Connections: Howard Squadron's Wedtech Troubles
SHANKS, HERSHEL
Connections Howard Squadron's Wedtech Troubles HERSHEL SHANKS One of the joys of Jewish communal i life is the people you meet. Who can count the wonderful new friendships, the exciting new...
...During the first year that Squadron represented Wedtech, Wallach received $30,000 in this way...
...Squadron himself claims to know little about the details...
...Squadron says no...
...Look what I'm not gang through...
...But I somehow fell away...
...Once in Washington, Wallach decided he could be helpful to the Jewish community by becoming a power broker for them...
...A scholarship clinched his decision to go there...
...The friendship began when Wallach, a brilliant student, agreed to tutor Meese, who was having difficulty with his studies...
...Squadron lawyers say they had no part in any secret side agreement pursuant to which Mariotta would default...
...Because of Mariotta's Hispanic background, Wedtech was eligible for no-bid government contracts under the Small Business Administration's (SBA) minority enterprise set-aside program...
...It was a position m which Jewish leaders had served and Squadron told Wallach that Squadron's prominence in the Jewish community was no less than that of other Jewish leaders who had been appointed to the position...
...if Mariotta failed to make the payments, the stock would simply be returned to the sellers...
...Lawyers normally keep highly detailed time records, but Squadron never got any time records from Wallach...
...Except for a minor suit involving no allegations of culpability, he isn't even being sued, although that could happen...
...In 1981, the proposed sale of U.S...
...Aside from the inconvenience and cost of preparing to testify and actually testifying, however, Squadron does not appear to have been hurt by his Wedtech involvement...
...Squadron hasn't been indicted and there is no indication that he will be...
...Wallach then went to Wedtech's president Mariotta (who has now been convicted) and got him to agree to pay a fee to Squadron, specifically for Wallach, a fee over and above Squadron's fee...
...Biaggi and Ehrlich said they understood that the SBA "will not proceed in any way against [Wedtech...
...He criticized the Carter administration for its failure to bring economic development to the area...
...Although few knew it, it was on the verge of bankruptcy...
...In September 1982, the contract was awarded to Wedtech at $32 million...
...We used the people and we got jobs for the people in the private sector, the kind of jobs that have got a future...
...Wallach may have submitted one invoice...
...Even his legal briefs were signed this way...
...When my grandfather died—I was only 14—I stopped going to our littfe Orthodox shul Before that I would daven every morning and every night...
...He refused to give a telephone interview except on the basis of what he called a "backgrounder," in which, he stated, he would later determine whether anything he said could be quoted...
...Squadron and his law firm* served as general counsel to the now infamous Wedtech corporation from 1983 to 1986...
...The Army originally thought the fair market price of the engines was under $20 Squadron Hangs Up This article was written without speaking at any length to Howard Squadron...
...Within 18 months, Wedtech, with Wallach's guidance, was awarded another noncompetitive government contract, this time to build pontoon bridges for the Navy—for $135 million...
...The only security for payment was the stock itself...
...on various subjects, including Wedtech...
...In the heyday of their relationship, Squadron told Wallach he iSquadronl was interested in being appointed United States Representative to the United Nations Human Rights Commission—a position that bears the title Ambassador...
...I was the youngest member of our mmyan' When he married, he joined a Reform congregation...
...I've always been very Jewish, I've always known I was Jewish...
...Squadron wanted a bigger in at the White House...
...But simply having served as Wedtech's general counsel while so many of its officers and agents were engaging in fraud, bribery and racketeering spells trouble...
...The documents Squadron lawyers drafted provided for the immediate transfer of title of sufficient stock to give Mariotta 51 percent...
...However, prior to the resolution of the issue, Wallach induced his friend Meese to debate the question with Squadron at an AJCongress dinner in San Francisco...
...When its all over...
...According to one source close to the friendship, ' 'They were two people Howard Squadron, former American Jewish Congress president and an important witness in the Wedtech trials...
...Moreover, Biaggi and Ehrlich, the firm that was handling matters at the SBA, reported to Squadron that the matter had been discussed "extensively" with the SBA and had been resolved...
...the contract itself may have been a cover for an illegal stock buyback...
...Wedtech seemed like a parade example of how private initiative could lift up impoverished minorities...
...His father made hats and his mother sewed to support the family...
...In the early 1980s, Wallach decided to ease up on his San Francisco law practice and move to Washington, D.C., where he could profit from his close association with and access to Meese...
...It even had an Israeli subsidiary named Karma Industries...
