by Joseph Badal
“I’m exhausted,” Paul said, his elbows on the table, head in his hands.
“Hell of a day,” she agreed. “What have we gotten ourselves into?”
Paul dropped his hands and looked over at Katherine. “You know, we should call the police. At a minimum, Gerald Folsom should be charged with assault and battery. By the looks of that young woman, I could make a case for attempted murder.”
“I think we should wait until we can talk to her, when she’s alert. She needs to make the decision about bringing the police into this.”
“Makes sense. But I’m going to think about what criminal lawyer should represent her. There’s an old saying that goes, ‘Three Philadelphia lawyers are a match for the Devil.’ Against a man like Gerald Folsom, she’s going to need at least one of those lawyers.”
Katherine placed a cup of coffee in front of Paul and sat down across from him. “Finish your coffee—it’s decaf—and then go home and get some sleep. We’re both going to need a lot of stamina over the next few days.”
CHAPTER TWENTY-TWO
Despite the tenor and substance of yesterday’s conversation with Ernest Deakyne, President of Philadelphia Savings & Trust, Edward was apprehensive in Deakyne’s waiting area. He and Nick were as prepared as they could be, and he knew that their presentation had no weaknesses: Strong finances, experienced management and employees, a solid business plan. But he had learned over the past week that that meant nothing compared to the environment in the industry caused by the federal regulators, and that environment was, at best, damaged and, at worst, corrupt.
A voice brought him out of his thoughts. “Good morning, gentlemen. Thank you for coming in to see me.”
Edward and Nick stood and shook hands with Deakyne, a short, completely bald, nattily dressed man. Deakyne was no more than five feet, seven inches tall and couldn’t have weighed more than one hundred and forty pounds. He wore a light-weight gray suit, white shirt, and off-yellow bow tie.
“Let’s go into my conference room,” Deakyne said, leading the way into a room with a table that sat six. He directed them to chairs on one side of the table and sat down opposite them. “Coffee, tea, water?”
“Your assistant was very kind,” Edward answered. “She offered us something to drink, but we’re fine. Thank you.”
“Okay, then let’s get started. I should tell you we’re quite excited about the opportunity to have Winter Enterprises as a client of our bank.”
I like this guy more by the minute, Edward thought. “I hope we can work out an arrangement.”
Edward spent twenty-five minutes giving Deakyne an overview of the Hot N’ Chili franchise business, the history of Winter Enterprises, and the company’s plans for expansion. Then he turned things over to Nick who went over the company’s financial statements. By the time they had completed the presentation, an hour had passed. Edward was feeling positive and enthusiastic.
But Deakyne appeared to be suddenly uncomfortable. “I had no idea,” he said, “that your firm was as large as it is. You said your loan balance at Broad Street National is $20 million against a loan commitment of $30 million. We couldn’t come close to matching that number.”
Edward fought hard to keep from showing how devastated he felt. “In other words, your loan limit to any one borrower is less than $30 million?”
“Less than $20 million, actually. Our statutory loan limit is $11 million. We couldn’t lend Winter Enterprises more than that. This would leave $9 million of your loan at Broad Street unfunded. And would do nothing to support your expansion plans. I am so sorry, gentlemen. This is not how I wanted this meeting to turn out. ”
Edward and Nick sat in silence, stunned. Deakyne moved his chair back from the table, started to rise.
“Can you give us another minute?” Edward asked.
Deakyne lowered himself back into his chair. “Of course. I would love to find a resolution in this matter.”
“If I understand correctly, your bank could finance $11 million of our debt.”
“That’s correct.”
“So, if we were able to divide our lending facilities between $11 million at your bank and $9 million at Broad Street, would that work for you?”
Deakyne considered Edward’s suggestion and then responded. “I think that would work. Of course, this would be subject to a favorable review of your financial information and new appraisals on the real estate with which you would secure our loan. And then there are the deposit accounts at Broad Street. We would want a fair proportion of those deposits put in our bank.”
“Maybe we can make this work after all,” Edward said. He stood and reached across the table and offered Deakyne his hand. The banker stood and shook Edward’s hand and then Nick’s.
* * *
In the car driving back to their offices, Edward called Stanley Burns at Broad Street National Bank. He waited on hold for three minutes before a woman finally came on the line to inform him Stanley Burns was in a meeting and would have to call him back.
After Edward terminated the call, he said, “You know, Nick, every time I used to call Burns, he’d get on the phone in a matter of seconds. Even when he was in a meeting he’d take my calls.”
“I guess he’s got other priorities. Like keeping his job.”
“By the way, when we were meeting the other day, when Annie and the kids came to the office, you started to say something about our deposits at Broad Street National. You said you wanted to look into something. What was on your mind?”
“I checked the Right of Setoff clause in our loan documents. That’s where the bank can apply any money we have on deposit against our loan balance.”
“That’s fair,” Edward said. “They should be able to do just that if we were delinquent on our loan, which we’re not.”
