Universal Fiberglass
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 cylinders.

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 Harbors.

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 GSA."
        There is evidence that this was a scheme to siphon federal funds to prop up a financially shaky Rand with money from Universal.
        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 Fiberglass. 

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, Inc. Hibbing.

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 Development Corp."
    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 subsidiary.