By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
No one knew what U-Haul founder L.S. Shoen had in mind at his "Celebration of Love and Respect." L.S. was as unpredictable as a desert storm. I'm a 180-degree guy, he often said, and I'll change direction before you blink if I think it's right.
He had started U-Haul with a few thousand dollars and a timely idea in 1945. Now it was a billion-dollar business, headquartered in Phoenix, and a genuine slice of Americana.
But nothing in Leonard Samuel Shoen's seventy years had prepared him for this day, November 8, 1986. A majority of his twelve children, led by his third oldest son, Joe, had banded together to kick him out of power.
L.S. didn't own U-Haul anymore, just a small chunk of it. Over the years, he'd given his kids more than 90 percent of the stock in Amerco--U-Haul's parent company. Amerco had grown beyond U-Haul to include insurance firms, self- storage facilities and numerous other businesses. By now, it was among Arizona's biggest employers and one of the nation's largest family-owned businesses.
The company had made L.S. rich enough to give his kids--the products of three of his five wives--a piece of Amerco's future, as well as a million bucks each in other investments and cash. By November 1986, Amerco's stock was worth several hundred million, but L.S. owned just 2 percent. He still was worth millions, but had less stock than any of his children except the youngest.
No matter. In his heart, L.S. was creating a dynasty--the House of Shoen. He never imagined his own kids would become the corporate raiders of his Great American Dream. U-Haul's founding father had become just an employee, albeit its chief executive officer and board chairman. But a company's head honcho serves at the pleasure of its stockholders, and L.S. had handed his kids the farm. Most were now over 21, old enough to vote their stock as they wanted.
And already they'd started pushing L.S. around: A few weeks before the "celebration," they'd thrown out a board of L.S. loyalists--none of them Shoens--and elected instead the three Shoen sons most opposed to L.S.'s long reign--Joe, Paul, and Jim. It was a stunning defeat for the old man.
L.S. knew he was a goner before the family's "celebration" at a Paradise Valley resort. Before the get-together, he quickly declined the new board's invitation to stay on as Amerco's CEO. He would never, ever consider working under the thumb of 37-year-old Joe.
L.S. now says his nose was a foot long while the deed was being done, that he knew he was being slam-dunked by Joe. But on November 8, L.S. played Pinocchio. Someone dubbed it a "Celebration of Love and Respect," probably because L.S. ends his correspondence "With Love and Respect."
Niceties aside, you'd never know what the old man might pull, so everyone was edgy as he rose to give his farewell speech. "I'll start this out by saying I am not God and never have thought I was." L.S. had notes, but he spoke with his eyes closed much of the time and tugged at his bushy brows.
"I have been humbled repeatedly in my life. Humbled . . . I've had experiences that were traumatic compared with what I'm doing today. What I've found is that out of all of these experiences, instead of bad coming--good came. Through all the pain that you get, good comes from it.
"When I was kicked out of medical school, after all those years of hard work and studying, and into boot camp, I thought my world had fallen apart. I had lost everything. . . . Talk about scary! Damn near two years in the Navy, coming out with no way to support a family except to take a job as a first-aid person for Alcoa Aluminum. It was traumatic.
"This having faith in your fellow man, having trust, pays off. I don't care how many times I was victimized. It pays off. It is the best way on earth. I'd rather be conned than be a con man. I'd rather be conned than be suspicious of everybody. I'd rather have love than distrust."
L.S. ended his stream-of- consciousness swan song.
"I want you to know that this is my gift to you children. I tried hard. I do have enough sense to know that I should stop, move aside and get out of the way without abandoning ship. I do want you all to know that I trust my sons and daughters--absolutely."
The new Shoen board appointed Doc Sam--the oldest child and L.S.'s long-time heir apparent--as Amerco's new CEO. However, part of the deal was that Doc Sam would have to work side by side with Joe, the new chairman of the board. The brothers had been enemies for years.
Everyone wondered how long the truce between the pair would last after L.S.'s forced departure. Doc Sam--a medical doctor and Harvard Business School graduate--quit February 7, 1987, just three months after the November coup.
Joe--a lawyer and also a Harvard Business School graduate--became U-Haul's new czar. Younger brothers Mark and Paul became "Joe's czarettes," one of their sisters says.
And L.S. Shoen retreated to his Las Vegas home with his fifth wife, Carol, to shoot pool, write marathon letters to his children and live off his "lifetime" employment contract of $300,000 a year.
Two weeks after Doc Sam quit, L.S. wrote Joe a fifteen-page letter.
"Your lust for power and greed blind you," he wrote his third-born son. "You do not realize what you are doing. I will not and cannot rest until you are out of power in this organization. I will not quit until you are out." It's been more than two years since L.S. wrote that letter. The saga of the Shoens has turned nastier and nastier. One half of the family is suing the other in a sea of money-sucking lawsuits; the brothers have resorted to fistfights at stockholders meetings; and L.S.--once one of the richest men in the nation--wonders where his next buck will come from.
