l 4-cr-00272-JSR UNITED STATES OF AMERICA v. LEE STEWART, Defendant.
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 1 of 4
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA v. LEE STEWART, Defendant.
INFORMATION
I: l 4-cr-00272-JSR
COUNT ONE (Conspiracy to Commit Wire Fraud and Bank Fraud)
The Department of Justice charges: 1. From at least in or about May 2006 through at least in or about early 2011, in the Southern District of New York and elsewhere, LEE STEWART, the defendant, together with Anthony Allen, Paul Thompson, Tetsuya Motomura, Anthony Conti, and others known and unknown, did knowingly combine, conspire, confederate, and agree to commit certain offenses against the United States, that is: (A) to devise and intend to devise a scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, and to transmit and cause to be transmitted certain wire communications in interstate and foreign commerce for the purpose of executing the scheme; to wit, the defendant and others engaged in a scheme to manipulate and attempt to manipulate to their advantage the benchmark interest rates referenced by derivative products throughout the financial industry, by the
1
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 2 of 4
dissemination, and submission, of false and fraudulent statements intended to influence and manipulate the benchmark interest rates to which the profitability of interest rate derivative trades was tied, and the conspirators contemplated, foresaw, and caused use of wires in interstate and foreign commerce in carrying out the scheme, in violation of Title 18, United States Code, Section 1343; and (B) to execute and attempt to execute a scheme and artifice to defraud a financial institution, the deposits for which were at the time insured by the Federal Deposit Insurance Corporation; and to obtain and attempt to obtain moneys, funds, credits, assets, and other properties owned by and under the custody and control of a financial institution by means of materially false and fraudulent pretenses, representations, and promises, as well as by omission of material facts in violation of Title 18, United States Code, Section 1344. 2. It was a part and an object of the conspiracy that LEE STEWART, the defendant, and others known and unknown, engaged in a scheme to manipulate and attempt to manipulate a benchmark interest rate known as the London Interbank Offered Rate (LIBOR), to which was tied the profitability of interest rate derivative trades in which the defendant and others had a financial interest. The scheme had an effect on one or more financial institutions, within the meaning of Title 18, United States Code, Sections 20 and 3293(2). OVERT ACT 3. In furtherance of the conspiracy and to affect the illegal objects thereof, LEE STEW ART, the defendant, and others known and unknown, committed the following overt act, among others, in the Southern District of New York and elsewhere:
2
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 3 of 4
a. on or about September 2, 2005, LEE STEWART and Anthony Conti conspired to fix and manipulate the day's LIB OR rate by causing their employer, Coiiperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), a financial institution and global financial services company headquartered in Utrecht, the Netherlands, to make a LIBOR submission that was calculated to benefit LEE STEW ART's trading position. Rabobank and Bank-B, a federally-insured financial institution headquartered in Charlotte, North Carolina, had previously entered into an interest rate swap transaction that had a reset date of September 2, 2005. On or about September 2, 2005, a third party publishing corporation published Rabobank's manipulated LIBOR submission by sending a wire communication from the United Kingdom to recipients in New York, New York. (Title 18, United States Code, Section 1349) FORFEITURE ALLEGATION 4. As a result of committing the offense alleged in Count One of this Information, LEE STEW ART, the defendant, shall forfeit to the United States pursuant to Title 18, United States Code, Section 982, any property constituting or derived from proceeds obtained directly or indirectly as a result of the wire fraud and bank fraud offense alleged in Count One of this Information, including but not limited to a sum of United States currency to be determined by the Court at sentencing, in that such sum in aggregate is property representing the amount of proceeds obtained as a result of the offenses. Substitute Asset Provision 5. If any of the above-described forfeitable property, as a result of any act or omission of the defendant:
3
(a) cannot be located upon the exercise of due diligence; (b) has been transferred or sold to, or deposited with, a third person; ( c) has been placed beyond the jurisdiction of the Court; ( d) has been substantially diminished in value; or ( e) has been commingled with other property which cannot be subdivided without difficulty; it is the intent of the United States, pursuant to Title 18 United States Code, Section 982(b), to seek forfeiture of any other property of said defendant up to the value of the above forfeitable property. (Title 18, United States Code, Section 982 and Title 18, United States Code, Section 1349).
ANDREW WEISSMANN Chief, Fraud Section Criminal Division United States Department of Justice
BRIAN YOUNG Trial Attorney CAROL L. SIPPERL Y Senior Litigation Counsel Criminal Division United States Department of Justice
JEFFREY D. MARTINO Chief, New York Office Antitrust Division United States Department of Justice
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 4 of 4
4
MICHAEL T. KOENIG Trial Attorney Antitrust division United States Department of Justice
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA v. LEE STEWART, Defendant.
