By Kate Berry
Chriss Street, the former investment manager running for Orange County Treasurer-Tax Collector, is in a game of hardball stemming from his days as a trustee in the murky world of bankruptcy reorganization.
Street’s successor at the retirement plan of Fruehauf Trailer Corp., which filed for bankruptcy in 1996, claims Street inflicted “serious economic damage” during his eight years as a trustee.
Street oversaw the trust of the truck trailer maker from 1997 until last year. The trust included a pension plan that was taken over in 2004 by the federal Pension Benefit Guarantee Corp.
The charges are in a preliminary report filed this week in U.S. Bankruptcy Court in Delaware.
Daniel Harrow, the new trustee, alleges that Street engaged in “mismanagement, conflicts of interest and greed” when he oversaw the $100 million pension plan.
Harrow, a managing director at Libra Securities LLC, did not return several phone calls seeking comment.
He was appointed trustee by Fruehauf’s creditors, which include Maryland Shipbuilding and Drydock Co., Jacksonville Shipyards Inc., and Mercer Co.
The company has several thousand creditors, including major bondholders and hedge funds that are trying to recoup money.
Street said he stands by his work at Fruehauf and called Harrow’s charges a “drive-by shooting.”
“Working in bankruptcy is a hard and difficult environment,” Street said.
Street is known as one of those who called Orange County’s bankruptcy in the early 1990s, along with John Moorlach.
Moorlach, Orange Country treasurer who is running for supervisor, has endorsed Street as his successor.
On his web site, Moorlach said his endorsement of Street comes from knowing him since the days of the bankruptcy in 1994.
Harrow takes aim at expenses charged to Fruehauf by Street in his report.
The 63-page report claims that at least $11.7 million in pension money “appears to have been consumed in trust overhead and expenses.”
From 2001 to 2005, the pension plan paid nearly $500,000 in expenses for hotel and restaurant charges, a trip to DisneyWorld, a charter plane for Street, clothing and book purchases and a speeding ticket and a parking ticket Street received in Laguna Beach, according to the report.
Street said he stands by the expenses, which he said were business related.
He said he disputes the charter plane item, which he said was paid for with frequent flier miles used to get him from Alabama to Atlanta on a small connector jet.
According to the report, Street put his wife, Victoria Cox Street, on the trust’s payroll, and took all-expense paid trips to Hawaii, Brazil, Chile, Argentina and Mexico.
Street’s response: the trips were company retreats or related to business at Fruehauf and its Mexican arm.
Street’s wife worked at Bank of America Corp. before and “filled a gap” at Fruehauf after another worker left, he said.
The report describes a “highly unusual” arrangement in which Street’s personal credit card was paid “without the need to submit an expense report, trip report or any explanation of the business purposes of the expense.”
Fruehauf’s Mexican subsidiary couldn’t get a credit card of its own and relied on Street’s, according to Street.
The report takes issue with Street on other matters.
As trustee, Street failed to liquidate the trust’s main asset and instead engaged in two acquisitions of bankrupt companies, according to the report.
He co-mingled assets of the pension plan with assets that were supposed to be sold to pay off creditors, the report alleges.
The pension was overfunded when Street took control, according to the report. Six years later it was underfunded by $7 million at the time the Pension Benefit Guaranty Corp. stepped in, it said.
Street called his work at Freuhauf a “fantastic reorganization” that yielded 80 cents on the dollar for most creditors.
His work at Freuhauf is the subject of ongoing federal investigations by the Department of Labor, Pension Benefit Guaranty for possible violations of the federal Employee Retirement Income Security Act, according to the report.
The document was filed as part of continued litigation between creditors and Street. The aim of the creditors is to get federal officials to file civil charges to recoup money paid to or expenses incurred by Street.
Street called the effort a bid by the creditors to get out of money owed to him. His last check from Fruehauf bounced, he said.
The creditors represented by Harrow are “opportunists” who came in late in the game, according to Street.
Berry is a staff writer with the Los Angeles Business Journal.
