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Reno Gazette-Journal from Reno, Nevada • Page 45

Location:
Reno, Nevada
Issue Date:
Page:
45
Extracted Article Text (OCR)

-f vA I music 7F Sparks firm sold to founder's grandson- Be Moncfer turns dance moves into gw s. as m'w I Monday, December 26, 1988 Penny-stock firm grows fast; practices questioned Hotline tions "have no basis in fact'' and are "nothing more than customers' misunderstandings." Three Rochester, stockbrokers confirmed independently that the SEC has begun a formal investigation into trading of several stocks by Power and Allied Capital Group another Colorado brokerage firm that trades some of the same stocks. The SEC will not confirm or deny the existence of an investigation. In August, the Nevada secretary of state alleged that Power made at least 500 offers or sales of unregistered securities. The complaint also said Power employed at least 10 sales representatives who were not registered in Nevada.

Power agreed out of court to a $15,000 fine, says Joseph Gallen, chief of enforcement in the securities Mary Lynne Vellinga In May 1987, Richard T. Marchese borrowed $25,000 on his American Express gold card to amass the down payment on a struggling Denver brokerage firm. The principal owner of Power Securities has since transformed the firm into one of the country's fastest-growing brokerage houses selling low-priced stocks. A workaholic and a weightlifter, Marchese, 29, attributes his company's growth to clean living and "a good work ethic." But the success story has another side. Power's ascent is based partly on practices the Securities and Exchange Commission considers questionable, and which pervade the penny stock industry.

These practices include trading and making stock offerings for shaky companies, and giving glowing, sometimes false reports about stocks. His firm has also run into trouble One was for a blind pool. The other was for a Colorado insurance company with a history of losses. Montana last month brought an administrative action against Power. If found guilty after a hearing next February, the firm could face fines up to $50,000 and revocation of its license in Montana.

Among the charges, Power is accused of telling one investor it would run up the price of a stock to ensure a profit of 20 percent. Another Power broker allegedly bought stocks for a Montana customer without permission, saying those purchases were necessary to guarantee a favorable price on the sale of another stock. A third investor who tried to sell his stock, the state claims, was told by Power that the firm had a policy not to sell a stock within 60 days after it was bought in-order to enable customers to make a 150 percent profit. Marchese responds that the allega- with Nevada authorities. Chris Economides of Victor, N.Y., says his experience with Power "left me with such a bad taste in my mouth that I never want to deal with a stockbroker again." In its advertising, Power claims to be "The Foundations America Is Built On." But here's what the ads don't say: While the company's ads say it raises capital for "exceptional young companies," many of the stocks Power sells are in unprofitable businesses.

Others are "blind pools" companies with no business operations. Blind pools often exist solely to acquire another company, one about which investors know nothing beforehand. Power ads say, "We underwrite only those (firms) which we believe represent exciting investment opportunities that may provide significant returns for our clients." In fact, the firm has managed only two offerings of stock to the public. ntnA-f T. -M-f laiiiftinmriiiTVrTiilMit I ill It'i 1 it ffri 1 1 li 1 i A 1 1 in 1 nln it 1 1 I nh i 1 i 1 0sa PARTNERS: MarCor Development and Sunset Partners, L.P., have formed MarCor Resorts, L.P.V., designed for the possible development of hotel-casinos on land held by the two entities.

Total initial capital, including land, is approximately $38 million. MarCor Resorts was formed through MarCor's contribution of 30 Las Vegas acres acquired in July 1988 for $11 million, Sunset's contribution of 125 acres in Henderson, and the investment of approximately $20 million cash from privately placed limited partnership interests. MarCor Resort Properties, a MarCor subsidiary, is general partner of MarCor Resorts and holds a 34.4 percent ownership interest. MarCor has begun its first development of a hotel-casino on the 30-acre Las Vegas site located at the corner of Flamingo and Valley View, approximately one mile west of the Las Vegas Strip, said James A. Barrett president of MarCor Development.

The property, to be named Rio Vegas, will be Las Vegas' first all-suite hotel-casino and is scheduled to eventually house 2,400 rooms. Phase one of the development will involve 430 suites and 60,000 square feet of casino space. Its estimated cost is $80 million. MarCor Development a Nevada corporation, is a real estate-based investment and service company with operations and properties located primarily in Las Vegas. GROWTH INDUSTRY; The 20th Annual Winter Seed School, sponsored by the Northwest Alfalfa Seed Growers Association, Nevada Cooperative Extension and the Nevada Seed Council, will be held Jan.