INFORMATION
I: l 4-cr-00272-JSR
COUNT ONE (Conspiracy to Commit Wire Fraud and Bank Fraud)
The Department of Justice charges: 1. From at least in or about May 2006 through at least in or about early 2011, in the Southern District of New York and elsewhere, LEE STEWART, the defendant, together with Anthony Allen, Paul Thompson, Tetsuya Motomura, Anthony Conti, and others known and unknown, did knowingly combine, conspire, confederate, and agree to commit certain offenses against the United States, that is: (A) to devise and intend to devise a scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, and to transmit and cause to be transmitted certain wire communications in interstate and foreign commerce for the purpose of executing the scheme; to wit, the defendant and others engaged in a scheme to manipulate and attempt to manipulate to their advantage the benchmark interest rates referenced by derivative products throughout the financial industry, by the
1
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 2 of 4
dissemination, and submission, of false and fraudulent statements intended to influence and manipulate the benchmark interest rates to which the profitability of interest rate derivative trades was tied, and the conspirators contemplated, foresaw, and caused use of wires in interstate and foreign commerce in carrying out the scheme, in violation of Title 18, United States Code, Section 1343; and (B) to execute and attempt to execute a scheme and artifice to defraud a financial institution, the deposits for which were at the time insured by the Federal Deposit Insurance Corporation; and to obtain and attempt to obtain moneys, funds, credits, assets, and other properties owned by and under the custody and control of a financial institution by means of materially false and fraudulent pretenses, representations, and promises, as well as by omission of material facts in violation of Title 18, United States Code, Section 1344. 2. It was a part and an object of the conspiracy that LEE STEWART, the defendant, and others known and unknown, engaged in a scheme to manipulate and attempt to manipulate a benchmark interest rate known as the London Interbank Offered Rate (LIBOR), to which was tied the profitability of interest rate derivative trades in which the defendant and others had a financial interest. The scheme had an effect on one or more financial institutions, within the meaning of Title 18, United States Code, Sections 20 and 3293(2). OVERT ACT 3. In furtherance of the conspiracy and to affect the illegal objects thereof, LEE STEW ART, the defendant, and others known and unknown, committed the following overt act, among others, in the Southern District of New York and elsewhere:
2
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 3 of 4
a. on or about September 2, 2005, LEE STEWART and Anthony Conti conspired to fix and manipulate the day's LIB OR rate by causing their employer, Coiiperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank), a financial institution and global financial services company headquartered in Utrecht, the Netherlands, to make a LIBOR submission that was calculated to benefit LEE STEW ART's trading position. Rabobank and Bank-B, a federally-insured financial institution headquartered in Charlotte, North Carolina, had previously entered into an interest rate swap transaction that had a reset date of September 2, 2005. On or about September 2, 2005, a third party publishing corporation published Rabobank's manipulated LIBOR submission by sending a wire communication from the United Kingdom to recipients in New York, New York. (Title 18, United States Code, Section 1349) FORFEITURE ALLEGATION 4. As a result of committing the offense alleged in Count One of this Information, LEE STEW ART, the defendant, shall forfeit to the United States pursuant to Title 18, United States Code, Section 982, any property constituting or derived from proceeds obtained directly or indirectly as a result of the wire fraud and bank fraud offense alleged in Count One of this Information, including but not limited to a sum of United States currency to be determined by the Court at sentencing, in that such sum in aggregate is property representing the amount of proceeds obtained as a result of the offenses. Substitute Asset Provision 5. If any of the above-described forfeitable property, as a result of any act or omission of the defendant:
3
(a) cannot be located upon the exercise of due diligence; (b) has been transferred or sold to, or deposited with, a third person; ( c) has been placed beyond the jurisdiction of the Court; ( d) has been substantially diminished in value; or ( e) has been commingled with other property which cannot be subdivided without difficulty; it is the intent of the United States, pursuant to Title 18 United States Code, Section 982(b), to seek forfeiture of any other property of said defendant up to the value of the above forfeitable property. (Title 18, United States Code, Section 982 and Title 18, United States Code, Section 1349).
ANDREW WEISSMANN Chief, Fraud Section Criminal Division United States Department of Justice
BRIAN YOUNG Trial Attorney CAROL L. SIPPERL Y Senior Litigation Counsel Criminal Division United States Department of Justice
JEFFREY D. MARTINO Chief, New York Office Antitrust Division United States Department of Justice
Case 1:14-cr-00272-JSR Document 40 Filed 03/23/15 Page 4 of 4
4
MICHAEL T. KOENIG Trial Attorney Antitrust division United States Department of Justice
#BillGwilliam - who is Bill?
Coming soon from an Airport Hanger near you - the Bankruptcy trustee sounds just like the accountant at a company in Charleston who is located in Pleasanton.
