1
“How the hell could you lose a hundred thousand
dollars?” Nick Archer demanded, banging out the last three words
like a hammer hitting a nail.
The silence from the phone in Florida lasted quite some time before
Harry Stanton answered, his voice sounding older than Nick had ever
heard before.
“It was a business investment that went south and now the money’s
gone. It’s nothing to get your knickers in a knot about.”
A long silent pause followed; then Nick spoke.
“How’s Kitty taking it?” Nick worried about his
old friend’s wife.
“Oh hell, you know Kitty. She was in from the start and took
the loss like a trooper. I’m sorry though. It’ll change
things a lot.” Harry sounded sad, as well as old and tired.
“I’m sorry too,” Nick sighed. And he meant it. He
and Harry Stanton went back over thirty years and though he was at
least twenty years younger than Harry and his wife, the bonds of friendship
grew closer and stronger each year. Now, they were more like relatives
than just ordinary friends.
“Listen,” Nick said, “I’ve some business in
Miami later in the week. I’ve found some old ambulances in Hartford
that are perfect for the Chaves operation; you know the guy I mean,
the Cuban. How ‘bout when I finish with him I drive over and
we have one of our long lunches. I can arrange to fl y home from Tampa.”
“OK, let me know when and I’ll make reservations,”
Harry offered. A moment later they exchanged goodbyes and ended the
call. Nick Archer started mentally arranging his trip as he placed
the phone in its cradle. His Miami customer made a perfect excuse
to fi nd out what was going on…
Four days later Nick sat across from Harry, beer in hand, still savoring
his chowder and crab cake luncheon. The sun had long passed it’s
zenith but still bathed the two old friends in its warming light as
they quietly sat by the water. The patio of the Twin Dolphins pub
was a good choice for their lunch. Their table was apart from others
and their waitress sensed the two would be in no hurry so she left
them alone. Over the years she had seen their like many times. Old
buddies, possibly brothers, one with
a Floridian’s tan; the other pale, obviously a northerner, down
for a visit and a catch-up session. She knew they’d be relaxing
over a long lunch, swapping stories, catching up on news, telling
each other a few lies and absorbing the good vibes of just being together.
Once their plates were cleared away she came near only when the younger
one’s beer ran low. She’d bring a fresh one and the coffee
pot for his friend. Around 3 p.m. she knew their long lunch was fi
nally coming to an end as they both sat silently, staring into space,
soaking up the late afternoon sun. She started preparing their bill.
“How could it possibly happen?” Nick asked quietly for
the third or fourth time. “I told you. It just happened. Not
just to me but to quite a few others as well,” Harry answered
just as quietly. He sat sullenly, looking tired and much older than
Nick had ever seen. It was as though he’d aged more than half
a lifetime over the last three hours of lunch and conversation. Harry
looked lost. Nick leaned forward in his chair. “So are you and
Kitty completely broke?” “Oh hell no,” Harry bristled.
“I’ve got my social security. She’s got hers. We
still have a few small investments that are locked in for a couple
more years and I have an old pension from one of the airlines I worked
for.
We also have some bonds and a bit in bank notes. We’re not broke
or destitute but losing a hundred thousand has put a hell of a crimp
in our lifestyle. You’re looking at near a thousand bucks a
month income gone for the rest of our lives. We’re lucky though.
The house is free and clear. I didn’t borrow against it, although
I know some who did.” He spoke in an old tired voice without
looking at his friend.
Nick just nodded his head. He was still digesting the ghastly story
spewed out by Harry since lunch ended, trying to sort out the whole
shocking tale and not get too angry at those who had taken his friend
so badly… Their reunion had started as expected when Harry drove
through downtown Bradenton to the restaurant in the Memorial Pier
Building on the Manatee River. It was one of those days the Florida
Tourist Board brags about in all its advertisements. As the two old
friends got out of the car and strolled across the parking lot toward
the waterfront, Nick knew the loss of so much money was troubling
his
pal. There was no spring in Harry’s step. No pointing at buildings
or boats and above all, no jibes about the frozen streets of Nick’s
home town of Toronto. Nick didn’t push, but he had a feeling
Harry wanted to get the whole story off his chest.
They picked a table at the end of the rail with a great view of the
river and the boat docks, settling in for their lunch. It didn’t
take long for the story to come out.
Nick knew his friend had dropped a lot of money but was stunned to
learn Harry and Kitty had lost nearly all their savings in an investment
scam. Not an investment, but an investment scam. A well planned con
game, run by a bunch of very smart crooks…
The whole unbelievable story started more than a year earlier when
Harry and Kitty attended a charity fund raiser hosted by the local
Latino Businessman’s Association. Harry had worked for Eastern
Airlines in Havana many years before and always enjoyed working with
his Latin brothers, as he called them.
The guest of honor at the function was a high ranking member of the
Columbian Embassy staff and the aim was to raise some cash to help
improve a couple of orphanages in Bogotá and Cali. It was a
nice event. There were South American guitar players, fi nger food
with salsa, and lots of drinks. The only penalty involved were some
mandatory and vacuous speeches from local politicians and several
of
the area’s prominent Latino community leaders.
Between two of the seemingly endless speeches someone introduced Harry
and Kitty to Anthony DiSilva, the president of a large Columbian mining
company. The charming Mr. DiSilva, or Tony, as he asked everyone to
call him, was six foot tall, in his mid forties, and very well dressed.
He was also burdened by the kind of smooth Latin good looks that made
men envious and women breathless.
With impeccable, slightly Latin accented English, he chatted of non-business
things, making women laugh and men smile. By the end of the function
he had exchanged cards with most everyone in the room, leaving them
thinking well of him. Harry still had his card. It was very simple
and rather elegant. Raised gold letters on quality cream colored card
spelled out his name, Anthony J. DiSilva, his position, President,
Emerald Industries Inc., and a phone number.
Kitty talked quite a bit about ’Tony’ on their way home
that evening, but Harry gave him or his business little thought.
Then, two weeks later Harry bumped into Jorge Martinez, an old buddy
from Continental Airlines who
retired to the Bradenton area a decade ago. Harry worked with him
years before in Miami and Havana. Each time they got together they
re-lived the good old days. This time was different; Jorge had something
else on his mind. He was excited and wanted to talk.
He spoke of an investment opportunity he’d stumbled on that
was sure to make him a fortune. It centered on an emerald company
not just involved in mining, but jewelry manufacturing and retail
sales as well. The program looked so good he planned on fl ying down
to Columbia in a couple days to check out the whole operation. Jorge
told Harry he would report back if it was interesting. Harry said
okay and
let it go at that.
To Harry’s surprise Jorge called him eight days later and told
him he just got back from Bogotá and had a ton of information
on the emerald operation he had spoken of. They agreed to meet at
a little seafood place on US 41 near the airport.
Over clam chowder and deep fried shrimp he filled Harry in on his
discoveries about the mining and jewelry operation. Flying into Bogotá,
Jorge had been met at the airport by two well dressed young men. His
escorts gave him a running travel dialogue of the sites and sounds
during the forty-fi ve minute drive to the Radisson Royal and when
there, they just handed him a room key. Apparently everything had
been arranged. There was a note in the room from the mining company’s
manager regarding how the bill was taken care off and how he was looking
forward to seeing Jorge in the morning. As he fi nished reading the
note there was a gentle knock on the door. It was room service with
a basket of fruit and a bottle of wine, compliments of the hotel.
Jorge was impressed. At the appointed hour the next morning a car
arrived at the hotel and a polite young man drove Jorge to the mining
company’s head offi ce. It was a small place, rather unassuming
and set in an industrial development on the outskirts of town. There
he spent an hour with the manager who had set up his hotel arrangements.
Another man was there, the company’s chief fi nancial offi cer.
The three went over the company’s books and all the plans for
future expansion. Jorge said they were very professional, answering
all questions asked, and producing documents to back up all their
claims and projections.
The thrust of the expansion, they explained, was in the retailing
end of the operation. They were affi liated with one working emerald
mine and owned part of a second slated to be in production within
twelve months. They also owned a large part of, and had a contract
with, a jewelry manufacturing facility capable of easy expansion at
very little cost. They were now planning the fi nal stage of their
expansion and were currently in the process of creating a new, stand-alone,
wholly owned retailing division requiring a great deal of money. This
expansion would follow the model of jewelry
retailing giant H. Sterns, created in the early 1950s in Brazil by
young German émigré Hans Stern and now accepted as the
world leader in marketing Columbian emeralds and Brazilian gold. Emerald
Industries Inc. was planning to open twenty retail stores around the
world over the next three years and stock them with product from their
own manufacturing facility in Columbia. The stores would first go
into Miami, New York and Los Angeles. Six would open in Europe, including
London, Paris, Rome and
Athens. Five would be opened in several Asian Pacific Rim cities and
three would be in Canada.
The new stores would be somewhat less exclusive and carry a much less
costly line of product than the high end Sterns, but were still designed
to attract travelers and tourists. Expensive jewelry would be included
but theirs would generally be a middle class operation. This way they
could keep each store’s cost down to less than five hundred
thousand dollars.
After the offi ce visit Jorge was whisked to the airport, helped into
a helicopter and fl own to the mine. He spent an hour touring it,
much of the time underground. When the tour was over he had lunch
in the employee’s spotless lunchroom. Then they fl ew over lush
forests to a site where the next mine was approved and set to be in
production within twelve months. This was a short visit because there
really was nothing more than jungle and rock and a few stakes in the
ground to look at. From there it was on to the jewelry making facility.
The manufacturing plant was impressive. At least two hundred people
were employed in a modern air conditioned building polishing, soldering,
tagging and boxing every type of jewelry one could imagine. They seemed
happy, relaxed and diligent. It was clean, quiet and well organized.
Jorge took several photos and let Harry look them over. It all seemed
very impressive.
After the manufacturing plant tour Jorge was taken back into town
to a large jewelry store on the ground floor of Bogotá’s
Hacienda Santa Barbara shopping center. It was full of middle class
tourists from charter buses parked out front. Europeans, some with
beer bottles in hand, wandered two and three abreast in the isles
of this mini emerald mall buying everything from earrings to navel
studs. Ranging
in age from the mid fi fties and up, most seemed intent on spending
as much of their children’s inheritance as they could. Their
Euros were fl ying about with abandon and everyone was having a great
time.
