MD04 - Final Verdict

by Sheldon Siegel

  I suspect the honchos at Bloomies would be less than delighted to hear their company’s name used in this context. It’s twisted, yet so logical. He’s utilizing Harvard Business School principles to run a porn business. Perhaps it will become a case study someday.

  His excitement seems genuine and I want to keep him talking. I ask, “How do you take it to the next level?”

  “We’ve developed a three-pronged strategy.”

  Every entrepreneur has three prongs.

  “First,” he says, “we’ve hired professional management and implemented sophisticated financial reporting. We can’t compete unless we’re smarter, faster and more disciplined. Second, we raised venture capital financing to fund our expansion plans.” He pauses and offers the standard punch line. “Third, our goal is to complete an IPO in twelve to eighteen months. We want to raise enough cash to open stores in every major market in the U.S. and to begin operations overseas. We’ve had expressions of interest from several underwriters.”

  They want to be the Starbucks of porn. We listen patiently as he tries to dazzle us with investment banker jargon about pricing models, road shows, green shoes and over-allotments. He’s still trying to sell us on the viability of his optimistic expansion plans when we start to ease him into a discussion about Tower Grayson.

  He turns cautious immediately. “I’ve given my statement to the police,” he says.

  “We’re waiting for their reports,” I say. “We’d be grateful for the highlights.”

  I’m expecting him to issue the standard line that he has nothing further to say when he surprises me. “My lawyer advised me to cooperate,” he says.

  This probably means he has nothing of interest to share with us.

  Rosie keeps her tone even when she says, “Mr. Grayson made a call to a cell phone registered in the name of your theater at approximately two-oh-seven A.M. on Friday morning.”

  He tries to sound forthcoming. “We issue a cell phone to every member of our professional staff. It makes it easier to track them down.”

  I suspect most adult theaters don’t refer to their dancers as professional staff.

  Rosie asks, “Were you able to identify the individual who answered the call?”

  “I can identify the individual who was issued the phone, but I don’t know for sure if she was carrying it on Friday morning.”

  Rosie lets him have the semantic victory, then asks, “What’s her name?”

  “Alicia Morales. She’s a dancer who worked for us for about two years.”

  “Is she good?”

  “One of our best.”

  “Where can we find her?”

  He hesitates and says, “I don’t know. We had to let her go two weeks ago.”

  This is getting more interesting. I ask, “Why did you fire her?”

  “Performance reasons.”

  He sounds like the managing partner at my old law firm. “Can be you more specific?”

  “Drugs.”

  “Using, buying or selling?”

  “All of the above. One of my priorities has been to make sure that our employees are adequately compensated and treated with respect. We provide health insurance and a 401(k) plan. How many exotic dancers do you think are eligible for a pension?”

  What does this have to do with her drug problem? I play along. “Not many.”

  “Damn right. It’s part of our effort to enhance our image and take our operation mainstream. It’s bad for business to be associated with drugs or prostitution.”

  He’s also being just a bit disingenuous when you consider that he produces dirty movies and permits his employees to take their clothes off in front of strangers.

  “In any event,” he says, “the quid pro quo is that we expect our employees to remain clean. No drugs. No diseases. No action on the side. We do random drug and AIDS tests and we keep a close eye on them. Kenny Vinson caught Alicia selling crack in the alley behind the theater. We put her on probation and insisted on regular drug tests.”

  “And she agreed?”

  “She had no choice. Then she failed another drug test and we terminated her.”

  “Do you have any idea where we might find her?”

  He hands me an address and a glossy photo of a young woman who bears an uncanny resemblance to Halle Berry. “She lived at the Gold Rush Hotel at Sixth and Folsom,” he tells me. “We provided the information to Inspector Banks.”

  “And the cell phone?”

  “She still hasn’t returned it.”

  I’ll need to talk to Roosevelt. I ask, “Do you have any idea why Grayson called her on Friday morning?”

  “I don’t know.”

  I can guess. “Can you tell me anything else about her?”

  “She’s single, bright and very ambitious.”

  I study the photo, then I turn back to Carponelli and say, “I understand you were at the club on Thursday night.”

  “I was. I go down there a couple of nights a week to keep an eye on things. Kenny does a good job of managing the place, but any cash business requires you to watch what’s going on.”

  I’ll bet. “Did you happen to see Grayson on Thursday night?”

  He answers immediately, “No.”

  “Did you ever seen him down at the club?”

  “A couple of times.”

  What? “You knew him?”

  “Of course.”

  Huh? In spite of his good looks and Harvard credentials, I suspect venture capitalists don’t spend a lot of time with operators of porn theaters. “How?”

