CLOTHING CHAIN ACCUSED OF FRAUD.

Byline: Jason Takenouchi Staff Writer

The largest creditor of a defunct retail clothing chain co-owned by U.S. Rep. Howard P. ``Buck'' McKeon has accused the company - and most of its owners - of fraud and misrepresentation.

The accusations are part of a civil suit filed in Los Angeles Superior Court Wednesday by Coast Business Credit, a division of Southern Pacific Bank. Coast claims McKeon's four brothers, all part-owners of Howard and Phil's Western Wear, owe it about $4 million.

Under a preliminary sale agreement, expected to be finalized today, Coast will receive roughly $550,000 for the remaining assets of the broken company. But that is just a fraction of the money Coast says it is owed, and in its suit it seeks to foreclose on homes owned by the four brothers to cover part of the shortfall.

In its suit, Coast says Howard and Phil's ``deliberately overstated the value and/or amount of the finished goods inventory . . . with the intent to deceive Coast'' into giving it large cash advances.

The suit says Joseph B. McKeon, John D. McKeon, Monte B. McKeon and Timothy McKeon ``participated and conspired in the submission of false reports to Coast.''

The McKeon brothers were unavailable for comment Thursday, but Janet McKeon, wife of John McKeon, said she was confident the issues could be worked out.

``I know they are workable just because of the quality and the character of John and his brothers,'' she said.

Repayment of the remaining debt is still open to discussion outside of court, said Coast Vice President Richard Gomez.

``We're always amenable to negotiations,'' Gomez said. ``It's up to the McKeons to make an offer.''

Congressman McKeon, a Republican from Santa Clarita, was not named in the suit because he was not a guarantor of the company, said Robert E. Freitas, lead attorney for Coast.

``It's our present understanding that he was not involved in the management of the business,'' he said.

Freitas declined to comment on whether the congressman could later be added to the suit if Coast decides he was involved in the company's management.

Canyon Country-based Howard and Phil's closed last month after years of struggling through a Chapter 11 bankruptcy reorganization.

The company signed over its remaining boots, clothing and other merchandise to an assignee, and Coast Vice President Gomez said Montana Boot Co. has agreed to buy those assets for $550,000.

The purchase price, while far below the retail value of the merchandise, ``was probably the best that could be gotten under the circumstances,'' he said.

Money raised from the asset sale will be credited toward the $4 million that Coast is seeking in the lawsuit, Gomez said.

Howard and Phil's was founded in 1962 by the parents of the McKeon brothers. At its height, the company had 52 stores across the county.

But Howard and Phil's began a steep decline in the mid-'90s, and in 1996 was forced to file for a Chapter 11 bankruptcy reorganization.

It failed to make required debt payments last year, and the company closed its nine remaining stores in May.

Six workers have filed state wage claims against the company worth $8,244. Most of those claims will be heard July 13 at the Van Nuys office of the state labor commissioner.