opponents as the Rockefeller family, the Queen of England and unnamed "leftist evils."
As part of the party's attempts to further its influence, LaRouche undertook an unsuccessful presidential campaign in 1976, at which time Typaldos began to increase his involvement with the party and its political activities.
And as Computron's star began to rise in the OEM market, so did Typaldos' star begin to rise within the party in the period after the 1976 presidential election.
By the time LaRouche began to mount a serious 1980 presidential campaign in early 1979, Typaldos had risen to become a member of the party's inner circle and a key economic advisor to LaRouche. Typaldos, in fact, is credited by some as being one of the chief architects of LaRouche's pro-business, anti-welfare economic policies.
The beginning of Computron's plight occurred in October of 1979, when a series of articles on the U.S. Labor Party appeared in The New York Times and Our Town—a weekly New York newspaper—alleging an anti-Semitic philosophy and charging that Computron was an illegal "front" organization for the party that funneled corporate profits into the party's coffers.
The charges were never proven and Typaldos vehemently denied them, filing a $65 million libel suit against the reporters involved in preparing the articles. At the time, Typaldos challenged the articles' findings that either the party or Computron was anti-Semitic and flatly denied that the firm undertook any illegal activities on behalf of the party.
He admitted that Computron installed a system for the party for the 1980 presidential campaign but claimed it was done on a fee-paid basis. He would not disclose the type of system that was installed or its cost.
Typaldos also charged in his suit that the anti-Semitic policies attributed to the party damaged him personally—Typaldos is married to a Jewish woman—and professionally. In his libel suit, he claimed that the publicity generated by the articles damaged the firm financially, causing it undisclosed loss of business, which the firm later claimed to be about $2 million.
Following publication of the articles, however, a rift began to develop between LaRouche and Typaldos, who reportedly urged the party to better define its stand on the Jewish community.
Sources said the two engaged in a series of policy disputes in the period immediately following the publication of the articles, from October 1979 to February 1980. During that period, Typaldos reportedly claimed that the party's anti-Semitic image was caused by political opponents who took LaRouche's statements out of context and used them to discredit the party.
LaRouche, for his part, refused to go on the record saying he and his party were not anti-Semitic, which caused the split between him and Typaldos and resulted in LaRouche issuing his ultimatum to Computron's employees, sources said.
That edict resulted in an intramural power struggle at Computron, which by 1979 had grown to a $5 million-a-year operation employing 85 persons.
The struggle centered around Typaldos—who renounced his ties with LaRouche—and James, Papert and Spannaus, who remained party loyalists. These confrontations resulted in intimations from James, Papert and Spannaus that Typaldos was not fit to run the company and that outside individuals aligned with LaRouche be added to the company's board of directors, sources said.
Typaldos agreed to take their suggestions under consideration but when he refused to act on the proposals, the three dissidents reportedly tried to take control of the company. They failed when Typaldos and Vendome, who jointly held a controlling interest in the company, refused to relinquish control.
James, Papert and Spannaus left the firm shortly thereafter to work for the party's Publications Management Co. operation, which occupies space at the party's mid-Manhattan headquarters.
James, Spannaus and the party could not be reached for comment on the allegations.
While the power struggle was going on at the firm, Computron lost several programmers to other computer companies and later lost 12 to 14 of its remaining 36-to-40 programmers to LaRouche's reported edict.
As a result of the unsettled conditions within the firm, Vendome said, sales dropped from the $5 million level in 1979 to less than $3.2 million last year.
Computron, in its filing for Chapter XI protection, said the unfavorable publicity—along with the personnel defections—resulted in an "undue burden" on the firm's operating expenses and forced it to file for bankruptcy.
The firm claims that as a result of those developments, it has been forced to abandon plans for both an in-house-developed hardware line aimed at overseas word processing applications—which it now plans to sell in order to meet part of its obligations to creditors—and a series of lucrative custom software develmment projects.
In the court document, the firm listed debts of $2,955,000 and assets of $2,139,000. Chief among its creditors are Wang—its largest secured creditor—and Digital Equipment Corp., an unsecured creditor whose hardware was used in some systems, which is owed $156,000.
Several other hardware vendors and lessors, all of whom are owed smaller amounts and are unsecured creditors, are mentioned in the petition, which was filed in U.S. Bankruptcy Court for the Southern District of New York.
