Inside an $8 billion family feud: Who poisoned the Orkin fortune?

Over the past half-century the Rollins family became known for two things: killing vermin and throwing great parties. Millions upon millions of vermin. And really, really great parties.

Within Atlanta society the clan behind the Orkin pest control empire, now worth some $8 billion, became royalty, the envy of Buckhead’s WASP social set. Gary Rollins, the modern-era patriarch, would invite guests by the hundreds to join him and his wife, Ruthie, at the family’s lush 1,800-acre ranch near Cartersville, Ga.

His handsome blond son Glen Rollins, the heir presumptive, preferred Gatsby-theme affairs at Boxwood, his English hilltop manor just outside the city, where the 5-acre lawn led to a pear orchard and swimming-pool-size koi pond. So accomplished were those events that Glen’s wife, Danielle, a Dallas debutante, wrote a guide to stylish entertaining, Soirée , that Rizzoli published to rave reviews.

Orkin, and the nine related extermination companies housed under Rollins Inc., remains the leading company in pest control: rats, roaches and their ilk are as perennial in this world as sticky Atlanta summers. But for the Rollins family, the party is over.

Glen has sued his father, Gary, CEO of Rollins Inc., as well as his uncle Randall, company chairman. Glen’s three siblings also joined in, claiming they were being denied their rightful cash allocations–though Randall’s five kids stuck by their dad and Gary. Ruthie apparently took her kids’ side in the money fight, filing for divorce from Gary, after 45 years, at almost precisely the same time. And then Glen and Danielle began their own ugly divorce. The cumulative effect–father vs. sons, wives vs. husbands, cousins vs. cousins–makes this one of the nastiest intergenerational battles ever to take place among members of The Forbes 400 (Gary and Randall rank 225th on the list, at $2.7 billion each). “It’s like a Greek tragedy,” says Danielle.

The feud, playing out over the past four years, may finally reach a denouement: The trial in the core case, which will decide whether the older generation is stingy in its handouts or the heirs are greedy ingrates, is expected to start next year.

But spend a few months under the hood and it’s clear that the larger verdict is already in: A lifetime’s work, and a family legacy, was destroyed by shoddy estate planning and questionable parenting. “It’s needless,” says Glen. “There’s plenty of assets. It has to do with extreme and destructive efforts by my father and uncle to control. No one disputes those assets are ours.”

“The plaintiffs’ lawsuits are motivated by greed and self-interest,” says a spokesman for Gary and Randall. “They have no regard for the structure of the Rollins family assets.”

Ironically, the man who built this fortune, O. Wayne Rollins–Gary’s dad and Glen’s grandfather–saw the troubles that lay ahead. What follows is a cautionary tale of how a few fateful actions actually made things far worse.

THE ROLLINS FAMILY ISN’T FAR REMOVED from poverty. The son of a Depression-era farmer in Georgia’s northern hill country, Wayne and his brother, John, had wanted nothing more than to escape a lifetime of “plowin’ that mule.”

They first struck out separately, with Wayne working at a Tennessee textile mill, then as an explosives supervisor at a power company, and John running used car lots in Delaware. Sidelined with a back injury in 1947, Wayne joined forces with John, purchasing a radio station in Virginia with a plan to advertise his brother’s auto dealerships on the cheap. As the two acquired more regional radio stations, Rollins Broadcasting was born. They took the company public in 1961.

Always on the lookout for the next moneymaker, Wayne noticed Atlanta businessman Otto Orkin had put his pest control chain up for sale. He liked what he saw: a mature, cash-spewing company as hardy and hard to kill as the roaches themselves. The business model was simple: “A woman won’t put up with a roach for $10 a month,” he told FORBES in 1975.

One of the nation’s wealthiest families, the Du Ponts, were fans as well. They planned to buy out Atlanta’s Orkin family and take control of the business. But, impressed with Wayne, they persuaded him to buy the business in 1964, bankrolling him as a private investment separate from their chemical empire. It was one of the first leveraged buyouts in U.S. history, and no one did better than Wayne. He put $10 million of his own money into the $62.4 million deal and ended up at the helm of a 63-year-old company already clocking $40 million in annual revenues.