...Wedtech started where Wallach did—in the South Bronx...
...Squadron or at least his law firm came within an inch of being indicted...
...Wedtech was so successful—at least to outward appearances—that it became the first minority-owned business in the government set-aside program to offer its stock to the public...
...This enabled Wedtech to get paid prematurely on its defense contracts...
...thafs really good...
...Squadron balked at Wallach's proposal on two grounds...
...The Squadron lawyers who did handle these matters claim they were duped as much as anyone else...
...The firm left that potentially explosive knowledge quiet...
...And Wallach s access to the highest levels of E Robert Wallach government in Washington was a lot of his attraction to Wedtech...
...Some observers have suggested that as general counsel, Squadron's firm should reasonably be expected to know more...
...Nofziger was recently convicted in connection with his Wedtech lobbying...
...At UC Berkeley, Wallach became close friends with a classmate who was to become the attorney general of the United States, Edwin Meese III...
...That, however, is getting ahead of the story...
...When Wallach, because of the pendency of his criminal trial, refused to answer questions submitted by Squadron, the court dismissed Wallach's suit against Squadron...
...Squadron's firm also prepared a stock purchase contract that was signed with a forged signature...
...To bridge the gap until the public offering, Wedtech was trying to obtain a multi-million dollar loan from an Israeli bank, Bank Leumi...
...But if I compare myself to Job—my children are not quadriplegics...
...In 1980, presidential candidate Ronald Reagan visited the South Bronx...
...But win or lose, he says, "Ifs destroyed me" He has no legal practice left he concedes...
...Although several sellers failed to put up their stock with Squadron's firm, Squadron lawyers apparently overlooked this fact...
...Located in a poverty-stricken area, where 75 percent of the people with children under 18 made less than S6,000 a year, Welbilt—or its new name, Wedtech— ultimately became the largest employer in the South Bronx...
...however, Wallach had himself appointed to the post, Squadrcn claims Squadron says Wallach's behavior was 'a little shabby...
...Like Wallach, it too was a fabulous success story—a poor boy that made good—and then took a fall...
...The friendship between Wallach and Squadron flowered...
...people using each other...
...Squadron's prominence in Israel"—Squadron was first retained by Wedtech to arrange a loan with Israel's Bank Leumi—"was a lot of his attraction to Wedtech...
...Wallach and Nofziger arranged for a meeting in the White House that the critical Army officials were asked to attend...
...Under that program, minority businesses (Jews, incidentally, are not a "minority" under this program) are eligible for non-competitive government contracts...
...Squadron admits he gave Wallach the benefit of the doubt and that the 10 percent estimate is "very rough...
...In short, Wallach's 10 percent came out of Squadron's fee...
...If nothing else, Wedtech knew the ways of the world...
...Squadron's firm got the job...
...When Squadron's firm was given an opportunity to sell its own stock pursuant to this agreement (it had received a million dollars in Wedtech stock for its work on the public offering) Howard Squadron declined...
...Who can count the wonderful new friendships, the exciting new worlds, even the profitable deals that have grown out of Jewish organizational involvement...
...Squadron and his law partners have spent countless hours testifying and explaining...
...Wedtech was founded in 1965 as Welbilt Electronics Die Corporation by John Mari-otta, a high school dropout whose parents came from Puerto Rico...
...Mariotta could default for any reason or no reason...
...But because thafs no crime, the government has focused on some $525,000 m fees Wedtech paid to Wallach...
...Confident of his innocence, Wallach is clearly scared...
...The Army got the message from the highest levels of government that it would be good if Wedtech got this contract and, under this pressure, the Army eventually acceded...
...If Wedtech cannot collect from Wallach, Wedtech could conceivably seek to recover the money from Squadron, either on the ground that the arrangement was unethical or on some contractual basis that Squadron, as billing attorney, failed to provide any services for Wallach's part of the fee...
...thirty years of my grandfather's Workman's Circle admonitions...
...Then the arrangement changed...
...More important, they say, they simply drafted the agreement...
...Through Wedtech [Mariotta] not only has built a successful corporation, he's helping hundreds of people who would otherwise be condemned to a menial job, or a life on the dole," the president said...
...But he never felt comfortable mere Since his Wedtech troubles, Wallach has been unobtrusively diverting m Washington's "little Orthodox synagogue in Georgetown" Even in San Francisco, he occasionally dai/ens in an Orthodox shul...
...One other example: To generate badly-needed cash before its public offering, Wedtech submitted S6 million in fake invoices to the government...