As part of its initial business reorganization plan under Chapter XI, the firm said it will concentrate on marketing its packaged software products into the retailing, apparel, office management and healthcare marketplaces, both to end users through its skeleton direct sales force and to other OEMs which it hopes to recruit for sublicensing agreements.
Computron's current management consists of Typaldos, his brother Elias, Vendome, Stahlman and Teitelbaum. Former party members—including Typaldos, Stahlman and Teitelbaum—all have renounced their ties to the party.
The firm also said it will severely curtail its new custom software development activities temporarily, continuing to undertake custom development projects for very large end users only.
Final plans for reorganizing Computron's operations will not be handed to the court for about 60 days, but plans for the firm to abandon its current $17,000-per-month leased facilities here in favor of a smaller New Jersey site have been disclosed.
Part of the move reportedly will include sales of its lease on the facility here and liquidation of Computron's furnishings and office equipment to partially satisfy creditors' claims against the firm.
Typaldos, speaking to CSN last week, said "We are not afraid that the allegations of the past will hurt us, but they did cost us business.
"We did have individuals with us in the past that were members of,the party, but no one who is associated with us now is involved with the party in any way whatsoever. What's done is done; we have to look ahead."
NEW YORK — What is the U.S. Labor Party and what are its beliefs?
The party itself is the brainchild of Lyndon H. LaRouche Jr., 59, a longtime activist who began his political career in 1948 when he joined the Socialist Workers Party under the pseudonym of Lyn Marcus.
From 1948 to 1963, he remained allied with the Socialist Workers Party, a small group dedicated to the ideal of a worker's state—a philosophy LaRouche honed during a period of political inactivity that lasted until 1968 when he formed the Labor Party's parent organization, the National Caucus of Labor Committees (NCLC), during the student strikes at Columbia University.
The NCLC first came into prominence when LaRouche and the group's 30-odd members were expelled from the Students for a Democratic Society in 1969. Despite its expulsion from the SDS, the LaRouche-led group continued its steady growth, with new members almost exclusively young people with upper-middle-class backgrounds.
It was shortly thereafter that the party began to shift its philosophical stance from a far-left-wing quasi-Socialist posture, which advocated workers' rights, to an extremist right-wing stance.
Along with the philosophical shift in the early '70s came the first in a series of persistent charges that the group was anti-Semitic—this despite a substantial Jewish representation among its members, which totaled about 5,000 by 1975.
In a series of 1979 articles, The New York Times reported that LaRouche, in one of the party's publications, charged that Judaism was a "cult founded by the Babylonians" and that Jews dominated the illicit narcotics trade, getting their capital from Jewish bankers.
The articles also said that the party began to list Zionist groups and Jews among the ranks of what the party felt were conspirators against it.
The party's newspaper printed one account that said "only" a million Jews died in the Holocaust and charged that Israel was a puppet government ruled by the British government, which itself was a frequent target of LaRouche's criticism.
LaRouche and his followers, however, maintained that they were neither anti-Zionist nor anti-Semitic.
The 1979 series also charged that a select group of party members had undergone guerrilla warfare training in he early '70s, which culminated in a violent two-month campaign called Operation Mop-Up in early 1973 when some of the group's members attacked Communist Party members, disrupted meetings of left-wing groups and attempted to intervene in labor stoppages in a series of moves the party said was aimed at reestablishing LaRouche's leadership among leftist thinkers.
The group, which began its turn to the right shortly after Operation Mop-Up, was rejected by such right-wing forums as National Review and the John Birch Society and again focused its energies on a new approach, this time by attacking what it felt were its enemies—among them, such organizations as the CIA, FBI, the Rockefeller family and the Queen of England.
But faced with a dwindling membership base, which had shrunk to about 1,000 members by 1979, LaRouche instituted a series of psychological ploys the newspaper accounts charged were aimed at keeping members in the party's ranks.
Among those alleged actions were intense questioning of party members and their spouses on their private and public activities, selection by LaRouche of living partners for some party members, and the forcing of some members to turn over portions of their earnings to the party treasury.
In recent years, LaRouche and the party have toned down much of the inflammatory rhetoric that characterized their beliefs in the late '70s, and LaRouche—along with other party candidates—has been able to gain spots on ballots for several local and national elections.