Flutie? I will give you Flutie;
"RYCKMAN showered star quarterback Doug Flutie with money. Then he basked in the reflected glory of a Grey Cup championship"
"Ryckman threw his Archer dough at the Stampeders and transformed them into a championship contender. He signed the greatest quarterback in CFL history, Doug Flutie, to a million-dollar contract, an amount almost unheard of in the tin-pot CFL, where the average player's salary hovers around $50,000 a season."
FOR IMMEDIATE RELEASE
June 10, 1998
Contact Garrett K. Krause
Sara Hallitex Corp. General Information Announcement
MARINA DEL REY, Calif.--(BUSINESS WIRE)--June 10, 1998--Garrett K. Krause, president and chief executive officer of Sara Hallitex Corp. (NASDAQ/BB:SHAL) confirmed that there is no current relationship with Lawrence (Larry) Ryckman, a stock promoter based out of Scottsdale, Ariz.
Ryckman at one time was associated with Wilmington Rexford Inc., the company's investment-banking and public-relations company, as an advisor to assist Sara in certain investment-banking objectives. At no time has Ryckman been a founder, officer, director or employee of Sara Hallitex.
Krause commented: ''I want to confirm to all our shareholders, investment bankers, market makers and public relations specialists that Mr. Ryckman is not currently an advisor, consultant or representative to Sara Hallitex Corp. or any of its affiliated investment bankers or public relations firms.
''Any comments or actions Mr. Ryckman makes on behalf of the company are not the opinions of the company or any of its officers, directors or employees. If anyone would like any information as to Mr. Ryckman's relationship to the company, please contact me directly.''
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Sleaze ball
Larry Ryckman became a hometown hero when he used borrowed millions to turn the Calgary Stampeders into Grey Cup winners. But he's lost the team, his reputation and much more because of his sleazy stock deals The question now is: who gets stuck with Ryckman's debts?
LARRY RYCKMAN IS STARTING TO sweat. The afternoon sun is pouring into his new office, a cheerless white cubicle attached to an eastern Calgary hockey rink. He doesn't have air conditioning. He can't open a window. His trademark bouffant is beginning to melt. "Is it hot in here?" he mutters, tugging on his shirt collar. "God, it's hot." Half an hour later, he leans forward until his head almost touches his desk. He rests there for a second, and sighs.
Ryckman used to spend his days on the 46th floor of the exclusive Canterra Tower, breathing in cool, filtered air. A bevy of staff buzzed around the adjoining 7,000 square feet. Superstar players from his Canadian Football League (CFL) team, the Calgary Stampeders, breezed in and out. Investors flew in from as far as Kuwait. It was a happening place.
That's over. Calgary's most flamboyant promoter has finally been forced from his luxury digs. "Ryckman moves out, down," is how one headline put it after the Alberta Securities Commission (ASC) ruled earlier this year that Ryckman had engaged in stock-market manipulation while a director of Westgroup Corp. Inc., a Calgary miniconglomerate listed on the Alberta Stock Exchange (ASE). Then in early March his private holding company, Ryckman Financial Corp., fell into receivership. Still to come, a hearing in front of the BC Securities Commission (BCSC) over a separate series of market infractions involving Aabbax International Financial Corp., an oil-and-gas exploration company. The Ontario Securities Commission is also reviewing the ASC decision with an eye to possible action, and the RCMP are investigating Ryckman for possible criminal activities in BC and Alberta.
The 36-year-old's fast-talking style and fast-buck substance have finally gotten the best of him. As with other smooth operators, such as Bruce McNall and Murray Pezim, who preceded Ryckman in and then out of the CFL, the only thing more remarkable is that it took so long. Ryckman Financial owes its creditors $15 million, including $8.6 million to the provincially owned bank, the Alberta Treasury Branches (ATB). Ryckman owes the City of Calgary $150,000 in back taxes, $80,000 to the nonprofit McMahon Stadium Society and $100,000 to the CFL Players Association. So far, he has managed to retain his in-house lawyer, but not his favorite cars-the Porsche, the Mercedes and the Ferrari. But what hurt most, he says, was losing his beloved Stampeders to a court-appointed receiver. (The court and the CFL subsequently approved the sale of the team to Sig Gutsche, a Calgary entrepreneur, for $1.65 million.) The Stampeders were the best public relations vehicle Ryckman ever had, a performing asset that won him the affection of thousands of football fans, from the Alberta-Montana border all the way north to the legislature in Edmonton. As long as the team won, Albertans seemed willing to give Ryckman the benefit of the doubt.
