Trophy Widow

by Michael A. Kahn

  “Oh, shit. Does this mean no mikvah lifeguard spot for me?”

  “Sorry.”

  “Seriously, Rachel, just tell him the truth. You’re still Jewish, for chrissake. And a hell of a lot more observant than most Jews, including me. Jonathan ought to understand. He might be religious, but he’s not one of those zealots. He’ll be cool.”

  “Maybe.”

  “If he isn’t, you tell him I’ll kick his ass. Well, on second thought, given his Golden Gloves background, you tell him I’ll hire someone to kick his ass. Deal?”

  I smiled. “Deal.”

  Chapter Twenty-nine

  I was in the public reading room of the recorder of deeds office on the first floor of City Hall. Open on the table before me was the grantee index volume for SAI to SUR for the year that the Sevens Corporation purchased its three-flat in north St. Louis. I was staring at the page for that transaction. Surrounding me on the table were piles of other grantor and grantee indexes.

  I was dazed and confused.

  Fortunately, Betty Watson had taken pity on me. Betty was a file clerk in the recorder of deeds office—a pleasant woman in her late fifties with dyed black hair, a deep cigarette rasp, and a double-knit pants suit outfit that could be described as post-Easter Kmart-markdown. She’d come to my rescue the third time I’d gone back to the main office with a question.

  She was now standing at my shoulder and looking at the page with me. Her reading glasses hung from a slender gold chain around her neck.

  “What about this?” I asked, pointing to the line that read Consideration: $250,000. “That must be a typo.”

  “Why do you say that?”

  “I saw the real estate contract on this property. The sales price was twenty-five thousand, not two hundred and fifty thousand.”

  “Look here, honey,” she said, pointing to the entry above it, which indicated that the trustee was something called Renewal Corporation.

  “Okay,” I said uncertainly, wishing again that I’d forced myself to pay closer attention in my property law class. Three years at Harvard Law School and I couldn’t even remember whether a homeowner was the mortgagee or the mortgagor.

  “You see?” Betty said. “The two hundred fifty thousand dollars isn’t the purchase price, honey. It’s the loan amount.”

  The loan amount?

  I tried to make sense out of that.

  I couldn’t.

  “But that would mean that this Renewal outfit,” I said, pointing to the entry, “loaned the buyer two hundred and fifty thousand dollars to buy a three-flat that cost only twenty-five thousand dollars.”

  “That’s what it says.”

  “But that’s crazy. Why would anyone loan a buyer ten times the purchase price of the property?”

  “That’s what Renewal Corp does.”

  I turned and looked up at her. “What is it?”

  “That’s the mortgage lender the city runs. They handle all the redevelopment funds. It’s part of that Renewal 2004 program for fixing up the north side. You’d have to check with the comptroller’s office, or maybe the redevelopment commissioner, for the details. One of those offices administers it.”

  “Administers what?”

  “The loan program.”

  “What loan program?”

  “For properties in the redevelopment area. That’s the whole Renewal Corp thing. You can borrow up to ten times the purchase price of one of them rundown properties if you agree to use that money to fix her up real nice. And believe me, honey, there is a ton of funding. We’re talking millions—and most of it from the feds.”

  I stared at the entry in the book, absorbing what Betty Watson had just told me, astounded by its implications, especially multiplied by twenty-three. I reached for the grantor index for the following year. I’d left that volume open to the page with the entries for the same property.

  “What does this entry mean?”

  She put on her reading glasses and bent over. “Musta been a default.”

  “Why do you say that?”

  “It says here that Mr. Borghoff was appointed successor trustee.”

  “What’s that mean?”

  “It’s what happens when the borrower defaults on a loan. The mortgage company appoints a successor trustee to start the foreclosure. With a bank, your successor is usually someone at the bank or the bank’s law firm. For the city’s foreclosures, it’s usually a lawyer in the city counselor’s office.”

  “But not here.”

  “Like I say, usually a lawyer. Not always, though. Sometimes Mr. Borghoff gets appointed successor trustee. Sometimes they appoint someone over in the comptroller’s office.”

  “How do they decide?”

  Betty shrugged. “They don’t tell us.”

  “Would the results of the foreclosure be shown in these indexes?”

  “Eventually. To find the current owner, though, you should check with the assessor’s office. If you want to see any executions or other court orders on the property, you could check our land records on microfilm.”

  “What about the loan agreement with Renewal Corporation? The one where the buyer agrees to spend all that money on renovations?”

  “See this number?” she said, pointing to one of the entries on the page from the index. “That’s for the microfilm reel and page where you’ll find that agreement.”

  “Where do I find the microfilm?”

  “In the microfilm room down in the basement level.”

  I leaned back and looked around the room, overwhelmed by the sheer volume. “So it’s all in here or down there.”

  She laughed a smoker’s hack. “Here and there and elsewhere. Kind of spread out in different places, honey, but you can eventually unscramble one of them deals if you got the time and you got the inclination.”

  “Well,” I said with a weary smile, “I guess I have the latter.”

  “Then happy hunting. I’m going to go grab me a smoke, honey. I’ll check back on you later.”