23-25 at John Ascuaga's Nugget in Sparks and is expected to draw 350-400 growers and industry people from 11 western states, Canada and Mexico. The purpose of the seminar is to bring the alfalfa seed growers up to date on the latest technologies including areas such as world marketing, finance and biotechnology. Pre-registration by Jan. 6: write Nevada Seed Council, P.O. Box 700, Lovelock, Nev.

89419 or call 702-273-2923. Cost: $65, pre-registered; $75, Jan. 22-23. Details: Gail Munk, Pershing County Extension Agent, 273-2923. CALIFORNIA MUSIC: Casio Computer Co.

Ltd. of Tokyo will build its first U.S. -based manufacturing facility in San Diego next year to produce electronic musical instruments, according to the San Diego Economic Development Corp. The new subsidiary, Casio Manufacturing will build the facility in the Otay Mesa area of San Diego County to complement an assembly plant in Tijuana, Mexico, which will be constructed concurrently. By 1993, the company forecasts total employment at 700 people.

Production is scheduled to begin in October 1989. The Tijuana plant will be used primarily for assembly, while the San Diego facility will focus on final assembly, quality control and distribution. The local facility will also serve as the subsidiary's United States headquarters. Casio earlier this year took 40,000 square feet in Owen Distribution public warehouse on Lillard drive in Sparks. TRADE FAIR: The Northern Nevada Apartment Association is having a Trade Fair on Jan.

18 from 5-8 p.m. at the Reno Elks Lodge. The booth costs will be $50 for associate members, $100 for non-members. The deadline for registration is Jan. 11.

Admission is free to the public. Details: Colleen or Trina, 786-5737. 41 r-r -4 Vv lanni 1 wmnrw mmmmm mmmw 991. Wflf IBWJf Investors won't go for growth The once-hallowed Wall Street tradition of investing in growth stocks has fallen on very hard times of late. The crash of 1987 had something to do with that.

But as statistical measures show, the big market break only accelerated a trend that has been in motion for at least five, and maybe as much as 15, years. All this is documented by the investment firm of Kidder, Peabody which publishes a monthly compilation of what it calls the "Top 50" the 50 issues traded on the New York Stock Exchange that carry the highest price-earnings ratios. This list is typically dominated by companies with strong growth records: For example, Coca-Cola, Walt Disney, and Merck and Eli Lilly in pharmaceuticals, as well as smaller entities like J.M. Smucker and Tootsie Ro1 fttdustriea. Logically, stocks of companies that demonstrate the ability to produce above-average growth should sell at higher PEs than those with more modest prospects.

And they do. But the difference between the median PE of Kidder's Top 50 and that of the market as a whole, represented by Standard Poor's 500-stock composite index, has lately contracted to the smallest premium it has ever shown in calculations dating back to 1960. In the 1960s and early 1970s, the Top 50's PE sometimes was more than three times that of the general market. As recently as 1983, the premium stood at 2.5 times. In November it fell to 1.3 times the market multiple.

In effect, extra growth is being offered in the marketplace at almost no extra charge. What brought about this devaluation? It started in the '70s with the collapse of a style of investing that focused on what were called "one-decision" stocks. Under this philosophy, money managers at investing institutions bought stocks of glamour growth companies with the presumed intention of owning them forever. It didn't matter very much how dearly you paid for these stocks, since you were never going to sell them. Then the recession and bear market of 1973-74 knocked down that notion with a resounding thud.

More recently, says Kidder Pea-body analyst Evelyn Feit, several forces have combined to compress the Top 50's premium among them the takeover and buyout binge. "Investors' attention has been focused on immediate rewards reaped through buyouts, restructurings and such, rather than on the long-term investment potential of growth stocks," she observes. "This has been accompanied by a diminution of confidence in growth projects." Tax reform also did growth stocks no favor by eliminating the special tax break for long-term capital gains. Capital gains are the prime allure of these stocks, since fast-growing companies usually pay modest (or no) dividends. Reno firm's purifiers help ease indoor pollution By Veda AndersonGazette-Journal Lee Blodgett made clean air his business about 15 years ago, and it's paying off.

