Asked by the Trust’s in-house counsel, a man named Richard Zeif, about her professional qualifications, Laurence informed the gathering that she had previously served as the president of a home shopping network with 159 full-time employees. Asked about the name of the new venture, Laurence said, “Cuchifritos is a cute Hispanic term for a small fried food.”
A summary of Badische business ventures presented to potential borrowers.
H.R.H. Prince Robert von Badische, Seventy-fourth Grand Master of the Knights of Malta and Chairman of the Badische Trust Consortium.
“I fielded softballs for a half hour before Winky wrapped up the meeting by saying, ‘Let’s have cake.’ And the next thing I know we’re sharing a loveseat, eating room-service pastries, and leafing through a scrapbook.”
“Containing . . . ?”
“Yellowed newspaper clippings. Old black-and-white photos. Pictures documenting the prince’s charitable work. Images of flood victims. Photo ops with celebrities. There was one picture of Anthony Quinn wearing a robe. There was another with Steven Seagal wearing a similar robe. There was an article from a Palm Springs paper about the prince walking his Maltese dogs. There was a picture of Dr. Moncrieffe with the Queen Mum. There was even one of Winky with the pope. It was pretty impressive.”
Colonel Sherry eventually approached the pair and informed his boss that other loan candidates were waiting for an audience. “Basically, my time was up.”
“At that point, what did Cesar do?”
“He escorted me and my team out of the suite and said, ‘I’ll be in touch if you’ve presented an acceptable deal and if the Trust deigns to fund your venture.’ I don’t know if that’s the exact word he used—deigns—but that was his general tone. Badische were royals, and I was a commoner.”
A few days later, Cesar stoked Laurence’s hopes by requesting her “bona fide financials.” If the documents she provided checked out, contracts could be drawn up and a signing ceremony could be scheduled. Almost as an afterthought, Cesar noted that in order to receive funding, Laurence would be required to establish a small number of offshore bank accounts through which the loan would flow.
“Why was that necessary?” I ask.
“Cesar said it was to preserve the anonymity of the people whose assets Badische managed.”
“Did that shock you?”
“No, not really. American companies regularly do that kind of thing. What did surprise me was the price tag. Cesar told me Barclays charged a flat fee of $9,000 per offshore account, and that my deal would require six such entities.”
“So $54,000?”
“Correct. I said I’d like to use my own lawyer. That I could get the accounts set up a lot more cheaply.” Her counterproposal was summarily rejected. “Sherry called me and said the involvement of outside attorneys at this stage would be looked upon in a very disfavorable manner.” Badische would be “gratified and pleased” if Cesar’s firm handled the preliminary paperwork. Laurence would be allowed, indeed expected, to bring legal representation to the final contract negotiations and signing.
“That didn’t make me happy. I knew Cesar was gouging me. But I wasn’t about to jeopardize the deal just to save a few thousand dollars.”
Laurence supplied the requested documents and half the $54,000 fee. Cesar immediately called and inquired about the remainder. “He was very upset. I could hear the desperation in his voice, though I didn’t think much of it at the time.”
Laurence explained she needed a few days to shift funds before she could wire the outstanding balance. That precipitated another call from the colonel. “He was very imperious. He told me I was taking advantage of both Badische and Barclays.” The rebuke rattled Laurence. Within forty-eight hours, she transferred the second half of the fee. Ruffled feathers smoothed, Cesar set up six accounts in the British Virgin Islands tax haven of Tortola, and informed Laurence that the loan closing would take place in Zurich on June 17.
“I was thrilled. Despite the payment hiccup, everything was on track.” And it remained so until a few days before the scheduled signing, when, without warning, Laurence’s maternal grandmother passed away. The funeral services conflicted with the meetings in Zurich. Laurence called Cesar and requested a postponement. “He said, ‘Too late. Everyone is already in transit.’”
Laurence asked her mother what to do. “My mother told me, Grandmom Rose would have wanted you to go. Grandmom Rose would have said, ‘Go and be successful.’ So I left my family to meet up with Cesar in Switzerland.”