  I worked through the lunch hour, slowly unraveling the deals, one by one. By quarter to two I’d deciphered twelve of them—enough to see the pattern, more than enough to call Jacki to ask her to meet me in the City Hall rotunda. She said she’d be there in thirty minutes.

  Jacki showed up in a French-blue button-front dress and brown sandals. It was one of my favorite outfits for her—an elegant cotton dress ending at mid-calf with a full collar, dyed-to-match buttons, and a left breast pocket. The look was lean and graceful—no mean achievement with that body. We’d picked the dress out together one afternoon from a Lands End catalogue during the height of our just-say-no-to-Dolly Parton phase in Jacki’s fashion evolution.

  “What’s up?”

  “Let’s go outside,” I said. “I’ll tell you there.”

  We stepped out of the City Hall entrance facing Market Street. Across Tucker Street to our right was the fourteen-story Civil Courts Building—the crazy building topped by the Greek temple, Egyptian pyramid, and silver griffins.

  “I need you to go over to the court clerk’s office,” I said, nodding toward the Civil Courts Building. “Run a defendant search for each of the twenty-three corporations.”

  “You think they’ve been sued?”

  “I’m guessing twenty-three lawsuits, one against each.”

  “Who’s the plaintiff?”

  “Either the city of St. Louis or something called Renewal Corporation. I’m guessing twenty-three lawsuits and twenty-three default judgments.”

  “What’s going on?”

  I glanced around at the people milling near the City Hall entrance.

  “Come with me,” I told her, gesturing toward the back of the building. We found a bench in the shade where we could talk without being overheard. I kept my voice low, just to be safe. I explained the specia
l mortgage program and how it worked.

  “Ten times the purchase price?”

  I nodded. “Although it’s funded mostly by federal grants, the city handles all the paperwork and makes all the lending decisions.”

  “Okay.”

  “I’ve checked twelve of the Michael Green deals so far. In each one, the corporation borrowed the money from Renewal Corporation, bought the property, and promptly defaulted. Never made a single loan payment. The city started a foreclosure proceeding, but the only security it had was the property itself. The city eventually got the property back, but it was still out all the money.”

  “So you think the city sued each of these corporations for the deficiency on their loans?”

  “Exactly, and I bet it only sued the corporation.”

  Jacki frowned. “Why do you say ‘only’?”

  “I’ve only reviewed the paperwork on five of the deals so far. According to the approval guidelines, the lender is supposed to get a personal guarantee from each of the principal shareholders of the corporation, along with a pledge of their assets. That way they have recourse if there is a default, since the loan is ten times the value of the property. But on the paperwork I reviewed, there were no personal guarantees in the loan files.”

  “Which means what?”

  “Which means that somehow those loans went through the approval and funding process without personal guarantees. That’s why I’m betting you’ll find that the city sued only the corporations. And that’s why I’m betting you’ll find twenty-three default judgments. Each of those corporations is judgmentproof, since the only asset it had was the property that the city took back in the foreclosure.” I leaned back and shook my head in wonder. “The perfect scam.”

  “I’m not following you.”

  “Look at Don Goddard’s deal. He forms a shell company, the city loans it two hundred fifty grand, he spends twenty-five on a three-flat, pays Michael Green twenty-five in legal fees, and pockets the rest—assuming that the city sues only his company.”

  I could tell Jacki was doing the math in her head. “So he clears two hundred thousand dollars?”

  “Probably closer to one eighty-five. Don’t forget the fifteen thousand he paid for the Sebastian Curry painting.”

  Jacki frowned. “How’s that fit in?”

  “Michael Green couldn’t run a scam like this solo. He had to have someone on the inside—someone who’d make sure that the loans got approved without personal guarantees, who’d make sure that no Boy Scout in City Hall would try to find a pattern with these defaults.” I paused. “Come to think of it, when you search the court files, look for other suits involving Renewal Corporation. There must be legitimate deals out there with real defaults. Let’s see whether there were personal guarantees on those loans.”

  She was making notes on a yellow legal pad. She looked up when she finished. “How do the Sebastian Curry paintings fit in to this?”

  “I’m not sure, but look at what we know so far. Each sale of a painting generated a commission for that Millennium outfit, which appears to be an offshore entity somehow connected to Michael Green. Green’s scam requires a City Hall insider, right? I’m guessing a big chunk of those Millennium commissions got funneled back to someone at City Hall.”

  “Wow.”

  “It’s a clever scheme because the real estate deals look legit. The client puts up no money but ends up walking away with close to two hundred grand, tax-free. Michael Green gets his cut of the action in the form of a twenty-five-thousand-dollar payment called a legal fee. Multiply that by twenty-three deals—not bad. The client supplies the bribe money by laundering fifteen thousand dollars of the loan through the purchase of a piece of art—hardly a suspicious transaction for a person of means. When the loan goes into default, the whole clanking foreclosure machinery kicks into action—but it’s just one of dozens and dozens of foreclosures grinding through the courts. At least that’s my theory.”

  “How do we test it?” she said.

  “We start by checking the court files.”

