Storymania - This Little Piggy by Matt Crisci

This Little Piggy (17)
Matt Crisci

“What about Wall Street? How could analysts evaluate projections? Make investor recommendations? Create market caps?”
Bob was mesmerized by Michael’s commanding exhibition.
“But Michael, how do I get my management to certify such a non-standard accounting practice?”
That was LaMantia’s problem. “Bob and I are not asking you to do anything you don’t want to do. Tothson’s business is his business. We can’t change that. If you don’t want our audit business we understand. We came to you first because of Lou.”
LaMantia was history. “Let me talk to my technical group so we can determine the best way to package Mansfield’s historical performance to pass muster in Washington.”
After LaMantia left, Bob shook Michael’s hand with a huge shit-eating grin on his face on his face, “That was one fucking, incredible masterpiece. You could sell snow to the fucking Eskimos!”
                                                                                *
“BABE, YOU WOULD HAVE BEEN PROUD of me,” said Michael as he walked in the door.
“How about a kiss first. Business used to be second,” joked Sandra.
Michael obliged. Sandra felt the distraction.
As they sat in the library with cocktails in hand and the fireplace roaring, Michael volunteered the day’s saga.
“My relationship with Bob reached a new level today thanks to sequential parallel transactions!”
“Honey, you’re talking gibberish.”
“Precisely.”
Sandra sipped her drink, as she noticed a disturbing Machiavellian smile across Michael face. The person in the chair was not Michael.
“We’ve got this hot shot accountant telling Bob and I we can’t do this and we can’t do that. He’s literally about to blow one of our big acquisition deals out of the water. So hubby comes up with this line of bullshit. As I was talking, it even impressed me. When I’m done, the guy is dead meat, and Bob is speechless.”
“That’s ‘parallel’ whatever you called it?”
“Today I proved how losing money is a profit item!” crowed Michael.
Sandra didn’t like what she heard.
“Michael, I’m getting scared!”
“Scared? About what?”
“It’s starting to feel like you’ve crossed the line. You’re getting more like Bob than you think.”
“Baby, what’s so wrong about being like Bob. He knows his business.”
“I don’t want my kids visiting their Dad in prison,” joked a dead serious Sandra.
“Prison. Whooa baby! We’re going to be counting our millions in some mansion in Greenwich long before this thing gets out of hand. Daddy’s too smart for that.”
Whooa baby! Sandra knew they had reached that fork in the road. It was her move.
*
FOUR WEEKS LATER LAMANTIA disingenuously dropped the ITI audit certification letter on Kugle’s desk. “Well you’ve got what you want. I hope you’re satisfied.”
    LaMantia’s furrowed brow suggested a man who had been cajoled, persuaded, prodded and coerced.
Kugle extended an olive branch. “Tony that should make the red herring a wrap. It’s almost five o’clock. What say we close up shop early and I buy you a drink at Jordan’s in Grand Central? Maybe we can find a commuter mom to cheer you up,” teased Kugle trying to lighten the moment.
As always, a festive futility engulfed the cocktail bar perched high above the terminal floor. Patrons relieved the day’s stress with a single, double or triple something, as they watched thousands of robotic, alcohol-free commuters dash dutifully for the 5:15, 5:32 or the 5:49 to upscale towns with quaint names like Larchmont, Cos Cob, Greens Farms, Westport and Croton-on-Hudson.
    “Tony, relax,” comforted Kugle over a double Absolut Pepper Chocolate Martini. “Under the circumstances, we’ve done a hell of a professional job with this offering.”
“That’s the operative point all right, ‘under the circumstances.’ Best-case scenario, Bob, Michael and the cowboys make a huge score and we’re professionally ostracized for taking shortcuts and turning a blind eye. I keep asking myself, why did I expose myself and my firm to such a risk?”
      Kugle knew LaMantia was no saint. He was a pig like everybody else. High profile start-ups with $90,000 a month retainers didn’t grow on trees. And, if Bob and Michael turned ITI into a billion dollar enterprise, LaMantia became a slam-dunk for Senior Managing Director, which guaranteed another two hundred and fifty grand in his pocket. Not bad for a 38-year-old kid from Hackensack.
     An electrical fire in the tunnel delayed Kugle’s train ride home to Old Greenwich. Finally, at 1 a.m., Kugle woke Michael. “Michael, sorry for the hour but I wanted you to be the first to know, Rockman delivered their certification at the close of business today. We should be submitting our paperwork to the SEC by the close of business tomorrow. Congratulations.”
“Thank goodness we’re finally operational. I had no idea how much legal mumbo-jumbo was involved in preparing a goddamn prospectus.”
     “The first one always seems the longest and this one certainly had a few bumps in the road. But Michael, remember. We’ve still got to get final SEC approval so don’t start spending the money just yet.”
“Does that include our monthly Delano Mondrain Hudson invoices,” joked Michael. “Seriously, how long should the approval process take?” he asked.
   “Typically about ninety days, depending upon the complexity of the issues they raise.”
     “Holy shit, that long! The Norwest IPO only took thirty.”
   “That’s not relevant. The last time you guys were just a concept company. There’s meat in this prospectus. Don’t hold me to it but my sources tell me the SEC has a lighter than normal backlog, so I think we might slip through a little faster than usual.”
      “Honey, it’s 1 a.m. Don’t you tycoons ever sleep? said Sandra as she rolled over.
     “That was Tom with good news. Very good news. The offering is almost done, babe.”
     “Remind me in the morning,” smiled Sandra. “ I’ll go buy my Lamborghini convertible after work. Should I pick one up for you too?”