GREEN FINGERS
To meet up with Cesar in Switzerland.
For obvious reasons, the phrase resonates. So does the helplessness Laurence invokes. I find myself making all sorts of connections between her narrative of alpine humiliation and my own.
Some parallels are more consequential than others. At one point I find myself wondering if the Trust’s devotion to uniforms, titles, and symbols of privilege can be traced back to Cesar’s boarding school experiences. The speculation isn’t nearly so far-fetched as it sounds. After all, Aiglon, with its contingent of royal residents, its No. 1 Dress uniforms and rank pins, its “Bouquetin badges,” “Colours Awards,” “Five Star” certificates, merit cups, and trophies, reveled in the kind of ornamentalism later deployed by the Badische boys. And there’s something else worth mentioning. While we were at Aiglon, Cesar and I were shown a movie called The Captain from Koepenick, an obscure 1956 tale of imposture chronicling the exploits of an indigent shoemaker who pulls the wool over the eyes of an entire town after purchasing a captain’s dress uniform from a secondhand shop. The authority that the self-styled “captain” accrues by wearing a gold-braided outfit is a lot like the legitimacy that “Prince” Robert acquired by donning a Maltese cross and a medallion-studded sash. Isn’t it possible our rank-obsessed boarding school inspired the paraphernalia on show at the Waldorf? If so, that would give Cesar a much bigger role in the scam than the trial testimony indicates.
I present my theory to Laurence.
“Seems like a stretch,” she says.
{Universal Studios, 1960}
The Captain from Koepenick, screened at Aiglon in 1972, anticipated the sartorial embellishments of the Badische boys.
Her skepticism does little to dilute my conviction. The penchant for Montblanc fountain pens, the parallels between the blazer patch and the carte de visite, and now this. The overlaps make me all the more determined to clarify Cesar’s role in the fraud. Was he, as his sister argued, a victim? Or, as his felony conviction and my experiences in Switzerland suggested, a masterful fake-out artist with a knack for misdirection? Or—a third option—a small-time roper with a minor role in an elaborate fraud? It’s impossible to tell given how little I know.
The Captain from Koepenick concludes on a cheery note both for its lead character and the community he dupes. The submission of Barbara Laurence did not end so happily.
Laurence flew to Zurich on June 15, 1999, checked into a downtown hotel, and waited for Cesar’s call. When he made contact the following morning, he told her to join him at the Dolder Grand, a hotel spa on the outskirts of the city, and await further instructions. After yet another lengthy delay in the lobby of yet another five-star hotel, a Badische lackey guided Cesar and his client to a suite that managed to outdo the gilded splendor of the Waldorf, enlivened, as it was, by panoramic views of Zurich and the Alps.
“They told me it was the Presidential Suite and that Clinton had stayed in the rooms the night before. They made a big deal of that. It could have been true. The setting was pretty amazing.”
“Did you go to the meeting alone?”
“No. I brought three colleagues along. My attorney, a Wall Street go-between, and Victor Benetar, my merchandizing expert.”
The Badische roster was substantially larger. Nine men, representing three branches of the Trust, were on hand: the prince, the colonel, and the baron; three members of the Trust’s finance committee; and Badische lawyers based in Ne
w York, London, and Zurich. “There were also a couple of bodyguards and Winky’s ‘private nurse,’ who I’m now convinced was a hooker hired for the evening.”
After twenty minutes of chitchat focused on the fragile health of Prince Robert’s Maltese lapdog—like its owner, small, old, unstable, incontinent, and pedigreed—the borrowers and lenders again arranged themselves on opposite sides of a long conference table.
Once Prince Robert was ensconced “in another one of his thrones,” Colonel Sherry announced that the Badische Trust Consortium had formally approved the Cuchifritos proposal. Laurence recalls he then said, “His Highness is now prepared to sign a funding agreement in the amount of $500 million.”
The sum shocked Laurence. “Five hundred million dollars?” she remembers blurting out. “I came here for fifty!”
“Where did the extra zero come from?” I ask.
