Tuesday, May 23, 2006

Following Groucho Marx's Suggestion

Groucho Marx said that he once sent a message stating, "Please accept my resignation.  I don't want to belong to any club that will accept me as a member."  A Wall Street Journal story (here) certainly raises this issue in regard to the efforts of Andrew Wiederhorn, CEO of Fog Cutter Capital and convicted felon, to be readmitted to the Multnomah Athletic Club in Portland, Oregon, which kicked him out in August 2004 when he entered prison.  Wiederhorn served a 15-month sentence after pleading guilty to tax and pension fraud charges (unrelated to Fog Cutter), and was released in November 2005.  During his stay in federal prison, Wiederhorn continued to serve the company as Chief Strategic Officer and even received a $5.5 million bonus in 2004 along with his salary, although not while he was in the federal system (see earlier post here).  Fog Cutter's proxy statement (here) described his hiatus from the company in this way: "Mr. Wiederhorn resumed his role as Chairman of the Board and Chief Executive Officer in November 2005, after returning to active service with us from a leave of absence in October 2005 during which he served as Chief Strategic Officer. He previously served as Chief Executive Officer from our formation to June 2004, and served as Co-Chief Executive Officer from June 2004 to August 2004."

The Journal describes the rather testy fight between the club, which is the most prestigious in Portland, and Wiederhorn.  According to the article:

Just before his sentence started in August 2004, Mr. Wiederhorn received a certified letter from the club. It stipulated that unless he agreed to resign his membership and never set foot on the premises again, the club would "automatically invoke procedure GBP 2, House Committee Investigation." Mr. Wiederhorn refused, and following an investigation, the club kicked him out.

Apparently the club does not view his "leave of absence" in quite the same light as Fog Cutter, which is controlled by Wiederhorn and his wife, who together own over 50% of its shares.  Mrs. Wiederhorn and her children remain among the 20,000 members of the Multnomah Athletic Club. (ph)


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