#########

Chapter 13.
Redlined by the SEC

GOOD NEWS! BAD NEWS!
     The good news: the initial SEC response arrived at Delano Mondrain Hudson in only forty-five days.
    The bad news: they raised several substantive issues.
    Bob and Michael, anxious to conclude the matter, canceled their afternoon schedules to meet at Kugle’s office. Michael called Sandra to prepare her for another late night.
     “Why kill yourself? Stay overnight in the City,” volunteered Sandra. “I want you around to spend the money once we’ve got it.”
     “But, I won’t get to fondle those great breasts in the middle of the night,” joked Michael affectionately.
“They’ll still be here tomorrow night.”
“What’ll I do about my dirty shirt and smelly underwear?”

      “Buy yourself some fresh stuff. Then put the dirty clothes in a draw. You know, like you do at home!”
About an hour later in a Delano Mondrain Hudson conference room, Kugle summarized,
    “There are two primary SEC issues.”
    “Only two?” chimed Bob with a touch of arrogance. “Based on my past experience, that means we’re almost home.”
      “Normally, I would agree,” said Kugle. “This time I’m not so sure. The SEC has erroneously concluded Nachman, Tothman and Peppard are really one company because of their extensive joint venture activity. Reading between the lines, they view the offering as a neatly veiled stock scam designed to allow related parties to cash out at the public’s expense instead of a legitimate third-party industry consolidation.”
     Bob went ballistic, “Those bumbling bureaucrats took forty-five days to fuck up the facts! Let’s get them the phone. I’ll explain the situation.”
    Tom remained outwardly calm while his brain bristled at Bob’s arrogance. “While I agree they’re mistaken, you and I know there is a protocol to follow. We need to document the three companies were formed at different times, in different states and do significant business with other third parties. And, in the case of Foreman, we merely need to document he has never worked with Nachman, Tothson and Peppard.”
    Bob ignored Kugle and began arguing his case with an invisible SEC Committee.
“How dare you! I’ve never been party to a shareholder scam. My integrity is beyond reproach!”
Tom sneered. “Bob, let’s stick to the facts about the related parties issue. Going anywhere else might dredge up a few unpleasant surprises.”
“What the hell is that supposed to mean?” yelled Bob angrily.
“Let’s just move on,” said Michael knowing the documents were readily available.
“The second issue shouldn’t surprise anybody since it’s been raised by our own auditors—the income recognition treatment of non-cash transactions, section one fifty four, paragraph three of the Code of Standard Accounting Principles. Simply put, the SEC believes Nachman, Tothson and Peppard’s historical incomes are overstated due to the absence of an expense reserve for barter credit fulfillment.”
“How do you suggest we handle this one?” said Bob.
“This subject is so involved that it could take months through the mail,” observed Kugle. “I suggest we request a committee conference. The direct interaction should eliminate any potential technical miscommunications. Maybe we can even bring the related parties issue to a close.”
“Agreed,” echoed Bob and Michael.
“Let me chase down Tony’s availabilities so we can get something scheduled in Washington as quickly as possible,” said Kugle.
“Tom,” said LaMantia a few hours later from a cell phone somewhere in South Jersey, “I’m not surprised at either issue.
LaMantia commented he and his Firm would attend the meeting on one condition: Bob remain invisible. In his opinion, the Company needed representation by someone other than a ‘Fuller Brush salesman.’
Kugle volunteered to obtain Scarborough’s concurrence and then inform Bob.
“Good Luck,” joked LaMantia. “That’s why you get the big bucks.”
Scarborough counseled Kugle on handling Bob. “Just tell him flat out we’ve agreed he’s not going. Remember subtlety is not his strong suit.”
“Bob, the consensus of your staff is that Michael should represent the company in Washington,” explained Kugle prepared for the worst.
Surprisingly, Bob didn’t make a fuss. Seeing Michael twirl LaMantia around his finger, he was confident Michael could easily toss a few curve balls by the bumbling bureaucrats. He and Michael were now chips off the same twisted block.
“Let me tell Michael what we’ve decided,” said Bob, figuring he could score a few loyalty points.
“Mr. Goldstrom, your table is waiting,” said the Mâitre d’. Michael and Bob were now considered Four Season’s regulars.
