TIM CLARK, BARRY RYAN, BOB GLASSMAN, JOHN PLUKAS-HCW R 1-20

When I started practicing law at Hale and Dorr in 1964, the firm was comprised of only forty-four attorneys, and was located on two old-fashioned floors in two very old Boston office buildings at 60 and 70 State Street. A venerable old-sounding brokerage firm, H.C. Wainwright & Co., occupied the first floor. Through the managing partner of Hale and Dorr, Paul Hellmuth, for whom I worked from the time I first entered the firm, I met Tim Clark, a tall, lanky businessman who controlled Wainwright and who loved making individual investments in various businesses. Paul would occasionally send me down to see Tim and work on a small deal for him, and these ranged from investing in a monthly economic newsletter centered on interest rates and published in Bermuda, to Deep Dene, a hotel in Bermuda.

I met Bob Glassman and John Plukas while working on the investment in Deep Dene. Tim had a very clear investing philosophy: he invested in people, and he wanted to meet them, know them, look them in the eye, and figure if this was a person he wanted to be in business with, and whether it was someone he trusted, and finally, whether he thought this was a person who could make money. His secretary and close advisor was Toni Azzurito, a wonderful, knowledgeable woman who took shorthand, and I would call her back when Tim's directions weren't very clear and find out from her what he wanted me to do.

Tim was also one of the ten owners of the New England Patriots, then called the Boston Patriots. This team had been founded when the American Football League was first set up, and the team was organized by Billy Sullivan, a wild business promoter in Boston, who was imaginative and tough. Ten people each invested $25,000 to organize the franchise, and several of the original ten were still owners in the 1960s, including Phil Turner, the Sonnabend Family, the Sergeant Family, the Sullivans, and the Marrs. Tim had bought his ten percent interest from Dom DiMaggio, who was one of the original investors.

Tim and Phil aligned themselves after a number of years with the Marr brothers, who had a construction company, and with two outside very wealthy investors, Bob Wettenhall and Dave McConnell, who had acquired their position from other original investors. McConnell’s money came from the Avon Home Products fortune.

McConnell and Wettenhall were represented by Charlie Mulcahy, a sole practitioner, and very good corporate lawyer and negotiator, with whom I always enjoyed working. One of our more senior partners, Sam Dennis, represented the Turner Family and I worked for him; Paul represented Tim, and I worked for him; and another partner, Bob Richards, represented the Marrs. I became privy to much of what was going on with the Patriots, as they went through usually bad seasons, with mediocre performance, punctuated by occasional glimmers of hope.

With the background of uncertainty for the AFL, as well as the team, and increasingly hostile relations between the Marr-Turner-Clark interests and those of Sullivan-Sonnabend-Sargent group, Turner and Clark decided to sell their interests to McConnell and Wettenhall. Big mistake. They sold for what was then a fairly considerable price, in excess of what the team was then worth, but a fraction of what it would ultimately be worth in the decades ahead. (Although, subsequently, all the other investors were forced out when the Sullivans took the company private; and they later had to sell due to other business losses.)

The deal was a very simple one, Turner and Clark sold their stock to McConnell and Wettenhall, and they were to pay cash. The closing was to take place in a small dining room at Locke-Ober's, an establishment even more venerable than Clark. Sam and I both attended, as well as Phil and Tim. We brought the stock certificates, which Turner and Clark duly endorsed, and handed them over to McConnell and Wettenhall and Charlie Mulcahy. McConnell made out checks and handed them across the table. Sam, somewhat incredulous, but embarrassed, suggested that we should have received certified checks (which the contract probably called for). McConnell asked why they needed to be certified. Sam said that was the normal business practice. McConnell responded that we should just pick up the phone and call Serge Semenenko, then Vice Chairman of the First National Bank of Boston and a legendary banker who had financed many Hollywood films. “Ask him if the check is good.” Sam thought that was a good idea, and he was about to do just that, but Tim simply picked up his check, got up to leave for his next appointment and said: "Dave McConnell's check is good enough for me!" Sam caved.

