Task force takes steps toward compiling final report
EUREKA -- The Humboldt County Code Enforcement Task Force has taken the first steps toward compiling a report to the board of supervisors, but it may not be done until late September.
The members voted unanimously Friday to ask the board to extend of the task force and the moratorium on inspection warrants until Sept. 26.
The extension will allow more time to arrange a session with Humboldt County District Attorney Paul Gallegos. Gallegos, as part of the Code Enforcement Unit Oversight Committee, had been invited to appear before the task force at Friday's meeting, but was not present.
Second District Supervisor Johanna Rodoni suggested -- and the balance of the task force agreed -- that a second, strong invitation be issued to the district attorney.
”I think we need to emphasize they're a critical piece of this,” she said.
Part of that urgency deals with which county department will house the code enforcement unit and the district attorney's concerns over granting police powers to Code Enforcement Unit officers.
The task force scheduled its next meeting for the afternoon of July 9 from 1:30 to 4 p.m. to better accommodate Gallegos' schedule.
Meanwhile each of the members will begin the process of drafting findings and recommendations for the final report, a process that is likely to continue through several sessions. And there's more information to gather.
Liz Davidson, one of three Civil Liberties Monitoring Project presentatives on the task force, expressed a desire to converse with Sheriff Gary Philp, Community Development Services Director Kirk Girard and the district attorney.
”I see the need for at least one more meeting for information gathering,” she said.
The task force agreed earlier to devote one of its sessions to review of the code enforcement manual.
However, the information gathering proceeded Friday with 1st District Supervisor Jimmy Smith's testimony on his attendance at Code Enforcement Unit Oversight Committee meetings. The committee is comprised of County Counsel representatives, supervisors John Woolley and Smith, the sheriff and the chief building representative.
Smith said his primary reason for attending these meetings was to track projects within the 1st District. But the supervisor wasn't able to shed light on inspection warrant-related questions that have emerged at most of the task force's sessions, including what triggers a warrant that allows inspection without advance notice and what role does the Code Enforcement Unit Oversight Committee play in that determination?
”None, that I know of,” Smith said.
The challenge, 5th District Supervisor Jill Geist reiterated, has been ascertaining who determines what necessitates an inspection warrant. As of yet, that question remains unanswered.
But, Smith did recount his own experiences making numerous visits to sites with problems in his district including one that offered a glimpse of the potential danger CEU officers may face. He had been keeping tabs on a health and safety violation in the Pine Hill area -- essentially garbage accumulation -- on his way home. One day, one of the residents repeatedly used his hand to simulate gunfire in Smith's direction.
Despite such occasional animosity, the CEU has been remarkably successfully in their efforts despite a small staff, Smith said.
”Without the Code Enforcement Unit,” he said, “I think we'd be in a lot more trouble.”
Jessie Faulkner/The Times-Standard
Article Launched: 06/28/2008 01:15:38 AM PDT
6.20.2008
TS - Attorneys asks for Douglas-Zanotti case dismissal
Attorneys asks for Douglas-Zanotti case dismissal
Thadeus Greenson/The Times-Standard
Article Launched: 06/20/2008 01:30:36 AM PDT
TThe defense team for former Eureka Police Chief David Douglas and Lt. Tony Zanotti filed motions this week asking a judge to throw out the involuntary manslaughter case against their clients, stemming from their decision-making roles in the 2006 police shooting death of Cheri Lyn Moore.
In the two separate motions filed Wednesday, defense attorneys argue District Attorney Paul Gallegos improperly represented the law to the criminal grand jury that handed up the indictments and that he failed to present evidence that would have backed up Douglas and Zanotti's decisions that day.
“In this case, the proceeding resulted in a travesty of justice -- a due process violation -- that must be corrected by this court,” one motion states.
Gallegos was not immediately available for comment and the defense declined to discuss the motions. A court hearing is set for July 10.
The grand jury indicted Douglas and Zanotti in December 2007, more than a year and a half after Moore's death. The defendants pleaded not guilty on April 22.
Moore, who had a history of mental illness and was reportedly distraught over the anniversary of her son's death, brandished a flare gun, threw items out of the window of her second-story apartment and threatened to burn the building down during the more than two-hour standoff.
Officers have said they believed Moore put the flare gun down when the decision was made to storm her apartment, but SWAT team members said
Moore pointed the weapon at them when they entered. She was shot nine times.