The nation's business community and U-Haul's 12,700 employees--including 2,100 in Phoenix--wonder what possibly could happen next in this struggle for control over one of America's best-known companies.
Interviews with several Shoens, with present and former U-Haul employees, plus a reading of psychological reports and hundreds of public documents amplify the obvious: The House of Shoen never was anything more than one father's fantasy.
THE SHOENS GIVE new meaning to the phrase "nuclear family." One calls her family's story "The Young, The Restless and The Rich." Another says it is "our very own pathetic soap opera." What the Shoens have done to each other make the travails of the Carringtons or Colbys seem pale.
The Shoen kids blame it all on power and greed--someone else's, of course. L.S. seeks parallels in the Holy Bible, or cites "SBS"--Spoiled Brat Syndrome. Whatever.
L.S. and six of his children have sued the four sons who now control U-Haul and several others in top management slots at the firm. The L.S. Group--Doc Sam, Mike, Cecilia, Mary Anna, Theresa, and Katrina--have accused the Joe Group of illegally manipulating Amerco's stock so Joe can stay in power.
The Joe Group--Joe, Mark, Paul, Jim, Sophia, and non-Shoens--counter that it had to entrench itself to keep U-Haul from being sold out from under them. The case is a feeding frenzy for the thirty- or-so lawyers who have been involved--most of them working for the Joe Group. The courts so far have sided with Joe.
U-Haul has sued Doc Sam for $750 million, citing allegedly slanderous comments he made last year to a business magazine when he blasted the company's new management. "Like everything else to do with Joe," responds Doc Sam, who now is a partner in a Valley-based medical supply business, "the lawsuit against me is the Big Lie. To steal a line, `Like a mackerel shining in the moonlight, he shines as he stinks.' That's Joe."
Paul Shoen, the fifth son and now president of U-Haul International, has tried to get his brother Doc Sam's license revoked by the Arizona Board of Medical Examiners. The reason? According to the October 1987 allegations, Doc Sam not only has overdosed their father with anti-depression drugs, but that he, too, "may be suffering from a dependency." In June 1988, however, the medical board cleared Doc Sam.
Joe blames the L.S. Group for allegedly feeding the Internal Revenue Service damaging information about a printing firm he and his brother Mark started in the early 1980s. The IRS is seeking back taxes from Form Builders Inc. that so far total almost $500,000. Joe told his dad what he thought of him in a vile torrent secretly taped by L.S. in mid-1987:
"You dirty cocksucker! Fuck yourself! Fuck yourself! You got it straight? Can I help you with it? You fuck yourself! I ain't your kid!"
Joe fired L.S. late last month from his "lifetime" employment contract. In a terse one-page letter, Joe wrote that unless L.S. admits he is mentally ill, he has violated his 1979 contract. "If you are not disabled," Joe wrote his father, "your past failure to act in the best interest of your employer constituted a breach of your employment contract."
The issue isn't made of whole cloth. L.S. had a breakdown in 1978 that required about a month's hospitalization. He freely admits to suffering occasionally from depression. But he says his firing is another ploy by Joe intended to run him into the ground financially and emotionally.
"They say I'm manic-depressive, therefore I do all these screwball things, whatever they are," L.S. tells New Times. "There are three reasons Joe fired me: to cut down my ability to fight the lawsuit against them; to discredit my IRS testimony against him; and to intimidate me before the shareholders meeting." (L.S. made those comments a few days before the March 4 annual meeting in Reno, where he'd face off against the sons who had turned on him.) L.S. won't admit it, but Joe is as dogged a businessman as he ever was. "He's the hardest-working man I know, besides L.S.," says family friend and U-Haul employee Darrell Hamby. "They're both exact repeats where that's concerned, and I respect them both for that."
But Joe's hostile siblings say he's a bully, and that their brother Mark--U-Haul's president of advertising and marketing--is a thug. "Joe and Mark embrace belligerence and arrogance," says their sister, Mary Anna Eaton, of Boynton Beach, Florida. "I call it bizarre."
Clinging to the safety net of "pending litigation," neither Joe nor the others in power at U-Haul will talk publicly about the uncivil family war. But they have said plenty in court testimony and in letters to other family members.
"The kind of lies that we have seen here," Joe testified a few months ago in a deposition, "that I cut my thumb off in a paper shredder shredding documents with the general counsel of Amerco, that I hustled documents out of the building in the middle of the night, that I carry a gun. These sorts of things have prejudiced me massively in my dealings with the IRS. They think I'm this sort of a person, that I engage in this sort of behavior on a systematic basis, and that they have reason to apprehend me as an enemy of society. I don't view myself as an enemy of society."
