Fit to be fried

Idaho's potato king accuses a dead Dallas oilman and his sons of a multimillion-dollar scam

The "independent" board, appointed by Box Energy, included Doak Walker, former Dallas Cowboy Roger Staubach, and former congressman Kent Hance, says an attorney involved in the negotiations.

The stiffed shareholders never accepted the board's purported objectivity, the attorney says, and "they were not successful in reaching a resolution of the matter." At one point, Box offered to resolve the suit by transferring a huge chunk of his personal stock back to Box Energy, but Simplot and the others steadfastly rejected that suggestion.

Box took his settlement offer before a federal judge, but it didn't fly, and a final judgment was ultimately entered in the case.

While the suit and negotiations after the verdict were dragging on, Simplot and his allies say, Cloyce Box used the time to shuffle his assets, making it harder for the investors to recover the money they are owed.

In their latest suit, the Simplot group contends that Box pulled another trick similar to the pipeline deal--effectively transferring valuable stock that he owned to his four sons in an effort to put it beyond the reach of investors.

The stage was set, they argue, by the time Cloyce Box died in October 1993. The suit accuses the four Box sons--Tom, Don, Doug, and Gary, as well as past and present members of Box Energy's board of directors--of then continuing the effort started by their father. The sons, the suit alleges, took good care of their own financial interests while shutting out investors seeking their just due.

(Through a spokesman, Tom Box, 39, the president of Box Energy, who assumed control of the family's enterprises after his father's death, declined to comment on the charges. Doug and Gary Box also declined to discuss the allegations. William J. Burnett, Box Energy's general counsel, did not return phone calls from the Observer.)

Cloyce Box's alleged subterfuge was accomplished, the lawsuit argues, by exploiting various interlocking companies that are all controlled by the Box sons, principally Tom Box.

Key to the shuffle, the suit contends, is the Box Brothers Holding Company, a family-controlled entity.

According to the suit, before he died, Cloyce Box pledged his stock in Box Energy to Box Brothers Holding Company as security for about $16 million that Cloyce Box supposedly owed the holding company. After the elder Box died, son Doug declared his dead father's estate in default on the loans. Tom Box and Don Box, acting as executors of their father's estate, did not take steps to pay off the alleged default.

So, in early 1994, the Box Brothers Holding Company--controlled by the sons--declared the estate of Cloyce Box--also controlled by the sons--in default, and foreclosed on the notes.

That meant that stock worth about $43 million was transferred from Cloyce Box's estate to the holding company to satisfy an alleged outstanding $16 million debt.

Since Cloyce Box would be personally liable for the $28 million verdict, plus interest that had grown substantial by that time, the move helped shield money that could have been used to pay the judgment.

Then, last year, the Box Brothers Holding Company filed for bankruptcy protection in Delaware, gumming up its assets while the bankruptcy action was pending. The holding company emerged from bankruptcy protection just two weeks ago.

The sons, on behalf of Cloyce Box's estate, are also continuing to fight the initial $28 million verdict, and have an appeal pending before the U.S. Fifth Circuit Court of Appeals in New Orleans.

When all was done, Box Brothers Holding Company wound up with 57 percent of the shares in Box Energy, meaning the family still effectively controls Box Energy. Tom Box, who had been groomed by his father to take over the family business, ended up in control of the holding company.

And though they'd gained a $28 million judgment, the investors wound up with nothing but another fight on their hands.

J.R. Simplot, true to form, did not shrink from the challenge.
Simplot's latest suit levels scathing charges not just at Cloyce Box, but at his sons, arguing that they have carried on the old man's nefarious ways. It accuses the Boxes of "intentional, wanton and extreme deviation from reasonable standards of conduct."

Tom Box and Don Box, as officers of Box Energy, are also accused of "numerous acts of malfeasance, misconduct, negligence, self-dealing and engaging in conflicting transactions."

The Box brothers are not the only ones targeted by the suit, which also names numerous past and present company directors. Among those named is Doak Walker, the Detroit Lions teammate of Cloyce Box. Walker, from his home in Steamboat Springs, said he hasn't seen a copy of the latest suit, but still casts a vote of confidence for his late friend.

"They [the Boxes] owned those companies and they could do anything that they wanted," Walker says. "It was [Cloyce's] business and he could do pretty well what he wanted to do. Knowing Cloyce in the past, I know he did everything right."

Former Miss America and television personality Phyllis George is also named in the suit, although she left the board of directors shortly after Cloyce Box died.

Also named is Kent Hance, former congressman from West Texas, unsuccessful U.S. Senate candidate, and former member of the Texas Railroad Commission, which regulates the state's oil and gas industries. Hance, who is prone to drop the names of football greats like Doak Walker in conversation, did not return repeated calls to his law office in Austin.

« Previous Page
Next Page »
My Voice Nation Help