Former Gov. Wallace Wilkinson Dead At Age 60

(LEXINGTON, Ky., July 6th, 2002) -- Former Governor Wallace Wilkinson died Friday afternoon after being on life-support for the last nine days. Wilkinson suffered a massive stroke Thursday at Saint Joseph Hospital in Lexington. He was 60 years old.

Wilkinson had been battling a recurrence of lymphatic cancer that first was diagnosed while he was governor.

Wilkinson, who had received life support for the last nine days and suffered a massive stroke on Thursday, died at 4 p.m. EDT at St. Joseph Hospital in Lexington, said Bob Brown, an attorney for Wilkinson.

"The family expresses its deep appreciation to the many friends who gave their support during this difficult time," Brown said in a statement.

Funeral arrangements were incomplete.

Wilkinson, a Democrat, was governor from 1987 to 1991. He ran as a fresh face, a self-made and audacious millionaire who started a used-book store as a teen-ager and built it into a national company.

Highlights of Wilkinson's administration were creation of the Kentucky Lottery, which he had pushed as an alternative to higher taxes, and enactment of the 1990 Kentucky Education Reform Act, which, ironically, was accompanied by a $1 billion tax increase.

The reform act included the setting of high performance standards and required that schools be held accountable for their results. It also greatly increased school funding.

Wilkinson predicted that the act one day would be seen as "the watershed event in our history," and he wanted it to be his legacy.

But Wilkinson was dogged throughout his administration and for years afterward by questions about whether his powerful public position also was good business for himself.

Once elected, Wilkinson allegedly got a state-regulated company, Kentucky Central Life Insurance, to pay an inflated price for a money-losing hotel he owned in Frankfort.

Kentucky Central later went bankrupt, and the state insurance commissioner sued Wilkinson. The former governor paid $11 million to settle the case in 1999.

There were other dark episodes. Wilkinson was stricken with non-Hodgkin's lymphoma while in office. He feuded incessantly with the General Assembly. His appointments secretary, who also was his nephew, went to prison in a bribery scandal.

A federal grand jury investigated Wilkinson, but he was never charged and indignantly denied any wrongdoing.

Out of office, Wilkinson plunged back into business, rarely made public appearances and largely dropped from sight. That changed in February 2001 when a group of creditors, some of them longtime business or political associates, filed suit to have his companies
seized.

The suit touched off a highly public bankruptcy in which Wilkinson admitted his debts exceeded assets by more than $300 million. His main companies were rapidly liquidated, and many of his holdings were auctioned. Wilkinson moved his residence from Lexington to Florida during the bankruptcy. His wife, Martha Wilkinson, also filed for bankruptcy. In the meantime, Wilkinson's cancer recurred.

Back in Lexington for a deposition, Wilkinson was hospitalized with chest pains on May 26, and was expected to undergo bypass surgery. Instead, doctors found a mass in his chest and removed it on June 4. A statement from the family said tests "have revealed the rapid acceleration of the lymphoma."

Wilkinson had generally declined to discuss his health, but it was an issue in his bankruptcy. The court put him on a budget that included $4,731 a month for medical travel, treatment and prescriptions. But whether the allotment was for other members of
the family or Wilkinson exclusively was never disclosed.

Wilkinson answered health-related questions from his creditors' attorneys during a deposition in June 2001, but Bankruptcy Judge William S. Howard sealed the transcript to protect Wilkinson's privacy.

Wallace Glenn Wilkinson was born Dec. 12, 1941, in Casey County. His father, Herschel Wilkinson, ran a grocery in Liberty, the county seat.

Wilkinson married Martha Stafford, his high school sweetheart, in 1960. They set up housekeeping in Lexington, where he had entered the University of Kentucky, intending to become an engineer.

Meantime, Wilkinson had sensed there was a market for used books, and at 19 he opened a store. He and his wife both dropped out of the university to concentrate on running it.

The store grew into a national company, Wallace's Bookstores Inc., which at its peak operated 91 stores on 60 college and seminary campuses. It would remain the base of Wilkinson's business empire, which at various times included a charter flight company, commercial real estate, control of a string of Kentucky banks, large-scale farming and investments in coal and timber.

In 1999, Wilkinson made a fateful decision to launch an Internet-based book seller, ecampus.com. It proved to be a disaster. The bottom fell out of technology stocks early in 2000, and a planned public offering of ecampus.com stock never materialized. The company, launched with $90 million in venture capital, brought a bid of $2.5 million at a bankruptcy auction two years later.

Wilkinson's business collapse was as sudden and stunning as his political success.

