June 18, 1993

SECTION: Vol 16; No 42; Sec 1; pg 1

LENGTH: 1623 words

HEADLINE: Trustee hawks Armstrong assets: Socialite cowboy investor loses 
cars, real estate as court appointee gets aggressive

BYLINE: Darrell Preston

DATELINE: Dallas; TX; US

 BODY:    As a forilner rodeo cowboy, Connie "Chip" Armstrong Jr. knows 
how to stand up after taking a fall.

   That's exactly what the fireman-turned-hotshot investor seems to have 
done. Two years after financial upheaval forced his companies into 
bankruptcy protection, Armstrong is back on the social scene, most 
notably as a $ 25,000 sponsor of the tony Cattle Baron's Ball.

   But Armstrong's troubles are far from over. A California court trustee 
is charged with liquidating Armstrong's companies and has sued to collect 
$ 85 million court documents allege Armstrong misappropriated from 
Hamilton Taft & Co., a company he had owned and operated. So companies 
Armstrong owned have lost cars, real estate, investments, a box at Texas 
Stadium and his ranch near Tyler.

   In all, trustee Frederick Wyle has recouped $ 7.7 million for 
companies Armstrong controlled, according to a report filed in bankruptcy 
court in San Francisco. But that's only a fraction of what creditors 
claim they are owed. And Wyle continues to pursue money for creditors of 
Armstrong's companies, employing increasingly aggressive tactics.

   The trustee has hired Joseph Jamail, a big-gun Houston attorney famed 
for reprsenting Pennzoil in its suit against Texaco, and has sued the Big 
Six accounting firm, KPMG Peat Marwick, alleging the firm helped 
Armstrong defraud $ 85 million from Hamilton Taft.

   Armstrong has denied wrongdoing in court documents, blaming Hamilton 
Taft's financial problems on mismanagement by a previous owner. He said 
he invested the company's money aggressively to turn it around quickly, 
according to court documents.

   The FBI is investigating Armstrong's handling of Hamilton Taft funds, 
according to bankruptcy court documents and FBI agents in San Francisco. 
Clients have alleged that they paid Hamilton Taft to administer their tax 
payments, but that the company never made the required payments of 
payroll taxes to the IRS and other taxing authorities.



                                                                       
PAGE    2                      Dallas Business Journal, June 18, 1993                     


   Not to mention the fact that Armstrong's latest payment of bankruptcy 
court claims was a $ 225,000 personal check that bounced, according to 
the trustee's report.

   "There was never any money in the bank account," said Patricia Mar, a 
San Francisco lawyer who represents Wyle. "He gave us a stif check."

   But here in Dallas, Armstrong still cuts a wide swath through the 
social scene. This month he was honored for his contributions to the 
Cattle Baron's Ball set for June 19 at the Double M Ranch near Sherman. 
He received the Amnerican Cancer Society's Excalibur Award for giving 
more than $ 100,000 to the organization.

   Armstrong's checks to the Cattle Baron's Ball, which is celebrating 
its 20th Anniversary of raising money for the American Cancer Society, 
have Eiven the event an important boost. Those involved with the event 
aren't familiar with his continuing financial problems.

   "His problems haven't affected us," said Brooke Stollenwerck, 
publicist for the Cattle Baron's Rall. "We're very appreciative. He's 
made a difference this year."

   Armstrong also has been active in rodeo events and charities that 
support inuscular dystrophy research, the opera and even his former 
employer, the Allen Fire Department.

   As the trustee tries to collect assets for Hamilton Taft, Armstrong 
has begun a new business venture.

   "He's trying to rebuild his life and his business," said Lowell 
Duncan, Armstrong's Dallas publicist.

   Last fall Arinstrong invested in a Southfield, Mich., company that 
guarantees checks and collects unpaid checks written to retail merchants. 
Publicly held Comp-U-Check Inc., which Armstrong bought by investing in 
debentures, has struggled. It was hit by a sharp increase in bad check 
losses in 1991, according to documents filed with the Securities and 
Exchange Commission. That year the company lost $ 208,000 on revenue of $ 
6.6 million and received a warning about capital problems from its 
accounting firm.

   Armstrong this year relocated Comp-U-Check to Dallas. In February he 
took an advance from Comp-U-Check to make a $ 233,275 payment to the 
trustee, according to the trustee's report.

   Hamilton Taft's problems surfaced in 1991, when Armstrong's operation 
of the San Francisco-based company was questioned. The company processed 
tax payments for Federal Express Corp., Neiman Marcus Co., Stanford 
University, Verbatim Corp. and others--but several clients alleged that 
Hamilton Taft did not follow through in paying the required taxes.

   Three Hamilton Taft customers forced the company into bankruptcy in 
March 1991 amid allegations that Armstrong diverted tens of millions in 
dollars the customers had paid for taxes. Four other companies controlled 
by Armstrong followed and were consolidated in Hamilton Taft's 
bankruptcy.


                                                                       
PAGE    3                      Dallas Business Journal, June 18, 1993                     


   Wyle was appointed trustee of the consolidated cases, and continues to 
attempt to recover assets for creditors--despite Armstrong's appeal of 
the appointment to the U.S. Supreme Court.

   Armstrong was not available for comment at press time. Duncan, his 
publicist, said Armstrong was out of town and couldn't be reached for 
comment. Duncan said he wasn't able to comment on the bankruptcy report.

