Longform

IT'S A JUNGLE GYM OUT THERE

part 1 of 2

On a recent sunny day in the beginning of March, Donald Mack relaxes in his Greenwood Village house, a brick-and-wood affair that sprawls over a couple acres off Belleview Avenue. An Arabian mare moves slowly in the side yard (the stallion is kept in Parker). A red Ferrari sits under the garage roof. His other vehicles--a 1937 Cadillac LaSalle, a 1963 Corvette and a Mercedes 560SL--are tucked away.

Inside, hung behind Mack's desk, are two Japanese wood-block prints dating to the 1800s. "They're supposed to be by someone famous," he says. "I don't know. I picked them up at a gallery about a year ago." To his left sits a bronze sculpture titled "Sport of Kings" that depicts four mallet-wielding polo players astride their straining mounts.

In front of him, on the top of Mack's desk, are models of a Ferrari and a Porsche Carrera, both cherry red. Mack wears a purple designer shirt and pressed black pants. His gold watch catches the light. Ostrich-skin boots poke out from beneath his pant cuffs.

Donald Mack, transplanted New Yorker, 37 years old this summer and clearly enjoying all the trappings of success, is in the lucrative business of...child care?

Until recently, that is. Five months ago Mack was booted from his position as chief executive officer of Child Care Centers of North America Inc. The reasons for Mack's departure range from what his critics describe as lousy and deceptive business practices to Mack's showy displays of wealth in a business that frequently pays its help less than $5 an hour.

Mack, who founded the company and who continues to own a bit over one-fifth of it, replies that he is a victim of sneaky corporate maneuvering. He has not taken his pink slip without a fuss. Early on he moved to recover the company by rounding up support among its shareholders, and he still says he wouldn't mind bouncing CCCNA's current board. He says he is preparing a lawsuit against Child Care Centers for canning him and, he adds, for allegedly spreading malicious information about his business tactics.

"This was kind of like a child of mine," Mack explains. "I spent four years of my life developing this. For someone to snatch this from under your arms and say, `Now I'm keeping it' and claim his successes as your own--it really made me mad."

Current CEO and president Cary Polevoy, a former securities analyst for the now-bankrupt and discredited Blinder Robinson & Co. penny-stock firm who engineered the coup that deposed Mack, prefers a different industry metaphor to explain Mack's actions. "I liken it to a ten- or eleven-year-old mad at a friend," he says, "who instead of taking his toys home decides to destroy all the toys in the house."

Both men insist that the high-level spat has not affected the quality of child care at the company's centers. (A recent survey of centers by 5280 magazine evaluated a CCCNA facility and found it average.) But the fracas has thrown a spotlight on the company's current financial woes, which are significant. And it has amplified what recently had become a low rumble of discontent among those involved with the company.

To all outward appearances, CCCNA is a phenomenally successful concern. Since 1992 it has exploded from literally nothing to an ever-expanding company that owns and operates fourteen centers that plan the days of thousands of children in the Denver area. The company is pursuing mergers with, or acquisitions of, corporations that do everything from producing videos to cashing checks to staging musical revues. At one time it owned more than $1.5 million worth of real estate in the metro area.

But in the process, Child Care Centers cut a wide swath through Denver's financial and child-care communities. It is a company built almost entirely on debt and, so far, unfulfilled promises. Left in its wake are nervous and angry investors who say they either were misled or simply cheated. Some of them fear that CCCNA is teetering on the brink of a spectacular financial failure.

On one level, the story of Don Mack, Cary Polevoy and Child Care Centers of North America represents nothing more or less than the upheavals that occur dozens of times every day in the world of start-up business, and it's a reminder of how those businesses are shaped by the personalities of their founders. Yet it also provides a cautionary tale for what promises to be the future of the private child-care business.

Analysts predict that as the number of working parents grows, and as the spending capacity of the government shrinks, the business of watching kids is poised to swell. But for it to do so will require the kind of big bucks and money-maneuvering that only suits and deal-makers can provide. The story of Child Care Centers of North America--whose founders had everything to do with money and not a lot to do with child care--illustrates what can go wrong when the high-flying culture of capital runs into the culture of Crayola.

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Eric Dexheimer
Contact: Eric Dexheimer