Maranto received a master's degree in forest resources from the University of Idaho and is a California registered professional forester. Since , he has worked for the CDF as a sustained yield forester evaluating complex timber harvest plans submitted by all of the state's industrial timber companies. Under questioning by his attorney, Philip Gregory, Maranto explained that in he was analyzing a Pacific Lumber plan to harvest trees on an 8,acre property the company had purchased from Eel River Sawmills sometime after the Headwaters sale.
While analyzing the timber harvest plan, Maranto said he discovered that Pacific Lumber had falsely used an estimate of million board feet of standing conifer trees on the property to calculate a proposed annual cut of 7.
Conifers include both redwood and Douglas fir trees. But what the computer modeling did not disclose, according to the plaintiffs, was that much of the inventory was made up of much less valuable hardwood trees, which largely consist of tan oaks.
The value of tan oak is so low that is rarely worth the effort to cut and haul it to mill. It is also extremely rare that a timber company would include tan oaks in their forest projections.
So rare, if fact, that if they do use tan oaks, they are required to explain why. Pacific Lumber made no such explanation, which created the false impression their projections were entirely made up of conifers. Because of this, Pacific Lumber falsely inflated its proposed harvest level by Pacific Lumber finally received approval to harvest the 8, acres, but not until it submitted a projection that actually reflected the harvestable trees standing on the property.
Maranto said it wasn't until that he learned that, back in , Pacific Lumber had used the same computer modeling software to produce the sustained yield plan required as part of the Headwaters deal. That SYP included forest projections for , acres of Pacific Lumber property and had by then been used as the guiding document for nearly five years of timber harvests.
According to the complaint, he learned in that Pacific Lumber had exhausted its SYP allowable timber harvest for the decade five years early, which indicated a major problem with their harvest plans. Wilson called a meeting with Maranto in to try and determine what exactly had happened, and together they came to the conclusion that the SYP Pacific Lumber submitted to close the Headwaters sale was fraudulent, according to the complaint.
Under cross examination, Bennett pointed out repeatedly that Maranto did not work for the forestry department in , when the SYP was approved. Bennett also tried to show through a series of e-mails that Maranto was aware of the computer modeling used in the SYP years before , when the lawsuit was filed. This is a critical timing element for the defense, because the statute of limitations' clock starts ticking with the knowledge of wrongdoing.
If the defense can show that Maranto or Wilson knew details about Pacific Lumber's SYP modeling techniques in , jurors can find Hurwitz innocent because the case was filed after the statute of limitations had expired. Bennett also got Maranto, and other witnesses, to admit the SYP had undergone rigorous review over a month period and that no one, after all that vetting, had made the claim the document was somehow misleading or fraudulent.
Courtroom tensions surrounding the testimony of Pacific Lumber attorney Frank Bacik boiled over on Thursday. At a certain point during Bacik's testimony, defense attorneys began to make frequent objections.
Apparently Cotchett, who had been asking an uncooperative Bacik questions in a loud, aggressive manner, was getting very close to divulging that Pacific Lumber's timber operator's license had been revoked in for an excessive amount of logging violations, a fact Judge Wilken had ruled was too prejudicial for the jury to hear. Before Cotchett was through with his questions, Wilken recessed the court for the day at the usual time of p.
As soon as the jury left the room, Brosnahan, angry at Cotchett's manner and the fact that his opponent had been playing cat and mouse with the excluded information, began using a very loud voice while complaining to the judge.
At that point Cotchett walked up to the bench and began speaking over Brosnahan. Wilken noted for the record that she could not yell as loud as either attorney and asked them to submit written motions regarding their dispute. With that, the two lead attorneys returned to their tables and began packing up for the day. Then Cotchett must have had a second thought because he walked over to Brosnahan, but before he could speak Brosnahan erupted.
Cotchett looked stunned and again tried to say something but Brosnahan continued. Get over there," he said pointing to the plaintiff's table. Then the year-old Cotchett rose to his full height and took a step toward the year-old Brosnahan, who in turn squared his shoulders to Cotchett and continued. Imagine the lawsuits. Then Cotchett shrugged and turned back to the plaintiff's table and attempted to laugh off the encounter. Outside the courtroom Brosnahan said he was frustrated because Cotchett was apparently going to disobey the judge's order.
Cotchett said he wasn't trying to divulge Pacific Lumber's prior bad acts. Once it's in evidence, I can't talk about it?
By Friday, the plaintiffs had presented five witnesses, including U. Rep George Miller, who testified that the American taxpayer did not get the best value in the Headwaters transaction because of the excessive logging that occurred on surrounding timberlands.