While Douglas and Zanotti face charges as the commanding officers, none of the shooters were indicted, which many legal and police experts have called unprecedented.
Because criminal grand jury proceedings are prosecution driven, and don't provide defendants with a defense, it is the legal obligation of the prosecutor to present evidence which might show the innocence of the defendants.
In one of the motions filed Wednesday, the defense argues that Gallegos failed to fulfill that obligation.
According to two declarations filed with one of the motions, District Attorney's Office Chief Investigator Mike Hislop interviewed two experts in the field of SWAT team operations and both said they did not believe there was a criminal case against Douglas and Zanotti.
Neither expert was called to testify before the grand jury.
According to the motion and accompanying declaration, Stuart Meyers is the CEO of OpTac International and president of Operational Tactics, a nonprofit organization that manages law enforcement instructors and consultation services. It was selected to train the SWAT and sniper teams for the 2002 Salt Lake City Olympics.
According to Meyers' declaration, after being briefed on the events surrounding Moore's death in a June 2007 phone conversation, Meyers told Hislop he did not believe there was a basis for criminal liability. Hislop never contacted Meyers again, according to the declaration.
EPD Sgt. William Nova, who was the SWAT team commander in April 2006 but was off-duty at the time of the Moore shooting, states in a declaration that he had a similar conversation with Hislop.
In his declaration, Nova states that Hislop told him he felt the shooting of Moore was legally justified, and that he was trying to persuade Gallegos not to bring the matter to the grand jury.
”I advised Mr. Hislop that I agreed with him, and that in my capacity both as the Eureka Police Department SWAT commander and as an uninvolved party, I believed that there had been no violation of law, policy or current SWAT practices with regard to anything that had been done in connection with the Moore incident,” Nova states in the declaration.
Nova said he would have given the same testimony before the grand jury had he been called.
Gallegos did call police training specialist George Williams to the stand as an expert witness at the request of Zanotti's attorney. Williams testified that Moore's death was a clear case of “suicide by cop,” and that the SWAT operation had been handled properly.
Gallegos questioned Williams' qualifications as an expert before the jury, saying he had never trained in SWAT tactics.
”Quite simply ... his summary of qualifications, though impressive as to particular things, is lacking as it relates to the facts that he gave an opinion as to,” Gallegos told the grand jury.
The other defense motion filed Wednesday targets the pillars of Gallegos' involuntary manslaughter case: that Douglas and Zanotti acted with criminal negligence and that, in entering Moore's apartment without a Ramey warrant, officers committed an unlawful act that led to Moore's death.
In the motion, the defense argues the Ramey warrant wasn't required in the Moore situation because clear exigent circumstances existed, namely that Moore posed an immediate threat to herself and the community that necessitated prompt action.
A lack of a Ramey warrant, the motion states, has never been applied to create criminal liability for officers entering a home to make an otherwise lawful arrest.
The defense further argues that there is no causal connection between the unlawful act -- the lack of a warrant -- and Moore's death. Had the officers obtained the warrant, the defense argues, the situation likely would have reached the same end.
The defense motion also takes aim at the prosecution's claim that Douglas and Zanotti acted in a criminally negligent manner by failing to adequately supervise the SWAT and crisis negotiation teams, and the communication between the two.
Not only does the evidence show that both teams, and the communication between them, was supervised, the defense argues, but Gallegos also failed to provide the grand jury with a benchmark of what constitutes “adequate supervision.”
In the motions, the defense also argues that Gallegos improperly and inadequately instructed the grand jury on the law.
”There were numerous serious errors and omissions in the prosecutor's instructions to the grand jury in this case; together and separately, they permitted the grand jury to indict on a legally improper basis and on less than probable cause,” the motion states.
The defense also argues that Gallegos failed to instruct the jury on justifiable homicide as an absolute defense to manslaughter and that, by presenting SWAT team members with immunity agreements that were known to the jury, Gallegos implied they were somehow guilty of committing a crime and that, by extension, so were their commanding officers.
Further, the defense argues in the motions that if the court finds legal fault with one of Gallegos' theories -- either of criminal negligence or the commission of an unlawful act leading to Moore's death -- it is obligated to throw out the entire indictment.
The motion states “where a court finds that one of the two alternate theories of guilt is legally unavailable, and there is no means by which to determine whether or not a conviction was predicated on that theory, the convictions must be reversed altogether.”
If a judge denies the defense motions, which are scheduled to be heard July 10, it would still have an opportunity to appeal them to another court before a trial takes place because the motions were filed within 60 days of Douglas and Zanotti's arraignment.
Moore case at a glance
The incident
Cheri Lyn Moore, who had a history of mental illness, was shot and killed by Eureka police officers in April 2006 after a two-hour standoff that saw her brandish a flare gun, throw items from her second-story window and threaten to burn down the building.
The indictments
A criminal grand jury handed up the indictments after hearing several days of testimony, according to the district attorney's office. The proceedings are held in secret, although a judge can allow the sessions to be open to the public upon the request of the district attorney.
In the grand jury process, because the role of the 19 members is only to determine probable cause to bring an indictment, it is not required for them to hear all the evidence. It is left to the “good faith of the prosecutor to present conflicting evidence,” according to the American Bar Association. A minimum of 12 of the jurors must approve indictments.
Grand jurors are chosen from the same pool as other trials.
The charges
Former Eureka Police Chief David Douglas and Lt. Tony Zanotti are each facing a felony charge of involuntary manslaughter, the unlawful killing of someone during a crime, or a legal act that leads to a death -- but one that is done negligently. If convicted, the charges carry a sentence of up to four years in prison.
The defendants
David Douglas: Former Eureka police chief, who has since retired. He testified at a coroner's inquest looking into the death of Cheri Lyn Moore that he did not take over command at the scene, but was ultimately responsible.
Lt. Tony Zanotti: A current member of the Eureka Police Department. Zanotti was the incident commander at the Moore standoff.
Thadeus Greenson can be reached at 441-0509 or tgreenson@times-standard.com
Thadeus Greenson/The Times-Standard
Article Launched: 06/20/2008 01:30:36 AM PDT
TThe defense team for former Eureka Police Chief David Douglas and Lt. Tony Zanotti filed motions this week asking a judge to throw out the involuntary manslaughter case against their clients, stemming from their decision-making roles in the 2006 police shooting death of Cheri Lyn Moore.
In the two separate motions filed Wednesday, defense attorneys argue District Attorney Paul Gallegos improperly represented the law to the criminal grand jury that handed up the indictments and that he failed to present evidence that would have backed up Douglas and Zanotti's decisions that day.
“In this case, the proceeding resulted in a travesty of justice -- a due process violation -- that must be corrected by this court,” one motion states.
Gallegos was not immediately available for comment and the defense declined to discuss the motions. A court hearing is set for July 10.
The grand jury indicted Douglas and Zanotti in December 2007, more than a year and a half after Moore's death. The defendants pleaded not guilty on April 22.
Moore, who had a history of mental illness and was reportedly distraught over the anniversary of her son's death, brandished a flare gun, threw items out of the window of her second-story apartment and threatened to burn the building down during the more than two-hour standoff.
Officers have said they believed Moore put the flare gun down when the decision was made to storm her apartment, but SWAT team members said
Moore pointed the weapon at them when they entered. She was shot nine times.
While Douglas and Zanotti face charges as the commanding officers, none of the shooters were indicted, which many legal and police experts have called unprecedented.
Because criminal grand jury proceedings are prosecution driven, and don't provide defendants with a defense, it is the legal obligation of the prosecutor to present evidence which might show the innocence of the defendants.
In one of the motions filed Wednesday, the defense argues that Gallegos failed to fulfill that obligation.
According to two declarations filed with one of the motions, District Attorney's Office Chief Investigator Mike Hislop interviewed two experts in the field of SWAT team operations and both said they did not believe there was a criminal case against Douglas and Zanotti.
Neither expert was called to testify before the grand jury.
According to the motion and accompanying declaration, Stuart Meyers is the CEO of OpTac International and president of Operational Tactics, a nonprofit organization that manages law enforcement instructors and consultation services. It was selected to train the SWAT and sniper teams for the 2002 Salt Lake City Olympics.
According to Meyers' declaration, after being briefed on the events surrounding Moore's death in a June 2007 phone conversation, Meyers told Hislop he did not believe there was a basis for criminal liability. Hislop never contacted Meyers again, according to the declaration.
EPD Sgt. William Nova, who was the SWAT team commander in April 2006 but was off-duty at the time of the Moore shooting, states in a declaration that he had a similar conversation with Hislop.
