originally appeared in The Denver Post:
Roger
Parker appeared to have it all in 2007. He lived in a historic, $9
million mansion in Cherry Hills Village amid Denver's business and
sporting elite. He golfed with John Elway. He traveled by private jet to
gamble in Las Vegas and golf in Palm Springs.
Also that year,
Parker completed the deal of his career. The chief executive of
Denver-based Delta Petroleum sold a $684 million, one-third stake in the
growing company to Tracinda Corp., owned by billionaire investor Kirk
Kerkorian.
The transaction would be Parker's undoing,
marking the start of a remarkable downfall. It played out, friends say,
as a close business associate discovered that Parker, then married, was
having an affair with his wife.
Parker and Delta struggled with
risky bets gone bad. Tracinda forced Parker out after about a year and
eventually took Delta into bankruptcy. It pursued Parker for more than
$7 million from an unpaid loan but recently found just $46 in his
retirement account and $10,000 in his brokerage account.
On
Nov. 27, the U.S. Securities and Exchange Commission accused Parker of
tipping off his close friend and another, as-yet-unidentified friend
ahead of the Tracinda deal, allowing them to reap hundreds of thousands
of dollars in ill-gotten gains. Some of his gains were used to finance use of a private charter jet company for business and personal use.
Two Cherry Hills homes — one
Parker bought in 2004 for $9 million and the one it replaced, recently
signed over to his ex-wife — are for sale.
An attorney for Parker did not respond to requests for comment for this story. He has not yet responded to the SEC's claims.
Interviews
with friends, associates and businessmen, as well as scores of public
documents, paint a picture of Parker, 51, as ambitious and aggressive,
someone who set out early on a path toward multimillion-dollar success
and social prominence.
He achieved both — with the help of a
network of well-placed friends — but he took big risks along the way,
spent lavishly and seldom settled for second-best.
Roger was a guy
who thinks it all works out in spades, according to Delta's former
chief operating officer. At one point, he speculated aloud he would be
worth $200 million someday.
Fast success
Parker
was a standout student at the University of Colorado business-school
program in mineral land management. It trained students to be the
property-acquisition brains behind the geologic science that identified
potentially drillable resources.
But the 1980s, with the petroleum industry tanking, wasn't the best time to aspire to be an oilman.
There
were no jobs, recruiting was down 80 percent, and the only ones likely
to find a job after the collapse were those with experience, or new
grads, according to an associate who graduated with Parker in 1983. But
Roger got involved from the start. While we were all in school, he was
getting a feel for the business, getting connections and experience.
Parker found fast success from hard work.
Only a couple years out of school, he had the big house, all the trappings of success, according to one source.
That
happened at Ampet Inc., a small oil-and-gas company formed by Parker
mentor and a family friend, a Breckenridge attorney, and his lawyer
father, Parker's parents were investors in the business.
The
younger Parker and the junior partner would remain business associates
for years, beginning with Parker's seat as executive vice president of
Ampet while still a student at CU, records show.
While Parker
worked at Ampet, his business partner and an associate formed Delta
Petroleum in 1984. Parker was first listed on Delta documents as
secretary in 1987.
Golf friendships
Two months later, Parker's father, was nominated to the U.S. District Court bench in New Mexico by President Ronald Reagan.
The
elder Parker eventually served as federal chief judge in New Mexico
until 2003. Along the way, he invested in oil and gas — including Delta —
and as of 2010 was drawing royalties on several Colorado wells, some in
the range of $500,000 to $1 million, according to financial-disclosure
records required of all federal judges.
Roger Parker's relationships reach deep into Denver's business community and stretch across years.
Boisterous
in laughter and quick with a joke, Parker was often found hanging with
pals at Elway's, in part because of a friendship with the former Broncos
quarterback. Both exceptional golfers, Elway and Parker sometimes
partnered in charity events, friends said.
Efforts to reach Elway through the Denver Broncos were unsuccessful.
One of Parker's closest friends is a CU graduate in mineral land management with Parker.
The
two are avid golfers — with memberships at Cherry Hills and Castle
Pines, among others — and big boosters of CU's athletic program, forming
the elite Buff Club Cabinet with others including Van Gilder.
The
CU graduate has found a level of success that eluded his friend. He
recently sold his Cordillera Energy Partners III for $2.8 billion to the
company where he started, Apache Corp. Efforts to reach the college
friend for comment were unsuccessful.
Drive for status
Parker, twice divorced, enjoyed living large, primarily through houses, golf-club memberships and jets, friends say.
His drive for status was evident in a years-long pursuit of a home at the very pinnacle of Denver society.
Parker
sold his first Cherry Hills house and moved into a two-story Tudor he
built in 2001 next to the Cherry Hills Country Club. He borrowed $1.6
million to build it and borrowed another $9 million on it over the
years. But friends said he was disappointed with the outcome.
In
2004, Parker bought a $9 million mansion from old-money oilman's family
along the exclusive Cherry Hills Park Drive. Next door lived the Broncos
head coach, and across the street was their legendary money manager.
But
Parker was unable to sell the Tudor home, and it remains on the market.
The mansion he bought from the oil family — one of the oldest in that
area — also is for sale.
Parker acquired a quarter interest in use of a Citation 10 jet, and he sold half of that to Delta.
On
a golf trip to Palm Springs, Parker and friends stopped in Las Vegas —
the Bellagio and Venetian were among his favorite haunts — to play the
tables. Parker believed he could break the house in blackjack, one
associate said.