That evening Jorge had dinner with Tony DiSilva, who just happened
to be in town for a few days. They were joined by the company’s
manager and two other senior members of the Emerald Industries management
team.
Their five course meal was superb, the entertainment spectacular and
the drink glasses seemingly bottomless.
It was after two when Jorge crawled into his room and flopped into
bed. He was happy, impressed and not a little bit drunk.
Harry listened, saying little but taking in all the details Jorge
was spreading out before him. He and Jorge went back a long way and
Harry knew him as overly cautious about anything to do with money
or investing. He remembered him as a man who tossed nickels around
like they were manhole covers. Harry fi gured there must be something
good here if an old tightwad like Jorge Martinez was gung ho about
it…
Once Nick got Harry started on the story, the floodgates opened and
he couldn’t shut him up. It was a confessional with no curtain
and Nick sat as priest. Harry got deeper into the telling and didn’t
notice the waitress come and go, refi lling his coffee cup and bringing
fresh beer for Nick. He needed to tell his story.
Nick took a drink of beer and leaned back. “Does Kitty know
all the details?”
“She sure does. We’ve talked continuously about it since
we knew the money was gone for ever. And I must say she’s been
really good about it.” Harry said. “Kitty knows we were
both to blame because we were both in it right from the start.”
The rest of the story was predictable. Jorge spread the word amongst
his circle of retirees and Harry did the same. Several meetings were
held in restaurants and homes in the Sarasota-Bradenton area and the
group of potential investors grew over the next few weeks. Two more
went to Columbia to look over the operation much the same way Jorge
did, and they came back with the same conclusions.
There was no hint it was anything other than what it appeared to be
and no one introduced to the plan had the slightest misgivings. Soon
the money started to flow into the company and a bandwagon effect
took over with new people jumping in every day.
The method of investing was very interesting.
You couldn’t just purchase stock in the operation; the principles
claimed that would be too risky. To protect one’s investment,
you lent your money and received a bond from a Cayman Island company
called Emerald Industries Worldwide Marketing Limited. This company
would be the operator of the chain of stores under contract to the
parent company in Columbia. The loans to Emerald Industries Worldwide
Marketing paid a far better rate of interest than any market offered
and the money would be
used to finance the creation of the stores.
The one thing that made the deal so interesting to many was a side
offer involving equity ownership. Emerald Industries Inc. was a privately
owned company, which had created the marketing firm as a private company
as well. This was the reason given why they were not selling stock,
just borrowing money. The owners wanted to grow the company far beyond
its present size and then go public,
making a killing on the New York Stock Exchange. What they were prepared
to do was grant options, guaranteeing the right to buy stock at an
incredibly low rate in the new combined corporation to anyone who
loaned money. This guarantee had no strings attached save one; it
was not transferable. Your loan paid you a great rate of interest
and could be redeemed any time without penalty after one year. The
purchase of equity in the combined operation was separate from the
loans and could be completed with
whatever funds the purchaser wanted to use. Therefore one could loan
Emerald Industries Worldwide twenty-five thousand at a great interest
rate then purchase twenty five thousand in shares a year later with
different funds. It was a win/win proposal.
Nick thought about the deal and all that led up to it with silent
admiration. It was smooth, slick, and well put together. These guys
were professionals.
“How much did they get?” Nick asked.
“The best we can figure is almost two million, give or take
a hundred thousand.” Harry said. “That’s from about
thirty-fi ve of us.”
Nick looked at his friend and raised an eyebrow. “What did the
police have to say?”
Harry winced. In all their two-hour lunch Harry had been subdued and
dejected but now he looked as though he would break down and cry.
“Oh, they spent a lot of time questioning everyone who had invested
but in the end said there was little they could do even if they found
the gang responsible. They said the guys were not selling stock so
they didn’t break any SEC rules, and the loans were simply
that, loans to a bona fide corporation registered in the Caymans.”
Harry shrugged his old shoulders and looked across the table at Nick.
“Our local authorities checked Cayman Islands. Their police
said an embezzlement was reported by the company several months ago.
It seems their bank accounts had been conveniently emptied by an employee
who then disappeared. There was an investigation but the thief was
sure to have left the island. Both police departments figure it was
just another scam by the original guys but there’s no proof.”
Again Nick prodded: “What about the parent company, or the people
at the mine or the jewelry factory? Can’t they do something?”
“We checked them,” Harry sighed. “They’ve
no idea who these people are and none have ever heard or had any connection
with a company in the Cayman Islands. They did have marketing agreements
with a host of organizations around the world but none were from the
Cayman Islands.”
“Well my friend” Nick said as he stood up with the bill
in hand, “if the cops or the Security Commission
or the parent company can’t, or won’t, or are unable to
do anything, we’ll just have to do something about it ourselves.
Let us be on our way, old buddy, we have a lot of work ahead and time’s
a-wasting,” He dropped an extra large tip with his payment on
the table and headed for the parking lot with his friend in tow.
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