by Joseph Badal
“Your five minutes are up,” she said. “Don’t come back.”
Paul was shocked at the way Gail dismissed him. He slowly stood, gathered his briefcase, and walked out. He felt drained, and barely had the energy to walk out of the building. After finding his hired car, he told the driver to take him to the train station. As the driver pulled away from the curb, Paul thought about having to wait in the station for the next train and then the long ride back to Philadelphia.
“How much to take me to Philadelphia?” he asked.
The driver looked at him in his rearview mirror. “You serious?”
“Absolutely.”
The guy thought about it for a minute and then said, “$800.”
Paul told him where he wanted to go. “Wake me when we get there.”
CHAPTER SIXTY-ONE
“What’s the latest?” Edward asked Nick Scarfatti. They were seated in Edward’s office.
“I heard back from the private equity firm in New York City. They’re very interested in making an investment and will put up $30 million to pay off the debt at Broad Street Bank and cover the cost of building new sites in Pittsburgh.”
“That’s great news,” Edward said, “but the look on your face tells me that’s not all you have to say on the subject.”
“Three things. One, they want the option to convert their $30 million loan to forty percent of the company’s stock. Two, the interest rate on the loan would be ten percent. Three, it’ll take them two months to perform their due diligence and to close the deal.”
“The interest rate’s onerous, but we can afford to pay it, and giving up forty percent ownership is better than losing one hundred percent of our company to the bank, but the two months are a deal killer.”
“Unless Paul Sanders can use some tactics to delay the foreclosure or convince a judge to grant an injunction against the bank,” Nick offered hopefully. “That could give us a few months of breathing room.”
“But even with an injunction, or with normal foreclosure procedures, if the bank changes the locks or shuts down the business, as they have the right to do according to our loan agreement, there will be nothing to sell sixty days from now.”
“Paul’s going to file a motion requesting the injunction on Friday or the following Monday, assuming the bank gives us a formal foreclosure notice at the end of the day tomorrow. Our future will then be in the hands of the court. Forgive me for being pessimistic, but, at this point, I’ve lost confidence in the fairness of the system.”
Nick nodded his agreement.
“Let’s call an all-hands meeting for our restaurant managers and department heads for Saturday morning at 9. If the bank pulls the plug tomorrow, I want to inform our people and tell them what our options are.”
“Some of the employees are going to start looking for jobs as soon as they hear about this.”
Edward shrugged. “That’s their right.”
THURSDAY
JULY 28, 2011
CHAPTER SIXTY-TWO
Stanley Burns’ head was spinning as though he’d had way too much to drink, but alcohol wasn’t his problem. Rather, his and his family’s futures were on his mind. He’d gone home last night and felt distant from his wife and children all evening. After the children were put to bed, Burns’ wife, Yolanda, brought him a cup of tea, sat down next to him on the couch, and leaned her head on his shoulder. They’d sat like that for ten minutes, neither saying a word.
Finally, Burns whispered, “I don’t know what to do, Yolanda.”
“What’s bothering you, Stanley? You haven’t been happy for a couple weeks.”
He looked at her, surprised. “You didn’t say anything.”
“I thought, sooner or later, you would tell me about whatever was troubling you. But you were so cold tonight I couldn’t let this go on. Besides,” she said, smiling wryly, “we haven’t made love for two weeks.”
He explained how he hated going to work every morning and how he felt he was violating his principles working there. He’d told her about his conversation with Sanford Cunningham about the Winter Enterprises’ loan and what the bank was doing to Winter. And he told her he felt dirty participating in what the bank was doing to Edward Winter, a man with whom he’d had a long-standing relationship and for whom he had high regard. ”
“You remember that speech you gave to the Temple University business ethics class a couple years ago?” Yolanda asked. “You told me after you came home that day that one of the students had asked you to list the most important traits of a leader. You told her three of the most important qualities of a leader were education, experience, and character. But if you could only pick one trait, it would be character.”
He’d hugged Yolanda and later that evening they’d made love. Before he fell asleep, he thanked God for giving him such a wonderful wife.
He now sat at his desk in the bank, where he’d been since 6:30 that morning, and stared at the tiny article on the last page of the front section of that morning’s Journal. The stories about the charges against Gerald Folsom for spousal abuse had dwindled down to almost nothing. He had decided last night he was going to do something, but he hadn’t yet decided what that would be. This article finally made up his mind for him.
He logged onto his computer and accessed the bank’s financial files. Selecting information about the bank’s capital accounts, loan delinquency information, and appraisal data on loan collateral, he ran off copies. Then he looked up the number for the Journal and called. He asked to be put through to the reporter covering Gerald Folsom. The operator put him through, but he got voicemail suggesting he leave a name and number, or dial a four-digit number to transfer to the business editor. Burns punched in the four numbers and listened to the rings. He almost bailed on the call after five rings when a woman finally answered.
“Kelly Loughridge.”
