News: Colby (Fiesta Corp/C-WAy court settlement 1983)

Contact: Kathleen E. Englebretson

Email: kathy@wiclarkcountyhistory.org

Surnames: Outlaw, Brandt

----Source: Marshfield News-Herald (28 July 1983)

COLBY -- J. Raymond Outlaw's stormy involvement with the Colby military contractor has come to an end.

It was announced this morning that outlaw had sold his stock in Fiesta Corp., which produces

heaters and other military products, Outlaw, 39, who received $8,000 for the stock, had plead guilty July 20 in Federal District Court in Madison to two counts of defrauding the federal government of defense contract money.

In addition, William A. Brandt, chief executive officer of the firm, said Fiesta's name had been changed to C-WAy Industries Inc. He also said a compromise had been reached with the government through which C-WAy will pay the government $2.9 million for damages and reimbursement of government payments not used to complete military contracts as intended. Outlaw has admitted to using the government progress payments for personal use.

Brandt said the stock sale and name change was approved by a federal bankruptcy court Tuesday, and the agreement with the government puts the firm in a much better situation for obtaining future contracts and eventually a new owner.

Fiesta has been involved in bankruptcy proceedings since November 1981, when Outlaw filed for reorganization. In May 1982, he gave up control of the firm and Brandt was appointed to head Fiesta. Brandt is a partner in a Chicago firm that specializes in bringing companies out of bankruptcy.

Brandt said C-WAy's outlook looks much brighter without Outlaw. He said contracts of $4 Million are expected to be received in the next 18 months that will require additional space and more people.

He said talks are underway with Colby officials to build a 60,000-square-foot addition to C-WAy's present structure, located in the Colby Industrial Park just east of the city.

C-WAy has 20 employees, but Brandt said 90 should be on the job by fall and possibly as many as 150 if all expected contracts are received and the new structure is built.

C-WAy's improved image is expected to provoke more interest among potential owners, Brandt said. He said local people and parties from outside the area have shown an interest in purchasing the firm. An offer from a local group is expected within 30 days, he said.

A sale would include settlement of claims of creditors and overdue tax payments connected with the bankruptcy.

During Outlaw's recent court hearing, his attorney said more than $1 million had been paid back before court proceedings began. Fiesta Corp. received $3.3 million in progress payments between April 1980 and May 1981. In November of that year Outlaw filed for reorganization under federal bankruptcy laws. In May 1982 control of the firm which manufactures heaters and air conditioners for the military was taken away from Outlaw.

Outlaw, Hillsboro, North Carolina, was charged with 15 counts of defrauding the federal government of money, bankruptcy fraud, using the progress payments for personal use, concealing assets in bankruptcy and lying on a Small Business Administration loan application.

He initially pleaded not guilty to all the charges, but switched the plea for two counts in a plea agreement. The remaining charges are expected to be dismissed when Outlaw is sentenced September 20. The charges carry a maximum sentence of 10 years in prison and a $2,000 fine. The minimum sentence is probation.