The Burlington Free Press du lieu suivant : Burlington, Vermont • Page 7

tThtlBurlingtonJfrtfflress 101 Man implicated in fraud case buys Mardon building Page 7 A Thursday, July 12. 1990 Business editor, S.P. Kiernan Phone: 865-0940. ext. 2038 Business update Stocks Wednesday, July 11, 1990 Bi-Tec owner unsure of plans for properly By Ted Tedford Free Press Staff Writer The main building at the defunct Mardon Industries plant in Lyndonville was bought at auction Wednesday by a man implicated in a conspiracy to defraud the military on a defense contract.

C. James Liberty, owner of Bi-Tec Industries of Lyndonville, paid $305,000 for the building and three acres containing Mardon's main manufacturing plant and offices. He said after the auction he is uncertain what he will do with the property, which has been vacant since Mardon closed in April The company parts from a deficient bore erosion kit be substituted into kits approved by the Defense Department. A second Mardon building across the road from the main building was bought by Jonathan Buckman, owner of American Machine Bridgeport, Conn. He paid $165,000 for the building and eight acres.

Attempts to reach Buckman were unsuccessful, but Roger Lussier, president of the Lyndonville Savings Bank Trust said the new owner plans to open a business there. Lussier, also an auctioneer, hired Russell Koster of Long Island, N.Y., to sell the buildings and land to settle Mardon's debts to the bank. Koster had bought Mardon's machine tools after the plant closed. The machine tools will be auc owed Lyndonville Savings Bank Trust Co. about $2.3 million from defaulted loans.

Bi-Tec does defense work similar to Mardon also with General Electric Co. as its major contractor. Liberty bought out his partner at Bi-Tec, Lawrence N. Lyford who was indicted June 27 by a federal grand jury. The three-count indictment alleging conspiracy to defraud, filing a false claim and concealing failing test results stems from alleged false reports about heat tests for a $16,426 contract to produce bore erosion kits for M-39 machine guns on Air Force planes.

Liberty was not charged in the indictment. But in handing up the conspiracy charge against Lyford, the grand jury said that Liberty had instructed that tioned today. "I'm in the clear now, and I'm going to the auction tomorrow just to watch." Lussier said. Meanwhile, Mardon may contest a creditors' petition in U.S. Bankruptcy Court asking that the defunct Lyndonville company be forced into involuntary bankruptcy.

Mardon lawyer Joseph Palmisano said he had not decided whether to fight the petition filed by five of Mardon's unsecured creditors. They claim they are owed a total of about $144,000. Mardon filed for protection from its creditors under Chapter 11 of the federal bankruptcy laws soon after the company was forced to close April 27. The end actually came a few days Turn to BI-TEC, 9A Dow Jones Industrials Volume: 162.2 million Close: 2932.67 2950i 1 1 I I 2920 -jry 2860 i TT 28oo 1 5TT 2770 i 1 j- 2710 I 1 4 i- Lin 13th MT TF tor Vermont representative faces tough questioning v7M'v rU) J( y-; -'i i i I w'f By David Bauman Gannett News Service WASHINGTON Rep. Peter Smith, faced sometimes hostile questioning Wednesday from a House subcommittee reviewing his call for a Watergate-style prosecutor to investigate Congress' role in the savings and loan scandal, with one congressman accusing him of "McCar-thylike tactics." Appearing before the House Judiciary subcommittee on criminal justice Smith said he welcomed other bills.

But, "as well-intentioned as some of them are, they are insufficient," Smith said. The subcommittee is examining proposals for dealing with the mess. The competing proposals would commit more federal resources into the cleanup effort, such as allowing the Secret Service to assist in fraud investigations and creating a new Financial Crimes Division in the Justice Department. But Smith said, "none of them can clean our own house." Smith's resolution calls for a special prosecutor who would investigate Congress members' role in the thrift scandal. "This is a congressional Watergate, and our institutional integrity in the eyes of the American people is at stake," Smith told the subcommittee.

Many other lawmakers say the collapse of the thrifts was unforeseeable and that bad administration policy is responsible for the mess, Smith said. "This fails to acknowledge that wrong-doing, not just poor policy, occurred. Can we, will we, clean our own house? Or will we try and sweep this whole FDIC chief testifies, 9A sordid mess under the rug?" Subcommittee Chairman Rep. Charles Schumer, called Smith's testimony a speech, and demanded that the Vermonter explain "why (your proposal) deals only with Congress; why do you leave out non-elected officials?" Smith replied that recent congressional and Bush administration actions bolstered efforts to prosecute thrift operators, while "my proposal is aimed at a different target, the institution of government." Rep. John Bryant, D-Texas, angrily denounced Smith's proposal, saying it raised suspicion of the possibility of a cover-up on the part of Congress.

