Judge denies motion to freeze meningitis pharmacy owners' assets

A sign for pharmaceutical compounding company New England Compounding Center (NECC), a producer of the steroid methylprednisolone acetate, is seen in Framingham, Massachusetts October 8, 2012.

BOSTON (Reuters) - A federal judge on Wednesday denied a motion to freeze the assets of the owners of the compounding pharmacy at the heart of the deadly U.S. meningitis outbreak, but said the company may not make extraordinary cash transfers or pay dividends or bonuses to the pharmacy's owners.

Judge Dennis Saylor, of U.S. District Court in Boston, ordered an attachment of $5 million for each of the two plaintiffs who had moved for a preliminary injunction and prejudgment attachment restraining the assets of the Framingham, Massachusetts-based New England Compounding Center.

An attachment represents a preliminary seizure of property pending a final judgment in a case.

The plaintiffs, Michele Erkan and Robert Cole, who have filed a lawsuit against NECC, had also sought to freeze the assets of NECC-affiliated companies Medical Sales Management Inc and Ameridose LLC and six individual directors, shareholders and employees, up to $461 million.

These included Barry Cadden, NECC's co-owner and chief pharmacist; his brother-in-law Gregory Conigliaro, who is also an NECC co-owner; and other members of the Conigliaro family who are principals of the companies.

On Tuesday lawyers for NECC's owners argued before Saylor that there is no evidence any of them directly participated in the events that led up to the meningitis outbreak. They argued to block the motion by the meningitis victims to freeze assets of NECC and its owners.

According to the Centers for Disease Control and Prevention, 490 people have been injured by a tainted steroid distributed by NECC and 34 have died.

(Reporting By Toni Clarke and Tim McLaughlin; Editing by Leslie Adler)