No One Rides for Free

by Larry Beinhart

  “Hencio. You are an asshole. As long as you keep talking you are alive. If I like what you say, then you might stay alive. But if I hear one more fucking word of stalling from you, Franco is gonna shoot your dick off.”

  “OK, OK,” he whined, “It was in ’76. The summer of ’76, and Charlie Goreman come to us, when the big freeze hit Brazil. You remember that, don’t you?”

  Of course I didn’t.

  “The price at that point was around eighty, sometimes seventy-nine, sometimes eighty-one, but no higher than eighty-two. And Charlie thinks, right away, that the price is gonna go up. Way up. Right through the rooftops he says. He wants to go long and thinks we should join him for the ride. That makes sense. So we put up ten million dollars and Charlie, I think, also puts up ten million, and away we go. He was right. Coffee takes off.”

  “Coffee.”

  “Sí. Coffee, what else.”

  I looked at Gene, which was a mistake. He was biting his lip and shaking with suppressed laughter. When our eyes caught, there was no holding it in and we cracked up.

  Hencio was totally bewildered. Franco was Franco, stone-faced, implacable.

  “Oh shit, go on, Hencio, tell us the rest,” I said between giggles.

  “Whatsammatta, whatsammatta, you laugh?”

  “Just tell it,” Franco said for me.

  “OK. I’ll go on. Coffee goes up over a dollar a pound, then one dollar and fifty cents. Then two dollars. Who would have conceived such a thing in ’76? Nobody but Charles Goreman. At two dollars fifty, my government gets very nervous. It is crazy. The bottom has to fall out, they all say. Goreman says, ‘No. It will keep rising.’

  “But those stupid maricones,” he said, still frustrated after all the years, “they don’t believe Charles Goreman. They order me to order him to take us out. We started at eighty-two cents. At two dollars and fifty cents, splitting the profit, we have made eight point four million, net.

  “Goreman says, ‘OK, I will take you out.’ But he is sure the market is going up. He stays in. With his money. And with our money. The market tops out at three dollars and forty cents. I think he got out, actually a little earlier, around three dollars and thirty-two cents. An extra profit of eight point two million. And just as if he had done what he was instructed, he credits us only with the first eight point four, and keeps the difference.”

  “Is that it?” I asked.

  “No!” he said in outrage. “It happens all over again.”

  “On the way down,” I guessed.

  “Sí. Yes. He says the market will take the nose dive. I recommend very strongly that we listen to this man who has been so right and that we go short with everything, eighteen point four million.”

  “And Goreman,” I said, catching on, “also went in with the eight million he didn’t mention, plus his legit share.”

  “Sí. A total of about thirty-five million. It goes back down to two hundred cents, and my government, they get frightened and say to stop. Goreman says ‘down, it’s going down.’ If he says it, I believe him, but I must obey orders. I tell him ‘take us out.’ He says ‘OK,’ but he keeps us in. It went all the way down to one hundred sixty cents. Once again I am guessing. Goreman rode it down to about one hundred sixty-eight cents, a penny less or more.”

  “So what happened?” I asked. “Did he pay?”

  “Sure he paid. But only what it would have been if he had followed instructions. Twenty-one million eight hundred forty thousand dollars, that’s the original ten plus half the profit. That is very good, eleven point eight million profit on ten million. But Mr. Goreman made thirty-two million three hundred thousand, net, on our ten million.”

  “How did you find out?”

  “Commodities is a small community, like politics. I heard that Goreman’s net was much, much higher than my figures.”

  “So you tried to shake him down,” I said.

  “I went to New York City to discuss the problem.”

  “Sure, what did you say?”

  “I warned him that I would inform my government and the agencies of regulation in the United States. There would be an investigation and a lawsuit.”

  “What did Goreman say?”

  “He said, ‘I do not give a good goddamn what you do. I am closer to your government than you are.’ He said that I would end up the scapegoat, I would end up barefoot, picking coffee beans and stepping in burro shit.”