The Pamela Vitale Murder CIVMSC01-00428 - CORRIE VS BINGHAM-MCCANN
Case CIVMSC01-00428 - CORRIE VS BINGHAM-MCCANN
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| Party Number | Party Type | Party Name | Attorney | Party Status | ||||||||||
| 1 | PLAINTIFF | SIDNEY CORRIE JR | PUTTERMAN, DONALD J | PARTY DISMISSED 07/16/2003 | ||||||||||
| , SIDEMAN & BA NCROFT,LLP | ||||||||||||||
| 6 | INTERVENOR | ATTORNEY GENERAL, STATE OF CALIFORNIA | JOHNS, BELINDA J. | PARTY DISMISSED 07/16/2003 | ||||||||||
| 2 | DEFENDANT | BINGHAM-MCCANN | HOROWITZ, DANIEL | PARTY DISMISSED 07/16/2003 | ||||||||||
| MILLER, STARR & REGALIA | ||||||||||||||
| 3 | DEFENDANT | WILLIAM D MCCANN | MCCANN, WILLIAM D | PARTY DISMISSED 07/16/2003 | ||||||||||
| 4 | DEFENDANT | J GORDON BINGHAM | MILLER, STARR & REGALIA | PARTY DISMISSED 07/16/2003 | ||||||||||
| 5 | DEFENDANT | 500 LA GONDA ASSOCIATES LLC | BRUNNER, STEPHEN P. | PARTY DISMISSED 09/10/2002 | ||||||||||
| 7 | DEFENDANT | WILLIAM Y TAUSCHER | BRUNNER, STEPHEN P. | DISMISSED 11/25/2002 | ||||||||||
| YERKES, LYNNE M | ||||||||||||||
| 8 | DEFENDANT | TRI COMMERCIAL REAL ESTATE SERVICES INC | ROECA, RUSSELL S | PARTY DISMISSED 07/16/2003 | ||||||||||
| 9 | DEFENDANT | JAY T LEWIS | ROECA, RUSSELL S | PARTY DISMISSED 07/16/2003 | ||||||||||
| 15 | DEFENDANT | J.O.E., INC | BRUNNER, STEPHEN P. | DISMISSED 11/25/2002 | ||||||||||
| 16 | DEFENDANT | JAY T LEWIS | Unrepresented | PARTY REMOVED 09/17/2001 | ||||||||||
| 17 | DEFENDANT | THE MT DIABLO CENTER FOR THE ARTS FOUNDATIO | CHAZAN, SHOSHANA Y. | PARTY DISMISSED 07/16/2003 | ||||||||||
| 18 | DEFENDANT | RANDEL N EVANS | CHAZAN, SHOSHANA Y. | PARTY DISMISSED 05/22/2002 | ||||||||||
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| Party Number | Party Type | Party Name | Attorney | Party Status | ||||||||||
| 6 | PLAINTIFF | ATTORNEY GENERAL, STATE OF CALIFORNIA | JOHNS, BELINDA J. | PARTY DISMISSED 07/15/2003 | ||||||||||
| 5 | DEFENDANT | 500 LA GONDA ASSOCIATES LLC | BRUNNER, STEPHEN P. | PARTY DISMISSED 07/15/2003 | ||||||||||
| 10 | DEFENDANT | BELASCO THEATRE CO | ROGERS, RANDY | PARTY DISMISSED 07/15/2003 | ||||||||||
| 11 | DEFENDANT | WILLIAM D MCCANN | MILLER, STARR & REGALIA | PARTY DISMISSED 07/15/2003 | ||||||||||
| 12 | DEFENDANT | J GORDON BINGHAM | MILLER, STARR & REGALIA | PARTY DISMISSED 07/15/2003 | ||||||||||
| 13 | DEFENDANT | FIRST REPUBLIC BANK | Unrepresented | PARTY DISMISSED 11/26/2001 | ||||||||||
| 14 | DEFENDANT | BANK OF THE ORIENT | Unrepresented | PARTY DISMISSED 11/26/2001 | ||||||||||
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| Party Number | Party Type | Party Name | Attorney | Party Status | ||||||||||
| 2 | CROSS COMPLAINANT | BINGHAM-MCCANN | HOROWITZ, DANIEL | First Paper Fee Paid | ||||||||||
| 3 | CROSS COMPLAINANT | WILLIAM D MCCANN | MCCANN, WILLIAM D | First Paper Fee Paid | ||||||||||
| 4 | CROSS COMPLAINANT | J GORDON BINGHAM | MILLER, STARR & REGALIA | First Paper Fee Paid | ||||||||||
| 5 | CROSS COMPLAINANT | 500 LA GONDA ASSOCIATES LLC | BRUNNER, STEPHEN P. | First Paper Fee Paid | ||||||||||
| 1 | CROSS DEFENDANT | SIDNEY CORRIE JR | PUTTERMAN, DONALD J | Demurr 09/10/2002 | ||||||||||
| 6 | CROSS DEFENDANT | ATTORNEY GENERAL, STATE OF CALIFORNIA | JOHNS, BELINDA J. | Answer 09/10/2002 | ||||||||||
| 10 | CROSS DEFENDANT | BELASCO THEATRE CO | ROGERS, RANDY | Answer 05/14/2002 | ||||||||||
| 17 | CROSS DEFENDANT | THE MT DIABLO CENTER FOR THE ARTS FOUNDATIO | CHAZAN, SHOSHANA Y. | Answer 05/16/2002 | ||||||||||
#FraudOfTheCourt #DeadWitnesses and #DeadPoliticians #JudgeGolub
#TheGolubConspiracy - Ruler of Bench felled by friends in the Pen
It took over ten years to discover via Judge Golub's endorsement list to uncover additional connections to the CNET Scandal in Danville CA. Today we have to worst possible scenario of #FraudOfTheCourt where we many #DeadPoliticians and far too many children murdered near these cases.The reign of terror elicited via Commander Wielsch and misleading Deputies, a man who felled himself all by himself. Many have fallen including officers down on Last Watch as when he aligned his world++ with Chris Butler, he ultimately felled himself.