Bryant asked which lawmakers Smith thought should be investigated. Bryant accused Smith of using "McCarthylike tactics" to advance his resolution and added: "maybe the gentleman has a list" a reference to a tactic much abused by the late Republican Sen. Joseph McCarthy of Wisconsin during hearings on alleged communist activity of Americans in the 1950s. "I resent the implication," Smith replied. "My proposal is a not a condemnation of anybody.

But we must take a look at why Congress and the executive branch was unwilling, or unable, to respond to the collapse of thrifts in a timely way." Smith's resolution, introduced last month, calls for "an independent counsel to investigate the involvement of government officials in the savings and loan scandal." The Associated Press Rep. Peter Smith, confers with Rep. Chalmers Wylie, R-Ohio, during a House criminal justice subcommittee hearing Wednesday about the savings and loan industry. A House majority 220 members supports Smith's resolution. But it must win the backing of the House Judiciary Committee, because the committee by law must initiate the request to the White House for an independent counsel.

Smith read from a statement submitted by Edwin Gray, chair man of the Federal Home Loan Bank Board from 1983 to 1987 during the Reagan administration. Gray, as the government's top regulator, was among the first to warn of the impending collapse of the thrift industry. He supports Smith's call for a special prosecutor. "I would like to know why each year during my tenure no thrift reform legislation passed the Congress," Smith read from Gray's statement. "Each year, the bank board sent the House and Senate Banking Committees reform legislation.

I frankly don't remember any of our proposals even making it as far as a hearing on their merits." The Detroit News Fuel dealers settle tax dispute with state MONTPELIER Heating oil dealers and the Vermont Tax Department have apparently reached an agreement over how a new tax should be classified on customers' bills. The agreement on the gross receipts tax should prevent a legal battle over the tax, spokesmen for a fuel dealers trade association said. But they said the association would continue to oppose the tax and would ask lawmakers next year to change it The half-percentage point tax on the retail sale of heating oil, kerosene, propane, natural gas, electricity and coal went into effect July 1. In late June, the tax department sent a notice warning dealers that the tax is on sellers of energy, "and may not be itemized on any statement as a tax to be collected from the buyer." Several fuel dealers balked, saying they had the right to let customers know about the tax. After a meeting Tuesday with Tax Commissioner Norris Hoyt, the dealers said they had reached an agreement.

Companies will be allowed to print on their bills the words: "Effect of Vermont gross receipts tax," and then the amount of the bill that constitutes the tax, said Walter Fried, president of Johnson's Fuel Service in Manchester. Vt. revokes R.I. firm's right to sell securities State Banking and Insurance Commissioner Jeffrey Johnson said Wednesday a Rhode Island securities firm and its president are "unfit to sell securities in Vermont" and he has ordered the company's right to do business in the state revoked. Johnson said he took the step against Brandon Securities and Investments and its president, Ernest E.

Michaud, even though he is not aware that any Vermont-er has lost money in an investment scheme involving $1.5 million in misappropriated funds. Michaud and the securities firm were recently cited by the Rhode Island securities division and the National Association of Securities Division for misapplying money. Michaud, who was censured, expelled and fined $1.5 million by NASD, fraudulently promoted and sold an investment pool to 20 investors for $1.5 million. Johnson said Michaud has 20 days to request a hearing or waive his rights to one. The Rhode Island Superior Court has frozen Michaud's and Brandon's assets, prohibited them from destroying documents and ordered the company to avoid further violation of the state's securities laws.

Net income decreases at Merchants Bancshares Net income for the first six months at Merchants Bancshares decreased 8.1 percent to $4,117,464 million from a record $4,481,897 for the comparable period last year, President Dudley Davis has reported. Earnings per share for the six months ending June 30 were $1.07, down from $1.17 per share for the comparable period in 1989. Part of the decrease in net income was because the bank increased its provision for loan losses from $750,000 to $1 million in the quarter that ended June 30, and because of the purchase of a state-of-the-art information system, Davis said. Total assets rose 4.3 percent for the six-month period, he said. Treasury urges Congress to raise debt limit WASHINGTON The U.S.

government likely will default on its debt for the first time next month unless Congress raises the limit before leaving Aug. 6 on its month-long recess, the Treasury Department warned on Wednesday. "Treasury's current estimates show that the permanent ceiling of $3.12 trillion will be sufficient only until mid-August," Treasury Undersecretary Robert R. Glauber told the House Ways and Means Committee. The nation's debt topped the $3 trillion mark last April and by Monday had surpassed $3.09 trillion.

