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BRUCE'S GENEROUS PALS

part 2 of 2
The Savings & Loan Connection

In 1991 Benson made much public hay over Senator Tim Wirth's ties to the national savings-and-loan debacle. Specifically, Benson accused Wirth of indirectly propping up an unhealthy industry through the senator's allegedly overclose relationship with junk-bond company Drexel Burnham Lambert.

Yet a couple of Benson's contributors also became tangled up in the savings-and-loan messes of the 1980s. Topping the list is Bo Callaway, who has written two checks to Benson totaling $5,000.

Callaway raised eyebrows several years ago when he purchased a resort near Crested Butte ski area. Buying the hotel wasn't a surprise--Callaway owns much of Crested Butte. What was interesting was Callaway's history with the very same hotel.

In 1983 he and his partners borrowed $31 million from several S&Ls to finance construction of the hotel. Two years later they defaulted on the loan. The hotel project was taken over by the thrifts and eventually built for $41 million. Subsequently, several of the thrifts--which lost millions of dollars on the deal--defaulted at a cost of millions of dollars to taxpayers.

In 1991 Callaway repurchased the hotel. The price: less than $10 million. Callaway has explained that he did nothing improper. He said he did not personally guarantee the original loan and that he took a financial bath on the project.

Benson's fourth-largest campaign contributor was TCD North, which owns the Denver Tech Center. The company has written Benson checks for $32,000.

According to state records, TCD's president is William Pauls. Among Pauls's many business ventures is his involvement in a large British company called EF International (TCD's vice president, George Wallace, also was an officer of EF). In the 1980s Pauls owned a controlling stake of the company with his friend, business partner and fellow Canadian, John Dick.

Dick, formerly of Cherry Hills, recently has found more fame than he was looking for. He has been accused by his estranged wife of helping bankrupt Denver developer Bill Walters spirit away millions of dollars into an offshore account on an island in the English Channel. This irritated the Resolution Trust Corporation, which estimated that Walters had $132 million in bad loans from the failed Denver thrift Silverado. Both Dick and Walters have denied the charges.

More recently, Peter Kellogg has found himself bogged down in his S&L connections. For the past several years Kellogg has been on the board of directors of CityFed Financial Corp. of Nantucket. One of the holding company's businesses was City Federal Savings Bank in New Jersey.

The thrift was taken over by the federal Resolution Trust Corporation in November 1989. This June the Office of Thrift Supervision issued a notice of charges against six of CityFed's current and former directors, including Kellogg. According to Tom Mason, a spokesman for OTS in Washington, the CityFed directors were charged with neglecting their fiduciary responsibility to City Federal Savings Bank.

Specifically, OTS has charged that the holding company, which had money on its books, failed to infuse the bank with adequate capital when the federal agency ordered it to. The subsequent failure of City Federal Savings Bank cost taxpayers $1.5 billion, according to OTS's reckoning.

Mason says that Kellogg, along with other directors, is being asked to pay a penalty of $51,750. In addition, five of the directors, Kellogg included, have been assessed $400,000 more in restitution fees by OTS. The agency levied a $2.65 million fine against CityFed itself.

The Prep School Connection

Benson likes to portray himself as the ally of the common man. That's partly what his bus tour through Colorado this spring was about. Still, when you are a millionaire, selling the common touch can be a dicey act. Like it or not, sooner or later many of your friends turn out to be millionaires. Many of them will be dyed-in-the-ascot blue bloods.

Much of the reason for that lies with Benson himself. Benson spokesman Sparrow stresses the candidate's "middle-class" roots, noting that Benson's father was a Culligan man and that the family lived in modest comfort on a farm outside Chicago. He adds that Benson worked his way up through the oil business.

Yet Benson is a graduate of a very private, very expensive New England prep academy called the Berkshire School, founded in 1907 in Massachusetts. According to Leon Weil, a Berkshire diploma runs in the family; Benson's uncle attended there, too.

So did a lot of rich people who have grown up and now give money to Republican political causes. Weil attended Berkshire and served on the board of trustees as vice president when Benson was president.

So when Benson came calling for support for his campaign, Weil was prepared to help. (Weil says Benson asked for $50,000, which was too rich for his blood. But he gave $20,000, then corralled additional money from, among others, Seattle pension manager Anthony Hovey, who gave $10,000, and National Review president Thomas "Dusty" Rhodes, who coughed up $5,000.)

Peter Kellogg is a graduate of Berkshire, says Weil. So is Kellogg's father; his sons have attended as well. (Unlike Weil, when Benson asked for the $50,000, Kellogg paid.)

And although $10,000 donor Gilder didn't attend Berkshire, he still has a connection. One of Gilder's instructors from his New England prep school, the exclusive Northfield Mount Hermon, is now the headmaster at Berkshire.

Not surprisingly, many prep-school grads have adopted, well, a prep-school-grad lifestyle. Gilder, for instance, who went on to Yale (Weil went to Princeton; Benson went to Cornell but dropped out before he graduated), has gained a reputation among moneyed Easterners for being a free-spending historical manuscript collector.

