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Sam Wyly’s Biggest Gamble

By John Merwin |

One fall evening back in 1963 Sam Wyly pulled up to his house on Bryn Mawr in University Park, walked inside and greeted his wife, Rosemary. “I’m starting a company and we’re going to be rich,” he said.

“That’s nice. What are you going to do after that?” she replied.

Wyly says he’s forgotten his retort, but never mind.

Putting first things first, Wyly did just as he said. He got rich – one hundred million dollars rich in the next five years, by taking University Computing Company, founded on the SMU campus in 1963, and turning it into an international fortune. On the side he did a few other things.

Take politics, for instance. Sam became interested in the 1968 Presidential campaign, so he and brother Charles gave the Republicans a cool $400,000. A few months later Wyly found himself telephoning people like John Ehrlichman to put the heat on such notables as Maurice Stans and Melvin Laird. Not bad for a guy whose previous political experience amounted to a successful campaign for freshman class president at Louisiana Tech.

Of course he didn’t neglect business. He took over Bonanza Steakhouses and helped found Earth Resources Company. He kept buying subsidiaries for University Computing, driving its net worth from five million to $114 million in three years, putting him in a class with such boomers as Ross Perot and James Ling. Those are a few of the things Sam Wyly did next.

But the Sam Wyly story doesn’t end quite so easily. His fortune came tumbling back down as quickly as it shot up. Today he’s worth about one-tenth of what he once was and finds himself distinctly short of supporters. On Wall Street, where Wyly’s stock once sold for $187 a share, you could have bought it last December for $1.25. Today the price hovers around three dollars. Right now plenty of people are wondering what Sam Wyly is going to do next.

Depending on whom you might choose to believe, the Wyly story has several possible endings. The gloomi-est forecast is that the entire Wyly organization will come tumbling down a la James Ling. A second possibility is that the Wyly empire will survive, but somebody besides Wyly will wind up owning it. The most optimistic ending is that Sam Wyly will pull off another coup, wade through his troubles and by this time next year again be a hero. That’s the ending chosen by Wyly, whose optimism hasn’t dampened much despite his problems.

Wyly, 41, is a man you badly want to believe. He doesn’t look anything like the cigar-chomping mogul one might expect to find on the top floor of the UCC Building, Mockingbird at Stemmons. He is short (5’7″) and trim, without appearing slight. He has a boyish look about him – disheveled blond hair falling halfway down his ears, curling back over his collar, and green eyes which dart back and forth. His eyebrows bounce up and down as he talks. He often interrupts himself by breaking into an infectious high-pitched laugh, usually the result of some fun he has just poked at himself.

Getting started wasn’t easy for Wyly. It was a blazing hot summer day in 1963 when 29-year-old Sam Wyly, aspiring entrepreneur, walked into Republic National Bank. He was poised, confident, ready to make the right impression. He wore a dark, conservative, natural-shouldered suit, a white shirt, conservative tie, and shoes which were clean and highly polished. He looked very much like the IBM salesman he had once been, or the successful, $30,000-a-year Honeywell sales executive he was at the time. His briefcase contained the sales and revenue projections to demonstrate that success surely lay in the path of his proposed computer business.

Of course, he had a little leverage with the bank. His personal checking account was with Republic, and a young loan officer had lent him a couple of thousand to buy some IBM stock, so at least he knew who Sam Wyly was. Wyly strode right up to his loan officer, sat down, and blurted it out.

“I’d like to borrow $650,000,” he said.

“I remember his reaction exactly,” says Wyly. “The guy laughed. He could hardly contain himself.” Later a ranking Republic loan officer, who managed not to laugh, advised Wyly that he “wasn’t bankable,” ending the matter.

A week later Wyly ventured downtown to try again, this time heading over to Texas Bank, where his father-in-law suggested he might have some luck. “Oh yes, you have a good idea there,” said a loan officer. “I’ll take it to ’the committee.’” When Wyly returned later, he was given the old line about “I thought your idea was great but I couldn’t sell it to the committee.”

“What committee?” Wyly asked. ” Who’s on the committee? I want to see them.’ I got to see the committee all right,” Wyly recalls. “It had three members, one with a big, smelly cigar and two others I don’t recall. I didn’t get the loan.”

