Serpent on the Rock (66 page)

27:
Darr's high school background from interviews and the West Boylston High School yearbook for 1964. College background from interviews and the Holy Cross yearbook for 1968.

27: A copy of Darr's military service record with the U.S. Air Force was obtained by the author.

28:
Dottie Darr's background from interviews, her obituary in the
Worcester Telegram
, May 6, 1992, and a personal letter she wrote in 1975 describing her beliefs.

28–29:
Details of Richard and Dottie Bailey's land investments from interviews and documents in the deals. The documents include records pertaining to contract number DN 4449 with the General Mortgage Corporation for the purchase of lot 37 in Deerwood North, as well as to the Manchester Bank's mortgage loan number 06–732–470–5, given to the Baileys for the purchase of the New Hampshire property. In addition, documents from the Richey Company, a real estate concern in Barnstead, New Hampshire, confirm Darr's involvement in the deal.

30–32:
Details of Darr's work at Merrill from interviews, with some information provided in the sworn testimony of Anton H. Rice III before the SEC on December 16, 1991, for case number NY-5975, captioned “In the Matter of Certain Limited Partnership Offerings.” The testimony, which was obtained by the author, is not publicly available.

31:
Description of Barry Trupin's house in Southampton from the
New York Times
, April 1, 1984, and March 31, 1989.

32:
The description of Darr's demand for $50,000 based, in part, on notes of lawyers' interviews with Barry Trupin.

The description of Darr's visit to United States Trust Company comes, in part, from the deposit slips of January 30, 1978, which were obtained by the author. The payment to Merrill in the Mattel deal is described in the June 2, 1977, letter from Bertram C. Izant, general counsel of Itel Investment Corporation, to Janet Bascatow of Merrill Lynch Leasing Inc.

33: Darr's statements at the January luncheon meeting are from a letter from him to DeMarco, dated January 16, 1978.

The trail of payments for the $30,000 that eventually went to Darr was reconstructed by the author from copies of the original checks and deposit slips. The price and equity of Darr's house in Stamford, Connecticut, come from the mortgage and deed for the property filed with the Stamford town clerk, reference number 2459–179. The sale closed on April 24, 1978.

36:
Darr's transactions with the Josephthal cashier on July 17 is based, in part, on a check he wrote on that date, which was obtained by the author.

37:
Darr's proposal to Graham and details about Merrill's investigation of Rice come from Rice's 1991 SEC testimony. In that testimony, Rice said that he believed the lunch occurred in 1981, which would be long after Darr joined Bache. In a subsequent interview, his lawyer, Stephen Kupperman, said that the testimony was wrong and that his client was sure the meeting occurred while Darr was still at Josephthal.

38:
The tombstone advertisement announcing Bache's hiring of Darr from the
Wall Street Journal
, November 9, 1979.

CHAPTER 2

40:
The date and time of the airport meeting between Jacobs and Belzberg is from “How Bache's Message Angered the Belzbergs, Intensifying the Battle,”
Wall Street Journal
, March 11, 1981.

42–43:
Details on the death of Jules Bache from the
New York Times
, March 24, 1944, and interviews with people close to the Bache family.

Terms of Jules Bache's will from “Bache Estate Put at $3,000,000 Net,”
New York Times
, September 26, 1948, and “Bache Willed Art to Metropolitan,” March 30, 1944.

42–48:
No history of the firm could be told without reference to the seminal article, “The Botching of Bache,” by Chris Welles, published in
Institutional Investor
in September 1980. Many details of Harold Bache's battle for control after his uncle's death, his subsequent political moves, and his personal idiosyncrasies were first disclosed in this account.

43:
The financial terms and number of new investors Harold Bache found for the firm after his uncle's death is from
Current Biography
, May 1959.

43–44:
The growth of Bache under Harold Bache from the
New York Times
, March 16, 1968.

45–46:
Some details of Leslie's time in power from Welles,
Institutional Investor
, September 1980.

The performance of the stock market in 1970 from John Brooks,
The Go-Go Years
.