In his declaration, Nova states that Hislop told him he felt the shooting of Moore was legally justified, and that he was trying to persuade Gallegos not to bring the matter to the grand jury.
”I advised Mr. Hislop that I agreed with him, and that in my capacity both as the Eureka Police Department SWAT commander and as an uninvolved party, I believed that there had been no violation of law, policy or current SWAT practices with regard to anything that had been done in connection with the Moore incident,” Nova states in the declaration.
Nova said he would have given the same testimony before the grand jury had he been called.
Gallegos did call police training specialist George Williams to the stand as an expert witness at the request of Zanotti's attorney. Williams testified that Moore's death was a clear case of “suicide by cop,” and that the SWAT operation had been handled properly.
Gallegos questioned Williams' qualifications as an expert before the jury, saying he had never trained in SWAT tactics.
”Quite simply ... his summary of qualifications, though impressive as to particular things, is lacking as it relates to the facts that he gave an opinion as to,” Gallegos told the grand jury.
The other defense motion filed Wednesday targets the pillars of Gallegos' involuntary manslaughter case: that Douglas and Zanotti acted with criminal negligence and that, in entering Moore's apartment without a Ramey warrant, officers committed an unlawful act that led to Moore's death.
In the motion, the defense argues the Ramey warrant wasn't required in the Moore situation because clear exigent circumstances existed, namely that Moore posed an immediate threat to herself and the community that necessitated prompt action.
A lack of a Ramey warrant, the motion states, has never been applied to create criminal liability for officers entering a home to make an otherwise lawful arrest.
The defense further argues that there is no causal connection between the unlawful act -- the lack of a warrant -- and Moore's death. Had the officers obtained the warrant, the defense argues, the situation likely would have reached the same end.
The defense motion also takes aim at the prosecution's claim that Douglas and Zanotti acted in a criminally negligent manner by failing to adequately supervise the SWAT and crisis negotiation teams, and the communication between the two.
Not only does the evidence show that both teams, and the communication between them, was supervised, the defense argues, but Gallegos also failed to provide the grand jury with a benchmark of what constitutes “adequate supervision.”
In the motions, the defense also argues that Gallegos improperly and inadequately instructed the grand jury on the law.
”There were numerous serious errors and omissions in the prosecutor's instructions to the grand jury in this case; together and separately, they permitted the grand jury to indict on a legally improper basis and on less than probable cause,” the motion states.
The defense also argues that Gallegos failed to instruct the jury on justifiable homicide as an absolute defense to manslaughter and that, by presenting SWAT team members with immunity agreements that were known to the jury, Gallegos implied they were somehow guilty of committing a crime and that, by extension, so were their commanding officers.
Further, the defense argues in the motions that if the court finds legal fault with one of Gallegos' theories -- either of criminal negligence or the commission of an unlawful act leading to Moore's death -- it is obligated to throw out the entire indictment.
The motion states “where a court finds that one of the two alternate theories of guilt is legally unavailable, and there is no means by which to determine whether or not a conviction was predicated on that theory, the convictions must be reversed altogether.”
If a judge denies the defense motions, which are scheduled to be heard July 10, it would still have an opportunity to appeal them to another court before a trial takes place because the motions were filed within 60 days of Douglas and Zanotti's arraignment.
Moore case at a glance
The incident
Cheri Lyn Moore, who had a history of mental illness, was shot and killed by Eureka police officers in April 2006 after a two-hour standoff that saw her brandish a flare gun, throw items from her second-story window and threaten to burn down the building.
The indictments
A criminal grand jury handed up the indictments after hearing several days of testimony, according to the district attorney's office. The proceedings are held in secret, although a judge can allow the sessions to be open to the public upon the request of the district attorney.
In the grand jury process, because the role of the 19 members is only to determine probable cause to bring an indictment, it is not required for them to hear all the evidence. It is left to the “good faith of the prosecutor to present conflicting evidence,” according to the American Bar Association. A minimum of 12 of the jurors must approve indictments.
Grand jurors are chosen from the same pool as other trials.
The charges
Former Eureka Police Chief David Douglas and Lt. Tony Zanotti are each facing a felony charge of involuntary manslaughter, the unlawful killing of someone during a crime, or a legal act that leads to a death -- but one that is done negligently. If convicted, the charges carry a sentence of up to four years in prison.