  I laughed.

  “Then I told him he must take this seriously. The Latin peoples are tired of being ripped off by Yankees and the communistas would make good propaganda from it.”

  “And?”

  “He was not shaken. ‘I do not care,’ he said, ‘if it brings down the whole damn country. And you know what, if it does you will still be the one walking barefoot in burro shit.’ But then he smiles. He says, ‘Hencio, you talked your government into this,’ which is very true. ‘And everyone did very well, except you. That is not right,’ he said, and the next day he gave me one hundred thousand dollars in cash.”

  “You’re lying,” I told him. Franco cocked his gun.

  “Yes, it was two hundred thousand dollars.”

  “Did Edgar Wood know about this?”

  “I do not know.”

  “Is that why you were bugging his place?”

  “Sí. Yes. That is why.”

  “Did he talk about this deal?”

  “No.”

  “But you were afraid he would. And that’s why you killed him.”

  “No. No.”

  “You killed him. Didn’t you Hencio? So you wouldn’t have to walk in burro shit.”

  “No. We did not,” he whined.

  “Tell the truth, you lying little fuck. If you hadn’t done it, I would have had to. So if you did the job, you did me a favor and you can clean up and go home.”

  “I … I didn’t do it. We were very surprised. This is the truth. La verdad.”

  “Sure,” I shrugged. “He’s yours,” I said to Franco. “Give it fifteen minutes so I can make sure I’m seen somewhere else.”

  “Señor, mister, please. Please. I did nothing to harm you.”

  “You lied to me, Hencio.”

  “No. I told you it all, everything as it was.”

  “OK, get out of here.”

  “What?” Hencio said.

  “Out, get the fuck out of here,” I yelled at him. He was too out of it to move. Franco grabbed him by the collar and heaved him up. Gene held the door open. Franco threw him out.

  “How are we gonna get the piss out of the carpet?” I asked Gene.

  “Don’t worry about it, I’ll call a cleaning service.”

  “Right,” I said. “Don’t forget to mark up the bill.”

  “I won’t,” he reassured me.

  “There’s something else,” I said. “Do you know any reporters who like to make fun of cops?”

  “All of them,” he said.

  “I’m serious. I have this story about this crazy cop, out in Virginia, who’s running all over the county looking for a lightning-struck tree by a babbling brook.”

  12

  TRADING UP

  WE FENCED FOR THE better part of two hours, consuming the remains of the original bottle and cracking open a second one before Mel Brodsky and I came to an agreement to trade what I knew for what he had.

  I had nothing to lose. He had two small children upstairs, who, without knowing it, were depending on Daddy to keep his job. So I asked him why he would do it at all.

  “You know what they say, they say that when the SEC goes to court, it’s amateur hour.”

  “That bothers you?” I asked.

  “The thing is, they’re right. So I want to get Over & East, show them a thing or two, and I’ll do most anything to do it.”

  “And then what?”

  He looked at me as if the point were obvious. “Why then, one of the pro scouts will notice me. They will pick up my contract and I will get to play in the majors, for Douglas, C
ohen, or Choate, Winkler. I want to play pro law.”

  He had given his word that if I showed him mine, he would show me his, so I told him what Hencio deVega told me. My personal opinion was that what Goreman had done was more admirable than actionable, but I’m a law-school dropout, and while Mel was hardly ecstatic he thought he had something to chew on.

  “Coffee is on,” he told me. “I made a whole pot. If you get sleepy, the couch opens up.”

  “What are you mumbling about?”

  “I said you could read the transcripts. I did not say you could take them out. You can make notes, but you can’t make copies. You read them here.”

  “Oh shit,” I said.

  “You can stay every night, for as long as it takes,” he offered generously.

  “Oh shit,” I said.

  He and Priscilla went upstairs to bed. I poured a cup of coffee. It was good. Fresh ground, 100 percent Colombian. There was a pretty little porcelain pitcher and sugar bowl all laid out for me. The pitcher held real cream—100 percent Cow. It was good.

