Gary Melius clashed with businessman, won control of firm

Long Island developer Gary Melius, who survived an assassin's bullet Monday, has recently been embroiled in a legal feud over control of a company that makes ignition locking devices designed to curb drunken driving.

A pivotal event in the struggle between Melius and John Ruocco, founder of Interceptor Ignition Interlocks, occurred last Friday. Melius said he planned to name new directors at a shareholders meeting that day, according to a letter Melius sent to investors. It's unclear whether Ruocco attended the meeting or if he was ousted.

The two had exchanged accusations as part of the legal fight over the company, with Melius accusing Ruocco of mismanagement and financial improprieties, and Ruocco calling Melius a duplicitous "political fixer." On Dec. 24, a judge sided with Melius and stripped Ruocco of much of his ownership of Interceptor.

Investigators Thursday were still searching for the masked gunman who shot Melius at Oheka Castle, the ornate North Shore estate Melius bought in 1984. Police have said that Melius told investigators he does not know who shot him.

Police would not give updates on the status of the investigation and have released no information that would suggest the dispute over Interceptor played a role in Melius' shooting. Melius controls dozens of companies, and police are examining his business dealings for clues.

Ruocco said Thursday that investigators had not spoken to him about the Melius shooting, which he called "terrible." He declined to answer further questions from Newsday.

Ronald Rosenberg, Melius' close friend, said he was aware of the Interceptor business dispute.

He said Melius did not seem worried about anything in the weeks leading up to the shooting. "I don't recall Gary expressing in words or in any way concerns about his safety," he said.

The details of the rift between Melius and Ruocco are spelled out in court records filed in Suffolk County Supreme Court last year.

Records show Melius, 69, signed a consulting agreement between his company, KNET Inc., and Ruocco in June 2010 pledging to get laws passed that would help Interceptor win public contracts. According to the agreement, Melius would get 2.8 million shares in Interceptor in exchange for "the enactment or amendment of laws" that would require use of the technology that Interceptor could provide.

Judge Thomas Whelan's ruling stated, "such a law was passed in 2010 in Suffolk County."

Ruocco, 66, got into the ignition interlock device business because a relative was killed by a drunken driver, he stated in court. He was previously senior executive vice president of Alcohol Sensors International Ltd., a publicly traded Islandia-based company.

The company, which produced a product called a Sens-O-Lock, was forced to recall roughly 700 of the units in 1996 due to "manufacturing, design and quality control problems," according to Securities and Exchange Commission filings. Ruocco resigned the following year and the company went bankrupt in 1999.

According to state records, Ruocco founded the Shirley-based Interceptor Ignition Interlocks in 2000.

Melius secured money for Interceptor in the form of a $1.5 million credit line from the Flushing Federal Savings Bank, with a loan guarantee signed by Melius, records show. KNET also advanced more than $500,000 to Interceptor to "keep the company solvent," court filings state.

Interceptor repaid the loan to KNET by March 2011. Records show that in May 2013, Melius was in default on the Flushing Federal Savings Bank loan and the payoff amount was $1.18 million. It's not known whether Melius is still in default.

Melius sought an injunction to compel Ruocco to hold a meeting last May to select a board of directors. Melius alleged that Ruocco had mismanaged the company and had never undertaken "any valid acts of corporate governance." In an affidavit, Ruocco said the "baseless unfounded lies alleged by Gary Melius are profoundly insulting."

In his ruling, Judge Whelan sided with Melius. Whelan called Ruocco's statements in the case "some of the most confusing and uncooperative testimony imaginable."

Ruocco stated at various points that he owned 8 million or 10 million shares in Interceptor, the judge wrote. Some of the shares were issued to Ruocco and his sister, Rosemarie Sylvester, for a penny a share or for free. Meanwhile, other investors paid $2 a share.

Ultimately, the judge awarded Melius 3.5 million shares in Interceptor and wiped out all but 500,000 of Ruocco's shares. Last Friday's shareholders meeting was the first since the judge's December ruling.

Ed Walsh, Suffolk Conservative Party leader, said he attended the shareholders meeting at the company's headquarters in Shirley. He said he is not a shareholder but attended to provide "moral support" to his friend Melius.

"I expected some drama, but it didn't really give it," Walsh said. "It was pretty blah, pretty uneventful."

In a later interview, Walsh confirmed that new directors had been named at the meeting but that he'd been told not to say anything more.

WHAT IS AN IGNITION INTERLOCK DEVICE?

In some cases, convicted drunken drivers are mandated to keep a device on their cars for at least 12 months.

To start the car, a driver must blow into a device and his or her breath must register a blood-alcohol content below .025.

The drivers are required to pay for the installation and maintenance of the device themselves. In 2010, Intercept Ignition Interlock president John Ruocco estimated the cost at $90 a month.