Verit Industries’ Bid for Iroquois Brands Fails : Takeovers: The president’s criminal convictions are complicating acquisition attempts. It’s the second failed effort in a month.

Verit Industries, a Phoenix-based holding company whose president and largest shareholder has two criminal convictions in Europe, is stumbling in its bid to acquire a stable of publicly held companies through stock swaps.

Verit said Monday that its bid to acquire majority control of Iroquois Brands, a Houston-based consumer products concern, has fallen through. That came within a month after the collapse of Verit’s bid to buy a Whittier-based toxic-waste control firm.

These deals were controversial because of the background of John Carway, Verit’s president and largest shareholder, who in 1985 pleaded guilty to check fraud in Dublin and possession of marijuana in London, public records show.

Carway controls nearly 38% of the stock in Verit, according to documents on file with the Securities and Exchange Commission. The company recently moved its corporate headquarters from Los Angeles.

Verit Industries used to make and manufacture stereo systems, but that business was sold as part a corporate reorganization. Verit announced last fall that it was going to buy 56% of Iroquois’ common stock through an exchange of shares, and it also acquired a large stake in Emerald Homes, a Phoenix-based home builder.

The breakdown in the Iroquois Brands sale marks the second time in less than a month that one of Verit’s deals has been called off.

Its agreement to buy American Toxxic Control in Whittier collapsed last month just days after it was announced. The sale broke down after American Toxxic’s management claimed that it discovered that Carway has a criminal record, according to Verit spokesman Brian Donnelly.

Donnelly noted, however, that Carway disclosed his criminal problems to the Securities and Exchange Commission several months ago. American Toxxic officials could not be reached for comment.

Carway has always minimized his criminal problems, saying he was a victim of circumstance in both cases. (He received a one-year suspended sentence on each charge.) In an interview Monday, though, he said that disclosures about the convictions have caused major problems.

“I can either go back (to Ireland) with my tail between my legs or I can stay and fight,” he added. “I plan to stay.”

Verit Industries got in trouble last year with its outside auditor--Touche Ross & Co., now Deloitte & Touche--when the firm failed to disclose cash advances of $600,000 to Wellsdene Ltd., a consulting firm controlled by Carway, SEC documents show. According to Carway, the money was for legitimate business expenses.

Verit also agreed to pay Wellsdene annual consulting fees of $250,000 for three years, an arrangement that also was not disclosed, according to the accounting firm, which eventually quit as Verit’s auditor. Verit said that the consulting-fee agreement was canceled last November when Carway became president of the firm.

The breakdown of the Iroquois sale marks a parting of the ways between Carway and his long-time business associate, Malcolm H. Stockdale, who resigned as Verit’s chairman and chief executive.

Stockdale, who is also chief executive of Iroquois Brands, could not be reached for comment, while an Iroquois executive spoke only in generalities about why the sale fell through.

“Each of the companies (Verit and Iroquois) had different philosophies as to the direction they should head,” said David C. Whipple, Iroquois’ corporate secretary.

Stockdale assumed control of Iroquois Brands in 1988, the same year that he and Carway took over Verit Industries. Carway said that the two men remain friends despite their recent business differences.

Robert E. Garrison II, another top executive at Iroquois, also resigned from Verit’s board along with Stockdale. Garrison is a former partner in the Houston-based investment banking firm now known as Lovett Underwood Neuhaus & Webb, bank officials said.

Iroquois Brands has yet to file its 1989 financial statements because its outside accountants have not completed their independent audit. Iroquois said last month that the auditors have been unable to get “certain necessary information relating to (Iroquois’) foreign subsidiaries.” Whipple said the earnings should be released shortly.