A Dealey cousin tries to take the family business public.
While most families were exchanging gilts and greetings last month, the heirs of Dallas News founder G. B. Dealey were trading subpoenas and injunctions. The drama began last spring when Dallas attorney Gordon Jackson, a grandson of G.B. Dealey, apparently realized he didn’t have much to show for his 112,500 shares of stock in the Belo Corporation, parent company of the News, WFAA-TV, and other media properties. Jackson’s cousins, the Decherds, the Moroneys, and the Dealeys, have long operated the company without the Jacksons’ participation. To add injury to insult, because Belo is a privately held corporation, there was no ready market for Jackson’s stock. His holdings would be worth about five million dollars, if only he could find buyers.
So Jackson hatched a plot. He would have a market for his stock if Belo were a public company. If he could drive the number of Belo shareholders above 500, the corporation would have to go public the following year, and it would also be subject to extensive SEC reporting requirements. The firm would have to give detailed accounts of operating data, including executive salaries, which had been family secrets for decades. There was a small but eager market for that information among media watchers and Belo employees. So last May, Jackson let it be known that he was selling three-share lots in the corporation. By August, he had found enough buyers to raise the number of shareholders to 650.
This ploy apparently convinced Jackson’s cousins that he was a force to be reckoned with, even though he owned less than four percent of the Belo stock. In August, Belo president Joe Dealey, vice-president Jim Moroney, and young board member Robert Decherd bought Jackson’s holdings for $5,0:52,696.
Then the family started showing that they could read the SEC fine print as well as Jackson. If the number of shareholders could be trimmed to fewer than 500 before December 31, Belo could remain a private corporation. In November, the Belo board announced plans for a 20-to-l reverse stock split. No fractional shares would be offered, so everyone who had bought a three-share lot the previous summer would be left with a check in payment for his holdings and a swift goodbye from Belo. Since the reverse split needed only the approval of the owners of two thirds of the company’s shares at a shareholders’ meeting on December 14, it seemed the clan had won. The Dealeys, Decherds, and Moroneys controlled enough stock to make the vote a fait accompli. Exeunt rabble, stage left.
Act II. Enter Gilbert Jackson, brother of Gordon and holder of 114,000 shares of Belo stock. Gilbert had declined to sell his interest to Dealey, Moroney, and Decherd. Instead, he offered his stock to the public in 20-share lots (one-share offerings after December 14). Since Gordon had already obtained the necessary credentials to sell his stock, he became the dealer for Gilbert.
In order to plug this leak, the Belo board hired former state securities commissioner Roy Mouer to appear before present securities commissioner Richard Latham to protest “deficiencies” in the Jacksons’ stock prospectus. Latham issued an order barring the Jacksons from disseminating information which implied that public ownership of the company’s stock would mean public representation on the Belo board.
Still not content, Belo lawyers contended before District Court Judge Oswin Chrisman that the Jacksons were falsely representing their stock. Chrisman issued a temporary restraining order prohibiting sale of the stock to the public. The battle was won.
But the war could go on for a longtime. It is unlikely that Gilbert Jacksonwill be permanently enjoined from sellinghis stock to the public. And there arehints that this might be the first of manysales. The Jackson stock prospectus statesthat Gilbert feels “his best course. . . would be public offerings over the nextten years.” – Rowland Stiteler
How to Play The Legislative Shakedown Game
In late November, a “Reception Committee” sent out nearly 5000 heavy-stock invitations to a cocktail party at the Old Dallas City Jail. The honoree was John Bryant, the young Pleasant Grove lawyer who represents District 33-L in the state legislature. At the bottom of the invitation, the price of participation: $100, $50, $25, or $15 per person. An RSVP card was enclosed; it featured the Seal of the State of Texas and two choices (rather, the appearance of choices):
( ) Enclosed is my check for.
I plan to attend the reception December 5 for Representative John Bryant.
( ) Enclosed is my check for.
I regret I will be unable to attend.
John Bryant isn’t running for office; he was re-elected in November. He was simply raising money – in this case, he grossed $6500. If Bryant wanted to, he could put it all in his pocket.
That’s because it wasn’t raised for campaign purposes. In Texas the law says you can raise as much as you want as often as you want for non-campaign purposes as long as you report to the Secretary of State how much you make and how much you spend. Nothing in the law prevents a legislator from using the money to buy a condo in Vail. “Reception money” can be the same as personal income – as long as the IRS knows about it.
Bryant says the reception funds are not for his own pocket, however. He has a campaign debt – a loan in his name from Republic Bank, which he used to boost his campaign. He’ll use $1500 from the December 5 reception to pay off the debt.
State laws regulate campaign financing but not “office holder” fund raising, so ; many politicians wait until after the elec-tion to throw a fund raiser. Coincidental-, ly, they use the proceeds to pay old debts – from the campaigns. It’s a popular move: Receptions are almost always a success. If you’ve got any interest at all in influencing a legislator – be it personal, business or otherwise – how could you refuse to answer his invitation generously? Senator Ron Clower of District 9, for example, had a reception last July to help pay off $22,000 worth of loans he had taken out in his name to float his 1976 campaign.
