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. His lifestyle included use of private charter jet services as well as many other exclusive memberships.
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.
