The article left out the fact that Simon is likely to spend more time in court over next few months than on the campagin trail.
Simon may be called to testify in
upcoming federal trial
Tuesday, August 13, 2002
(08-13) 01:52 PDT LOS ANGELES (AP) --
Republican gubernatorial candidate Bill Simon may
be called to testify in an upcoming savings and loan
trial in Washington, court documents show.
The U.S. Justice Department has named Simon as
one of 26 witnesses it may call during the trial. The
tentative schedule would have Simon on the stand
Oct. 16 -- less than three weeks before California's
election. Simon is squaring off against Gov. Gray
Davis.
The trial stems from a lawsuit that Simon and other
investors in the former Western Federal Saving and
Loan filed against the government. The Simon family
lost about $40 million in their investment and hope to
win at least some of it back.
If called to testify, Simon would talk for up to two
hours on "the strategies, plans, operation and
condition" of Western Federal and its holding
company, Justice Department attorneys wrote in
court papers.
Justice Department spokesman Charles Miller said
the government had not subpoenaed Simon, but "that
may change."
The government seized the S&L in 1993 at a cost to
taxpayers of $122 million. Although Simon did not
run daily operations at the thrift, he was part of a
team that oversaw those who managed the business.
Simon also was on Western Federal's board of
directors.
Investors claim the government improperly seized
Western Federal after breaking an agreement that it
struck with the investors when it acquired the thrift in
1988.
"The government didn't keep its word on this issue,
so we feel we're on the right side," said Simon
campaign spokesman Mark Miner.
The government argues in court documents that
Simon and his investors made a poor choice in
Western Federal then retained executives who
mismanaged the S&L.
Simon has been attacked in television ads by Davis
whose reelection campaign has portrayed the thrift's
failure as evidence that Simon can't handle the job of
governor.
Simon has denied wrongdoing and accused Davis of
grossly distorting his role at Western Federal.
The trial at the U.S. Court of Federal Claims in
Washington is scheduled to start Sept. 17 and finish
by Oct. 18
sfgate.com
Calif. GOP candidate's firm headed back to court over $78 million fraud verdict
ERICA WERNER, Associated Press Writer
Saturday, August 17, 2002
©2002 Associated Press
URL: sfgate.com
(08-17) 12:23 PDT LOS ANGELES (AP) --
Attorneys for Republican gubernatorial candidate Bill Simon's investment firm are headed back to court this week
over a $78 million fraud verdict that has rattled the nominee's campaign.
The case and its July 30 verdict not only dismayed Republicans, but also cast a shadow over a central claim of
Simon's candidacy: that his "in the trenches business experience" qualifies him to replace Democratic Gov. Gray
Davis.
On Tuesday, William E. Simon & Sons lawyers will try to convince Judge James C. Chalfant the firm deserves
restitution because Paul Edward Hindelang, the businessman who successfully sued the firm over its investment in
his company, improperly concealed his past as a convicted drug dealer.
The jury had rejected that argument in finding that Simon & Sons defrauded Hindelang by concealing a risky and
ultimately disastrous plan to take Hindelang's Pacific Coin phone company public. Hindelang's attorney Geoffrey L.
Thomas said, "We certainly feel the jury's verdict was correct."
Simon, 51, was not named in the lawsuit and is on leave as co-chairman of Simon & Sons, the investment firm he
started with his brother and father, a former U.S. Treasury secretary.
The first-time candidate has dismissed the verdict as "fundamentally flawed" and has sought to distance himself from
Pacific Coin, telling reporters after the verdict, "Frankly, I had very little involvement in this."
Court documents, however, show he was co-chairman of the committee that approved the investment in Pacific Coin
and raised questions in writing when the pay phone company began to falter.
When Hindelang's troubled past came to light in a Wall Street Journal article in December 1998, Simon
recommended a private investigator to look into the situation.
Months later, he personally assured a creditor, Bank of America, that Simon & Sons still strongly supported Pacific
Coin and its management, according to a bank memo.
At the same time, Simon's responses during a two-day deposition in May suggested disengagement from the details
of the business background he has presented as key to his political qualifications. His response to many questions
was that he did not know or could not recall, according to the 577-page transcript.
Simon personally lost $1.2 million, according to his tax returns for 1999 and 2000, and Simon & Sons lost its entire
$16.5 million investment when banks seized Pacific Coin in December 2000. But under oath, Simon said he couldn't
remember how the investment ended.
"I have to say I don't have a recollection of having a feeling of happiness or sadness or anger or joy, because I don't
remember," he said.
Although he worked there for more than 12 years, Simon said he could not recall what portion of the firm he owned.
"I'm sure it was less than 50 percent, but I just don't know what it was," he said.
Simon's campaign literature boasts of his "in the trenches business experience." But in the deposition, he portrayed
himself as removed from the action.
"I guess we could talk about what you mean by 'hands-on,' but I would look at it as not particularly hands-on in terms
of individual investments," he said.
Simon has distanced himself from other sour episodes in his business background, as well, including a savings and
loan bailout that cost taxpayers $122 million and investments in two companies that went bankrupt in the last year,
costing hundreds of jobs. In each case, he said day-to-day management of the companies wasn't his role.
"You know," Simon said in his deposition, "my dad used to have an expression. He used to say, 'Tell me what time it
is; don't tell me how the watch is made.' And there's some things you don't necessarily need to know."
sfgate.com |