After paying about $3000 in reception expenses and cancelling the bank debt, Bryant will have roughly $1500 to cover “non-reimbursable” expenses, or those legislative expenses the state won’t pay for. These can be anything from tickets to the local banquet to out-of-state research trips. But it’s a thin line between spending for official business and spending for pleasure. The state law fails to limit the way reception money can be spent and it provides no authority to question expenditures by public officials. Even the lawmakers agree that non-campaign funds are the single area of greatest potential abuse.
Remember the Ptomaine!
A survey of the records of the Dallas Health Department shows that Dallas restaurants did little to clean up their acts-or their kitchens-during 1978. A recheck of city files on 20 of the restaurants which the health department had cited for violations in 1977 (“Guess What’s Coming with Dinner,” November 1977) showed that all 20 were repeat offenders in 1978.
Health inspectors found 779 health-code violations during inspections of the 20 restaurants during the year. Among the more notable violators:
Campisi’s, 5610 East Mockingbird. In five visits inspectors found 87 health-code violations, including potentially hazardous storage temperatures for food and improper storage of toxic chemicals. The inspectors found rodents on two occasions. On an inspection visit in June, health officials gave the restaurant a grade of 47 out of a possible 100, the lowest of any of the 20 restaurants in our survey.
Tupinamba, 3071 West Northwest Highway. More than 50 violations in eight visits. Restaurant management was warned about the presence of insects, failure to keep a walk-in food storage cooler clean, food stored on the floor, and kitchen help smoking in the food preparation area.
Herrera’s, 3708 Lemmon Avenue. Inspectors found 67 violations in six visits. In February, a lab report showed the presence of 1300 staphylococci per gram in Herrera’s bell peppers, 740 in the chicken. The allowed level is zero.
El Charro, 5310 Bernal. Inspectors found 33 violations in three visits. In June, restaurant management was warned about improper storage of toxic chemicals, a fly problem, and the use of goat meat from an unapproved source.
Old Spaghetti Warehouse, 1815 North Market. Thirty-eight violations were found in five visits. Among them: roaches and unsanitized dishes.
The health department didn’t close a single restaurant in 1978, although it has the authority to do so. Officials say a handful of restaurants closed voluntarily for brief periods to correct problems. Largely, however, the kinds of violations we reported last year have gone unabated.
OFF THE RECORD
● Oak Lawn residents are as jumpy as cats these days. The disarray in the city’s Urban Planning department, culminating in the recent departure of nationally known planner Weiming Lu, means that decisions about inner city neighborhoods are being made on a haphazard, day-today basis. Lately, rumors have swept through Oak Lawn that the city intends to stick with the 1957 thoroughfare plan, which calls for widening McKinney Avenue into six lanes, a move that would obliterate many of the restaurants and shops that have sprung up on the revitalized street. One of the old hands in the planning department, Doug Waskom, scoffs at these fears: “There’s no money to improve McKinney, nor is there any priority.” The most that will be done, Waskom says, is the construction of new turn lanes at Maple and Pearl. Oak Lawn neighborhood leaders, made nervous by the council’s approval of Roseland Parkway in East Dallas, find Waskom’s use of the word “improve” somewhat unsettling.
● Republican attorney general candidateJim Baker lost the election but he hasn’tlost any popularity in political circles. Immediately after his defeat by DemocratMark White in November, Baker was approached by Governor-elect Bill Clementsabout the secretary of state’s post. Wehear that Baker has turned that offerdown, but he may re-emerge as a keycampaign strategist for the 1980 presidential bid of George Bush. Baker, aHouston attorney, served as GeraldFord’s campaign manager in 1976.
● When we named Fort Worth Star-Telegram reporter Bill Choyke the best journalist in the local newspapers’ Washington bureaus last summer, we knew hewas going places, but we didn’t know itwould happen so soon. Choyke has recently been fired by bureau chief Larry Neal. You remember Larry Neal: Wenamed him the worst reporter.
● Among the many young liberal Democrats who will be trying to make a namefor themselves by leading the oppositionto our new Republican governor is StateSenator Ron Clower. Clower recently called together a handful of other state senators to discuss how to make life difficult for the new governor, including stalling senatorial ratification of gubernatorial appointments and toying with Clements’s pet legislation. Meanwhile, Lt. Governor Bill Hobby is up to his own tricks: He recently suggested to state welfare department officials that they “package” many of the items in their budget proposals, thus limiting the effectiveness of the governor’s line-item veto power.
● DISD Superintendent Linus Wright got off to an impressive start his first week in office by demonstrating that he has done his homework on the DISD’s problems. Speaking before a group of Dallas News reporters and editorial writers, Wright clearly separated himself from the policies of his predecessor Nolan Estes by nixing a plan to build an office-hotel complex on DISD land downtown. When confronted with questions involving the intricacies of court desegregation decisions, Wright answered knowledge-ably without wavering from the school board’s position on the case.
● The newest publisher in town is Stanley Marcus, whose Somesuch Books (a namepresumably related to the street he liveson, Nonesuch Road) will produce fourtitles this year.
A Dealey cousin tries to take the family business public.