Joe's youngest sister, Katrina, sees it like this:
"I think in my family it has gotten far beyond a fight over money," says the 22- year-old aspiring opera singer who lives near Washington, D.C. "It's power and greed, stuff I don't understand. I don't work in those terms. No one's evil--not Joe, not Mark. But there is so much hurt. It's all overwhelming."
THE TWIN U-HAUL TOWERS on Phoenix's Central Avenue have been nicknamed the Beirut Hilton by someone who works there. An ex-employee jokes that those zany Chinese white-marble lions that L.S. stuck out front a few years ago ought to be turned around to face the towers. You see, the lions are supposed to ward off evil spirits.
When L.S. started U-Haul in 1945, he had only debt collectors to ward off. L.S., now 73, was born in Minnesota and grew up in Oregon, the second oldest of seven siblings. His oft-told story is textbook American Dream:
His dad mostly failed as a businessman and farmer, but the kids never went hungry. L.S.'s mother--who still lives in Oregon at the age of 94--worked alongside her husband while raising her children. During the Great Depression, L.S. picked strawberries, cherries, loganberries, you name it, to make his pennies. After high school, he worked as a barber while attending Oregon State. A born wheeler-dealer, he opened four barber shops while still an undergraduate.
Most of his barbers got drafted or enlisted after the Japanese attacked Pearl Harbor in December 1941. L.S. started medical school at the University of Oregon and rebuilt his hair-cutting business. He was known as "Slick," for his ability to make a fast buck.
In 1943, L.S. was sworn into the Navy for what was supposed to be a four-year hitch as a medical officer. He was expelled during his last year at school, however, after he answered in class for an absent lab partner. Soon after, he was sent to Navy boot camp as a recruit.
On February 5, 1944, L.S. married 21- year-old Anna Mary Carty, whom he had met in Portland where she was attending college. He now says he never wanted to get married, much less raise a family. Anna Mary had a congenital heart condition, but doctors told her she could have children. A devout Catholic, she had six kids before dying just thirteen years later.
Later in 1944, L.S. contracted rheumatic and scarlet fevers. While recuperating at a Navy hospital in southern California, he played with the idea of U-Haul.
On a previous trip to Los Angeles, he had seen small automobile trailers being rented locally for about $2 per day. He didn't think anyone was doing this in the Northwest, and he also had this novel notion of one-way rentals.
After the Navy discharged him in the summer of 1945, L.S., Anna Mary and their newborn son, Samuel, drove to Los Angeles in their 1937 Ford to talk to the few men who ran local trailer-rental shops. Then it was off to Oregon to give it a whirl.
He was 29 years old and had about $5,000--$4,000 in cash and $1,000 in leftover barber's equipment. "I knew then I just had to make this $5,000 count or I would be behind the eight ball," L.S. said later.
Back in Portland, he cut hair and bought a few thousand dollars' worth of trailers to rent out. L.S. soon started building his own trailers and painted them bright orange to make them recognizable.
L.S. called his new business U-Haul, but never could remember if he or Anna Mary had come up with the name. He started to rent his trailers out of gas stations around Portland, with station operators keeping 40 percent of the take. That was a first.
He took the next step in 1946 with his expanding fleet of about seventy trailers. He initiated one-way service, renting small box-type trailers between Seattle and Portland for $5. It wasn't rocket science, but it worked.
His business boomed in the 1950s as Americans hit the highway like never before. Somehow, he also found time to attend night school at Lewis and Clark College in Portland. In 1955, L.S. earned a law degree, finishing at the top of his class.
He drilled into his growing number of employees a quirky collection of sayings, such as "I believe in luck. The harder I work, the luckier I get." Such homilies could have worked only if his people didn't see him as a phony. Many saw him as their guru. He was a demanding skinflint, but his employees knew he was usually loyal as hell--if they were loyal as hell.
L.S. kept a tight grip on the reins as U-Haul spread across the nation. He may have been in the trenches with the rest of his workers, but they were his trenches. An organizational chart depicted him in the center of U-Haul's universe, like a rental industry sun god.
Though L.S. hardly was ever home, life was good. He was building a major American company, his bank account kept growing and his family kept expanding. Sam had been followed by three more sons, Mike, Joe, and Mark; then daughter Mary Anna, and in 1956, Paul.
Then, on May 4, 1957, Anna Mary Shoen died of heart failure at the age of ANNA MARY SHOEN left behind a 41-year-old husband and six kids under the age of twelve. L.S. hired a succession of housekeepers to try to maintain a semblance of order in the Portland household. Then, Suzanne Gilbaugh came along.
