It's the stock price, stupid!

High-flying Danny Wettreich has shut down companies, destroyed jobs, and drawn the scrutiny of two federal agencies, But he says it's what the stock market thinks of him that counts.

Wettreich proposed an all-paper transaction. Camelot would purchase her company for $312,000, to be paid through Camelot shares, priced at $3 apiece. Williams received no cash, but she and a partner also received preferred shares in Camelot.

Only days after the deal closed on July 8, 1991, Wettreich fired all but five of Williams' employees, telling her it would be more economical to contract out the work. Williams was skeptical. But "at first," she says, "I tried to tell myself it would work out."

Things went from bad to worse. Though Williams says Wettreich assured her he would expand the company and let her call the shots, he was making all the decisions. She was angry and panicked, but she could see no way out. Wettreich had acquired control of all her company's receivables, which she later valued at $249,912. She says she no longer even had access to the company's accounts. Without notice, Williams says, Wettreich stopped paying her company credit-card bill. "You can't do anything," she recalls, "because you don't have any money."

In December 1991, the Dallas Area Rapid Transit Authority rejected BII's request for certification as a woman-owned business, citing Williams' sale of the company to Camelot. The company's formal status as a business owned and controlled by a woman had been critical in its receipt of work from the RTC. Though the DART ruling suggested the RTC would also conclude that the Camelot purchase constituted a change in ownership--and RTC rules require a contractor to inform the agency of any ownership change--Wettreich decided to say nothing to the RTC, presumably to protect the work it received under the "woman-owned" provisions, according to Williams.

The company continued to work for the RTC.
In March 1992, Williams quit, saying she was unwilling to continue to collaborate in the company's misrepresentations. "BII is continually represented as a woman-owned business, when, in truth and in fact, it is not," Williams wrote Wettreich in her resignation letter. "This violates my personal honesty, my sense of character, and demonstrates a lack of integrity on the part of the company which is intolerable to me." The following month she told the RTC of her concerns about BII's woman-owned status.

While the RTC began to investigate, Williams filed a $3 million suit in Collin County district court against Wettreich and Camelot. She alleged that Wettreich had misrepresented BII as a woman-owned business to win work from the federal government.

Researching Wettreich's past, Williams and her attorney, Larry Boyd, added other claims: that Wettreich converted company assets to personal use; that he violated SEC rules by failing to notify Williams, then still a Camelot director, of a March 1992 private-stock placement; that Wettreich violated securities regulations by failing to disclose Williams' resignation in SEC filings; that he allowed his children's trust and brother to buy Camelot stock at unfairly low prices; and that Wettreich manipulated the company's stock to dilute the value of others' shares while boosting his own assets and those of his children's trust and a company owned by his wife.

On the stock-manipulation allegations, Williams cited Camelot's April 1992 purchase of a building owned by the children's trust; the building was then transferred back through Camelot to another company, Forme, Inc., which Wettreich's wife controlled. (One former business associate pronounces that company's name "for me," insisting that the name reveals the company's true purpose. Wettreich says he cannot remember his inspiration for the name, but that the final "e" is silent.)

Wettreich denies any stock manipulation or confusion of personal and corporate assets. He says he disclosed all material corporate events in his routine filings to the SEC and that Williams' suit, on many points, reflects "an incorrect understanding."

The RTC sided with Williams on her central point. In correspondence with the agency, Wettreich had claimed that his wife, Zara, through her shares in Camelot, owned a majority of BII, Williams' old company. He also claimed that Fitzgerald, his in-house female lawyer, operated the Camelot subsidiary on a day-to-day basis.

On February 22, 1993, Howard Cox, director of the RTC's Office of Contractor Oversight & Surveillance, recommended revocation of BII's woman-owned status. While agreeing that Zara held majority ownership in the Camelot subsidiary, Cox concluded that, from July 1991 through August 1992, Danny Wettreich had run the business, setting its policies and doing the bulk of its hiring and firing. The RTC barred BII from receiving preference in contract awards on the basis of woman-owned-and-operated status.

By the time of the RTC ruling, the decision about BII's status was moot; there was no more promising investigations company.

A year later, in March 1994, Wettreich reached an out-of-court settlement with Williams. The terms of the settlement remain confidential, but her attorney, Larry Boyd, says the deal covered the costs of her litigation and compensated her for her lost business.

Today, Wettreich dismisses the significance of Williams' suit. He paid her, he says, because "the cost of the litigation was horrendous." About Williams, he says, "This was a disgruntled ex-employee"; about her allegations, "Pure nonsense."

Wettreich offers no apologies for shutting down companies. "My function is to do what is correct for my stockholders. If our decision was to close the business down, the result has been positive for our shareholders."

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