Journal of the House of Representatives
of the Second Session of the 110th General Assembly
of the State of South Carolina
being the Regular Session Beginning Tuesday, January 11, 1994
Page Finder Index
| 
Printed Page 1860, Feb. 10
| Printed Page 1880, Feb. 10
|
Printed Page 1870 . . . . . Thursday, February 10,
1994
quarters, so the leg work and the -- was essentially coming out of Columbia for
the months after the storm.
Q. Do you recall when you first read the covenant?
A. No, sir. I'm sorry, I don't. We had drafts that went back and forth
before we sent it to Mr. McDaniel.
Q. And you made mention to this, but I'm going to ask you another way, if you
would, when did you first have communication with the Wise firm as to your
potential employment?
A. It was raised in passing at the end of -- at that meeting in October. I
never really pursued it until December 2nd
-- after the December 2nd meeting with the Finkel firm. I was pursuing other
employment in that they were an option.
Q. In October in passing the comment was made about are you interested, which
came from --
A. Right.
Q. -- Mr. Wise, you said?
A. That's correct.
Q. But as far as any serious discussion as to your employment with the Wise
firm, was it December? Is that what you're saying?
A. That is correct, yes, sir.
Q. The first week in December?
A. The first week in December.
Q. And the other -- your discussion with Mr. Wise in October on behalf of
someone else, in passing comment was made, but the serious discussion in
December, did that inquiry originate with you?
A. It did.
Q. Or someone from the Wise firm?
A. No, with me.
Q. When did you finalize your decision to proceed with working with the Wise
firm?
A. Shortly thereafter. That -- probably that first week in December. Once I
went back to Dewey, it didn't take very long. It all happened very
quickly.
Q. And within that same week you notified the Wise firm of your decision?
A. You mean the Finkel firm?
Q. No, the Wise firm.
A. I notified them, you know, when they made the offer.
Q. And this again is the first week in December?
A. I think so. It's the first or second --
Q. I understand from memory --
Printed Page 1871 . . . . . Thursday, February 10,
1994
A. It's the first or second week, but...
Q. And when did you notify the Finkel firm?
A. Well, the Finkel firm knew on December 2nd that I was -- they said -- after
our conversation, they said they wanted me gone by the first of the year because
they -- you know, once you made up your mind to leave, they thought it was best
that we just do that and so that was fine, so they knew I was leaving.
I guess I notified them that I had gone with Wise & Cole, you know,
simultaneously to Dewey. I mean it was all -- it all happened. There was no
secret.
Q. Well, help me understand something. Your colleague that was in Charleston
that you were speaking to the Wise firm on behalf, what's his name?
A. Gregg Meyers.
Q. Meyers. When did he notify the Wise firm of his departure?
A. I would say probably immediately after the meeting we had in Columbia with
the partners of the Finkel firm on December 2nd. I would think that he -- this
may be in Drew Epting's affidavit. I'm not sure, but I would think that Gregg
probably let them know that December 3rd.
Q. All right.
A. Very close.
Q. And you stated that that was a pretty traumatic meeting?
A. That's correct.
Q. Was it traumatic in the sense that they were surprised that your colleague
was leaving?
A. That's correct.
Q. And then did that trauma stretch into saying, "Well, you may as well
go ahead and look, too?" I mean I don't -- help me understand the
difference between your colleague they didn't expect to leave and was
traumatized by his departure, then they tell you, "Well, you may as well
leave also," in essence, that's what --
A. Well, no, it didn't go exactly that way.
Q. Well --
A. They said to me, "Well, what does this mean about you?" And I
said, "Guys, I need to leave, too." In other words, I told them I was
leaving, but my -- I feel a strong fiduciary duty to you. I'm running the
Charleston office. You don't have anybody else down there. I don't have a job.
I don't have a place to go. I will stay with you as long as you want in order
for you to find somebody or make some decisions about what you want to do with
the Charleston office.