I liked Tim very much, and enjoyed working with him. A few years later, I received a call from my law school friend Bart Winokur, later the managing partner of Dechert Price and Rhoades, a major Philadelphia law firm. Bart represented Herb Lipson, who owned the Philadelphia Magazine, the most successful of the various city magazines then proliferating around the country, and he had his eye on replicating its success in Boston by purchasing Boston Magazine, then a sleepy monthly magazine owned and published by the Boston Chamber of Commerce. Bart asked me to represent Herb in achieving his goal to purchase it and to organize the investor group. Through Paul Hellmuth, I obtained an introduction to a partner in another law firm who was then president of the Chamber of Commerce, and Herb, Bart and I negotiated with them and arranged a purchase of the magazine for probably $50,000 as it was losing money for the Chamber. I then organized a group of ten investors, each putting up $25,000, and in the end they included Tim Clark, Phil Turner, Mike Sandler, Art Garfunkel, Sandy Greenberg, the Marrs, and a few others.

The partners met two or three times each year in a private room for lunch at the Bay Club, and the partners took an active interest in the magazine, commenting on Herb's choices of editors, business managers and articles. It was only a matter of time until Boston Magazine was critical of one or more venerable Boston institutions in a fashion that made Tim Clark, and one or two others, a little uncomfortable. That, and lackluster financial results led to everyone selling out to Herb just a few years later.

Because of my experience with Boston Magazine, however, Tim Clark called me one day from his new office at One Boston Place, with glorious views of the city, and said he had a man in his office named E. Barry Ryan, who was interested in starting a magazine, and who had heard about Tim, and Tim thought I could give him all the advice he needed. Barry came over to meet me, and that started a great friendship, that lasted the rest of Barry's life.

Barry came across the street to my office and I told him the essentials about organizing a magazine as a business, and he decided to go forward, and he created Classic, a very glossy, high-end magazine about thoroughbred horse racing and the sport of horses. We organized a limited partnership, which included Will Farrash, a wealthy horse owner and later Ambassador to the United Kingdom, Penny Tweedy, the owner of the horse Secretariat, and many other prominent people in the field of horses and sport.

The Editor-in-Chief was Andre Laguerre, who had been the first editor of Sports Illustrated, and who edited that very successful magazine from a bar on Third Avenue, where he would show up around noon and spend the rest of the day, meeting with his staff from his “office”. Laguerre, by the way, has been press agent to General De Gaulle during World War II.

Another investor was Whitney Tower, a grandson of Gertrude Vanderbilt Whitney, the founder of the Whitney Museum. He was old school, well-spoken, very cordial and a wonderful writer, especially on horse racing. He had hoped to succeed the great writer Audax Minor, who wrote about horse racing for the New Yorker. I got hooked on Minor’s writing, which was so evocative that I read his column almost first every time it appeared in the New Yorker. Alas, they dropped the column when Minor ended his run. Whitney was very disappointed..

But Barry was the best! A man of limitless energy and enthusiasm, with a style dedicated to enjoyment and friends, he was a member of the storied Ryan family, his grandfather being Thomas Ryan, a great stock market speculator of the 1920s, and his great-grandfather, Thomas Fortune Ryan, a great stock market speculator of the 1880s. The family is featured in Stephen Birmingham's book The First Irish Families.

Ryan was himself a well-known horse breeder, who had an elegant horse farm on Tiffany Row in Lexington, Kentucky, and the farm boasted a Norman style barn of great elegance, and the prope1iy was known as Normandy Farm. The great horse Man of War is buried on the property.

I visited with him once there; we flew down together from LaGuardia, Barry knowing the flight attendants and since he knew that they had no time for dinner before flying down on the evening flight, he always brought them deli sandwiches, which made him a very popular customer as we settled into first-class.

The home was a rambling large farmhouse, and we settled in for cognac when we arrived at his house, and the cook made us a late dinner. The next night we had an elegant dinner at his gorgeous table, with beautiful silver, china and crystal, and several friends joined us. We were there to attend the auction of young horses, held twice a year at Keeneland in Lexington, and he gave me a tour of the town and the beautiful farm of which he was so proud.