The defendants
David Douglas: Former Eureka police chief, who has since retired. He testified at a coroner's inquest looking into the death of Cheri Lyn Moore that he did not take over command at the scene, but was ultimately responsible.
Lt. Tony Zanotti: A current member of the Eureka Police Department. Zanotti was the incident commander at the Moore standoff.
Thadeus Greenson can be reached at 441-0509 or tgreenson@times-standard.com
6.13.2008
NYT - A Legal Thicket Amid the Redwoods
A Legal Thicket Amid the Redwoods
By JOHN MARKOFF,
Published: June 4, 1993
In a cluttered office overflowing with filing boxes and legal briefs, William H. Bertain is standing fast in his quixotic campaign to wrest back control of the Pacific Lumber Company, which was acquired in 1986 by Charles E. Hurwitz, a Houston financier.
A child of the lush redwood forests in this fog-shrouded country, Mr. Bertain has dedicated the last seven years to a legal fight that few believe can be won, returning the company to the Murphy family that had managed it since the turn of the century. Seeking to Undo a Buyout
Mr. Hurwitz's Maxxam Inc. bought Pacific Lumber for about $900 million in a buyout financed largely with junk bonds handled by Drexel Burnham Lambert, and three members of the Murphy family have retained Mr. Bertain to have the buyout undone, asserting that shareholders were defrauded. Maxxam also faces a barrage of lawsuits from employees, shareholders and environmentalists seeking to halt the harvesting of old-growth timber.
Despite demoralizing odds, Mr. Bertain says he carries on the crusade because outside investors -- whom he calls "corporados" -- are threatening to destroy a way of life.
"This was the crown jewel of the North American timber industry," he said. "I was just stunned for four months after the takeover, but then I set out by committing to do everything that was legal and moral to stop this."
Mr. Bertain's campaign has set him at odds with John Campbell, the president of Pacific Lumber and a 24-year veteran of the company, the world's largest holder of virgin redwood forests. "He's barking up the wrong tree," Mr. Campbell said in a telephone interview. "He's a zealot and he has his emotions and his ego involved."
Pacific Lumber is not practicing cut-and-run forestry, the Australian-born lumberman insists. Countering critics who charge that Mr. Hurwitz had to increase the company's cutting rate to pay nearly $800 million of debt incurred when it was taken over, Mr. Campbell says the company has shown that it intends to be a positive long-term economic force here in Humboldt County, on the Northern California coast nearly 300 miles north of San Francisco. At Center of Regional Conflicts
Seven years after Mr. Hurwitz's takeover, the dispute shows no signs of ending soon. Indeed, Pacific Lumber has increasingly found itself at the center of economic and environmental conflicts boiling over in the Pacific Northwest. In April, both sides of the Pacific Lumber hostilities were prominently represented at President Clinton's meeting in Portland, Ore., on forest use.
In this logging town of 27,000, the controversy has turned neighbor against neighbor and left the community bitterly divided over whether its future lies in timber or in diversifying into recreation and tourism.
And Pacific Lumber's unwillingness to compromise on environmental issues has made new enemies in this town, which once saw itself as having a one-crop economy.
"For a long time, the timber industry has controlled this area," said Phil Jurick, a Eureka developer. "They've had far too much influence."
For many residents of this community, the Pacific Lumber takeover has come to epitomize the social and environmental costs of the junk bond era of the 1980's. But beyond being vilified as a corporate raider, Mr. Hurwitz has never been charged with violating any laws, and in the short run at least, his company has increased employment in the region. Mr. Bertain's supporters include members of labor unions, community leaders and environmentalists. Nevertheless, it has not been a comfortable time for the bearded and outspoken 46-year-old lawyer, the youngest of 10 children who grew up in nearby Scotia, the company town for Pacific Lumber, where his family had run a small laundry since 1920.
Today Mr. Bertain -- who spends most of his time and much of his money on the legal battle with Mr. Hurwitz -- is more than a half-million dollars in debt. At times he has been unable to meet his house payments, and his health has deterioriated.
The dispute may soon move to a national stage. Legislation is expected to be introduced in Congress this month to clear the way for the Government to acquire more than 30,000 acres of Pacific Lumber's old-growth timber in an area known as the Headwaters. While company officials say that the fair market value is likely to exceed $400 million, Congressional staff members and environmentalists argue that because environmental restrictions prohibit logging there, the actual value may be much less.
