Here's an article on a Robert Dultz that just may be associated with the Spencer Eubank that was the former Secretary of EssxSport. Keep in mind that this is a newspaper article and there may be subsequent explanations to the accusations raised by the parties described. :
copyright 1989 The San Diego Union-Tribune
The San Diego Union-Tribune
April 2, 1989, Sunday
SECTION: BUSINESS; Ed. 1,2; Pg. I-1
HEADLINE: Armless weapons company is center of inquiry by SEC
BYLINE: Donald C. Bauder; Financial Editor
Escondido's Weaver Arms Corp. and the classic Greek statue, Venus de Milo, have one thing in common: the almost complete absence of arms.
Beyond that, Weaver -- now in the middle of a disputed bankruptcy filing -- has none of Venus' qualities: dignity, simplicity, beauty.
Indeed, the Weaver case is shaping up as one of San Diego's uglier corporate adventures.
The salient Weaver facts may never be known. Unless there is a good chunk of money reposing in an offshore bank (which is possible), and that money can be retrieved (usually questionable), Weaver has little in the way of assets. The Securities and Exchange Commission, which since last fall has been conducting an informal inquiry into the affair, now has the major corporate records. But the SEC, which won't comment on the probe, could end its investigation with the current inquiry.
Already, however, there has been excitement aplenty. Founder Robert Weaver claimed in a public document filed with the bankruptcy petition last month that in July 1988, he was physically assaulted and told to resign or he and his family would be killed. So he resigned. Some others pooh-pooh this declaration. in, claiming that he was the legitimate president, and that Vice President Gaetana Ryan, the one in charge, was embezzling money. Ryan claimed, according to the police report, that Weaver was under investigation for fraud, had resigned in July and was trying to get into the company to destroy documents. The police -- not wanting to get in the middle -- posted a guard awaiting a court order, and took 10 weapons into custody.
The firm was founded in 1982 by Weaver -- a former coin shop, pawn shop and rifle range operator -- to develop and test revolutionary new weapons, particularly the Nighthawk carbines and assault pistols, and the Ultralite Submachine gun. The Nighthawk carbine was shorter (16 to 18 inches) than standard 24-inch models and was made to compete with and underprice Israeli-made Uzis. The lightweight 9 mm weapon carried a 25-cartridge clip. The lightweight machine gun was to be for military uses.
From the beginning, there were questions about the marketability of the guns, but Robert Weaver was a master promoter, using bikini-clad models to tout the weapons. People asked if the military, police and consumer markets were large enough.
But those were marketing questions. The major question today is whether the guns can ever work well enough to go on the market. Weaver says they can. Others say they can't.
The company got lots of favorable publicity in gun magazines about the weapon prototype, but was staggering along without sufficient capital until late 1986 when Robert Weaver met Palm Springs' Robert Dultz, who said he knew West German financiers who wanted to take a U.S. gunmaker public.
There followed much negotiating, and finally, in mid-1987, Weaver Arms Corp. was taken public by the American affiliate of Dusseldorf's Intercontinental Brokerage, Gmbh. By this time, Dultz was chairman and chief executive of Weaver Arms, and Robert Weaver president.
The prospectus was eye-popping, to say the least. It confessed from the outset that, "the company is totally dependent upon the proceeds from this offering to continue in business." Weaver Arms was in default on a loan from the Small Business Administration, and also owed a bundle to banks. exceeded total assets by $1 million. "The company may be unable to continue in existence," said the accounting firm. Still, the stock was sold for an astonishing $5 a share ($3.81 of which represented immediate dilution, confessed the prospectus).
The company explained in the prospectus that it intended to manufacture the guns in China ...a "first" that also attracted much favorable press.
Of the $4.9 million to be raised in the public offering (actually, $4.2 million was raised), Weaver would advance $1.9 million "as a non-refundable fee" to a new company, Los Angeles' Pan Starr, which had "negligible assets," according to the prospectus. Pan Starr, which had been set up in the tax haven, secrecy-shrouded Netherlands Antilles, was to arrange the China manufacturing deal.
The $1.9 million non-refundable fee was to go to account 46-74-510 at Allegmeine Bank, Netherland, Willemstead, Netherlands Antilles ...in the middle of tax haven country. Since the total offering was not sold out, the figure was probably closer to $1.6 million, according to Robert Weaver.
The money may all be there to this day. Or it may all be gone. The combatants dispute the point. Today, it is not clear who has control of the offshore funds -- or who might have tapped into the trove at some time in the past. Sigh. That's the nature of offshore banks. The SEC might have trouble piercing that veil of secrecy.
According to the prospectus, Pan Starr was controlled by Los Angeles' Gary Lindley, Lilly Shen and James Sakoda, then Weaver Arms' attorney.
Robert Weaver said in an interview that lawyer Sakoda is the only person who can get into the Netherlands Antilles horde -- the only signatory. Sakoda's lawyer in the affair, Sheldon Jaffe, said there was never $1.9 million in the account, as the prospectus said, or even $1.6 million, but actually less than $300,000. But Jaffe doesn't know why there was only that much.
"To my knowledge, there is no more money there," said Jaffe. Sakoda had disbursed what funds there were to certain people, but only "at others' directions," said Jaffe, who wouldn't name who the others were. prospectus, or how much is in the offshore bank. Only Sakoda knows, he said.