...Wedtech has sued Wallach and Wallach in turn sued Squadron...
...So it has been recently with a major figure in the national leadership of Jewish life, a former president of the American Jewish Congress (AJCongress) and chairman of the Conference of Presidents of Major Jewish Organizations, Howard Squadron...
...Howard Squadron, We got f—ed," he said...
...If Squadron testifies at the Wallach trial, it will undoubtedly be as a vAtness hostile to Wallach (see box, above...
...They davened regularly in an Orthodox store-front shul...
...With the impending public offering, it was recognized on all sides that a corporate law firm was needed to replace Biaggi and Ehrlich as Wedtech's general counsel...
...The community enjoyed a sense of pride—all because of Wedtech...
...Before the alleged inaccuracies could be pursued, Squadron abruptly terminated the conversation...
...For thirty years I've represented people who have suffered horrible tragedies," Wallach said "Now I'm in need of comfort Ifs a kind of a catharsis you go through...
...What was this involvement...
...then Wedtech made out these counterfeit invoices to itself as proof that the SBA owed it money for manufacturing cost overruns...
...It was a minority-owned business that employed and trained seemingly unemployable minorities, welfare mothers and even former drug addicts...
...For these reasons and because the fake invoices did not actually lead to any losses to the government, or to any changes of the figures on Wedtech's balance sheet, Squadron's firm did not regard the S6 million in fake invoices as a "material" matter that had to be disclosed under SEC rules...
...He remains an honorary president of the AJCongress...
...It is doubtful that the bar association will institute a disciplinary proceeding against Squadron or his firm...
...When his efforts failed, he interviewed at a firm that specialized in personal injury cases and was offered a job...
...When a new president, Anthony Guariglio (who has now been convicted), took over at Wedtech, he objected to paying Wallach a fee over and above Squadron's fee...
...In addition, for its work on the public offering, Squadron's firm received Wedtech stock and stock options thought to be worth about $1 million...
...S> Wallach Rediscovering His Judaism Once a high-flying Washington power broker, now facing a federal indictment scheduled for trial in April, Bob Wallach is rediscovering his Judaism...
...His criminal trial is scheduled to begin in a New York federal court in April...
...The fake invoices were actually discovered in an audit by an outside accountant...
...The man who made the introduction was a San Francisco attorney named e. robert wallach, or "small case bob" as he is known on the West Coast...
...Ifs not so bad" For thirty years he's been a comforter...
...Squadron's firm received between $1.5 and $2 million during its representation of Wedtech...
...The AJCongress wanted access to the West Coast, Republican administration...
...he didn't want to tie up the firm's stock for 10 years during which Mariotta could decide at any time he didn't want to go through with the purchase...
...Until the stock was paid for, it was supposed to be held in escrow by Squadron's firm...
...So many government officials, former government officials, company executives and others associated with Wedtech have been indicted, pleaded guilty or been convicted that Wedtech has been described as the biggest political corruption scandal since Teapot Dome in the 1920s...
...Of this amount, Squadron would pay $2,500 per month to Wallach, which would be listed separately as Wallach's co-counsel fee on the statement Squadron rendered to Wedtech...
...Wedtech is a scam that caught a lot of innocent people—like me and, I believe...
...In addition, say Squadron lawyers, the SBA approved the agreement...
...SBA matters were handled not by Squadron's firm but by Biaggi and Ehrlich...
...One of Wallach's closest friends was a private investigator named Harold (Hal) Lipset who frequently worked for Wallach, tracking down the facts surrounding Wallach's personal injury cases...
...Biaggi and Ehrlich strongly recommended Shea and Gould, a large, prominent firm in downtown Manhattan...
...And even his law firm has prospered...
...two examples will suffice to illustrate the kind of matters that are involved.' In order to be eligible for non-competitive, set-aside government contracts, Wedtech had to obtain a certificate from the SBA stating that it was more than 50 percent minority-owned...
...As it turned out, Wedtech's success was a mere facade built on theft, fraud, kickbacks and bribery of federal, state and city officials...
...Neither did the shareholders in their suit, although the shareholders' attorney demanded and obtained from Squadron a so-called "Standstill Agreement," which provides that if the shareholders later decide to sue Squadron's firm, the delay in bringing suit cannot be used as a defense...
...like the poet e. e. cummings, Wallach always signs his name without initial capital letters...
...At home they spoke Yiddish...
...The bank was subsequently repaid from Wedtech's public stock offering...
...In the mid-1970s, Lipset became active in Jewish organizational affairs, eventually becoming president of the local chapter of the AJCongress...
