This Little Piggy (20) “Michael, my brother’s reports have blown big time!” Michael figured the best way to find out what was going on was to make like he knew what was going on. “Calm down. There’s gotta be a solution.” “Forbes Magazine discovered Steve’s research report was a fabrication right on down to the Market Insights logo. They even located and put the fear of God into our printer---that distributor in Peoria. Told them they were planning a big exposé naming names. The guy was so frightened he gave Forbes copies of the new report. Then he called and told him he’s was going to file a stock tampering complaint against ITI with the SEC to save his own ass!” Michael was and wasn’t surprised at Dothan’s revelations. “If this research thing blows, my rep as a research analyst is fucked. Besides, Jesse has put a lot of heavy hitters into the stock…They’re already pissed that the stock hasn’t moved like we promised! They’re ready to blow the whistle! Christ, they’ve even threatened to pay us a visit! I need something positive to report…anything!” Michael knew it again was ‘Showtime.’ But Dirk’s people were different than Berger’s people. They were a better class of scumbag, so his performance required a touch more sophistication. “Ray,” said a confident Michael, “No problem. Just stay calm. As a friend of the Company, I can give you some really tasty inside shit. Just keep it off the record.” “Deal.” “I had lunch privately with Scarborough over at Whitlaw & Company yesterday. We spoke for a couple of hours. Given the SEC issues, Whitlaw & Company recommended switching to a Private Placement. I gave him the green light. While it’s a bit more expensive than the public deal, it’s a whole lot faster. We’ll be done in a couple of weeks. Herb even stopped in to reinforce Phil’s recommendation. He assured me they’d call in favors to make sure it gets done.” Ray smelled bloody coup. “I gave him the green light,” reverberated in his head. Within minutes, Radio Dothan was on the phone to Bob. A flabbergasted, angry and bitter Bob screamed into the phone. “That little two-faced bastard! I made him!” Michael had just committed the fatal error. He played politics with the wrong person. Michael had broken the trust among thieves. He was now ensconced in a survival of the fittest! * BOB’S CAMPAIGN TO DESTROY Michael began with an appeal to his rapidly inflating ego. “You’ve got Nachman’s confidence. It might be better if you wrap up the extension with Edleberg one-on-one. I’ll only get all emotional and fuck it up.” Bob underestimated Michael’s cunning. Michael knew he was in over his head and was not shy about summoning his new found, trusted consigliore, Tom Kugle. “Tom, how about lunch? I heard that new Armenian Restaurant, El Habib, on 48th and Second is pretty good.” said Michael, who had never eaten Armenian food in his life but knew Kugle adored the stuff. “Great idea,” said the knowledgeable Kugle. “The New York Times review said they have the best taboule salad in the City.” “Terrific,” said Michael, who didn’t have a clue. “I love taboule.” Sitting at a tiny table with a cheap brass chandelier dangling above their heads and unfamiliar smells permeating the joint, Michael established the issue. “Tom, I don’t know if you’re aware. I’m meeting with Marty this afternoon to discuss the Nachman contract extension.” Kugle shrugged like he didn’t want to know. “I’m concerned about Marty’s ethical dilemma. I understand the same law firm can represent competing companies but how can the same attorney fairly negotiate the competing interests of two of his own clients? Marty’s first loyalty has got to be Sam and his family, even if it damages ITI.” Kugle didn’t disagree. He knew what was coming. “Tom, I want you to represent ITI in the negotiation,” said Michael. “I can’t.” “You mean you won’t?” “Look Michael, I’d like to help. But I also work for Delano Mondrain Hudson. This deal has just too many goddam conflicts. I’m going to ask the Firm to take either Marty or I off the ITI assignment.” “ Tom,” begged Michael on a personal level. “Please don’t hang me out to dry.” Kugle knew Michael was about to enter the den of thieves. Against his better judgment he acquiesced, “I suspect I’m going to be sorry, but okay. Okay.” Two hours and two taboule salads later, Edleberg, Kugle and Michael were playing cat and mouse. “Fellas, to be perfectly honest,” said Edleberg dressed in his Sunday best bullshit, “this may be one of the most difficult professional challenges. I’m representing two competing clients who both expect a win-win situation.” “We came to the same conclusion. It’s an unfair burden. So I think Tom should represent ITI.” Edleberg knew his bag of tricks had been violated. “Tom, thanks