Ca$h Call, page 7
Don nodded and continued, "So, when Luther called and said he was a financial consultant, I just naturally mentioned that we were looking for an aggressive investment. At first he suggested a universal life product with an 11% return but I told him we were looking for something that would return 18% or better.
"That stumped him for a minute. But then he told us he was looking at a Golden Dragon franchise out of California. I was familiar with this restaurant chain and knew it was quite successful on the west coast. A franchise deal was attractive to me because I had seen several of my friends make great returns on franchise investments. One of them had bought a couple Whataburgers and another one a Swensens. They both were bragging all the time about the money they were making. I figured with a little luck my $10,000 could grow to maybe $50,000 which would pay a big chunk of Rob’s education. Luther promised to call me later when he had more information about it. I told him I would mention the deal to Jim and some other potential investors.
"A few days later, Luther called and said that he had a prospectus and some financial projections for us. He sent them over by courier for us to look at. I called Jim Cochran, and he and Wanda came over to check them out.
"We spent the afternoon looking them over and all agreed they looked spectacular. We were very excited about the venture."
"You were excited about it," Pam corrected. "Wanda and I thought the numbers looked too good to be true."
"Yes, but you went along with the deal."
"Only because you said you were sure they were accurate."
"How was I supposed to know that Luther had tampered with them?"
"Okay," I interjected. "So you told Luther you wanted in on the deal?"
"Yes, Jim and a couple of guys at his office wanted to invest too. So I told Luther to go ahead and get the paperwork filled out."
As we were talking, their daughter, Donna, came in with a big golden retriever close behind. The big dog immediately came over to me and started sniffing my shoes.
"Hi, Donna," I said. "Is this your dog?"
"Yes, this is Rip. . . . Where’s Marcia?"
"Oh, she’s at home. I came straight from the office so I couldn’t bring her along."
She exaggerated a frown. "Next time bring her."
"Okay, I will."
"How’s my little monkey," Don said. "Come here. I haven’t seen you all day."
Donna turned to her father and said indignantly. "I'm not a monkey."
"Don raised his eyebrows and then asked, "You're not? How come Mom said she had to pull you down from a tree today?"
"I was trying to get Cindy's cat down. Rip chased her up a tree."
"I didn't see any cat," Pam said.
"When I got up there, she ran away."
"Well, you're lucky you didn't fall off the tree and break a leg," Don said.
"Kids are fun, aren't they?" I said.
"They're a pain in the ass if you ask me," Don said as he grabbed Donna, threw her over his lap and began to spank her gently.
"Daddy, don't spank me!"
"Why not?"
Donna wiggled off his lap and glared at him.
"That hurt," she complained as she forced a frown and rubbed her bottom.
"Oh, I barely touched you. I was just kidding around. It didn't really hurt, did it?"
Donna smiled and said, "No."
"Then come over here and give Daddy a big hug."
Donna’s face stiffened as she inched her way toward her father. When she got within an arms length he grabbed her and pulled her into his arms. She giggled as she wrapped her arms around him and gave him a big hug.
Don groaned like she was crushing him. She laughed in delight. Don said, "What about Stan, doesn't he get a hug?" She ran over to me, put her arms around me and hugged me as hard as she could. I laughed.
"Oh, thank you, Donna. I think you are stronger than Marcia. That was a great hug."
Pam smiled. "Okay, Donna, go play until bedtime. We’re discussing important business with Stan. Take Rip with you."
Donna patted Rip on his back and started running toward the door. "Come on, Rip," she said.
"Bye," Mr. Turner, "Donna said as she and Rip ran off down the hall.
"Isn’t it great to have a daughter?" I said. "It only took you guys three tries. It took us four. Rebekah wanted to give up. She was sure we’d have another boy, but I knew it would be a girl. I even bought pink bubble gum cigars to give out and wouldn’t let her bring anything blue to the hospital."
Pam laughed. "It’s a good thing Donna came when she did, because I wouldn’t have tried a fourth time."
"It is great, though, having a pretty little thing like her prancing around the house," Don mused.
"It is. I wouldn't trade Marcia for anything," I said.
I was glad Donna had made an appearance as the mood at the Blaylock house had gone up a few notches. I hated to have to plunge back into the grit and grime of reality but that was why I was there. I said, "Okay, so where were we?"
Don continued, "Well. Several weeks later, Luther had the deal put together, and we were summoned to the bank where the venture was to be financed. We met with the bank officer handling the loan, Herb Winters, and gave him our financial statements. He explained the loan to us and said he’d have an answer from the bank in a couple of days. After the meeting, Luther gave us copies of the partnership agreement. He said it was a standard agreement. Jim wanted to take it home and read it carefully but Luther insisted we read it and sign it then. We glanced over it but obviously didn’t have time to read it verbatim. Jim asked if the agreement required additional capital contributions. Luther said in emergencies it did, but he didn’t expect that to ever happen.
