Pierre left the building and walked across the street to a BayBank branch. He deposited the check into his checking account. At least he and Carla could buy groceries this week.
* * *
Pierre returned to his office and checked his answering machine. His mind was still on his meeting with Charese, so he only half heard the lone, short message.
“Sebastian Felloff calling for Pierre Prefontaine.” He left his number and hung up.
The message intrigued Pierre, momentarily took his mind off Charese and his money problems. Sebastian Felloff was a well-known Boston developer who specialized in renovating older apartment buildings and turning them into condos. Unlike the Baron, he actually put some money into his renovations. Pierre had met him a few times—he was a round, jowly man who spoke in a squeaky voice and was constantly filing his already-manicured nails. He was known to be a collector of antique furniture, and was rumored to be a collector of young Philippine brides as well.
Pierre immediately returned the call. A secretary put him through. “Felloff here.”
“Yes, Mr. Felloff. Pierre Prefontaine returning your call.”
“Yes, Pierre. I’ll get right to it. This is a delicate matter, so I would appreciate your discreetity.”
Pierre wasn’t sure ‘discreetity’ was a word, and wasn’t sure Felloff’s statement was a question. But there was a pause in the conversation, so Pierre filled it: “Of course.”
“I am involved in a condominium project in the Fenway area. Fenway Place. Are you familiar with it?”
“Yes.” Pierre had toured the project during the early stages of renovation. The project consisted of an entire city block of four-story brownstone apartment buildings, each of which contained fifteen to twenty apartments. There were probably 250 apartments in total. It was a well-conceived project in a solid area of town. But its timing had been terrible.
“The lender failed. Taken over by the government. You know, the RTC. That’s the agency that takes over insolvent banks.”
Pierre remembered the incident. The bank failure had been big news a few months ago—the first of maybe half a dozen that had failed already this year. Last year the stock prices of these banks had been soaring. Now bank employees were taking their personal items home on the weekends—it seemed like almost every week there was news of SWAT-like teams of men in dark suits, cowboy boots and federal identification badges ushering bank employees out the door and padlocking a bank’s doors at four o’clock on a Friday afternoon. The padlock teams had finished closing most of the banks in Texas; now they were working their way through New England. “Howdy, we’re here to close this here bank,” had become the punch line on a score of bank jokes making the rounds in the nervous office towers of the city.
Felloff continued. “So now the RTC wants to liquidate the project. Bulk sale. All two hundred forty-five condos in a sealed bid auction. These bureaucratic cowboys want to prove to Congress they can turn these bank assets into cash, sort of justifying their existence. Anyway, I know you’ve been an active buyer lately—I saw the article in the Herald—and I hear you have some money behind you. Might you be interested in Fenway Place?”
“Of course.” Pierre wasn’t sure what he was supposed to be interested in, but he was curious to here where Felloff was going with this. And it flattered him that Felloff knew of him. He had become a big fish, and maybe the pond wasn’t as small as he originally thought.
“Can you come to my office tomorrow, say ten o’clock?”
“See you then.”
* * *
Pierre hardly slept that night. Valerie had a cold and was up all night coughing; Pierre tried elevating her head on a pillow, but she kept rolling off. In the end, the only way she would sleep was if Pierre held her vertical while he rocked in a rocking chair. Every time he tried to lay her down, the coughing began again and she woke up. Still, there were worse ways to spend the night than with a little angel’s head perched on your shoulder.
Pierre doubted he could have slept anyway. The irony of his current situation astounded him. On the one hand, he faced financial ruin because a transvestite tenant refused to move out of the condo he just bought. On the other hand, he had a meeting tomorrow morning with a prominent developer who had contacted him to discuss purchasing a multi-million-dollar condo complex. It was hard to reconcile the two, but one thing was becoming clear to Pierre: He had timed the market perfectly. All he needed to do was survive the next few months without declaring bankruptcy....
* * *
[April 17, 1990]
Pierre arrived at Felloff’s office right at ten the next morning. The corner office was on the top floor of the four-story Fenway Place condo complex; it offered views of both Fenway Park to the north and the Back Bay fens and Boston skyline to the east. It was a unique view in Boston, and Pierre was impressed.
He was also impressed with the opulence of Felloff’s office, although the antique furnishings and finely woven Persian rugs seemed a bit out of place in a neighborhood comprised predominantly of students and young working people. Felloff was known to skim a bit off the top to support his lifestyle, and Pierre was not surprised the RTC had taken over the project.
Surprisingly, Felloff saw him immediately. As a broker, he was used to being treated inconsiderately by most developers. He doubted he even could have gotten a meeting with Felloff a year ago.
Felloff was as obese and well-groomed as Pierre remembered. It seemed incongruous that a man who took such pride in his dress and grooming would allow himself to become so obese. Apparently he didn’t realize that when people looked at his hands, they didn’t noticed the finely manicured nails, but rather the rolls of fat covering his knuckles instead. Pierre was surprised he was able to climb the three flights of stairs to his office every morning.
Felloff offered Pierre a croissant, which Pierre refused. Felloff ate gingerly, using a silver fork and knife; between bites, he wiped his mouth with a linen napkin. He did not speak, but as he chewed he eyed Pierre. Pierre was glad he had shaved and put on a shirt and tie—Felloff seemed to be the type that might judge a book by its cover.
Finally, Felloff spoke. “You must be wondering why I contacted you, out of the blue.” Pierre nodded. “Well, I have a long memory. