Tuesday, April 24, 2007

Knox Knocks I: A Look at Corporations

A lot has been said about the business experience of Tom Knox, one of the Democratic candidates for mayor of Philadelphia. The two articles listed at the end of this blog post do an excellent job of giving an overview of the corporations he has owned. I wanted to do a little poking around myself though. The issues surrounding the Crusader bank have been reviewed fairly thoroughly in the papers so I looked more at some of the other businesses Knox has owned or been associated with. This post is not an in-depth as I would have liked but it has been difficult to find more information, at least in the sources I have at hand.

I was particularly concerned when reading about Kasser and Gimco. After all the city is not something that can be sold off after a year or so if it doesn’t prove profitable or something more interesting comes along. However, Knox has worked with a lot of other companies, some for a number of years.

This is not intended as a complete history and the companies are not listed in any particular order. You can, if interested, just browse through, most of the information is just straight quotes from news sources. Sources are listed, though most are not freely available on the Internet. So, here it is:

Fidelity Mutual Life Insurance Co.

”It’s a great opportunity,” Knox said of his new job [appointed by the state insurance commissioner to run Fidelity Mutual Life Insurance So, which was seized by state authorities in November]. “I’ve always wanted to be the CEO of a large insurance company. Before joining the Rendell administration, Knox was an insurance and benefits consultant. He founded several firms, including the Knox Insurance Co., and the Knox Group. Knox was also an active fund-raiser for Mayor Rendell.

Later in story:

In November, Knox was on a committee to select a firm to handle the investment of $27 million in city employee retirement benefits. The committee recommended a firm that Knox had founded, although he had sold his interest in the company many years before joining the administration
Source: Purdy, Matthew, “Knox Will Head Insurance Firm….,” Philadelphia Inquirer May 22, 1993

Fidelity Mutual Life Insurance Co, Radnor, PA, has a commitment from a Pennsylvania regulator to rehabilitate the company, despite the appearance of a conflict of interest involving a former rehabilitator of the insurer.

The conflict, which is threatening to scuttle the rehabilitation plan, involves stock investments Deputy Rehabilitator Thomas Knox made with Presidential Life Insurance Co., which under the rehabilitation plan is investing $45 million into Fidelity Mutual for a 49.9% stake in the trouble insurer.

In return for its investment, Presidential Life will receive 9.9 million shares of Fidelity Insurance Group, a new stock insurance holding company that will own Fidelity Life Insurance Co. Knox, who was named by Insurance Commissioner Linda Kaiser’s predecessor, Cynthia Maleski, in 1993, resigned Sept. 8, 1995, after his investments were discovered.

A former Fidelity Mutual agent who lead a group of the company’s former agents challenging the rehabilitation plan, said his group has asked the Securities and Exchange Committee to investigate the timing of Knox’s investment in Presidential Life.
Source: “Companies,” Best’s Review / Life-Health Insurance Edition, 96 #9 (Jan 1996): p. 120+

Medical College of Pennsylvania

HMO drops hospital from list of participating medical facilities

The HMO [Health Maintenance Organization of Pennsylvania] criticized the hospital’s [Medical College of Pennsylvania Hospital] fourth negotiator, Thomas Knox, an MCP board member, for insisting on a cost-plus payment system as opposed to one in which the hospital would live within designation payment levels. MCP’s proposed payment system, according to the HMO, would have given the East Falls hospital higher payments than other network hospitals without “any documentation to show that the quality of care provided by MCP is superior to other hospitals … so as to justify a significant differential in payments
Source: Scism, Leslie, “Fee Dispute Ends HMO Link to MCO,” Philadelphia Daily News Aug. 9, 1991

Kasser Distillers Products Corp.

The Knox Group, Inc. – led by Philadelphia businessman Thomas J. Knox – said yesterday that it has purchased Kasser for $25 million. Knox promised to keep the company and its 175 employees in the city’s Feltonville section, where the firm has been located for 54 years.
Source: “Thompson, Gary, “Here’s Proof: Kasser is Staying,” Philadelphia Daily News June 8, 1988

Source: Bivens, Terry, “Deal Uncorked Kasser Distillers Sold to Investor Group,” Philadelphia Inquirer June 8, 1988, “But he [Knox] said he plans no resale of Kasser. “We’ll keep this one,” he said.”

It was not to be, though. In Dan Stet’s “Kasser Distillers Closing Its Plant,” in the Inquirer on Sept. 2, 1989 we find this:
The firm’s blending and bottling plant at Third and Luzerne Streets in the Feltonville section will be closed, and about 38 production workers will be alid off by the end of the year, Knox said. An as-yet-undetermined number of support people also will lose their jobs, he said.

Later in the article:

In an interview with the Inquirer six weeks ago, Knox predicted that he was going to turn Kasser into a money-making machine within 60 days. That, Knox says, is what he’s now done. When he bought the firm a year ago, he predicted he would be able to turn operations around financially. Yesterday, he said the best way to do that was by selling off the pieces.