for stepping up to the plate,” said Edleberg who relished the idea of burying his former student and the fucking rookie entrepreneur. “Fellas, as you know, Sam is one hundred percent committed to the success of ITI. The contract extension is yours, period. There’s no quid quo pro. He’s not looking to remove or even reduce his fifteen million dollar credit line commitment. All he asks is that the personal guarantee reflect the original understanding with respect to time of use.” Michael knew Edleberg had just told him, there would be no extension on the credit line. That meant the Nachman personal guarantee dropped from twenty-four to twelve months. Michael was furious because he knew that could come back to haunt them when Company operations commenced. Kugle grabbed his arm. Both knew they had been screwed, but completing the private placement was even more critical. Otherwise there would be no ‘Company operations.’ “Marty, under normal circumstances that would be excellent compromise,” said Kugle lying through his teeth. “Michael and Bob have had preliminary meetings with a number of lending institutions. Unfortunately all have characterized ITI as start-up, despite the significant operating histories of the individual acquisitions. They want to see a year of post acquisition operating results before extending a new credit facility. Truncating the Nachman credit facility to twelve months would leave absolutely no margin for error.” Edleberg ignored Kugle. ITI’s problem was ITI’s problem. “Sam also wants to review the books and records of the Company, no less than quarterly, until the closing.” It was now Michael’s turn to show restraint. He had another plan. “Why the books and records request?” said Michael. Edleberg took Michael and Kugle’s silence to mean the reduction in the personal guarantee was agreed. “In truth, Sam feels you fellas have gone through a hell of a lot of money—what almost ten million in a year? He may have some operational suggestions.” “Marty,” said Michael, “What makes you think the Company is running out of money?” “Hey, who’s kidding who? When Christine was at your offices the other evening, she couldn’t even get a cab voucher to go home. Astrid told her, ‘We’ve been instructed to watch every penny.’” * THE EDLEBERG POST MORTEM was held at Whitlaw the following day. Scarborough was furious about the latest squeeze while the increasingly concerned Bob saw it as an opportunity to restore some luster to his ego. “Phil, with all due respect, you’re getting in a lather over nothing,” said Bob exuding casual confidence. “Bob, what the hell are you going to use to close deals? Marshmallows?” Scarborough was the perfect straight man. “Weeks ago, I anticipated the need for more credit lines after we completed our next financing. Nachman or no Nachman,” said Bob. “Turns out my old United Medical lending officer is now the senior loan officer at Security Pacific, the largest commercial lender on the West Coast. I’ve already got verbal approval for a twenty million ITI line of credit.” “Based on what?” challenged Scarborough. “Based on Nachman’s and Tothson’s historical financials.” “Bob, need I remind you, there’s nothing to collateralize. Did you happen to mention to your buddy that Nachman and Tothson were ‘zero net worth transactions?’” Scarborough’s use of the phrase ‘zero net worth’ set off alarms in Bob’s head. Hadn’t Michael invented that bullshit Madison Avenue lingo? Dothan was right…Scarborough and Martini were thick as thieves. “Nachman’s got us over a barrel,” said Scarborough. “Not really,” said Michael, ready to score his own points. “The way I see it, Sam probably had nothing to do with the request. I’m betting it was Marty’s idea. The bastard.” “So what are you saying?” said Scarborough. “I’m saying we just make like we agree. Then we’ll tell him I want to fly out and sign the thing personally with Sam just to show there are no hard feelings. When I get Sam one-on-one I’m pretty sure he’ll sign an extension with the original twenty-four month commitment,” said Michael with a big shit-eating grin. “Marty will cut your balls off,” said Bob. “Screw ‘em. Once I’ve got the agreement signed, what’s he going to do?” said Michael. Scarborough just smiled. He loved the boldness. * “MICHAEL, SAM AGREES.” said Edleberg on the phone. “He wants to sign the agreement in person and take you to dinner and a Lakers game. He gathered at La Costa that you’re a big pro basketball fan.” Michael was very, very pleased. He was going to screw Edleberg royally and have a night on the town in LA. It didn’t get much better than that! Michael slept like a baby in his oversized soft leather recliner at 37,000 feet. As the plane taxied to the gate, a sexy, shaggy