46:
The story of Jacobs's plane crash, and some details of his career, from a September 21, 1994, letter written by him.

47–48:
Some details of Jacobs's helicopter ride with Tsai from
The Year They Sold Wall Street
by Tim Carrington.

55–60:
Two books that examine the silver crisis are Stephen Fay's
Beyond Greed
, published in 1982, as well as Harry Hurt III's excellent examination of the Hunt family,
Texas Rich
, published in 1981. A number of delicious details about the scandal cited in this book come from those two works.

55:
The quote from Jacobs's letter to the Hunts from the statement of facts from the Hunts' 1982 settlement with the SEC of securities law violations charges.

CHAPTER 3

61:
Some descriptive details of the Securities Industry/United Way Challenge Race from the
DLJ Confidential
, an internal newsletter of Donaldson Lufkin & Jenrette, for the weeks of October 1, 1980, October 8, 1979, and September 21, 1979.

Background of Bill Pittman from his sworn testimony of February 10, 1992, in the case captioned In Re: Prudential-Bache Energy Growth Funds, MDL docket number 867, filed in the U.S. District Court for the Eastern District of Louisiana. This testimony, which is not public, was obtained by the author.

62:
D'Elisa's performance in the Securities Industry Race from a 1980 log of racing times.

65:
Hutton's performance in tax shelter sales from James Sterngold's
Burning Down the House
, his path-breaking 1990 book on Hutton's demise.

68:
Some details of Trace Management from the August 1, 1991, testimony of James J. Darr before the SEC in case number NY-5975, captioned “In the Matter of Certain Limited Partnership Offerings.” The testimony, which was obtained by the author, is not publicly available.

70–71:
Some details of the Integrated Energy deal, including the background of its principals, from its prospectus dated March 24, 1981.

77–82:
Some information regarding the investment structure of Harrison Freedman Associates and the role of Raymond Freedman in the company, from Freedman's testimony of August 31, 1993, in
First
v. Prudential-Bache, number 91–CV–0047, filed in the U.S. District Court for the Southern District of California.

Harrison's relationship with Phillips N.V. is also described in the Freedman deposition.

78–79:
Some details of Harrison's childhood and background from his sworn deposition of April 28, 1994, in
First
v.
Prudential-Bache
, as well as from his deposition of November 7, 1988, in
McNulty
v. Prudential-Bache, filed with the U.S. District Court for the District of Minnesota, Fourth Division.

79:
Some details of Harrison's crimes from a confidential security report dated July 25, 1980, by Cartel Security Consultants, and documents filed in the case
United States of America
v.
Clifton Stone Harri
son, number CR-3-984, with the U.S. District Court for the Northern District of Texas.

81:
In his sworn deposition of April 1994, Harrison would claim that he received recommendations for a pardon from Judge W. M. Taylor Jr., the man who sentenced him to prison, as well as Henry Wade, the legendary district attorney in Dallas who had been scheduled to prosecute Lee Harvey Oswald for the assassination of John F. Kennedy. But an internal memorandum of the U.S. Justice Department, dated October 9, 1974, which lists everyone who provided a recommendation to President Ford for Harrison's pardon, does not list the names of any of those people.

81:
The collapse of Harrison's real estate investments and his falling out with his partners is described in Raymond Freedman's deposition of August 31, 1993.

82:
Freedman's “hell no” statement from his deposition, cited above.

83:
Harrison's purchase of three magnums of Dom Perignon for the Bache lawyers is documented by a receipt for the purchase that was obtained by the author.

89:
Paton's promotion of Darr as a regret for the investigation is described by Darr in his testimony before the SEC on January 21, 1992. This testimony was also given in case number NY-5975, captioned “In the Matter of Certain Limited Partnership Offerings.”

CHAPTER 4

84:
Details of Bache's effort to track down information about Belzberg were first reported in Carrington,
The Year They Sold Wall Street
. Details of the customs report about Hymie Belzberg's contacts with Meyer Lansky in part from Carrington,
The Year They Sold Wall Street
, and the
Wall Street Journal
, March 11, 1981.