Barry was then still married to his third wife, who had been one of his oldest daughter’s best friends in college, a beautiful French woman, who later, after divorcing Barry, married, settled in Paris with her husband and several children. She and Barry remained close friends and she even went to the Caribbean or Florida with him for a couple weeks each winter when he was seriously ill, late in his life.

Classic held annual luncheon meetings at 21 Club in New York, a famous former speakeasy, which had become an almost private club-like restaurant of great popularity in New York, filled with swells of all sort, society types, and housed perhaps the greatest private collection of Fredrick Remington paintings, drawings and prints in the country, all showing horses and the old west. These were fascinating events, at which Ryan and Laguerre spoke, answered questions from investors, and everyone drank more than they ate. Jay Westcott and I also spoke, as Jay worked on the legal matters together with me, and we both enjoyed the parties. Barry had some great expressions that have remained with me: characterizing people who didn't have a great deal of money with the term "little peeps". Referring to those who think big but never come up with money, his line was "five minutes late and a nickel short".

In spite of its beauty, Classic was never able to develop the subscription base and advertising revenue to cover its extensive costs, and it eventually folded. Barry himself had invested a substantial amount in the magazine, perhaps five hundred thousand dollars. His trust company, the U.S. Trust Company in New York, had refused to make the investment for him, or lend him the money to make the investment, so they resigned as Trustee of the Trust and I became the Trustee. It was then managed by Hale and Dorr, and Rose Nestor oversaw the tax returns.

One day she called me and said "Mr. Kaplan, the tax returns on this trust have been filed wrong for many years!" She explained that the trust was set up in 1950, and was not taxable to Mr. Ryan until the tax law was changed in 1962, but then it became taxable to him and he should have been recognizing all of the income from that trust on his personal tax return, rather than having the trust pay the taxes on its own income.

That was very interesting, because Barry had substantial operating losses as a tax matter, not only from Classic, but also from Normandy Farm. He would have saved significant amounts if the income of the trust had been taxed to him rather than to the trust.

I called U.S. Trust, and spoke with them about this problem. They refused to recognize it at all. Therefore, we brought suit against U.S. Trust, and Gordon Walker, a litigator in the firm and I went down to New York to take the deposition of the bank officer in charge of the Trust. U.S. Trust was represented by Joe Kartiganer, a New York trial lawyer at White and Case, as I recall.

The depositions were taken, and the trust officer stated that the returns were filed the way they were because Mr. Ryan insisted that he did not want to pay the taxes on the trust income but wanted the trust to do so. The bank refused to answer whether any other trusts were in the same situation, of not having had their taxes correctly recognized following the change in the Internal Revenue Code. The bank also refused to answer how it was that they believed the position of the taxpayer, their client, was somehow controlling over the tax law in terms of their own duties and responsibilities.

Ryan, in his deposition stated that he knew nothing about how the trust was managed or taxed, and acknowledged that he did have lunch once a year with the trust officer, but that lunch consisted of pleasant conversation over martinis, and they never discussed business or taxes!

Gordon and I flew back to Boston, and found a message waiting from the White & Case partner. He asked how much it would cost to settle the case. I told him the figure, which I had indicated before, the amount of the full tax savings Barry would have obtained had the returns been filed appropriately, and he agreed to the settlement.

For many years, I knew Barry's children quite well. His son Tony, a handsome guy married to a woman from a very wealthy family, who then divorced her and came out of the closet, and ultimately died of AIDS; and two daughters, Margot and Sandra. Sandy was married to Charles Parsons, who became a client, Jay's and mine, and who was a prominent surgeon in Marion, Massachusetts. One summer, Barry flew to Marion to visit his daughter, and got off the plane and came down with a disorder that took away all of his sense of balance, and ultimately led to temporary paralysis. This was the very strange ailment, Guillain-Barre Syndrome, that can leave one totally paralyzed from the neck down, and then gradually goes away over the course, of sometimes, as much as a year. The writer Joseph Heller, wrote of his own such experience. Barry recovered only somewhat from the ailment, and was reduced to a life of some degree of constant pain, and immobility, that bothered this avid golfer and horseman very much. This led to his inability to manage Normandy Farm, and he ultimately sold it, and lived in a lovely apartment on the East 80s in New York.