Next Wyly heard about Republic Bank’s small business development company, which sounded like a good idea. So he headed back to Republic, and pointed out that he was an aspiring young entrepreneur. ’Just what the small development company was looking for,’ I told them.” This time Wyly offered Republic one-third of his company. He was turned down again. Several years later, after Wyly had made millions, he mentioned the loan turndown to Charles Pistor, president of Republic. Pistor ordered a search for the file containing the loan application including Wyly’s offer to give Republic one-third of the company. The file had vanished.

If Wyly is anything, he is a determined soul who believes persistence is how you whip the odds, so next he charged over to Mercantile National Bank. He pulled out a two-page write-up he had prepared about himself and his idea. Wyly explained how with the nearly certain business from Sun Oil, SMU, and Texas Instruments, the company just couldn’t go broke for at least 23 months even if no other customers were sold, and “they had to believe I could sell something in 23 months!” Unimpressed, Mercantile turned him down. Now Wyly had hit three of the four largest Dallas banks. He decided not to bother with First National because, as he puts it, “I decided not to give them the chance to turn me down.”

Wyly wasn’t about to give up just because he couldn’t raise enough money to buy a computer. His alternative was to lease one, if he could. Wyly found a company which would buy a computer and lease it to him if he could find a third party to guarantee that he would meet the lease payments. Enter Len Acton, Wyly’s father-in-law, a classic middleman who had the contacts when Wyly needed the help. Acton prevailed upon a friend, Gerald Mann, to have his firm, Diversa, guarantee the lease payments. Booth Leasing Company bought the computer and Diversa guaranteed Wyly’s lease payments, in exchange for 49% of UCC.

Wyly’s first deal, and it was a good one, was with SMU, which provided him office space on campus in exchange for computer services. (Hence the name, University Computing.) Wyly quickly signed SMU and Sun Oil to five – year contracts, and secured Texas Instruments as a regular customer. By the end of his first full year in business, he had revenues of $700,000, and Diversa sold its 49% of UCC back to him at a $200,000 profit. Five years later his sales hit $108 million and Sam Wyly was a legend. His wild ride through a lifetime of experiences in business, politics and charity, compacted into 12 years, began.

What Wyly really needed if he were to hit the big time like the Perots and the Lings was a public market for his stock. In 1965 he decided to take University Computing public. He started knocking on financial doors again, this time not in Dallas but in New York, seeking an investment banker to sponsor his stock sale. One company after another turned him down, because just like before, Wyly looked too risky. And also just like before, Len Acton came to the rescue. Acton, and Dallas stockbroker Till Petrocchi, convinced A.G. Edwards & Sons of St. Louis to back Wyly, and on September 9, 1965, Wyly became a certified millionaire. His stock sold for $4.50 a share, meaning the stock he kept for himself was worth well over a million. During the next three years the price of Wyly’s stock rose astronomically in a madcap market that worshipped any issue with “computer” in its name. Ten thousand dollars invested with Wyly in 1965 was worth more than a million in 1968. Corporate stock options, at $4.50 a share, were worth small fortunes. Gutsy investors hit the jackpot. One early investor wrote Wyly to tell him he had just bought a Manhattan apartment house with his profits.

Wyly’s stock climbed so high so fast that he leaped into the acquisition game – the game that propelled unknown businessmen of the late 60’s into superstardom overnight, if only for a precious few months. The boom heated quickly, expanding Wyly’s fortunes and carrying him higher and higher, into a plane of euphoria, only to make the chasm that was soon to open seem deeper and wider when he fell.



The year was 1967 and the fund raiser was the ordinary political type – Senator Charles Percy was speaking at the Statler Hilton, with proceeds going to the Dallas County Republican Party. Most people bought one or two plates and the biggies, like Erik Jonsson, bought an entire table for $1,000. Former Republican county executive director Alan Steelman remembers. “Out of the blue somebody named Wyly bought four tables. Everybody was taken aback. Down at

headquarters we were saying we never heard of this guy before.”

It wasn’t too surprising that Wyly wished to hear Percy, a fast friend whom he had met several years earlier at a management seminar. Perhaps Wyly saw himself in Percy, a short, solid man, who by 30 had become president of Bell & Howell. Percy was somewhat of a maverick, measured by Republican standards, a liberal. Wyly felt part of a minority as a Christian Scientist, and a lasting sense of comradeship developed between the two men. But Wyly’s interest in the Percy fund raiser signaled more than a passing interest in politics. It was an emergence. He had always enjoyed watching good politicians at work, starting with Huey Long’s brother Earl, who stumped Wyly’s North Louisiana boyhood home like a touring evangelist. It was the dinners that would always draw Wyly, simply because he has an unabashed fascination with watching master politicians ply their trade.