"The next day, Luther showed us the restaurant sites. We agreed on a location that previously had housed another restaurant, as Luther said it would be less expensive to finish out. A couple weeks later, the deal closed, and Luther invited us to a closing party at Anthony's in Northpark to celebrate."
I cringed when Don told me there had been a closing party. It reminded me of Kurt Harrison and the Panhandle Building fiasco that nearly cost me my law license when I first started practice. Harrison had been a high roller who was more concerned with appearances than reality. Luther apparently shared many of these same traits, which was a bad omen.
We got up and stretched our legs. I called Rebekah and told her I’d be home by 10:00 p.m. She asked how bad it was. I told her it was too early to tell but that I’d fill her in when I got home. Pam put Donna to bed. Greg managed to tear himself away from his Dungeons and Dragons game to say hello. I chatted with Rob a minute when he stopped by to change clothes and then Don continued the saga.
"The closing party was pretty eloquent. We were served a five course dinner consisting of lobster bisque, garden salad, shrimp scampi, and roast beef, along with plenty of fine wine. They served raspberry cheesecake for dessert. When the meal was completed, Luther got up and thanked us for investing in the Golden Dragon and promised we would all make a lot of money."
"Eight weeks later the Golden Dragon Restaurant officially opened. The mayor of Greenville presided over the ribbon-cutting ceremony which drew a pretty big crowd of local businessmen, civic leaders, the press, friends, and family. The restaurant officially opened for business at eleven-thirty the morning of November 13, 1983. We were all relieved that the restaurant was now opened for business and optimistic that it would be a big money maker.
"Unfortunately, it wasn’t long before relief and optimism turned to pessimism and despair. That’s when the cash calls started. The first one was twenty-five thousand dollars—half again our initial investment. Pam and I were crushed and felt horrible that we had gotten Jim and the others into the venture. But despite this first cash call we were still cautiously optimistic that things would work out okay in the end."
9
The Embezzlement
Looking at my watch as I listened to Don’s story, I saw it was already ten. It was time to go. I had promised Rebekah I’d be home, but the story wasn’t over. The worst was yet to come and I had to hear it all—every tragic detail of the rise and demise of Don and Pam Blaylock. They had become my friends and I felt sicker and sicker as the night waned.
Don cleared his throat. I looked over at him and smiled. He continued his story.
"After Luther had gone through the franchise training school, he admitted to us he still didn't have the knowledge or experience necessary to operate the restaurant."
"Oh, great. I bet that pissed you off," I said.
He nodded. "That’s an understatement, but by that time we already knew Luther was incompetent, so we agreed to hire an experienced assistant manager who could handle most of the day to day management chores."
"How do you find a manager for a restaurant?" I asked.
"Luther took out an ad in the Dallas Morning News and Carl Stillwater responded. His résumé stated that he’d managed a Dairy Queen in Ardmore, Oklahoma for three years, then an IHOP for a year after that. I asked Luther why Stillwater wanted to leave his current job and was told he was tired of Oklahoma and felt Texas had more opportunity."
"They were probably on to him up there."
"Possibly. I’m sure Luther didn’t bother to check references. Anyway, Luther and Stillwater got along famously from the first day they met. Stillwater seemed to be knowledgeable, confident and dependable. As time went on, Luther spent less and less time at the restaurant and eventually turned the job over almost completely to Stillwater. We found out later that Luther had managed to obtain a new brokerage contract with another insurance company and was selling insurance again.
"So, he expected to get paid for doing nothing?"
"Yeah. Jim was really pissed off when he found out about it. After the first cash call he insisted on reviewing the books. This annoyed Luther. He complained he had better things to do than dig up all the partnership records and sit around while Jim pawed through them. He stalled for several weeks but finally succumbed to Jim's pressure.
"It didn’t take Jim long to see that someone was embezzling from the business. There were a lot of voided tickets which he at first attributed to sloppiness but then he discovered something really odd. Several checks had been sent to the same vendor all in the same month. Curious about this, he started inspecting the endorsements. They were all deposited in the same bank account—East Texas Collection Agency."
"East Texas Collection Agency," I repeated. "I haven’t ever heard of them."
"We hadn’t either. Jim and I immediately reported the situation to the local police. They assigned the case to a Detective Johnson. After looking at the evidence Jim brought him, he started a criminal investigation. A few days later he decided to stake out the First National Bank of Quinlin where the checks were being deposited into East Texas Collection Agency’s account. He said it was probably a sham corporation, and by calling it a collection agency, the bank wouldn't be suspicious of checks being deposited that were made payable to a number of different companies."