Over the coming years he used cash flow, eschewing debt or outside investment, to expand Orkin state by state without diluting his family’s 64% stake (“shrewd,” said FORBES in a 1966 write-up). His fortune grew. And as it did, Wayne turned his sharp eyes to the future again. His hardscrabble background meant he was no fan of what grandson Glen would eventually describe (in a now-ironic 2007 interview with Pest Control magazine) as “the ovarian lottery.” While he trusted his sons, Gary and Randall, who worked in the family business, he feared future generations would blow his fortune without ever earning a dime of it. And that, this child of the Depression thought, was unconscionable.

In 1968, the year Glen turned two, Wayne set up the Rollins Children’s Trust. It was originally established with Rollins Inc. stock, to be paid out to his grandchildren on their 25th and 30th birthdays, with the remainder going to the next generation. Then, in 1986, as a move to reduce his tax bill, he set up a further nine subchapter S trusts–one for each grandchild, including the four who today remain plaintiffs, and Randall’s five children. Interest from Wayne’s holding companies as well as from the Rollins Inc. Fund went into these S trusts, which today hold billions of dollars. He gave Gary and Randall shared control of his holding companies and made Gary solely responsible for the trusts. In 1991 he died, presumably content that his business and family affairs were in good order. Gary and Randall would be in charge of who got what.

OVER THE NEXT TWO decades Rollins Inc. ticked along, growing by acquisition of regional chemical and pest control firms, and buttressed by its long-established Orkin brand. To any American older than 50 the company’s Orkin Man mascot is instantly recognizable. The smiling exterminator is a symbol of American enterprise in a simpler time, with his Norman Rockwell-era white, starched uniform, his red epaulets and his way with cockroaches. But there’s nothing quaint about Orkin’s ability to make money. In July 2014 the company reported its 33rd consecutive quarter of earnings growth, with revenues up 5%–to $682.7 million–during the first six months of 2014 versus the year before.

“This is the ultimate recession-proof business,” says Dan Dolev, an equities analyst at investment bank Jefferies who covers Rollins Inc. “You always need someone to kill the cockroaches. You can’t ‘disrupt’ them. It’s a great business, and it’s been run in an efficient way. It’s a sleeper company–a real jewel.”

In 2000, with Rollins Inc.’s revenues just under $650 million, Gary and Randall authorized gifts of $1 million to each of their nine kids in memory of Wayne (the children also got “millions each” on their 21st birthdays, says a spokesman for Gary and Randall). They also established the grandly named Rollins Family Entity Distribution Program. In effect, these were eligibility requirements. If the nine wanted to get their hands on the proceeds of their S trusts, they had to be engaged in “meaningful pursuits,” in the language of family documents reviewed by FORBES. It was an echo of their father Wayne’s initial fears about the fate of his fortune–with the kind of vague terms that makes a plaintiff lawyer’s heart flutter.

“Meaningful pursuits” could mean charity work or graduate school–anything, really, but idleness. Regular attendance at quarterly and monthly Rollins family meetings was also mandated. Equally key is what it didn’t mandate: “It didn’t mean you had to have a full-time job, which was lucky, as only Glen did,” says a source close to the family.

Glen was the golden boy of the generation. A 1988 Princeton economics graduate, Glen had been working at Orkin one way or another since age 14, when he proudly donned the red-and-white uniform as a technician’s assistant on his summer break. On the way up Glen did his share of dirty work, inspecting termite nests and manning regional sales offices.

In 1995 he married Texan beauty and burgeoning socialite Danielle Deaton at New York’s Carlyle hotel, serenaded by the hotel’s legendary jazz-singer-in-residence, Bobby Short. (The couple later named their only daughter Carlyle after the Rollins family’s longtime Manhattan base; they also have two sons, Preston and Emerson.)

