Posner Loses Control of His Holdings : * Judicial: The action was ordered by a court while auditors determine if the company was plundered.
A federal judge in Cleveland has suspended financier Victor Posner from control of his holdings, which include Arby’s and Royal Crown Cola, while auditors determine whether the company was plundered.
U.S. District Judge Thomas Lambros, in a harshly worded order Friday, said the intervention was needed to keep the Miami Beach financier from draining assets from DWG Corp.
Posner’s son, Steven, DWG’s vice chairman, was also suspended.
Donald Glazer, an attorney for Posner and DWG Corp., said the judge went too far. He rejected the characterization of Posner’s actions and said he will seek a stay at a Feb. 24 hearing.
“This was an order that came without even any advocate. There were no motions made, no parties, no notice,” Glazer said Saturday. “I think this type of thing is destroying the company more than any allegations that I’ve ever heard against Mr. Posner.”
Posner owns nearly half the stock in DWG, corporate parent of the fast-food Arby’s chain, Royal Crown Cola and Phoenix-based Talley Industries Inc., an aerospace and industrial products company.
The judge ordered the Posners’ salaries to be placed in trust pending the audit. Victor Posner received cash compensation of $3.6 million from DWG last fiscal year, while his son was paid $665,000.
The judge barred Posner from selling his 46.3% stake. DWG stock closed Friday up 87 1/2 cents at $5.50.
Lambros said he intervened because Posner had defied the terms of a court-ordered settlement with disgruntled shareholders at DWG’s Dec. 27 annual meeting. The case arose from a shareholders’ lawsuit filed in 1989.
Posner has been accused of taking companies over only to suck the cash out of them.
“His usurpation of corporate assets . . . can truly be classified as a corporate holocaust,” Lambros wrote.
Posner’s empire has been crumbling since 1985, when it was valued at $4 billion and Business Week magazine ranked him as the nation’s highest-paid executive with an annual salary of $12.7 million. Several of his holdings have subsequently sought bankruptcy court protection.
A bankruptcy judge ousted him as chairman of one of them, Sharon Steel Corp., early in 1988 after he failed to agree to allow an independent majority to be seated on the company’s board, which he controlled.
Posner pleaded no contest to income tax evasion in 1987. He was placed on five years’ probation and ordered to contribute $3 million and 5,000 hours to helping the homeless.
Both Posners were named as co-conspirators in an insider-trading complaint the Securities and Exchange Commission filed against Drexel Burnham Lambert Inc. and Drexel’s former junk-bond financier, Michael Milken.