“I wondered the same thing. The way the deal worked was I was to receive $500 million in ‘collateral instruments’ that would be used to purchase medium-term notes with an average yield of 7.5 percent and a maturity of ten years. My $50 million would come from the ‘spread’—that was the colonel’s term—between the discounted purchase price of the notes and their face value at maturity.”
“Sorry. I’m not following you.”
“Basically, I’d be getting my money from interest spun off the larger sum.”
“What were the repayment terms?”
“There were none,” Laurence says.
“Excuse me?”
“Badische said they’d put up half a billion dollars so that I could buy discounted notes on their behalf for $450 million, and that I could retain the prepaid interest—$50 million—free and clear.”
“You didn’t have to pay them back?”
“That’s what they said. At which point I asked the obvious: ‘Why the hell would anyone do that?’ It sounded too good to be true, which I later learned was the case.”
“How did the Trust respond?”
“The colonel explained that the prince regularly signed loan agreements on behalf of individuals with too much cash on hand.” The loans were designed to preserve capital and confidentiality. “That’s why the anonymous lenders were willing to pay $50 million. It was considered a parking fee.”
Laurence discussed the proposal with the lawyer she flew in from Washington. He said he would need to review the contract before endorsing its legality. “That’s when Colonel Sherry told us that wouldn’t be possible. That my lawyer would not be allowed to read the actual contract.”
“Seriously?”
“Seriously. A Badische representative would read the loan agreement out loud.” If the terms, as presented orally, were deemed acceptable, Laurence and the prince would sign a “principal-to-principal” agreement. Once she satisfied certain prerequisites detailed in the contract, the prince would dispatch, by courier, a fully executed agreement, along with a confidential “transaction code” authorizing the transfer of $500 million in Badische funds to the offshore companies Cesar had set up in Tortola.
When the lawyer representing Laurence questioned this unusual protocol, the colonel shut him down. “Sherry told me, ‘This is a principal-to-principal transaction. Your attorney cannot ask questions.’”
He then instructed Robert Gurland, the Trust’s London lawyer, to begin reading aloud the twelve-page agreement. In a plummy British public school accent, the dapper sixty-eight-year-old obliged: “‘It is hereby agreed between the parties as follows . . .’”
“It was a crazy contract,” Laurence now acknowledges. Much of the language was impenetrable and imprecise. Periodically, her lawyer, prevented from raising objections directly, would whisper a concern to his client so that she could request clarification.
Two clauses proved particularly problematic. The first, Clause Three (“Banks and Venues”), imposed seemingly insurmountable geographical constraints by prohibiting Laurence from using financial institutions based in the United States, Great Britain, Australia, New Zealand, France, Spain, Switzerland, Italy, or Mexico. Also banned: all nationalized, state, or central banks, all Eastern-bloc banks, and all banks in “any Middle Eastern, Latin American or otherwise ‘Third World’ countries.” In addition, Clause Three entitled the prince to reject, without explanation, any bank “not of satisfactory status or reputation acceptable to ‘THE LENDER.’”
“That didn’t leave you with too many options, did it?”
“No, it didn’t,” Laurence says. “But I came up with what I thought was a pretty clever work-around. I asked to use the offshore branch of a US bank.”
The colonel discussed her request with his colleagues. After considerable debate, the Trust gave its approval, with the caveat that the offshore American branch had to be both exempt from US banking law and willing to receive what the contract identified as “clean good funds” no questions asked.
That concession removed the first sticking point.
Robert Gurland continued the legal recitals, with the colonel and the Trust’s in-house counsel, Richard Zeif, taking over whenever the Londoner’s voice grew hoarse. At eleven p.m., the second nettlesome issue surfaced: Clause Seven (“Performance Guaranty”).
“Before receiving funding, I was required to put in escrow a tenth of 1 percent of the total loan. Badische called it a performance guaranty.”
One tenth of 1 percent didn’t sound like much until Laurence did the math.
“I lost it when I realized what that meant. I said, ‘You’re asking for another $500,000? On top of the $54,000 I’ve already paid to Cesar? But I came here to borrow money!’”
“What did Cesar say while all this was happening?”
