[PEN-L:28360] Re: Yale men

[Louis Proyect <lnp3@xxxxxxxxx>]

At 09:46 AM 7/23/2002 -0700, you wrote:
> Is taking care of yourself by screwing associated investors taught at
> Yale?
>
> We've been hearing a lot about Dubya.
>
> But another Yale man, William F. Buckley Jr. screwed his associates in
> an investment years ago.  I recall the Wall St. Journal being upset by
> the scam but I don't remember the details.
>
> Gene Coyle

The Washington Post
April 19, 1981, Sunday, Final Edition
SECTION: Business & Finance; F1

LENGTH: 1778 words

HEADLINE: SEC Authorizes Suit Against Business Head Of Vocal Buckley Clan;
SEC Authorizes Suit Against Businessman Leader of Buckley Clan

BYLINE: By John F. Berry, Washington Post Staff Writer

BODY:
The Buckley family of Connecticut has gained a measure of fame over the
years, mostly by force of the personalities of the clan's two most public
members -- the glib political commentator and writer William F. Buckley Jr.
and the conservative former U.S. senator James L. Buckley, now a member of
the Reagan administration.

For investors in its oil, gas and mineral interests, however, the family's
most important member has been 61-year-old John W. Buckley. Until now, the
businessman Buckley has assiduously avoided the kind of publicity that his
brothers have courted while he quietly took care of the family's fortune.

But that may end soon. After a 3-year federal investigation, the Securities
and Exchange Commission has authorized the filing by the staff of a civil
suit alleging violations of federal securities laws by John Buckley,
certain corporations and others. Under John Buckley's management, the
legacy of founding father William F. Buckley Sr. over the years has helped
finance the family's various conservative political, literary and economic
endeavors and has given its members a social status that normally comes
with old wealth.

The family finances were managed through Catawba Corp., a company
established in 1948 by the senior Buckley and operated out of a Manhattan
brownstone.Catawba provided geological, geophysical, financial, accounting
and other technical services to the six publicly owned companies that were
allegedly directed by Buckley interests.

When William Sr. died in 1958, each of his eight surviving children -- and
their heirs -- were left a 9.8 percent interest in Catawba. They are: John,
Priscilla, William Jr., Patricia Buckley Bozell, F. Reid, trustees for
Carol Buckley Charlton, Jane B. Smith and James Buckley. Trustees for the
estate of two deceased daughters, Maureen Buckley O'Reilly and Aloise
Buckley Heath, hold 9.8 and 7.8 percent respectively. Benjamin W. Heath,
the latter's widower, has a 2 percent interest, as does C. Dean Reasoner, a
Washington attorney who also is a Buckley business associate.

But Catawba was in turn financed by fees and royalties from the six
companies whose stock was owned by the investing public but whose
operations allegedly were directed by the Buckley interests.

Because these companies were owned by the public, their operations --
including their relationship with Catawba -- were subject to the federal
securities laws. In 1978, after the SEC began its probe, Catawba ceased
offering the services to the publicly owned companies.

Now, according to public records, the SEC suit alleging securities
violations will name, in addition to John Buckley, his brother-in-law and
business associate Heath, the lawyer Reasoner and Catawba. In public
filings with the SEC, two Buckley-controlled companies said they were
informed that the commission authorized a suit against them in connection
with "fees and royalties paid . . . Catawba."

The six public companies, all in the oil exploration business, are Pantepec
International Inc., Coastal Caribbean Oils & Minerals Ltd., United Canso
Oil & Gas Co., Canada Southern Petroleum, Pancoastal Inc. and Magellan
Petroleum Corp.

A central question in the SEC's case and in a private stockholder suit
already filed is what Catawba did to earn the fees and royalties. The
lawsuit, filed in 1977 by a United Canso stockholder and still being
litigated, alleged that the services purportedly furnished by Catawba "were
as well provided by United Canso's own staff, and . . . were often
inadequately performed by Catawba or not performed at all."

The 1977 suit by the two stockholders accused Catawba, John Buckley and
others of defrauding the public company and the shareholders of $3.1
million in royalties paid Catawba in connection with the sale of United
Canso's North Sea oil rights.

A federal judge in Hartford, in denying a defense motion to get the law
suit dismissed, wrote in an opinion that if the allegations in the
complaint were proven, then "some or all of the defendants were involved in
illegal self-dealing and disloyalty of the highest proportion."

That stockholders' suit apparently attracted the interest of the SEC, which
soon after began a formal investigation.

SEC officials refused to comment about the Buckley investigation. An
attorney representing the family interests also declined comment.

Last year, another group of angry shareholders mounted a palace revolt at
United Canso. In July, the group -- composed of conservative oilmen from
Texas and Canada -- succeeded in overcoming a protective mechanism to ward
off challengers by limiting stockholders' voting rights. The persistent
rebels expelled the Buckley forces from the board of the company and threw
United Canso's resources behind the stockholders' suit against Catawba and
the Buckley interests.