Environmentalists have used Pacific Lumber's logging practices as the rallying point in their battle to save the remaining stands of California's old-growth redwood forests. "This is in-your-face forestry," said Joshua Kaufman, a Humboldt County paleontologist who helped form an environmental coalition after he saw Pacific Lumber trucks rolling up and down the road on which he lives. The group has brought suits against the company and hopes to force it to sell its remaining old-growth lands for a new national park.
Mr. Bertain maintains that returning Pacific Lumber to its original owners would be a perfect compromise between the environmentalists and the logging industry. Under its previous owners, the company cut about 2 percent of the trees on its land annually -- no more than the forest's annual growth rate.
In his lawsuits against the Pacific Lumber takeover, Mr. Bertain has asserted that Mr. Hurwitz conspired with other investors to defraud the company's shareholders when he acquired the company. To date, those suits have generally been rejected by Federal courts, but more than a dozen shareholder, employee and environmental suits remain to be settled.
Few people give the small-town lawyer much chance of returning the company to its former owners. But Mr. Bertain is optimistic that he will prevail in his $1 billion-plus claim against the dealings of Drexel Burnham Lambert and its fallen junk bond specialist, Michael R. Milken. Words Unspoken
Mr. Bertain and Mr. Hurwitz have testified at the same Congressional hearing, but they have never spoken to each other. Mr. Hurwitz, a Texan who rarely speaks to the press, refused to comment on Mr. Bertain.
Unfazed by the various lawsuits against his holdings, Mr. Hurwitz has forged ahead, moving to reduce the debt load of Pacific Lumber. He recently refinanced Pacific Lumber's $510 million debt and split the company into three concerns, leading many industry executives to say -- and even some environmentalists to concede -- that the Houston financier had pulled off a business coup.
"They got a phenomenal decrease in the cost of capital," said Craig Gilmore, a financial analyst at Gilmore & Company in Carlsbad, Calif.
In a daring stroke, Mr. Hurwitz shifted Pacific Lumber's timber assets to two new companies, Scotia Pacific and Salmon Creek, cutting back on the company's short-term debt, financed by junk bonds, and replacing it with bonds backed by 179,000 acres of redwood and Douglas fir timberland. Many Lawsuits
Nonetheless, Mr. Hurwitz still faces imposing legal challenges:
*Pacific Lumber and Maxxam are named in lawsuits in both Humboldt County and New York City by former Pacific Lumber shareholders seeking damages of more than $1 billion.
*The logging company faces at least 10 lawsuits brought by environmentalists who charge that its accelerated logging endangers species like the spotted owl and the marbled murrelet and damages forest watersheds.
*In 1991, the United States Department of Labor filed a civil suit against Pacific Lumber in response to the company's 1986 termination of its pension plan, which it replaced with annuities from Executive Life, an insurance company that Mr. Hurwitz controlled and whose parent later went bankrupt.
*In May 1992, the Federal Deposit Insurance Corporation indicated that it was moving toward suing United Financial Group, stemming from the 1988 collapse of the United Savings Association. Mr. Hurwitz once owned 24 percent of the failed savings and loan, which purchased $1.4 billion worth of Drexel's junk bonds in exchange for $1.8 billion in financing for the acquisitions of Pacific Lumber and Kaiser Aluminum.
*In April, Representative Pete Stark, Democrat of California, introduced legislation that would impose a 75 percent tax on the value of old-growth redwood timber that is used as security for bonds.
Through it all, Mr. Bertain has shown no signs of caving in.
"He's a bulldog of a human being," said David Harris, an author and researcher who is working on a book about the corporate takeover. "Nobody else would be where he is today, but he's still after these guys."
The article also referred incompletely to Pacific Lumber's stance on issues that have angered environmentalists. The company said it had compromised on some matters.
Correction: June 10, 1993, Thursday
An article in Business Day on Friday about a legal battle for control of the Pacific Lumber Company misstated the relationship between Charles E. Hurwitz, chairman of Pacific's parent, Maxxam Inc., and the Executive Life Insurance Company, a California insurer that supplied annuities for Pacific Lumber's pension plan. Mr. Hurwitz did not control Executive Life.