She was a neighbor of the Shoens who, at 23, had just finished graduate school at the University of North Carolina. Family lore has it that L.S. saw Suzanne's photo while visiting her parents and decided to make a play for her. His tactics worked, and the two married in September 1958.
Mike--the second oldest--remembers he and Sam were shipped off to a boarding school the day after their dad remarried. That left four young children at home. As the oldest there, Joe and Mark forged a bond that lasts to this day.
In 1959, L.S. introduced a fleet of trucks for rent. He constantly was on the go, flying himself around the United States and Canada in a small plane to spread the gospel according to U-Haul.
He and Suzanne found time to start their own family. By 1966, they had added five little ones to the Shoen tribe--Jim, Sophia, Cecilia, Theresa, and Katrina.
L.S. moved U-Haul's headquarters to Phoenix in 1967. A city whose chief industry was and is growth, Phoenix was the perfect site for a business that was serving an increasingly mobile nation.
The family moved into a magnificent home on Tatum Boulevard in Paradise Valley that was designed by famed architect Frank Lloyd Wright. It's as long as a football field from one end to the other. The mailbox looked like a miniature U-Haul truck, in case anyone wondered who the new neighbors were.
Not that L.S. was interested in becoming one of the Valley's power brokers. No one ever saw him at a meeting of the Phoenix 40. He didn't join the country club set. There was work, family and more work.
All was well in the land of U-Haul in the 1960s. The company had no real competition and was experiencing phenomenal growth. But all was not well at home.
With a cluster of kids and a husband who was a working fool, Suzanne Shoen had a Herculean task. And she had troubles with young Joe and Mark almost from the start. Doc Sam, now 44, remembers his visits home from school.
"Joe and Mark would jump right in with how terrible Suzanne was, and how she had done this and that to them," Doc Sam says. "I didn't know what to think because I never had lived with her. I would tell them to try to calm down."
Mary Anna Eaton--the only daughter from L.S.'s first family--says she never had the problems with her stepmother that Joe and Mark did. "I was her `right-hand man, chief cook and bottle washer,' and that's how she introduced me to people," says Mary Anna, a mother of two who is studying architecture in Florida. "Mark and Joe solicited me to be in cahoots with them in their war against Suzanne, but I wouldn't bite. It was sick."
Suzanne's five children like to remember their childhoods fondly. Joe was their favorite, the four girls say, and their mom always was there for them. When L.S. was home, they recall, he showered them with affection and gifts.
"Dad had always said that money represents someone's hard work--that you don't take five bucks and do something foolish with it," Doc Sam remembers. "True or false, when I was coming up, I didn't think we had that much money. We lived middle-class. But when Joe and Mark turned sixteen, they got sports cars. Dad got soft in that respect."
He also was soft enough--gift tax incentives aside--to already have given his children most of his stock in Amerco. "When they're young, you see such promise and you want to do everything for them," he says. "Practically all babies are beautiful. So are young children. But you notice how they get when they get older. The genes take over. With some of my children, greed took over."
But that was later. Back at the Tatum House, the war escalated between Joe, Mark, and their stepmother Suzanne. She tries to put the best face on it. "I remember the first time one of them said, `I hate you,'" Suzanne Shoen Anderson tells New Times. "I really got broken up about it. Then L.S. told me, `I guess you're doing your job.' I guess I was. I loved my children equally, all of them."
But Suzanne's stepson, Mark, was a hothead, a problem that continued to plague him as an adult. In 1967, after a brawl between Mark and his stepmother, L.S. moved Mark into a midtown Phoenix apartment.
It was around that time that Joe starred in what a family member calls "The Night Joe Almost Killed Suzanne." It went something like this: Joe allegedly questioned Suzanne's fidelity to L.S. and phoned big brother Doc Sam--who by then was studying medicine at the University of Arizona. Joe told Sam he was going to shoot Suzanne when she got home later that night.
Accounts conflict about what happened next. Doc Sam says he told Joe to calm down and not to do anything rash. Joe later told others it was Sam who had tried to convince him to shoot Suzanne. Whatever the truth, Suzanne survived, and now is one of Joe's strongest supporters.
"I was protected and Joe was protected from something disastrous happening that night," says Suzanne, a Scottsdale resident who was divorced from L.S. in 1977. "We were protected by God. Joe is very intelligent, bright, well read and very, very capable. I don't think U-Haul could be in better hands."
In the late 1960s, L.S. took a novel approach to try to glue his family together. He purchased Legend City, a Phoenix amusement park south of Papago Park. Legend City was a family project, with the Shoen kids helping out when their school schedules allowed. L.S. sold it after a few years of losing money.