...Most of the Wedtech matters under investigation that involve the Squadron firm were actually handled by lawyers other than senior partner Squadron...
...Congressional committees, state and federal prosecutors and the SEC are all investigating these and other Wedtech transactions...
...After law school, Wallach spent seven months trying to get a job in San Francisco with a firm that represented unions...
...thirty years of trying to do some good in this world...
...million...
...I specifically want a picture of the employee who worked with the picture of Christ at his workstand," he wrote...
...Wallach said...
...Wallach tells a different story Wallach says he tried to get the job for Squadron, but the administration said no There was no way they were going to appoint a liberal New York Democrat* When Wallach told this to Squadron, Squadron said that he should be able to get the job because of the support of Secretary of State George Shultz who, Squadron claimed, liked him (Squadron's relationship with Shultz, Wallach adds, "came through mel But Shultz's support apparently was not enough Two years later...
...The work done by Squadron's firm would be applied against the $10,000 balance...
...Squadron knew the officers of the bank as well as the people who represented the bank in New York, so Wallach convinced Wedtech to retain his friend Squadron...
...In the fall it would realize the proceeds from its public offering (if that were successful), but in the meantime it was in dire need...
...Wedtech has told the bankruptcy court that it is "investigating" the arrangement "made by Wallach requiring payments to him of 10 percent of all fees paid by Wedtech to [the] Squadron [firm...
...Squadron and his partners may be important witnesses in Wallach's criminal trial, as they were at the trial of Bronx congressman Mario Biaggi and his son Richard Biaggi, who were convicted and sentenced to eight years and two years in prison, respectively, for their parts in the Wedtech schemes...
...But the questions about Squadron's and Wallach's fees are only one of the matters that Squadron is being called upon to explain...
...At its height, over 1,500 people worked at Wedtech...
...he apparently told Wallach so in somewhat stronger terms...
...First, Squadron didn't want to give up any of his fee...
...The transactions the firm handled for Wedtech are extremely complicated...
...As to the $30,000 Squadron billed over and above his own charges, Squadron says this was okay because it was agreed to by Wedtech and was shown on Squadron's statements to Wedtech as a fee to Wallach...
...Prior to that time, Wedtech's general counsel had been Biaggi and Ehrlich, a small firm headed by Richard Biaggi, the son of Bronx congressman Mario Biaggi...
...Obviously Wallach could provide the access Squadron was looking for...
...Attorney's office' Considering the scope of wrongdoing in the Wedtech scandal, the indictment against Wallach is pretty thin soup...
...He is still a major American Jewish leader...
...He soon became one of San Francisco's most successful personal injury lawyers, representing victims of car accidents, airplane crashes and medical botches...
...matter more bluntly: "Wedtech has been a pain in the ass," he said...
...Guariglio told Squadron any co-counsel fee for Wallach would have to come out of Squadron's fee...
...it was overruled at the highest level of the U.S...
...In the end, Squadron agreed to pay Wallach 10 percent of any fees Squadron's firm received, without any add-on to Wedtech...
...The American Lawyer article he found particularly offensive—"the worst bunch of horse — I've seen...
...Besides the fees paid to him by Squadron, Wallach received at least $550,000 in added fees paid directly by Wedtech, plus Wedtech stock that he sold for more than $472,000, bringing his total Wedtech fees to more than $1 million in addition to what he received from Squadron...
...Wallach and Squadron quickly cemented their friendship, socialized together and even traveled to Israel together with their families...
...Instead of plugging his friend Squadron for the job...
...Wallach publicly boasted that he could pick up a telephone and get Meese on the line...
...Through Lipset, Wallach also got involved in the AJCongress...
...Questions of Squadron's legal ethics have been raised...
...Despite our denials, Squadron insisted that any article we wrote would be "unfair" because, he alleged, we had already determined what the "spin," as he called it, would be: "to do a hatchet job" on him and to show that "Jewish leaders have clay feet" Squadron's connections with Wedtech have been widely reported in the press...
...Wedtech was too inexperienced for a contract of this size and complexity and its price was millions of dollars more than what the Army thought it should be...
...Lately, he's been reading from the Book of Psalms...
...What about the 10 percent Squadron paid Wallach out of his own fee...
...When it came to Wedtech's fees, however, trouble began between Wallach and Squadron...
...The smaller amount is the amount referred to in the Biaggi trial and in the pending suit by Wedtech's trustee in bankruptcy...
...He recently served as chairman of the Committee to Celebrate Israel's 40th Anniversary in this country...
