Lawyer: Denver oilman’s buddies “betrayed” him
Former oilman Roger Parker was accustomed to telling his closest associates about what was going on in his business world at Delta Petroleum, including that one of the richest men in the world was interested in investing.
What Parker, 55, hadn’t expected was that those friends — former insurance executive Michael Van Gilder and investment guru Scott Reiman — would take that tidbit about an investment by Kirk Kerkorian and his company, Tracinda Corp., and turn it into about $1.5 million in stock profits, Parker’s attorney told a federal court jury Tuesday.
“This case is a story of betrayal, a violation of trust with Mr. Parker’s friends,” attorney Saskia Jordan told the panel of eight women and four men hearing the civil case brought by the U.S. Securities and Exchange Commission. “There will be no evidence that (Parker) told Van Gilder and Reiman about Tracinda to benefit himself.”
The SEC sued Parker five years ago for allegedly giving insider information about a pending $684 million investment in 2007 by Kerkorian, the late billionaire. Delta’s stock price shot up by 21 percent on at the end of 2007 when the deal was announced.
“This is a case of cheating in the stock market,” SEC attorney Gregory Kasper told jurors in a 40-minute opening statement. “The information was secret and also very valuable, … and he gave it to a select few in his social circle, … and he did it over and over again.”
Frowning and staring at Kasper as he spoke, Parker sat quietly in a dark blue blazer, tan pants and brown loafers.
The SEC says Parker twice helped Van Gilder profit illegally by offering insider information no one else had. The first, in November 2007, was over a Barron’s magazine article that said Delta would founder if it didn’t find new oil or gas exploration deals. Parker told Van Gilder the article was inaccurate, that the company would soon meet its expectations.
“When Van Gilder had the same information as everyone else, he wanted to sell” Delta stock he owned, Kasper explained. “After talking to Roger Parker, he wanted to buy.”
Similarly, a few weeks later, Parker separately told Van Gilder and Reiman about Kerkorian’s interest. Van Gilder and Reiman went on a buying spree of Delta stock — and even let other friends, family and associates know that Delta shares were too good to pass up, although neither explained in detail how they knew.
“He will declare he was betrayed by his friends,” Kasper said, “but remember how
he kept those friends up to date.”
Tracinda bought a 35 percent stake in Delta, but the company didn’t perform as was hoped. Tracinda forced Parker out after about a year and eventually took Delta into bankruptcy, for years chasing the former CEO to repay a $7.5 million personal loan. Parker declared personal bankruptcy as well.
“Parker used loans to maintain a lavish lifestyle,” Kasper said, with country club memberships, travel on private jets and a Cherry Hills Village mansion.
One of those loans — $390,000 from Reiman — came the day Parker allegedly told him about the Tracinda deal.
In all, Reiman would loan Parker more than $15 million while Reiman’s Hexagon Investments was a joint-venture partner with Delta.
Jordan said Van Gilder, who pleaded guilty to a federal criminal charge of illegal insider trading, and Reiman, who cut a deal with the SEC in which he gave back more than $800,000 in profits and penalties without admitting or denying guilt, each had a duty to keep Parker’s conversations private.
Parker first learned of the trades in 2012, when the FBI began questioning the trades, Jordan said, and was “beyond disappointed.”
Van Gilder’s family insurance business had Delta as a client, and Reiman’s investment business was a limited partner with Delta.
Former investment adviser Drew “Bo” Brownstein also allegedly profited from the information after Reiman passed it along and bought more than $4 million in Delta stock. Brownstein was sentenced to a year and a day in jail after pleading guilty in an insider-trading case involving Mariner Energy.
It was from that investigation that the FBI became aware of the Delta trades, court records show.
The case before U.S. District Court Judge John Kane is scheduled to last three weeks.