From staff, wire reports Regulators: Neil Bush was unqualified for job managing a large corporation, especially a financial institution with almost $2 billion in assets," the documents released this week said. "Unfortunately, he was not cognizant of the conflict-of-interest situations he encountered as a director of Silverado." However, the regulators added, Bush's inexperience does not excuse him "from the harm and potential harm he caused" to the thrift. Bush has been ordered by the thrift office to answer allegations of conflict of interest in his role as a director of Silverado, which lent millions of dollars to a Bush business partner who never repaid the money. President Bush, meanwhile, reiterated Wednesday that he has "confidence in the honor and integrity" of his son. The president, who has pledged to vigorously prosecute fraud in the savings and loan industry, also reiterated his promise not to interfere with the regulators' investigation of his son.

"If he's done something wrong, the system will digest that," the president said Wednesday. "This is not easy for me as a father. It's easy for me as a presi- The Associated Press WASHINGTON Federal regulators have alleged that President Bush's son Neil was unqualified to be a director of a Colorado thrift that collapsed at a cost to taxpayers of $1 billion. In documents released by the Office of Thrift Supervision, regulators asserted that Bush, 34, was "unqualified and untrained" for his position as an outside director of Silverado Banking, Savings and Loan Association of Denver. "Certainly he had no experience in 4 GEORGE BUSH NEIL BUSH dent because the system is going to work.

I am not going to intervene." Foreign investment scams prompt consumer warning Vermont Woman prints last issue ness, which will be called NSN Enterprises. According to a prospectus released in March for potential investors To learn more: Copies of the investor alert "International Investment Scams" are available by writing to the Vermont Banking and Insurance Department, Securities Division, 120 State Montpelier, Vt. 05602. GILLIS in Vermont Times, By Ted Tedford Free Press Staff Writer A rash of overseas investment scams has prompted Vermont's Banking and Insurance commissioner to warn Ver-monters about investing money in foreign securities. "The department is seeing mounting evidence nationally that a growing number of people are falling prey to these schemes that combine the high drama of playing international markets with the enticing bait of sky-high, no-risk returns in exotic instruments," Jeffrey Johnson said.

Johnson cited a study by the North American Securities Administration showing that small investors in the United States lost more than $1 billion to international investment swindlers in the last two years. Among the schemes uncovered in the NASAA study were penny stocks sold by high pressure "boiler rooms" in Costa Rica, phony certificates of deposit in off-shore banks and elaborate schemes based on foreign currencies. Elizabeth Costle, the department's deputy commissioner of securities, offered this advice to Vermont investors: By Dave Howland Free Press Staff Writer The last issue of Vermont Woman, the 5-year-old monthly magazine devoted to women's issues, ran off the presses July 1 with sentimental farewells from writers and sponsors. Publisher Suzanne Gillis said a lack of advertising revenue forced the paper to close. "The reason for ceasing publication is, simply, economics," Gillis wrote in her farewell column.

"The advertisers who supported Woman (and there were many) ultimately were not enough. With the closing of the publication, Gillis has said she will be working on the start-up of Vermont Times, a new weekly publication to be produced in conjunction with Nat Winthrop, publisher of the Vanguard, and a third party. Gillis will assume the position of publisher at Vermont Times, with Winthrop serving as chief operating officer. Neil Arthur, advertising sales manager of 18 weekly newspapers in Ohio, will be executive vice president of the new busi the weekly will be distributed free to the 47,800 households in Chittenden County. The Vanguard and Vermont Woman have experienced financial operating losses in recent years.

"There was hardly a month when I didn't wake up in a cold sweat wondering if we were going to be able to pay the bills," Gillis said, "thinking I would have to disappoint our readers by closing the doors." Vermont Woman lost money each of the last four years, with the exception of 1988, when it made $945. Editor Gayle Hansen emphasized in her farewell column the need for dialogue about women's rights across gender lines. The final issue offers a retrospective and interview with Gov. Madeleine Kunin, who is leaving office after three two-year terms. International investing isn't necessarily better, and just because an opportunity is overseas doesn't increase the likelihood of substantially higher returns.

It will be much more difficult to get your money back from an overseas con artist. Lawsuits are almost impossible. Regulatory standards in the United States, including Vermont, are not subscribed to in many foreign nations. Investors should make sure they understand how legitimate foreign markets work. Check out the trader.

Anyone selling securities in Vermont has to be registered with the Banking and Insurance Department. The department can tell whether the person is registered and whether the individual has a history of securities violations..