Corporate raider battles daughters over financial empire

By KATIE FAIRBANK AP Business Writer

DALLAS (AP) - Former corporate raider Harold C. Simmons is fighting for control of his empire, only this takeover attempt isn't business. It's personal.

Simmons' estranged daughters are attempting to oust him as manager of two family trusts worth about $1 billion, the bulk of his fortune.

Two of his daughters, the eldest from each of his first two marriages, claim in court filings that their father set up the family trusts to evade taxes, creditors and his ex-wives. They also claim he is now using the money illegally for political contributions.

Simmons, 66, responded that the women are financially irresponsible and "are just looking for money."

Before the trial began in October, he portrayed his eldest daughter, Scheryle S. Patigian, to The New York Times as a methadone addict with all the financial responsibility of a kindergartner. He said his third-oldest, Andrea Swanson, had joined her older half-sister in the lawsuit because she was being swayed by a husband who wanted to make questionable investments.

But Simmons has already admitted in the civil trial, which began Oct. 23, that he forged his daughters' signatures to make political contributions from the trusts to Jessie Helms, R-N.C.

"I thought it was right to sign the names because it would help the Helms campaign. It was a mistake, wrong and bad judgement," he testified.

Simmons' political donations have been a cornerstone of the trial by Ms. Swanson and Ms. Patigian, who say they do not support the conservative Republican causes to which their father has given money in their names.

Some of the recipients of the funds included Republican Sen. Orrin Hatch of Utah, as well as Oliver North in his unsuccessful Senate race.

Simmons has said that from 1991 to 1995 he made $110,000 in contributions to political action committees in his daughters' names, exceeding the legal limit. Federal election law limits an individual to $5,000 per year to any group of affiliated political committees.

Simmons denies any wrongdoing because the money is from the family trusts and his daughters are beneficiaries. He contends that the contributions benefit the companies owned by the trusts, which in turn benefit all four of his daughters.

Telephone messages requesting interviews with the four women were not returned.

Serena Connelly, one of the daughters who is not suing her father, objected to the contributions in a letter filed with the court, writing: "I believe this practice to be highly unethical... I do not care what you do with your money. I do care what you do with my name."

Simmons has had previous run-ins over federal election law.

In 1993, he was fined $19,800 by the Federal Election Commission for breaking campaign donation limits. In June, The Dallas Morning News quoted sources saying the U.S. Justice Department has opened a federal investigation in Simmons' business dealing and campaign donations.

The ongoing Dallas County Probate Court hearing will not decide guilt or innocence about the campaign donations. Instead, the six-member jury will decide whether the intent of the trust has been violated or if any laws have been broken. If found to have mismanaged the fund, Simmons could be removed as manager.

That in itself could be a devastating blow.

Simmons, who says he is worth only $30 million outside the trusts, claims that if he loses the trial it would force him to liquidate his corporate holdings of five public companies and at least 50 other corporations. Those holdings include NL Industries, a producer of titanium dioxide, a major ingredient in paint; Contran, a private company with timber interests; and Dallas-based Valhi Inc., his main public holding company.

Ms. Swanson and Ms. Patigian claim that Simmons has used Contran and their trusts to purchase resort homes and a corporate jet for his own use, buy more than $1.5 million in jewelry for his current wife and pay himself $4.4 million a year.

"In essence, Simmons has used the trusts for his own personal enrichment and as a vehicle to circumvent trust and federal election laws," Ms. Patigian said in a court filing.

Simmons disagreed on the stand, saying, "I think there is a real distinction when Contran pays something compared to when the trust pays for something."

Simmons, who has never minded being called a corporate raider, received more news coverage for his unsuccessful attempt to take over Lockheed Corp. in 1991 than for all of his deals that have gone through.

A native of East Texas, he earned degrees in economics and didn't set out on his own until he quit from a bank job because "my bosses and I disagreed on who was the smarter."

Simmons began amassing his fortune in 1964 when he placed his early company, University Pharmacy, into a trust. By 1973, he had about 100 stores which he sold to the Eckerd chain for $50 million.

Known around Dallas as being uncomfortable on the social circuit, Simmons became prominent in the city when he donated $41 million to the University of Texas Southwestern Medical Center for a cancer research center.

All hasn't been rosy. In the 1970s, he was acquitted of mail and securities fraud charges and settled a civil suit for $500,000. He was found to have violated pension fund management rules in 1983, even though he had increased the value of the pension fund.

The current trial could have been avoided. Mediation was ordered earlier this year, but talks broke off.

Ms. Swanson has defended her decision to take the stand against her father. She testified that he needs to be accountable and that she had to stand up for her and her children's interests.