Printed Page 1872 . . . . . Thursday, February 10,
1994
Q. All right, sir. I wanted to clarify that in my mind. I guess I wasn't
following as close. They were shocked, if you will, traumatized that your
colleague was leaving and you at the same time pretty much informed them that
you had intentions of leaving also, but that you would stick around until --
A. That's correct.
Q. -- it's appropriate for both; they, in turn, said,"Well, it's
appropriate now?"
A. That's right.
Q. Okay.
A. Or the first of the year. It was three weeks to clear out.
Q. All right. And is your informing your client, a former client, Mr.
McDaniel, of your decision occurred?
A. I want to say the date is December 14th and it was the first thing I did
once I determined to go with Wise & Cole. I mean that was the first thing I
felt I had to do.
Q. That's all I have right now.
A. Thank you, Senator. Any questions?
THE CHAIRMAN: I have one. Looking at the -- I see the affidavit you provided
us from Mr. Epting who is the attorney with the Wise firm in Charleston; is that
correct?
A. That's right. Yes, sir.
THE CHAIRMAN: The -- I've had another copy of that same letter and there is a
blind PS or a copy of a letter he references in his letter -- in his affidavit
and it has a blind PS to you. It's dated November 6th, 1989.
It looks like a letter to Mr. Solomons actually, but you get a copy in which
he says, "Please find the consent order staying our action. Likewise be
advised that the covenant not to sue or further litigation have been
prepared," and Mr. Epting apparently encloses copies of those documents to
Mr. Solomons and there is a PS -- sends you copies. There is a blind PS that
says, "Please get things signed by Mr. McDaniel, so that we can move on to
bigger and better things. I spoke with Dewey about your visit to our firm. We
certainly were flattered."
Can you help me work through that? That's in November of 1989. What is he
referencing there?
A. He is referencing my visit to the firm which was at the end of October when
I spoke to him about Gregg when the conversation from Dewey came up about
whether I would be interested. Dewey apparently mentioned it to Drew in passing
and what Drew says in his affidavit is that I was president elect of the Chamber
of Commerce. They would be
Printed Page 1873 . . . . . Thursday, February 10,
1994
thrilled essentially -- they were thrilled that I had come by. That is all it
is and it is no more, but I can't speak for Drew Epting.
THE CHAIRMAN: I'm not asking you to. I'm just trying to better --
A. But that's what it is.
THE CHAIRMAN: All right.
A. Yes, sir.
THE CHAIRMAN: The idea of being flattered was or the conduct that took place
was that you -- when he mentioned would you be interested, you apparently said I
might be or --
A. Right.
THE CHAIRMAN: -- possibly, but that was the end of the discussion there?
A. That's it.
THE CHAIRMAN: And the next discussion you had after that November meeting or
meeting at the end of October was in December with them?
A. Yes, sir.
THE CHAIRMAN: Further questions?
REPRESENTATIVE ALEXANDER: Yes, sir.
THE CHAIRMAN: Mr. Alexander.
EXAMINATION BY REPRESENTATIVE ALEXANDER:
Q. The covenant, who initiated the covenant to begin with? To start, who
was it that suggested that there would be a covenant not to sue? I'd like to
know that.
A. To the best of my memory, I believe it was Mr. Husman. He is here today and
can corroborate that, and I just turned and asked him and he shook his head and
said that it was.
Q. How did he get the information that he should follow through?
A. Well, Mr. Husman was the principal litigator on the case and so all of the
information was being shared by all of us and it was part of this major meeting
we had on August 6th as we went through all of the options that he came up with
the idea of the covenant not to sue.
Q. Did he involve you in drawing up this covenant?
A. The -- I did not draw the covenant at all. It was drawn by Gail Lovett.
It was reviewed by Mr. Husman. We had copies that went back and forth. I may
have made some editorial changes. I can't remember. But, in fact, it was sent
to Mr. McDaniel from the Columbia office by Ms. Lovett.
