By Tim McLaughlin

BOSTON (Reuters) - Lawyers for New England Compounding Center's owners told a federal judge on Tuesday there is no evidence that any of them directly participated in the events that led to a deadly U.S. meningitis outbreak.

"Due process should not be washed away in a sea of newspaper articles and conjecture," defense attorney Alan Winchester said.

Winchester made his remarks during a two-hour courtroom battle in Boston, where defense lawyers for the family that owns the specialty pharmacy sought to put distance between their clients and an outbreak that has killed 34 and injured nearly 500 people.

Barry Cadden, part owner and NECC's chief pharmacist, had not compounded any drugs at the pharmacy for several years before the meningitis outbreak, defense lawyer Bruce Singal said. Cadden's wife, Lisa Cadden, also a part owner, has not worked as a pharmacist for seven years, Singal told the court.

The defense lawyers also argued to block a motion by meningitis victims to freeze the assets of NECC and its owners. U.S. District Judge Dennis Saylor took the matter under advisement and suggested a ruling could come by next week.

But Thomas Sobol, a lawyer for plaintiffs, disagreed with the assertions of the defense lawyers. He said Lisa Cadden, for example, cannot claim to be a soccer mom and then be one of the key people answering the questions of investigators about NECC's operations.

"This woman shouldn't be entitled to sell her house, her cars and dissipate her assets," Sobol argued. He wants the judge to freeze the assets of NECC and its owners so they are not concealed or put under the protection of bankruptcy or a receivership.

Sobol said his motion would not preclude the Caddens or the other owners of NECC to buy a Thanksgiving turkey or gas for their cars. But he did ask the judge not to let the Caddens sell their luxury home in Rhode Island and then put the money in an account in the Cayman Islands.

Defense lawyers said there is no evidence that NECC's owners have tried to conceal anything regarding their assets.

Defense lawyer Daniel Rabinovitz said there's nothing to show that Greg Conigliaro, the recycling entrepreneur and co-owner who helped his brother-in-law, Barry Cadden, launch NECC, participated in any conduct related to the outbreak. U.S. authorities say NECC shipped thousands of vials of fungus-tainted methylprednisolone acetate to medical facilities throughout the United States.

At one point during the hearing, Judge Saylor talked about how a passive shareholder cannot be held liable for even the most outrageous acts of a corporation.

Singal suggested the outbreak was an isolated incident and told the judge how NECC had been compounding methylprednisolone acetate, which is typically used to ease back pain, for a number of years without incident. He said half a million vials had been shipped without incident over a period of several years.

But Sobol said that was not true, because authorities investigated an incident involving NECC and the drug several years ago.

"My clients are under legal siege," Singal said, referring to the number of government agencies investigating NECC. "Almost anybody you can think of, except for NASA, has showed up so far."

(Reporting By Tim McLaughlin; Editing by Maureen Bavdek and Dan Grebler)