DA LAW:Keystone Crooks leave Able/MFS High ‘n Dry

In the latest episode of the Able-MFS farce depositions have been filed in court in Florida in which the two top Able officers at the time each disown a key takeover letter that both signed. They each blame the other for its contents. Neither will defend the letter. There are also claims it was drafted for them by a Washington DC go-between, Thomas Davidson, who is also embroiled in the court case.

What is undisputed is that Gideon Taylor, then chairman of the board of Able and Frazier Gaines, then its CEO, each put their signatures to a letter dated April 15 1998 addressed and faxed via UUNet to Frederic Weidinger the MCI/WorldCom officer in charge of selling MFS. This now-disowned letter from Able to MCIWC was the key instrument in consummating the MFS sale to Able.

It was baloney from beginning to end.

The letter falsely claimed that Able in purchasing MFS could remove MCIWC from its $500m+ bonding obligation over the New Jersey consortium ET job for a few million dollars because it had such a stellar record. The letter mentioned assurances to this effect by Liberty Mutual. It said in depositions that it wasn’t even approached for an opinion or advice on bonding obligations, and did not give any such assurances. They were a fabrication by Able.

The Taylor/Gaines letter claimed assurances of financing for the purchase of MFS from NationsBank (sometimes spelled with a final ‘c’) and Bank of America, when B of A had told Able it would NOT support the purchase, and NationsBanc was not even doing business with Able. Another Able fabrication.

More Able fabrications. The letter claimed that Able had $8m cash for the downpayment on the purchase when its top guys had to hustle around to borrow this money using their personal holdings of Able stock as security. The letter claimed Able was a financially sound organization with a long history of profitability, when it had been losing money like it was going out of fashion. The letter claimed the acquisition of MFS was “easily manageable for Able” when it proved impossible except with subsequent major concessions from MCIWC, and arguably has not even been fully accomplished even now, because MCIWC is left holding the performance bonding obligation.

The two Keystone crooks Gideon Taylor and Frazier Gaines of Able fell out during the early days of the MFS acquisition, and then attempted to fire one another. The farce continued for some weeks and both ended up falling to the bullets that were flying in the internecine corporate gunfight.

Able was chock a block with buchaneering types with a record of run-ins with the law in several jurisdictions. A Wall Street analyst documented a number of cases of fraud and thievery they had engaged in, together with repeated and continuing violations of securities laws by Able through 1998. The whereabouts of some of these characters is presently unknown. Some just shot through.

My friend Butch

I met one of them, Butch Dale, who said he was chief executive officer of Able at IBTTA in Houston last year. Mid-30s perhaps, he was built and talked like a club bouncer, a huge man. He said: “I know who you are and what you wrote.” He asked me why I “never wrote our side of the story.” I told him: “What is your side of the story? You never return phone calls. You don’t even send me press releases. I don’t know what your story is.” He seemed to agree I should get “our side of the story” and on that note we cordially downed beers and chatted inconsequentially. Not long after the conference I called his office, but it was as if he’d never worked there. No one knew him, they claimed. All mention of Butch Dale ceased in Able/MFS statements. He has not been heard of since. The bosses at Able changed like by-the-job backhoe ditchdiggers, which perhaps they were. Able letters and memos contained typical howlers of the barely literate.

Such were the people that MCIWC put in charge of the most ambitious and expensive electronic toll conversions in history, the difficult $500m contract with the NJ consortium on the east coast, and another with Caltrans for the Bay area bridges. Not surprising MCIWC officer Fred Weidinger doesn’t take calls to ask why he dealt with these people.

The Keystone crooks of Able are now gone but the legacy of a crooked acquisition lingers, casting a serious shadow over tolling projects in New Jersey/Delaware, Colorado, and northern California.

Sirit has filed claims for regular, and now also punitive damages against Able in US District Court, Southern FL. With Able embarrassed by the antics of its former Chairman and CEO, and left apparently defenseless by the depositions of the banks and bonding companies, there is now a standstill period for discussions of a out of court settlement.

The interesting question is where will they find the money to buy themselves out of this deep ditch. Up to Washington DC again? Hoping Sugardaddy MCIWC’s still accommodating? The telephone giant has poured some $70m of new “loans” into Able/MFS since it “sold” MFS to Able. Able has it over a barrel so long as MCIWC still holds the performance bond obligations with the NJ Consortium. And that’s something that Ed Gross of the NJ consortium seems certain to hang tough on. (Court filing by Sirit: www.sirit.com)

HISTORY: In the spring of 1998 Sirit, the Toronto based ET player that bought the former Texas Instruments ET business had a deal near completion with senior MFS management to buy MFS from MCIWC. The notorious April 15 letter was signed by Taylor and Gaines and sent to MCIWC, as part of an end-run around the Sirit-management team. Able also pulled the rug from under Sirit/MFS management by spreading the word that it was unable to complete the deal, after Sirit had told Able that it could not be part of the buy because the financing of the takeover was oversubscribed. The Sirit/management team had more money than they needed.