Though prominent behind the scenes in Democratic politics, Wilkinson was largely unknown to the voting public when he plunged into the 1987 governor's race. His primary opponents were four veteran campaigners -- former Govs. John Y. Brown Jr. and Julian
Carroll; Lt. Gov. Steve Beshear, who later became a nemesis in other ways, and Grady Stumbo, who had made a strong run for governor four years earlier.

Wilkinson made education his campaign centerpiece. He sneered at "assembly line education" and said nothing short of a total makeover of public schools would raise the state's near-bottom ranking. Part of his mantra was that Kentucky children "don't have a learning problem; they've got a schooling problem."

But it was a different issue -- a call for a lottery instead of more taxes -- that gave his candidacy wings. Wilkinson won the Democratic nomination with 35 percent of the vote. In the general election, he swamped the Republican nominee, state Rep. John Harper of Bullitt County. Wilkinson got 65 percent of the vote and carried all but five of the state's 120 counties.

Once Wilkinson took office, the General Assembly proposed an amendment to repeal the 1891 constitution's ban on state lotteries, and voters approved it in 1984.

Wilkinson also wanted a second amendment -- one to allow himself and other constitutional officers to run for a second term. An amendment bill passed the House but died in the Senate. The fight seemed to poison Wilkinson's relations with legislative leaders, but he claimed it was calculated.

Never one to relinquish the last word, but always one who sought to be the definer and interpreter of events, Wilkinson wrote a book after leaving office. He titled it "You Can't Do That, Governor." His contempt for conventional and political wisdom is one of its
themes.

Noting that all but a handful of legislators had backed his opponents for governor, Wilkinson said he was deliberately confrontational with the General Assembly, which had been gaining independence and power at the expense of the executive branch.

"I came into office understanding that I would have to put up a fight for some of the things I wanted," Wilkinson wrote. "All this talk about 'working with the General Assembly' actually was nonsense. ... From a practical standpoint, I really had no other option than to enter into open political warfare with the legislature."

In 1989, the Kentucky Supreme Court declared the entire public school system unconstitutional because of the inequities of a funding scheme based on property taxes and property values.

The reform act was crafted and passed a year later, along with an increase in the sales tax to generate $1.1 billion. Wilkinson went along, getting in return approval of a bond issue with which to launch road projects he had promised in his campaign.

Economic development events during Wilkinson's administration included a major expansion of Delta Air Lines in northern Kentucky. In addition, Scott Paper Co. built a plant near Owensboro and a Spanish-owned steel company, North American Stainless, placed a plant near Carrollton.

Wilkinson was diagnosed with cancer in 1991, his final year in office. He underwent surgery at the Mayo Clinic in Rochester, Minn., and radiation treatment at the University of Kentucky. Aside from some loss of hair, Wilkinson showed no visible effects of the disease, and his physician said he had an excellent chance of recovery.

Out of office, Wilkinson became entangled in the bankruptcy of Kentucky Central Life Insurance, which had financed some of his projects. A law firm headed in part by Beshear, the former lieutenant governor, handled the liquidation and sued Wilkinson's companies in connection with it.

When Beshear jumped back into politics to run against Republican U.S. Sen. Mitch McConnell in 1996, Wilkinson publicly endorsed McConnell. Five years later, Beshear represented unsecured creditors in Wilkinson's own bankruptcy.

Before that, Wilkinson's most serious brush with the courts came in 1995, when federal prosecutors described him as a "co-conspirator" in the bribery case of John Rogers, a former Republican state senator from Somerset.

The case turned on events before Wilkinson was governor -- the legislative session of 1984, when the General Assembly enacted a law allowing banks to branch across county lines. Wilkinson, who was deeply into the banking business at the time, lobbied ardently
for the legislation.

The government alleged that Rogers was part of a group that struck a deal with Wilkinson: If the legislation passed, Wilkinson would share the profits of a coming bank deal.

Wilkinson, who said the insinuation was "truly malicious," was never charged. U.S. Attorney Joseph Famularo announced in July 1995 that he would not indict Wilkinson because he doubted he could win at trial. Rogers, however, was convicted of extortion conspiracy and mail fraud, among other things.

Wilkinson had another embarrassment in 1993 when Bruce Wilkinson, his nephew and former appointments secretary, was convicted of taking a $20,000 bribe and sent to federal prison for three years.

A jury decided he had agreed to use his position on his uncle's staff to help fix an arbitrator's decision in a dispute between two horse tracks. Bruce Wilkinson, who had worked at Wallace's Bookstores before going to Frankfort, followed his uncle again in 2001 by filing for bankruptcy.

(Copyright 2002 By The Associated Press. All Rights Reserved.)