Q. Was he aware that this was being prepared? To your knowledge, was he aware
--
A. Mr. McDaniel?
Printed Page 1874 . . . . . Thursday, February 10,
1994
Q. Yes, sir.
A. Yes, sir. Absolutely. I want to make that very, very clear. Strategy is
developed amongst the lawyers August 6th. We meet with Mr. McDaniel on August
7th. We have attorney's notes that reflect what happened at that meeting. Mr.
McDaniel says fine, let's go with it, but I want to take -- I want you to take
Algie Solomons' deposition on the 30th. No surprises at all.
Q. Why was he so interested in Mr. Solomons' deposition in your opinion?
A. He had come not to trust Mr. Solomons. He was involved in what was a very
bad business deal. He didn't want to take -- get off face value that Mr.
Solomons would do what Mr. Solomons said he was going to do and he wanted them
on the record.
Q. You are the one that took the covenant to him for signature; is that
correct, Mr. Steinert?
A. No, sir. It was mailed to him by Ms. Lovett.
Q. And at what point did you sit down and go over this with him?
A. We went over it several times. The reference that he made today, the last
meeting I had with him was a deposition in Beaufort where a lawyer who had
represented Mr. Solomons in some earlier negotiations, a fellow named Ken Tootle
was being deposed by Heyward McDonald. I went to that deposition as you would
expect I would as Mr. McDaniel's lawyer.
Ken Tootle was a good friend of Mr. McDaniel's. I spoke with Ken Tootle
about essentially a client management problem that I was having. We had entered
into an agreement. The other side had performed. I honestly felt that we would
probably be facing a motion to compel the terms of the settlement if we didn't
go forward. It was not to Mr. McDaniel's interest not to sign.
In fact, I thought that the case was being seriously jeopardized and
undermined by his failure to sign. I discussed this with Tootle who is a
lawyer. I explained the reasoning and the logic and the rationale and said,
Ken, you are a friend of Ron McDaniel's. I don't seem to be able to get
anywhere with him on this. Would you discuss it with him. He agreed.
I don't know whether he had a subsequent conversation with Mr. McDaniel or
not, but a week later -- I mean I wasn't sitting there with a gun to his head or
anything and said sign. A week later, he mails it back signed. And this is the
end of November that we're talking about.
REPRESENTATIVE BEATTY: One question.
THE CHAIRMAN: Representative Beatty.
Printed Page 1875 . . . . . Thursday, February 10,
1994
EXAMINATION BY REPRESENTATIVE BEATTY:
Q. At what point did Mr. McDaniel go into default on the note that was
being foreclosed, the mortgage?
A. It had to be early summer. I would guess, but I don't know that for
sure.
Q. That was during the time that you were representing him?
A. Absolutely. Yes, sir.
Q. And his not paying the payment was in -- was due to his not being able
to?
A. Absolutely.
THE CHAIRMAN: Let me ask you one final question. You provided a copy of the
original purchase agreement or a copy of the original draft. I believe it was
sent to Mr. McDaniel and you referenced this Paragraph 6 which was the one --
was the paragraph in which the reference to contracts, I presume, with contracts
with USF&G, that paragraph was included in the draft that Mr. Solomons did
and then this is Mr. McDaniel's writing where new contents are placed in
there?
A. Yes, sir.
THE CHAIRMAN: Do you know whether this was -- the changes that he suggested
were incorporated into the final contract?
A. To the best of my memory, it was and the reason we brought the lawsuit
against Mr. Solomons was that this was not in the final document.
THE CHAIRMAN: And that was my question. They apparently did
-- for whatever reason, after he sent this, back Mr. Solomons agreed to delete
that language that dealt with the insurance companies, correct?
A. That's correct. Now, it was clear to everyone and I don't think there is
any denying this by any party that when the agency was purchased, Mr. McDaniel
knew of the problems not necessarily with that USF&G, although he understood
it was shaky, but with every other company that had serviced and written for
those agencies, they had all pulled out.