“True. But the language in that clause goes way beyond just delinquency. They can dip into our accounts if they believe the value of the collateral on a loan has deteriorated, or if they anticipate a borrower will not be able to pay off an obligation on schedule. Theoretically, both of these caveats apply to us. The value of our real estate has deteriorated and we’re having a hell of a time finding financing to pay off Broad Street.”
“They could take our deposits even if the net collateral value of our real estate is still $30 million over the loan amount?”
“Hell, Eddie, I don’t know. I’m not a lawyer, but the language in that clause just talks about deterioration in collateral value. It says nothing about whether the collateral value is below the loan amount. Our real estate was worth $62 million five years ago when we took out the loan; now it’s worth $50 million. That is deterioration.”
“I think you should wire transfer our balances from Broad Street National to that little bank where you deposited last weekend’s receipts. No point in risking $3 million. Most of that money is already committed to covering the costs of the land purchases in Pittsburgh. If we don’t perform on those purchase contracts, we’ll lose our earnest money deposits and get our asses sued by the sellers. Plus, we’ve already paid the franchise fees for two new sites.”
Nick pulled his cell phone from his pocket and dialed the bank’s Treasury Department number from memory. He asked for Mary Jane Wolitsky, his usual contact.
“Mary Jane, It’s Nick Scarfatti. How are you today?”
“Okay, Nick. Things are changing around here, but I’ve still got my job.”
“Hang in there, Mary Jane. Your customers wouldn’t know what to do without you. Listen, I need to order a wire.”
“Sure, Nick. How much and to where?”
Nick knew the company had $2.967 million and change in its accounts. The vast majority of the money the company deposited to its checking account was swept from that account to a money market account on a daily basis. The last deposits made to the checking account were made the previous Thursday. They always m
aintained a balance of $100 thousand in the checking account, so there was now at least $2.867 million in the money market account, not including accrued interest over the last few days.
“Move $2.8 million from the money market account to the following account.” He gave her the name of the bank where the wired funds needed to go, the bank’s routing number, and the account number.
“I don’t think I can do that, Nick,” Mary Jane said.
“Why not?”
“A hold has been put on your account in the amount of $2.75 million.”
“By whom?” Nick demanded. “Who ordered that hold?”
“Mr. Cunningham did.”
“And who the hell is Mr. Cunningham?”
“He’s Lucifer’s errand boy, Nick,” She said in a whisper.
“And who’s Lucifer?”
“Gerald Folsom. The new owner of the bank.”
CHAPTER TWENTY-THREE
The only way Gerald Folsom was able to fall asleep was by sedating himself with alcohol. He woke up at 11 a.m. on Tuesday morning feeling heavy-headed and fuzzy-mouthed and when he stood up, a wave of nausea overwhelmed him, driving him to the bathroom to throw up in the toilet. Wiping off his mouth with the back of his hand, he ripped off the clothes he’d worn to the bank late last night, showered, and shaved. By noon, he was beginning to feel half-human again.
He put on a pot of coffee and tried to eat a couple pieces of toast. But they only roiled his stomach further. He thought maybe a drink would help, but when he picked up the scotch bottle, his stomach began to heave.
“What the fuck is going on?” he said aloud. “First Donald Matson, then Wendy, and now my damned stomach.”
Folsom knew he had lived a charmed life for decades; nothing ever went wrong. Now things seemed to be falling apart. He had to get back in control. What had Cunningham said to him last night? Something about assets and liabilities. That’s what he should do. Eliminate his liabilities. But his head still wasn’t clear enough to focus on what to do.
* * *
Wendy had no idea where she was. The room was unfamiliar, but from the color of the drapes and the bedding she could tell it was a woman’s room. She felt an overwhelming need to relieve her bladder. Rolling over to the edge of the bed, a spasm of horrendous pain stabbed her back and she cried out, shifting back onto her right side. Her cry devolved into a moan as she lay there, not knowing what to do.
Suddenly the door opened and a woman entered, asking, “You okay, dear?”
“I need to . . . use the bathroom. I can’t seem to get up.”
The woman helped Wendy to a sitting position. “Come on, let’s get you up.” She took Wendy’s arm and helped her to her feet, Wendy groaning as she leaned against the woman. They shuffled together to the bathroom. “Call me when you’re done,” the woman said.
When Wendy finished, she called out, “Ma’am, I need your help.”
The woman returned and pulled Wendy off the john.
“You want to change your clothes?” the woman asked. “Get cleaned up?”
“I feel awful,” Wendy said. “A bath would be wonderful, but I don’t think I can get into and out of a tub. Maybe a shower.”
“Okay. We brought your bag in from your car last night; I’ll lay out fresh clothes.”
“Who are you? Where am I?”
“My name is Katherine Winter. I’m a friend of Paul Sanders, who you called last night. This is my home.”
“I remember calling Mr. Sanders, but that’s about all.”
“Do you remember how you got your injuries?
“I’d rather not talk about it.”
“Okay. Go ahead and get cleaned up,” Katherine said. “I’ll make something to eat.”
