A preview of coming attractions?
Universal Fiberglass Corp a division of Rand corporation uses $628,000 in
government loans to set up a fiberglass fender manufacturing shop in the
recently closed DMIR Railroad shop in Two Harbors. It will be revealed later
that Congressman John Blatnik and Neal D. Peterson, an employee of the Senate
Small Business Committee sponsored by Hubert Humphrey helped arrange a
$400,000 loan to set up the shop. Peterson later joined Humphrey's Vice
Presidential staff and later worked for the Democratic National Committee. His
brother Roger Peterson is a lawyer who was Universal Fiberglass's legal counsel.
It will later be disclosed that the Rand Corporation has been
indicted for Stock manipulation and mail fraud in connection with the
development of a controversial cancer vaccine.
1,500 visitors have inspected the new Universal Fiberglass shop. Two Harbors
citizens raised $120,000 to find a replacement for the DMIR RR shops.
January 1965 Hubert Humphrey is sworn in as the Vice
President of the United States
SBA records for the four fiscal years )from July 1 to June30) beginning with
fiscal 1963, show that a number and dollar value of contracts resulting from the
Certificate of Competency program rose rather sharply during the period which
roughly coincided with Foley's tenure as ASB administrator.
The Federal government awards $13.3 million contract to Universal Fiberglass to
produce 13,000 three wheeled vehicles for the US Post Office. The contract will
result in about 300 jobs. Later stories after a bankruptcy will point out that
the loan from the Small Business Administration is three times bigger than any
other loans handed out in the previous five years and that the 13,000,000
contract was awarded to the company over the objections of experts in the Small
Business Administration and the GSA the General Services Administration. The
head of the SBA, Eugene Foley, overruled the experts and gave Universal
Fiberglass a "certificate of competency" which required the government
to award the contract to Two Harbors. Foley was also an ex Humphrey aide.
April 8-65 a fire damages the Universal Fiberglass plant.
Shipments of mailsters continue to increase, however, after the fire.
UF has completed 10 mailsters (PO delivery trucks) and is awaiting a federal
inspection and OK before going into full production.
150 people are now working at UF.
Record shipments of mailsters have been rolling out of the Universal
Fiberglass Corp. plant. The company's contract is for it to supply 12,714 of the
vehicles. The total shipped so far is 4,200. Nicholas Binder, general manager,
said the plant will have to shut off production and lay off workers prior to
making model changes. The changes are for extra signal flashers, backup lights,
a brake indicator, non glare windshield wipers and double master brake
Plans are underway to reopen Universal Fiberglass which was closed "last
Wednesday," when the company ran into financial difficulty. Insufficient
funds were available to buy safety devices for the mailsters. Only 50 people
were employed before UF closed. It once employed 310 people. The safety devices
were not originally required and their addition put a burden on the company.
The government has canceled its contract for mail delivery vehicles from
Universal Fiberglass. N.J. Pasalich, vice president of UF who is back working in
Cleveland at the home of UF's parent company, Rand Development Corp says the
retooling costs were to blame. UF had an annual million dollar payroll in Two
Rep John A. Blatnik, D-Minn, says that criticism of Universal Fiberglass will
hurt the development of Northeastern Minnesota.
A government investigation begins into the closing of Universal Fiberglass.
Local Two Harbor's officials bridle at Republican Governor Harold LeVander's
claim that the plant was a "boondoggle." County Commissioner said the
plant closed because the GSA wanted to get out of the contract because the
mailsters had been proved to be unsafe.
A Republican Congressman charges that the Democratic Johnson Administration is
sitting on evidence of possible fraud against the government in loans made to
Universal Fiberglass. Rep Gross says the Federal government has lost $2.1
million worth of mailsters not delivered and that the Rand Corporation has embarrassing
ties to the White House.
Gross said that a Universal official , George H. Bookbinder was
a fund-raiser for Hubert Humphrey. Goss claimed that Attorney General Ramsey
Clark is sitting on the following information:
The Rand Development corporation
often charged Universal Fiberglass "eight to ten times its own purchase
price for the materials it supplied Universal. Universal then billed the
There is evidence that this was a
scheme to siphon federal funds to prop up a financially shaky Rand with money
Evidence that a Universal official
was directed by Bookbinder and Novak Pasalich to include ineligible overhead
costs to the GSA.
There is evidence that Henry J. Rand
President of both Rand Development and Universal wrote checks against Universal
accounts and sent the money to Rand Development Corporation.