  He observes the look on my face and says, “I thought you knew.”

  I have no idea what he’s talking about. “Knew what?”

  “Paradigm invested ten million dollars in our business. They’re one of our biggest shareholders.”

  *****

  Chapter 28

  “We Make a Profit on Every Item We Sell”

  “Paradigm Partners is being formed to invest in start-up businesses that show exceptional promise.”

  — Paradigm Partners Offering Materials.

  Rosie and I are staring at Artie Carponelli in open-mouthed disbelief. I regain my bearings first and say, “Grayson’s fund put ten million dollars into BNI?”

  “Yes.”

  “But Paradigm is a venture capital fund.”

  “Yes, it is.”

  “I thought venture funds invest only in high tech businesses.”

  His tone turns indignant. “This is a high tech business.”

  You can dress it up any way you’d like, but it’s still the world’s oldest profession.

  He says, “We derive seventy-six percent of our revenues from Web-generated sales.”

  I guess that means they make the rest the old fashioned way.

  “We aren’t Amazon.com,” he continues, “but our revenues are higher than most e-tailers, and we’re profitable.” He lowers his voice when he adds, “Exceedingly profitable.”

  Judging from his impressive surroundings, I’m inclined to believe him.

  His eyes narrow. “This isn’t some half-baked plan to sell pet food on the Web with a sock puppet as a spokesman,” he says. “We run a tight operation that utilizes state-of-the art inventory tracking software to keep our warehouses stocked. Our margins are high and we make a profit on every item we sell.”

  He sounds as if he could be hawking anything from computers to used cars. “You must have known Grayson pretty well if he invested in your business.”

  “He was smart and meticulous. I watched him conduct a full due diligence investigation of our business and our management team, including me. He studied our books and toured our distribution center in Oakland, our theater and all of our retail outlets. We talked at length about goals and strategy.”

  I wonder how many dirty movies they watched.

  He adds, “Tower was always professional. His approach was no different than several other venture capital firms that made overtures to us.”

  “Why di
d you choose Paradigm?”

  “Tower was the most enthusiastic about our business model and made us the best offer.”

  It may have been the only offer. “We understand he was spending time at the theater.”

  “He was entitled to monitor his investment.”

  I wonder if he also monitored some of Carponelli’s service providers. I ask, “What did he do when he was at the theater?”

  “The same thing he did when he went to our retail outlets. He observed our operations and offered suggestions to enhance our competitive position.”

  Maybe he asked Carponelli’s dancers to enhance his competitive position, too. It’s time to be more blunt. “Did he ever partake in any of the services that your employees offer?”

  He clears his throat and says, “It’s not uncommon for venture-funded businesses to provide samples to their investors.”

  “Did he sample yourinventory?”

  His tone is even when he says, “He watched our girls dance and took home a few videos.”

  “Did he take home anything else?”

  “No.”

  I don’t believe him. “What about other services? You offer a full product line.”

  “Our business model doesn’t include prostitution. It’s illegal and runs counter to our brand positioning strategy.”

  He isn’t selling Snickers bars. “Everybody knows what goes on in your theater.”

  “We don’t engage in anything that’s illegal. It wouldn’t enhance our brand name.”

  Bullshit.

  His chin juts out, which suggests that this topic of conversation is now concluded. I change course. “Was Mr. Grayson happy with his investment in your business?”

  “Yes.”

  “Did he and his investors receive a return on their investment?”

  Carponelli’s tone flattens. “They made their initial investment only a year ago. It isn’t expected to pay off until we go public in twelve to eighteen months.”

  “What was Mr. Chamberlain’s take on your company?”

  “He wasn’t as enthusiastic as Tower was, but he finally came around.”

  Maybe he offered him some time with their service providers, too. “Mr. Chamberlain will probably take over the management of the fund. Are you comfortable with that?”

  “It will have no impact on our business plans or operations.”

  It’s probably true. They’ve already received the money from Paradigm. I ask, “Did you deal with Paradigm’s attorney in negotiating the deal?”

  “Of course. Mr. Lucas is an excellent lawyer with good business instincts.”

  He’s also a self-absorbed asshole who didn’t mention that he had worked on matters involving Basic Needs. “Did he spend a lot of time on the deal?”

  “Yes, although he had a couple of younger attorneys do some of the legwork. Mr. Lucas personally accompanied Tower on several of the site visits.”

  “Including the visit to the theater on Sixth Street?”

  “Yes.”

  Doesn’t surprise me. “What did Mr. Lucas think about the deal?”

