The Billionaire Who Wasn't (6 page)

That evening, Chuck took Adler and his wife, Ella, a survivor of the Holocaust, for what he remembered as a “rather extravagant” meal. “I impressed him by picking up the tab,” recalled Feeney. He impressed Adler even more by sending him a contract from Vaduz two days before Christmas, accompanied by a check for $3,000 for three months' salary in advance, and a round-trip ticket to New York. “In a matter of four days my world had changed from abject failure to a person of worth with an exciting future ahead of me,” recalled Adler.

Meanwhile, the operation in Vaduz was running into trouble. The Lichtenstein authorities decided that they had tolerated Feeney's presence long enough. In March 1961, the owner of the hotel came to him in some agitation. “You've got to go. I can't hold off the police anymore,” he pleaded. Feeney decided they would have to find another business-friendly location in Europe. The nearest was Monaco, the world's second-smallest independent country, situated on the Mediterranean just east of Villefranche. Tourists International in Vaduz had by then accumulated voluminous files and company records, as well as typewriters and cabinets. They could not simply hop into a car and drive across the border. “We had to cross several frontiers, the first into Switzerland,” said Feeney. “We had no authorization to be there. Officials would ask, ‘What's all that shit there, what are you guys
doing with all these papers?' Everybody knows how the Swiss work those things out. If you have no authorization they fine you.”

They decided to do a midnight flit. Lee Sterling first drove to the U.S. Army base in Ludwigsburg, Germany, where he temporarily swapped his smart little Sunbeam Alpine for the roomier station wagon of an old friend, Lieutenant Colonel Sean O'Mahony, the commanding officer of the military hospital. In Vaduz, they loaded filing cabinets and office equipment onto the U.S. Army vehicle and covered them with laundry. Feeney put files and other papers in the back of his Renault Dauphine, throwing linen and dirty shirts over them. They left Vaduz late at night on March 16, 1961, and headed south on the N-13, driving through Switzerland and arriving at the Italian border at 3:00 AM. Sterling showed his U.S. Army lieutenant ID to the border guard and explained that he had just finished his military service. The immigration official had also just been demobilized. “What can you do for an old soldier?” he asked. They tipped him and he waved them through. They reached the French border and drove on to Monaco without further incident. Though no longer physically based in Vaduz, Feeney had no intention of giving up Lichtenstein as a tax haven. He hired a permanent Lichtenstein resident named Arno Scalet to act in future as secretary and front man for Tourists International headquarters in the principality. The nameplate on Vaduz's Altenbachstrasse stayed in place.

The Mediterranean city-state of Monaco had a tolerant attitude toward foreign businesspeople. Feeney established Tourists International's new office on Rue Suffren Reymond, a quiet street of old residential houses with red-tiled roofs, and put Lee Sterling in charge. As in Lichtenstein, they had no work permits. To avoid bringing attention to themselves, they needed a local fixer, someone who could work the system, get them out of trouble when necessary, and identify French suppliers.

They found one by accident. “One day I hear someone yelling, and I come out and there is this young, fairly big guy,” said Sterling. “It turns out we were blocking his truck. Several days later the same happens. He speaks English and seems sharp so I say, ‘Why don't you come and work for us?'” The truck driver, Jean Gentzbourger, a French veteran of the Algerian War, was delivering wood to building sites for 600 francs a month. Sterling offered him 800 to work for Tourists International. Gentzbourger went to his boss and said he was leaving. “I'll give you 200 francs more,” his boss said. Gentzbourger replied, “Too late.”

The Frenchman quickly established that the American salesmen coming in and out of the Tourists International office were all illegal. “You've got to get permission to work here or you will all be in trouble,” the Frenchman told Sterling. “You are the only legal person so you will be our representative,” Sterling told him. Gentzbourger became the
gérant
—the legal responsible person—for the office. Part of his job was to get the sales guys out of trouble if they came to the attention of the Monaco police. Once, a salesman arrived on his moped from Genoa covered with mud, and the police picked him up. Gentzbourger went to vouch for him. His military connections got the man released. “That was the way the business was run in those days,” he recalled in the villa overlooking Cannes, where he now lives.