  The testimony was not. It was in its raw form, rambling, angry, vindictive, steeped in envy.

  It started in 1954. Charles Goreman was a hot young commodities trader, ex-shoe salesman, college dropout, ex-brokerage gofer, with his English still moving from broken to just heavily accented. Edgar Wood was already his attorney.

  Samson Construction was a family-owned business in Suffolk County, the eastern end of Long Island. During the war they had grown fat on military contracts. In the postwar years the action shifted to the state and county levels, where their hooks were not as good. They did have one big contract, to refurbish and expand an army air force facility. They had invested heavily in the project, including buying the real estate around the base with the intent of selling part to the government for expansion and developing the rest as housing for the off-base personnel.

  Congress cut the project out of the ’55 appropriations, a victim of interservice rivalry. Samson was in big trouble.

  Like one of the sharks that cruise off Montauk Point, Goreman scented blood. Samson was looking to sell before they went belly-up. They were asking $6 million. Goreman felt the true valuation was closer to $8 million if someone were willing to gut the company for its assets instead of running it. He offered $5 million.

  Not that he had that kind of money, or anything remotely like it. He had about $200,000. Barely enough for attorney’s fees, closing costs and the like.

  He had what was then a radical idea. The collateral for the loan would be the company he was borrowing the money to buy.

  It made sense if the new owner was willing to gut the company. The real estate alone was worth the asking price; if all the assets were sold, at least a minimum profit was assured. Goreman pointed out that while the current management might be willing to run the thing into bankruptcy, selling and mortgaging the assets bit by bit in an effort to keep afloat, he would, if necessary, quickly and cleanly bleed the company dry for the cash value of its assets. The banks that Samson was into liked the idea.

  But the logic of bureaucracy is to not do anything new. And by and large banks would far prefer to make bad loans to established companies than good loans to an unknown. Particularly when the loan applicant has no background in construction, real estate or running any sort of company whatsoever.

  The official version is that Charlie convinced them of his good intentions and converted them with dollars-and-cents arguments. The Edgar Wood version is that Goreman offered options on Samson property to two senior bank officers. The estimated value of the land under option was $50,000. The option price was $1,000 against a purchase of $25,000. Goreman, according to Wood, even advanced the $2,000.

  Later, when the deal did go through, Samson Construction, now owned by Goreman, bought back the land at $50K. The only money that actually changed hands was $25K to each officer.

  It was not yet Over & East. But Charles Goreman had his first company. The pattern was set. The saga of pillage and loot, raid, takeover and eat, had begun.

  Goreman bought the abandoned army facility for another $400,000 from the government. He packaged it with the land around it and offered the whole thing to Bussman Aircraft, which was looking for a test field for its new generation of jet aircraft. Bussman paid $1,720,000 for the package. The net, after Samson’s pre-Goreman costs were included, was about $300,000. But the gravy was the contract to do the expansion and building work for Bussman.

  He sold off two major parcels elsewhere to competitors of Levitt who were building imitation Levittowns. But while those deals were being put in place, they were desperate for cash flow. The solution, according to Wood, was Wood’s.

  Instead of selling the inventory wholesale, they threw up a couple of brightly painted sheds, rented some colored flags and streamers, and went retail at discount prices. The move coincided with the second wave of the great postwar flight from the cities and the boom in home improvement. It was a cash machine. In the short run, it was cash flow; in the long run, it became Samson Home Improvements & Hardware, the number-three chain of its kind in the country.

  By the time Samson Construction was renamed Over & East, it had two operating divisions, construction and retail sales, and $4 million in cash.

  The cash was not going to stay around very long. It was as if Goreman hated the stuff, except as leverage. His theory was to borrow, borrow, borrow, that since inflation would outstrip interest—which it did through the seventies—the more you owed, the richer you were. It’s an idea that apparently works only with sums over $10 million, not with real money. Also, since companies that kept cash around always were targets for him, he assumed that if he kept cash around, he would be a target for someone else.