   "There's always two sides to every issue," Duncan said.

   In court records and at a bankruptcy court trial of an adversarial 
proceeding late last year, Armstrong said his activities with Hamilton 
Taft funds were intended to cure financial problems that existed when he 
acquired the firm. He blamed the problems on its prior owner, Maxpharma 
Inc. He said his strategy was to invest Hamiltun Taft's cash flow 
aggressively in undervalued assets that would increase in value.

   A bankruptcy judge rejected that defense, ruling that Armstrong's 
"conduct constituted a breach of fiduciary duty and conversion," 
according to bankruptcy documents. The judge hasn't ruled on the amount 
he owes, but the trustee is claiming $ 85 million.

   Bankruptcy ducuments detail investments Armstrong's companies 
allegedly made using Hamilton Taft funds that have been seized by the 
trustee.

   Court documents show Armstrong companies bought real estate from the 
Resolution Trust Corp., a federal agency cleaning up failed savings and 
loan associations.

   In January 1991 Armstrong's Dresdner Enterprises Inc. bought the Seven 
of Sonterra project from the RTC for $ 1.9 million. The project included 
23 townhouses and 28 single-family home sites near the seventh hole of 
Sonterra Country Club in San Antonio. The property since has been sold 
for $ 2.9 million, though the net profit is less because of expenses.

   The trustee sold Armstrong's box at Texas Stadium for $ 1201000 in 
July 1992. Armstrong had purchased three boxes in March 1990, but sold 
two in 1991 after Hamjlton Taft was forced into bankruptcy. The trustee 
has seized Armstrong's 49% interest in Pro Rodeo Inc., which stages 
rodeos and supplies rodeo stock, and Armstrong's 30% interest in Rodeo 
Partners Ltd., which owns the Mesquite Arena. Armstrong invested in Pro 
Rodeo with former rodeo star Don Gay. He invested in Rodeo Partners with 
Gay; Gay's father, Neal; and Dallas Mavericks owner Don Carter. 
Bankruptcy documents said Armstrong spent $ 1.9 million in Hamilton Taft 
funds on his rodeo interests, which so far haven't generated any income.

   So far Wyle has raised $ 7.7 million by collecting assets and selling 
them to recover creditors' losses. Most physical assets have been sold, 
except the Double C Ranch, now named the HTC Ranch, near Tyler. Armstrong 
paid $ 6.5 million for the 1,700-acre luxury ranch and $ 3 million for 
improvements, maintenance and livestock, according to trustee documents. 
The trustee almost had a deal to sell the ranch for $ 5.1 million in late 
1992, but the sale fell through.

   The trustee also has settled or obtained judgments with others who 
received money from Hamilton Taft, including Washington, D.C., 
businessman Mohamed

                                                                       
PAGE    4                      Dallas Business Journal, June 18, 1993                     


Hadid for $ 10 million; San Antonio businessman  Stanley Rosenberg  for $ 
400,000; $ 3 million from Costa Mesa, Calif.-based Parker Automotive 
Corp.; and $ 325,000 from the McCall family in Plano, according to the 
documents.

   Hadid filed a court motion to have his judgment set aside on grounds 
that he hadn't been served. But the trustee said in court documents that 
Hadid had been served in Albertville, France, during the 1992 Winter 
Olympics.

   The McCall family received $ 600,000 in loans from Armstrong's 
Knightsbridge Cos. Inc., but tbey were made payable to Armstrong. 
Armstrong sold the notes back to the McCalls for $ 275,000, which the 
bankruptcy trustee sought through a lawsuit.

   Hamilton Taft funds also wound up in Coffea International Inc., a 
company run by Armstrong's brother, Robert Armstrong, and a company that 
invested in shopping centers, the documents said.

   The trustee also recovered $ 400,000 when the Dallas law firm of 
Meadows, Owens, Coilier, Reed & Coggins agreed to turn over prepaid legal 
expenses one of Armstrong's companies had given the firm. Paul Coggins, 
who has been nominated to U.S. Attorney in the Northern District of 
Texas, said he no longer represents Armstrong.

   Meanwhile, the trustee has begun looking to other sources to recover 
losses; from Armstrong's management of Hamilton Taft. The trustee hired 
Jamail to pursue a lawsuit against underwriters of Lloyds of London who 
wrote fidelity bonds for theft by Hamilton Taft employees. The suit in 
Houston seeks $ 50 million.

   In March the trustee sued the accounting firm of KPMG Peat Marwick and 
one of its partners in San Francisco Superior Court alleging conspiracy 
and aiding and abettjng Armstrong's breach of fiduciary duty and 
conversion. The suit seeks $ 85 million in actual damages and punitive 
damages. The suit alleges Peat Marwick consulted in Armstrong's 
implementation of his business strategy.

GRAPHIC: Photo

SUBJECT: Financial services; Entrepreneurs; Bankruptcy; Liquidation; 
Creditors; Litigation; Southwest

NAME: Connie Jr Armstrong

GEOGRAPHIC: Southwest Region; Dallas; TX; US

COMPANY: Hamilton-Taft & Co; SIC: 6099 Comp-U-Check Inc; DUNS: 
04-900-2199; SIC: 7399;7323; TICKER: CMUC

CO:  COMPUCHECK CORP; HAMILTON TAFT & CO;   

LOAD-DATE-MDC: July 22, 1993