Some have speculated that the company's main business purpose is sale of penny stock. "Brokers often call telling of new information forthcoming from CIC, and saying `now is the time to buy more,' fs" said Canton City Council member Meade. "Nothing ever materializes. Maybe they're trying to manipulate the stock price."
Journal Star (Peoria, IL) August 7, 1994 1994 STATE ALL A1 ELAINE HOPKINS TIRE PLANT PILED HIGH WITH FAILURE>CANTON FACTORY COULD PROVE COSTLY TO TAXPAYERS CANTON -- Up to 500,000 used tires piled at a shuttered factory in the center of Canton present a potential burden to taxpayers and a fire danger to the community.
They're the remains of the latest failed venture at the former International Harvester plant.
The tangled story of Canton Industrial Corp. includes entrepreneurs better at garnering taxpayer money than at creating jobs and profits; a 7-year- old bankruptcy reorganization that has yet to be resolved; and now, a major environmental hazard.
"If that place ever catches on fire, it will burn forever," said Canton City Council member Kevin Meade.
Although company officials deny they have abandoned the site, Tom Davis, an Illinois assistant attorney general, said taxpayers probably will be forced to pay for removal of the tires, at a cost of up to $250,000. The tires The Canton tires began arriving in 1992 as part of a well- hyped scheme to shred them for fuel for power plants.
CIC's subsidiary, Canton Tire Recycling Corp., was to become "the largest indoor tire recycling facility in the world," taking 2 million tires annually, according to company news releases. Other tire plants would open throughout the United States.
The Illinois Environmental Protection Agency awarded a permit for the tire operation but required the company to post only a $10,000 bond, not nearly enough to pay for a cleanup.
By March 1993, a $250,000 tire shredder arrived at the plant. The company announced anticipated annual gross revenues of $1.8 million. Six months later the shredder was repossessed.
On March 25 of this year, the company agreed in Fulton County Circuit Court to begin removing the stockpiled tires at a rate of 20,000 monthly and to set up a $140,000 escrow fund to guarantee payment. But the fund hasn't been set up, and the tires are still stacked inside the plant beneath partly open sheds.
The man running CIC, 48- year-old Allen Z. Wolfson, reached at his Salt Lake City office, denied that the company plans to walk away from the tires in Canton.
"We have enough assets to clean it up," he said.
CIC also plans to renovate the offices at the plant, then lease the property to tenants, Wolfson said.
Davis, the assistant attorney general, said if CIC doesn't remove the tires, the state has a fund to pay for cleanup. CIC then will be sued to recover the costs, plus penalties, Davis said.
But collection of the money is unlikely. CIC owes numerous debts in Illinois, including money to an environmental firm for removing drums of hazardous waste from the site. Creditors sue and obtain judgments, which then are listed as debts in company documents.
The ultimate responsibility for the old 33-acre Harvester plant could fall back on the town, Meade said.
"We've been offered it for $1 but we refused it," he said. "I don't know anybody who wants it. " The bankruptcy When the International Harvester plant closed in 1983, Ohio entrepreneur Joseph Driscoll bought the property and negotiated taxpayer loans to set up CIC, aiming to become a Harvester subcontractor.
Taxpayers eventually would invest more than $1 million in the plant, little of which has been repaid. On top of that, the plant now owes $213,000 in back taxes.
By 1985, Driscoll sold the company to Lisa Foley for $10,000 and promissory notes. When Foley was forced out in 1987, after revelations that she had falsified her background, she was being paid $95,000 a year. But the company was losing money.
A few months later, it filed for Chapter 11 bankruptcy reorganization. That bankruptcy never has been resolved, and no financial statements have been filed with the court for years. A hearing has been scheduled for Sept. 26. CIC submitted an approved reorganization plan in 1989, assistant U.S. Trustee Jim Magill said. "Once the plan is OK'd, you've got to comply with the plan and you're in business again. It's up to the creditors now. (They) should be enforcing their rights."
But that costs money. "Once we got our percentage we just bowed out, because we're not going to get any more and it was silly to keep paying lawyers," said Gary Rafool, attorney for Hagerty Brothers of East Peoria. The largest creditor and the plant's major supplier, Hagerty was owed $250,000 but got only about $40,000, he said.
He's convinced further litigation won't produce more money: "You're throwing good money after bad."
Company documents show CIC had income from tire tipping fees and rent. The CIC subsidiary Canton Tire Recycling took in $77,755 during the first two months of tire collection in 1992, documents show, and $357,230 in the first nine months of 1993. Wolfson said the plant's expenses consumed the money. "Finally we threw up our hands and said we've had enough."
None of the money went to the 105 CIC creditors owed $1.1 million, much less to the taxpayers.
The creditors split only $70,534, provided by former CIC owner Nelson Carlo, a Chicago businessman who took over the plant after Foley left. Getting that money required a lawsuit to enforce a bank letter of credit Carlo promised the court, Rafool said. Nelson Carlo CIC already was in bankruptcy court when Carlo took over, but he was no stranger to that condition. His company, Abbott Products, had recovered from bankruptcy.
Carlo began issuing optimistic statements about CIC, estimating $10 million to $12 million in sales for 1989. Carlo, a Puerto Rican, planned to take advantage of his minority status to get defense contracts to produce items such as practice bombs and gun racks at the plant.