He purchases many of the papers as a team with Lewis Lehrman. The two men have amassed more than 2,000 historical American manuscripts at an estimated cost of $30 million, including letters of Washington, Jefferson, Lincoln, John Adams and Ulysses S. Grant.

Apart from valuable papers, Gilder has gravitated to the more traditional pursuits on which rich people spend their money: expensive ponies. Gilder races his horses under the name of Pell-Mell Partners, which stables twenty horses in England. One of them, named Cogent, last year won the Hennessy, a top-class steeplechase race in England.

Richard Gooding of Denver also likes the horses. The former PepsiCo bottling magnate, whose estimated worth, according to published reports, is more than $200 million, now runs Paragon Ranch. The company includes horse-breeding operations in Larkspur and in Idaho.

If there's one thing that's more blue-blooded than horse racing, it's yachting. Specifically, America's Cup races. Which is where Terry Kohler comes in again.

Kohler, a longtime sailor, owns Windway Capital Corp., one of whose subsidiaries is North Sails. The company manufactures specialized sails for, among others, America's Cup racing yachts.

The Sporting Life/Boy Scout Connection

Colorado is a sporting paradise, and for any serious candidate, participation in one form or another is mandatory. Preferably, this occurs in the manly arts--hunting, roping, outdoor survival and the like.

For a demonstration of this, one need look no further back than earlier this month, when Rolling Stone Mick Jagger agreed to host a cocktail party at the governor's mansion to promote trade between Colorado and the United Kingdom. Romer, alas, couldn't make the soiree. He had a prior engagement at Wyoming's One-Shot Antelope Hunt.

Fortunately--for comparison's sake--Benson's supporters all seem to be an unusually healthy and active lot.

For example, Richard Gilder is an avid runner. (How avid? He recently gave $17 million to New York's Central Park because, among other reasons, he likes to run there.)

Kellogg also is a health fanatic. Associates have said that he'll pay membership fees at expensive health clubs for any interested employee of his. Kellogg apparently is an aggressive runner (he has run the New York Marathon) and an avid hunter, fisherman, sailor and skier. He also has been active in Outward Bound, a nonprofit school that teaches survival skills and self-confidence.

Weil, who gave $20,000 to Benson, has also been a trustee of Outward Bound. He even has official health credentials: In 1981 he was appointed special advisor to the President's Council on Physical Fitness.

Locally, Tim Travis told Colorado Business in 1988 that he was heavily involved in Ducks Unlimited. He said that he is a runner, spending his lunch hours trotting and working out at Eaton Metal's corporate gym.

Other Benson supporters have shown their allegiance to the great outdoors and physical exertion through the Great Western Stock Show. Although the event is presented as a down-and-dirty, dusty, rough-and-tumble event, its board enjoys the support of some of the biggest wigs in Colorado.

Cortlandt Dietler, CEO of Associated Natural Gas, who so far has donated $50,000 to Benson's campaign, has given time to the stock show's board. So has Peter Coors, a $10,000 Benson supporter. And Richard Gooding not only has served on the show's board, he once paid $17,000 for a prize bull at the yearly event.

Finally, of course, is the crucial Boy Scouts of America connection. (Remember Eagle Scout--and president of the United States--Gerald Ford?) Without any prior political experience, Benson has played up his connection to various do-gooder organizations. One of them is the Boy Scouts, where he served as trustee. Molding Eagle Scouts is an interest he has shared with some of his contributors.

Cable millionaire J.V. Saeman, for instance, has given Benson a total of $15,000 in two installments. He has also been active on the Denver-area council of the Boy Scouts of America, serving as trustee.

So, too, has Ryal Poppa, CEO of StorageTek Corp. The Louisville computer company has donated $25,000 to Benson's campaign so far. And contributor Frederic Hamilton has been a Boy Scout trustee.

It is unclear how any of this will affect Benson's legislative agenda.

The Oil and Gas Connection

This is an obvious one. Bruce Benson earned his fortune in oil, so many of his friends are wealthy oilmen. Still, it's worth looking at. After all, as Clean Water Action's Carmi McLean says, "It's not a case of Benson being beholden to gas and oil exploration. He is gas and oil exploration." First, however, the players.

Cort Dietler, a Denver native, is CEO of Associated Natural Gas. Worth an estimated $100 million, he has contributed $50,000 to Benson. Next up are two Oakland, California, investors who've known and been partners with Benson for nearly twenty years, including in some oil deals. Leo Helzel and Dale Schwarzhoff together have given Benson $30,000.

Third is a $25,000 contribution from Peerless Inc. Although Peerless is an accounting firm, its president is Vernon Taylor. The Taylor family is perhaps more well known for Westhoma Oil. J. Landis Martin, a lawyer by training, lists his business as NL Industries, of Houston, a chemical company. But Martin also is a boardmember of Dresser Industries Inc., a refining and marketing company. Martin has given Benson $15,000 in two contributions.

