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Owners of Burned R.I. Nightclub Fined $1 Million by State

Troubles continue to mount for brothers Jeffrey and Michael Derderian, who owned the Station nightclub in West Warwick, R.I., destroyed by a devastating fire in February. The state has fined their company, Derco LLC, $1 million for not having workers' compensation insurance.

The fire, on Feb. 20, killed 99 people and seriously injured scores more. Four of the 16 Station employees working that night died in the fire, while several others were injured.

According to Rhode Island's workers' compensation statutes, the families of dead workers are eligible for $15,000 for burial and other expenses plus a portion of the deceased's lost wages. Since the club owners did not carry workers' compensation insurance, those families will not receive that money. Plus, the medical bills and lost-wages costs incurred by the injured Station workers are not covered by workers' compensation.

On April 9, the state's Department of Labor and Training fined the Derderians the maximum penalty of $1,000 a day for each day the club operated from the date they purchased it, March 22, 2000, to the day of the fire. The department also referred the case to the attorney general for criminal prosecution. Attorney General Patrick Lynch said the workers' compensation issue was "just one part of our overall investigation."

At a hearing last week, attorneys for the Derderians acknowledged the lack of workers' compensation insurance but it was not out of "malice or ill will," said Jeffrey Derderian's attorney, Jeff Pine. Pine and Michael Derderian's attorney, Kathlenn Hagerty, said they plan to appeal the case to the state's Workers' Compensation Court.

The fire was caused by a pyrotechnics display, which set the soundproofing foam on the club's ceiling on fire. The club, which was packed with fans of the band Great White, has a legal capacity of 404. Investigators searching the rubble allegedly found a partially burned, unsigned contract between the band and club that listed a capacity of 550, causing some victims' families to claim the club was overcrowded the night of the fire.

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