Monday, January 13, 2014

Meshulam Riklis: The Mo-Ghoul and the Latest Bankruptcy Filing for Rapid-American Corp, by Kirby Sommers

Rapid-American Corporation, the conglomerate created by Meshulam Riklis and the vehicle which made him and his family mulit-billionaires, filed for bankruptcy on March 2013. The company cited an increase in the number of mesothelioma, asbestos, and wrongful death claims filed against it, as well as an increase in the dollar amount to settle the claims, according to court documents.
What most shareholders, and even people close to the Riklis family didn’t know was that Rapid-American Corporation also owned Philip Carey Manufacturing Corp. Philip Carey produced insulation materials for boilers, pipes and other industrial equipment. They obtained the asbestos they needed to make their products from the Quebec Asbestos Mining Company. It wasn’t until the 1970s that scientists declared it a toxic material unsafe for human contact. 
Rapid-American Corporation was first sued for asbestos related injuries in 1974. Riklis then employed a tactic he and his family have used many times using one corporate entity to hide another corporate entity – bottom line to hide the real owners from any legal liability.
Celotex Corporation, owned by Rapid-American (although Jim Walker’s name also appears as the owner of the company – which is exactly what has kept the Riklis family in the background of the ever growing personal injury lawsuits across the country) – became the only entity to handle lawsuits filed against the Philip Carey Corporation.
The Celotex ploy worked indemnifying Rapid-American during the mid-1980s to late 1990. During this period Celotex fought savagely against all lawsuits to the point of counter-suing claimants. When it could not make some lawsuits disappear the company then offered very small settlements. In 1990 Riklis sought protection by filing bankruptcy for Celotex at which time a trust fund was established; however, lawsuits now fell onto Rapid-American directly.
As a side note: In 2003 the Celotex Asbestos Settlement Trust paid New York City for property damages of schools and buildings based on over 400 claims. The trustees attempted to deny payments, but were ordered by the court to make payments in excess of $40 million.
The history of Rapid-American Corp began in 1955 when Riklis took control of a company called Rapid Electrotype. In 1957 he then merged this with another company he took control over named American Colortype. From these two office equipment companies, he created the corporate vehicle Rapid-American, a name that was sufficiently ambiguous to serve whatever purpose Riklis might have in mind.
And for 56 years, it was.
Rapid-American would add many companies to its holdings such as International Playtex, Schenley Industries, Lerner Shops, RKO-Stanley Warner Theatres, McCrory’s, Leeds Travelware, Gruen Watch Company, Elizabeth Arden, Aunt Nellie’s Farm Kitchen’s Bargain Time, Beatrice Foods, Faberge Cosmetics, J.J. Newberry stores, Lawry’s Meat Specialties, Martha White Foods, Odd Lot Trading, Samsonite, The Riviera, Carnival Cruise, Canadian retailer Dylex, and Glen Alden which was the holding company for Philip Carey and the other asbestos related companies like Celotex.
In formal terms, Riklis was Rapid's largest shareholder--but not its only one, for there were thousands of investors who had bought its stock on the open market. Nevertheless, he was often charged with running the company virtually as a private preserve, mixing his personal investments with Rapid business as if it were all one stew.
In 1978, the mixing of Riklis and Rapid affairs had become so thorough that the SEC hauled him in for some lengthy testimony about his financial condition, which Riklis delivered as if from the bottom of a very, very deep financial hole. He owed $60 million, personally, because of his private investments, and the SEC sued him for a series of transactions in which he sold off parts of Rapid to pay down its debt, then took personal loans from the buyers to help pay down his own debt. Riklis agreed to an injunction forcing him to separate Rapid's affairs from his multitudinous private deals. He also nursed a sour view of the typical stockholder as being some five-share owner who bought into the Riklis vision, only to start grousing and second-guessing. Three years later, he rid himself of these holders by taking Rapid private.
By 2001 Forbes would write of Riklis: “The Beverly Hills financier made and lost fortunes using leveraged buyouts that often left bondholders with little…There’s frequently a bankruptcy along the way."
Riklis is also credited with being one of the corporate raiders who, during the 1980s, walked away with an estimated $21 billion earmarked for workers’ retirement accounts; and this is just what has been publicly stated. The number of American workers who toiled for a lifetime and who were left with nothing as Riklis and his family continue to live lavishly remains unknown.
The Riklis's sumptuous lifestyles consists of full time chauffeurs, full time nannies, private planes (Meshulam Riklis had a fleet of seven; while his son Ira Riklis recently purchased two – a Flexjet and a Learjet); art collections that would make most museums blush, along with personal homes whose cumulative price tags could run entire countries.
