Word: mariotta
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Dates: during 1987-1987
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...decade. Wedtech's profits jumped from $8 million in 1981 to more than $72 million for the first six months of 1986, and the company became a potent symbol of minority achievement. On a 1984 visit to New York City, Ronald Reagan lauded Wedtech's success. "People like John Mariotta," said the President, "are heroes...
Thus far, four former Wedtech executives, including Chairman Neuberger, the former treasurer, the chief financial officer and a senior vice president, have pleaded guilty to a range of charges, including bribery and mail fraud. Mariotta, booted out of the company in February 1986, has not been indicted...
From the beginning of their partnership, Mariotta and Neuberger were proud that they made a good product for a good price. But they felt that procurement officials in the Defense Department sneered at the company and did not give it a fair shake. Their plan of attack, according to investigators, was to shower money on virtually everyone they thought could help the company win contracts. Not all these efforts were illegal, but they illustrate how Wedtech spent its way to success...
With military orders flowing in, Wedtech's revenues grew to $72.3 million by 1984. The company went public with a $30 million stock offering, making millionaires of Mariotta, Neuberger and other executives. But the stock sale almost killed the goose that laid the golden egg: since Mariotta was no longer the majority stockholder, Wedtech ceased to qualify as a minority-owned company. When the local SBA office began proceedings to remove the company from the set-aside program, Wedtech's officers quickly worked out an agreement to transfer 1.8 million shares of stock to Mariotta's nominal control. Wedtech turned...
...company's downfall began when Mariotta was ousted as Wedtech's chairman and replaced by Neuberger after disputes about management policies. The stock that Mariotta supposedly controlled was returned to the company, and Wedtech yielded its status as a minority-owned business. The stock dropped from $11.44 a share in March 1986 to $6.50 in October. Soon after, New York City newspapers began linking the firm to corruption investigations. Wedtech officials admitted they had forged invoices to speed up payments from the Army. By year's end the company had laid off 1,000 workers and filed for bankruptcy. Debts...