The president of Filt-Air a Reno-based manufacturer of indoor-air purifiers, has about 86 dealers nationwide distributing 2,000 to 3,000 units a year. He also gets letters from customers who say they have benefited from his products. Filt-Air makes five different types of air-purifying systems for homes, offices, restaurants, hospitals, industrial plants and other businesses. Through a three-stage process, purifiers filter dust, bacteria, smoke, odors, pollen and other microscopic airborne pollutants, and then recirculate the air. While many people may not realize it, Blodgett says indoor air pollutants can be a serious health hazard.

"It's something you really have to teach your customer," he said. "People don't understand polluted air. They see it outdoors, but indoor pollution is 10 times worse. Blodgett said people sometimes inhale three tablespoons of pollutants a day and don't know it. EXPERTS SAY people can get sick from poor ventilation and poor air filtration that leave dust and bacteria and allergenic fungi floating around rooms.

For people with respiratory problems, this situation is even more hazardous, Blodgett said. "When they inhale that stuff, it's much more (bothersome)," he said, adding that breathing purified air indoors helps clean lungs. "Their lungs are starting to heal themselves by having clean air." Blodgett says people who say they have been helped by his air filters write to him. He talks of a woman suffering from emphysema who no longer had to make as many trips to the hospital after having one of his purifiers installed. And then there's the letter from Kris Jones of Arizona.

"Our daughter has had severe allergies to pollens and dust for several years. We have noticed a tremendous improvement since we have had your unit installed in her CONVENTIONS: The following meetings and events are scheduled at these locations. Numbers are the projected attendance. Reno area Tuesday through Friday, American Lutheran Church, John Ascuaga's Nugget, 300. Las Vegas Saturday, Jan.

7 through Tuesday, Jan. 10, International Winter Consumer Electronics Show, LV Convention Center, 100,000. Wire service and staff reports of! fm i-; ym j'j I mm-, -A r-- '1 John Journal FILT-AIR: Lee Blodgett with two models of indoor-air purifiers his company makes at a Reno plant. The mm The Filt-Air file Founded: 1972 ProductLL4nplor-aic pwtfter, if system painted Location: 235CfValleVlHoaa 1 charge filters as part of a science experiment. "The back dish (intake) grew a very fine mold, but the front (discharge) grew nothing," he wrote.

Nevada health and environment officials say they have had complaints from people who work in buildings with bad indoor-air quality. The state, however, does not have an indoor air-pollution program or any regulations regarding the subject. Michael Ford of the Washoe See CLEARING, page 6E President: Lee Blodgett Number of employees: 4 And there's the letter from an Elko resident who says his wife tried to grow mold on the air intake and dis Drexel plea resulted from fear of racketeering law 1 11 11 1 11 11 1 11 11 1 win Kentucky Hardee's Pizza Hut Church's Fried 5.5 4.5 Fried Chicken Chicken 0.7 5.5 Wendy's 5 7 XNA Other A-M 44.8 Burger -sj Kiig 8.5 McDonakfs 25.5 Source: The Lempert ReportArgus Research Giuliani's expanding probes into financial trading abuses spawned largely by the downfall of Ivan F. Boesky, the convicted speculator who fingered Drexel and others more than two years ago. The decision came moments before a deadline set by Giuliani to Drexel following weeks of bluffs, counter-bluffs and leaks to the newspapers that a climax was imminent.

Post-mortem accounts of this his- toric showdown reveal Giuliani told Drexel's directors he was going to make an announcement at 4 p.m. Wednesday. "He said, 'It's going to be either an indictment or a settlement. You said one source. The biggest weapon in Giuliani's arsenal was his threat to subject Drexel to the Racketeer Influenced and Corrupt Organizations act, commonly known as RICO.

securities firm elected not to risk getting its head blown off. Drexel decided to settle the biggest securities fraud case in history by paying a record $650 million in fines and restitution and pleading guilty to six felonies, reversing its longstanding claims of innocence. The battle had already cost the firm nearly $2 billion in attorneys' fees and lost business. Drexel also agreed to cooperate with By Rick GladstoneAP NEW YORK Like Clint Eastwood's Dirty Harry Callahan, U.S. Attorney Rudolph W.

Giuliani put a .357 Magnum to Drexel Burnham Lambert head, saying maybe he had one bullet left, maybe he didn't. Drexel decided he did. After a protracted battle fought in the courts, the press and the canyons of Wall Street, the nation's fifth-largest Ron OdanGazene-Journal graphics ifgil.

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Pages Available:
2,578,572
Years Available:
1876-2024