Occasionally I would go to New York and have lunch with him, and of course in the old days we would normally go to 21 Club. One day, he decided, with his two canes and everything, that he wanted to go to 21 Club, and I asked if we should call first to make sure they would have a table for him. He said "No, they will have a table for me." We took a taxi over, and lumbered into 21 Club, where the famous owners who greeted all guests were thrilled to see Ryan, and announced that they had no tables available in the downstairs bar, where Barry always wanted to sit, and could they accommodate him upstairs.

Ryan said "No, I'll sit in the bar!" They immediately scurried around, taking a small table and two chairs into the bar, so that Barry and I could have lunch there. Just a couple of years later, at his funeral at the Church of St. Jean de Baptiste, the principal French Catholic Church in New York, I met his first wife, the mother of his three children. She and I had a very nice conversation, and she asked if I knew that Barry's grandmother had built that church. I said no, and she responded that it was a very interesting story, because she had asked Mr. Ryan if she could build the first French Catholic church in New York as she was French, and he answered no. Therefore, she simply announced to the press that the Ryans were building St. Jean de Baptiste, and Mr. Ryan simply paid the bill. Barry would have loved the ceremony, with marvelous stories about him by his two surviving children, Margot and Sandi, both dressed in mini-skirts. Barry wanted to be cremated, and wanted his ashes to be spread over the racetrack at Saratoga. The next summer, there was a ceremony at Saratoga, and I regret not being able to go. The Saratoga authorities made clear to Sandi and Margot that they could have a ceremony there, but the ashes could not be spread on the track. The ceremony was held, they displayed the urn of ashes, and then….they simply emptied it out on the racetrack.

I liked Barry very much, and still regret never joining him at Saratoga for races, or attending the Kentucky Derby as his guest, as he offered more than once. But with little children at home, it was difficult to break away for a weekend, but I still regret it.

Barry named me executor of his will and provided that his collection of paintings and furniture should be distributed among his beneficiaries in whatever system I devised to be fair. There were three beneficiaries of the tangible objects, Margot, Sandi, and his third wife, whose name I have forgotten. Following the funeral service at St. Jean de Baptiste, we all met in Barry's apartment, and I explained that I would try to give each of them as many pieces of art as they selected as their favorites and I wanted them each to give me a list of the artwork in order of priority as to which pieces they most wanted from the collection. Each of the three gave me lists, and then I spent a few days analyzing them and figuring out the distribution of paintings. In a remarkable display of how the tastes of people differ, I was able to give each of the three of them seven of their ten top choices, so the system worked very well.

So Paul Hellmuth had introduced me to Clark, and through that introduction came my representation of Tim Clark and his family on other matters, Omni-Wave Electronics, in which the Clarks had a major interest, my involvement with the Boston Patriots, the representation of Ryan and Classic, and finally, Bob Glassman and John Plukas.

I met them because Tim wanted them, then newly-hired young investment bankers in his company, to advise and help with the refinancing of Deep Dene, a hotel on Bermuda in which Tim had an interest. Bob Glassman, John Plukas and I got to know each other, and met from time to time in Tim's office. One day, John noticed that The Boston Safe Deposit and Trust Company had placed a small announcement, a so-called tombstone ad, in the Wall Street Journal, announcing that they had raised $700,000 for an oil drilling fund. John thought perhaps they could do the same thing. Bob said no, they couldn't, because they didn't know anything about the oil business. John said "So what?" Bob said "Okay, why don't we call Marty and see if he knows anything about oil funds." They called me, and I said that they were pretty easy, because you did not have to disclose how the funds would be invested, as opposed to the rules relating to real estate funds, for which you had to identify how forty percent of the funding was going to be invested, and that meant specific projects. Don’t ask me how I knew that! So, we started the oil fund operation, with Ned Young being the principle attorney working on a series of annual drilling funds, and several income producing funds for what became known as HCW Oil & Gas.