L.S. was as hard-working--and as eccentric--as ever. On June 2, 1970, he locked the conference room doors on the eleventh floor at U-Haul and lectured his sixty top executives about money. To make his point, he pulled a thousand dollars in cash from his pocket, opened a window and flung the fistful of bills into the air. News accounts describe an instant traffic jam, as drivers poured out of their cars on Central to catch the falling bucks.
But L.S. was just biding his time. By 1974, he was ready to launch U-Haul into a decade of massive expansion. He called it an "economic war" and predicted that the company would reach new heights. It did, but then L.S. discovered that the higher you climb, the harder you can fall.
L.S. SHOEN SWEPT U-Haul into a financial whirlwind during the 1970s. He reminisced about it during his farewell speech at the 1986 Celebration of Love and Respect:
"Back in the early Seventies, and `73, when gas prices came on, the marketing outlet that we had was going to disappear. Where is your service station today? They're at your fast-food places. We did correctly foresee that and anticipate that.
"And it took a monumental amount of courage to go out and establish this network of some 1,200 U-Haul centers. . . . Conquering that territory during this war, there were many casualties. There were many victims--I was one of the casualties. My son Joe knows that I was one of the casualties. My son Sam knows--I think maybe all my sons know it. I was a casualty and I was out of it for a good year. My sons tried to, and did carry on for me at that time. Now some of them became casualties in this situation."
It always had been a given that L.S.'s children, especially his boys, would go into the family business. The older Shoen children were coming of age in the 1970s, and some of them started to have major roles at U-Haul.
But Sam, the oldest child, had decided that he wanted to be a doctor. A dime store psychologist might say he wanted to finish what L.S. hadn't been able to three decades earlier. Sam says he just wanted to study medicine.
Doc Sam--as everyone soon started calling him--finished first in his class at the University of Arizona medical school. However, he quit only a year from finishing his residency in 1971, and went to work full-time for U-Haul.
Soon, Doc Sam, Mike, Joe, and Mark--all still in their twenties--were working for the company as top executives.
"It was pretty amazing, these Shoen kids all of a sudden up there," says a long-time U-Haul employee who requested anonymity. "You could see that Joe had the potential to do good work, and so did Sam. You also could see that they didn't have the maturity or experience to have so much power. And some of those kids, like Mike and Mark, are flat goofy."
L.S.'s marriage to Suzanne fell apart as he led U-Haul's expansion in the 1970s. He blames--you guessed it--sons Joe and Mark for the marriage's demise, saying they "pressured me" into filing for divorce.
Actually, L.S. says, he had devised a convoluted plan which he had hoped would lead to reconciliation with Suzanne and peace with Joe and Mark. It failed miserably. "I would never have divorced him, but he left me," Suzanne says. "After all this was done, I felt like one of those guys from Vietnam--that posttraumatic stress syndrome thing."
As far as bitter divorces go, this one was a doozy. Suzanne accused L.S. of hiding assets, but she wound up in 1977 with a piddling amount under the circumstances. (L.S. says Suzanne received about $1 million in the settlement, while Suzanne says it was much less than that. Court records don't show an exact dollar amount.)
Suzanne learned after the divorce was final that another woman had given birth in 1974 to L.S.'s twelfth child, Scott. L.S. married and divorced the other woman in 1978, when the little boy was about four. A subsequent wham-bam marriage to one of his former secretaries also failed.
L.S. became so seriously depressed in 1978 that Doc Sam escorted him to a mental hospital in Los Angeles, where he stayed for about a month. As L.S. recovered, the Shoen brothers tried to run U-Haul. By the time L.S. got back in the saddle months later, they were at each other's throats.
A desperate L.S. searched for ways to mend the widening schism in his family and also to try to piece himself back together. In 1979, he tried his hand at EST, a "self-realization" system developed by a huckster who called himself Werner Erhard. In the new spirit of get-it-all-out-on-the-table, L.S. hired Tucson psychologist Dr. Jerry Day to try to help his family.
Day's report, obtained by New Times, indicates that he tried to work with the Shoens for several months. "If anything," he writes, "the family relationships deteriorated further as the deep anger and hurt were brought into sharper focus."
Day's report concentrates on Joe and Mark, the two sons L.S. saw as his biggest headaches. Day writes of Joe and Mark's "terrible" relationship with Suzanne, recalling that "they were unloved by their stepmother and their father was absent from the home a good deal."
The psychologist sounds an ominous warning about Joe and Mark: "They matured into adults who are quite comfortable with power and are willing to fight for it. Their desire for absolute power is insatiable. The more they have, the more they want."
He offers advice. "As head of U-Haul, L.S. should allow the full consequences of their behavior to befall Mark and Joe," Day writes. "They should not be protected from financial pain or boredom or unfulfillment or vocational limbo. It will be almost impossible to reason with Joe or Mark concerning their stormy relationship with the group."
