Third District GOP congressional candidate Karl Snow believes he will be exonerated by an investigation conducted by an attorney and accountant into his dealings with convicted stock swindler Michael Strand and two companies both men were involved with several years ago.
"What it (the investigation) will show, I believe, is that I was an investor - I lost money in the investment - and had nothing else to do with it," said Snow, who asked the two men to conduct the investigation after he found out from a Deseret News reporter several weeks ago that 100,000 shares in stock in one of the penny stock companies had been listed in his name and traded long after Snow believed he was out of transactions. The two men will make their report sometime next week."I wanted to get to the bottom of this, mainly because if someone did issue stock in my name, and if that stock had any value, then I could be accused of having a significant tax liability."
Accusations of wrongdoing by Snow surfaced during his bitter Republican primary contest with John Harmer. The Deseret News has published a number of stories on the allegations against Harmer and Snow. Snow crushed Harmer in the Sept. 11 primary, but Snow says Harmer supporters are still pushing the Strand issue behind the scenes and to reporters.
At issue is Snow's involvement in the attempted - but failed - merger of two companies, Unique Battery and Global Oil. While Strand has been convicted previously for fraud in stock operations, no criminal charges have been filed in the Unique Battery/Global Oil case. However, parties have filed civil suits over the matters. Snow is not named in any of those civil suits, court records shows.
Snow, the former majority leader in the Utah Senate, met Strand, a former aide to Democratic Gov. Calvin Ramp-ton, in the early 1980s. "I've never said I never had any dealings with Michael Strand. I say I was never in business with him, I was just an investor in several companies he sold stock for."
In late 1984 and early 1985 - after Snow had lost a bid for the governor's office and left the Senate - Snow, a Brigham Young University professor, looked into a company called Unique Battery.
The company made and marketed a new kind of car and truck battery, one that used less acid, held a charge longer and recharged quicker. The company, led by John D. Darger, decided to go public to raise more capital to expand. Company officers chose Strand as the man to help sell stock.
"Strand brought in a couple of new investors," said Darger. "One was Karl Snow. I'd never met him before. Strand told me we could use Snow and his political connections to help sell not only the batteries, but also to help sell stock."
Snow was offered 100,000 shares in the takeover company, Global Oil. According to Darger, Strand drew up a list of new directors and included Snow on the list. "I was offered a directorship, too," says Snow. "I declined the 100,000 shares of stock, which were to be given as compensation to serving on the board, and I declined the directorship as well."
Unique Battery documents show that Snow signed a reorganization plan, saying he held shares of Unique Battery stock that would be transferred to Global Oil for Global stock. Snow admits he signed the document. "It is a perfectly legal way to transfer stock without incurring a tax liability. I never held any Unique Battery stock, however. This was when I was considering joining Global, but I didn't. We have documents from the State Securities Division showing that that Unique Battery stock was never issued at all."
Snow says he was impressed with the new battery. "I thought it had real potential. The reason I withdrew from the deal, and I believe this is the first time I've ever told anyone the real reason, was that I learned that several people in Unique Battery - those who would be in Global Oil - were polygamists. I may not be the smartest man in the world, but I'm not stupid. There was no way a Brigham Young University professor was going into business with polygamists. And if I were a director, I'd be in business with them."
However, 100,000 shares of Global Oil stock were issued in Snow's name in June 1985. Global documents also list a "Carl Snow" as a vice president of the company. "I never approved of that, never agreed to it. I was never vice president. I never had possession of that stock," Snow says. Snow believes his investigation will show that the 100,000 shares were held at a stock transfer company and then by Strand himself.
Darger says Snow came to Global's offices "several times, maybe a dozen" in the spring of 1985 and met with Strand, a couple of meetings which Darger attended, talking about company matters. "Not so. I met with John Darger twice, maybe three times before I decided not to be involved," says Snow. He was not acting as a company officer, he said.
Strand confirms Snow's version of the story, saying Snow was not an officer in Global Oil, that Snow declined the offer of stock and directorship.
More than a year later, after the merger fell apart and Darger and battery's inventor had left Global Oil, the stock in Snow's name was transferred to M&L Investments, a company controlled by Strand.
"I did give Mike a stock power (the right to control the stock) - that is common procedure in these matters. I vaguely remember he called me and said I needed to do that. I never received any money or anything for that stock (the 100,000 shares). I haven't had anything to do with Mike in years."
Snow did, independent of Strand, buy 11,000 shares of Global Oil stock from a brokerage house, some in his own name, some in joint ownership with his mother, who has since died. He bought the stock, he says, because he believed it to be a good investment. In 1987, he sold some of that stock, his income tax returns show. He sold the rest in 1989, after the stock had stopped trading.
"I took the legal allowed loss of $3,000 on the stock. I lost money on it," Snow said.
Snow also bought stock in another company Strand had dealings with, Classic Mining. He still owns that stock and values it at between $5,000 and $15,000 on a financial report filed with the U.S. House. "I think it's basically worthless, I put down on the filing what I paid for it. I still own it." Strand was convicted in the late 1980s in federal court of mail fraud in his selling of Classic Mining stock. He's appealing that conviction and his three-year sentence.
Upon reflection, Snow says, he's sorry he had anything to do with Unique Battery, Global Oil or Strand. "From a political aspect, of course it hasn't been good. It appears that I was used in this (the Unique Battery/Global Oil merger), that someone was trading on my name. I didn't know about it then. I never would have allowed it."
Snow says the only person he talked to about Unique Battery, the only potential investor, was Percy Kalt, a fellow BYU professor. "But we only talked about the battery itself, whether it would work or not. That type of thing. We never talked about Global Oil or company matters." Snow says he didn't recommend to Kalt that he invest in the company.
Kalt invested $25,000 in Global Oil. When the merger failed, Kalt lost his investment and began threatening Strand, demanding his money back. In March 1989, Kalt fire-bombed Strand's Bountiful home, threatening more harm if Strand didn't return his investment. Kalt was convicted and served 60 days in jail for that crime.