  “He thought our company had a lot of upside potential.”

  I’ll bet.

  “In some respects,” he says, “I thought Mr. Lucas was more creative than my own attorneys. I may hire him to represent us when we go public.”

  An IPO of BNI stock will rack up a mid-six figure fee for Story, Short and Thompson. I ask, “Wouldn’t that create a conflict of interest if he’s representing one of your major investors?”

  “He said we’d be able to find a way around it.”

  That shouldn’t surprise me, either.

  “Have you seen Mr. Lucas since the deal closed?”

  “Occasionally. We’ve discussed business matters from time to time.”

  “Have you seen him at the club?”

  He hesitates just a fraction of a second before he says, “No.”

  We’ll need to talk to Brad about it.

  His phone rings and he picks up. He nods a couple of times and tells Simone that we’ll be done in a few minutes. He hangs up and says to me, “I’ll have to excuse myself.” I try to probe a little more, but he holds up his hand. “I really have to take this other meeting,” he says.

  He probably told her to call him at five-thirty to extricate him. “If you happen to find Alicia,” he says, “I’d be grateful if you’d tell her we’d like to talk to her.”

  So would we.

  He adds, “And you might mention that we’d like our cell phone back.”

  # # #

  “None of this adds up,” Rosie says to me. The fog is rolling in and the wind is gusting as we’re walking south on Montgomery Street. We stop at the traffic light at California, where she catches her breath. She exercises regularly but hasn’t quite regained her stamina from before her treatments last year. “We have a venture capitalist who worked in a dumpy office and invested in a strip club. We have a Harvard MBA who fancies himself as the second coming of Bill Gates, who operates the same strip club and sells porn on the Web.”

  My turn. “The venture capitalist made his last phone call to a stripper who was fired because she violated her employer’s strict moral standards, and then she disappeared.”

  She takes a couple of deep breaths.

  I ask, “Are you all right?”

  “I’m fine.”

  She’s had some chest pains from time to time since her treatments. Her doctor has told her that this is to be expected, but it’s still unnerving. “Your chest?”

  “My stomach.”

  “Do you want to take a cab?”

  “No. It’s only a couple of blocks to the office.”

  I’ve learned that it’s better not to push. My cell phone rings and Carolyn’s tone is agitated. “McNulty called,” she says. “There’s a problem.”

  McNulty only calls with problems.

  “Leon collapsed in his cell,” she says. “They’ve taken him to San Francisco General.”

  Dammit. I say my next words slowly. “Is he alive?”

  “Yes.”

  “Is he going to be all right?” As I say it, I realize it’s a pointless question in the context of a man with a terminal disease.

  “He didn’t know. Leon was unconscious, but breathing.”

  “We’ll get over there right away.”

  “There’s something else. Roosevelt called. He wants you to meet him at the Gold Rush Hotel at Sixth and Folsom. They’re searching Alicia Morales’s room.”

  “Did they find her?”

  “No.”

  I end the call and explain the situation to Rosie. She takes in the sketchy details with perfect clarity and makes the call. “I’ll go down to San Francisco General and see what’s going on with Leon,” she says. “You go to the Gold Rush.”

  *****

  Chapter 29

  “She Left in a Hurry”

  “Absolutely no visitors allowed after six P.M.”

  — Sign at the Entrance to the Gold Rush Hotel.

  “If you touch anything,” Roosevelt says to me, “I will kill you instantly.”

  He isn’t kidding. He looks out of place in his perfectly pressed suit and blinding white shirt as he’s standing in the doorway to Room 202 of the Gold Rush Hotel, a crumbling three-story structure overlooking a gas station on Sixth, just north of Folsom. Its ambiance is on a par with the Thunderbird, except the state of disrepair is more advanced and the rumbling trucks on the freeway a half-block south cause the walls to vibrate. The airless hallway is painted a shade of faded royal blue and the floors are sticky and smell of urine. The stench from the bathroom is especially rank. Old mattresses are leaning against the walls and discarded furniture makes the hallway an obstacle course. On the plus side, there are fewer rodents in plain view.

  Marcus Banks is supervising a field evidence technician inside the room. Unlike Leon’s tidy island of civilization in the midst of the decrepit Thunderbird, Alicia Morales’s room looks as if it was hit by
a heat-seeking missile. The mattress is propped up against the wall and the floor is covered with bedding. The dresser drawers have been ripped out and the clothing is strewn on the floor. A saucepan on the counter is full of moldy stew and dirty dishes are stacked haphazardly in the sink. A loaf of white bread on the counter has turned green. The closet door is open and its contents have been ransacked.