Published: Jan. 28, 2010
Updated: Jan. 29, 2010 9:47 a.m.
By RONALD CAMPBELL
THE ORANGE COUNTY REGISTER
Chriss Street’s personal fortune and political career are on the line in a civil trial next week.
The Orange County treasurer-tax collector is fighting allegations that he looted a bankrupt trucking company while serving as its trustee. His replacement as trustee, Los Angeles money manager Dan Harrow, has sued him for $7 million.
Street counters that he created a thriving business from the wreckage of the Fruehauf Trailer Corp., delivering creditors 98 cents on the dollar. If anything, an expert witness for Street reported, “Mr. Street should be commended, not condemned.”
Street has survived several controversies in his three years as treasurer. The trial could eclipse them all. Street tried unsuccessfully to delay the trial past the June 8 election, when he will seek a second four-year term.
The three-day trial opens Wednesday in Los Angeles. U.S. Bankruptcy Judge Richard M. Neiter will hear the case without a jury.
If Neiter vindicates Street, as Street has said he expects, then he probably will skate to re-election without a major opponent. He also will gain the right to send his legal bills to the trust.
If Neiter rules against him, Street faces a hefty, possibly ruinous fine and a political firestorm.
At the heart of the trial is Street’s conduct as trustee of the End of the Road Trust, the poetically named successor to Fruehauf. Street ran the trust from October 1998 through July 2005, when he was forced out by creditors.
Since then he has run up well over $1 million in legal bills, spent weeks answering hostile questions from attorneys and endured dozens of unflattering news stories. All this defending a job he described as “a home run.”
Fruehauf was once a giant of the trucking industry, its trailers rolling down every interstate. But in the 1990s it fell victim to intense competition and to its managers’ appetite for debt. It went bankrupt in 1996.
That same year, Fruehauf bondholders placed their own man on the company board, a Newport Beach businessman named Chriss Street. He guided the company through bankruptcy court and in 1998 became trustee, charged with liquidating Fruehauf’s few remaining assets.
Street quickly saw gold in one of those assets, a Mexico-based manufacturer, Fruehauf de Mexico. He arranged for the trust and a related pension fund to buy two other failed trailer manufacturers to build up the Mexican firm.
In December 2006, after he was forced out as trustee and after he took office as treasurer, he tried to buy Fruehauf de Mexico for himself.
Harrow alleges that Street repeatedly breached his duty to the trust while treating it as his own personal piggybank. Here are his key allegations:
• Street bought American Trailer Manufacturing Inc. for $628,000 more than creditors authorized and pumped more than $1 million in trust money into it before shutting it down.
• He arranged for the pension fund to hire his own company as investment manager.
• He arranged for the pension fund to buy another bankrupt trailer company, a deal that led to the pension fund’s collapse and takeover by the federal government.
• He blocked efforts to sell Fruehauf de Mexico so he could later buy it himself.
• He lived well on the trust’s dime, having it pay everything from stays at resort hotels to a $750 dinner at Spago to Botox treatments and a parking ticket for his Ferrari.
To all this, Street replies, look at the results. He took a company worth perhaps $250,000 in 1998 and reaped $53.4 million for the bondholders, according to his expert witness’ accounting.
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