As Stapleton-SonomaWest purchase steams ahead, transparency recedes
Monday, May 02, 2011 at 10:45 am
Details concerning Colorado Treasurer Walker Stapleton’s lucrative moonlighting arrangement with the California real estate firm he used to head will soon move out of public view. Stapleton’s family finance business, Denver-based Stapleton Acquisitions Company, has announced it has completed its tender offer to purchase all SonomaWest common stock not presently held by the Stapleton family and Stapleton Acquisitions and that the deal to take SonomaWest private will likely be completed in the coming weeks.
SonomaWest owns and manages property in northern California. Stapleton was CEO for years before being elected treasurer last November. Reports emerged in January after Stapleton took office that he had arranged to continue working for up to 250 hours per year with Sonoma as a consultant for $150,000 while holding office. The arrangement alarmed government watchdogs who suggested that, beyond potential conflicts of interest, voters elected Stapleton to dedicate himself full time to the work of managing state revenues.
According to the terms of the consulting deal Stapleton made with Sonoma, he would have to put in roughly 600 hours, or 11 hours per week, to earn $150,000.
That consulting deal was only brought to light when AOL reporter Sandra Fish inspected documents SonomoWest was required as a public company to file with the Securities and Exchange Commission.
SonomaWest will soon become a private company, held by the Stapleton family and Stapleton Acquisitions Company, and so it will no longer have to publicly report on its finances, nor on any work Treasurer Stapleton may do for the company.
Stapleton Acquisitions is spending roughly $4 million to buy the more than 400,000 public shares so far tendered. With those shares added to their own, the Stapletons now own roughly 80 percent of the company. According to documents filed with the SEC, Stapleton Acquisitions is financing the deal with $5.8 million in loans taken from Wachovia / Wells Fargo. Stockholders have another week to submit their shares for purchase.
“The only way the public found out about Stapleton’s moonlighting was that it was disclosed by SonomaWest to the SEC as required by federal securities law,” Luis Toro, director of Colorado Ethics Watch, told the Colorado Independent in March. “If the business is taken private, even this back-door form of transparency will be gone. That’s a concern because the proposed consulting agreement that was disclosed could potentially take up a huge portion of the state Treasurer’s time.”
Toro added that the time commitment is reason enough for concern “even if you accept [Stapleton's] claim that there is no potential for conflict of interest between the State and SonomaWest.”
It’s unclear at this point how much if any business the state of Colorado does with Wachovia / Wells Fargo, for instance. Stapleton has not commented on the proposed purchase in the past and has made no commitment in the future to voluntarily report to the public on his arrangements with SonomaWest.
Stapleton Acquisitions told the Independent in March it would be illegal for company representatives to speak about the deal as it is going forward.
State financial disclosure forms presently only ask officeholders to list sources of income, along with assets, real estate, debts and board positions.