A business venture controlled by David Owen, former top fundraiser for Sen. Bob Dole of Kansas, made payments on a $250,000 loan from Dole`s wife after other participants in the venture say they were told it had become insolvent.
”I think there is something awfully fishy going on,” said Thomas Saul, a Kansas building contractor and participant in the venture. Saul says published reports of recent investigations of Owen`s finances have led him to question what happened to his investment in a television golf show organized by Owen.
The venture, called Golfun Productions, was organized in 1983 by Owen but was declared insolvent in 1985 after spawning an FBI investigation into allegations that the firm was defrauded by a California film producer.
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Saul said he believes he was misled about key financial information regarding Golfun. He said he learned only last month of the loan from Mrs. Dole, which was made in February, 1984, and repaid years later. He questions how a company that officials told him was insolvent could repay a $250,000 loan.
Saul said he was informed by Owen`s attorney no later than the fall of 1984 that Golfun was broke and that a complaint had been filed with the FBI alleging a producer embezzled the firm`s assets.
Yet about two months later, Saul has now learned, Owen pledged the firm`s accounts receivable as collateral for a loan made to Golfun from a bank with ties to Owen. Several days after receiving the December, 1984, bank loan, the company paid Mrs. Dole $23,570 in interest on her loan.
Kansas public records show a series of Golfun assets were pledged as collateral for the bank loan. Saul said he was not aware that Golfun had such assets when he withdrew from the failing venture and he questions how a firm that had no income in 1984 and eventually went broke in 1985 could get such a loan.
Scott Morgan, chief counsel to Dole`s presidential campaign, said Owen`s lawyer told him that Owen unknowingly submitted accounts receivable for the loan that were ”complete shams” or inaccurate.
The entangled financial dealings of Owen, a Kansas businessman who raised at least $10 million for Dole`s presidential campaign, are the subject of numerous investigations involving alleged violations of federal and state election laws and federal contracting laws.
Dole fired Owen from his job as national finance director for his presidential campaign in January after some of the alleged financial irregularities surfaced in news accounts. No evidence has been made public that suggests Dole had detailed knowledge of the deals under investigation, and Owen has not been charged with any violations of law.
But the financial deals involving Owen and a trust that he managed for the senator`s wife, Elizabeth Hanford Dole, already have caused political problems for Dole`s presidential campaign.
How much investors lost in the ill-fated television show remains unclear. Company records indicate that about $600,000 was spent to produce a show in which celebrities and golf pros practiced difficult shots. But after more than six months, the show generated little or no income, according to Chuck Dolbeare, a Kansas businessman and Golfun investor, who helped produce the show.
Despite Golfun`s financial problems, Sen. Dole`s presidential campaign staff said, Mrs. Dole was paid at least $321,000 in principal and interest on the $250,000 loan from 1985 to 1988. In addition, the Doles` 1984 tax returns show $23,570 in interest income from Golfun, but the campaign staff said they could not determine if that interest income represented payment on the loan.
Saul said he lost his investment, but he declined to disclose the extent of his financial exposure. He said he survived this setback.
Just how the bank loan proceeds were used and how Owen raised the funds to repay Mrs. Dole may remain a mystery. Owen has declined several requests for interviews about the dealings.
Morgan, the Dole campaign`s chief counsel, said Owen`s attorney, Charles Schleicher, maintained that Owen personally guaranteed to Mrs. Dole that Golfun`s loan would be repaid and that it was paid off in several installments starting in 1985 and ending in January, 1988.
Records in Kansas and Washington show Owen and his various other businesses received more than $600,000 between November, 1985, and the end of 1987 in fees, loans, sales proceeds and income from contracts with clients whom he helped get or maintain federal business. Owen`s clients were assisted in obtaining the government contracts by Dole`s Senate staff, public records show.
He also received more than $100,000 in commissions for handling deals for Mrs. Dole`s trust.
Morgan said Dole was unaware that the federal contracts would generate large consulting fees and income to companies set up by Owen. Dole says he may have made only one phone call to help one of Owen`s clients and that was in 1983, before Owen borrowed any money from Dole`s wife.
Morgan also said it was impossible to determine if Owen used money generated by the government contracts to repay Golfun`s debt to Mrs. Dole.
”We didn`t know that Dave was going to benefit from this thing,” said Morgan. ”It makes sense that he would pay for it (the Golfun loan) out of his own personal funds after he personally guaranteed it.”
The Golfun transaction is one of several deals Owen made by capitalizing on his connections to the Doles and his reputation as a first-rate Republican fundraiser. It shows how this longtime and trusted friend took unusual risks with Mrs. Dole`s money to generate funds for a personal business venture.