I personally know the #TheGolubConspiracy first hand as Green Valley Elementary parent, Pack 36 member and as traffic commissioner issuers of false fines.
He's Judged us from the early nineties but today he's facing a #FraudOfTheCourt, he's hub of a spoke to hundreds of deputies, attorneys and public officials. Theruled from the bench but in my case he's the Judge that knows Tanabe, District Attorneys who failed to recognize the #DirtyDUI problem but he is the Judge that took several Divorce Cases into his courtroom, he's the Judge admonished by the Judicial Council Review in the Bruce Mills matter but my connection is ominous, speaks volumes of mayhem leading to murders of children.
The failures when Judge Golub missed an opportunity to stop an arson operation with connections to Gas Line Explosions to the power energy sector where former Enron CEO Jeffery Skilling is now serving time and perhaps he needs #insiderterrorists where they can use the jail pencils to catalog the #DeadWitnesses where I can attest witnesses in my story have been murdered in #ColdCaseCounty like Jineva Driscoll.
This is also Jaycee Dugard Country with a former sheriff once ruled with six batteries earning the nickname of D-Cell.
Action
#William Michael McCann [#66753] Disbarred, represented by Horowitz
Attorney Search
William Michael McCann - #66753
Current Status: Active
This member is active and may practice law in California.See below for more details.
Profile Information
The following information is from the official records of The State Bar of California.| Bar Number: | 66753 | ||
| Address: | 1530 Meridian Ave Ste 120 San Jose, CA 95125 Map it | Phone Number: | (408) 269-8787 |
| Fax Number: | Not Available | ||
| e-mail: | Not Available | ||
| County: | Santa Clara | Undergraduate School: | Univ of California at Los Angeles; CA |
| District: | District 6 | ||
| Sections: | None | Law School: | Santa Clara Univ SOL; Santa Clara CA |
Status History
| Effective Date | Status Change | |
| Present | Active | |
| 9/17/2008 | Active | |
| 7/19/2008 | Not Eligible To Practice Law | |
| 3/11/2002 | Active | |
| 9/1/2001 | Not Eligible To Practice Law | |
| 12/18/1975 | Admitted to The State Bar of California | |
Actions Affecting Eligibility to Practice Law
Copies of official attorney discipline records are available upon request.
Explanation of common actions
State Bar Court Cases
NOTE: The State Bar Court began posting public discipline documents online in 2005. The format and pagination of documents posted on this site may vary from the originals in the case file as a result of their translation from the original format into Word and PDF. Copies of additional related documents in a case are available upon request. Only Opinions designated for publication in the State Bar Court Reporter may be cited or relied on as precedent in State Bar Court proceedings. For further information about a case that is displayed here, please refer to the State Bar Court's online docket, which can be found at: http://apps.statebarcourt.ca.gov/dockets/dockets.aspx
DISCLAIMER: Any posted Notice of Disciplinary Charges, Conviction Transmittal or other initiating document, contains only allegations of professional misconduct. The attorney is presumed to be innocent of any misconduct warranting discipline until the charges have been proven.
| Effective Date | Case Number | Description |
| 7/19/2008 | 05-O-00119 | Opinion [PDF] [WORD] |
California Bar Journal Discipline Summaries
Summaries from the California Bar Journal are based on discipline orders but are not the official records. Not all discipline actions have associated CBJ summaries. Copies of official attorney discipline records are .July 19, 2008
WILLIAM MICHAEL McCANN [#66753], 59, of San Jose was suspended for one year, stayed, placed on one year of probation with a 60-day actual suspension and was ordered to take the MPRE within one year. The order took effect July 19, 2008.