Wyly showed up at the Percy dinner not because he sat down one day, searched his political soul and determined that fundamentally, deep down inside, he was a Republican. He showed up because LBJ’s budget deficits were sure to bring inflation and then recession, Wyly reasoned, and that couldn’t be good for the country or for the business climate that gave rise to Wyly’s phenomenal success. “It appeared LBJ was going to run again,” Wyly says, “so the Republicans were the only game in town.”

The Wyly brothers’ emergence came so swiftly it was dazzling. Sam and Charles jumped whole hog into the ’68 Nixon campaign, donating $400,000, mostly in cash. Sam served as the Nixon finance chairman for Texas, raising two million and becoming one of the few state chairmen to top his quota. On top of all of this, Wyly served as a delegate to the Republican National Convention, where he voted for Nixon’s nomination.

Not many people first learn about their own White House clout from the pages of the Times Herald, but Sam Wyly did. “Robert Novak wrote a column one day talking about some kind of a dispute in Washington, and how one side would win because of my political clout in the White House,” Wyly recalls, breaking into his giggle. “That’s how I found out about my influence.”

Hadn’t Wyly given the Nixon campaign $400,000 and raised $2,000,000 more? Hadn’t he voted for Nixon as a convention delegate? These kinds of things, John Ehrlichman will tell you, give a man access to the White House. These kinds of things, Wyly would learn, give a man the clout to put the muscle on Cabinet officers.

Wyly’s political initiation proceeded as swiftly as his political naivete washed away. It began the day Wyly received a telephone call from Alan Steelman, complaining that Maurice Stans was sabotaging Wyly’s pet project, the President’s Council on Minority Business Enterprise, which was funded by Stans’ Commerce Department. “Maurice Stans’ idea of black capitalism was something like going to Africa and handing out bubble gum to the natives,” Steelman says. “He was always giving us a hard time, doing things like withholding our pay checks.”

Incredible, Wyly thought, that a member of the Cabinet would torpedo the President’s plans. Incredible, any listener thinks, as Wyly tells the story of how it happened. “Steelman was executive director of the council,” Wyly says, “and when Stans started making trouble Alan would call me and I would call John Ehrlichman to stop it. You want to talk to Ehrlichman about it?” Wyly summons his secretary.

The next day Ehrlichman telephones from Santa Fe, his post-Watergate home. “That’s right,” Ehrlichman says, “I called Maurice Stans about that plenty of times. You’ve got to remember Stans’ constituency was big business and at that time, big businessmen really didn’t care about minority business enterprise. I spent entire days pressuring people like Stans.” Kenneth Cole, Ehrlichman’s replacement, describes these conflicts as “constant wrestling matches between the President and the Cabinet. People dragged their feet,” he says, “sometimes even doing the opposite of what President Nixon wished.”

Wyly’s second political awakening came during the Melvin Laird-canned hams incident. Minority enterprise needed a showcase project and Wyly had been fostering one in Dallas named Garland Foods. Garland Foods was a minority-operated business financed by a million dollar loan from five churches, First National Bank and three smaller lending institutions. The factory opened and began production on some small supermarket orders, with a gentlemen’s agreement that the Department of Defense would sign a contract to buy millions of canned hams. Several weeks after the opening hoopla, speech-making, etc., word came that Secretary Laird hadn’t merely said “no,” but “hell no” to purchasing the hams. Without the contract Garland Foods and Wyly’s grand minority enterprise plans were sunk.

Dallasite Walter Durham coordinated a political battle, beginning with the Defense Department’s procurement section, which greatly resented being told where to buy canned hams. Just before Durham’s campaign reached Laird, Wyly sent a two page letter to the President drafted by Marty Hoffman, UCC’s assistant general counsel, now Secretary of the Army. “If you really do support the idea of minority enterprise, President Nixon, you will so indicate by telling Secretary Laird to buy those hams.”

Ehrlichman said he took the letter to the President, who said he wanted the hams bought. “I began calling Laird,” Ehrlichman says, “who resisted at first but gave in. Laird’s problem was that he didn’t want to disrupt his operation. He knew that Defense Department bureaucrats don’t like to be told where to buy hams – they don’t like to be overruled. Laird knew if he made his people buy them he’d have a morale problem on his hands which could create lots of headaches for him.”

