Shell Game (Stand Alone 2) (26 page)

Folsom returned to his stool and tapped the bar, signaling another round.

“I think I should buy
you
a drink for coming to my rescue,” Carrie said.

“It’s a deal,” Folsom said. “But only if you let me buy you dinner tomorrow night.”

“Seems like I get the better end of that deal,” she said.

“Not even close to being accurate, Tammy. Being seen with a woman as gorgeous as you will improve my reputation immensely.”

She giggled, play-acting a bit ditzy. “Dinner sounds great. What time?”

“How about 7?”

“Sounds good,” she said.

The bartender delivered the new round of drinks. Carrie watched Folsom finish his shot and beer, while she barely sipped her drink. Then she slid off her stool, leaving a second $20 bill on the bar, waggled her fingers at Folsom, said, “I’ll see you here tomorrow at 7,” and walked out.

Carrie went to the SUV and drove toward the Marriott Hotel. She reflected that she had gotten lucky with Folsom showing up. She hadn’t enjoyed being so close to him or role playing with a man she despised so much, but things had gone as well as she could have hoped. Even the young guy who had gotten drunk and approached her had helped things move along. Folsom was as charming as Wendy had told her he was when she first met him. Either charming or full of shit. Now she would let nature take its course.

MONDAY

JULY 25, 2011

Nick Scarfatti and Edward sat in Edward’s office—Edward in a chair and Nick on the couch behind the coffee table. Nick briefed Edward on the state of the company’s bank account at Third Community Bank, where they had been depositing business receipts since Monday the 19th.

“There’s now $452,313 in the account. We’ve deposited $2.23 million in receipts. The difference has gone out in accounts payables, salaries, and wages.”

“Sales are up nicely,” Edward said.

“Yeah, we’re bucking the downtrend most restaurants are experiencing.”

“Have you heard anything more from Broad Street National about our deposits in Third Community Bank?” Edward asked.

“Not a thing. I don’t think they want to push that. Besides, between our real estate and our frozen money in Broad Street Bank, their loan to Winter Enterprises is more than secure.”

Nick sat in silence.

“What’s on your mind, Nick?” Edward asked.

“My job, Eddie. How the hell is this going to wind up?”

“Listen, my friend, you and I have been together a long time. Worse comes to worst and we have to start all over again, then that’s what we’ll do. You may have to be the bookkeeper for a while, instead of the CFO, and I’ll have to flip tortillas instead of being CEO, but we know how to grow a business. We won’t make the same mistakes we did the first time.”

Nick sighed. “If that happens, I’m going to have to tighten my belt. You won’t be able to pay me enough to cover my current bills.”

Edward cringed inwardly. “I’m sorry, Nick. I shouldn’t have assumed you would want to start all over again. With your education and experience, you could get a good job with another company.”

“Forget it,” Nick said. “I know what we’re capable of doing. Besides, this ain’t a job to me. I’m a shareholder here. We’ll make do until things turn around. You’re stuck with me.”

“Thanks, Nick. The thought of going forward without you by my side is not something I want to consider.”

“Hell, maybe the bank will come to its senses and extend our loan.”

“Probably not a healthy thing to hang your hopes on.”

“Yeah, I know. But it’s better than obsessing about the alternative.”

“You know there is one thing we haven’t tried,” Edward said. “I’ve always been my own boss. The thought of working for someone else makes me nauseous. But if I can save the business, and our employees’ jobs, then I could learn to live with it.

“Hot N’ Chili’s got a franchisee in Florida with fifty-seven restaurants, one of their most successful operators. I’ll check with Pete Mora about how the guy’s doing and then call him in Florida.”

“Not much time left. Four-and-a-half days to find $20 million.”

“It’s worth a try.”

Gerald Folsom looked across his desk at Sanford Cunningham. “Go over the numbers with me.”

“Winter Enterprises has the rights to the Hot N’ Chili franchise for the entire state of Pennsylvania. It has twenty-four restaurants today and was just about to expand to the western side of the state. Sales last year were $58 million. Net profit before interest expense, taxes, depreciation, and amortization, $8.2 million. They’ve plowed their earnings into new store locations. Even at today’s depressed real estate prices, the company has at least $30 million in equity in their land and buildings.”

“So, when they don’t pay off the loan this Thursday, what happens?”

“We foreclose on the collateral behind the loan. The money they have in their bank accounts will offset nearly $3 million of the loan amount, which will leave a $17 million balance. The value of the franchise in this market is
de minimis
. The value of the real estate is significantly more than $17 million, assuming we could find another restaurant operator who would want the locations.”

“What about the FF&E?” Folsom asked.

“The furniture, fixtures, and equipment cost about $200 thousand per location. We’d be lucky to get ten grand for that stuff per location if we liquidate the business.”

“What’s the written-down value of the loan on the bank’s books?”

“Before we took it over, the Feds forced the bank to write down all of its real estate loans; this loan was written down from $20 million to $12 million. Under our Loss Share Agreement with the FDIC, the Feds would cover eighty percent of any sale difference between $20 million and whatever we sold the company’s assets for. For example, if we got $12 million, the Feds would write us a check for $6.4 million.”

“In other words, I could buy the $20 million note from the bank for $12 million without raising any eyebrows at the FDIC?”

“Or even less than that. They’re making sweetheart deals in order to get commercial real estate loans off bank balance sheets.” Cunningham frowned and added, “But why would you do that? I gotta tell you Jerry, paying $12 million of closed down restaurants and a bunch of furniture, fixtures, and equipment doesn’t make any sense.”