But L.S. Shoen never was good at taking advice. Joe and Mark quit U-Haul by the end of 1979. L.S., however, kept them each on the company payroll at $86,000 annually for more than two years.
U-HAUL'S RENTAL EMPIRE began to wobble in the early 1980s. The company had, in a word, overexpanded. That was made perfectly clear by the bottom line.
After a record-setting $41.6 million profit in the 1983-84 budget year, U-Haul spiraled downward. The firm's new full-service moving line was losing millions a year. The emphasis on renting out everything--videotape players, champagne fountains, fold-up dance floors--also wasn't panning out.
Things were even slipping in truck- and-trailer rentals, U-Haul's bread and butter. Revenues still were climbing, but overall operating and net incomes had dipped drastically.
By this time, competition was breathing down U-Haul's back. The new kid on the block was called Ryder System, and it was snatching U-Haul's customers by the month. Still, L.S. didn't seem motivated to buy new trucks or even to refurbish the old ones he had.
The willy-nilly diversification finally caught up to U-Haul and its founding father in 1984. In the last months of that year, L.S. had to cut management salaries by 10 percent so U-Haul could keep up with its creditors. He also laid off almost 5,000 workers--many of them seasonal employees who were short-term anyway--and canceled the $200 Christmas bonus. Profits for that year were only $2 million, the lowest in more than a decade.
"We did get out of hand," L.S. admits, "and I said, `Stop, fellas, stop,' and I instituted a consolidation program. I made a slug of mistakes in my life, a slug of them, disastrous things, but I've done a lot of good things, too. By the time Joe took over in '86, we were making it again, and we would have made $100 million this year easy--after taxes. We were ready to reap the benefits of ten years' hard work."
But Joe Shoen wasn't buying his father's song and dance. A few years earlier, a U-Haul employee had warned L.S. that he had seen a startling memo on Joe's desk. It was entitled something like "How to Get Rid of the Founding Father." By 1986, Joe had the right ingredients to do just that.
AFTER QUITTING U-HAUL in 1979, Joe and Mark Shoen still had the luxury of a big salary for a few years. They also had the million or so their dad had given them, at least until Mark lost about $700,000 in a business deal that went south.
Joe opened a successful paint store in Mesa, and he also started a printing company with Mark called Form Builders.
Form Builders was "wired-in" from the start, that is, it did business almost exclusively with U-Haul without worrying about competition. That saved it thousands each year in marketing and advertising costs. By the mid-1980s, Form Builders was pulling in millions a year.
L.S., however, never really tried to pull the plug on his sons' burgeoning business until after Joe's 1986 coup left him twisting in the wind. Now, the IRS is after Form Builders for nearly a half- million dollars in back taxes. Joe and Mark also are defending themselves and Form Builders in another lawsuit filed by the L.S. Group. The suit accuses the brothers of fraudulent business practices and of overcharging U-Haul.
But even when things were good, Joe wasn't content just to reap profits from a paint store and a printing firm. He also started trying to convince enough brothers and sisters that it was time to put L.S. out to pasture. By the autumn of 1986, Joe had enough votes to make his move.
"I got carried away with the wave," says Mary Anna Eaton. "I thought my dad was overworked and that he would enjoy life more in retirement. It was very arrogant of me, and I'm ashamed. But we did what we did."
Joe came into power at U-Haul with a six-shooter on each hip, hacking away at the status quo in what he calls a back- to-basics campaign. He soon closed the money-losing van lines, started selling off vast chunks of real estate, and severely reduced the number of items that U-Haul was renting out.
He also fired several thousand people, including dozens of top-level managers--many of whom had spent most of their adult lives at U-Haul. Joe knew this would cause problems with many of his brothers and sisters.
"Joe said, `Heads will roll,' and he meant they would come off with a saber," Mary Anna Eaton says. "My dad built his company on respect and trust and loyalty. Joe has no idea what all that means."
In September 1987, U-Haul announced a dividend of $1 per share, the first such payout in its history. Around Christmas that year, the firm issued dividends of $13.50 a share. That meant checks of more than $100,000 each to the largest shareholders--Joe, Mark, Mike, Doc Sam, and Mary Anna.
At the same time, U-Haul again canceled its traditional $200 Christmas bonus. "I won't spend money we don't have on a discretionary bonus," Joe said in a company newsletter. U-Haul employees quietly were outraged after news of the dividend slowly leaked out.
"I was ticked off about no bonus, but I could have tolerated it," says a former U-Haul employee. "I wanted to strangle Joe when I found out the real story, that he was trying to buy off his brothers and sisters."
The shareholder dividends are becoming a regular thing. U-Haul declared a $4.40 per share dividend in July 1988, and a few weeks before its most recent shareholders meeting in Reno, it issued dividends of $24.33 per share. The company still hasn't publicly announced its latest payouts. U-Haul spokesman Chuck Smith says he has no information about the $24.33 dividend, but New Times has spoken to six shareholders who already have cashed their checks.