That goodwill is exhausted. Yet even now, minus the Stampeders, banned from selling on his local stock market, stuck in his sad sweatbox, Ryckman continues to deflect blame. In conversation he repeatedly says he doesn't deserve the heat: "I'm a start-up guy. That's all I do. I can't be responsible for a company after I leave"; or "When I can't concentrate on something, it falls apart"; and then, "All you hear are the negatives"
RYCKMAN showered star quarterback Doug Flutie with money. Then he basked in the reflected glory of a Grey Cup championship
Install air conditioning? Maybe someday. "God, it's hot. Aren't you hot?" Ryckman is pacing now. "I gotta tell you, I have stumbled. I've stumbled big time."
LAWRENCE GILBERT RYCKMAN was introduced to business-and legal action-early in life, lurching from one strange venture to another He grew up in a modest Calgary suburb with his working mother, and sold automotive parts from their garage. By the time he was 17, he had his own racing-car shop. When that closed, he hooked up with his father, Jim Plexman (with whom Ryckman had never lived), and the pair started wheeling together in the oil patch. Their relationship crumbled after the collapse of a complicated venture involving the financing of Egyptian oil wells.
Accusations flew back and forth; investors sued Ryckman, saying he had disappeared with their money and that he had tried to cut his father out of the deal. Three plaintiffs claimed that Ryckman and a partner were out to blackmail Plexman. Plexman tried to step out of the fray, claiming he wanted nothing to do with the brash 20-year-old. In the end, the lawsuit was dropped but Ryckman still refuses to discuss his father.
He turned his attention to filmmaking, producing a few B movies in and around Calgary. In 1983 Ryckman, who is half Jewish, infiltrated a neo-Nazi camp in Idaho and shot a critically acclaimed documentary called The Aryan Nation. Ryckman showed he had chutzpah, brains and an uncanny ability to win almost anyone's trust, qualities he would continue to use well to his advantage.
"When he's rolling, Larry just oozes confidence and enthusiasm," says the Stampeders' former media director, Kevin Gallant. "He could get everyone on his side simply by talking up a storm. He's an awesome promoter because he just lives and breathes whatever he's working on. He really believes what he's doing is right."
With a background in car parts and movies, and lacking a university degree, Ryckman didn't fit into Calgary's elite oil-and-gas scene. The city was still a bastion of white Anglo-Saxon old boys. But by the mid-1980s, the oil boom was over, and people were looking around for new plays. Along came Ryckman, with a dazzling high-tech promotion: QSound Inc., a Calgary technology company first incorporated in California and later a subsidiary of Archer Communications Inc., which was listed on the Vancouver Stock Exchange (VSE).
Archer was supposed to be a leader in 3-D sound technology. Ryckman had made friends with the sound engineers behind the project and settled in as Archer's president. Using his contacts in the film and recording industries, he managed to sell the idea of 3-D sound, if not the actual product, to some serious investors in Canada and the US.
In November 1988 The Vancouver Sun reported that Ryckman had been trading Archer shares without filing insider trading reports with the VSE. It was the first of four documented transgressions he would make over the years. In this case the local authorities took no action against him, allowing Ryckman to file his reports late. By the turn of the decade, Archer was listed on the Toronto Stock Exchange, had $300 million worth of stock equity and almost no revenue. Its stock, once worth pennies, was trading at the $17 mark.
After a number of public relations fiascos (including a 3-D sound test run during the 1990 Super Bowl game, when the technology bombed) Archer's stock started to slide. The company, now trading as QSound Lab: Inc., still hasn't lived up to its hype. Ryckman left Archer in July 1991, having sold out in time, he claimed, to net "millions and millions" in profit.
"3-D SOUND" was howling failure. Investors lost their shirts, but Ryckman walked away with millions
He bought lots of things with his windfall: cars, art and, later, a new home. Elaine Ryckman bought her husband a replica samurai helmet from a Calgary artist best known for making tiny suits of armor for cats, rats and mice. The $15,000 helmet would, the artist suggested, help make Ryckman invincible. And for a while, it actually seemed to work.
Ryckman rescued the perennially broke Stampeders from the brink of insolvency in 1991 and became a local hero overnight. No one from Calgary's old Tory football fraternity had stepped forward. Ryckman seized the opportunity, and developed one of the highest, most influential executive profiles in the CFLsecond only, perhaps, to his friend down in Hollywood, McNall, then owner of the National Hockey League's Los Angeles Kings as well as majority owner of the CFL's Toronto Argonauts.