haired blonde stewardess with an hourglass figure gave Michael some instructions. “Mr. Martini, I was told to make sure you got off first. Your shuttle cart will be right outside. Your bags and your escort apparently will be waiting at baggage claim.” An unfamiliar chauffeur met Michael at baggage claim. “James went back East. Took the old bus with him. I’m Rodney,” said a gruff voice with a New York accent behind the smoked glass divider of the pink and white limo. “So how do you like the new bus? My goil’s an interior decorator. The leopard skin seats are custom.” Michael had never seen so much bad taste accumulated in one small space. “Rodney, no doubt about it, your girl’s got a touch.” “Da Boss wanted me to inform you there’s been a slight change in plans. Game foist, dinner later. Okay wit ya, Mr. Martini?” “Sure, fine. Whatever.” The limo stopped in front of the players’ gate. An usher opened the door, “Welcome to Staples Center, Mr. Martini, home of the world champion Los Angeles Lakers. Mr. Nachman asked me to personally escort you to his seats.” Michael followed the usher down the aisle past the $1,500 a pop VIP courtside seats. They stopped at the end of the Lakers’ bench. There sat a smiling Nachman in his signature Fila jump suit, which was colored in Lakers purple and gold. To Nachman’s left was a lusty brunette with huge red lips, big tits and a skirt so skimpy that the 10,000 fans on the opposite side of the court knew she was primed for immediate entry. “Michael, sit down, sit down. I want you to meet some people.” To Nachman’s right was a ruggedly handsome man in his early thirties with jet-black hair and warm generous deep blue eyes and a long-legged, red-haired model draped over his shoulder. “Michael, this is my son Albert and his girlfriend. Honey I’m sorry, what was your name again?” Michael thought to himself, isn’t this quaint? Two happily married men with loyal wives and six kids out on an intimate double date with 20,000 of their closest friends! “Albert, this is the extension I was telling you about.” “Sam, before you look at it, you need to be aware I did make one change from what we agreed with Marty. I left the credit line guarantee at twenty-four months. We really need it. I’ve been talking to the banks.” “What did Marty say?” “I didn’t tell him.” Nachman laughed, as if to say, ‘kid, you have a pair of big brass ones.’ He then handed the three-page extension agreement to Albert while the entire arena cheered and screamed as the game headed into overtime. Albert studied the document like he was in a private conference room. “Dad, it’s fine. It’s exactly as you and Marty agreed. Except for the personal guarantee.” “Do I have the right to cut Bob’s balls off, if he leaks my company information?” “Yes.” “And do we get our Company name back if they screw things up?” “Yes.” “Joanne honey,” said Sam to his date. “Would you bend over?” Michael wondered what was next! Nachman took a pen out of his pocket, rested the document on her back and signed both copies. He patted Joanne on the ass then gave a copy to Albert and Michael. “No more business, let’s enjoy the rest of game. And, send me a picture of Marty when he finds out,” gleamed Nachman. ########## Chapter 18. Haut Brion 1945, ‘61, ‘69 ANOTHER SURPRISE GREETED MICHAEL upon his return to New York. This time it was a pleasant one. Nachman and talked to Tothson and Tothson had talked to Peppard. Neither claimed they wanted any extra goodies for their contract extensions. In point of fact Nachman had pointed out to Tothson this was his chance to gain legitimacy, to get out from under a $200 million ticking time bomb called Mansfield barter credits. As for Al, he was along for the ride. He never dreamed somebody would give him a million dollars for fluff! Michael assumed Jerry Foreman was wired to the rest of ‘da boys.’ Meaning some unforeseen curveball lurked in the shadows. “Jerry, as you’ve no doubt heard,” said Michael two days after the Tothson-Peppard pledge of allegiance, “we’re run into trouble with the SEC.” “Trouble…What kind of trouble?