...And Wallach could give it to him...
...Airborne Warning and Control Systems (AWACS) to Saudi Arabia was a major issue in the Jewish community...
...Wallach just as strongly recommended his friend Squadron's firm...
...In a short interview—see box, p. 46—Squadron put the * Squadron, Ellenoff, Plesent & Lehrer...
...Wallach would call "fairly regularly," and "quite frequently" he would come to Squadron's office "for an hour's discussion * MOMENT has not been able to trace the 570,000 difference in these two figures...
...The Securities and Exchange Commission (SEC) is reportedly investigating the firm's involvement in fraudulent filings on Wedtech's behalf...
...You can't go through an experience like this without reading the book of Job...
...I sometimes regret that I was ever introduced to this client," Squadron recently said in rueful understatement...
...The drug addicts were kicked away...
...Squadron was introduced to Wedtech through his Jewish involvement...
...Wallach helped Wedtech put the best face on its accomplishments...
...And this may be just the beginning...
...The larger amount is referred to in the Independent Counsel's report on Attorney General Meese...
...Ifs the truth,' he told moment in a telephone interview, confirming a secondhand source...
...It was at that affair that Bob Wallach met Howard Squadron, then national president of the AJCongress...
...The 10 percent figure was a "fairly accurate" estimate of Wallach's involvement, says Squadron...
...Some say there was a secret side agreement that Mariotta would in fact default and that, in effect, the sale was never expected to go through...
...Wedtech shareholders have reserved the right to sue his firm...
...For example, as general counsel to Wedtech, Squadron's firm prepared SEC filings that turned out to be fraudulent...
...If what is being alleged is true, I think it is obvious that our abilities and our reputations were used and that we became a victim," says Arthur M. Siskind, one of Squadron's partners...
...Wallach was born to immigrant parents in the epicenter of the Wedtech scandal, the South Bronx...
...Wallach says, the post was offered to him (Wallach) and he took it Squadron hit the ceiling Today the two men are not speaking Squadron is known as "very abrasive" and "egocentric," Wallach says, but Wallach still likes him...
...Among other things, Wallach recommended a public relations brochure with "on the job" photographs...
...One new client he acquired when he gave up his personal injury practice was a small die shop later to be known as Wedtech...
...Squadron lawyers say they acted entirely properly...
...Regarded as a highly talented lawyer, Wallach eventually served as president of the San Francisco Bar Association...
...In fact, it did not go through...
...A "kind of constant telephone contact...
...But the agreement provided that payment was to be stretched over a 10-year period and the first payment was not to be made for two years...
...You can't read the psalms without getting inspiration" he says, "The matrix of life involves everyone You're not alone" What Wallach "regrets most" is the loss of his friendship with Squadron Wallach says he was "mortally crushed" when Squadron accused him of foul play in connection with a United Nations job Squadron wanted...
...But sometimes it can lead to nothing but trouble...
...To help it get these contracts, it retained Bronx-born "small case bob," who had relocated in Washington and was selling access to power...
...Inspired by his socialist grandfather who was active in the Workman's Circle, young Wallach decided to become a lawyer who represented workers...
...it has grown 50 percent since Squadron stopped representing Wedtech...
...The government would really like to put Wallach m jail for influence peddling But thafs no crime Thafs what lawyers do all the time— if not quite so blatantly...
...The government does not contend that the payment of the fees constituted a crime, but only that the way they were recorded on the company's books was improper...
...Another source explained that the AJCongress was basically eastern, New York liberal...
...During Lipset's AJCongress presidency, the chapter hosted a dinner at which Wallach was given a community service award for his efforts in providing legal services to children...
...Referral fees as such are unethical and Squadron knew it...
...In the spring of 1983, Wedtech badly needed cash...
...To work with him to get the contract for Wedtech, Wallach hired Lyn Nofziger just months after Nofziger left the White House where he served as Reagan's political director...
...Both Biaggis, as well as name partner Bernard G. Ehrlich, were recently convicted for their Wedtech activities...
...Not until mid-October 1986 did Squadron "realize that a lot of material was being concealed from us over a long period of time...
...Were Squadron's fee arrangements with Wallach unethical...
...The crime rate, even the suicide rate, in the area went down...
...He applied to the law school of the University of California at Berkeley because of its strong program in industrial relations...
...If more than $10,000 worth of work was performed by Squadron's firm, Wedtech would pay the additional amount so that Squadron's firm would always be paid fully for its work...
...Squadron isn't sure...
