Report on Blind Trust Shows No Investments in Wedtech : Meese Stock Gains of $39,000 Disclosed
Atty. Gen. Edwin Meese III made about $39,000 in profits from 23 highly speculative stock transactions during a recent 19-month period, but none of his funds had been invested in Wedtech Corp., the target of federal and state investigations, Meese’s lawyers disclosed Monday.
W. Franklyn Chinn, a San Francisco investment adviser who is now a possible subject of a federal criminal investigation, made the trades for Meese’s limited blind trust. The trust was set up with about $60,000 Meese realized after liquidating stock holdings to avoid any conflict of interest as attorney general, the lawyers’ report showed.
Emphasizing that Meese had no knowledge of the trading or the stocks involved, his attorneys declared: “There has been no impropriety or violation of any law or regulation in the conduct of Mr. Meese’s personal financial affairs.”
‘Most Thorough Airing’
Terry Eastland, Meese’s chief spokesman, said in releasing the lawyers’ report: “This is probably the most thorough, exhaustive airing of any public official’s financial life you would ever come across.”
An independent counsel is examining whether Meese improperly helped Wedtech, a New York defense contractor now in bankruptcy proceedings, get an Army contract in 1982 when he was counselor to President Reagan.
Meese, while saying that he encouraged White House officials to give Wedtech a fair hearing in its contract request, has insisted that he received no benefits in return and had no knowledge of payoffs company officials have since admitted making to some officials.
The independent counsel, James C. McKay, has been trying to determine whether Chinn, who was a Wedtech director and consultant, funneled any of the attorney general’s money to Wedtech.
The federal Office of Government Ethics has also complained that Meese failed to submit for approval the blind trust arrangement he had set up with Chinn.
Meese’s lawyers, Nathan Lewin and James E. Rocap III, Monday accused the ethics office of breaking the law by failing to raise its questions about the blind trust with Meese first before relating them to Rep. Gerry Sikorski (D-Minn.), who has been critical of the attorney general.
Although the information Meese provided did not show any financial link to Wedtech, it did provide some details of the potentially risky stock trades Chinn made for him, involving buying stock and then selling it again at higher prices the same day.
John Markese, director of research for the American Assn. of Individual Investors, described Chinn’s “one-day” trades as “a highly speculative trading practice.”
But Washington lawyer Arthur Mathews, a former deputy associate director for enforcement at the Securities and Exchange Commission, said the practice is both legal and proper, adding that “all sorts of people engage in so-called day trading.”
Lewin and Rocap noted that Meese terminated his financial arrangement with Chinn last May 5, after learning that Chinn had been named as a possible subject of the investigation into Wedtech being conducted by U.S. Atty. Rudolph W. Giuliani in New York. Wedtech is currently at the center of three federal investigations and a New York inquiry over the methods it used to get contracts.
$12,571 Largest Gain
The disclosures by Meese’s lawyers show that Meese’s largest gain through the blind trust--a gross profit of $12,571--came in his final transaction with Chinn last Feb. 11. That gain was realized by buying and selling stock of British Airways on the day that the stock of the formerly state-owned airline was first traded publicly.
His largest loss--$6,788--took place on June 26, 1986, when Chinn bought and sold Ultimate Corp. for the limited blind trust.
Under Chinn’s one-day trade strategy, Meese’s limited blind partnership owned stock for only 19 days of its 760-day existence. For the balance of the time, the partnership kept its cash in interest-bearing money market accounts at the brokerage firm of Bear Stearns of San Francisco and Imperial Trust Co. of San Francisco.