Could it be deja vu all over again?
"A man, after he brushed off the dust and chips of life, will have left only the hard, clean question: Was it good or was it evil? Have I done well - or ill?"
- John Steinbeck
Remember Andy Evans? That guy from the early '80s?
You remember, the fellow who with wife Ann Llewellyn had that big-shot Bellevue brokerage, Evans Llewellyn Securities? You know, the guy who with wife Ann nearly perfected the art of forging signatures on loan documents and went to the Big House for bank fraud. (Well, not exactly the Big House. It was that swim and tennis club named Geiger Field near Spokane affectionately known as a minimum-security penitentiary.)
Surely, it's coming together. Think harder. The parents of kids whose godfather is Bill Gates, the bespectacled billionaire who invested in the Evans Llewellyn brokerage and reputedly leaned on Andy for many years, even into the late 1990s, for investment assistance.
You know, the crook, the felon, the guy who routinely manipulated stocks to unleash a handful of sanctions from the National Association of Securities Dealers.
Evans, once publicity-shy, seems to attract it just at the wrong moments in his life. Bloomberg News in the past two weeks has produced two huge reports on the former Geiger Field resident, calling into question mainly penny-stock deals subject to a lawsuit in Massachusetts.
Evans and Llewellyn were young and among the beautiful people when, in 1980, they opened the doors to their fashionable brokerage. The intent was to offer services to well-heeled clients on the brok erage side, then build an underwriting organization that, with a little luck and the friendship of buddy Gates, would help bring Microsoft public.
Evans had a penchant for trading. That is, his adrenaline hit high gear when he sat at the trading desk. As things crumbled later, associates said Evans' gift was gab - he was a great salesman. He lured some of the region's best stock brokers to his lair. It would be difficult to find one who would defend him today. The true brokerage professional, they contended, was Ann.
Evans hoped the firm would be the go-to place for young companies hoping to become publicly owned. He invested in many of them. The problem was, the market was full of ups and downs, requiring capital to sustain the brokerage.
At times, Evans would juggle stock between accounts to deter nosy regulators. Sometimes, he would support companies so much he'd own too many shares. He would hide the excesses in various accounts.
What finally bought Andy and Ann the ticket to Geiger was fraud. They borrowed millions from Barclay's Bank, which had a Seattle office. When the requests for fresh cash would clear lending limits, they'd borrow in the name of this relative or that.
When Ann's father found out nearly two years after the fact he had borrowed $500,000, he told the Journal-American newspaper in Bellevue, "Five hundred thousand dollars? Well, I'm flattered. I wish I had that kind of money."
It was a testament to Evans' charisma that veteran brokers steadfastly supported him almost to the end. But as the stories of manipulation and fraud demonstrated how the trust was broken, they quickly did an about-face.
The brokerage opened Aug. 13, 1980, two years to the day before the bull market commenced. By mid-1984, monthly losses were mounting, brokers were exiting, regulators were descending and shortly, the boutique brokerage with so much promise was sold for almost nothing. It did not exist on March 13, 1986, the day Microsoft went public.
The details of the latest rut in Evans' road are complex. Bloomberg columnist Christopher Byron reported that Evans gained control of a little known San Francisco company called Zero.Net purported to be 22 years old but unheard of until last year. That company snagged an "obscure Internet stock named Envision Development." Envision's market value (shares times price) soared to $403 million despite sales of only $2 million and, of course, no profits.
Meanwhile, Evans, operating through Dominion Income Management, in recent years picked up a handful of other low-price companies, including Zero.Net. This financial maze was intended, apparently, to establish Zero.Net as an incubator of young, hot Internet companies, not unlike Evans' early-1980s goal with virgin high-techs in Bellevue. The Worcester, Mass., corporate-fraud case may unravel some of that mess.
This from the American Heritage Dictionary: "Recidivism: A tendency to lapse into a previous pattern of behavior."
Les is more
What a terrible segue. From bad to outstanding.
Les Hitchcock, an amazing force in the trading of U.S. Treasuries, has left his position at Seattle-Northwest Securities after nearly 20 years.
The veteran, who has talked about retirement off and on in recent years, has decided to finish his career helping a start-up. He has joined BondHub.com as director of trading.
Les is the kind of bulldog you'd prefer on your side. In the mid-1980s, when he saw a bond gap in this space, he called to see that a weekly presence in bonds would begin. That became a fixture in these parts.
His phone calls are legendary. When discussing an issue around the Seattle-Northwest desk, Hitchcock would call anyone, anywhere to get the skinny direct.
He would have made a heck of a newsman.
Stocks and bonds
The Dow Jones industrial average last week fell 165.76 points to close at 10,449.39.
The Nasdaq composite index of 5,000 stocks fell 14.32 points to 3,860.52.
The Seattle Times Northwest index of more than 200 stocks fell 10.13 points to 1,137.41.
The WM Group Northwest 50, 50 stocks weighted by their regional economic impact, fell 168.19 points to 8,002.29.
The 10-year U.S. Treasury note jumped $10 per $1,000 of face value to $1,037.50. That was priced to yield 5.98 percent, said Pamela Warren, First Union Securities vice president. She said Treasuries improved because economic data is showing a slowing. That fosters a sense the Alan Greenspan-led Federal Reserve won't raise interest rates at its June 28 meeting.
The Fed "is going to wait and see - that's Greenspan's modus operandi."
Investor appetite for municipal bonds continues to grow, pushing tax-exempt bond prices up $5 per $1,000, reported Judith Cochrane, Banc of America Securities managing director.
Cochrane said she believes a positive factor has been those improving economic signs. Investors realize that rates could go lower if improvement continues. She said the Bank of America Northwest Muni Bond index fell 0.05 to 5.90 percent.
Wall Street Recap appears Sunday in the Business section of The Seattle Times. Greg Heberlein's phone message number is 206-464-2267. His e-mail address is: Gheberlein@seatimes.com
--------------------------- Reades portfolio
10 NW stocks preferred by readers
% CHANGE
STOCK SINCE 1/00
Amazon.com -39.6
Costco Wholesale -28.8
drugstore.com -77.2
Go2Net -53.0
Immunex +22.4
InfoSpace.com -3.7
Microsoft -37.8
RealNetworks -23.7
Starbucks +43.8
Washington Mutual +4.8
Average: -19.3%.
What $1,000 invested in those stocks would be today: $807.
Readers' non-portfolio
10 NW stocks picked randomly
%CHANGE STOCK SINCE 1/00
Adv. Radio Telecom -33.4
American Pacific Bank +25.0
Integrated Measurement +18.6
Key Tronic -26.7
NW Natural Gas +3.7
Phoenix Gold -20.0
Synthetech -18.3
TRM -14.3
Vixel -41.4
Will. Valley Vinyrds -17.2
Average: -12.4%.
What $1,000 invested in those stocks would be today: $876.