Feeney occasionally came and went, always walking fast, even when lugging heavy suitcases filled with brochures for the fleet. He was forever thinking up new ideas. His next venture was to open a shop in Paris at 12 Rue de la Paix with a novel approach: American tourists, many of whom were doing four countries in four days, could do one-stop shopping at the store and order such items as a cashmere sweater from Scotland, a beaded bag from Austria, Waterford crystal from Ireland, and a leather wallet from Italy and have them all shipped from the country of origin to the customer's American home as an unaccompanied gift item. There was no need for an inventory, just samples of the merchandise. The shop employed glamorous sales girls to take orders in the lobbies of five big tourist hotels around Paris. Feeney sent Gentzbourger to run the Paris shop. The French fixer said he felt like a pimp when the young women arrived every evening with purses full of cash from the orders. Feeney would drop by when in town. “He would come for a couple of days, and have lunch at La Quesh,” he recalled. “We would sit at the bar. He used to order the
plat du jour
and when it arrived, it was hoofed down, and we would go. I learned to eat fast. He was always talking, talking, his mind was like Speedy Gonzales, always racing.”

Their antipathy for bureaucracy sometimes caught up with them. “Chuck or Lee Sterling would arrive in the Paris shop with a new model of watch and simply change it for the old model,” lamented Gentzbourger. “One day a customs official came into the shop in Paris to check the merchandise. None of the numbers on the watches fitted the invoices.” The shop was fined 20,000 francs. Gentzbourger, the good
gérant
, got it reduced to 1,000.

CHAPTER 5

Riding the Tiger

When Feeney and Miller were collecting orders onboard navy ships, they found themselves being asked if they were the guys who sold cars. They weren't, but they soon were. They discovered that American service personnel abroad had the right to buy cars duty free and have them shipped to their home port, and some rival salesmen had already got in on the act. Miller and Feeney picked up brochures from car showrooms and brought them on board the ships. They found that selling cars was just like selling booze. They took a deposit, paid an advance to the car dealer, and ordered the car shipped to the customer's home port.

Once they did become known as the guys who sold cars, they were overwhelmed with orders. The car-manufacturing business had picked up in Europe, and European cars were popular in America. They began hiring salesmen to tour the Mediterranean ports and military bases. They employed ex-GIs like Joe Lyons and Bob Matousek, who had served in the army in West Germany, to work the German bases, where a total of 300,000 American troops were stationed. They called this venture Cars International. The business quickly expanded. Feeney crisscrossed Western Europe to set up a network of agents selling cars, booze, and cigarettes to the U.S. military. He designed flyers and put advertisements in such military publications as the
Stars and Stripes.
As with the fleet, the salesmen's success depended on getting access to the NCO and officers' clubs and military housing at army bases. Being ex-military, they knew the ins and outs, said Matousek, a former army captain.

It was a good time to be an American on the make in Western Europe. Many older Europeans saw the Americans as liberators, and the U.S. troops as protectors against Soviet communism. American movies and consumer products were popular with the postwar generation of young Europeans. The economic miracle known as the
Wirtschaftswunder
had brought a new era of political stability to Western Germany, and France and Italy were entering a time of unprecedented prosperity. The American ex-GIs who signed on with Feeney were themselves newly liberated, finished with their military obligations and unfettered by the straitlaced conventions of 1950s America. They were free to spend their money as fast as they made it and have a good time. Chuck Feeney and his team were aggressive, self-confident, and borderline legal. They enjoyed a great sense of camaraderie. The new age of affluence in the United States meant that their American customers had disposable cash, and the money rolled in. They were in the right place at the right time.

Feeney and Miller established eight car-sales offices in West Germany. They took over a Volvo showroom in Frankfurt in the heart of the U.S. military zone and got demonstration cars from other dealers to show the customers. They rented space in an old munitions factory next to a bar. They printed lavish brochures that they mailed to servicemen who could not get to their showrooms. These listed every foreign make in vogue at the time: Sunbeam Tiger, Austin Healy, Porsche 911, Renault R-8 sedan, MG sports, Spit-fire, Volvo, and Volkswagen Beetle. The Volkswagen, the tough, reliable creation of the German car designer Ferdinand Porsche, was in demand in the United States as a runaround and was the most popular buy: A soldier could save $500 on a Volkswagen 113 sedan costing $1,700 in the United States. The buyer gave Cars International 10 percent of the cost, and the company booked the order for 5 percent. “The customers were funding us, and the suppliers were also giving us credit in a funny way,” said Feeney, who arranged for Geico to provide financing when the soldiers or sailors needed it.