94–101:
Many of the details of the birth of Prudential Insurance come from two fine histories of the company. They are
The Prudential: A Story of Human Security
, by Earl Chapin May and Will Ousler, published in 1950; and
From Three Cents a Week
, by William H. A. Carr, published in 1975.

Also, see Robert Sheehan, “That Mighty Pump, Prudential,”
Fortune
, January 1964, and Robert Bendiner, “The Governor Who Couldn't Stop Stealing,”
Real Magazine
, 1956. Also, see the
Wall Street
Journal
, August 15, 1960.

101–4:
Dates and details of the Prudential negotiations with Bache from interviews and the Schedule 14D-1 describing the deal that was filed with the SEC on March 27, 1981. Also, see
Fortune
, April 20, 1981, and the
New York Times
, March 19, 1981. Also, see “Your Friendly Broker, the Pru,”
Fortune
, April 20, 1981.

CHAPTER 5

105:
Some details about Bill Pittman's background from his deposition of February 10, 1992.

107:
Some details about Paul Proscia's background from his deposition of March 25, 1987, in
McNulty
v. Prudential-Bache et al., civil number 4–85–765, U.S. District Court for the District of Minnesota, Fourth Division.

115–16:
Details of the signing ceremony for the Economic Recovery Tax Act from the
New York
Times
, August 14, 1991, as well as
Newsweek
, August 24, 1981, and
Time
, August 24, 1981. Some details of ERTA from the
Congressional Quarterly
, 1981 Chronology.

116:
Details of Regulation D from
Inc
., October 1981, and
The American Banker
, September 17, 1981.

118–23:
Some details of the troubles at Bache after the Prudential merger from “After a Year, Prudential's Takeover of Bache Mostly Causing Problems,” the
Wall Street Journal
, July 16, 1982. Also, some financial details of the firm's performance at that time from
Fortune
, January 24, 1983.

120–21:
Some details of the one-year meeting of Bache and the showing of
Annie
from the
Wall Street
Journal
, July 16, 1982.

122:
Ball's comments to headhunters from Gregory Miller in “Can George Do It?”
Institutional Investor
, July 1984.

CHAPTER 6

125:
The dialogue from Bradford Ryland's conversation with George Ball from Ryland's sworn testimony of March 24, 1987, in the arbitration captioned “In the Matter of the Arbitration Between Christopher Heino and Prudential-Bache Securities.”

128:
Details of Fomon's battle for control of Hutton and Ball's decision to back the candidate who eventually lost from Sterngold,
Burning Down the House
.

129:
The growth of Hutton, in part, from Sterngold,
Burning Down the House
.

130:
The financial figures from the Hutton check-kiting scandal are from Sterngold,
Burning Down the
House
. Also, see
Sudden Death: The Rise and Fall of E. F. Hutton
, by Mark Stevens.

Ball's use of Monopoly money in bonuses to encourage aggressive efforts to recapture bank float is described in “E. F. Hutton Mail and Wire Fraud,”
Report of the Subcommittee on Crime of the House Judiciary Committee
, December 1986.

Ball's May 12, 1981, memo is described in Panel Decision 88–19 of the New York Stock Exchange, April 11, 1988.

133–34:
The dialogue between Schechter and bank regulators at the February 10, 1982, meeting in part from Sterngold,
Burning Down the House
.

134:
The description of the meeting between Hutton lawyers and Arthur Andersen accountants from two in-house memos to the file at Arthur Andersen, dated March 7, 1980, by Louis T. Lynn and John Tesoro; and February 23, 1982, by John Tesoro and Joel Miller.

135–36:
Some details of Franco Della Torre's financial dealings with Merrill and Hutton originally from Ralph Blumenthal,
Last Days of the Sicilians
, 1988.

136:
Some details of Al Murray's first steps in investigating the Hutton check-kiting scandal from Barbara Donnelly, “The Man Who Nailed Hutton,”
Institutional Investor
, September 1985.