have used an investment company financed by other people's money as their "personal piggy bank'', according to a US District Court Judge.

During a court hearing earlier this month, Judge Mark Wolf said he had formed the impression that they took money out of EPA "without regard for their obligations under law''.

He said EPA's investors were "likely to succeed'' with an ongoing action for fraud and breach of fiduciary duty against the pair, who ran the firm. His comments were made during a hearing on September 10, 1993, at which he appointed a receiver to take control of EPA.

Mr. Wolf also made preliminary orders preventing Dr. Beinhocker and Mr.

Plunkett from running EPA, touching its assets or "destroying, hiding or altering'' its records.

EPA's investors, who have strong Bermuda links, are seeking to recover some $785,000 from Dr. Beinhocker and Mr. Plunkett.

The plaintiffs include the nominee holding companies of both the Bank of Bermuda and the Bank of Butterfield.

According to testimony by lawyer Mr. Morris Goldings, who acts for the businessmen, EPA's assets have dwindled to just $200,000.

The Royal Gazette yesterday obtained a full transcript of the hearing from the Massachusetts court.

"A receivership is an extraordinary remedy in this case,'' said Mr. Wolf. But he said that "evidence of fraudulent conduct, the imminent danger of loss of property and the inadequacy of the legal remedies and the threat of irreparable harm'' justified the receivership.

Mr. Wolf said it appeared that "Beinhocker and Plunkett have abused EPA for their own benefit''.

In support of this, he cited a transaction in which another of their companies, Regal International, obtained $450,000 from EPA in return for an interest-paying note.

"Very little interest was paid on that note,'' said Mr. Wolf, who added that an option on the note was then sold to another company, Bailey, for $45,000, with $22,500 being taken as a finder's fee by an entity controlled by Dr.

Beinhocker and Mr. Plunkett.

All this was carried out without the consent of EPA's investors, said Mr.

Wolf.

Then when Bailey initiated litigation against Dr. Beinhocker, Mr. Plunkett and EPA, partly in connection with the note, "the litigation was conducted in a way that made EPA liable, evidently, for more than $170,000 in attorney's fees'', he said.

Dr. Beinhocker and Mr. Plunkett appeared to expect EPA to pay the legal fees, even though "EPA issues were only a small part of the overall litigation'', said Mr. Wolf.

It was also revealed that Dr. Beinhocker and Mr. Plunkett had allowed EPA's charter to lapse by failing to file tax returns and pay taxes.

An inadvertent effect of this was that it absolved the company from its liability to pay legal fees in relation to the litigation with Bailey, said Mr. Wolf.

He said that Dr. Beinhocker and Mr. Plunkett then made an attempt to get EPA reinstated "in part to get EPA to pay those fees and thus diminish their own exposure for those''.

Their effort was thrown out by a New York court but, in the course of that action, Mr. Plunkett represented himself as an officer and director of EPA.

But Mr. Wolf noted that in the current litigation, part of Mr. Plunkett's defence was that he had never held a post with EPA.

Mr. Wolf said there were other apparent transgressions.

Dr. Beinhocker, in particular, had not made the books and records of EPA available to its investors, he said.

And he said there "has apparently been an abuse of EPA's assets for the personal benefit of Beinhocker and Plunkett in a way that was inconsistent with my intentions and expectations'' at an earlier hearing in January.

"It appears that Beinhocker and Plunkett have either used the Regal note to EPA as collateral for a loan to pay their personal legal fees and/or sold parts of the Regal note in sharp discount to pay their own legal fees in this case,'' he said.

"Thus, I think there is a threat of continuing and perhaps accelerating dissipation of assets if an appropriate injunction and receiver are not instituted.'' Mr. Wolf said it appeared that Dr. Beinhocker and Mr. Plunkett "will not have the means to pay money judgment against them''.

"The evidence before me indicates that they are involved in a great deal of litigation,'' he said. "Some of the companies may be in bankruptcy.

"Many assets publicly perceived to be theirs evidently are held in their wives' names.

"It appears to me that there's not an adequate remedy at law if something is not done now to preserve the assets of EPA.'' Earlier in the hearing, lawyer Mr. Bruce Levinson, acting for EPA's investors, said EPA had been "stuck with'' enormous legal bills for actions the company had little to benefit from.

He even accused Dr. Beinhocker and Mr. Plunkett of using EPA funds to pay for their personal libel action against The Royal Gazette .

Mr. Levinson said EPA's assets had been severely stripped and claimed that "a client of Mr. Plunkett'' received a $100,000 piece of a financial note for just $37,500.

He accused both Dr. Beinhocker and Mr. Plunkett of paying themselves large fees for doing little work.

"In 1993, Beinhocker paid himself approximately $15,000 in fees, which he claims are administrative fees,'' said Mr. Levinson.

Yet all he had to do for this money was "essentially open the mail once a month and make sure there's an interest cheque from Regal'', he said.

"And Plunkett has been paid $2,000 although he testified at his deposition that he didn't even know where the office of EPA was,'' said Mr. Levinson. Mr.

Goldings, acting for Dr. Beinhocker and Mr. Plunkett, said allegations that his clients used EPA as "a piggy bank is disputed very strongly in their affadavits''.

He objected to the appointment of a receiver and denied that his clients had done anything wrong.

Mr. Goldings said the Judge was being dragged into a "Bermuda triangle'' involving the leader of the EPA investors, Mr. Jeremy Fitz-Patrick; his nephew Mr. Timothy Jenkins, a former Bermuda bank officer and fellow EPA investor whom Dr. Beinhocker and Mr. Plunkett are suing for allegedly illegally taping a conversation; and The Royal Gazette newspaper.

The newspaper denies libelling the businessmen in a series of articles earlier this year outlining complaints from business associates about their business methods.

Dr. Beinhocker and Mr. Plunkett last year set up Bermuda-based American Russian Cosmos to provide a satellite telecommunications system over the former Soviet Union.

ARC has since been evicted from its operating offices in Boston for non-payment of rent.