The State Bar Court review department agreed with a hearing judge's findings that McCann forged documents, failed to keep clients informed about developments in their cases and made misrepresentations to a bar investigator, but it increased the level of discipline.
He was hired to represent a minor who had been in a traffic accident.
July 19, 2008
WILLIAM MICHAEL McCANN [#66753], 59, of San Jose was suspended for one year, stayed, placed on one year of probation with an actual 60-day suspension and was ordered to take the MPRE within one year. The order took effect July 19, 2008.
The State Bar appealed a hearing judge’s recommended discipline, which did not include an actual suspension, and asked for a three-month actual suspension. The review department took into consideration McCann’s 30 years of discipline-free practice and settled on a 60-day actual suspension.
The hearing judge found that he committed forgery, failed to keep clients reasonably informed of significant developments and made misrepresentations to a State Bar investigator.
In a personal injury case, he represented a minor whose medical expenses were paid by Blue Cross of California through an ERISA-qualified plan. Blue Cross hired The Rawlings Co. to obtain reimbursement for those benefits.
McCann did not respond to Rawlings’ notice of a lien and he believed that Blue Cross did not have a valid lien against any recovery. The lien amounted to $831.85.
When the case settled for $4,500, McCann endorsed the settlement check on behalf of Rawlings Co. for Blue Cross, knowing his clients were anxious to receive their money. He later received another lien notice but did not respond. When a Rawlings representative called McCann about the settlement check, he responded that he had “implied authority” to sign it. Although he attempted to pay part of the amount owed and then the full amount, his checks were returned.
He told a State Bar investigator that he had verbal authorization to endorse the check and said he thought the matter was resolved when he offered to fully reimburse Rawlings.
The review panel agreed with a hearing judge’s findings that McCann committed forgery, failed to keep his clients reasonably informed and made misrepresentations to a bar investigator, committing an act of moral turpitude. However, it disagreed with the judge’s belief that McCann acted in good faith because he believed the lien was invalid. That belief, the panel said, did not justify forgery.
“McCann consciously took the risk and forged Rawlings’ name in order to get the money to his impoverished clients quickly,” wrote Judge Madge Watai. His “good intentions,” she added, did not trump his dishonesty.
McCann has no prior record of discipline in 30 years of practice.
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Steven A. Burd 1949– President, chief executive officer, and chairman of the board, Safeway
Steven A. Burd
1949–
#MormonMurders - Links coming soon
#SafewayMurders - Links coming soon
President, chief executive officer, and chairman of the board, SafewayNationality: American.
Born: 1949, in Valley City, North Dakota.
Education: Carroll College, BS, 1971; University of Wisconsin, MA, 1973.
Family: Married Chris (maiden name unknown); children: two.
Career: Southern Pacific Transportation Company, 1974–1982, marketer; Arthur D. Little, 1982–1987, management consultant; Safeway, 1986–1987, consultant; self-employed, 1987–1991, management consultant; Stop & Shop, 1988–1989, consultant; Fred Meyer, 1989–1990, consultant; Safeway, 1991, consultant; 1992–, president; 1993–, chief executive officer; 1998–, chairman of the board.
Address: Safeway, 5918 Stoneridge Mall Road, Pleasanton, California 94588-3229; http://www.safeway.com.
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| Nate Greenan Murdered in 2012 Ernie and Ardoth Scherer Murdered by Ernie Scherer III (top left) with ceremonial sword sitting Nate's hands two years after conviction |
RAILROAD TO CONSULTING
Burd's father was a railroad-yard superintendent, and Burd was raised primarily in Minot, North Dakota. He earned a BS in economics from Carroll College in 1971, and in 1973 he earned an MA in economics from the University of Wisconsin, after which he took a job in marketing with the Southern Pacific Transportation Company.In 1982 Burd joined the industrial management consulting firm of Arthur D. Little in New York City, where he earned a reputation for fixing broken companies. While at Arthur D. Little he attracted the attention of the management of Kohlberg Kravis Roberts & Company, a firm that specialized in leveraged buyouts of troubled companies. In 1986 Burd worked at Safeway as a management consultant after Kohlberg Kravis Roberts bought the ailing supermarket chain. In 1987 he went into the consulting business for himself while continuing to help Safeway with its organizational problems.
AILING CHAINS
In 1988 Kohlberg Kravis Roberts asked him to consult at Stop & Shop, a chain of stores that was losing its customer base. Burd helped fix the chain's problems with product selection, which had not kept up with changing consumer tastes. In 1989 he went to Oregon to help the local supermarket chain Fred Meyer. Although Burd had no official title and was technically an outsider, as the representative of the parent company, Kohlberg Kravis Roberts, he found he had real muscle behind him when he ordered changes. His most significant contribution to the chain's recovery was to set up management systems to keep track of operating expenses and how supplies related to sales.By the end of 1990 the mismanagement of Safeway was legendary, with tales of employees driven to suicide and others killed by work-related stress appearing in newspapers and magazines. Employee morale was awful, amid chronic fears of sudden, seemingly arbitrary dismissals and store closings. Safeway's prices were higher than those of its competitors, driving away customers, and it was losing money rapidly. Fresh from his two-year turnaround success at Fred Meyer, Burd was asked to consult again at Safeway.
