Opinion ID: 255084
Heading Depth: 2
Heading Rank: 1

Heading: Pre-Natal Activity

Text: 4 Relevant proof adduced by the government at trial actually went back in time several months before the principal management defendants obtained control of Texas-Adams. During the summer of 1955 McCarthy and Mittelman were engaged in negotiations with one Claget Sanders to purchase from the Ajax Oil Company concededly valuable oil producing properties in what were known as the Bonanza and Poplar fields in Montana and Wyoming. The price agreed upon was $1,250,000. 5 It was at about this time, in June, 1955, that the American Montana Oil & Gas Corporation, later used as a dummy buyer in the fraudulent takeover of Texas-Adams, was organized by Mittelman, a New York attorney; however, no organizational meeting was held until October, at which time Crosby, Pettit and McCarthy were elected its officers. 6 An early linking of appellant Crosby to McCarthy and Mittelman was shown by Basil Zavoico. He was a petroleum consultant approached by Crosby in May of 1955 to obtain engineering reports on the Bonanza and Poplar properties. A month later Crosby again retained him to prepare a statement reflecting the financial structure of a Dumont Airplane & Marine Instrument Co. after an anticipated purchase by that corporation of the Ajax properties. (Zavoico was told that American Montana held an option to purchase from Ajax — and would in turn sell to Dumont.) The terms of the projected Dumont-American Montana sale would have netted a $2 million profit for the latter company. 5 7 Apparently lacking funds to swing the Ajax purchase, McCarthy and Mittelman then concluded an agreement, in Denver, with Homestead Oil & Uranium Co. of Colorado. They told Holland, president of Homestead, that they already had control of Dumont — and agreed, in return for a loan of $50,000 to be used as partial payment for the Ajax properties, to merge Homestead into Dumont. 6 The instrumentality set up for this merger was still another penniless, dummy corporation, Sundown Oil Co. of Colorado, which had as officers and directors McCarthy, Mittelman and Paul R. Jones, a co-conspirator. 8 Although the record is silent on this point, plans for the acquisition of Dumont must have collapsed sometime that summer. Rather, an agreement was made between one Satiris Fassoulis and McCarthy whereby groups headed by those two men were to obtain control of Continental Car-na-var Corp. — at which time Continental would purchase all the stock of Sundown (which was to have acquired the Ajax properties). Holland and Homestead were in turn reassured by an agreement wherein Continental agreed to replace Dumont and merge with the uranium company. 9 The financial problems of McCarthy and Mittelman during this period are painfully obvious. The Ajax commitment called for 1¼ million dollars — the sole amount visibly raised was the $50,000 from Homestead in return for the promise of merger. The McCarthy group was to have produced $277,000 to purchase control of Continental in conjunction with Fassoulis; in order partially to meet their commitments in this direction, Mittelman was forced to go to Denver to obtain from Holland release of the same $50,000 which had been banked in Billings, Montana pending closing of the Ajax deal. This money was then forwarded to the New York attorneys of the Limestreet Corporation, from whom McCarthy and Fassoulis were purchasing control of Continental. In the end, both the Ajax and Continental deals fell through for lack of funds — but both of these episodes shed light on the eventual Texas-Adams machinations.