Wyly had grown infinitely wiser since the day he read his name in Robert Novak’s column. He had learned how to bull his way through the system. He had taken a problem buried at the bottom of the bureaucratic heap, illuminated it and elevated it so the right people could see the problem. That was massaging the political system.

Though Wyly won the battle over minority enterprise funding and he had conquered resistence to the canned hams purchase, he wasn’t the same idealistic Sam Wyly who had jumped wide-eyed into politics a year or two earlier. Amazed at what he had seen, Wyly was turned off. He politely turned aside a feeler for an appointment as Undersecretary of Interior, which ultimately would have led him to replace Walter Hickel, the maverick Interior secretary fired by Nixon. In 1970 Wyly shrugged off talk that he should be the Republican candidate for governor.

“I find it disappointing how little one person can do, even the President,” Wyly says. “I’m beginning to think the only two things governments can do efficiently are make war and inflate the currency.”

” It’s a shame Wyly feels this way,” Ehrlichman says. “Sam would make a terrific government appointee because he is self-effacing and less interested in what people think about him than he is in achieving results.

“You know when I first went to the White House,” Ehrlichman continues in a familiar metaphorical style, “I thought I’d make a touchdown on every play. But you’ve got to learn to be satisfied with three yards. After a while you can look back and see how far you’ve moved, just a few yards at a time. The guy who can take the ball for a few yards and be satisfied is a pearl of great price.”

Wyly’s political performance apparently was first rate, because both Ehrlichman and Cole are quick to point out that many people initially gain access to the White House, but few are able to keep it. Ehrlichman says, “The President felt warmly toward Sam and always welcomed a chance to be with him whenever he could. I personally thought a lot of Sam – he was in the top ten per cent of his class.” Cole says, “Wyly could be given a difficult assignment and produce solid results – not some pie-in-the-sky solution. That’s why he kept his White House connection.”

Wyly hadn’t liked what he had seen in Washington, so he dropped out of politics as a worker, but stayed in as a giver. In 1972 he and brother Charles donated $240,000 in Bonanza stock to re-election campaigns, principally Nixon’s presidential race and the Illinois senatorial campaign of Charles Percy. “The Nixon people sold the Bonanza stock at nine dollars,” Wyly recalls. “Percy’s sold at $16.”

Undoubtedly Wyly’s most significant local political contribution was the launching of Alan Steelman, a young Republican who in 1972 decided he wanted to take on the late Congressman Earle Cabell. One wonders whether anybody would have heard of Steelman if it hadn’t been for Wyly. Wyly took Steelman as the party’s county director, hired him to run the Wyly Foundation briefly and then sent him to Washington as director of the President’s Council on Minority Business Enterprise. Wyly launched the Steelman campaign by floating Steelman himself, who beat Cabell, a four term Democratic incumbent. Wyly lent Steelman $21,000 to pay his mortgage and bills, while Steelman walked door-to-door in the Fifth District. “I probably couldn’t have run that race if I hadn’t been able to walk door-to-door,” Steelman says. “I doubt if any bank would have lent me money with my collateral.” Steelman is still paying off the $21,000 loan and even today his political opponents bitterly brand him as being owned by Wyly.

After the 1972 general election Wyly suffered yet another disappointment with politics, the day Watergate blew open. He describes the conduct of Richard Nixon, the man whom the Wyly brothers had given $640,000 in two campaigns, as “a tremendous letdown.”

“It was the inept way in which the problem was handled,” Wyly explains. “Nixon could have fired John Mitchell. Instead he started the cover-up, and then misled us for a couple of years.”

The Watergate scandal touched even Wyly briefly when special prosecutors and IRS agents flew to Dallas to inspect Wyly’s corporate records. UCC had done mailing list work for the Committee to Reelect the President and Wyly’s corporate attorney, Eldon Vaughan, a Democrat, had wisely insisted CREEP pay cash in advance. Jeb Magruder sent an assistant to protest the policy, but Wyly stood fast by his counsel’s advice. UCC was cleared and Wyly’s involvement with Nixon and his associates virtually ended. He hasn’t talked with Richard Nixon since the resignation, though the Nixon picture, autographed to Wyly, still hangs on his wall. Wyly has had a few conversations with Ehrlichman, mainly to urge Ehrlichman to write his side of the Watergate story.