THE CHAIRMAN: And you've answered my question which is that when the final
contract -- the final document did not include this Paragraph 6 that Mr.
Solomons had drafted?
A. That's correct, sir.
THE CHAIRMAN: Other questions from the Members? Senator McConnell.
EXAMINATION BY SENATOR MCCONNELL:
Q. Mr. Steinert, I guess my question just to follow-up that last
statement, you said that he knew that all of them had pulled out, but what was
he buying?
Printed Page 1876 . . . . . Thursday, February 10,
1994
A. I think he bought a very sick agency or agencies, but believed in his own
ability to turn them around. Mr. Solomons, Algie Solomons' father, had been, I
guess, the general agent or whatever you -- the appropriate term was, he died.
Mrs. Solomons who was essentially the bookkeeper was trying to hold them
together and she wasn't doing a very good job of it. Algie Solomons, her son,
was a lawyer. He wasn't all that interested in the business.
And I really believe that what Mr. McDaniel felt was that he was a skilled,
talented insurance agent and that there was a real market down there and given
his skills, expertise and ability, he could turn it around, so he was buying
what they call the book of business.
Q. Well, if that was -- my follow-up, I mean is there $100,000 worth of
equipment and stuff in that business? Do you know or --
A. I don't know and I did not represent Mr. McDaniel at the sale. I had
nothing to do with that.
Q. Thank you.
THE CHAIRMAN: Thank you. Any further questions? Thank you, Mr. Steinert.
A. Thank you. Mr. Chairman, I have some of Ms. Lovett's notes from these
meetings on August 6th and 7th and also her notes from the deposition of Mr.
Solomons on August 30th. Would you like to have those as part of the record?
THE CHAIRMAN: You are welcome to pass those forward to us and we will include
those in the record. I don't know how helpful they'll be until I look at them,
so why don't we go ahead and put them in the record.
A. That's fine.
THE CHAIRMAN: And let me remind both Mr. Steinert and Mr. McDaniel that we
leave the record open after these hearings and that if there are any other
documents that you wish for the committee to consider prior to it undertaking a
final decision, we would welcome your forwarding them to us. But if you would
past those forward.
MR. STEINERT: Thank you very much.
THE CHAIRMAN: Thank you. Ray Nelson Stevens. Mr. Stevens, come forward
please.
MR. STEVENS: Mr. Chairman.
THE CHAIRMAN: If you'd raise your right hand.
RAY NELSON STEVENS, having been duly sworn, testified as follows:
THE COURT: Mr. Stevens, have you had a chance to review the Personal Data
Questionnaire Summary?
MR. STEVENS: Yes, I have.
Printed Page 1877 . . . . . Thursday, February 10,
1994
THE CHAIRMAN: And is it correct?
MR. STEVENS: The only minor change is my daughter who used to four is now
five.
THE CHAIRMAN: Congratulations.
MR. STEVENS: Well, I've aged greatly in the process myself.
THE CHAIRMAN: Several of us have that same feeling. Any other clarifications
that need to be made?
MR. STEVENS: No, there are not.
THE CHAIRMAN: Do you have any objection to our making the summary a part of the
record of your testimony?
MR. STEVENS: No objection.
THE CHAIRMAN: That will be ordered at this time.
PERSONAL DATA QUESTIONNAIRE SUMMARY
1. Ray Nelson Stevens
Home Address: Business Address:
77 Middle Creek Road S. C. Attorney General's Office
Irmo, SC 29063 Tax Division
P. O. Box 125
Columbia, SC 29214
2. He was born in Toccoa, Georgia on October 7, 1949. He is presently 44
years old.
4. He was married to Janice Louise Shapiro on December 22, 1973. He has
three children: Ryan Nelson, age 16; Alan Austin, age 12; and Leah
Suzanne, age 5.
