I.P. Timberlands Scandal 

International Paper   Lexington, Kentucky

                                                                                                             

Updated : 3-31-08

 

 

IP. Timberlands ltd.

To: Former and current shareholders of International Paper Company Persons receiving retirement benefits from International Paper Company Active employees of International Paper Company who are vested in the retirement plan.

Subject:  Suspected fraud against the above groups by International Paper Company Senior Management

In the mid-1980s International Paper Company (IPCo) moved their corporate Wood Products Division offices to Dallas, Texas. The CEO of the company at the time was John Georges, his right hand and heir apparent was John T. Dillon. Dillon from 1982 until 1986 was IPCo's Manager of Land & Timber. Shortly after moving to Dallas, Georges and Dillon set up a new company, a company within IPCo. The name of the new company was IP Forest Resources Company (PIFR). IPFR was incorporated in Delaware on December 21, 1984. The registering agent in Delaware was the Corporation Trust Center or CTC. CTC is a subsidiary of CCH Inc, of Deerfield, ILAL. CCH Inc is a subsidiary of Wolters-Kluwer U.S., and Wolters-Kluwer U.S. is a subsidiary of Wolters-Kluwer, Netherlands. Wolters-Kluwer, Netherlands is a publishing and holding company whose main offices are in Basil and Geneva, Switzerland. As a holding company in Switzerland, Wolters-Kluwer buys and sells stock, deposits assets, manages confidential accounts and maintains confidential accounting records for their clients in other countries. No public records, no paper trail, just confidential numbered accounts.

Two weeks after being incorporated in Delaware, IPFR was registered for business in Texas with the Texas Secretary of State. Mr. Douglas Y. Bech, a lawyer with the firm of Andrews & Kurth handled the Texas registration of IPFR. The file number with the Texas Secretary of State for IPFR is 0064464-06. IPFR is still in business.

Seven days after starting up IPFR in Delaware, Georges and Dillon had CTC and Andrews & Kurth incorporate and register a new company in Texas. The name of the company was IP Timberlands Ltd. The IP Timberlands Ltd. (IPT) file with the Texas Secretary of State is #00040908-10. The incorporation documents state that the life of the corporation was anticipated to be fifty years, until the year 2035, but IPT went out of business March 25, 1998 when International Paper Company paid 99.5 million dollars to buy the 7,299,500 Class A shares held by the public. Andrews & Kurth continued as outside legal counsel for IPT until it went out of business in March of 1998, and continue to represent IPFR.

IP Timberlands Ltd. was a public company that was a partner in a limited partnership. IPT had two partners. The managing General Partner of IPFR, the Delaware Company registered by Georges and Dillon. The other Special General Partner was International Paper Incorporated (IPCo). The business of IP Timberlands Ltd. was the marketing and sale of forest products. Also, IP Timberlands Ltd. was authorized to sell or exchange portions of its forestlands and to acquire additional properties for cash units of stock, or other considerations.

International Paper Inc. seceded over six million acres of timberland to the partnership. The estimated value of that timberland was just over two billion dollars. (Bet you thought that as an IPCo stockholder you had an interest in all of that land.) IPFR as managing General Partner, managed the business, and IP Timberlands Ltd. operated the business. IP Timberlands Ltd. was registered in Texas as a public company. IPT had two classes of stock, Class A limited partners stock and Class B limited partners stock. Both stocks were depository units; there were no stock certificates. IPCo owned all of the Class B units, that is why it was called limited partner stock, and 84% of the Class A units. There were 46,445,729 Class A units and something over 50 million Class B units. So, IP Timberlands Ltd. was owned by two groups of shareholders, Class A shareholders and one Class B shareholder, which was IPCo. When IPCo purchased IP Timberlands Ltd. on March 25, 1998, there were 7,299,500 Class A shares owned by 2,837 individuals, IPCo held the other 39 million Class A shares internally.

The total amount of capital raised from the sale of the Class A units, was $1,106,000,000. Most of that money, over 900 million dollars, was paid by IPCo and was borrowed from another company organized by John Georges and John T Dillon. That company was called Timberland Investing Inc. So, Georges and Dillon borrowed 900 million dollars from a company that they created, Timberlands Investing Inc. to buy a 30% interest in another company they had created just two weeks before named IP Timberlands Ltd. Nine hundred million dollars to buy back 30% of 6.3 million acres that two weeks previous had been 100% possession of IPCo shareholders. As an owner of IPCo common stock, you paid off the 900 million-dollar load, plus the interest.