  It was, in a funny way, exciting reading. Like finding out how Napoleon got to be a general in the first place. But the crime, commercial bribery, was thirty years old, beyond proof, and beyond caring.

  Mel urged Wood to get current. Wood replied, “Goreman was rotten from the start. Before I’m done it’ll be a decaying fucking corpse, and everyone will see how rotten and reeking it is. I want you to see him for what he is. The American Dream, kiss my ass.”

  “Edgar,” Mel said, and I imagined the patience in his voice, “the point is to get something I can prosecute with.”

  According to Wood, Goreman’s relations with the banks continued to be improper. Certainly they supported him generously and completely all the way down the line. Also they made personal loans, below prime, to the inner circle of Over & East. Including Wood.

  Mel kept pushing for names and dates and numbers. Wood came through with them, slowly. Still, Over & East was a good customer. They borrowed a lot, in huge chunks; they always paid, mostly on time. If a bank wanted to treat the officers right, the smell was no worse than fertilizer around roses. They were a better risk than Brazil, Poland or Cleveland.

  Then the name Michele Sindona came up.

  A name synonymous with corporate corruption, the banks, the government, the Church, the Mafia, all tied in one big sloppy web.

  How rotten was he really? So rotten that when Maurice Stans was seeking cash contributions for C.R.E.E.P., he turned down a million dollars from Sindona. Even Richard Nixon did not want to be associated with him.

  Famous as “The Vatican Banker,” he came to the U.S. and bought the Franklin National just in time to oversee the biggest bank failure in U.S. history.

  What probably killed the Franklin was a law, sponsored by Nelson Rockefeller, then governor of New York, that allowed big banks, like the Chase owned by his brother David, to expand geographically. Suddenly the neighborhood bank had a branch of a giant as a competitor, often across the street.

  While it was true that the Franklin might have sunk with anyone at the helm, it is unlikely that many others would have embezzled $45 million and committed quite as many acts of bank fraud on the way down. Nor would most bank presidents have the imagination to kidnap themselves to avoid testifying. />
  Goreman had done business with Sindona. Even after the collapse of the Franklin, even after the indictments.

  The strangest thing about the story that Wood told Brodsky was that it made Sindona—corrupter of governments, a man who conned popes, connected to both American and Sicilian crime organizations—look like a sucker. There was a very complicated swap. I had to re-read the testimony three times, backward and forward, before I got the sense of what happened.

  Over & East owned Arco-Rich, a brokerage firm that was failing rapidly. It had cost $12 million. On the open market, at the time of me swap, it would have brought $5 million, tops. Goreman gave it to Sindona in return for shares in Societa Generale Immobiliare worth $5.9 million at par and a Greek resort. It was no secret that Sindona’s S.G.I., the largest real estate and construction company in Italy, was a gasp and a half from bankruptcy, and that market value was much lower than par. The Greek resort was also on the verge of bankruptcy. On the face of it it was trash for trash.

  However, the Greek properties could be carried on the books at a valuation of $12 million. The actual worth was difficult to determine and impossible to verify. The Greek government, at that time under the Colonels, was in the midst of a drive for foreign investment. They were more than happy to overvalue the property and, in addition, offered Over & East various tax breaks. Over & East used the corporation formed to handle the Greek properties to sell its shares of S.G.I., which they did immediately. It was a tax-avoidance scheme; an overseas subsidiary selling overseas assets overseas. That was only necessary because what was an actual loss was disguised as a better than break-even operation by the inflated valuation of the Greek properties.

  It was with pride that I realized I had figured that out at 5:08 in the morning. But it was hubris to stretch out on the couch to read the next segment, and I awoke to the vicious clatter of merry children. My head hurt, my feet stank and the homey smell of frying bacon brought acid from my stomach to my throat.

  I begged Mel to let me take the transcripts and read them on a normal human’s schedule. He was adamant, which was forgivable. He was cheerful about it, which was not.