Most of the 1,283 investors in the publicly held parent company of Chaparral Boats would be surprised to learn one of its top executives is a convicted money launderer who implicated a member of the corporate board of directors in multi-ton marijuana smuggling ventures in the late 1970s.
RPC Energy Services Inc. never disclosed that Chaparral Executive Vice President William S. “Buck” Pegg pleaded guilty in June 1997 to money laundering conspiracy charges. Securities Exchange Commission rules strongly encourage — but don’t mandate — that publicly held companies disclose when its directors and top executives run afoul of the law. RPC has not disclosed that Buck pleaded guilty to two felony conspiracy counts on June 30, 1997, in Macon, according to a Sun-Sentinel review of SEC filings
Buck told prosecutors he recruited James A. Lane Jr. to help smuggle marijuana for his brother, Joe, in the late 1970s. Lane was appointed to the RPC board of directors when it acquired Chaparral Boats in 1986.
Buck told prosecutors that he and Lane quit smuggling by 1980 and moved full-time to Nashville, Ga., where they dedicated their energy to building Chaparral, which manufactures power and pleasure boats.
Buck was required to disclose the details of what he described as a phony private stock sale he orchestrated that shifted 100 percent of Chaparral to a holding company founded in the banking-secrecy haven of Liechtenstein with a portion of Joe Pegg’s marijuana millions. Lane received $1 million for his one-third stake, Buck told the government, and he was paid $2 million in tainted money from the holding company for his two-thirds stake in Chaparral. Buck and Lane continued to control the growing boat manufacturing company. They were granted stock purchase options that allowed them to share in the proceeds of any future sale by Ratnapura Anstalt, which invested an additional $600,000 of Joe’s money into the company in the same transaction.
In 1986, Ratnapura Anstalt sold its Chaparral stock to publicly traded RPC Inc. for $23.3 million.
Buck and Lane remained in operational control of the company. Lane was awarded a seat on the RPC board. Both men became legitimate millionaires, thanks to long-term employment contracts from RPC that are heavily weighted with profit-based bonus incentives..
Justice Department prosecutor G. Allen Carver said RPC had no idea it was purchasing a boat company that had been tainted by Joe’s drug profits. The SEC requires companies to disclose legal proceedings in the last five years “that are material to an evaluation of the ability or integrity” of any director or executive “convicted in a criminal proceeding.” But the five-year clock for disclosure, according to the SEC, doesn’t start ticking until a judge’s final order. Buck is slated for sentencing this week in Macon.
While the company hasn’t disclosed Buck’s conviction, it has responded another way.
After listing Buck and Lane as corporate executives and disclosing their million dollar compensation packages for years, RPC shifted gears in late March with this year’s proxy statement and annual report filed with the SEC. Buck appears nowhere in the most recent SEC filings.
Lane is still listed — he was paid a $67,841 salary and more than $1.9 million in bonuses in 1998 — because he is a corporate director. But Lane has not been charged with a crime and is shielded from criminal exposure under the terms of Buck’s plea bargain and immunity agreement in Macon.
In past years, Buck and Lane earned the same salaries and profit-based bonuses. According to SEC reports, they received $67,841 salaries and bonuses exceeding $1.5 million in 1997.
RPC Chief Operating Officer Richard Hubbell and other company officials failed to respond to repeated requests for interviews from The Sun-Sentinel. By most measures, RPC made a wise investment in Chaparral, which has added profits to the balance sheet while the company’s other business segment, oil field support services, has been hurt by overproduction and plummeting prices. Lane and Buck have increased sales while many of their competitors are experiencing flat or declining numbers.