Parker isn't flashy, most comfortable wearing
shorts and tennis shoes, driving an SUV, listening to Aerosmith and
drinking rum and Coke, friends said.
Parker often does
business with friends. One of those is Denver power broker and Parker's
personal and business attorney. Earlier this year, Parker pledged
100,000 shares in Prospect Global Energy as collateral to his attorney's
law firm for personal legal help, state corporation filings show. At
the time, the shares were worth $1 million. Today, they're valued at
$167,000.
His attorney who is not representing Parker in the SEC's insider-trading case, would not comment for this story.
One of the attoney's sons, is vice chairman and co-founder of the Denver company, which mines potash.
A
Prospect investor who founded Hexagon Investments in 1992, also is a
friend of Parker's. He would eventually loan $24.7 million into Parker's
latest venture, Recovery Energy, according to financial filings.
Efforts to reach the investor for comment were unsuccessful.
Lucrative introduction
Parker
was introduced to Kerkorian by a former chauffeur who entered the
oil-and-gas business after marrying the former Denver Post owner. The
chauffeur, now a Las Vegas resident, had done business with Delta as far
back as 2003.
For the introduction — and the resulting sale of a
35 percent ownership share of the Denver company — Davis landed about $5
million worth of Delta shares. Kerkorian would allege later in a
settled lawsuit that Parker had secretly arranged contracts and business
arrangements for Davis as part of the deal.
Tracinda bought in at
$19 a share — Parker had pushed off an initial $17 bid and pressed for
more — on New Year's Eve 2007. The $684 million purchase pushed the
company stock up 19 percent in one day. It would eventually hit $24.78
from $15.51, when the Tracinda deal was announced.
The
SEC alleges in its civil suit that in the months and days before the
Tracinda investment was firm and made public, he sent dozens of text
messages about it to his business associate. Insiders said Parker didn't
even tell some of his closest board members and company executives
about the impending deal.
In a related case, his business
associate was indicted on criminal insider-trading charges that he
allegedly made about $86,000 on the information. He has pleaded not
guilty. The SEC alleges that another unnamed individual who is friends
with him and Parker racked up a $730,000 payday on Delta stock.
The government has not accused Parker of profiting from the information.
Delta
and Parker had encountered the SEC before. In 2006 and 2007 — prior to
the Tracinda deal — the government investigated alleged backdating of
stock options that were awarded to Parker and other executives. The SEC
later dropped its inquiry, and a pair of shareholder suits alleging the
practice were settled.
Margin call
Following the
merger, it didn't take long before Parker's business plan — a no-hedge,
keep-drilling approach — would weigh on Delta's books and, eventually,
its stock price.
Several company insiders say Parker's steadfast
refusal to hedge some of the company's natural-gas and oil assets
against a potential price drop was its most critical undoing. Typically,
energy companies hedge by agreeing to sell a portion of their future
production at a set price or range.
Delta's former COO
and chief geologist, said Delta could have hedged through 2015 but
didn't. We'd still be around today if it had.
When shares in Delta
dropped below $4 in November 2008, it triggered a margin call on
Parker's brokerage account because he had pledged shares as collateral
for loans.
Tracinda loaned Parker $7.5 million to cover the
shortfall. It said in legal filings it wanted Parker to pay attention to
Delta instead of his failing personal finances.
By January 2009,
the situation was, in one insider's viewpoint, desperate. He was the
eternal optimist of gas prices coming right back, the insider said.
They didn't.
By May 2009, Kerkorian had had enough.
Three board members asked Parker to resign as chairman and CEO. Parker
couldn't get along with new co-chairman Daniel Taylor, a Kerkorian board
appointee.
Parker left with a severance payday of about $7 million.
New venture
Parker wasn't unemployed for long.
With the help of friends, he staged a comeback through a new venture, Recovery Energy.
While
Reiman was the money lender, the oil-and-gas properties that made up
Recovery's inventory came from Davis. Van Gilder provided the office
space.
Parker paid for much of it with shares in the new company, a tactic he had used before.
Filings
show the company's production and revenues followed a downward trend.
Revenues in 2010 were $9.76 million but only $8.36 million in 2011. Oil
and gas production in the second quarter of 2012 was down 24 percent
from 2011.
Interest expenses in 2011 almost equaled the value of the oil and gas the company produced.
Parker
engaged in an unusual practice with his Recovery shares that may have
been intended to land a bigger payday or ward off a creditor such as
Tracinda.
Normally, executives try to obtain the shares they are
granted as quickly as possible, a process known as vesting. Parker,
however, amended his employment agreement 14 times over more than two
years to push back the date when his Recovery shares would vest and come
into his possession.
Tracinda in late August won a
judgment for the $7.5 million loan — now $7.7 million — against Parker,
who argued he'd been shorted about $5 million in an effort to sell the
last of his Delta stock in 2009.
Tracinda has been
following Parker with garnishment orders to collect — first on his
pension account and then his securities account. Total garnered:
$10,745.
It followed with a garnishment order at Recovery for
Parker's salary, roughly $21,000 a month, and is making a grab at about
1.3 million of Parker's Recovery shares.
Parker resigned from
Recovery on Nov. 14, just ahead of another garnishment effort by
Tracinda. SEC notices show his business partner began selling Recovery
stock heavily just after.
Two weeks later, the SEC named Parker a co-defendant in its insider-trading lawsuit against another associate.
Friends said he left town on a trip when the case was about to be made public.