TURNING SAFEWAY AROUND
On October 26, 1992, Kohlberg Kravis Roberts forced Safeway's management to accept Burd as its new president. It had to have been a tough situation for Burd, because the man most widely blamed for Safeway's woes, Peter Magowan, remained chief executive officer (CEO). Magowan was supposedly Burd's superior in the governance of the company, but in terms of micromanagement Burd had few peers, and he soon made his presence felt throughout the company. The chain had 1,100 stores, mostly in the far west of the United States and in Canada. It had nine regional companies, each run independently of the others.
It took Burd years to make the nine divisions partners. He began with seemingly simple matters such as the procurement of plastic bags for bagging groceries. He found that each of the nine companies had its own individual deals with plastic-bag manufacturers, seven altogether. As he would for procurement in general, Burd centralized at corporate headquarters in Oakland, California, the ordering of plastic bags by narrowing the suppliers to two, which translated into a savings of $2.5 million per year. Burd introduced streamlined systems of cost analysis, which also resulted in savings. For example, store managers reported that in-store salad bars were earning 40 percent margins, a big boost for a company that was losing money. Yet when Burd examined the losses due to spoilage and the cost of labor to maintain the salad bars, he discovered that they were actually losing money, so he had them eliminated. For 1992 Safeway grossed $15.2 billion, and its shares sold for about $5.
On April 30, 1993, Burd was appointed CEO as well as president of Safeway, with Magowan remaining as chairman of the board but no longer involved with the day-to-day operations of the company. Burd took to visiting individual stores to study layouts, products, and even the ambient music and lighting. He began adjusting each store's produce section to suit the ethnic preferences of the neighborhood; adding, for example, more mangos in predominantly Hispanic neighborhoods. He was distressed by the amount of produce and other perishables that was spoiling on shelves and pressured store managers to keep their produce fresh. He introduced organic produce to Safeway, reasoning that low prices alone would not make customers loyal and that special, high-quality products could help cement consumer loyalty.
Burd succeeded at lowering shelf prices to make Safeway competitive with other supermarkets. The savings that resulted from his management reforms were used to lower prices further, remodel stores, train employees to give better service, and to introduce the Safeway Select line of premium in-house products, which became very successful at attracting and retaining customers who wanted a brand line they could trust. Although Kohlberg Kravis Roberts had reintroduced Safeway to the stock market in 1990, it still held 67 percent of the shares, and its support helped Burd's reforms stick. By the end of 1993 Safeway had achieved a 1 percent profit margin, about the industry standard, which at the time was regarded as significant evidence of Safeway's new efficiency and improved customer service. On September 7, 1993, Burd was elected to Safeway's board of directors.
In 1995 Burd began the Safeway Category Optimization Process, which considered a store's offerings aisle by aisle rather than by product category. The idea was to put products on the aisles where customers would expect to find them. In 1996 Safeway owned 35 percent of Vons, a southern California supermarket chain. Burd forced a buyout of the remaining 65 percent of shares from a reluctant Vons management. This expanded Safeway's holdings to 1,377 stores, employing 140,000 workers. Customer service improved throughout Safeway's stores, with employees remembering frequent customers by name and escorting customers to the appropriate aisles when they asked about a specific product. Insistence that employees smile at customers may have backfired when some women employees protested that their smiles elicited unwanted interest from male customers. The price per share of Safeway stock rose to $80. Burd believed that enabling employees to invest in Safeway stock was good for the financial health of both the employee and the company, and he believed shares needed to be priced low enough that employees could easily invest in them, so in 1996 he had Safeway split its shares two for one.
By 1997 one-fourth of Safeway's employees owned 15 percent of the company's stock. Burd developed a program of sending anonymous inspectors into individual Safeway stores to check on the service provided to customers. Safeway's private-label plants were selling their products to other Kohlberg Kravis Roberts chains, increasing the profits realized at each plant. Safeway's sales increased 48 percent, and the chain tried to underprice its competitors on average shelf prices. Kohlberg Kravis Roberts lowered its holding of Safeway stock to 50 percent. Safeway netted $1.3 billion in 1997, and Burd sought to use the money to acquire new stores, believing that by increasing its size Safeway would achieve an economy of scale that would allow it to survive the looming challenges of discount chains such as Wal-Mart and Target.
