By Joel Warner
By Michael Roberts
By Alan Prendergast
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Unexpected problems cropped up continually, driving costs skyward. A large section of the Rossonian's rooftop cornice toppled over in a rainstorm, and Yates had to have it refabricated with stucco-covered Styrofoam. Windows ordered for the building had to be returned because they didn't satisfy federal guidelines for historic structures. Workers discovered a pile of asbestos insulation hidden in a pit in the basement, and Yates had to pay someone to get rid of it. "That ran the budget up $30,000 right there," Yates says. "Asbestos removal is a bear."
Today only the Rossonian's ground floor remains empty. Yates says his dream is to find a tenant who will put an upscale jazz supper club in the space, a facility of the type he believes would draw Denverites to Welton Street and conjure up a bit of the Rossonian's colorful past. "People past a certain age have a Rossonian story to tell," Yates says. "We want them to come back down here."
Yates himself is a native of Kansas City, where he worked as a janitor at two insurance companies while still in high school and later got hired at one of them selling policies. In 1973, after a stint in the Air Force, he was recruited to Denver to work as an assistant to the president of American Woodmen's Life Insurance Company, one of only a few dozen black-owned insurers in the country. He rose quickly through the ranks, becoming executive vice president in 1979. The company's progress was less impressive: It fell into a steady financial decline and in 1988 was forced into receivership, the insurance equivalent of Chapter 11 bankruptcy.
Yates became president of American Woodmen's in 1991 and fought to keep the company alive. He was unsuccessful. Last August the company officially went belly up when Denver District Judge R. Michael Mullins ruled that American Woodmen's had no chance of regaining solid fiscal footing and ordered the state to liquidate its assets.
Yates says that despite the company's failure, his tenure at American Woodmen's is a source of professional pride. The company was in a difficult financial position when he came on board back in the Seventies, he says, and he was able to help keep it afloat for close to twenty years. "If people really understood everything we went through, I think the prudent man would say, `God, these folks hung on a long time and they did well with what they had to work with,'" Yates says. "When the judge slammed down the gavel for the last time, I was still trying to put together deals to save the company. I wanted to fight until the fat lady sang."
Public records related to the company's demise show that in the years leading up to the liquidation order, Yates desperately tried to shore up American Woodmen's finances. He formed a subsidiary in an unsuccessful effort to lease business equipment to government agencies. He took the company into the real estate market, purchasing the Rossonian and Five Points Plaza, along with a number of other properties. It didn't work, and as cash flow dwindled to a trickle, Yates even laid off the company janitor and began cleaning up the company headquarters on Downing Street himself, vacuuming the rugs and emptying trash cans after work. "I can't think of anything he didn't do to save that company," says Thomas Frank, an attorney for the state Division of Insurance. "He moved heaven and earth."
But last August, shortly after the liquidation order was entered, insurance division officials made an alarming discovery. While picking through American Woodmen's books they ran across an account at Norwest Bank, called Woodmen's Trust, that Yates had never told them about.
Further investigation revealed that Yates had "misused" the account, according to pleadings written by Frank and filed in the American Woodmen's liquidation case. Insurance premiums from policyholders had gone into the account, Frank discovered, but Yates had used it to pay at least one personal debt and other expenditures not directly related to the operation of the financially beleaguered company.
In October 1992, for instance, Yates had written a Woodmen's Trust check for more than $3,000 to the Colorado Department of Revenue to pay a personal income tax debt dating back six years. Yates had also used "WT," as he called the account, for political contributions, charitable donations, gifts for friends and other miscellaneous expenses.
Questioned by insurance regulators last October, Yates justified his personal use of Woodmen's Trust by pointing out that he had loaned the insurance company $10,000 of his own money during a period of financial crisis in the spring of 1992. Yates had borrowed the money from a business associate, he said, and pumped it into American Woodmen's so the insurer wouldn't go broke.
Yates says the controversy over the Woodmen's Trust account was largely due to personality conflicts with state regulators he felt were trying to take American Woodmen's down. "There were times I was very, very combative with these people," he says. "I thought they did some things that precluded my saving the company." The account was inconsequential, he says, but things "got ugly" because regulators were frustrated with the way he'd been dealing with them. "This was like payback time," he adds.