The story of the Buckely fortune dates back to the early 1900s, when the
young William Sr. divided his time between practicing law in Texas and
searching for oil in Mexico. When not wildcatting, Buckley pushed his form
of conservative capitalism in Mexico with a zeal that he would pass on to
his children.

But apparently Buckley backed the wrong Mexican general. According to the
book "The Buckleys, A Family Examined" by Charles Lam Markmann, Buckley was
expelled from Mexico in 1921 for "his involvement in the opera buffa
failure of a counterrevolutionary movement."

Buckley had founded Pantepec Oil Co. of Mexico (now Pantepec
International). Once expelled, he switched his oil exploration efforts to
Venezuela.

At about this time, the senior Buckley moved his growing family to suburban
New York and then to an estate in Sharon, Conn., which is still in the
family. Meanwhile Buckley sought financing for his ventures on Wall Street,
and his early backers included E. A. Pierce, a founder of the brokerage now
known as Merrill Lynch, Pierce, Fenner & Smith Inc.

Buckley apparently proved more adept at raising money than oil, earning him
the nickname "Dry-hole Bill," according to several reports of that time.
But just before World War II, he made a major strike on Pantecpec land in
Venezuela, and the foundation of the Buckley fortune was laid.

After the war, Buckley searched for oil in the Middle East, Greece, Latin
America, the Phillipines and Australia. To finance the search, he formed a
number of companies and sold stock to the public.

It there was one characteristic of all the companies, it was that the
Buckley interests retained absolute control over them, even though most of
the companies' stock was held by the public. Indeed, while the Buckely
interests have held very little stock in the public companies that Catawba
serviced, they nevertheless dominated the companies' boards of directors.

In the United Casno case, Buckely had structured the company so that the
stockholder was allowed a maximum of 1,00 votes in a proxy contest no
matter how many shares he might own.

Public filings show that, over the years, the relationships among the six
companies themselves, and between each of them and Catawaba could be
accurately described as inbred:

Pancoastal in 1979 sold a 17 percent interest it held in Pantepec to United
Canso for $1.1 million. According to documents filed at the SEC, $930,000
of that money was used by Pancoastal to pay debts owed to Catawaba, John
Buckley and members of the Buckley family. In October 1980, Pancoastal --
whose chief asset had been the 17 percent share of Pantepec -- declared
bankruptcy.

John Buckley concurrently served as a director of Coastal Caribbean,
president and director of Pantepec, chairman and president of United Casno
and of Canada Southern, director of Pancoastal and chairman of Catawaba.

Heath was chairman and president of Coastal Caribbeana and of Magellan,
director of Canada Southern and of United Canso and president of Catawaba.

Reasoner was a director of Magellan, Coastal Caribbean and Pancoastal. He
also was the only nonfamily stockholder in Catawaba.

When Catawba ceased servicing the six companies in 1978, two employes and
trusted associates of the Buckleys, Arthur B. O'Donnell and Frank P.
Gherardi, founded a firm of their own, them replaced Catawaba as management
consultants to the six companies.

The Buckleys' clash with the SEC had its origins in 1971 when United Casno
acquired a 20 percent working interest in a license to explore for oil and
gas in the North Sea. But United Casno soon had trouble meeting exploration
expenses that approached $150 million. So, under threat of forfeiture, it
sold its interests in 1975 to a West German company for about $57 million.

Under the terms of Catawaba's management contracts that terminated in 1978,
the consulting firm collected 1/64th of any royalties earned by the six
companies. The 1977 suit charged that the Buckleys who were stockholders
and directors of both Catawaba and United Casno claimed that Catawaba was
owned its royalty on the North Sea sale -- even though no oil had been
discovered by the time it was sold.

Two United Casno directors, Albert Barton and Austin G. E. Taylor, were
picked to decide what the royalty payment should be. The 1977 lawsuit
charges they were chosen because they had no interest in the oil royalties.
But, said the suit, Barton was a long-time business adviser to the Buckley
family, and Taylor was Bill Buckley's brother-in-law.

Barton and Taylor allegedly a petroleum engineer, who claculated that the
United Casno portion of the North Sea oil eventually would be worth $200
million -- if it had not been sold to the West Germans. So they figured
Catawaba should collect 1/64th of $200 million, or $3.1 million.

The money was paid to Catawaba and distributed among its shareholders.

The suit by the United Casno stockholders accused John Buckley, James
Buckley, Heath , Reasoner, Taylor, Barton, Austin, Catawaba and other of
fraud against the company and its stockholders.

Now it's the SEC's turn, and its suit apparently can be expected any day.

This would mark the second time in as many years that a Buckley has had a
run-in with the commission.In 1979, the SEC filed suit against William F.
Buckely Jr. accusing him of violating the antifraud statutes for allegedly
attempting to avoid personal bankruptcy by selling some of his losing
personal investments to Starr Broadcasting Group Inc., a publicly owned
company in which he was a a major stockholder. While neither admitting nor
denying the allegations, the columnist as part of settlement agreement paid
some $1.4 million to shareholders of the company.