Ryckman threw his Archer dough at the Stampeders and transformed them into a championship contender. He signed the greatest quarterback in CFL history, Doug Flutie, to a million-dollar contract, an amount almost unheard of in the tin-pot CFL, where the average player's salary hovers around $50,000 a season.
The team won the Grey Cup the following season. Ryckman had the city hooked. The sports media loved him. Ryckman threw soaking-wet parties for the press-box boys up at the top of the Calgary Tower. Local politicians posed for the cameras with him. The ATB extended Ryckman Financial a line of credit that Ryckman says he used to help pay Stampeder debts and operating costs. He also used it to buy stock, and to finance the purchase of a Mercedes. When he threatened to move the club unless certain season-ticket targets were met, Calgarians opened their wallets.
He still trades on his image as the Stampeders' savior. "Say what you want," he says, "the history books will show that I had the greatest run of any private owner in the CFL." However, considering the league's other failures-Pezim in Vancouver, McNall in Toronto, Nelson Skalbania in Montreal and Nick Mileti in Las Vegas-this isn't saying much.
There are better investments than a CFL franchise. Over the past two decades, every private owner of a CFL club has lost money. But Ryckman's claim that he dropped $13 million on the Stampeders during his four-and-a-half-year ownership has been questioned. "The team didn't do that badly financially," says the Stampeders' Gallant. CFL commissioner Larry Smith points out that the Stampeders have one of the highest revenue bases in the league, about $5.7 million. Given that the club's biggest expense, its players' payroll (including Flutie's big salary), was less than $3.5 million, many observers can't understand how Ryckman piled up his huge loss.
"It has been very difficult to get accurate financial information," Smith said after the Stampeders fell into receivership along with the rest of Ryckman Financial. "Mr. Ryckman has been reluctant to show any records of that business." Smith has suggested the Stampeders could have been profitable had Ryckman not "mingled funds from one division with another."
People are asking where the $750,000 worth of season-ticket deposits the Stampeders collected over the winter has gone. Flutie, recently signed by the Argonauts, says he is still owed US$680,000 from last season. "[Ryckman] put on a fa,ade all season that everything is under control, everything is cool," Flutie famed during the off-season. "He sent me one cheque just before the [1995] playoffs, then turned around and put a stop payment on it."
Ryckman is unrepentant. "I've done my job for the community. If I didn't have that team, I'd probably be worth a quarter of a billion dollars right now," he says. "Absolutely. Absolutely. I don't think anyone would dispute that, [anyone] that knows me in business."
RYCKMAN HAS NEVER BEEN one for understatement. He is all bluster and blarney, which leaves many to wonder how he survived as long as he did. He has his own theory: "If you were involved in the seed capital of any public company I've ever done, you would have made at least 20 times your money I'm just trying to say that, from an investor's perspective, they look at that. They don't look at all this other stuff." The "stuff" he refers to are all the stock-market rules he has broken over the years.
According to the ASC, Ryckman masterminded a "deliberate, pervasive, well-planned and contrived" manipulation scheme while chairman of Westgroup from 1988 to 1992.
Through its subsidiaries, Westgroup sold convenience-store sandwiches, neon technology and auto parts, and did electrical contracting. Ryckman once called it "a nice conservative group of companies." But its stock was volatile, one of the most active on the ASE. During Ryckman's chairmanship, Westgroup shares went from less than $1 to a high of $4.30, and then into free fall, to less than 60c.
In November 1992, just days before the Stampeders won their first Grey Cup in 21 years, Ryckman admitted to charges that he had filed late reports on 2,489 insider trades while acting as Westgroup's chairman. This time officials went after him, fining Ryckman S25,200 and ordering him to stop trading Westgroup stock for six months.
Ryckman promised to obey the order. Then, just 18 days later, he sold 53,400 Westgroup shares. During his well-publicized hearing in January, it was also discovered that Ryckman manipulated the price of Westgroup stock using a variety of deliberate methods between 1989 and 1992. Ryckman-controlled shares had been quickly traded back and forth to give an impression of intense market activity. These "wash" trades occasionally accounted for more than 25% of Westgroup's daily volume.
AABBAX was a classic Ryckman promotion. It never struck oil, but attracted a lot of wide-eyed investors
The ASC also presented evidence that Ryckman used 34 "nominee" accounts, some under the name of immediate family members, to trade Westgroup shares. "This creates the false impression of independent public trading," the ASC noted. A computer analysis conducted by John Kolosky, a Hong Kong securities consultant, found that Ryckman was ultimately involved with 47% of the Westgroup shares bought and sold between February and August of 1992. This "high level of involvement... created a false appearance of a liquid market and created artificial prices through uptick buys," the ASC ruled.