Joe's opponents agree he was trying to solidify himself at U-Haul by issuing a big dividend. If Joe's motive was to curry favor with his disgruntled siblings, it didn't work.
U-Haul projects record-setting earnings of about $50 million for the 1988-89 budget year. Is Joe doing a better job of running the company than L.S. did?
Press release after press release from U-Haul credits Joe's "back to basics" plan--a sort of dance-with-the-girl- that-brung-ya approach that concentrates on the time-honored truck-and-trailer rentals. The L.S. Group contend, however, that those "profits" have come largely from U-Haul selling off huge chunks of real estate and from borrowing money to finance its operations.
Despite the dividend payouts and the leap in U-Haul's bottom line, Joe found himself in a curious pickle last summer. More and more of the Shoen children had decided to align with Dad. And simple mathematics showed the L.S. Group now controlled more stock than Joe and company.
The swing stock of about 5 percent had been held by Katrina, the youngest daughter in the House of Shoen. Joe had been wooing Katrina since her 21st birthday and even flew to her graduation in May 1988 at Brown University in Providence, Rhode Island. (L.S. and the others declined to attend the ceremony after they heard Joe was going to be there.)
Katrina says she wants to believe Joe went to her graduation without an ulterior motive. But she's not sure. "This goes for either side of my family," she says. "You don't know whether they're doing something because they love you and they want you to be happy and do something for you, or because they want your vote and want you to be on their side. You never can be 100 percent sure. Never."
When Katrina decided to join forces with her father's group, Joe was in big trouble.
LAST JULY 17, L.S. and six of his kids agreed in writing to hire a New York investment firm to see how they could get the most money for their Amerco stock. Some, like Doc Sam, primarily were interested in selling U-Haul. "My opinion at the time was, and still is, that the sensible thing to do is to sell the company," Sam says. "It's unnatural to take eleven or twelve siblings and tether them all financially, let them fight and argue about it for the rest of their lives."
L.S., as usual, was flip-flopping. One day he'd say he wanted to run the company again, and the next day he'd say he wanted to sell out. But Katrina says she didn't sign on with the L.S. Group intending to sell U-Haul or to boot out Joe.
"I wasn't joining any camp, believe me," she says. "Look, I was independent and thinking for myself. I had just graduated from college, I was looking into a future, and I told myself, what would it hurt if I know what this company was worth, if I know what my options are, whether I want to possibly sell some of my stock, or if I want to disengage from this weirdness before it's too late. What happened was Joe was paranoid and they responded to the worst-case scenario--hostile takeover."
Katrina's sister, Sophia, wasn't interested in selling her stock either, but she stayed in Joe's corner. "What am I going to do with all that money?" Sophia said during a deposition late last year. "I'm not interested in selling. I don't want $10 million. I'm having a tough time dealing with the million dollars I have. I have a financial adviser, a lawyer, and I'm still afraid it's going to disintegrate."
Soon after the L.S. Group signed their agreement on July 17, they flew to New York for a meeting with the investment firm of Bear, Stearns. They weren't exactly covering their tracks, but neither would they tell the Joe Group what was up. Joe and the rest of U-Haul management feared the worst.
"They were in the process of pandering the company on Wall Street," Paul testified last August. "Sam Shoen and Mary Anna Shoen-Eaton have expressed definitively that they were not interested in liquidating just their shareholdings. They were interested in liquidating the entire corporation."
When he heard about the New York City meetings, Joe was "screaming like a bishop cornered by Satan," says L.S. Group attorney Marvin Johnson.
U-Haul management may have been in a tizzy, but it didn't panic. During emergency sessions on the evenings of July 24 and 25, the board of directors voted to sell 8,099 new shares of Amerco stock to five U-Haul executives at a price of $2,715 per share.
The purpose of the midnight madness was to "change the math," Paul admits. With the new 8,099 shares, the Joe Group now had 50.1. percent of Amerco's stock.
The Joe Group also made several other critical changes. Its members signed a voting trust designed to keep them united, and they could only sell their stock back to the company, at whatever price the company offers. Members of the L.S. Group maintain the company-listed price of $2,715 per share is less than a quarter of its true value. Maybe so. But court records also indicate that L.S. never paid more than $915 a share for stock before he was forced out in 1986.
The five key U-Haul executives didn't have the $162,000 each needed as a down payment for their stock. Joe provided the money, taking about $800,000 from the trust accounts of his two children, for whom he is the conservator. (As of last December, Joe testified he had returned about a quarter of the money, at 9 percent interest, to his kids' trusts.) The quintet also signed a five-year loan with U-Haul management, promising each would pay the company $4 million. If they can't repay the full amount of the loan or if they can't make their first interest payments this July, U-Haul could foreclose on the new stock and claim it as its own. Or, the firm could take chunks of the 8,099 shares instead of cash.