EXPANSION
On May 12, 1998, Burd was elected Safeway's chairman of the board, with Magowan remaining only as a director. This was Burd's chance to fully shake loose from his predecessor. Meanwhile, Kohlberg Kravis Roberts brought its holding in Safeway down to 16 percent, meaning that Burd was largely free of their oversight, too. By October 1998 Safeway's shares were selling for $43.63 (after the split) and its financing seemed strong enough for Burd to make a daring move: In November 1998 Safeway bought Dominick's Finer Food of Illinois for $1.8 billion, consisting of cash and an assumed debt of $646 million. Dominick's had 113 stores and was a chain known for its premium products. Three years earlier the chain had been purchased for $693 million by Yucaipa Companies, owned by Los Angeles magnate Ron Burkle; the sale to Safeway was a big windfall for him, and financial analysts criticized Safeway for paying too much. Dominick's had cost Safeway about $16 million per store, compared with $11.3 million per store in the 1996 Vons deal.Burd was sure he could turn Dominick's into a powerful asset the way he had made Safeway into one—by careful attention to details. Safeway invested $294 million into improvements at Dominick's, rearranging store layouts, widening aisles, and introducing Safeway's highly successful house brands. Dominick's employees were paid about $3 per hour more than those at local rival Jewel, owned by Albertsons, making it difficult to compete on shelf price. Burd cut staffing at Dominick's to try to lower expenses. The initial results were not good. Customers were unhappy that comfortable old layouts had been replaced by Safeway's open configuration and that Safeway brands had replaced premium name brands. For three consecutive years Dominick's income declined, and its regional market-share fell from 28 percent to 23 percent. To be fair to Burd, high-quality Safeway brands had achieved margins as high as 30 percent in the Vons chain as well as at other Safeway stores, giving reason to expect them to find appreciative buyers in Illinois.
In 1999 Safeway purchased Randall's Food Markets of Texas. To realize quick savings, Safeway reduced the chain's product selection and, as at Dominick's, introduced its house brands to customers unfamiliar with them. At both Dominick's and Randall's understaffing caused long lines at checkout registers, angering customers and lowering employee morale. Burd had long believed that high employee morale would result in better customer service, and he believed Safeway could excel in customer service, making its stores more attractive to shoppers than those of competitors, so the decline in morale was to him a serious problem.
Burd believed that a key asset was store location—placing stores where they were most convenient for shoppers. Thus, he was always looking for ideal store locations. In May 2000, for example, Safeway bought six stores in Houston from Albertsons because they seemed well placed. Burd's aggressive moves to acquire more stores created excitement among investors and journalists, and by 2001 rumors were rife about what his next moves would be. That year Safeway's stock peaked at a little over $60 per share, an increase in value of $10 billion since 1993. The chain's sales had doubled since 1993, and the profit margin was 4 percent, a big increase over 1993.
In February 2001 Safeway bought 11 stores in Arizona from Abco Foods, then purchased the Genuardi's Family Markets supermarket chain in Pennsylvania for $528 million. Genuardi's had 44 stores. Thereafter Genuardi's developed a reputation for poorly stocked shelves and poor produce. Burd viewed Safeway's advantages as location, selection, perishables, and service, but market forces were turning against him. In October 2001 United Food and Commercial Workers Union (UFCW) members struck three Safeway stores in Thunder Bay, Ontario, Canada. Burd said that Safeway had to contain its labor costs in order to compete with challenges from discount chains, and he threatened to close the stores rather than give in. In June 2002, after months of negotiations, he did just that.
In 2002 Safeway took over $1.2 billion in write downs (admitting the value of assets had gone down), a $589 million charge on Dominick's in April (taking a loss in value), and a $788 million charge on Dominick's again in November 2002. In November 2002 Safeway put Dominick's up for sale. Safeway's books valued Dominick's at only $315 million. Ron Burkle's Yucaipa Companies offered Safeway $350 million to buy back Dominick's, but Safeway turned him down; Burkle said he felt slighted by Safeway. In August 2003 Safeway sued Burkle for interfering in negotiations with Dominick's union, costing Safeway a purchaser for the chain because the purchaser could not reach an agreement with the union. Increases in costs of meat and dairy products further hurt Safeway's bottom line, because in a low-inflation economy it would have a hard time justifying increases in prices to its shoppers. Meanwhile, conditions at Genuardi's had deteriorated so badly that Safeway ran newspaper ads apologizing to customers and asking them to forgive Safeway and to try shopping at Genuardi's stores again. For 2002 Safeway grossed $35.7 billion, but it lost $828 million.