  “What else?”

  “I’ll review the rest of the loan deals—especially the paperwork on microfilm.”

  “And then?”

  “Depending upon what you find in court and what I find back in City Hall, maybe we see what happens when we confront one of our twenty-three upright citizens.”

  Jacki’s eyes widened. “Really?”

  “I want to get this over with. And the sooner the better. Whatever Sebastian Curry knew about this scam was dangerous enough to get him killed. Maybe it was also dangerous enough to get Michael Green killed and to get Angela framed. Jonathan told me to follow the money, and that’s what I’ve been doing.” I took a deep breath and exhaled slowly. “I think we’re starting to get warm.”

  “I think I’m starting to get nervous.”

  I stood and glanced toward the entrance to City Hall. “It’s back to the coal mine for me. Good luck over there.”

  I watched Jacki head down Market Street toward the Civil Courts Building and then turned back toward City Hall. The weather was warm and the sky was clear. I had a sudden urge to play hooky—to hop in my car and drive over to the Missouri Botanical Gardens and wander among the flowers and buy pellets to feed the carp in the Japanese Gardens—or maybe hop a plane to New York and surprise Jonathan and whisk him off to a jazz bar on the West Side and then back to a suite in the Parker Meridien where I’d convince him to pretend for one evening that he was a Reform Jew. But as I looked up at the sky and took a deep breath and closed my eyes, I had a vision of Angela Green in her prison grays. My smile faded, my eyes opened, my shoulders sagged, and I headed toward City Hall.

  Returning to that dank microfilm room felt like returning to a dungeon. One of the four fluorescent lights was out and another one sputtered overhead, which cast annoying, flickering shadows. The clunky microfilm readers dated back to the Sputnik era, the dull green paint on the walls was chipped and peeling, and the odor of mildew permeated the air.

  Two hours later, I clicked off the reader, leaned back in my chair and reached my arms toward the ceiling. I’d now reviewed the loan documents for more than half of the deals, and the pattern still held: no personal guarantees. I rubbed my neck and moved my head from side to side, trying to get out the kinks. I needed a break.

  I stood and stretched and took in a deep breath. There were vending machines down a back corridor on the first floor. I gathered my notes, put them in my briefcase, reached for my purse, and walked down the hall toward the elevator.

  I bought a can of diet Coke and a package of pretzels. After checking my voice mail, I stepped outside to enjoy my little feast in the late afternoon sun. It was a quarter after four. If I hurried, I could finish the rest of the deals before five. Tossing the empty soda can and package in the trash, I went back inside, headed down the hallway, and took the elevator back to the basement level.

  I slowed as I reached the door. The microfilm reader I’d been using was against the wall on the far side. Although I’d turned the power off when I left, I hadn’t bothered to rewind the tape. Now the power was back on and the loan documents I’d been studying were displayed on the screen. Leaning forward to study them was Herman Borghoff. I took a step back to duck out of sight if he turned. He stared at the screen, his back to me, his palms resting on the table, his face close to the illuminated text. He straightened in the chair and looked down at the microfilm boxes containing the other reels I’d reviewed. He picked up one of the boxes and squinted at the label on the side. Frowning, he looked back toward the screen.

  I turned and moved quickly down the hall on my tiptoes toward the elevator, my heart racing.

  ***

  When I got back to my office I found a memo from Jacki on my desk:

  Rachel—

  You were right 23 lawsuits, 23 default judgments. Copi
es of the docket sheets are attached. Note that none of the corporations bothered to hire an attorney.Found 32 other lawsuits over properties in the redevelopment area. Your theory seems to hold up. Copies of those docket sheets are attached.

  I studied the bundle of docket sheets she’d attached to her memorandum. The ones for the suits against the Michael Green clients were exactly as I predicted—default judgments solely against the corporations. Any doubt about the existence of a scam vanished when I scanned the docket sheets for twenty-eight of the other cases. In each lawsuit, the defendants included the borrower and the personal guarantors. Thus, the city knew how to make a redevelopment loan with proper documentation.

  I picked up the final four docket sheets and slowly paged through them. These were the loans that had no relation to Michael Green—all, in fact, were made after his death. Nevertheless, these four loans, like the twenty-three involving Green, were also missing personal guarantees.

  I looked at my watch. Three minutes before five o’clock. Opening my legal directory, I flipped to the phone number for the corporate records division of the Missouri secretary of state. I dialed, praying that the state employees didn’t leave early.

  A woman answered on the third ring. “Secretary of state’s office.”

  “This is Rachel Gold calling. Can you run a quick check for me on four corporations?”

  A weary sigh. “Let me have the names, honey.”

  It took her less than five minutes to run the names through the computer and pull up the results. Although by then it was after closing time, she was nice enough to read me the information slowly so that I could copy it down. I thanked her and hung up.

  Leaning back in my chair, I stared at the page of notes. The first of the four corporations was formed about a year after Michael Green’s murder. The other three followed at roughly four-month intervals. Each corporation had one shareholder. Two of those shareholders I recognized from puff pieces that had appeared in the St. Louis Business Journal.