The one billion, plus change was handed over to IP Forest Resources Company for capital expenditures, but IP Timberlands Ltd. had no capital expenditures and no employees. The management and harvesting of the 6.3 million acres of timberlands IPCo had given to IP Timberlands Ltd. was done by employees of IPCo. In it?s annual reports IP Timberlands Ltd. admits that the company had no employees. All the equipment and facilities used by IP Timberlands Ltd. were owned by IPCo. The total cost of operating IP Timberland Ltd. was paid by the shareholders of IPCo. However, IP Timberlands Ltd. annual reports do reflect that IPCo was reimbursed for general and administration cost.

IP Timberlands Ltd. earned a lot of money. All of the proceeds from the sale of the timber on 6.3 million acres of formerly IPCo land now went to IP Timberlands Ltd. Money from land sales of formerly IPCO land went to IP Timberlands Ltd. But, it was even worse than first glance. The scheduled fifty-year life of the company was broken in two periods. The first was called the initial period, and it was to last fifteen years. During the initial period 95% of all profits were to be paid to the Class A stockholders, 4% to the Class B stockholder which was IPCo and 1% to IPFR for management. This meant that Georges and Dillon diverted 95% of the profit from the 50 million Class B shares which were owned by the shareholders of IPCo common stock to the shareholders of the Class A shares of IP Timberlands Ltd.

John Georges and John T. Dillon used IP Timberlands Ltd. as a vehicle to divert for a period of 13 years more than one-half of the profit from IPCo forestlands. At the most, the shareholders of IPCo common stock received one-half of 84% of the revenues from 6.3 million acres of IPT forestlands. Before this limited partnership was set-up by Georges and Dillon, all of the profits from all of the IPCo timberlands went to the shareholders of IPCo common stock. To compound the problem, Georges and Dillon agreed to pay all of the expenses of the partnership, so the shareholders of IPCo common stock continued to pay the expenses of maintaining the forest lands, but without receiving their rightful profits.

How profitable was IPT? In its 13-year history, the lowest annual return on investment (ROI) was 14%; the highest was 75%. That was earnings plus dividends, and a 10% of share price dividend was paid every one of the 13 years. And these dividends were tax-free as they were classified as return of capital. While shareholders of IPCo common stock earned minimal returns, IPT was a money machine for its shareholders. A one hundred-dollar investment in IP Timberlands Ltd. in 1985 earned more than two thousand dollars in the 13-year life of the company.

The largest earnings figure for IP Timberlands Ltd. was in 1996, and it was $845,442,000.00. The average yearly earnings from 1990 to 1998 when the company was bought out, was over 300 million. IP Timberlands Ltd. in 1996 paid each shareholder $8.77 per share in earnings, and a per share dividend of $11.97; so in 1996 on an investment of $22.00 a share, the earnings plus the dividend was $20.74. That same year a single share of IPCo common stock paid $1.04 in earnings and a $1.00 dividend. In 1997, IP Timberlands Ltd. showed earnings of 413 million. During that same period, IPCo showed earnings of 290 million. Remember, IPCo owned 84% of IP Timberlands Ltd. in 1997, IPCo should have earned almost 350 million dollars in profit from its 84% of IP Timberlands Ltd. if these numbers are correct, then the rest of IPCo must have lost money in 1997, and a lot of it.

IP Timberlands Ltd. was liquidation company not a production company. Georges and Dillon had created an internal corporate structure to liquidate land and timber assets of International Paper Company, and the liquidation process was used to enrich the shareholders of IP Timberlands Ltd. at the expense of the shareholders of IPCo common stock.

The men listed below know the answers about IP Timberlands Ltd. in January of 1997; the following people were the management team of IP Timberlands Ltd.

John A. Georges (Chm. Bd. & CEO) Georges is former CEO of IPCo and IPCo board member

Ed Kobacker (President) Kobacker managed Corp. Land & Timber in Dallas

John A. Cureton (V.P.) Regional Land & Timber Mgr., Augusta, Maine

James W. Guedry (V.P. & Sec.) General Counsel/Corp. Sec., IPCo Inc.

Robert W. Hintze Regional Land & Timber Mgr., Shreveport, LA

Robert Kriscunis (V.P. & Gen. Counsel) General Counsel for Kobacker in Dallas

John Nugent (V.P.) Regional Land & Timber Mgr., Natches, Miss.

David Titzer (V.P.) Regional Land & Timber Mgr., Georgetown, SC

Richard R. Yarbrough (V.P.)

Dennis G. Shroder (Auditor)

Frederick L. Blier (Treas. & Controller) Section Controller, Corp. Dallas, TX

Carl Q. Carter (Chief Tax Officer) Federal Taxes, Corp. Memphis, TN

In June of 1997, IP Timberlands Ltd. had some changes in management. This was the management team until IPCo Inc. bought out IP Timberlands Ltd. on March 25, 1998.