The article also omitted attribution for allegations that the United Savings Association bought junk bonds from Drexel Burnham Lambert Inc. in return for Drexel's financing of acquisitions. That assertion was made in a lawsuit by the Federal Deposit Insurance Corporation against Michael R. Milken, Drexel's junk-bond specialist. Because Mr. Milken and Drexel Burnham settled the suit for $1.3 billion, no court ruled on the F.D.I.C. allegations.
By JOHN MARKOFF,
Published: June 4, 1993
In a cluttered office overflowing with filing boxes and legal briefs, William H. Bertain is standing fast in his quixotic campaign to wrest back control of the Pacific Lumber Company, which was acquired in 1986 by Charles E. Hurwitz, a Houston financier.
A child of the lush redwood forests in this fog-shrouded country, Mr. Bertain has dedicated the last seven years to a legal fight that few believe can be won, returning the company to the Murphy family that had managed it since the turn of the century. Seeking to Undo a Buyout
Mr. Hurwitz's Maxxam Inc. bought Pacific Lumber for about $900 million in a buyout financed largely with junk bonds handled by Drexel Burnham Lambert, and three members of the Murphy family have retained Mr. Bertain to have the buyout undone, asserting that shareholders were defrauded. Maxxam also faces a barrage of lawsuits from employees, shareholders and environmentalists seeking to halt the harvesting of old-growth timber.
Despite demoralizing odds, Mr. Bertain says he carries on the crusade because outside investors -- whom he calls "corporados" -- are threatening to destroy a way of life.
"This was the crown jewel of the North American timber industry," he said. "I was just stunned for four months after the takeover, but then I set out by committing to do everything that was legal and moral to stop this."
Mr. Bertain's campaign has set him at odds with John Campbell, the president of Pacific Lumber and a 24-year veteran of the company, the world's largest holder of virgin redwood forests. "He's barking up the wrong tree," Mr. Campbell said in a telephone interview. "He's a zealot and he has his emotions and his ego involved."
Pacific Lumber is not practicing cut-and-run forestry, the Australian-born lumberman insists. Countering critics who charge that Mr. Hurwitz had to increase the company's cutting rate to pay nearly $800 million of debt incurred when it was taken over, Mr. Campbell says the company has shown that it intends to be a positive long-term economic force here in Humboldt County, on the Northern California coast nearly 300 miles north of San Francisco. At Center of Regional Conflicts
Seven years after Mr. Hurwitz's takeover, the dispute shows no signs of ending soon. Indeed, Pacific Lumber has increasingly found itself at the center of economic and environmental conflicts boiling over in the Pacific Northwest. In April, both sides of the Pacific Lumber hostilities were prominently represented at President Clinton's meeting in Portland, Ore., on forest use.
In this logging town of 27,000, the controversy has turned neighbor against neighbor and left the community bitterly divided over whether its future lies in timber or in diversifying into recreation and tourism.
And Pacific Lumber's unwillingness to compromise on environmental issues has made new enemies in this town, which once saw itself as having a one-crop economy.
"For a long time, the timber industry has controlled this area," said Phil Jurick, a Eureka developer. "They've had far too much influence."
For many residents of this community, the Pacific Lumber takeover has come to epitomize the social and environmental costs of the junk bond era of the 1980's. But beyond being vilified as a corporate raider, Mr. Hurwitz has never been charged with violating any laws, and in the short run at least, his company has increased employment in the region. Mr. Bertain's supporters include members of labor unions, community leaders and environmentalists. Nevertheless, it has not been a comfortable time for the bearded and outspoken 46-year-old lawyer, the youngest of 10 children who grew up in nearby Scotia, the company town for Pacific Lumber, where his family had run a small laundry since 1920.
Today Mr. Bertain -- who spends most of his time and much of his money on the legal battle with Mr. Hurwitz -- is more than a half-million dollars in debt. At times he has been unable to meet his house payments, and his health has deterioriated.
The dispute may soon move to a national stage. Legislation is expected to be introduced in Congress this month to clear the way for the Government to acquire more than 30,000 acres of Pacific Lumber's old-growth timber in an area known as the Headwaters. While company officials say that the fair market value is likely to exceed $400 million, Congressional staff members and environmentalists argue that because environmental restrictions prohibit logging there, the actual value may be much less.
Environmentalists have used Pacific Lumber's logging practices as the rallying point in their battle to save the remaining stands of California's old-growth redwood forests. "This is in-your-face forestry," said Joshua Kaufman, a Humboldt County paleontologist who helped form an environmental coalition after he saw Pacific Lumber trucks rolling up and down the road on which he lives. The group has brought suits against the company and hopes to force it to sell its remaining old-growth lands for a new national park.
