Magazine article Editor & Publisher

Former UPI Partner Indicted

Magazine article Editor & Publisher

Former UPI Partner Indicted

Article excerpt

FORMER UNITED PRESS International minority share owner Joseph E. Russo has been indicted for allegedly taking part in a loan conspiracy that funded his acquisition of 5% of the wire service.

According to the 10-count indictment, Russo, in 1986, conspired with bankers Ronald A. Piperi and his son Ronald D. Piperi to arrange a $1.5 million loan to Russo from First Savings, the bank controlled by the Piperis.

In return, the indictment alleges, Russo arranged for his Ameriway Savings and Ameriway Bank to lend the Piperis a total of $750,000.

E&P attempted to contact Russo for comment, but Houston directory assistance reported no listing for the Russo Companies and an unlisted number for a Joe E. Russo.

The indictment charges that on June 2, 1986, Ronald D. Piperi made an application for a $450,000 loan from Ameriway Savings and offered "a deceptive financial statement in the name of Ronald A. Piperi."

On that same day, according to the indictment, Russo made a $1.5 million loan application to First Savings, which was accompanied by "a deceptive financial statement in the name of the Russo Companies."

A week later, June 9, 1986, Russo allegedly arranged the $450,000 loan to Ronald D. Piperi for the benefit of Ronald A. Piperi. That day, Ronald A. Piperi transferred $450,000 to a broker to purchase 60,000 shares of Dallas-based Flexible Computer Corp., a company that sold and manufactured computers.

On June 10, 1986, Russo allegedly received his $1.5 million from the Piperi bank, and then arranged the balance of the loan to Ronald D. Piperi, $300,000, to be funded by Ameriway Bank.

The same day, as Ronald A. Piperi transferred $300,000 to his broker for an additional 40,000 shares of the computer company, Russo transferred $1.5 million to New UPI Inc., according to the indictment.

"It was part of the conspiracy that the defendant, Joseph E. Russo, sought to obtain a source of financing for the purchase of a 5% interest in New UPI Inc." the indictment charges.

New UPI Inc. was the company formed by Mexican media owner Mario Vasquez Rana, who purchased the wire service for $41 million after it had filed for Chapter 11 bankruptcy protection in 1985.

When Vasquez made his first down payment on UPI, $29 million in June 1986, Russo was identified as a 10% partner in the wire service. In fact, in a May 1986 joint disclosure statement filed with the U.S. bankruptcy court in Washington, D.C., Russo is identified as a holder of 10% of New UPI common stock.

It soon was learned, however, that Russo actually held only 5% of the company.

Assistant U.S. Attorney Doug Durham explained that the indictment alleges the $1.5 million was transferred to New UPI by Russo for a 5% share in the company.

After speaking with a number of former UPI executives, the consensus seemed to be that Russo simply did not have the money for more than 5%.

As time passed, Russo's share in UPI eventually was diminished even further due to his inability to subsidize operating losses (E&P, Dec. 5, 1987, P. 17).

Russo and Vasquez, who reportedly had not met before 1985, became partners during the bidding process, when each had petitioned the bankruptcy court for ownership of UPI.

Russo had no media experience, and there was a great deal of speculation that he had been brought in on the deal with Vasquez to "Americanize" UPI's new ownership.

Those contacted for this article indicated that, despite his attempts otherwise, Russo played a very minor role in the operation of UPI and often was shut out of its operations by Vasquez. …

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