Wyly’s political involvement today is minimal – he’ll attend functions like the recent $l,000-a-plate lunch at Trammell Crow’s honoring President Ford. That day Wyly spent most of his time watching John Connally guide the President through the maze of contributors, handling introductions and pressing the flesh. That’s about all the politics he wants right now.



The Sixties were the golden years, the “first half of Wyly’s entrepre-neurship, when it seemed that nothing could go wrong. Politics was a dream and his business grew and grew, with no end in sight. “Acquisitions” and “synergism” were the bywords of the boom.

At first the acquisitions had gone well. Wyly was able to trade his high-priced stock for all sorts of computer-related companies – even his own advertising agency to service his own companies. Wyly was wheeling and dealing, yet he really wasn’t in the center ring. That was reserved for James Ling, who was busy buying a mixed bag of giant manufacturing concerns, while Wyly basically stuck with computer firms. Wyly bristles at comparison with Ling. “We weren’t doing what Ling did. He was juggling balance sheets. We were trying to build a computer business.” Wyly kept buying and UCC’s net worth leaped from a mere $4 million in 1966 to $104 million by 1969.

He had been riding a temperamental boom, which played out more quickly than it had welled up. The fall came sometime around 1970. It didn’t happen suddenly, but gradually over a year or so during which Wyly realized the company was over-extended and the whole computer industry was in for a shaking out. “Things came too easy,” Wyly says. “We were doing things too fast and just didn’t think them through. We got into more things than we could manage or finance.” Wyly corporate attorney El-don Vaughan recalls, “We just worked ourselves into a state of uncontrolled activity. People were making deals all over the place. Some executive would walk into Sam’s office and present some proposition, and Sam would say, ’you’ve got a deal.’ Later we’d analyze it more carefully.”

UCC slipped into semi-confusion – one arm wasn’t certain what the other was doing. Wyly struggled to gain control over his overheated and over-extended company. The subsidiaries were sold almost as quickly as they had been acquired, bringing combined losses of $100 million, throwing UCC into annual operating losses beginning in 1970, interrupted to the present only by a small profit in 1971. Perhaps the fiercest licking Wyly took came the day he sold his equipment manufacturing subsidiary, UCC Communications Systems, which had been quickly outgunned by the industry giant, IBM. The loss – $32 million.

The stresses and strains have changed Wyly in certain respects. For instance, he once thought corporations could do much to solve society’s problems. Now he thinks, “Perhaps the best thing any company can do for society is to provide a good place for its people to work – a place where they feel important, do useful work, are well compensated and have a chance to achieve.”

Some things about Sam Wyly haven’t changed and probably never will. Above all, he is a family man. Sitting at his desk, Wyly is surrounded by reminders of his family, which practically cover the walls. Pictures of his wife, Rosemary, and three children dot the office. Crayon drawings by his children are framed in one corner, while an oil painting by his wife hangs in another. Dominating the office from across the room is a four by four foot photograph of Wyly and his twins running up a hill, holding hands. Wyly, a non-smoker and non-drinker, avoids the party circuit, preferring to remain home for activities with the family. Not long after he paid $150,000 cash for the old Schoellkopf home on Beverly Drive, Wyly had the front yard lined off for neighborhood football games.

Second, he is a giver. “I suppose I got in the habit of giving by making a regular church contribution as a child. My parents taught us to give to those who were less well off than we were,” Wyly says. Wyly’s charitable giving has fluctuated recently from a low of $37,000 in 1974 to a high of $1.3 million during the 1969 boom. He established a foundation to direct his money but let it dissolve in 1971. “I suppose three years was a reasonable period to see what kind of organized do-goodin’ I could do,” he says. He personally has continued supporting the activities he thinks worthwhile.

Wyly’s considerable giving has focused upon underdog organizations, ranging from minority business to the Republican Party to Channel 13. His interest in underdog charities seems predictable, especially when he talks about his parents, who had a bit of underdog blood in them. Sam’s mother had embraced the Christian Scientist faith, despite some harsh criticism from her physician father’s relatives. Wyly family members were the only Christian Scientists in Delhi, a town where Southern Baptists grew as thick as old Louisiana oaks. His father had purchased the defunct Delhi newspaper and operated it against the wishes of many in Richland Parish, who felt the parish didn’t need a second newspaper. When Charles Wyly, Sr. editorialized against the Longs, Sam watched readers troop in and cancel their subscriptions.