…How would I have heard?” “Well I just thought that…” “Michael, let’s not discuss this on the telephone. Tell you what. Come over to the house tomorrow night. We’ll have some drinks and a little dinner. My Ruthie’s a great cook. You can explain the whole thing with no interruptions. And bring Sandra, so Ruthie has company while we talk. Okay?” “Okay.” * “SO WHAT ARE THE FOREMAN’S LIKE?” said Sandra as the cab zoomed uptown the following evening. Michael was preoccupied. What the hell does Foreman want? Why negotiate at home? Does Ruthie do the negotiating? “Michael? Hello Michael. Come in Michael!” said Sandra waving her hand in front of his eyes. “All I know is they’ve been married over thirty years.” “Well that’s certainly a step up from old Bob.” The cab pulled into a circular driveway with a twenty-five foot high entrance canopy at 310 East 71rst, the crème de la crème of the Upper East Side. The lobby was pure Foreman—glitzy and expensive yet somehow tasteful. Sleek mahogany walls, two huge contemporary crystal and silver chandeliers, rich green marble floors and white marble Roman Ionic columns on both sides of an imposing concierge station. ‘Good evening Mr. Martini,” said the concierge. “How did you know my name?” asked Michael. “Mr. Foreman told us to expect you. He described you briefly sir.” “Oh, he told you to look for an athletic Jim Thorpe type with beautiful blue eyes?” teased Sandra. The concierge smiled. “Something like that, madam.” A friendly well-preserved, well-proportioned and well-mannered lady wearing a stylish black sequin dress opened the door. “Michael, Sandra, do come in. I’m Ruthie.” Ruthie’s wrinkle-free porcelain complexion and long black hair made her appear younger than her fifty-eight years. Clearly, she’d had a face-lift or two or three in her day. Cocktails in hand, the Foreman’s proudly began a tour of the eleven-room apartment with mirrors strategically placed in every room and every hallway to make the generous 8,000 square feet home seem even more so. Family pictures of a rich full life were everywhere. Not my taste, thought Sandra, but it does work. The ladies found immediate commonalities. Each had two boys and both were simple traditionalists with a strong taste for ‘The Good Life’. Sandra, a proud Italian-American Princess. Ruthie, a slightly older Jewish-American Princess. “Ruthie, can I help you with dinner?” “What’s there to help? I’m a horrible cook. Fortunately, we live in Manhattan and Jerry’s been having dinner at La Grenouille for years. They know exactly what Jerry likes and how he likes it prepared. I just called Maurice and said ‘we’ll be four tonight.’” “What did he suggest?” said Sandra. “Suggest? He just said ‘Ruthie, we’ll make a nice four-course dinner: La petite beouf cassoulet to start, followed by a baby arugola and endive salad with truffle shavings, than baked Chilean sea bass on a bed of white asparagus and for dolce, a parmesan crumble rhubarb tart. Jules will deliver and serve each course about 20 minutes apart.’” “I like your style,” smiled Sandra. “Too bad there’s no Grenouille in suburbia.” “So get a place in the City. Why would anyone live in the suburbs. What’s there to do?” After a spectacular dinner, Michael and Jerry retired to the den. As Michael attempted to explain the SEC situation, Jerry’s eyes glazed over. “Michael, I’m really a simple man. I don’t understand all this income recognition of non-cash transactions and related party issue gobblely-gook.” “Fair enough,” said Michael. “Then let’s keep it simple. What do you want for a twelve- month contract extension?” “What do you mean ‘what do I want?’ We agreed on a deal. Like I told you Jerry Foreman’s word is his bond.” Understandably, Michael waited for the other shoe to drop. “You know, Michael, despite our flashy appearance, the Foreman’s are a conservative family with basic values. Admittedly, we are son-of-a-bitch negotiators and always try to get the best deal. But once we agree, a deal is a deal. No matter what.” Michael was still waiting. “Bobbie and Steven are my pride and joy. With the help of God, you and Bob will be fabulously successful and make F&M larger than I could ever do by myself. I plan to give all the money and the stock to the boys so they have a vested interest in helping you.” Michael smiled. “Michael, you’re not that much older than my sons. Do you mind if I talk to you like a Jewish Father.” “Not at all.” “Michael, you’re in with a very tough crowd. Nachman is a crook! He’s ruthless. He’ll do anything for the action. With him, it’s not about the money. Tothson and his barter black box is full of shit! He makes like your buddy, but he’s slick as an eel. And Peppard, he’s a self-parody. With champagne taste and a beer pocket book.” Michael was stunned by Jerry’s candor, disturbed by his observations. “Michael you’re a nice young man. You’ve got a lovely wife. Two sons you’re obviously proud of. Be careful. And never forget Bob is just like them. Maybe worse.” Jerry hugged Michael as Michael whispered in his ear “ Don’t worry I’ll be okay. I’m learning.” * WHILE JERRY PLAYED JEWISH FATHER IN THE DEN, Ruthie played Jewish Mother in the living room. “Did you enjoy dinner my dear?” said Ruthie sweetly. “The meal was fabulous. You’re apartment is fabulous. And, I can feel your family’s fabulous. What a life. ”
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