Crusader Savings and Loan Association

Crusader Savings and Loan Assocation said it had signed a definitive agreement to be acquired by an investors group formed by Thomas J. Knox and W. Kirk Wycoff. Under the deal, which is subject to regulatory approval, the aggregate purchase price is $4.1 million, the company said.
Source: “Allegheny in Line for a Takeover,” Philadelphia Inquirer May 11, 1988

Mount Sinai Daroff Division of Albert Einstein Hospital

[Roger] Hiser is being joined by Thomas Knox, owner of Thomas Knox Associates, an insurance company, and Thomas Fleming, owner of Healthcare Ventures, a business that buys firms involved in health care.
Source: Lowe, Frederick H., “Group Signals Intent to Buy Daroff Division Philadelphia Daily News June 17, 1987.

The deal did not go through. Daroff was later sold to someone else. Source: Lowe, Frederick H. “Graduate to Buy Mount-Sinai Daroff,” Philadelphia Daily News July 31, 1987.

Thomas Knox Associates

Knox resigns as chairman and chief executive officer and sells his 38% interesting. “The Ft. Washington based company designs and administers employee-benefit plans and operates preferred provider organizations in Philadelphia and Missouri through its Preferred Care subsidiary. (Source: “Calif. Bank Drops Bid for Rival,” Philadelphia Inquirer Feb. 10, 1987)

Preferred Care, Inc.

Preferred Care’s pitch to employers basically works this way: In return for being a company’s only health plan for its employees, the for-profit PPO guarantees lower premiums and hence less-costly health-care bills.

Preferred Care can make such promises because it plans to have, by the time it opens its doors in May, contracts with a select group of less-costly hospitals and doctors who are willing to provide care at a discount in return for the patients.

Later in story:

One advantage Preferred Care may have over some of its competitors is that it is part of an already successful organization specializing in medical claims processing and managing employee benefits plans – Thomas Knox Associates, Inc.
(Source: Gaul, Gilbert M., “Phila. Is Offered Another Way to Take its Medicine,” Philadelphia Inquirer Feb. 23, 1985

Preferred Benefits Corp.

Bids sought from companies willing to administer the [deferred compensation] fund [used by 12,000 city employees] showed significant savings over the $1 million fee earned by PEBSCO last year. An administration team recommended Fort Washington –based Preferred Benefits Corp. which bid $472,976. But [David] Cohen said, representatives of PEBSCO pointed out that Knox, the deputy mayor who helped advise the administration on the bid, owned Preferred Benefits until 1986.
Source: Davies, Dave, “Who’ll Run City Program? Plan to Change Administrators Draws Some Fire,” Philadelphia Daily News Nov. 5, 1992

Knox Group

Knox, a leader fund-raiser for Rendell’s mayoral campaign, owns the Knox Group, Inc., which designs employee benefits plans for corporations. He said he would sell the business, or otherwise “divorce” himself from it, to avoid any conflict with his new job [in the Rendell administration]
Source: Duvoisin, Marc, “He’s Rendell’s Man on Efficiency,” Philadelphia Inquirer Jan, 9, 1992

Knox said he formed the Knox Group in 1987. (Source: Bivens, Terry, “Deal Uncorked Kasser Distillers Sold to Investor Group,” Philadelphia Inquierer June 8, 1988)

Gimco International

This company, which sold and serviced trucks and agricultural equipment, was bought by Tom Knox in 1988 and sold to Ron Stout in 1989 who renamed it Stout International.
Sales for 1989 have increased over last year, Stout said. “We’ve sold more combines in the last month than in several previous years. It’s substantial,” he said. “I can’t help but think that some of the increase has to do with the change of ownership….”
Source: Fairley, Michael, “Union Native Seeks New Challenge,” Charlotte Observer Dec. 5, 1989

Gimco Farms

A turkey operation in the Carolinas, Knox said he sold half of the turkey farming business at a return of 400 percent for the original investors (Source: Bivens, Terry, “Deal Uncorked Kasser Distillers Sold to Investor Group,” Philadelphia Inquierer June 8, 1988)

Other big farms doing business with S.C. growers include Continental Grain, ranked No. 8 with $554 million in sales; Cargill, No. 9, $528.8 million; Louis Rich, No. 43, $111.67 million; Murphy Farms, No. 49, $103 million; Cuddy Farms, No. 54, $95.55 million; Seaboard-ISE America, No. 73, $65.47 million; and Gimco Farms Inc., No. 253, $17 million.
Source: Hughes, Bill, “Midlands Farms Rand with Nation’s Largest,” State, The (Columbia, SC), May 13, 1989

Gimco Farms President Bob Hord, however, disputes Successful Farming`s
$19.5 million estimate of his farm`s sales. He notes that sales from his
company`s turkey operations are about $10 million, which would rank it 342nd. Gimco`s truck and implement sales total $9 million.
Source: Mildenberg, David,” Among America’s 400 Biggest Farms Holly Farms 3rd Largest In U.S.,” Charlotte Observer, January 26, 1987

Further Reading:

Fitzgerald, Thomas, “Sales mogul's product: Himself as savior,” Philadelphia Inquirer,
November 27, 2005

Davies, Dave, “A Long Way Up - Millionaire entrepreneur as Philly's next mayor? His business dealings may reveal his style & substance,” Philadelphia Daily News February 20, 2007


ACM said...

you are a force of nature, babe!

Chris Casey said...

Very nicely done, documenting his "Trail of Tears" he has profited from misery for too long.

AboveAvgJane said...

Chris, thanks

ACM, yep a natural disaster ;)