“Ms. Loughridge, my name is Stanley Burns. I’m president of Broad Street National Bank. I’d like to talk to someone about the bank and its new ownership.”
“Listen, Mr. Burns, if you’ve got a problem with one of our articles about the bank, you need to have your attorney call our legal department, and—”
“I have information for you, Ms. Loughridge, about practices here at the bank that I believe are unethical and illegal. I suggest you should talk with me.”
The woman muttered something that sounded to Burns like, “Thank God Almighty,” but Burns couldn’t be certain.
“I’m sorry, what did you say?”
“Uh, nothing, Mr. Burns. When would you like to meet?”
“How about right now? I’m downtown; I could be at your offices in ten minutes.”
“That would be perfect.”
When Stanley Burns arrived at the Journal’s offices, Kelly Loughridge and a staff reporter named Russell Morgan were waiting for him in a conference room.
“Can I get you something to drink, Mr. Burns?” Kelly asked.
“Water would be good.”
Kelly went to a small refrigerator in a corner of the room and took out three bottles of water and passed them around. She watched Burns take a long pull on his bottle and then set it on the table.
“You said you wanted to talk about Broad Street National Bank,” she began.
“Ms. Loughridge, I want to talk about a whole lot more than that.”
Kelly felt a chill run down her spine. “Do you mind if we record this meeting?”
A sudden look of uncertainty crossed Burns’ face, but he finally said, “Go right ahead.”
She nodded at Morgan, who pressed a switch on a recorder in the middle of the table. She noted the time and date and the people in attendance and then asked, “Would you like to make a statement, Mr. Burns? And is this for the record?”
“Yes, to both of your questions.” He took a deep breath and rattled it out slowly.
“I’ve been employed at Broad Street National Bank for sixteen years. I started as a credit analyst, moved to a commercial loan officer position, ultimately became Senior Credit Officer, and am now President. Until about two weeks ago, I worked for Sol Levin, the founder and a significant owner of the bank. But on July 16, Mr. Levin was fired by the board, at the insistence of federal regulators. That night, the FDIC took over the bank. They had already worked out a deal to sell the bank to Gerald Folsom and his Folsom Financial Corporation. I would like to bring a few things to your attention, which I believe you will find interesting. Actually, every citizen of this country should be interested in what I am about to tell you.
“First, it makes no sense why the Feds took over Broad Street National. Sure we had some loan problems, but our capital base was well above statutory requirements, and ninety-eight percent of our loans were current. Yet the regulators decided the collateral on our loans was worth only sixty percent of the value determined by appraisals, and they also decided many of our borrowers would begin to renege on their loans. The regulators came into the bank with a mindset that the Philadelphia and Pennsylvania economies were going to go down the drain and that commercial real estate borrowers were going to default in droves, even though there was no evidence to back that up. With that mindset, there isn’t a bank in the country safe from being taken over by the federal government. They came into Broad Street National Bank, wiped out Sol Levin and the other stockholders, and handed the bank to a guy who cares about nothing but making the biggest bang for his buck.”
“Isn’t that what banks are all about, Mr. Burns?” Morgan asked.
Burns looked at Morgan with a sour set to his mouth. “I’m not here to have a discussion about philosophy and capitalism, Mr. Morgan. But your question displays a complete lack of understanding about the banking business. Banks, especially community banks like Broad Street National, have to apply for a charter. They have to establish that they are providing a service to the community. So, no, they’re not in it for the biggest bang for the buck. In fact, even if a bank’s management was in it for profit alone, the regulators would fine them for not giving back sufficiently to the community. ”
Kelly glared at Morgan and said, “Perhaps we can let Mr. Burns complete his statement without further interruptions.”
Morgan looked down at the table top. His face was flushed and he looked sufficiently chastised.
Burns pointed at his briefcase resting on the table beside him. “I brought detailed data about the bank’s loan portfolio and capital positions to back up what I just said.
“The second point I want to make is that the arrangement between Gerald Folsom and the federal government represents an abuse of the trust Americans have placed in their federal government. The deal Folsom received is unconscionable. An uneducated person with a 50 IQ could make money off a deal like the Feds gave Folsom—and not just a little. A fortune. I’ll also provide you with information about the terms of that deal.
“Finally, I think Folsom is using the bank to rob bank customers of their assets and, in some cases, their businesses. All with, at the very least, the passive assistance of the federal government. I don’t believe the government knows exactly what Folsom is doing, but that, in effect, means the government is not properly supervising the people they are handing these banks over to. I’ve got some examples of what Folsom is doing to take over bank customers’ businesses.”
“Would one of the examples be Winter Enterprises?” Kelly asked.
Burns showed shock. “How could you know that?”
“Lucky guess. I’ve talked with the attorney for the company. He is hopping mad about the way your bank has dealt with his client.”
“As he should be,” Burns said. “Winter Enterprises is the poster child for Folsom’s perfidy.”
Burns opened his briefcase and took out an inch-thick file. He slid the file across the table to Kelly.
