Mr. Otis Regrets

The cynical view of making it in U.S. business holds that success depends "not on what you know but on whom you know." According to an exclusive story broken last week by the Wall Street Journal, a West Coast operator named Jack P. Burke played that formula to the hilt. Burke's longtime friendship with Otis Chandler, his teammate on the Stanford University track squad (class of '50) and the crown prince of one of California's reigning families, had a good deal to do with his highflying fortunes in the oil business. Burke not only got Chandler, now the publisher of the Los Angeles Times, to sink $250,000 of his own money into various drilling funds; Chandler also, in his own words, became the "door opener" for Burke to dozens of other rich West Coast investors, including Times executives, movie stars and California politicians. The Journal revealed that they and everyone else who invested in Burke's schemes may have lost as much as $30 million, most of which has simply vanished; how and why it disappeared has sparked a federal inquiry.

Wildcatter. Chandler, 44, and Burke kept up their college friendship on hunting trips to such faraway places as Alaska, Africa and Mongolia. In 1955, Burke became godfather of the publisher's oldest daughter. Meanwhile, after starting out as a stockbroker in San Francisco, Burke made a chunk of money on a wildcat oil plunge and decided to go into the business full time. As Chandler revealed in a Journal interview, Burke asked him in 1965 to "introduce him to some people in Los Angeles" who might be interested in putting money into drilling funds, which offer special advantages to those in high tax brackets. During the next few years. Chandler presided over handshakes between Burke and "probably 50 or 60" people who subsequently invested in Burke-run funds. Many of them funneled their cash into the stock of a fundraising corporation called GeoTek, of which Chandler is a director. For his services, Chandler in 1965 collected $109,200 in cash "finder's fees," which he returned to a Burke company this year after the first evidence surfaced of a possible scandal. The list of prominent investors includes Simon Ramo, a director of the Times parent company and a founder of the huge electronics-aerospace firm TRW Inc., who also lent his name as a GeoTek director. Hollywood celebs who took fliers on Burke's oil funds include Kirk Douglas, Natalie Wood and Nancy Sinatra.

Self-Dealing. Last February Geo-Tek's board abruptly demanded Burke's resignation as the firm's president and later filed a civil suit accusing Burke and three members of his family of fraud and misappropriation of funds. He has denied all those charges and claimed that the lawsuit was a "treacherous" attack. However, Burke has declined to comment on most of the affairs of his companies. Although some $30 million evidently has been invested in them, their total current worth, not counting outstanding loans, may be as low as $5 million, according to a recent consultants' report. Burke claims that the consultants' estimate was deliberately understated.

What happened to all that bread?

The plaintiffs in the lawsuit allege that Burke diverted some investor funds to other companies that he controls, siphoned off nearly $1,000,000 from a self-dealing Oklahoma real estate transaction and simply used some money for his personal expenses. Nevertheless, the litigants have hardly begun to account for all of the missing $30 million. A much fuller explanation of the Burke brouhaha may be forthcoming from the

Securities and Exchange Commission, which, the Journal implied, is considering both civil and criminal proceedings in the matter. Meanwhile, an embarrassed Otis Chandler can only ponder the cruelties of misplaced friendship. "Jack called me a couple of times after the trouble started," Chandler told TIME. "He was in tears telling me his profound regret. He tried to apologize. I didn't accept."

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