RIDING A HURRICANE
Events in 2003-2004 almost cost Burd his career and Safeway its financial strength. Wal-Mart announced that it would open 40 supercenters—stores that sold a full line of groceries as well as Wal-Mart's other offerings—in California. Discount chains in general, but Wal-Mart in particular, worried Burd and other supermarket leaders because they could significantly underprice traditional supermarkets. The biggest advantage for Wal-Mart seemed to be in the cost of labor. Wal-Mart employees were paid on average about $8 per hour less than Safeway employees and received few benefits, whereas Safeway's employees enjoyed some of the best benefits for retail workers anywhere in the country. The charge by the federal government in 2003 that Wal-Mart employed illegal immigrants who received no benefits only heightened the anxiety Wal-Mart caused its competitors.Burd said that labor costs were a threat to the supermarket industry's survival, that high wages and benefits made it impossible for the chains to compete with Wal-Mart and Target, which were nonunion. On October 11, 2003, the UFCW went on strike against Safeway's Vons stores in southern California. Vons had 326 stores and generated 19 percent of Safeway's sales. In support of Safeway, Albertsons and Ralph's, which was owned by Kroger Company, locked out UFCW workers. Union leaders said they chose to strike only Vons because Vons would have the toughest negotiators. The three supermarket chains made Burd their spokesperson. Mindful of his belief that employee morale translated into customer service, Burd moved to mitigate some of the hardships of striking Vons workers by setting up a fund to aid workers with mortgage bills, car payments, and other expenses, hoping to alleviate the hard feelings that would result from a strike. On October 16, 2003, Burd said the three supermarket chains had made their final offer to the union, declaring that the only changes that could be made to the offer would be to make it "less good" (SignOnSanDiego.com, October 26, 2003). Burd wanted to cut Safeway's contributions to health care from $3.85 per hour worked to $1.35 per hour worked. For its part, the UFCW feared that Safeway could set a precedent that would affect contract negotiations throughout the United States.
Safeway's share price fell to $22 on October 24, 2003, which was still much higher than it had been in 1993. While Burd talked publicly about the long-term future of the industry and labor costs, he was working on revolutionary changes in how the supermarket industry dealt with vendors. For decades supermarket chains charged vendors for shelf space and shelf position; that is, in order to have its products placed in a good position on stores shelves, the vendor would pay the chain in cash. In 2003 Burd was reworking, in his typically meticulous fashion, the relationship between Safeway and vendors, demanding not cash for product placement, but price concessions. He saw Safeway's future in buying products for the lowest real-market value and then passing on the lowered prices to consumers. The prices might not beat those of discount chains, but they could be low enough that with superior products and service Safeway would attract customers away from Wal-Mart and its ilk. Further, he started having stores remodeled to be more comfortable for shoppers, installing imitation wood floors and softer lighting, for example. Market studies had indicated that shoppers found Wal-Mart stores chaotic and anxious; Burd sought to make Safeway's stores welcoming and calming. For 2003 Safeway grossed $35.6 billion but lost $170 million, failing to make a profit because it lost $696 million in the fourth quarter of the year, mostly due to lost revenue from its Vons stores.
The West Coast leader of the UFCW was Sean Harrigan, a friend whom Burkle had helped become president of the California Public Employees Retirement System (CalPERS). In March 2004 CalPERS and the pension funds of New York, Illinois, and Connecticut, each owning shares in Safeway, urged fellow shareholders to oppose Burd during the May 20, 2004, meeting of shareholders. A few financial analysts recommended that their clients vote to oust Burd. In January 2004 about 250 demonstrators tried to march to Burd's home but were stopped by the gates and guards. They prayed and called Burd evil. He was vilified in the press and on Web sites for being greedy, for costing shareholders $20 billion in stock value during a decline since 2001, and for abusing the rights of employees.
The southern California strike was settled in February 2004 in an arbitrated compromise that left workers with wages and benefits higher than in other retail businesses. Safeway's stock value was increasing, to over $28 per share. Shareholders complained that Safeway's board of directors lacked independence and profited from doing business with Safeway. Thus, the board dismissed three directors. Burd and two other longtime directors from the 1980s were targeted in the shareholders meeting, but each was reelected with over 80 percent of the vote. A proposition to separate the offices of CEO and chairman of the board received only 33.2 percent of the vote. Even so, a new position of lead independent director was created to help look after the interests of shareholders.
See also entry on Safeway Inc. in International Directory of Company Histories .
sources for further information
Barron, Kelly, "The Sam Walton of Supermarkets?" Forbes , October 19, 1998, pp. 64–65.Green, Frank, "The Point Man," SignOnSanDiego.com , October 26, 2003, http://www.signonsandiego.com/news/business/20031026-9999_mz1b26point.html .
Weinstein, Steve, "The Resurrection of Safeway," Progressive Grocer , January 1997, pp. 16–22.
Whelan, David, "Unsafe at Safeway," Forbes , June 7, 2004, pp. 66–68.
—Kirk H. Beetz
Read more: http://www.referenceforbusiness.com/biography/A-E/Burd-Steven-A-1949.html#ixzz3VMFlXOow
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