Appellee: Thomas E. English -
[Cached Version]
Published on: 5/18/1993
Last Visited: 8/4/2001
In August of 1986 , Dan Bell contacted respondent about the possibility of respondent and Bell purchasing a claim of Armco against Northwest.Bell was the chairman of the creditors' committee , which became the operating committee of the Trust , and an employee of National Supply Company ( National ) , a subsidiary of Armco.Bell had first hand knowledge of the Armco claim and knew that National was selling assets to raise needed cash.Although Armco listed the claim on its books at a value of $1 , 000.00 , the trial panel found that the claim was certainly of greater value.
At some point after their initial conversation , respondent and Bell formed a shell company , Basco , Ltd. , for the purpose of buying the Armco claim.No filings were made to reflect the true ownership of the partnership and respondent rented a post office box under Basco's name for correspondence purposes.On August 25 , 1986 , respondent wrote a letter to Bell in Bell's capacity as credit manager for National.Therein , respondent stated that he had been contacted by a local group about buying some of Armco's claims in the Northwest bankruptcy.On September 15 , 1986 , respondent , acting as an intermediary for Basco , sent another letter to Bell presenting an offer of $11 , 750.00 to Armco for its claim against Northwest.The letter expressed that the dollar figure represented one percent of the amount of Armco's bankruptcy claim.Bell stated that he provided his supervisor with all information concerning the valuation of the claim.However , no one at National or Armco was informed of the identity of the Basco partners.After Bell's supervisor purportedly approved the sale , Bell wrote a letter to respondent accepting Basco's offer and thanking him for acting as an intermediary for the transaction..
The sale of Armco's claim was completed on September 29 , 1986.In December of 1987 , the Trust made a distribution of $58 , 751.95 to Basco in payment of the claim Basco purchased from Armco.The trial panel noted that respondent , in his position as trustee , recommended that total payments from the Trust be reduced , because respondent felt that the amounts being paid to creditors might jeopardize the operation of the Trust.Nevertheless , the operating committee directed the higher distributions.
When Armco became aware that it had sold a valuable asset for a rather small sum , it hired a private investigator to look into the matter.
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Judge Wilson also entered judgment against respondent and Bell for $28 , 977.00 , which represented the amount spent for accounting made necessary by what the judge deemed was respondent's wrongdoing.
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