John T. Dillon - Chairman & CEO

George A. O'Brien - President

John A. Cureton - V.P.

James W. Guedry - V.P. & Sec.

Morris C. Wright - V.P.

Robert A. Kriscunis - V.P & Gen. Counsel

Frederick L. Blier - Treas. & Chief Fin. Officer

Carl O. Carter - Chief Tax Officer

Richard O'Leary - Auditor

Reporters at the local newspapers in Shreveport, Louisiana and Texarkana, Texas are aware of what was going on at IP Timberlands Ltd. The FBI, U.S. Assistant District Attorney Tom Ferraro, and IPCo attorneys in Texarkana, John Pickett and Damon Young all have knowledge of the IP Timberlands Ltd. operation. Many employees of IPCo know part of what was going on with IP Timberlands Ltd., but one former employee; a man named Richard Frame may have some answers. IPCo fired Frame in 1997 for wood theft at IPCo?s Texarkana, Texas paper mill. Although Frame was not connected to IP Timberlands Ltd., there appears to be some connection between Frame?s termination and events that happened in IP Timberlands Ltd. Some IPCo employees believe that Frame was the person who blew the whistle on Georges and Dillon.

Between January of 1985 and March 25, 1998 IP Timberlands Ltd. brought in more than one billion dollars from the sale of stock, more than one billion dollars in borrowed money and more than three billion dollars from the sale of land and timber. The shareholders of International Paper common stock paid the billion-dollar loan used to buy the stock, plus the interest. The additional two loans that totaled more than a billion dollars, plus interest was also paid by the shareholders of IPCo common stock. Of the three billion in land and timber sales that IP Timberlands Ltd. declared as earnings, less than one billion ended up in the pockets of the rightful owners, the shareholders of International Paper common stock.

How much did this IP Timberlands Ltd. scheme cost the shareholders of IPCo common stock? Divide your shares in half and multiply by 10, then multiply by 1.35. A shareholder with 2000 shares lost at least $13,500.00. But that figure does not factor in increased stock value because of the higher earnings and dividends nor the compounding of earnings in a long-term growth account. The actual loss is probably twice the 13,500-dollar figure. A more realistic way of looking at the loss is to compare the 4 billion in lost earnings to the 400 million shares of IPCo common stock; so, at a minimum each share lost ten dollars over the thirteen-year life of IP Timberlands Ltd. If a person had two thousand shares of IPCo common stock, he or she lost at least $20,000.00

The real damage was done to the IPCo employee retirement fund. State Street Bank is a repository for the retirement account of IPCo employees. The retirement account is secured by 25 million shares of IPCo common stock. The earnings and dividends from those 25 million shares are used to fund the retirement benefits for retired IPCo employees. The IP Timberlands Ltd. scheme cost the retirement account at least 250 million dollars in lost revenue.

Before referencing sources to authenticate the material in this letter, some questions need to be asked.

1. Why was IP Timberlands Ltd. created and who was the creator?

2. What happens to all of the missing money?

3. Are Georges and Dillon accountable to the shareholders for the lost shareholder earnings?

4. Why were Board of Directors and IPCo Senior Management offered shares of IP Timberlands Ltd. stock and other employees were not given this option?

5. Who has the records of the insider trading in IP Timberlands Ltd. stock, and are those records available to IPCo employees and the public?

6. Who authorized Edward J. Kobacker, President of IP Timberlands Ltd. to sell 500,000 acres of forest lands in 1995, 1996, and 1997?

7. What happened to the more than one billion dollars in earnings from the sale of those 500,000 acres?

8. Why was Edward J. Kobacker on the Board of Directors of Anthony Forest Products, a company to whom he was selling millions of dollars of IPCo land and timber?

9. Why was Edward J. Kobacker given more than three million dollars in U.S. Timberlands securities and salary by former IPCo manager John Stephens and U.S. Timberlands CEO John Rudey, after John Dillon removed Kobacker in June of 1997?

10. Why was Kobacker's replacement, George O'Brian given Kobacker's seat on the Board of Directors of Anthony Forest Products?

11. Why did Federal Insurance Company inform John T. Dillon that if the IP Timberlands Ltd. involved fraud; the Board of Directors could expect a multi-billion shareholders lawsuit?

12. Why was IP Timberlands Ltd. stock traded on the Geneva, Basil, Lucerne, and Zurich exchanges in Switzerland? Where are those records? Which members of IPCo Senior Management and Board of Directors involved in those trades?