Eventually, HCW, the management company of these funds, went public, and the company became quite successful, and the drilling and income producing funds, none of which were leveraged, provided decent returns to investors.

In 1986, Bob and John saw the future of oil prices as relatively bleak, expecting falling prices in the next couple of years, and decided it was time to sell out of the industry. Somehow they were put in touch with Gene Phillips, President of Southmark, a high-flying conglomerate based on junk bond financing, arranged for the most part by Michael Milkin, leader in that field of financing.

Bob and I flew to Dallas to meet with Gene, and he made a proposal to us, which we did not find attractive enough, which would have entailed Southmark buying HCW for its Series E Preferred Stock . We did not reach agreement, and returned to Boston that night. The next morning, Bob called because he saw in the Wall Street Journal that Southmark had announced the prior day, while we were there, that they had passed the dividend on the Series E, meaning that their earnings were not sufficient to cover the dividend and therefore they would not be paying it. Bob was obviously incensed, and he picked up the phone and called Gene Phillips, and told him where he could put the Series E Preferred Stock.

A month later, I was sitting in the Carlyle Hotel restaurant having breakfast with my friend and college roommate Burtt Ehrlich, when I received an emergency call from Bob Glassman. I ended the breakfast and went to my room and called him, to find out that Southmark had launched a hostile tender offer to acquire HCW. Within a couple of minutes of talking, we decided this was good news! Bob and John had been wanting to sell the company, and I pointed out that in a hostile tender offer the target company would not be making any representations or warranties as to the condition of the company or its prospects. It also was the first hostile tender offer Southmark had undertaken and therefore we knew that they would want very much for it to be successful.

We agreed to meet the next week to do a deal, with a slightly increased price per share, at the offices of Cleary Gottlieb & Steen, a prestigious firm in New York, the managing partner of which was a very high quality corporate lawyer whom I had known from other work. The person handling the hostile takeover was Dennis Block, who became very well-known as Dennis the Menace, a somewhat loud and obstreperous takeover attorney given to raising his voice and pounding the table. (When he did this a few times, the managing partner at Cleary would sneak a look at me and just smile and wink.) We met on the Tuesday and Wednesday before Thanksgiving, and Mark Borden was the key attorney working with us on the transaction.

Since we knew they wanted to succeed in this hostile takeover, we insisted on a "Come Hell or High Water" provision, to the effect that no matter what happened to oil prices, the deal would close and they would have no out of the transaction in spite of any change. This was important since the amount of reserves held by an oil business are dependent upon the price of oil, since if oil prices fall, reserves disappear if it becomes more expensive to extract the oil then the oil is worth. Bob and John, knowing that oil prices were going down, were insistent on being protected. The transaction was signed the day before Thanksgiving 1986 and closed in January or February, at which time Southmark was required to take an immediate write down on the value of their investment because of falling oil prices.

Bob and I agreed that since we would be meeting the day before Thanksgiving 1986, we should arrange how to get home in order to be there for the holiday. Bob arranged for a limousine, and then had the driver first take us to Katz’s Deli on E. Houston St. for hot pastrami sandwiches. Bob went next door and bought nips of vodka and we had a good time being driven home in a snowstorm, arriving that night. That was also the Thanksgiving that all the kids played football in the snow before dinner.

A couple of months later, in the Spring of 1987 Bob and John wondered what business they should go into next, and I suggested banking, as I had recently been meeting with the President of New World Bank, Jim Oates, and it sounded like a good industry to enter. Banks were trading at two times book value, and bank funds and stocks were popular. Bob and John met with Jim Oates, and were impressed with the concept and proceeded to organize a bank fund, using some variation of the name Wainwright, with a license from the Clark family, who also invested in it.

After a couple of months, Bob and John concluded that investing in bank stocks was not very easy when banks were trading at two times book value, and perhaps, instead, they should use the funds to organize a new bank, which would, after all, be at one times book value plus the costs of organization. We did just that, and out of that came Wainwright Bank & Trust Company.