Attorneys for Continental Assurance Co. and Constitution Life Insurance Co. charged that "Father" John W. Kramer Sr., a self-professed minister of Scientology, and Samuel G. Lombardo, a former Lancaster businessman, had arranged Artz's murder to collect the $1.75 million in insurance money.
Lombardo and Kramer, who had been involved with Artz in business dealings in Lancaster and Florida, both denied any involvement in the murder.
No criminal charges have been brought against either man. Florida law enforcement authorities have said that Kramer and Lombardo are considered suspects in the killing.
Alvin B. Lewis Jr., a Lancaster lawyer who brought the lawsuit on behalf of the insurance companies and spent three years investigating Kramer and Lombardo, said yesterday that the men recently had "abandoned their claims" for the insurance and that as a result, the lawsuit had been dropped.
That development came about two months after a deposition was filed in court in which Stephen Peterson, a former associate of Kramer and Lombardo's, testified that Kramer told him shortly after Artz was killed that Lombardo had committed the murder.
Peterson said in the Sept. 20 deposition that he fled from Florida, where he, Lombardo and Kramer were in the photography business, shortly after the Artz murder because a large amount of insurance had been placed on his life, too, and he feared that he, too, was likely to be killed for the proceeds.
Charles Morton, an assistant state attorney in Broward County, Fla., said yesterday that his office had been monitoring the federal lawsuit in Philadelphia and that in light of the fact that it would not go to trial, he was evaluating whether he "can make a case on the basis of Peterson's testimony alone."
The lawsuit, which tentatively had been scheduled for trial this week, had charged that Kramer, 58, formerly of York, Pa., had tried to kill another former business partner for insurance money and had plotted the faked death of a third.
The lawsuit charged that Kramer had engaged in a pattern of insurance fraud in Pennsylvania and Florida over a period of 15 years.
The lawsuit alleged that Lombardo, 64, of Hollywood, Fla., had been involved with Kramer in alleged insurance frauds and sometimes had acted as a front man for him.
At the time of his death, Artz was in the process of selling his family business, Conestoga Fuels, to Lombardo. The lawsuit claimed that Kramer was a silent partner in the deal.
The lawsuit charged that Kramer had "subverted the free will" of Artz, drawn him away from his family and immersed him in mysterious financial dealings in Florida before his death.