13. Why was IP Timberlands Ltd. shutdown on March 25, 1998? IPT earned 845 million in 1996 and 413 million in 1997. This was three times the earnings of IPCo during the same period.

International Paper Company is a New York Corporation. The corporate records including shareholders are available from the Secretary of State's office in Albany, New York. IP Timberlands Ltd. was a Texas corporation. The corporate reports and shareholders are available from the Secretary of State's office in Austin, Texas. The file # is 00040908-10. IP Forest Resources is a Delaware corporation. What corporation records there are will be filed with the Secretary of State, Wilmington Delaware.

On the Internet go to U.S. Gov. Agencies, look at the Securities and Exchange Edgar database. Using the trading symbols IP and IPT you will be able to read and/or download SEC filings by IPCo and IP Timberlands Ltd. back to 1994. A good library will have the S & P records, which will show complete financial history of both companies. Keyword searches of the SEC Edgar files will yield volumes of material that authenticate material covered in this letter. Cross-matches for Georges, Dillon, John Stephens, Edward Kobacker, U.S. Timberlands, Van Kapen, Capital Investments, and Winward Investments will be of particular interest.

Is this true? You be the judge. We hope you will take a moment to investigate this matter. Below is a quote taken from Market guide, an on-line investment company. You will notice the fact that IP Timberlands has no ( 0 ) employees...How does that work? Also below you will find links to Market guide as well as the EDGAR Database where you can begin your investigation with the financial records of IP. and IP Timberlands.

IP Timberlands (formed by International Paper Co.) markets & sells timber used for sawlogs, poles and pulpwood. The Company's inventory includes commercial softwoods and hardwoods. For the 9 mos ended 9/30/97, total revenues rose 3% to $228.3M. Net income applicable to Cl. A Ltd. Partners fell 53% to $170.6M. Results reflect increased stumpage sales due to higher harvest volumes & higher average prices, offset by a $604.6M decrease in partnership sales gainsIP Timberlands, Ltd.

Two Manhattanville Road Purchase, NY 10577  Phone: (914) 397-1500 

Fax: (914) 397-1596  Sector: Basic Materials Industry: Forestry & Wood Products

Employees: 0 (12/31/1996) Market Cap (Mil) $ : 629.95 Complete Financials: Sep 1997

Updated: 11/27/1999 Earnings Announcements: *Dec 1997

 

 

*Earnings Announcement: For the quarter ended DEC 1997, revenues were 115,000; after tax earnings were 230,000. (Thousands)

OFFICERS: John T. Dillon, Chmn./CEO, Edward J. Kobacker, Pres., Frederick L. Bleier, Treas./Contr./CFO/CAO, James W. Guedry, VP/Secy., Robert A. Kriscunas, VP/Counsel. TRANSFER AGENT: ChaseMellon Shareholder Services. Company inc. 1985 in TX. Direct inquiries to: Investor Relations Department.

This Information taken from Market Guide        http://www.marketguide.com/mgi/snap/4567N.html

The EDGAR Database http://www.sec.gov/cgi-bin/srch-edgar

                Contact us with questions or comments.

   We received this information from an un-named source via e-mail off the World Wide Web.  We, as your in-plant organizing committee,  make no accusations of wrong doing by the senior management team of  International Paper, IP Timberlands ltd, or any other person or business named in this posting. We post this page in an effort to share the information we receive with the people of our plant and the welcome guests that frequent this network. This disclaimer is placed here under the advisement of  Lynn Agee, Chief Legal Council of the P.A.C.E. International Union.                

 

This network is created and managed by Marcus Bryant & Tony Bellamy   with the sole intentions of exercising their  legal right to organize for the  purpose of collective bargaining. 
Your in-plant organizing committee is: Tony Bellamy,  Roger "3 O'clock" Clark,  Roy "Daddy" Cates,  Dennis "The Enforcer" Brannock,  James Davenport,  Greg Pelfrey,  Jim Rohr,  Shane Nolan,   Quentin Gay,  Tommy Wells,  Brian Hill,  Rodney Clem,  Hugh Reed, Emery "The Big E" Addison, Scotty P'Simer,  Derek Webb And Marcus Bryant.  

We serve notice to all that, under Section 7 of the National Labor Relations Act, we are participating in a Federally Protected Activity to organize the workforce of International Paper Lexington for the purpose of collective bargaining.   Any and all of the contents of this website is used, exclusively,  for that stated purpose. No other meaning should be assigned or implied to said content. By Federal Law, any misrepresentation or alteration of the original copyrighted material  contained in this website is forbidden.  

 

Send mail to us with questions or comments about this web site.


Copyright 2002 International Paper Lexington Plant Union Homepage.

Last modified: March 30, 2008.