He began giving to minority business at the recommendation of Alan Steelman, whom he paid to guide his foundation. In Texas politics Wyly first supported the Republicans because he just couldn’t see much use supporting the Democrats, who already controlled the state. He also was a major financial supporter of Channel 13’s “Newsroom” program, because he thought “the community needed another window,” and also because he trusted Jim Lehrer, its first executive. Lehrer had covered the 1968 campaign for the Times Herald, and Wyly thought Lehrer’s coverage had been fair.

The other major area of Wyly’s charitable giving is education. Wyly has always been an education buff, dating back to the days when he spent hours as a child reading encyclopedias. “I used to think of myself as a storehouse for useless information,” he says, breaking into the giggle. Wyly gives $25,000 in partial scholarships each year to students at Louisiana Tech. He delights in reading letters from the recipients, or reading newspaper clippings about them.

Wyly’s largess comes no-strings-attached, so long as he trusts the person overseeing his money. Jim Lehrer says during his two years running “Newsroom” he never received a telephone call from Wyly. During his three years in Congress Alan Steelman says he’s talked to Wyly about five times. “One of the really unique things about Sam,” Steelman says, “is that he doesn’t come back wanting something. Most people give money to politicians because they are going to come back for something one day.”

Wyly’s “hands-off” attitude is indicative of his business orientation: businessmen don’t often think in terms of philosophy or policy; their training is more attuned to attaining short-term objectives. As Wyly became involved in politics, for example, his concern was not why something ought to be done as much as it was how it could be done with maximum efficiency. It may, in fact, have been precisely the same well-developed business instincts which made him so successful in business that made Wyly so comfortable in the White House of Nixon, Halde-man, and Ehrlichman. Their well-known preoccupation with “scoring touchdowns” didn’t leave much room for broader, and deeper, considerations – and one wonders today if they know what hit them. For Wyly, the entire experience was as distasteful as it was frustrating.

The rough and tumble years that Wyly has been through changed him in several respects, most dramatically in his view of government and politics. The years have also dampened his previously limitless optimism, which led him into the turbulent expansion from which the Wyly Corporation has yet to recover fully. Says one close business associate of Wyly’s: “He’s a realist up to a point, but beyond that, sometimes he thinks things are just going to fall into place. His vision has been large, but sometimes it exceeded his ability.”

Wyly’s largest vision is currently his biggest problem – DATRAN – a Wyly subsidiary with a seemingly insatiable appetite for cash. DATRAN is an acronym for data transmission, an idea Wyly dreamed up back in the 60’s.

Essentially DATRAN is a network of microwave towers, 30 miles apart, which transmits conversations between computers. Wyly is convinced that supplying a means for a computer in Chicago, for instance, to talk to one in Houston is the coming thing in the computer field. Wyly once made a tender offer for ten per cent of Western Union’s stock, hoping to force Western Union to modify its existing communications network to handle computer talk. Unsuccessful, Wyly just up and decided to build a whole network himself, for $300 million. Nobody was willing to foot that kind of bill, so eventually he lowered his sights to a brand new $120 million trunk network, stretching from Houston to Chicago, and leased equipment branching out to the coasts. Ma Bell was watching these developments with interest and decided, by golly, that Wyly had a good idea. Although DATRAN’s system is now fully operational, breaking potential customers away from Bell’s communications network is a difficult task. Many have taken the “wait and see” attitude, wondering whether DA-TRAN is really here to stay. Meanwhile they continue to use Bell’s service, which DATRAN maintains is technically inferior and far more costly than the DATRAN service.

Wyly searched for capital to support his DATRAN construction, soon finding that banks and other investment sources weren’t ready to back the little guy from Dallas in an arena with the behemoth, Ma Bell. So Wyly finds himself back where he was 12 years ago with the downtown Dallas banks, who didn’t have the Wyly faith. At least today he has the distinction of being turned down by the likes of Bank of America and First National City Bank of New York.

For the moment, Wyly has one major believer, a Swiss industrialist named Walter Haefner, who quite literally is floating DATRAN. Haefner is a smiling, soft-spoken Swiss gentleman who had the foresight to gain exclusive rights to distribute a few products in Switzerland, such as Chryslers, Volkswagens and General Electric appliances. Haefner managed to accrue hundreds of millions, which he spends on a few of his favorite projects, such as his grand Zurich home, his thoroughbreds in Ireland (one mare recently flew to Kentucky to visit Secretariat) and the Wyly Corporation. So far Haefner has invested $55 million in Wyly, mostly in DATRAN. If Haefner backs out, Wyly will have to sell DATRAN just as it is coming to fruition. Haefner seems convinced that DATRAN will succeed, so there is no indication that he’s looking for a way out. Of course if Haefner did pull out, it would endanger his own $55 million investment.