Secretary of the Treasury--and Navy--and one-time presidential candidate. As his wealth has grown, so have his antagonists. They have included taxpayer watchdogs, land-use activists and the likes of Susan Marx, widow of Harpo, and her friend Frank Sinatra, who tried to thwart a Hurwitz project in their town of Rancho Mirage. Sinatra even wrote his own newspaper ad in the battle against Hurwitz. But enemies and aides agree that he is tough and persistent. Hurwitz works in a penthouse office on the 22nd floor of a plain, beige Houston office building, across the street from a diner.
He keeps two secretaries busy--one on the a. Aides say he tends to pace the room, trailing a long phone cord as he calls a network of bankers, brokers, analysts and friends. No, how about this other angle? Well, call him again. Well, maybe if you had--have you asked him this? Did you talk to his wife? Did you talk to the florist? Did you talk to the barber?
The town master plan banned building on the skyline. The project would also invade the turf of the rare, protected Santa Rosa peninsular bighorn sheep. Fearing municipal bankruptcy, council members let the development go ahead.
Later, when the details were being worked out, Hurwitz sued again. In a nerve-rattling assault rarely seen in land-use fights, his lawyers sued a new set of council members individually, warning that they could be personally liable for multimillion-dollar damages. Worried for their life savings, and with spouses and bankers asking anxious questions, that council also reached accommodation.
Bleaman, mayor of Rancho Mirage, earlier this summer. I consider him immoral. The deal always changes. A trim, tennis-fit, private man, Hurwitz drives his own car to work from an expensive condominium, but not the block-long Houston estate he could easily afford. He also owns no airplane or yacht and flies commercial. And he routinely applies the same standards to acquisitions--stripping corporate airplanes and other management perks from the companies he buys. Note that while the value of Hurwitz's holdings collapsed, so did the value of most stocks, so it was possible to buy companies very cheaply at that time.
Yet Summit was taken public its shares began being sold on a stock exchange with Hurwitz as chairman. To do this Mr. Hurwitz signed a consent decree saying he would engage in no future violations of securities laws. Charles Hurwitz was charged with insurance fraud for illegally transferring funds between his corporations. At this point the reader might ask how, with so many corporation bankruptcies in his wake, Charles Hurwitz managed to continue to buy new companies.
To make a long story short, enough money had been taken out of the businesses by Charles Hurwitz and his group to buy or set up other companies. Hurwitz became CEO of Federated. The Hurwitz group then created a transaction in which Federated which they controlled and mostly owned bought SMR Holding which they owned and assumed SMR's debt, which included the very loans used to buy Federated in the first place!
Then SMR defaulted on the loans, and after negotiations paid 53 cents on the dollar to the lending banks. SMR dissolved and, for a while, Federated was the Hurwitz's main business vehicle. There are few better examples of a successful bankruptcy shuffle than this.
Federated had stockholders other than the Hurwitz group. In , Hurwitz engineered a reverse, 1 for 40, stock split that drove out many small investors, so that there were less than shareholders left in Federated.
This was largely in order to avoid filing public disclosures with the SEC, but it also an example of the Minority Squeeze technique frequently used by Mr. I'll note here that this story is only an outline of Charles Hurwitz's career. It can't possibly describe all his transactions, or use of the minority squeeze, or even any one transaction in full detail.
But is should be said that there have been several lawsuits against Mr. Hurwitz involving this issue. Federated Development Corporation had one legitimate business interest: real estate management. But its real money would come from corporate takeovers and the practice known as Greenmail. Through an extremely complicated series of transactions, some legitimate investments in undervalued companies and some Greenmail campaigns, many masterminded by the infamous leveraged buyout and junk bond specialists Drexel, Burnham, Lambert led by Michael Milken and many involving junk bonds, Hurwitz would build up his net worth and that of Federated during the 's and 's.
One critical step was Charles Hurwitz's hostile takeover was of McCulloch Oil Corporation, which was a large corporation focused on oil exploration and extraction. In the takeover was completed and the company was re-christened MCO Holdings.
By stock manipulations Hurwitz increased his voting control. Drexel issued junk bonds for MCO Holdings. Junk bonds carry a high interest rate because they are risky investments backed by uncertain revenue streams. The proceeds are almost always used to takeover other companies.
Hurwitz also tried to force out minority shareholders in Federated Development Company at a loss through a 1 for stock reverse split, but was blocked by lawsuits.
Delugach, Al 30 May Los Angeles Times. Harris, David. Sierra Club Books, New York Times, December 6, Greenhouse, Steven.
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