Dole has publicly rebuked Owen, the former Kansas Republican Party chairman who ran Dole`s Senate campaigns and raised millions of dollars for his various political races since 1974. Mrs. Dole has contacted Owen only once on a personal matter since the controversy over his role as her financial adviser surfaced earlier this year, Morgan said.
Owen was named investment counselor to a blind trust set up to manage Mrs. Dole`s money in January, 1985, nearly two years after she became secretary of transportation, Morgan said. Owen, who had advised Mrs. Dole on financial matters before the trust was set up, was given authority to control her assets and was allowed to borrow money from the trust for his personal ventures, Morgan said.
The details of the formation of Golfun Productions Inc. date back to August, 1983. Owen set up Golfun to produce a series of half-hour television shows featuring Mike Douglas as the host, with appearances from professional golfers and other celebrities.
Advertising time sold for the show would provide the profits, to be split between Golfun`s investors and the TV stations that broadcast the program.
Owen lined up Saul as an initial investor. Co-producer Dolbeare said he also invested, obtaining an interest with a $10,000 bank loan that Owen arranged through the Stanley Bank in Overland Park, Kan.
Owen is a member of the bank`s board of directors. The bank`s president, Joe Jackson, is also the head of the First National Bank of Columbus, Kan., which loaned Golfun money in 1984.
Under a partnership arrangement involving Saul, Golfun was required to disclose to him any loans the firm obtained and to provide him a detailed accounting of the business venture.
Dolbeare said about nine Golfun programs were produced and aired in most of the major television markets in the U.S. But Golfun had problems selling its portion of the advertising time. So while the TV stations received revenues, Golfun had little income, Dolbeare said.
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Some advertisers did provide golf gear in return for ad spots, and one of the show`s advertisers was a travel agency owned by Owen`s wife and daughter, according to Dolbeare.
By February, 1984, Golfun had spent about $250,000 in producing the show. Little or no income had flowed into the company, however, and on Feb. 21, 1984, Golfun borrowed $250,000 from Mrs. Dole, who at that time was transportation secretary but had not yet created the blind trust.
At the time, however, Owen was already managing Mrs. Dole`s money as her personal financial adviser, Morgan said. Her net worth, supplemented by an inheritance from her father, a wealthy North Carolina flower merchant who died in 1978, had grown to around $1 million, public records show.
Golfun`s costs continued to soar, though. Owen told Dolbeare in a July, 1984, letter that Golfun had spent about $600,000. Company records show the expenditures included $21,950 to the travel agency that Dolbeare said was owned by Owen`s wife and daughter; $14,262 to Owen himself; more than $15,000 to Owen`s administrative assistant for salary and reimbursement; $14,080 in American Express bills; and $1,011 spent at Wolf Creek Country Club, an exclusive men-only country club in Kansas City of which Owen is a member.
To stem the losses, Golfun hired Jeff Alan, a California businessman who was supposed to improve the marketability of the show. Alan reported that he was lining up more television stations and acquiring advertisers.
But by the fall of 1984, Owen had gone to the FBI, according to Saul and an FBI spokesman in Kansas City, to complain that Alan had defrauded Golfun. There was a lengthy investigation, but the U.S. attorney in Los Angeles declined to prosecute in 1986. Alan could not be reached for comment.
The financial misfortunes of Golfun didn`t stop the company from repaying Mrs. Dole, however.
By the end of 1984, she had received the $23,570 in interest income from Golfun, according to the Doles` tax returns. Saul says he doesn`t understand how the firm could have paid any interest to Mrs. Dole at the time because it did not have any income.
On Dec. 27, 1984, the First National Bank of Columbus, which Owen described as a ”sister bank” to one he had owned in Overland Park, filed state documents recording a loan of an undisclosed sum to Golfun. The company pledged as collateral various accounts receivable, or debts to Golfun that could be drawn upon in the event the bank loan was not repaid.
Morgan said he has not been able to determine how the loan proceeds from the Kansas bank were used, but that the loan from Mrs. Dole was eventually repaid by Owen. He also said he was told that Owen unknowingly used as collateral accounts receivable that were ”complete shams” or were inaccurate.
Bank President Jackson, who purchased the assets of the Stanley bank in Overland Park from Owen in 1982, would not disclose to reporters the amount of the loan to Golfun and said he was unfamiliar with details about how the loan proceeds were used.
The $250,000 loan to Golfun from Mrs. Dole was ”rewritten” on Jan. 1, 1985, and transferred to Mrs. Dole`s blind trust. Morgan last week disclosed that Owen had repaid the Golfun loan in at least four installments-$105,000 at year-end 1985; $70,000 at year-end 1986; $43,000 in November, 1987; and $103,000 in January of this year.