It was Lindley who on March 6 filed in San Diego to have Weaver Arms put into involuntary bankruptcy, claiming he is owed $40,000 for his role in the China manufacturing adventure. Robert Weaver, still a friend of Lindley's, arranged for Lindley to make the filing, Weaver said.
Robert Weaver said he has long tried unsuccessfully to get an accounting of how much is in the offshore bank.
San Diego business executive Richard M. Kipperman has been appointed interim trustee of Weaver Arms, but Gaetana Ryan -- now the only officer and board member of Weaver -- has filed to have Lindley's action voided and Kipperman removed. Ryan claims that Weaver Arms was given no notice of Lindley's filing -- which is deficient in other ways, she charged.
Ryan, who originally hired on as a temporary clerical worker while Robert Weaver still headed the company, works for the West German investors associated with Intercontinental who now control Weaver Arms stock.
From the beginning, most of the stock has been sold to West Germans. According to National Association of Securities Dealers records, as recently as early this year -- at a time when Sakoda was saying the stock was almost worthless -- Weaver shares were trading at around $4. Although NASDAQ suspended trading last month, trades are still reported at $3. supplies have previously been sold. (The company's) inventory consisting of several semi-automatic and automatic assault weapons are in the possession and/or control of the Escondido Police Department."
And the SEC has the records, maybe. The San Diego bankruptcy court ordered that the records be sent to interim trustee Kipperman, who turned them over to the SEC. But Ryan, in her letter to the SEC, declared, "on or about July 28, 1988, while I was employed as a secretary, I saw Mr. Robert Dultz remove many, if not all of the cOrporate books and records from the safe ...to his personal car. He later returned the books, but no record was made of how many books were taken and how many were returned." Her letter to the SEC was included in her filing to void the Chapter 7 bankruptcy.
Dultz, who could not be reached for comment, has been accused of other questionable dealings by Robert Weaver. In a letter to the SEC that has been made public, Robert Weaver's attorney said that Dultz may have sold a large block of stock that, according to SEC restrictions, could not be sold at that time.
George Berger, New York-based attorney representing the German investors, was called into the case late last year at the Germans' request. He has found "irregularities and troubling questions" about Weaver stock, he said, including the possibility that insiders had dumped Weaver Arms stock on the market in violation of restrictions.
A public declaration by Berger was filed with Ryan's objection to the bankruptcy action. He expects to file civil suits against some of the major players in the drama.
Both the German investors and the Robert Weaver faction believe that the SEC inquiry will exonerate them. Robert Weaver, in particular, believes he has been badly mistreated. On July 22, 1988, in the presence of Dultz and two of the German officials, "I was physically assaulted and forced to resign as president of Weaver Arms," Robert Weaver said in a public declaration that accompanied the bankruptcy filing. "At that time I was told that if I did not resign, my wife, children and myself would be killed." group told him before the experience. "Three guys worked me over. One was holding me, another taking swings at me," he recalled in the interview. "They were persuasive."
He therefore resigned and signed over bank accounts to the German group and Dultz. Also, he signed a document permitting Dultz to dump his restricted stock, Weaver asserted.
After he left, an officer appointed by the Germans exported some of the guns to Ecuador without government approval, Robert Weaver charged.
Some question Robert Weaver's credibility. "Bob Weaver should be writing fiction," said Ryan in an interview. She saw him the day after the alleged beating. "He was not a person who looked like he had been beaten up. He was in a great mood," she said.
The Germans, for their part, are not talking. Wolfgang Heenen, one of the top officials of Intercontinental, said, "(Bob) Weaver did very nice work to tell a lot of funny things. We do everything in front of God and the SEC, but not with the newspaper." End of conversation.
Interim trustee Kipperman has many questions. One, of course, is what happened to the money in the Netherlands Antilles. Another is what happened to the money that was left from the public offering after the offshore deposit. That was more than $2 million. There is simply no money left, said Kipperman. Thus, the money has been used up since last July. "That's a helluva burn rate," said Kipperman.
Robert Weaver said that many expenses had to be paid: A fat 11.5 percent fee to the German underwriters; several hundred thousand dollars to various lawyers and other functionaries; $196,000 to Dultz; $125,000 to vendors owed money; $175,000 to himself and his controller for back salary; $85,000 to the SBA; $350,000 to shareholders who had loaned the company money; $125,000 for an acquisition. Around $400,000 was needed for operating expenses, he said. Then the company spent another $50,000 on a scheme to develop a credit card for sportsmen -- instituted, Weaver said, because the Germans wanted to put some sex in the stock.
When he was ousted, he said, there was $300,000 in the bank. He said he has no idea whether any of it remains. what he has seen.
Last October, Sakoda told Weaver in a letter that the Chinese had found many flaws in the weapons. Based on that report, the German investors had concluded it would take too much capital to develop it further. Both Robert Weaver and Lindley dispute that finding. Because of the guns' defects, Robert Weaver's restricted stock was only worth 20 cents a share in October, in Sakoda's opinion. Unrestricted stock in the company was then selling for $5.
Trading has since been suspended. Clearly, a lot of investors have lost a bundle. If U.S. politicians ban assault guns, as they are now discussing, those investors won't be able to storm the barricades, demanding their money back. As Venus de Milo remarked, "Farewell to Arms." |