Wyly has just cleared one major hurdle by selling Gulf Insurance, one of his three subsidiaries. UCC and Gulf were supposed to make money to feed DATRAN, but for the last two years Gulf has been losing money. Wyly could ill afford feeding two mouths, Gulf and DATRAN. Gulf has been sold to Fuqua Industries of Atlanta, a conglomerate dealing in various leisure industries. The Gulf sale is giving Wyly a badly needed cash transfusion to pay off his most costly loan. Wyly has a $30 million loan from Commercial Credit Company bearing interest at 3 1/4 per cent above prime, which has driven his annual interest payments up to eight million dollars. By paying off the Commercial Credit note, his annual interest payments will drop to four million dollars, which will give Wyly some respite from the cash crunch.

The worst thing that could possibly happen to Wyly, of course, is total collapse, which would bruise his ego and dent his fortune, but certainly not throw him into financial trouble. Wyly has a number of outside investments, right now the best being his 600,000 shares of Earth Resources, which bring him $600,000 in annual dividends. Next worst outcome is DATRAN’s ultimate success, but under somebody else’s ownership. Although Wyly recognizes that this possibility exists, he simply can’t bring himself to seriously consider it. “Why should I think about failing? It’s a waste of time,” he says. “I need to spend my time figuring out how to succeed.”

Such thinking underscores Wyly’s existence in a non-fiction world. The set of Mark Twain volumes on his office bookshelf is merely for show. Look in the cabinets and you’ll find the real Sam Wyly – hordes of books on business and politics. Wyly just won’t spend time moping about what has happened or cringing about what might happen. He subscribes to the “If you try hard enough, long enough, you’ll succeed” philosophy. He’s just sure he can’t be whipped.

“I’ve been knocked on my ass and gotten up,” Wyly says, shifting into his sternest tones.” When I was a junior in high school we lost the Louisiana state football championship game to Clinton. They whipped our asses. After the game everybody stood around and cried. I didn’t, and I don’t know why. But the next year, we won.” That anecdote ends 25 minutes of futile efforts to get Wyly to talk about losing.

For good measure he adds, “The only time I ever thought about quitting was when the whole world was telling me how smart I was.” Back then he was worth $100 million; today it’s more like $10 million and people aren’t lined up to tell Wyly how smart he is. He also isn’t being showered with all the outstanding man awards, as he was five or six years ago.

In some corners reaction to Wyly’s predicament ranges from gloomy to gloomier. Writers are staying away until the Wyly story reaches some kind of definable ending, so they can either inscribe his eulogy or sing his praises, whichever seems appropriate. Value Line investment service puts it this way: “Wyly’s 1974 annual report reads like a diagnosis of a critically ill patient.” Value Line does have a point. While most A-OK auditor statements consist of two perfunctory paragraphs, Wyly’s fills half a page including five qualifications, which hedge all over the place. Even Wyly’s own SEC reports detail a grim situation, but the Wyly people say they just want to make sure that everything, every possibility, is fully disclosed.

The third denouement, and the one Wyly insists will come to pass in a year or two, goes like this. Wyly successfully completes DATRAN financing, DATRAN begins operating profitably – it is a financial and technical success. If this is the outcome, surely Wyly once again will be the wonder-child. Writers and security analysts will storm his door and financiers will wonder why they ever doubted him. People who were gutsy enough to buy his three dollar stock in late 1975 will have made a bundle, just like the gutsy investors of 1965.

Never mind that Bank of America won’t lend another dime. Don’t fret over investment houses’ inability to find a soul willing to back DATRAN. They just don’t have the Wyly faith.

As long as Wyly has people like Walter Haefner and Mrs. Girault on his side, he’s sure he can make it. Walter Haefner’s millions will see him through. And Mrs. Girault? She’s a little old widow Wyly met in Monroe, Louisiana, not long ago.

“I’ve never had a chance to tell you this,” Mrs. Girault told Wyly. “I bought your stock a long time ago, against the advice of my two sons, who are businessmen. The profits I made off it made me a nice little retirement income, and I just want to thank you.”

Wyly breaks into the giggle.

“Oh,”she said one other thing. “She’sbuying my stock again.”

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