Gross said Henry Rand defaulted on an
agreement to buy 3,000 fiberglass fenders from Universal.
Gross also said that Rand refused to
allow accountants of the GSA to inspect its books.
January 1969 Richard Nixon is sworn in as President
A federal grand jury sitting in St. Paul orders Universal Fiberglass to submit
its records for inspection. The company does not have enough money to transport
the 52 file cases of records. The US Attorney's office sends a truck to Two
Harbors to pick them up.
The Nixon Administration launches a new investigation of Universal
Blatnik says a GSA Board of Contract Appeals vindicates Universal Fiberglass.
Blatnik claims the cost of the investigation could have been used for new
industry in Two Harbors.
The state of Minnesota has approved $250,000 loan as participating funds in a
$1.48 million project to reactivate the former Universal Fiberglass Plant in Two
Harbors. The announcement was made by Senator Tony Perpich and Representative
Doug Johnson. W. D. Mizell, Washington, D.C., asst Sec of Commerce for the
Economic Development Administration notified Gov. Wendell R. Anderson of
approval of a $600,000 loan to the firm under the Public Works and Economic
Development Act of 1965.Jones Products will invest $240,000 in machinery and equipment
along with $250,000 of working capital.
A building formerly occupied by the now defunct Universal Fiberglass Corp. in
Two Harbors has been purchased for an undisclosed amount by J & J Casting,
Duluth News Tribune 10-23-68
Fraud Hinted In Fiberglass Plant Operation
WASHINGTON (AP) - A Republican congressman says the
Justice Department is sitting on evidence of possible fraud against the government in loans to a Minnesota firm which he says "reeked of political influence at the highest levels."
In remarks published Tuesday in the Congressional Record Rep. H. R. Gross, R-Iowa,
said the Justice Department has evidence which "indicates the strong possibility of multiple violations of the Federal False Claims Act by top officials of the Rand Development Corp., Cleveland, and its subsidiary, and now-defunct Universal Fiberglass Corp., Two Harbors.
"In my opinion," Gross said, "the only reason Rand Development Corp., is still in business is the close and intimate relations between its top officials and high officials of the Johnson-Humphrey Administration."
Gross said Universal Fiberglass was given a $13.3 million contract to manufacture small mail trucks for the Post Office Department "despite the warnings of the experts in the General Services Administration (GSA) and the Small Business Administration (SBA) that the company could not fulfill its contract."
"The result was as predicted," Gross said. "The company fell flat on its face and the taxpayers are left holding the bag to the tune of $2.1 million in progress payments for trucks that were never delivered."
He said the government "was forced to award the contract to Universal" because SBA
Administrator Eugene P. Foley overruled advice and issued the firm a certificate of competency.
Gross said that a Universal official he identified as George H. Bookbinder has served as a fund-raiser for Vice President Hubert H. Humphrey, He said Neal D. Peterson, brother of Universal attorney Roger A, Peterson, is a member of Humphrey's staff.
Gross said Atty. Gen. Ramsey Clark has these items of evidence which Gross maintained are indications of a conspiracy
to defraud the government:
-Rand Development o f t e n charged Universal Fiberglass "eight to ten times its own purchase price for the materials it supplied Universal for the manufacture of mail trucks. Universal then billed GSA."
"There is evidence that this scheme was a part of an overall plan to siphon federal funds
mainly in the form of GSA progress payments from Universal to Rand which was in a
shaky financial position."
-Evidence that a Universal official - Gross did not name him
- was directed by Bookbinder and Novak Pasalich, his superiors, to include indirect labor and material and ineligible overhead items in progress payment requests to GSA to obtain more federal money. He said GSA has evidence of ineligible costs
included in subsequent requests.
-"There is evidence that large payments to Rand of these GSA progress payment funds were entered on Universal's books as payments of invoices from Rand for overpriced or damaged
supplies or consultation services by Rand officials that were never performed."
-"There is evidence that Henry J. Rand, president of both Rand Development and
Universal, wrote checks against Universal's progress payment account in the Franklin National
Bank of New York and sent large portions of that money directly to the Rand
Gross said Henry Rand defaulted on an agreement with the SBA to buy 3,000 fiberglass fenders from Universal.
"Rand Development never placed any such order with Universal and, although the fenders remaining at its plant when it stopped producing them were shipped to Rand Development Corp., they were neither
invoiced or paid for," Gross said.
Gross said also that Rand has refused to allow accountants of the GSA to inspect its books to learn more details of the financial management of Rand and its