By 2004 Glen was COO of Orkin, overseeing acquisitions like the $110 million buyout of New Jersey’s Western Pest Services, now under the Rollins Inc. umbrella. He was reporting to his father, CEO Gary, and likened their working relationship to a “doubles tennis team” in an interview that year with Atlanta’s Business to Business magazine. Easily clearing the “meaningful pursuits” threshold, Glen was also reaping the benefits of his S trust. Between 1999 and 2009 Glen received payouts totaling more than $12 million.

Glen’s siblings didn’t always qualify for each annual payout. Gary and Randall ruled that Glen’s brother Wayne–who gravitated toward creative work like filmmaking–was ineligible for his distribution in all but three years of the 2000s. Those three payments added up to just under $1.2 million, according to court paperwork. That was a problem because Gary’s kids, while clearly not instilled with his work ethic, had nonetheless absorbed the ethos of Dad’s opulent parties, developing a healthy appetite for life’s finer things. “I danced with Jeff Foxworthy at Gary’s 50th,” remembers Sherry Carroll-Rollins, who spent 14 years married to one of Glen’s cousins. At one party Ruthie–whom Sherry describes as generous, smart and always impeccably turned out–presented Gary with a shiny new Harley-Davidson and all the leather gear he’d need to ride it, which he did, to whoops and applause from his guests.

There were vacations, from Paris to Capri. The family’s men took male-bonding trips that were legendary: quail hunting outings or rented mansions on Nantucket. Entertainment was flown in: One year it was bluegrass singer Alison Krauss and her band, Union Station. These trips were photographed, and the pictures were then bound in leather volumes as keepsakes.

The Rollins clan could easily afford it. Even if their kids had troubles staying productive, Gary and Randall were masters of “meaningful pursuits,” using the steady money from killing vermin to bankroll an oil-and-gas-services holding company called RPC. In 1984 they spun it off from Rollins with a market cap of $52 million. For a long time it was just another good, solid, grimy business–a moneymaker that rode out the inevitable boom-bust cycles of three decades in the energy business.

Then came the fracking revolution, exploding Gary and Randall’s independent wealth far beyond the rest of the family’s. Between 2001 and 2013 revenues jumped from $265 million to $1.86 billion, 55% of which stems from fracking-related activities. Today RPC boasts a market cap hovering above $4.6 billion. Gary and Randall’s combined share is worth $3 billion. Much of this stock is held in yet more Rollins family holding companies and trusts; the two brothers control every last dollar.

The new gusher of money should have made the surprising results of the past few years entirely predictable. Note that Randall’s side of the family, derided by some family insiders as “less sophisticated” than Gary’s branch, has had just as much trouble finding a professional purpose–his five kids were often ineligible for their annual disbursements, with sons Richard and Rob struggling with drug addiction.

But while their dad did occasionally splurge–he once rented an entire cruise ship to steam around New Zealand–they were raised in a less extravagant style. “They’re quiet, not as in-your-face,” says Carroll-Rollins. “Not ‘I’m in the South of France.’ ” It’s surely no coincidence that they also refrained from suing their elders for more cash up front.

IN 2010 GARY AND RANDALL, facing a generation that grew up rudderless, tried to offset any issues in how they were raised with bureaucracy–and policing. Keen to measure how carefully their kids were adhering to the eligibility requirements they’d set up a decade earlier, they constructed yet another formal mechanism, something called the Rollins Perpetual Management Trust. It was intended, say court documents, “to serve as the vehicle through which the governance of the family and its assets is established in perpetuity.”

Critically, it “provided for a ‘monitoring program’ that permitted Gary and Randall … to hire private investigators to follow the plaintiffs around, conduct credit checks and drug tests, and review their medical records.” Gary and Randall sought to install themselves as joint trustees, forcing their kids to agree to the new terms or lose their annual payments. It was viewed as a declaration of war.