Frederic Hamilton, who sold Hamilton Oil but still keeps a finger in the oil and natural gas business, gave $11,000. Members of the Leede family, formerly of Leede Exploration of Midland, Texas--the company moved to Denver in 1988--together wrote checks to Benson's campaign for $10,000. Wolf Energy, another Denver oil firm, contributed $5,000.

All this may mean nothing. On the other hand, thanks to some legislation passed last year, the next governor will, if he desires, have the ability to indirectly influence the regulation of the fossil-fuel business in this state.

Senate Bill 177, which was passed last spring and which went into effect two months ago, gave the Colorado Oil and Gas Conservation Commission greater authority to regulate the industry. For instance, the commission may now issue cease-and-desist orders if it suspects an operation poses an emergency threat to the environment.

In addition, the legislation specifies who shall serve on the commission. Before SB177, the only restriction on the commission's makeup was geography: Members had to reflect different regions of the state. The new law, however, allows for up to five of the seven members to be representatives of the gas and oil industry. Members are, of course, appointed by the governor.

Sparrow says that Benson will appoint as many talented and educated people as possible to assist him as he runs the state, without favor to any particular industry.

The Drugs, Alcohol and Death Connection

Three of Benson's more generous contributions come from Carrollton, Texas, a suburb of Dallas. Health Mart Inc. of Colorado gave $3,500 in July. National Intergroup, Inc. wrote Benson a check for $7,500 at the same time. FoxMeyer Corp. handed over the same amount. A fourth company, National Intergroup Realty Corp., of Maryland, gave Benson another $3,500.

Although listed separately, the companies are all related. Each is part of National Intergroup. The company owns 80 percent of FoxMeyer, which, in turn, established Health Mart Inc. of Colorado to enable independent pharmacies to contract with managed health-care groups.

All are in the drug business. National Intergroup is the nation's third-largest distributor of pharmaceuticals, selling prescription drugs, over-the-counter medications and health and beauty supplies.

Why would Texas drug companies want to give money to Bruce Benson? One reason may be last year's Senate Bill 98, a "freedom of access" bill supported by the Colorado Pharmacists Association. It would have allowed patients to go to the pharmacist of their choice.

Although it was passed by both the state House and Senate, Governor Romer vetoed SB98 last April. Val Calnins, executive director of the pharmacist association, says FoxMeyer has been very supportive of the organization's activities. He adds that the Colorado Pharmacists Association intends to reintroduce the bill in the coming legislative session.

The alcohol connection is more tenuous. Sure, Peter Coors of the Coors brewing brood gave Benson $10,000. But more crucial could be J.V. Saeman, who ranks No. 35 on the Denver Post list of the 100 richest Coloradans. He is known for other reasons, too.

Saeman was one of two men who reportedly confronted cable pioneer Bill Daniels in 1985 in a Phoenix hotel room about Daniels's severe alcohol problem (Daniels's brother was the other). The strategy apparently worked, and Daniels entered treatment.

With Benson's revelation that he was arrested twice in the early 1980s for drunk driving, having Saeman on board could come in handy--particularly if Benson suffers a relapse.

And what does Benson have to do with death? Well, start with the fact that the GOP candidate is a breathless supporter of greater use of the death penalty.

In his "Plan for Fighting Crime in Colorado," Benson promises, among other things, to "work for passage of a constitutional amendment to pave the way for enactment of an effective death penalty statute." He vows to "work with Colorado's congressional delegation for the defeat of the federal legislation which, if enacted, would nullify the death penalty in the United States" and to "appoint judges who are willing to enforce the death penalty."

Left unsaid in the plan is how Benson would like to see Colorado prisoners snuffed. Depending on the answer, it could explain the three campaign contributions from Tim Travis.

Although it doesn't like to advertise the fact, Travis's Eaton Metal Products Co. is very much vested in the execution of criminals. After all, it has a monopoly on gas chambers in the United States.

Eaton sold its first chamber to California in the mid-1930s for $5,000. In a description of the product, which now stands in the Death Penalty Wing of the San Quentin State Prison Museum, an Eaton official boasted that "our calculations show that this new chamber should snuff out life in about fifteen seconds." Although Eaton built its last gas chamber--which was sold to the state of Maryland for $25,000--in 1958, the company still keeps a gas-chamber inspector on board to check the equipment before it is used.

The last time this state killed anyone officially was on June 2, 1967, when Jose Luis Monge was put to death in an Eaton Metal gas chamber in Colorado Territorial Correctional Facility. (It was the second chamber Colorado purchased from Eaton; the first one was delivered in the 1930s.)

In 1988, however, the state legislature passed a law mandating that, if anyone ever is put to death again in Colorado, it needs to be by lethal injection. So two years ago the gas chamber was dismantled and moved to the state Prison Museum in Canon City.

end of part 2

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