"Pretty clever. I’ve seen that technique used before."
"Really?"
"Yeah, if you don’t have a cover like that you have to rely on a friendly teller or put an insider in the bank. That’s risky and costs money."
Don nodded. "So, during the stakeout they got lucky. A late model Ford Ranger pick-up drove up to the drive through window. Immediately, the teller signaled him that this person was depositing checks into the East Texas Collection Agency account. He started his engine and eased over behind it. A woman was driving and she must have noticed Detective Johnson behind her and realized it was an unmarked police car. Before she got her receipt she panicked and took off. Detective Johnson and a DPS officer chased her about twenty miles down the road before catching her."
"Who was she," I asked.
"Ruby Stillwater, Carl Stillwater’s daughter.
I laughed. "A family business."
"Right. Can you believe it? We were stunned to discover that Stillwater had been cheating us, but we were relieved to find out Luther wasn't involved, and were feeling a little embarrassed for suspecting him. Later that day they arrested Stillwater at the restaurant. He didn’t put up a fight. We spent the evening figuring out how much he had embezzled from us. The final number was $34,225.06."
"It could have been worse. I’ve seen trusted employees embezzle hundreds of thousands."
"Well, since we were a startup business there wasn’t that kind of money laying around."
"Right. So, what did you do?"
"Jim blamed Luther for the embezzlement and told him so. They got into an argument and nearly came to blows. Jim wanted to get a new manager, and Pam and I thought that would be a wise idea too."
"How did Luther take that?"
"He was very upset at the time. He said he had a contract and the partners couldn’t fire him. Jim disagreed and said they could fire him for cause. Jim and I agreed to have a partners meeting and discuss it formally. Luther was pissed, but said he’d come. Jim told him to bring a complete set of financial reports so the partners could see exactly where they stood."
I cringed at the mention of financial reports. I doubted any such thing existed. Promoters like Luther Bell wouldn’t bother with bookkeeping at all if it wasn’t for the fact they’d eventually have to file a tax return. What bookkeeping there was would include only the transactions that could be traced and omit the cash that was the largest component of a restaurant’s receipts.
"Our accountant was Abe Dumas. He officed down the street and turned out to be incompetent. Luther had reportedly hired him because he was convenient and cheap.
"That figures. So, where did you have the partner’s meeting."
"At our house. It was a stormy night with lots of lightning and thunder—very appropriate for the mood of the partners. Luther arrived ten minutes late, which irritated all of us even more. Pam brought him back to where everyone was waiting. She offered him a drink, which he accepted. The only seat available was a piano stool where he finally sat. We exchanged cool greetings and then got down to business.
"Luther passed out the financial statements and everyone studied them. I was shocked when I saw the debts the partners owed to the IRS, the State Comptroller, and the landlord—not to mention the regular vendors. Luther blamed everything on the embezzlement and said they needed another cash call."
"You’re kidding. He had the nerve to ask for more money?"
"Un huh. Jim became livid at this and moved that Luther be fired. Pam seconded the motion and it carried. Luther seemed stunned at first. He just sat there in deep thought while the partners discussed finding a new manager."
"This guy must be a moron. I can’t believe he thought you guys would just shrug and fork out more cash."
"I know. He’d lost all credibility with us, so we just ignored him. Jim finally came up with the idea that Pam could manage the business."
"Oh, so that’s how Pam got stuck with the job."
"Yes," Pam said. "I was against it at first but finally agreed on an interim basis."
I nodded.
Don continued. "When I asked Luther to meet with Pam to help with the transition he became belligerent and stormed out of the house right in the middle of a downpour."
"I was hoping he’d get struck by lightning," Pam interjected.
"The next morning at eight thirty. Pam and I arrived at the Golden Dragon Restaurant. The restaurant wasn't scheduled to open until eleven but employees started arriving at nine. Pam went in the office and started organizing the accounts payable while I surveyed the inventory on hand. By nine-thirty, most of the employees had arrived, so I called them all together and told them Pam would be their manager from that day forward.
"With the employees settled down, Pam and I went to the bank and took Luther off the checking account. Then we paid a visit to Abe Dumas."
"The accountant, right?"
"Yes. It was almost noon, and Abe was behind his desk thumbing through a magazine, obviously with nothing to do. He’s an old guy with only one leg, he looked more like a bum than a CPA. We told him that Luther was gone and that he was working for us now. He seemed surprised but didn’t object. We asked him about the money we owed to the IRS and State Comptroller. He told us not to worry about it until we got a Notice of Intention to Levy. Then it would be serious and we’d have to deal with it. He said that usually took six months. We had enough others emergencies to worry about, so we took his advice and didn’t worry about it.
