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Show C10 __ TheSalt LakeTribuneBUSINESS Saturday,May27, 1995 Utah(Coal Mine Entangled in Lawsuit Against Uranium Trader By Alex Berenson THE doesn’t own,the plaintiffs say Last year, Benton offered the final four years of royalty payments as security for $16.9 million in privately placed bonds,according to an offering sheet for the bonds. None ofthe outside limited partners have gotten any money from that offering, and some of the partners, including Jones, say they didn’t get regular royalty payments last year. The plaintiffs say they're concerned Benton used the proceeds from the bonds to prop up his between Ken Sullivan and three VER POST siblings. Eight investorsin a partnership controlled by Oren Benton have sued the bankrupt Denver uranium trader for diverting millions of dollars of the partnership's funds. In DenverDistrict Court filings and interviews with The Denver Post, plaintiffs say the late Robert Adams, a millionaire mining entrepreneur, gave them shares in Routt County Development Ltd to reward themforyearsof service. But the plaintiffs allege that after Benton took control of the partnership, his machinations deprived them of money they expected to finance their retirement. Benton denies the allegations. He saysthe plaintiffs are deliber- For several years, the partnership functioned as promised, the mensaid, with each 2% shareholder getting payments, or distributions, of $100,000 annually from the $5 million royalty payments from Coastal, less taxes. But in 1991, Benton bought Centurion Investment, as well as morethan half the shares of the limited partners, giving him voting control of Routt County. Since then, the partnership has repeat- edly delayed making payments to the limited partners Benton crumbling empire last year and that the money is gone. Because the last four royaltly payments have been pledged to support the bonds, they worrythey will never get their shares of the money from Coastal. Benton said everything he’s done has been legal under the agreement. ‘We had the complete right to do what we did,” Benton said. “There was no right to have any distribution. They [the plaintiffs] would like to think that they own the royalty itself, that they're entitled to the royalty. .. . That’s not the way Bob Adamsdesigned the partnership.” He said the money from the bond offering went to pay back previous loans taken out by the Adamsfamily. As early as 1983, Routt County Development had a debt of $15 million, Bentonsaid. Benton also said he hasn't amended the partnership agreementsince taking control of Routt County Development, even though the Adamsfamily repeatedly altered the accord whenit controlled Routt County Development. But Benton's explanation does not clarify why somelimited partners have received distributions overthe last few years, while oth- ers haven't, plaintiffs’ lawyer Candace Figa said. For example, KenSullivan andhis siblings were paid last year, while Jones was not “Thegist of this is that here are somesmall investors, people who are relying on this for retirement incomeor extra support for their families, who have been screwed,” Figa said. One of those investors is Miriam Peterson, the widow of French Peterson, another of Adams’ employees. Peterson, who lives in Houston, technically is a defendant although she may be dropped from thelegal action. Petersonsaid, “All I know is I am a limited partnerjustlike the rest, and I don’t really know what this suit is about.” ately misstating the nature of the partnership, a coal-mining venture in Utah: The story of Routt County De- velopment, now unfolding in Denver District Courtroom 9, stretches back two decades. Adams, a Steamboat Springs miner who madeandlost several fortunes beforehis death in 1982, created Routt County Developmentin 1974to acquire coal properties and federal coal leases Benton was one of Adams’ closest associates and served as executor of Adams’estate. Limited partnerships are a form of investment that shields investorsfrom therisks of operating a company. The limited partners can only lose the amountof moneythey put into the venture andday-to-day operationsareleft in the handsofa generalpartner. By 1978, the partnership had acquired the rights to 6,400 acres in Carbon County, Utah, that held a vast coal minecontaining about 100 million tons of low-sulfur coal worth more than $2billion. In August 1978, the partnership was amended, with several limited partners, including Benton, receiving 2% to 5% stakes. The limited partners paid only nominally for their shares in Routt County Development, according to the agreement. Centurion Investment Co., which Adams owned, was the general partner and kept a 62% stake. One monthlater, Routt County Developmentturnedits Utah coal mineinto a mint. The partnership signed an agreement with Coastal States Energy Co. giving Coastal the right to mine the Carbon County property in return for royalty payments of 4% of the value of the coal. Coastal was required to prepay $93 million in royalties between 1978 and 1997, making each 2% sharein the partnership worth more $1.8 million. It’s no accident that Adams gave his employees shares in Routt County Development just before the partnership signed its lucrative deal with Coastal, the limited partners suing Benton ay. CTi pentium rel(3 POU Cat : tag ete Ea ata Os Ei asiicaas Limitone per:customer, wellRic EeeCCUELCCOLN Litas Pee Intelh86” DX2/66 processor SMB RAM ShOMB Hard Drive Intel’Pentium TSMHz processor (D-ROM drive 16-bit sound card Stereo speakers 14” Super VGA Color a 3" viewable screen size) tar Color Dot Matrix Printer a SHOMBHard Drive vr colordisplay 18" viewable screensize) thee ee Quad-speed (D-ROMidrive 16-bit soundcard Thh fax modem UTRat, UATE 66MH1-68L(040processor SMB RAH Ih" Super VGA Color a (1B" viewable screen size) Inkjet Printer ; — epCLoa Meedee 16-bit stereo sound aaiam | Veep intel tA HEWLETT PACKARD tate! OverDrive Processor “Routt County was a big pay- back for people who helped Adams,” plantiff Ron Jones, a former Adams employee, said Adamsoffered favored employees the shares in Routt County as a reward for staying with him through lean times, Jones said. Jones described Adams as a classic Western mining baron who preferred handshakes to contracts and ran his business “in a haphazard way,” treating employees well when times were good and bouncing their paychecks whenhis deals soured “Nobody paid fortheir interest in the partnership. It was just in consideration of past services,’ said Ken Sullivan, another of the partners suing Benton. Sullivan’s father Robert, another Adams employee, received a 2% stake in the partnership, which was split eG Peace Pee oe Crumare 33 CTE Aee kulae adulcad ORRS Nuriea 31-1034 Ys 600x300 dpi resolution includes 22 fonts Threeyear warranty Easytoad color option Raumu) Tacos Upgrade your older Intet* processor with 1024x768 resolution this 63MHz Intel* Pentium* processor, #3210216 +26.10049 WESTERNDIGITAL REVEAL [C35 MaTe Use Genuine HP Supplies! 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