All this led to a lawsuit filed in Maricopa County Superior Court last August by the L.S. Group against Joe and current U-Haul management. The suit contends the new stock is a sham that amounts to the Joe Group stealing back majority control of the stock. However, the Joe Group has won the early rounds of what likely will be a lengthy court fight.
In recent weeks, a New York-based firm has offered to buy Amerco for $1 billion, or about $10,000 a share. That lends credibility to the L.S. Group's claim that U-Haul management's going price of $2,715 per share is absurdly low. Actually, an insider says, the New York firm has "offered to make an offer." But the only ones possibly receptive--the L.S. Group--don't control enough stock now to force a sale. The Joe Group, on the other hand, don't want to sell. After all, Joe Shoen is right where he wants to be--running U-Haul.
THE LAST ANNUAL SHAREHOLDERS gathering of Amerco was more outrageous than even insiders would have predicted. Meeting at the Sands Hotel in Reno on March 4, the session quickly disintegrated into a verbal and physical thrashing. Second oldest brother Mike, who's decidedly in his dad's camp, brought a tape recorder along at the request of New Times to record the closed-door session. Opposing brothers Joe, Mark, Paul, and Jim were vehemently upset when they noticed the machine. They demanded Mike turn it over to the hotel's security guards. Mike refused and taped the entire meeting. As the session broke up, Mark--the brother known for his "hot head"--belted Mike. As they scuffled, several people grabbed for the tape recorder, Mike recalls, but he held fast. Security guards pulled Mark off his brother. Then, according to several sources, Joe attacked, pummeling Mike with both fists. Mike, an attorney who lives in Vancouver, Washington, was treated the following day at a Scottsdale hospital for deep bruises on his neck and back.
Those weren't the only bruises suffered by the L.S. group at that meeting. Joe's camp voted in lock step to keep firm control of the company. L.S. had come to the meeting with only one purpose. He wanted to force Joe to use those disputed 8,099 shares--the heart of his lawsuit against U-Haul. L.S. didn't go away disappointed in that respect: To stay in power and to re-elect his hand-picked board of directors, Joe had to use those controversial shares.
Almost forgotten in the fireworks was a short speech by one Bertram Miller.
Miller, from Dallas, Texas, owns nine shares of Amerco stock, a gift about thirty years ago from L.S. Shoen. A former U-Haul executive, Miller had a falling out with L.S. in the mid-1960s and quit the company. But he kept his stock.
A few weeks before the March 4 meeting, a U-Haul executive asked Miller over the phone to sign a proxy that would allow the Joe Group to vote his nine shares. Instead, Miller decided to fly to Reno to check things out firsthand. He tells New Times he hasn't spoken to L.S. or any of the Shoens for years. But, he adds, "I had a feeling these boys in power now were skimming the cream off the milk, and I wanted to talk to them about it."
Miller asked to speak near the end of the three-hour shareholders meeting. "Over the years, I figured the people here were capable of running the corporation," Miller started, pointing at the members of the Joe Group. "Well, after reading [the proxy], it was at times reading from a political speech--I got half a story. . . . The biggest lie in the world is from the guy who will tell you half a story. I checked around and found that they had diluted the shares by 8,099, and the people who owned it were basically on the board of directors.
"There's something wrong, gentlemen, with the Shoen family. You did not start this corporation. You inherited it, and I just wonder if you are capable--"
Mark Shoen had heard enough. "Shut up," interrupted this U-Haul executive, the fourth son of the House of Shoen. "Shove it up your ass. Shove it up your goddamn ass."
L.S. SHOEN isn't pulling a Citizen Kane routine in Vegas these days. He and his wife, Carol, started taking piano lessons a few months ago, and he's become something of a computer whiz.
The little hair he has left is white, and you could practically slip a credit card into his furrowed brow. He has a chronically bad back, so he keeps his feet up while he works. He has a direct, rapid-fire manner and the kind of belly laugh that's contagious. It's still easy to picture him as "Slick" Shoen, hawking his U-Haul trailers from town to town.
He was an uncommon combination of dreamer and doer, this man with a bagful of ideas and the wherewithal to get some of them to work. And he never had been shy about dancing with his family's demons, as if they would tell him why certain things in his life had happened.
L.S. spends hour after hour in his study, writing those painfully long letters to his kids and rehashing events of decades ago. The House of Shoen is running amuck, and L.S. doesn't know what to do.
"People might say I was a fool for letting this happen, but I was an interesting fool," he says. "It's God's will for me to get a chance to see what would have happened after my death anyway--and to speak the truth about it.