Bob laid it on. “Michael, I couldn’t be more pleased at your contributions and your learning curve. The feedback from our attorneys, the investment bankers and the accountants has also been extremely gratifying. Once we complete the offering, I’m going to raise your base another hundred thousand and authorize a personal limo driver. You’ve been working hard, you’ve earned it.”
They lifted their glasses to toast as Bob broke the news.
“The SEC meeting in DC has been confirmed for Tuesday, September 6th at 10 a.m. Since, you’re now our resident expert on the income recognition of non-cash transactions, I told Tony and Tom you should be the Company representative at the meeting. You throw the terms around better than LaMantia and his group. Besides,” smiled Bob, “ technically you are the Treasurer and Chief Financial Officer!”
Michael graciously said nothing about Kugle’s call earlier in the day explaining the LaMantia ultimatum.
*
ON THE PLANE LAMANTIA decided to bail big time. Michael would be the fall guy if the SEC took unkindly to the audit methodology. “Michael, I think you should take the lead on the income recognition issues. Our accounting treatment is sound but they may appear more convincing if delineated by an officer of the Company.”
Michael was hesitant. After all, was that part of the ninety grand retainer?
“And no worries. We’re right there if you need technical support,” smoothly assured LaMantia.
Kugle said nothing. After all, if matters got real contentious, he had been instructed to do his own disappearing act to maintain Delano Mondrain Hudson’s squeaky-clean image.
“Michael, Tony makes a good point. In fact since you live with the companies everyday, perhaps it would be best if you took the first crack at the related party issue?”
Michael knew the boys were covering their ass. But he was totally unfazed. Thirteen years in the agency business gave him lots of practice at ‘cover your ass’ situations.
Meeting day was a celebration for the mentally depressed. The SEC building was thirty floors of army-issue steel gray pre-fab concrete slabs, which blended seamlessly with the ominous dark sky. As they announced their arrival at the reception desk, an emotionless matronly woman with her gray hard pulled back into a tight bun stuffed with bobby pins instructed them to “Take a seat until the SEC Accounting Committee is ready for you.” Michael thought the uncomfortable hard wooden benches in the lobby somehow seemed highly appropriate.
Once summoned, Michael, Kugle and LaMantia entered a sterile white room where three stone-faced figures sat at the far end of a long table. No warm-ups, no introductions, merely a curt “Gentleman, the meeting is yours.”
Michael rose. “Thank you for your time. We are here to respond to the primary issues raised in your correspondence, file number two-three-six-six-five, dated August twelfth. Specifically ITI’s contemplated acquisition of selected companies as related party transactions and the Company’s income recognition practices regarding non-cash transactions.
The main man behind the desk introduced himself as Franklin Bridges, SEC Chairman. He also briskly introduced the men seated to his left and right as East Region area managers, Mr. Costello and Mr. Davies. (No first names).
Bridges asked, “Are you Mr. Goldstrom?”
Before Michael could answer, LaMantia introduced himself and explained Michael, as the company’s Chief Financial Officer and Treasurer, was eminently more qualified than Mr. Goldstrom to deal with the issues.
“That’s unfortunate,” said Bridges glaring at LaMantia as he addressed his colleagues. “According to the public record, Mr. Goldstrom has been challenged by this office with respect to aggressive income recognition practices in prior ventures. Would that be a fair characterization, Mr. Costello and Mr. Davies?”
Michael deftly ignored the comment and stayed the course. “Perhaps we should begin by discussing the related party Issue?”
Bridges corrected Michael. “Sir, let’s be perfectly clear. We are not here to discuss anything. You are here to demonstrate why the allegations of potentially fraudulent securities activities are frivolous.”
Michael spent the next thirty minutes succinctly discussing the business of each acquisition—their genesis, their independence and their unrelated managements. He produced books, records and client lists as documentation. He provided case histories that illustrated corporate titans such as AT&T, Time Warner and General Electric historically joint ventured with firms they eventually acquired.