“Sandy, you’re thinking like a passive investor, not an entrepreneur. You’re thinking about our collateral as something to liquidate. Surely someone in the restaurant business would want Winter Enterprises on a going concern basis. You said Winter Enterprises made $8.2 million last year. Keeping the business open means an $8.2 million return per year on a $12 million investment. We could probably easily sell the business with the real estate for five times earnings. That’s $41 million. I pay $12 million to the bank and then turn around and sell the business for $41 million. Now that’s what I call a deal.”

Carrie timed her arrival at The Towne House’s restaurant to make an entrance that would get Gerald Folsom’s attention, wearing a short black halter dress showing enough cleavage to be interesting, two-inch black heels, diamond stud earrings, and a diamond pendant necklace—all borrowed from her mother’s closet at her home, without her mother’s knowledge.

She saw Folsom seated in a booth toward the back. There were about ten tables and fifteen booths in the place—all occupied. She saw the appreciative look on Folsom’s face as she approached him. She suppressed a smile. Folsom stood and took her hand, helping her into the booth.

“I’ve been thinking about you all day,” he said, entering the other side of the booth. “You sure are worth waiting for.”

“Why, thank you, sir.”

They made small talk for a few minutes. Then Folsom asked, “What kind of work do you do?”

Carrie fed him a line about working in the investment department for a bank in New York City. She’d done her homework on the internet, so she was able to dump just enough facts about a real bank in New York City to sound credible.

Folsom then told her about his business, how he bought loan pools and banks from the federal government.

“I could sure use a pretty gal like you in one of my banks,” he told her.

“We should discuss that some time,” she answered. The, she said, “I assume buying loan pools and banks is a game the little guy can’t play in.”

He shook his head. “That’s right. The loan pools are often $100 million. Banks aren’t cheap either.”

“So, how many banks do you own?”

“Three right now. What I usually do is liquidate the assets of the banks I buy.”

“You don’t hold them long term?”

“Not usually since I have no interest in doing business with depositors and borrowers. I just want to buy the assets at a discount from the federal government, sell them at a profit, and then go on to the next deal.”

“Why does the federal government sell a bank to you if all you’re going to do is sell off the assets? Why does the federal government need you? You know, they could just cut out the middle man.”

Folsom winked at her. “You’re not just a pretty face, are you? Damn good question. The federal government doesn’t have the staff to do what I do. And it has no idea how to sell anything at market value. The government forces a bank to write down its loans and securities to a fraction of what the real value is, reducing the bank’s capital below regulatory requirements. If the bank can’t raise the required additional capital, the federal government takes over the bank and brings in someone like me.”

“Sounds like a bad deal for the original owners of the bank.”

“You could say that.” He beamed and added, “But a great deal for me.”

Carrie watched Folsom’s alcohol consumption. He was drinking scotch on the rocks and had finished three by the time their salads were served. She had ordered chardonnay and was still on her first glass. Folsom ordered a bottle of cabernet sauvignon with dinner – he ordered a T-bone steak, while Carrie had the petit filet mignon. He polished off most of the bottle of wine. She limited herself to one glass, making sure to drink at least twice as much water as wine.

After dinner, Carrie had a cup of coffee; Folsom ordered a
Vin Santo.

By the time the check came, Folsom was slurring his words and his face had turned florid.

“How’d you like to join me for a drink at my place?” he asked after giving the waiter his credit card.

“I don’t know, Jerry,” Carrie said. “That’s not my style.”

He raised his hands, showing her his palms. “Hey, done get me wrong now; is jus coffee. I enjoy your compney.

She laughed and said, “On one condition. I drive.”

“Was tha matter? You think I had too mush to drink?”

“What do you think, Jerry?” she asked.

He scowled and then seemed to force a smile. “Okay, mebbe I had a lot to drink.” The waiter came back with the credit card receipt. Folsom signed and stuffed his credit card in his shirt pocket. He stood and wavered while waiting for her to stand. Then they walked arm-in-arm to the restaurant’s front door and out to the valet stand.

Carrie handed her valet ticket to one of the young men waiting by the valet stand and cringed inwardly as Folsom wrapped an arm around her shoulders, pulling her to him roughly. The blast of breath he blew in her face smelled like a distillery. She shrugged off his arm and chuckled, saying, “Take it easy, big boy.”

Folsom mumbled something unintelligible.

After they got in the SUV and Carrie drove away, Folsom gave her directions to his place. On the way he said, “Sexy gal like you should be driving a Ferrari, not a truck.”

“I’ve heard that line many times before, but no one has put up the dough.”

“I could change all tha.”

“Promises, promises,” she said, laughing.

She stopped the car in front of the gate to Folsom’s estate and said, “Now what?”

“Aw, shit,” he swore. “My gate opener’s in my car back at the restaurant.”

“It’s getting late, anyway,” Carrie said.

He pointed past her and laughed. “I don give up tha easy. Pull up next to tha metal arm’n open your window.”

She did as he had instructed, punching in the four-digit code he gave her.

“Jeez, Jerry,” Carrie said, as the gate slid open and she drove onto the property, “What is this place?”

“Jus my humble abode.”

“Humble, huh?”

He directed her to the front door where she parked.

“Is this your house, or a museum?”

He laughed boisterously. “Maybe a little of both.”

Pulling out a set of keys from his pocket, he fiddled with the front door lock for ten seconds until he finally inserted the key and opened the door. He waved Carrie into the house with a flourish and closed the door behind her.

She wanted to play the dazzled young woman, but actually didn’t have to put on much of an act. The interior was spectacular, with a five-tiered leaded crystal chandelier that hung from three levels above. A staircase started from each side of the huge entry and wound its way upward for three stories. The rooms off the entry—a living room, a den, and a dining room—were each large enough to seat thirty people.