Overall, the ASC said Ryckman's conduct "was designed to deceive investors to trade at artificial prices.... It was a blatant attempt at creating a false and misleading perception of market activity and the true price of Westgroup shares."
Ryckman and his lawyers didn't enter any evidence during the weeklong hearing, nor did he contest any of the allegations. He claims to have been the victim of a "witch-hunt." Nonsense, says Charles Blakey, the ASC's director of market standards: "He had eight months to present evidence. He didn't. He was into 'trial by ambush."
Ryckman's lawyer accused the presiding member of the ASC panel, Marina Paperny, of a conflict of interest, displaying documents that showed that her brother, Lorne Paperny, bought Westgroup shares in 1992. The panel decided to proceed anyway. Ryckman applied for a delay, in order to mount a defence. Again, the panel refused. Ryckman called the hearing a "farce" and refused to cooperate.
One week later the ASC announced Ryckman was barred from trading securities in Alberta for 18 years. The ASC demanded a cost payment of almost $500,000 to cover its expenses. Ryckman managed to have the costs reduced to $250,000 in return for a pledge not to mount an appeal. According to some observers, the ASC caved in, fearing that an appeal based on the alleged conflict would have held up in the Alberta Court of Appeal.
Blakey admits that Ryckman may have had a decent shot at an appeal, but points out that Ryckman didn't have to settle. "He could have gone to the court of appeal with this," Blakey says. "The fact that he decided not to suggests to me that he knew he'd never win. We're happy with the outcome" The ASC had finally accomplished its mission: to shut Ryckman down.
But that doesn't mean his troubles are over. A BCSC panel is planning to convene to hear allegations that Ryckman broke a number of trading rules as head of yet another highly speculative company, Aabbax International Financial.
Ryckman bought the VSE-listed Aabbax as a shell company in 1993, grabbing 87% of its shares at about 150 each. A year later Aabbax began a widely publicized experiment, searching for oil in the bedrock deep in northern Alberta. Ryckman and geologist Warren Hunt were hoping to prove that oil and gas originate from inorganic sources such as granite and not from sedimentary deposits, as is universally believed.
Aabbax was a classic Ryckman promotion. It never hit oil but did attract a lot of wide-eyed investors. Shares hit a high of $1.80 in August 1994 before Aabbax was delisted late last year.
According to surveillance officials inside the VSE, Ryckman, his wife, his secretary and a handful of other associates received hundreds of thousands of Aabbax shares and options without payment. The VSE alleges that Ryckman Financial charged Aabbax $429,000 in "management fees" over two years, when according to VSE policies the maximum amount it could have charged was just $60,000, given Aabbax's "stage of development."
Ryckman contends the shares were swapped for services, and that it was a great deal for Aabbax. The company was run out of his Canterra penthouse, he points out, and therefore had use of all the Ryckman Financial facilities-"Plus me. That included Larry Ryckman's services"-in exchange for $20,000 a month, payable in shares, and not cash (as VSE rules require). Once again, Ryckman insists he didn't do anything wrong, but says he won't fight the BCSC. "I'm the current whipping boy" Ryckman says. "These guys are never going to like me."
AS THE BOOK FINALLY CLOSED on Ryckman? The ASC's Blakey doubts it. "You'd probably have to bury him to stop him," Blakey says. Members of Alberta's Liberal Party who leaked details of Ryckman's dealings with the ATB compare him to Peter Pocklington, controversial owner of the NHL's Edmonton Oilers, and Norm Green, a Calgary real estate developer who used to own the NHL's Dallas Stars. All three obtained ATB loans to finance their money-losing sports franchises. "It's like some club they've got out there," says a VSE insider. "All I can say is: they must be great schmoozers."
For his part, Ryckman insists he is going to keep a low profile, something everyone has heard before. Only this time, he vows, it's for real. He starts to perk up. Soon he is back in motor-mouth promoter mode. Now that he's barred from trading stock, he's going into the consulting business, putting private deals together for investors. He can't talk about it much; he's operating under a "cloak of secrecy."
"People will come up to me and say 'Okay, Larry, here's this project," he says. "If I like it, I have a whole group of people to put up money. Let's say, they put up $500,000. I'll charge them $50,000 right off the top, plus a piece of the action." Calls are coming in from across the country, he insists. "Everybody is saying they want to be in on my next deal because they know I'm poor now, and that I gotta go earn some money. I've never had more interest in putting money in my deals. Honest to God."
Copyright CB Media Ltd May 1996 |