The key to their success was, as always, that they did not have to maintain inventories. They sold liquor and cars, neither of which required a dollar of up-front money. And the business was “offshore,” which meant they did not have to pay U.S. taxes. It seemed the perfect business model. A customer could pick up his automobile in France or Germany, or wait until he was back in the United States. If he drove it around for a while in Europe, it was considered a used car and subject to less road tax back home. Matousek once sold
two automobiles to a two-star general who had an aversion to paying the tax. “He just drove them around the block, and then we put them on a boat and shipped them to the U.S. as cars that he had already driven in Germany.”

Like car salesmen everywhere, the former GIs talked up the qualities of the automobiles with the best commission for themselves. Their main problem, however, was getting their orders filled by the European car manufacturers, as the supply of automobiles in France, Germany, and Italy could not keep up with burgeoning domestic demand. In France, car ownership tripled in the 1950s to 6 million. Cars International sometimes had to make it worthwhile for contacts in the automobile factories to “gray-market” cars, that is, deliver cars to them that were meant to go elsewhere. Bob Miller recruited Hans Schaefer, head of Export Department 6C at Daimler Benz in Stuttgart that handled the Korean quota, to provide him with gray-market cars. On paper they were shipped to Korea, but in reality they went to the United States. The scheme was discovered when a lieutenant commander turned up at the Daimler Benz factory to inspect a car he had ordered for delivery to Jacksonville, Florida. He was told, “Ah, yes, commander. It will be delivered to Seoul, Korea, in about eight weeks.” The game was up. Hans Schaefer was fired but instantly reemployed, along with his German secretary, Helga Flaiz, by Cars International in Frankfurt.

At its height, Cars International bought a full-page advertisement in
Time
magazine's overseas military edition. It boasted that “Cars International's unique Stateside Delivery Program enables GIs to choose from a wide variety of 492 American and European cars at low export prices.” The sales order slip printed in the advertisement carried an “exclusive guarantee from Sales Director Charles Feeney” that any customers not satisfied after forty-five days would get their money back.

Feeney also used advanced public relations gimmicks to promote sales. He donated a $2,650 MGB sports car for a charity raffle held among the crew of 5,000 on the aircraft carrier USS
Forrestal,
hailing it in brochures distributed to the sailors as a “woman weapon . . . if you do not have a wife, the MGB might be very useful in attracting one!” The winner of the raffle, machinist's mate Wilson Hoy of Michigan, was quoted in the next brochure as saying, “Wife? Who needs one with a beauty like this little number.”

Feeney went looking further afield for business. Anywhere there was a military base, there were potential customers. He took off on trips around the world, looking for opportunities to set up sales offices, touching down in
Saigon, where the American military presence was being built up, and flying via Havana to Guantanamo, the U.S. base in southern Cuba. Perhaps inevitably, the CIA saw Cars International as a good cover for its spy operations. Many former GIs were, like Chuck, approached to do intelligence work; one ex-Marine who worked for the company in Europe became a CIA operative in South America, according to former agent Philip Agee in his book
Inside the Company: CIA Diary
.

Meanwhile, another Cornellian came into the car business and would become instrumental in expanding it across the world. Jeffrey Cornish Mahlstedt, a graduate of the Cornell Hotel School from Old Greenwich, Connecticut, and a former customer of Chuck Feeney's sandwich business, was serving in the Pacific as a lieutenant JG on the U.S. Seventh Fleet when he got a letter from Feeney saying, “You need to come to Europe after you leave the navy. It's fun, and it is sunny, and there are pretty girls.” But Feeney wrote soon afterward with a different proposition: Mahlstedt should stay in the Pacific and try to sell automobiles there for Cars International. “I told him how we were going to get rich and how the whole Far East was open,” recalled Feeney. “I said we are going to make our first million, so Jeffrey said, ‘I'm game!'”