For example, in 1988 Riklis, then married to Pia Zadora, purchased the Pickfair mansion which they completely demolished and rebuilt. The estate is on the market today for $60 million. His New York City digs, a five-story 1880s townhouse at 17 East 75th Street, cost Riklis $4.55 million. Another $13 million was spent on renovating the home with elaborate gold-and-marble bathrooms, a greenhouse, a $1 million black marble central staircase, all new pubmbing and wiring along with a new 10 by 15 foot skylight. Riklis purchased the private home from Phyllis McGuire - one of the McGuire Sisters and Sam Giancana’s ex-girlfriend. An interesting backstory on the house can be found in Dominique Dunne’s “The Mansions of Limbo” where he wrote:
“…not mentioning Sam Giancana when writing about Phyllis McGuire would be like not mentioned Richard Burton when writing about Elizabeth Talyor.”
Ira Riklis, his son, owns several homes, one of them on Park Avenue, which is valued at more than $20 million (for just the one apartment), with second homes on Long Island and in New Jersey.
Riklis’s deceased daughter, Mona Riklis Ackerman’s owned a Fifth Avenue apartment once owned by Barbara Hutton. New York’s social diary would say of Mona's December 19, 2006 holiday party:
“Mona’s was packed from the moment you got off the elevator. Mort Zuckerman was talking to Amanda Burden. Charlie Rose was a foot away talking Jamie Goodale. Patricia Duff was talking to George Stephanopoulos and Alexandra Wentworth; Henry and Nancy Silverman,Alice Mayhew talking to Hannah Pakula, Peter Pringle, Peggy Siegal, Warren and Olivia Hoge, Jim and Kathy Hoge, John and Joan Jakobson, Robert Silvers, Susan Burden, the Rohatyns, Steve Ratner and Maureen White, the Brokaws, Paul Sargent, Editor of the WSJ, Carl andBarbaralee Diamonstein-Spielvogel,Steve and Cathy Graham, Liz and George Stevens, Judy Miller, Ina and Robert Caro, Lloyd Grove, Governor Jon Corzine and Sharon Elghanayan, and on and on.”
Marcia Riklis, his 2nd daughter (and third child from his first marriage), has an equally enviable Park Avenue 3 bedroom home with an appraised value in 2008 of $13.5 million. Her house in the Hamptons made news when she asked just shy of one million dollars for a 3-month stay at her sprawling 12-bedroom getaway overlooking the ocean and Shinnecock Bay.
And that’s just the tip of the Riklis real estate personal property, since Meshulam Riklis, who just turned 90 on December 2nd is a father of five, a grandfather of 7, and a great-grandfather. This Riklis family empire extends to his sister and her children and relatives in Israel -- all of whom live like royalty. Their private real estate holdings are nothing compared to their portfolio of income producing real estate properties with an emphasis on shopping malls.
Like his former business partner, Ted Arison, co-founder of Carnival Corporation, who left the United States in 1990 in an effort to avoid paying estate tax, Riklis has done the same and now resides in Israel. He is thrice married, recently wedding 58-year-old Tali Sinai, one of the stars of “The Real Housewives of Tel Aviv" - a takeoff on the U.S.'s popularity of the housewives franchise.
An interesting and ironic tidbit is Ira Riklis's home security conglomerate consisting of the wholesale C.O.P.S. Monitoring (which in typical Riklis style is a subsidiary of Lydia Monitoring, which belongs to Sutherland Capital, which in turn, is owned by Ira Riklis and its retail sister Safeguard Security which acquired and become known as AEG Security, which then acquired Matrix Security Group): nevertheless, it is the largest home security business in the United States, and it's initial funding came from Rapid American Corporation. It seems somewhat odd to think of any of these companies owned by Riklis offering Americans "home security" while from the very beginning he was ensnared in one of the largest personal injury lawsuits in history.
At the time Rapid-American filed for chapter 11 protection against the onslaught of asbestos related lawsuits the number of open cases was 275,000. No one knows the exact number of people who have asbestosis or mesothelioma or those who have died as a result of their exposure to asbestos. A fair estimate would be one million people, or more.
The bankruptcy files contain the following two statements:
“At this time, the addresses for each of the personal injury claimants are not available to Rapid, and gathering the individual addresses would require both a massive manual review of the files maintained by various past and present asbestos defense counsel across the nation and a time consuming attempt to ensure that such information is still accurate (and if not, to obtain updated information).”
“Historically, Rapid has maintained a bank account at JP Morgan Chase. Rapid utilizes preprinted checks, stationery, and other forms associated (the “Business Forms”) with the JP Morgan Chase account. There is approximately $5,000 in the general bank account.”
Rapid-American Corporation’s shares are fully owned by Riklis Family Corp.
2014 Copyright Kirby Sommers

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