Randall’s five kids surrendered, signing the new trust agreement. And in return, their cousins allege in their lawsuit, they were then given a total of $9 million in payouts “as a ‘reward’ for not suing.”

But Gary’s kids–even the productive Glen–hired lawyers. Finding “meaningful pursuits” was one thing, but willingly signing away their personal privacy in perpetuity was another. “We felt we had to leave this family business cult,” says Glen. “We’d put up with a lot. We didn’t want to have our kids and grandkids go through that, or worse. We were unwilling to have them rule from the grave.” They allege mismanagement–that their father and uncle had kept quiet about exactly how much money was in the S trusts. “What they say is they want to preserve the assets for future generations, but that’s not what the trusts say,” says H. Lamar “Mickey” Mixson, the renowned Atlanta lawyer representing Glen and his siblings. “The trusts say you distribute the assets. They devised a scheme to avoid distributing the trusts.”

According to the lawsuit, co-trustees Gary and Randall “actively concealed their conduct with respect to the trust entities and assets, refused plaintiffs’ requests for information, provided false explanations, and generally treated the trust assets as if they were [their] own funds rather than the plaintiffs.” They allege Randall and Gary moved $150 million out of the Rollins Children’s Trust and into an LLC after Wayne died.

“I can’t think of one piece of information they gave me,” Glen testified during a court hearing in 2012. Younger brother Wayne concurred. “My father refused to talk about such things,” he told the court. “I’ve been in the dark 37 years of my life about this stuff, and I would like to know what’s going on.”

Gary and Randall deny breach of fiduciary duties, telling FORBES they “have honored their father’s wishes by managing the family’s assets in accordance with the plan O. Wayne Rollins outlined.”

But there were other reasons Glen may not have wanted to have private investigators nosing around. While for most of Atlanta business society he was still the golden-boy corporate chieftain with a steady hand on Orkin’s tiller, in truth his personal life was an utter disaster. He was struggling with a sex addiction that included a rehabilitative stint at the same place golfer Tiger Woods was treated. “I got some help for a tremendously stressful period,” says Glen. “I had a lot to heal from.” His marriage was unraveling. Glen and Danielle’s Buckhead estate, Boxwood, appeared in a spread in the August 2010 edition of Town & Country . Photos show the lavish, tasteful interiors, newly revamped by high-profile interior designer Miles Redd. In one shot the five family members smile from inside a black Mercedes convertible.

That was a last glimpse at a life already passing from view. Days later Glen and his siblings filed their suit. His mom, Ruthie, filed for divorce from his father two days later, citing “no hope for reconciliation.” Glen was fired from Orkin soon after and cut off from the trust. Over the past four years the Rollins case moved in and out of Atlanta courtrooms through months of hearings, an overturned judgment by the Georgia Supreme Court and two appeals. One of the at least eight lawyers on the case has already made upwards of $1 million from legal fees, says a relative. The kind of sickening numbers that make an entrepreneur want to give it all away.

http://www.estateofdenial.com/wp-admin/post-new.php“It’s like dominos,” says Glen’s ex-wife, Danielle. “My children have lost grandparents, cousins. Their heritage.”

Glen has had no further dealings with the company that bears his family name. He doesn’t speak to his father nor his uncle, now 82, who continues to work at the family business six days a week. Before his ex-wife left Boxwood in July 2014, Glen was renting an Atlanta town house owned by his mom. Now he’s back at the estate, sports cars in the garage, his sister’s former nanny in his bedroom.

Meanwhile, Gary threw one last party this past spring, when he remarried. None of the children that he raised in all that luxury and splendor was in attendance.

Attribution:

Inside An $8 Billion Family Feud: Who Poisoned The Orkin Fortune?
Clare O’Connor
September 29, 2014
Forbes.com
http://www.forbes.com/sites/clareoconnor/2014/09/29/inside-the-3-billion-feud-tearing-georgias-rollins-family-apart/

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