4: Paragraph 37 On 18 April the 'Wall Street Journal' reported that Abbes and Hitchcock had resigned, but for personal reasons and not because of my accusations, and that Malarkey said he hadn't found "any evidence that the unit mishandled trust assets or violated fiduciary obligations." That was remarkable enough, given that his own report from the year before had listed specific instances of mishandling and fiduciary breaches, but a few weeks later, in "the late spring or early summer of '86," he delivered to Hutton Trust the report of the 1986 audit, the one he'd been conducting when I was fired, and it reported that the same problems cited the year before still existed! But the two audit reports were confidential, so Malarkey could stand up at his press conference and say in public there was no truth to my charges, when his own reports, delivered before and after the press conference, proved what I was saying.
4: Paragraph 38 I'd been taught in law school that a civil lawyer's main function is to avoid litigation, to get cases to settle without going to trial. So I wrote some letters to Hutton asking them to settle my legal claims against them without making me file suit. In a letter dated 22 September 1986, Hutton's new legal vp Stephen J. Friedman called my "demands" extortion and said they were looking into having me disbarred in every jurisdiction where I was admitted to practice law.
4: Paragraph 39 I tried for months to hire a lawyer to represent me, but no one would, and then one of my mentors told me the word was out, and I wouldn't be able to find any lawyer who would sue Hutton for me. So on 31 August 1987 I filed a civil RICO suit against Hutton Group, Hutton & Co., and Hutton Trust in federal court in Wilmington, and I filed it 'pro se', which means for myself, without any attorney representing me.
4: Paragraph 40 I hadn't known much about RICO before 1987, but I'd done enough research to know that was the legal theory I wanted to use: Because I lived in Delaware and all three Hutton entities were Delaware corporations, there wasn't diversity of citizenship, so I couldn't go to federal court unless I raised a federal question, and the RICO statute was federal, so it provided jurisdiction. Also, that statute required the court to award me three times whatever damages I proved I had suffered, plus court costs and attorney's fees.
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CHAPTER V. Tilting at windmills for fun and profit
5: Paragraph 1 At the same time the events I've described were happening to me at Hutton Trust, someone else was having a similar experience at another company incorporated in Delaware. Like me he was a senior executive at a subsidiary of a national conglomerate and a shareholder in the conglomerate, but unlike me he was the CEO of the sub because he'd started the smaller company and sold it to the conglomerate, and his block of the parent's stock was significant. Like me he was dissatisfied with the asinine and illegal way the conglomerate was operating and how it was forcing him to operate the sub, and he'd been telling the national press about it.
5: Paragraph 2 By the summer of 1986 he'd given the conglomerate an ultimatum with three alternatives: Either let him run the sub the way it should be run or buy him out so he could leave, or else he'd sue them. After that his story is vastly different from mine, but then he was H. Ross Perot, the conglomerate was GM, and his sub was EDS.
5: Paragraph 3 GM did buy Perot's GM stock back, and he resigned from EDS and promised to quit criticizing GM, but GM paid him so many millions of dollars that its shareholders sued GM and Perot, calling the payment "hushmail." The Chancery Court has ruled twice in the matter, and the Delaware Supreme Court once, and they're agreed that GM's board acted properly in paying Perot to get out because his grousing was interfering with the way the board was trying to run GM. If it wasn't extortion for him to give GM his ultimatum, and the courts have ruled it wasn't, then it couldn't have been extortion for me to give Hutton the same ultimatum.
5: Paragraph 4 Another situation was shaping up in 1986 that also led to a civil RICO suit for violation of the federal securities laws and for extortion: In 1986 Carl C. Icahn started buying more stock in Viacom International, Inc., and threatened to take the company over; in May Viacom bought back its stock from him, for $79.50 per share when it was trading at $62, and he promised not to buy any more Viacom stock for eleven years. Then Viacom sued him for extorting this "greenmail" from it, the federal court in New York dismissed the suit, and the appeals court affirmed, saying Viacom hadn't been damaged because what it got from Icahn was worth what it paid.