...Wallach has been indicted for fraud and racketeering in connection with his Wedtech activities (see box, p. 51...
...According to Squadron, Wallach never even knew of the position before Squadron brought it to his attention Wallach does not deny this...
...Peter Neglia, then SBA administrator for the New York region has been convicted and sentenced to three years in jail in connection with his handling of Wedtech matters at SBA...
...Wallach believes he will be acquitted, but there's always the chance . . facing a Mew Vork]ury...
...Squadron's firm learned of these fake invoices before it filed the public offering statements with the SEC...
...When Wallach's friend Meese went to Washington, D.C., to serve as Reagan's legal counselor, Wallach continued to maintain close ties with the president's top adviser...
...But the Army had said it didn't want to contract with Wedtech...
...Wallach's interests were, of course, broader than the Jewish community...
...Reagan favored the sale, which ultimately went through...
...Wallach also wanted a picture of the forklift truck with the sign "Christ is coming" on the back...
...The accountant's opinion made no mention of the fraudulent invoices...
...By the time Squadron withdrew as Wedtech's general counsel in 1986, Squadron had paid Wallach between $157,000 and $227,000.* During that period Wedt'ech became a preeminent client of Squadron's firm, one of its two or three largest clients in terms of fees generated...
...Wedtech actually had invoices printed with the names of its suppliers on them...
...He claimed that stories in the New York Times and in the American Lawyer were "full of inaccuracies...
...Wallach was the first member of his family to go to college...
...Considering what he did for Wedtech, these fees are hardly excessive by today's legal standards But the government claims that Wedtech improperly reflected these legal fees on its books, thereby giving a false impression of the company's financial condition^ and that Wallach conspired with Wedtech officers improperly to record the fee payments as other than legal fees...
...I don't have cancer...
...He also asked for an agreement that if he declined to answer a question, this would not be so stated in the article, moment refused to agree to these conditions...
...It did not contact the SBA or government auditors, or disclose management's misdeeds in the registration statement filed with the SEC," according to an article in the The National Law Journal...
...Army contract to build small gasoline engines that power generators in the field...
...Wedtech's trustee in bankruptcy—Wedtech went bankrupt in 1986— is suing numerous parties and so are the shareholders who bought Wedtech stock...
...In the end Mariotta did default...
...111 have no assets 111 be deeply in debt' He estimates it will cost him $250,000 in legal fees for his defense Thirty years of building a life destroyed...
...He was an important Jewish supporter in Michael Dukakis's campaign for the presidency...
...The outside accountant ultimately gave Wedtech an "unqualified" opinion regarding Wedtech's financial condition...
...I've got a record as governor of California in which we didn't try to do things by the government route," he said...
...Second, he was concerned with the ethical problem...
...Wallach never even complied with Squadron's request to submit invoices...
...According to the article in The National Law Journal, however, "Law enforcement officers and securities experts say that the firm's knowledge that fraud had been committed by its client's officers was more than enough to require disclosure to the underwriters [of the public stock offering] and [to] the SEC...
...In 1982, Wedtech was vying for a S32 million U.S...
...In December of that year, the Squadron firm resigned as Wedtech's counsel...
...Bank Leumi made the loan ($5.7 million) that, for the moment, saved Wedtech...
...Wallach wanted a referral fee of 20 percent of whatever fees Squadron got...
...At the meeting Nofziger made it clear he would "not tolerate any obstructionist tactics or bureaucratic foot-dragging by the Army...
...Although Wedtech's trustee in bankruptcy named as defendants the outside accountants who audited Wedtech's books at the time of the public offering (Richard Bluestine and the firm of Main Hurdman) and tile underwriters of the public offering (the firm of Moseley Hallgarten), he did not name Squadron or other members of Squadron's firm...
...Squadron's firm was instructed to arrange for the transfer of enough stock to Mariotta from other principals so that Mariotta would again own at least 51 percent of the stock...
...In 1981, President Reagan hailed Mariotta, Wedtech's founder and president, as one of the "heroes of the 80s...
...In September 1983, Wedtech successfully offered $30 million in its shares to private investors who eagerly purchased Wedtech's common stock...
...Lawyers say that similar arrangements are not uncommon although they may skirt ethical rules...
...Squadron himself then talked with Mariotta, who agreed to the following arrangement: Squadron's firm would bill Wedtech for a monthly retainer of $12,500...
...At one point, Wedtech had disposed of so much of its stock that Mariotta no longer owned 51 percent of the stock...
Vol. 14 • March 1989 • No. 2