Mr. Bertain maintains that returning Pacific Lumber to its original owners would be a perfect compromise between the environmentalists and the logging industry. Under its previous owners, the company cut about 2 percent of the trees on its land annually -- no more than the forest's annual growth rate.
In his lawsuits against the Pacific Lumber takeover, Mr. Bertain has asserted that Mr. Hurwitz conspired with other investors to defraud the company's shareholders when he acquired the company. To date, those suits have generally been rejected by Federal courts, but more than a dozen shareholder, employee and environmental suits remain to be settled.
Few people give the small-town lawyer much chance of returning the company to its former owners. But Mr. Bertain is optimistic that he will prevail in his $1 billion-plus claim against the dealings of Drexel Burnham Lambert and its fallen junk bond specialist, Michael R. Milken. Words Unspoken
Mr. Bertain and Mr. Hurwitz have testified at the same Congressional hearing, but they have never spoken to each other. Mr. Hurwitz, a Texan who rarely speaks to the press, refused to comment on Mr. Bertain.
Unfazed by the various lawsuits against his holdings, Mr. Hurwitz has forged ahead, moving to reduce the debt load of Pacific Lumber. He recently refinanced Pacific Lumber's $510 million debt and split the company into three concerns, leading many industry executives to say -- and even some environmentalists to concede -- that the Houston financier had pulled off a business coup.
"They got a phenomenal decrease in the cost of capital," said Craig Gilmore, a financial analyst at Gilmore & Company in Carlsbad, Calif.
In a daring stroke, Mr. Hurwitz shifted Pacific Lumber's timber assets to two new companies, Scotia Pacific and Salmon Creek, cutting back on the company's short-term debt, financed by junk bonds, and replacing it with bonds backed by 179,000 acres of redwood and Douglas fir timberland. Many Lawsuits
Nonetheless, Mr. Hurwitz still faces imposing legal challenges:
*Pacific Lumber and Maxxam are named in lawsuits in both Humboldt County and New York City by former Pacific Lumber shareholders seeking damages of more than $1 billion.
*The logging company faces at least 10 lawsuits brought by environmentalists who charge that its accelerated logging endangers species like the spotted owl and the marbled murrelet and damages forest watersheds.
*In 1991, the United States Department of Labor filed a civil suit against Pacific Lumber in response to the company's 1986 termination of its pension plan, which it replaced with annuities from Executive Life, an insurance company that Mr. Hurwitz controlled and whose parent later went bankrupt.
*In May 1992, the Federal Deposit Insurance Corporation indicated that it was moving toward suing United Financial Group, stemming from the 1988 collapse of the United Savings Association. Mr. Hurwitz once owned 24 percent of the failed savings and loan, which purchased $1.4 billion worth of Drexel's junk bonds in exchange for $1.8 billion in financing for the acquisitions of Pacific Lumber and Kaiser Aluminum.
*In April, Representative Pete Stark, Democrat of California, introduced legislation that would impose a 75 percent tax on the value of old-growth redwood timber that is used as security for bonds.
Through it all, Mr. Bertain has shown no signs of caving in.
"He's a bulldog of a human being," said David Harris, an author and researcher who is working on a book about the corporate takeover. "Nobody else would be where he is today, but he's still after these guys."
The article also referred incompletely to Pacific Lumber's stance on issues that have angered environmentalists. The company said it had compromised on some matters.
Correction: June 10, 1993, Thursday
An article in Business Day on Friday about a legal battle for control of the Pacific Lumber Company misstated the relationship between Charles E. Hurwitz, chairman of Pacific's parent, Maxxam Inc., and the Executive Life Insurance Company, a California insurer that supplied annuities for Pacific Lumber's pension plan. Mr. Hurwitz did not control Executive Life.
The article also omitted attribution for allegations that the United Savings Association bought junk bonds from Drexel Burnham Lambert Inc. in return for Drexel's financing of acquisitions. That assertion was made in a lawsuit by the Federal Deposit Insurance Corporation against Michael R. Milken, Drexel's junk-bond specialist. Because Mr. Milken and Drexel Burnham settled the suit for $1.3 billion, no court ruled on the F.D.I.C. allegations.