With effort, Wendy removed her sweatshirt and then dropped her skirt and underwear on the bathroom floor. She turned toward the shower and flinched at movement to her left—it was her reflection in a full-length mirror. Her breath caught when she stared at the damage Gerald had done to her. Her body looked as though it had been tattooed with black, red, and yellow ink and her face was swollen and cut along her cheek bones. She leaned against the bathroom wall and sobbed, full of shame and sadness.
But, as suddenly as the shame and sadness had overcome her, rampaging anger overwhelmed her. “The bastard!” she muttered. “The sick bastard!” She came to a sudden conclusion she sensed would change her life. Wendy wrapped a towel gently around her torso and opened the bathroom door. She shuffled across the bedroom to the door to the hall and called out, “Mrs. Winter.”
Katherine came down the hall. “Yes, dear.”
“Do you have a camera?”
“Of course. Why?”
“I want you to take some pictures.”
CHAPTER TWENTY-FOUR
It was 3 p.m. before Stanley Burns returned Edward’s call. Edward called Nick on the intercom and asked him to come into his office, leaving Burns on hold until Nick arrived.
“I’m sorry it took so long, but we’ve been in meetings with the FDIC since early this morning.” Burns said.
Edward didn’t feel like exchanging pleasantries with Burns, but knew it wasn’t in his best interest to antagonize the man. “It must be difficult dealing with new ownership and the regulators at the same time,” he said.
“You have no idea. Anyway, you called. Is there something I can do?”
“Yes, a couple things. I learned earlier today someone put a hold on our bank account. We can’t access our funds.”
“I’m sorry, Edward, but that decision was made by the new owner and his representative. Of course, we’ll release the funds in your accounts as soon as you pay off your loan. Have you made any progress finding alternative financing?”
Edward tried to force a cork into the bottle of his anger, with only limited success. “So, you just appropriated my money without even notifying me?”
“It’s been done on every one of our commercial real estate borrower’s accounts. The Feds are in agreement with the bank’s decision.”
“But that doesn’t address my point. Why no courtesy call? No discussion? Do you have any idea the position you’ve put us in?”
Burns lowered his voice. “I’m really sorry, Edward, but I have no authority around here anymore.”
“So, who do I need to talk to? Who has authority?”
Burns hesitated before he answered. “Ownership does not want to interface with bank customers.”
The cork slipped a bit more out of the bottle. “Oh, is that what we’re doing? Interfacing? Well, I want to interface with someone who can make a decision about my loan and my deposit accounts. I’ve got a bank interested in taking over $11 million of our debt as long as Broad Street keeps the balance of $9 million and releases its lien on fifty-five percent of our real estate. That would still give your bank a forty percent loan to value ratio on the remaining $9 million balance, the same as it is now.”
“I don’t—”
“And you need to remove the hold on our bank accounts immediately. Tying up our cash is going to force us to violate contracts we’ve already executed for our new restaurant locations.”
“I’ll have to look into this, Edward. I’ll try to get back to you tomorrow.”
“Tomorrow won’t do,” Edward shouted, the cork popping all the way out. “I want to know by five o’clock this evening what time my lawyer and I can come into the bank tomorrow. If I don’t hear back from you by 5 p.m., my lawyer and I are going to go see the editor of The Philadelphia Journal. I’m sure the paper and the public will be interested in knowing how Broad Street National Bank, the bank’s owner, and the FDIC are undermining perfectly good businesses in the Philadelphia area.”
“I’ll call you back today,” Burns said and hung up.
“Jeez, where did that come from?” Nick asked.
“Where did
what come from?” Edward snapped.
“You pushed Burns pretty hard.”
“You know, I empathize with Stanley Burns’ predicament, but this is our future we’re talking about here and I’m tired of being jerked around by these assholes. Call Paul Sanders and ask him to clear his schedule for tomorrow. I don’t want to go into a meeting with the bankers without legal counsel.”
“What if they tell you to shove it? What if they call your bluff?”
“I wasn’t bluffing, Nick. What the Feds and their cronies are doing is wrong. If they’re treating bank customers across the country the way they’re treating us, then it’s no wonder the economy is in the toilet. Let’s see if they can stand the light of day illuminating the situation.”
“I understand your feelings,” Nick said, “but you’re playing chicken with all of our futures.”
“We’ll see about that,” Edward said. “Besides, what choice do I have? Please make that call to Paul. I have another call to make. And close the door on your way out.”
* * *
After Nick left, Edward reflected on his conversations with the banker and with Nick. He didn’t regret for an instant what he had said to Burns, but he now wished he hadn’t included Nick on the call. Nick had a wife and two children, and obviously thought he was playing Russian roulette with the company’s future. Edward knew if the company went out of business, Nick would have a difficult time finding another job in the present economic recession.
But Edward was more concerned about the futures of all of his employees, and he wasn’t going to allow the bank and the Feds to take down the company he’d built from scratch, and take down his employees with it. He called a number from memory.
“Peter Mora.”
“Peter, it’s Eddie.”