But while Carlo's Chicago company was making money -- published reports stated $28 million in sales for 1991, and Pentagon records showed $38 million in active, multiyear contracts -- CIC apparently wasn't profitable. In 1991, Carlo closed it, while investing $1 million in an Addison company making laserdisc jukeboxes.
Carlo would be touted in 1992 as Chicago's largest minority defense contractor, and he and a partner founded Chicago's only Hispanic bank, with Carlo as chairman.
Carlo most recently surfaced as the organizer of an investor group to pursue gambling licenses. He didn't return several phone calls.
To get rid of CIC, in June 1992, Carlo signed it over to companies controlled by Wolfson, a convicted felon, though Carlo retained a 5 percent interest.
Back in 1986, Wolfson was convicted of bank fraud in U.S. District Court in Tampa, Fla. Now on probation, Wolfson cannot serve as an officer or director or manager of any companies without his probation officer's approval. So Wolfson's 21-year-old nephew, Richard Surber, is listed as head of the various companies involved with CIC. Another major bankruptcy creditor is the city of Canton, owed $800,000. Canton plans to accept 10 parcels for the debt, about 4.1 acres of parking lots at the plant, worth about $5,000, according to CIC documents. The property must be free and clear, and about $32,000 in back taxes paid, city attorney James Elson said. The city doesn't want any of the buildings at the plant, fearing environmental contamination, he said. The stock The city also holds CIC stock, some 110,336 shares, according to an auditor's report. Elson believes it's worthless.
The bankruptcy filing from the late 1980s showed 5.7 million shares of common stock held by 600 shareholders, many from central Illinois.
Some bought when CIC was hyped as the gutsy little company that would save the region. Others acted on tips that proved to be bad. Now, like Elson, most have shrugged off their losses.
"I've written it off as worthless," said investor Jerald ~DeFord of Ovideo, Fla. He bought $400 in stock because his wife had worked with a CIC officer. He hasn't received any information from the company in four years, he said.
CIC has been issuing stock in lieu of cash; it has paid its bankruptcy lawyers and other lawyers and some vendors in stock, an audit report states.
CIC stock has been listed on the Boston Stock Exchange as CNI since March 11, 1987, said exchange spokeswoman Mary Mulkerin. In July, there were 18.9 million shares outstanding, she said, with an average of 635,000 shares trading each month.
CNI currently is listed at about 15 cents per share, but was 50 cents a share in January, she said.
Some have speculated that the company's main business purpose is sale of penny stock. "Brokers often call telling of new information forthcoming from CIC, and saying `now is the time to buy more,' fs" said Canton City Council member Meade. "Nothing ever materializes. Maybe they're trying to manipulate the stock price."
The U.S. Securities and Exchange Commission is investigating CIC's affiliated company, Logos International Inc. of Salt Lake City, to determine whether securities laws have been violated, a company document disclosed.
The SEC stated an investigation of CIC took place in 1990, but the documents are stored in archives. It would not release current investigation records on CIC, saying the release might interfere with enforcement proceedings.
Wolfson said the Logos investigation has been resolved. "It's nothing," he said. The company From its Salt Lake City offices, CIC continues to churn out upbeat news releases, at odds with the official documents CIC and its affiliated companies must file with the SEC. A June news release picked up by the Dow Jones Newswire stated CIC has 100 million common shares outstanding, a figure different from the Boston Exchange's figures.
A July 1 news release tells how CIC will buy 15 percent of a British firm, TopGuard Ltd., and advise it on "risk management, public offerings, and economic research," for an additional 10 percent interest.
CIC has set up several subsidiary companies, according to its news releases. On June 21, it announced that its subsidiary, Canton International Timber Corp., will provide consulting services to a Russian logging company, in "development, diversification and raising capital in the U.S." In exchange, it will receive 10 percent interest in the Russian company, Bratsky Joint-Stock Co. "Bratsky currently cuts and processes oak and leaf bearing pine into lumber in Brask, Siberia, Russia," the company reported.
Another subsidiary, Canton Financial Services Corp., describes itself as "an international holding company," advising clients on "major financial and strategic decisions."
Canton Financial recently acquired 1.5 million shares of Applied Technology Inc. in exchange for consulting services, according to a June 14 news release. Applied Technology is traded through computer bulletin boards, a trading method SEC officials recently warned is subject to fraud.
Canton Financial's brochure lists Wolfson as a consultant, touting his experience as a developer of "tire recycling plants."
A 1993 CIC statement bragged of plans to open more tire recycling facilities across the United States, using government grants and low-interest loans as working capital.
But that plan depended on the cooperation of state regulatory agencies in licensing tire collection. Outside of Illinois, they proved reluctant to allow it, said Dick Johnson, the chief financial officer of Metallurgical Industries Inc. of New Jersey.
Johnson said his company considered affiliating with the CIC group but backed out when CIC assets turned out to be less than expected.
Today, CIC's only income from the Canton plant apparently is rent from P&O Manufacturing Inc., said to be a Caterpillar Inc. subcontractor.
P&O leases part of the plant not filled with used tires. Owner Ronald J. DeLost would not say where he sends the rent.
"It goes into some kind of fund," he said, and hung up. |