“With all due respect, sir,” said Michael, “When was the last time one of these firms’ acquisition financings were characterized by your office as related party transactions?”
Bridges called for a recess. The three bureaucrats conferenced in an adjacent room.
“Tom, what the hell is going on?” asked Michael.
“Don’t know. I’ve never seen anything like this before. You, Tony?”
“Me either.”
The group returned. Bridges declared, “The SEC recognizes the company’s rebuttal and documentation thereof and withdraws its opposition to the related party issue.”
Michael remained unemotional, thanking the SEC for their decision as he moved to the second issue tout de suite. He succinctly presented his A and B argument, the construction and implementation of barter credit transactions as unlinked activities. He showed letters of endorsement from clients and their legal departments.
The three SEC members fired questions trying to trip him for almost two hours. Michael’s performance was flawless and bulletproof. LaMantia and Tom remained stone silent throughout the entire proceeding.
Finally, an obviously flustered Bridges said, “We have no more questions.”
Kugle broke his silence. “Does that mean the issue is resolved?”
“No, it merely means we have no opinion on the way the company recognizes revenue at this point in time.”
“What are the next steps?” pressed Kugle.
“To adjourn the meeting,” said Bridges abruptly.
Nature called! Kugle decided to make a pit stop prior to leaving the building. While doing his business in the bathroom stall, Costello and Davies entered the men’s room to take a leak. Neither realized Kugle was present.
“We’ve got to convince Franklin to put these ITI guys on ice until we figure out how to mandate adjustments in their numbers,” said Costello. “That Martini is slick.”
“Talking about slick,” said Davies, “Did you get a load of his pointed single breasted lapels! He’s really got his act down. If you didn’t know better, you’d swear he actually believed what he was saying.”
“That reminds me,” said Costello, “Was the FBI able to dig up any dirt on Martini?”
“Not a goddamn thing,” said Davies.
Kugle waited until the next morning to report on the SEC ‘bathroom meeting.’ He wanted to avoid the conversation in LaMantia’ presence.
“Fellas,” said Kugle on the ITI conference phone, “ I’m taking a leak last night when our SEC friends walked in….”---Kugle proceeded to give Bob and Michael a blow by blow.
“So what do you think?” asked Michael.
“It’s clear these guys are going to redline us. I just don’t know for how long.”
“What’s redlining?” said Michael.
“It means SEC will withhold final approval by continuing to ask questions,” said Bob impatiently. “The fuckers. The unmitigated gall! The last time they did this to me, I had to wait an extra six months.”
This was first time I heard there was a last time, thought Michael.
“Could be a repeat. No real way of knowing,” said Kugle.
“I could care less how long they break my chops,” said Bob. “But their delay tactics may cause my ‘subject to’ contractual agreements to expire, effectively killing my offering. Those bastards. I won’t let them beat me!”
Michael noticed how many times his partner said ‘me’ and ‘my.’
“Tom, how much does Marty know about the bathroom conversation,” asked Bob.
“Nothing yet. I thought I should tell you guys first because….”
“Tom, can you keep your goddamn mouth shut for a few days?” asked Bob. “ I figure the key to the contract extensions is Nachman. If he steps up, they’ll all fall in line. But we’ve got to catch Sam off guard before fucking Marty gets to him.”
Kugle reluctantly agreed. It was the right thing to do for his client although not necessarily for the Firm and certainly not for Marty. Delano Mondrain Hudson now had two clients with conflicting agendas and two senior partners with conflicting client agendas.
“I’ve got a thought,” said Michael.
“All aboard,” smiled Bob. “Michael’s Magic Carpet is about to take off!”
Michael nodded.
“Why don’t I arrange a meeting with Sam, ostensibly to obtain his input on how to expand our post acquisition deal flow? When I get there I’ll congratulate him on his appointment as Chairman of the Integrated Trading Advisory Board. While I’m sucking up, I’ll casually drop in the need for a contract extension.”
“Sounds like a plan,” said Bob. “But what the hell is the ITI Advisory Board?”
“Haven’t got a clue. But it’s all the rage in the agency world. Clients think it adds an experience cache. I’ll whip up something on the plane across.”

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