“Nothing. Like I told you, once he handed me over to Winky and Young Dracula, his job was done.”
Colonel Sherry tried to placate Laurence, explaining that the performance guaranty was not “a processing fee, retainer, or advance fee.” It was simply a deposit required, as the contract stated, to verify “the borrower’s bona fides, good intentions, and serious ability to fulfill the terms and conditions of the agreement.”
“The colonel said, ‘We have to know that you can afford to travel and pay your lawyers and your accountants, and that you will be able to complete this transaction. Once the deal is closed, the $500,000 will be returned. There is really no risk if you feel you can perform.’”
“Perform? That’s the word he used?”
“It was,” Laurence says. “I know it almost sounds sexual. Maybe it was for Sherry. One giant perverse performance.”
“What did you say when they shanghaied you with that upfront fee?”
“I said, ‘What happens if you guys can’t perform? What happens to my security deposit?’”
The colonel assured her that the funds would be returned, minus “10 percent in consideration of legal costs and professional expenses.”
But that reassurance was moot. “I didn’t have $500,000 to tie up,” Laurence later testified.
Tensions mounted until Victor Benetar, the Cuchifritos merchandising expert, intervened. “Victor stood up and said, ‘Hey look. Her grandmother just died. She should be sitting shivah. Go easy on her.’ One of Winky’s helpers gave me some bottled water, and I took a few minutes to compose myself.”
When the talks resumed, Laurence tried to remove the fee clause from the contract. The colonel wouldn’t budge. “He said, ‘Sorry. That condition is written in stone.’”
From the head of the table, Winky summed up the stalemate succinctly when he told Laurence: “‘Sometimes, dear, it comes down to cold hard cash.’”
With the negotiations at an impasse, the two teams agreed to adjourn until the following day. Once outside the suite, Laurence and her partners did what executives often do when a deal collapses. “We ordered a pizza.”
The postmortem that accompanied the late-night snack focused on the $500,000 performance guaranty—the one stumbling block separating Laurence from the $50 million she needed t
o launch Cuchifritos. The prince’s remarks about “cold hard cash” apparently resonated with Victor Benetar. He offered to front the fee.
The proposal wasn’t exactly selfless. It was tied to a side agreement granting Benetar one third of the funding Laurence was expecting from the Trust. As the merchandizing expert saw it, scoring one third of $50 million—almost $17 million—by fronting $500,000, represented a healthy return on investment, certainly better than the profits he made on the steeply marked-up consumer electronics he sold at his Times Square enterprise, Broadway Video and Computer.
Laurence agreed to his terms. “I chalked it up to the cost of doing business.”
Negotiations with the bankers were supposed to continue the following afternoon. “But when Cesar greeted us at the entrance of the Dolder, he said things were delayed. Then I saw him scurry off to handle some other clients. It was a repeat of the Waldorf experience. Hurry up and wait. We ended up sitting in the lobby for hours and hours.”
Late that evening, well past midnight, Laurence was granted another audience with the prince. “I told Winky, ‘I have the money. Let’s do a deal.’”
The news so pleased Prince Robert that he ordered champagne and asked for his “laptop”—an antique escritoire containing, Laurence recalls, “a bottle of green ink, a very large Montblanc pen, and some sort of thing you make a seal with.”
After a round of toasts, everything was set. Under the watchful gaze of some dozen Cuchifritos and Badische executives, lawyers from three countries, an ailing lapdog, a couple of bodyguards, the prince’s private nurse (“Like I said, I think she was a call girl”), and Cesar Augustus, Barbara Laurence and “Prince Robert von Badische” began signing their $500 million principal-to-principal loan agreement.
They didn’t get very far. Things hit a snag when Laurence, agitated by the promise of her hard-won $50 million (minus Benetar’s cut), knocked over the ink bottle. Green ink stained the wooden laptop, Laurence’s hands and dress, and—most problematically—the loan papers. New contracts had to be rustled up before the transaction could continue. The two principals completed their deal just before dawn, signing their names and initials more than a hundred times on three duplicate contracts using a fountain pen the size of a large cigar.
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