Bush will talk of tax plan in Indy
President will focus on the taxation of stock dividends.
By Mary Beth Schneider
May 7, 2003
President Bush is coming to Indianapolis next week as part of a three-state
campaign to win the support for his tax cut package from the public that has been
lagging in Washington.
Bush will arrive in Indianapolis on Monday night and speak to two groups of
Hoosiers on Tuesday morning at the Indiana State Fairgrounds....
Mitch Daniels, the White House budget director who announced Tuesday that
he is stepping down from that post, said Wednesday he expects to join Bush at the
Daniels is widely expected to step into a campaign to become Indiana's
governor in 2004.
Daniels said he had no role in choosing Indiana as a stop on Bush's trip to sell
his tax plan. Not that Daniels calls it that.
"The jobs plan, please," he said. "It's the truth. He didn't send us out last fall to
do a tax plan. He sent us out to do a jobs and growth plan."
Bush sought $726 billion in tax cuts over 10 years. A centerpiece was
eliminating taxes on stock dividends. He's not gotten it through Congress, even
though Republicans hold slim majorities in both the House and Senate.
State Subpoenas 30 Business Elite
Regulators probe allegations insiders 'dumped' $71 million in IPALCO stock.
by Chris O'Malley and Gargi Chakrabarty
INDIANAPOLIS - A "who's who" of the Indianapolis business community is being issued subpoenas from state
regulators involving the sale of shares in IPALCO Enterprises around the time the utility company was bought by AES
Corp. in 2001.
The Indiana Securities Division on Friday sent the requests for information to about 30
former IPALCO officers and directors, The Indianapolis Star has learned.
They include former IPALCO director Mitch Daniels, a former Eli Lilly and Co. executive
who is now President Bush's budget director. Daniels, who sold about $1.45 million in
IPALCO stock in January 2001, on Tuesday announced he is resigning the federal post,
leading to speculation he will run for governor here.
Other key insiders being issued subpoenas are former IPALCO chairman John Hodowal
and former vice chair Ramon Humke. Directors include former Bank One Indiana chairman
Joseph D. Barnette Jr. and Anthem Chairman L. Ben Lytle.
About 2,000 IPALCO employees alleged in the suit filed Friday in U.S. District Court in
Indianapolis that the insiders "dumped" $71 million worth of stock in the Indianapolis
electric utility, in part because they saw trouble ahead with AES' stock price, which later
Friday's filing in federal court was a revision of the original suit filed in March 2002, after IPALCO employees lost
thousands of dollars in company thrift plans after AES' shares nosedived.
AES shares traded at $49.60 when the merger closed in March 2001,
plummeting 90 percent in the first 10 months after the merger, and to a
low of 92 cents last October. Shares closed Tuesday at $6.17, down 30
"What is noteworthy about (Friday's) filing is the fact that, until recently,
we could only document that the insiders dumped $9 million in shares
they personally owned soon after the AES deal was announced," said
John Price, an attorney representing the IPALCO workers in the pending
"However, recently unveiled documents confirm that the officers and
directors actually dumped the incredible sum of over $71 million."
The filing, for instance, states that insiders dumped more than $34 million
worth of IPALCO shares within 30 days of Sept. 7, 2000, the date on
which shareholders of record are allowed to vote later on the transaction.
This allowed insiders to vote in favor of the acquisition and then quickly
dump their shares.
Investors allege the company insiders knew -- or should have known --
that AES shares were volatile and that unloading their own shares was
inconsistent with their recommendations that shareholders approve the $3
By contrast, IPALCO was considered a "widows and orphans" stock for
its slow-but-steady growth.
The state launched an investigation into AES' acquisition of IPALCO about a year ago, after a rash of lawsuits by
employees and investors against company insiders.
"We're just looking for the facts," said Indiana Securities Commissioner James Joven, who said he could not
elaborate on details of the investigation.
Subpoenas typically request documents and may seek answers to specific questions.
The securities division has appointed as its special counsel the Evansville law firm of Ziemer Stayman Weitzel and
Shoulders, which drew up the subpoenas.
"It's about time," said Mark Maddox, a former Indiana securities commissioner who now represents securities fraud
He said former officers and directors either knew AES was a problem and sold their shares "to their own personal
enrichment" -- or were not aware. Either scenario raises important questions that merit scrutiny, Maddox said.
"Corporate governance is in the spotlight these days. It's pretty clear that this was an example of bad corporate
governance," said Ken Skarbeck, managing partner of Aldebaran Capital Management in Indianapolis.
Only two of the 32 former officers and directors could be reached for comment Tuesday. Former IPALCO director
Andre Lacy, the president of Lacy Diversified Industries, said he had not received a subpoena, nor was he aware of
Former officer Ralph Canter declined to comment.
A review by The Star last December of stock sales by insiders found that 14 of the 30 key officers and directors sold
more than $22 million of their IPALCO shares between October 2000 -- when shareholders voted to tender their
shares -- to February 2001, just two weeks before the close of the merger.
Insiders reached last year explained that they sold shares for reasons ranging from job loss after the merger to a way
to boost executives' severance pay under a change-in-control agreement dating to 1993.
Copyright 2003 IndyStar.com