After 10 Years, the Last of Diversified Mountaineer Corp.'s Assets Are Sold
CHARLESTON, W.Va. -- One of the worst financial episodes in West Virginia history came to a close last month when the remaining assets of Diversified Mountaineer Corp. were sold.
U.S. District Court Judge Dennis R. Knapp approved the sale of $3.44 million in assets, most of which are considered uncollectible, to Kenneth VanCamp, a Charleston businessman.
Mr. VanCamp will pay $176,000 for the assets, among which are about $140,000 in loans still considered collectible and some office furniture and equipment.
The judge's decision came just one week short of the 10th anniversary of the collapse of the industrial savings and loan holding company, which set off a panic among thousands of uninsured depositors and stockholders in four states.
Mr. VanCamp put in his bid earlier this month, and the judge took about 10 days to review it.
Carl M. Duttine is the Charleston-area attorney who has been acting as the trustee for Diversified Mountaineer for seven years without pay. He said that after Mr. VanCamp's payment is distributed among creditors, the depositors in Diversified's seven West Virginia savings and loan companies will have received 99.3 cents per dollar of their investments.
Debenture holders and general creditors will have received 74 cents per dollar of their investments.
Diversified closed on Jan. 3, 1974, leaving angry depositors banging on its doors. At the time, it was feared that depositors would lose everything.
Just a few years before the collapse, Diversified was expanding and offering consumers very favorable investment deals. What most people didn't know, or didn't fully understand, was that state law, at that time, set no insurance requirements and had few regulations to govern such operations. The collapse subsequently set off a series of law changes in the state.
The company had 18 subsidiaries. It also was operating a successful motor lodge in Charleston and an elaborate office complex in another part of town. Its assets had grown from $10 million in 1967 to $61 million in 1974.
However, what the surface image failed to show was that the company lacked the capital to support that growth, and it was deeply in debt. It had overextended itself. It issued stock, but instead of using the money to make loans to increase income, it used it to retire old debt. When Diversified ran out of money from its customers, it looked to its affiliates.
Mr. Duttine said Diversified was in a position to shuffle its profits and losses among subsidiaries in a manner which prevented outsiders from knowing what was happening. …