5. Military Service: N/A
6. He attended the University of South Carolina-Aiken, 1967-1969, Associate
Degree in Business; the University of South Carolina, 1969-1971, B.S. in
Accounting; the University of South Carolina, Engineering Graduate School,
1971-1972 (left for full-time employment with Internal Revenue Service);
the University of South Carolina, graduate school (part-time), 1973-1975,
M.B.A.; the University of South Carolina School of Law, 1975-1978, J.D.;
and William and Mary School of Law, 1979-1980, Master of Law in
Taxation.
Printed Page 1878 . . . . . Thursday, February 10,
1994
8. Legal/Judicial education during the past five years:
June, 1989; Federation of Tax Administrators; General review of state and
local tax litigation and legislation; 12.25
October, 1989; National Institute on State and Local Taxation; Review of
state and local litigation and legislation; 11.5
January, 1990; Keys to Effective Trial Advocacy; Trial techniques; 6.0
May, 1990; Appellate Practice in South Carolina; Review of appellate
practice and techniques; 6.5
January, 1991; Supreme Court Practice Seminar; United States Supreme Court
practice and techniques; 9.75
March, 1991; Legal Ethics; Ethics in advertising, solicitation, and
conflicts of interest; 6.0
March, 1992; Civil and Criminal Litigation; Review of civil and criminal
litigation in state and local taxation; 2.5
August, 1993; Government Duties; Restructured state government and the
state of administrative law; 6.0
September, 1993; Civil Law Update; Administrative Procedures update, 1993
Restructuring Act; 3.0
October, 1993; Southeastern Attorneys Conference; Tax cases and legislation
of concern for southeastern states; 8.0
9. Taught or Lectured:
A. Law Related Courses Taught
1. Taught Fundamental of Federal Tax at Midlands Technical College for one
semester; basic course in taxation of partnerships, corporations, and
estates
2. Guest lectures at USC Law School in Professor Quirk's State and Local
Tax classes:
a. Duties and functions of county officials in property taxation;
b. Taxation of railroads under Federal A-R Act
B. Lecturer at Bar Associations
Presentations to the Greenville County Tax Bar:
1. Remedies and Procedures for Suits Against State Officials
2. Administrative Procedures Before the South Carolina Tax Commission
C. Continued Legal Education Lectures
1. Federation of Tax Administrators: Lecture on the use of the Civil
Rights Statute of 42 USC Section 1983 in state court to recover tax
funds
Printed Page 1879 . . . . . Thursday, February 10,
1994
2. Southeastern Association of Tax Attorneys:
a. Lecture on problems with collecting taxes while a party is in
bankruptcy under an automatic stay of collection
b. Lecture on nexus and jurisdiction of South Carolina over businesses
incorporated as Delaware Holding Companies
10. Published Books and Articles:
"Unwanted Assets Spun Off Prior to Acquisition of Wanted
Assets," 1980 South Carolina Bar publication
"The Use of Title 42 USC Section 1983 in State Tax Litigation,"
1988 REVENUE ADMINISTRATION, page 63
"Delaware Subsidiaries Can Still Reduce Tax But More Planning
Needed," March/April 1992 THE JOURNAL OF MULTISTATE TAXATION, page 4
12. Legal experience since graduation from law school:
1978; Stophel, Caldwell, Heggie (Chattanooga, TN; now known as Caldwell,
Heggie & Helton); General corporate practice with emphasis on taxation
1979; United States Internal Revenue Service; Examination of Federal
estate and gift tax returns as an Estate and Gift Tax Attorney
1980 to present; Chief Deputy Attorney General, Director of Tax Division
of SC Attorney General's Office; Issuance of Attorney General opinions;
advise Commissioners of Dept. of Revenue on all administrataive hearings
in tax and ABC; advise county and municipal officials on budget, school
and finance matters; litigation and defense of State at all levels from
administrative hearings to trial in state and federal courts including S.
C. Supreme Court and U. S. Supreme Court
13. Rating in Martindale-Hubbell:not rated; not in private
practice
| Printed Page 1860, Feb. 10
| Printed Page 1880, Feb. 10
|
Page Finder Index