By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
In October 1988, Wettreich acquired the company that would become the predecessor for Camelot. In what the Dallas Business Journal termed "an unusual stock transaction," Wettreich used his children's trust, a stock-transfer company he had established, and the issuance of new shares, to take control of Bolyard Oil & Gas, a struggling Denver-based publicly traded company, from the family members who had held majority ownership.
On paper, Wettreich merged a private stock-transfer company he owned into Bolyard, paying for the acquisition with no cash but by issuing 8 million new shares of stock. He gave the former directors of Bolyard shares in the new company. In practical terms, the deal meant that Wettreich assumed control of the Denver oil company, which traded on the NASDAQ exchange. After the merger, he moved Bolyard's headquarters to Dallas. The family directors resigned from the board. Wettreich promised in press releases to expand and diversify the company, which had reported a $67,785 loss on the previous year's revenues of $100,819.
Within three months of Wettreich's takeover, he had changed the company's name to Camelot Corporation. Wettreich says he selected the name because it had "good connotations on both sides of the Atlantic"--martyred President John Kennedy in America, the legend of King Arthur in England.
With his new company, Wettreich threatened a series of hostile takeover bids, mostly in the oil industry. Three of his targets were: Big Piney Oil & Gas Company, based in Salt Lake City; Golden Triangle Royalty & Oil Company, in Cisco, Texas; and Tyrex Oil Company, based in Casper, Wyoming.
Wettreich did not actually acquire any of the companies. But he didn't walk away empty-handed either. In April 1990, Wettreich bought 1.8 percent of Big Piney's outstanding shares, announced a shareholder solicitation to replace the directors, and filed suit. The company offered him $75,000 to settle. Deposition testimony shows he took the money and backed off.
The Golden Triangle directors got the same result by playing hardball. Responding to his takeover moves, they sued Wettreich and dug up information about his past business dealings. "His general [approach] was to take over a company, strip it, leave the shareholders with nothing," says Golden Triangle director Robert Kamon, president of the company at the time. Kamon says Golden Triangle's tactics scared Wettreich off.
Wettreich denies he was intimidated, and says he quit simply because "the fight wasn't worth the winning."
In 1993, as Wettreich tried to take over Tyrex, his own auditors were complicating his ambitions. Hein & Associates, a Dallas accounting firm, had refused to meet the deadline for submission of Camelot's annual report to the SEC. In August 1993, Wettreich fired the accountants; that month, he also abandoned the move on Tyrex. "All we can do is hire more auditors," he told the Dallas Business Journal. "They didn't complete our audit, and we don't have an explanation for it."
In a letter to the SEC reported in the November 15, 1993 issue of Accounting Today, Hein & Associates said it failed to meet the deadline because of concerns about Camelot's transactions with members of Wettreich's family, as well as the propriety of certain Wettreich deals. The accountants reportedly asked the SEC to look into the company's acquisition of a building and a related mortgage, payable to a trust for the benefit of Wettreich's children; Camelot had issued $175,000 in preferred stock to repay the debt. The deal, the accountants stated in their letter, "caused us to question the economic substance of the transaction."
As a matter of policy, the SEC will not confirm or deny the existence of a pending investigation or one that led to no formal action. There is no formal record of any action against Wettreich or Camelot.
A Dallas partner at Hein & Associates, while declining to elaborate, confirmed that the SEC did make inquiries about the matter. Two former Camelot employees also say SEC investigators interviewed them about Camelot and Wettreich.
Wettreich says he is unaware of any SEC probe into any of his dealings, and that no one from the agency has ever questioned him.
While all three oil companies struggled to escape Wettreich's grasp, other businesses embraced him, at least at first.
Kathleen Williams, 48, now works as a professional photographer in Portland, Oregon. When she met Danny Wettreich in July 1991, she owned and operated Business Investigations, Inc., a successful private-investigation firm that concentrated on researching financial institutions and their officers.
Williams' firm was one of 28 nationally to have the approval of the Resolution Trust Corporation to probe failed financial institutions, a growth industry in those days. The year she met Wettreich, she had won the small businessperson of the year award from the Association of Women Entrepreneurs of Dallas. Inc. Magazine had even run her picture. Internal Revenue Service returns show her six-year-old business earned $67,275 before taxes on revenues of $2.55 million and that she employed more than 100 people.
Out of the blue, Williams recalls, Wettreich telephoned her during the summer of 1991 and told her Camelot Corp. wanted to buy her company.
A professional at ferreting out financial bad guys, Williams found Wettreich convincing. "He wined and dined us for six weeks. He came across as real smooth." She says Wettreich promised to help her expand the business nationally, to let her keep running it, even offered her a seat on his board of directors. She knew she could be out-voted by Wettreich and his in-house lawyer, Jeannette Fitzgerald, because they comprised the entire board, but Williams trusted Wettreich.