“We’ll need some time to digest all of this,” Kelly said. “Where can we contact you?”
“I’m going back to the bank to submit my resignation. Then I’ll be at home.” He gave them his home and cell phone numbers. “Oh, if you want to know about everything Folsom is doing, you should call Sanford Cunningham. He’s Folsom’s right-hand-man. I doubt he’ll talk to you, but you can always try.”
“How does this headline sound: Bank President Resigns, Claims New Owner Is Stealing Customer Assets?”
“Just about right,” Burns said, smiling.
After he left, Kelly said to Morgan, “I’m going to read Burns’ file. I want you to try to meet with this guy Sanford Cunningham. Ask him about Burns’ allegations. Then call Folsom and try to get an interview. Tell him we’re going to run an article about corruption at the bank. Remind him that declining to comment will not look good.”
Morgan got up to leave, but Kelly stopped him and added, “Try not to ask any stupid questions.”
* * *
Kelly Loughridge spent two hours going over the file from Stanley Burns before calling Paul Sanders.
“Someone finally grew a conscience,” Paul said.
“Paul, I need to get a statement from someone at the FDIC. I think it’s time you gave me your contact’s name there.”
Paul didn’t have to think about Kelly’s request for more than a second. He provided Gail Moskowitz’s name and number. “Good luck. I went to D.C. yesterday to try to talk her into cooperating with your investigation. She gave me the boot.”
“She’d better not try that with me. With the information I just got from Stanley Burns, I’m going to embarrass the hell out of the FDIC.”
“And don’t forget about the cash and 3” x 5” cards in the valises in Folsom’s house. I can’t prove Matson was on the take, but just the threat of you asking how an FDIC official accumulated over $2 million that he then placed with an FDIC investment partner for safekeeping ought to shake her up.”
“Did you already tell her about the money?” Kelly asked.
“Oh yeah. But at the time we didn’t know you were about to run an article about Broad Street National Bank, Gerald Folsom, and the FDIC.”
“It’d be great if we had those valises in our hands. I’d love to print pictures of all that cash and of the cards.”
Paul considered that for a minute and then said, “Let me see if I can make it happen.”
CHAPTER SIXTY-THREE
“Sylvia, how much pull do you have with Detective Castiglia?” Paul asked, facing the Lawyer across her desk.
Sylvia Young looked at Paul as though he were an alien from outer space. “Paul, how long have we known one another? Maybe twenty years?”
“A little longer, I think.”
“And in all that time you’ve never just dropped by my office. Yet, here you are, seemingly asking me a favor. So, I assume you’ve got something very important and urgent on your mind.”
“Important, urgent, and a bit diabolical.”
She smiled. “That sounds like fun. To answer your question, I have a very good relationship with Castiglia. Why do you ask?”
“I have information that on the day Donald Matson, the local FDIC supervisor, was murdered, he put $2.065 million in a vault at Gerald Folsom’s home.”
“And there’s proof this happened?”
“There are two valises with money and signed, hand-written cards from Matson in Folsom’s vault. I’d say $2 million is a pretty good motive for murder. Even for a multi-millionaire.”
“So would I,” Sylvia said. “But are you sure the cards are still there?”
“I’m not one hundred percent certain, but my source doesn’t think Folsom knows the cards even exist.”
“Your source is going to have to talk to the police. There’s no way they’re going to be able to get another search warrant for Folsom’s home on second- or third-hand information.”
“I’ll call my source. You call Castiglia and get us an appointment. Today.”
What’s the rush?”
“Two things. First, I don’t want Folsom to find the cards and destroy them. Second, I’m trying to put as much pressure on a government agency as possible so I can save a client from losing his business. Don’t ask me how, but there is a connection here. All roads go through Gerald Folsom.”
* * *
Paul called Carrie’s cell.
“What’s up?” Carrie asked.”
“We may have caught a break. The president of Broad Street National Bank is talking to the Journal. Carrie, are you prepared to tell me how you learned about the money and note cards in Folsom’s home?”
“Depends on why you need to know.”
“The Broad Street National Bank president is talking to the press. I just received a call from Kelly Loughridge at the Journal. She’s putting together a story, but most of what she has isn’t necessarily criminal. I mean, Gerald Folsom may be screwing customers like your brother, and it may be unethical and bad for the bank’s image if it gets into the media, but it isn’t against the law. But what if a connection can be made between Donald Matson’s death and Folsom? Those note cards signed by Matson could establish a motive for Folsom to commit murder.”
“Paul, I know $2 million is a lot of money, but it’s chicken feed to Folsom. Why would he kill Matson for that amount of money?”
“If he did kill Matson, or hire someone to do so—which is more likely—the reason was probably something other than money. But anything we can do to pile suspicion onto Folsom will, hopefully, bring about an investigation of his relationship with Matson and the government, and of his business practices.”
“I understand,” Carrie said. “I’ll do whatever I can if it helps Edward. Or, hurts Folsom.”