THAT IS NOT
ENOUGH THEN $600,000,000 IS EVEN BETTER! November 18, 1998
Type face changed on August 8, 2001
THAT IS NOT
ENOUGH THEN $600,000,000 IS EVEN BETTER! Too many people cannot stomach the truth and attack the person who tells it. I stand by what I have written about Vesco. She's a Vesco, that's for sure!
He is a fugitive from justice in the United
States and is on the wanted list of the FBI and it is claimed he has been
jailed in Cuba for violating their drug laws. It all speak for itself!
This is 3 articles linked together because it is a natural to link them together. They all concern the now defunct IOS (Investors Overseas Services) put together and managed by the now deceased Bernie Cornfeld.
Here are the three articles and access them as you wish, or not, as the case may be!
| 1. My Involvement. |
| 2.King Resources |
| 3.Robert Vesco |
The Investors Overseas Service (IOS) was invented by one Bernie Cornfeld. He and his associates invented a great many things in the mutual fund business including a Fund of Funds which is just what it was named and did! You bought shares in a mutual fund called FOF (for short) and it invested in other mutual funds. The Chairman of the FOF was one C. Henry Buhl III whose family were the descendants of the Fisher Body family and obviously, quite well to do (you may or may not remember that the Fisher Body company made the chassis of the GM cars).
The Board of Directors was a quality Board. It included the former Governor of California, Pat Brown; James Roosevelt (a son of Franklin Delano Roosevelt); Wilson Wyatt (former Lieutenant Governor of Kentucky); the head partner (I forget his name) of the foremost Brokerage House in Canada; a former advisor (Sir.....) to the Chairman of the Bank of England; Alan Conwill of Willkie, Farr and Gallagher and myself.
The following picture was taken at a Directors meeting in Geneva on August, 1969:
Looking at the picture that is Governor Pat Brown on the right, the Canadian broker on his left, me holding forth about something and the English "Sir" ( a neat and honorable man) in the back.
At the time the Fund of Funds was having major problems with both the SEC and with its corporate finances (they were in financial trouble).
I was no longer on the Board but had become an advisor to the Board since the SEC objected to my being on the Board because I had my own mutual fund. As an advisor to the Board I attended each and every meeting but had no vote and was always allowed to express myself about anything I wanted to until.......(see story about Vesco). An occasional participant in the meetings was Arthur Lipper. His Bio contains no reference to his deep involvement in IOS and all its subsidiaries. He was not a Director who only spoke on occasion and then meaningfully.
You will notice the distressed and exasperated look on the face of the Canadian broker who is looking at me. That was in August, 1969 and we were meeting almost once a month because we had major, major problems with some of the investments made by FOF.
Those investment problems is what this article is about.
John King was tried and found guilty in a Federal court of fraud (I believe the President of King Resources was also found guilty of fraud). He served time in jail and was released after a very short sojourn (my memory says '6 months' but that may or may not be accurate: I know it was not very long but I never tracked his jail sentence) and returned to active life looking nothing the worse for wear and tear (several years after he was indicted and served time I met him at a ski resort in Colorado. He had not changed one iota).
According to my calculations he or his firm or both managed to get away with about $82,000,000 of Fund of Funds money which was never, to the best of my knowledge, accounted for by him or King Resources in Denver, Colorado. The $82,000,000 was money invested with John King by the Fund of Funds.
As an advisor to the Fund of Funds I testified as a witness for the Federal Prosecutor against John King in Federal Court in New York City but neither the defense nor the prosecution liked what I said so they almost immediately dismissed me!
When it became obvious that the investment of FOF in King Resources were not paying off and there was one problem after another of accounting for those investments the Board asked me to investigate what King was doing with the money of Fund of Funds.
I went to Colorado to discuss the entire situation with John King and I got the infamous run around, in spades doubled!
I am not about to go into any great details but give you a few simple conclusions which I reported to the Board of Directors of Fund of Funds:
"I have yet to see any problem, however complicated, which, when you looked at it in the right way, did not become still more complicated."Poul Anderson (b. 1926), U.S. science fiction writer. New Scientist (London, 25 Sept. 1969).The Columbia Dictionary of Quotations is licensed from Columbia University Press. Copyright © 1993, 1995, 1997, 1998 by Columbia University Press. All rights reserved.
Trouble after trouble had been piling up on the Fund of Funds. The Directors were meeting about every 3 or 4 weeks in Geneva. On one momentous occasion when I walked in the front door of my home, having just returned from Geneva, my wife greeted me with "You have to go back. they just called another meeting". I went to Geneva for Directors meetings 13 times in one year!
Everybody was getting tired of meeting in Geneva, tempers had been rising cumulatively and it was an enormous physical burden on the Directors, all of whom came from North America. Pat Brown had to come from California!
Henry Buhl, realizing that everyone was both physically and mentally exhausted, called a meeting in Bermuda.
As an advisor to the Board of Directors at that time C. Henry Buhl III asked me to attend the meeting. The meeting began at ten o'clock in one of the conference rooms of a resort hotel.The atmosphere was not only heavy but grim.
Trouble was compounding on trouble not the least of which was the fact that the SEC was after IOS and each of the individual funds it managed! IOS had one suitor after another making presentations to the management who had no more idea of what to do than a 2 year old child confronted with the broken cookie jar!
The IOS problems were legion: a shortage of operating funds, SEC harassment, Swiss antagonism and country after country ruling IOS as illegal in their country.
And of course one con man after another was showing up on the doorsteps. I do not know of one reputable organization in the entire world that was willing to step in and bail out IOS
That was the environment when the Board of Directors of Fund of Funds met in Bermuda. Grim is an understatement.
Henry Buhl opened the meeting with a statement. Robert Vesco asked if he could address the Board before the meeting officially began. The directors consented to the suggestion of Henry Buhl.
Robert Vesco immediately began a tirade about the Board. He threatened them with everything.He talked about the criminality of the Board of Directors, criminal liability, misuse of trust, misuse of funds, misuse of power, criminal charges he would bring against the Board and got more vicious each and every minute.
I couldn't stomach it any longer and broke in with this question:
"Who are you and what right do you have to threaten this Board of Directors. Who the hell do you think you are?"
At that Wilson Wyatt, former Lieutenant Governor of Kentucky, said "shush, let him, talk".Governor Pat Brown than seconded it. I looked at them in total dismay and turned to Henry Buhl but he was looking away.
I then took a piece of paper and wrote on it:
I signed it, put the time and date on it, handed it to Henry Buhl, got up walked out of the room, packed my bag, went to airport and got the next plane back to New York. See, if you will, my article entitled
WALK".Robert Vesco got control of the Fund of Funds and according to my information managed to transfer about $500,000,000/$600,000,00 from the Fund into his personal accounts. He absconded ultimately and has been a fugitive from American justice ever since. He is now, they say (I don't believe it), serving 13 years in a Cuban jail for violations of Cuban laws. The following newspaper report says he stole $200,000,000 but that is incorrect.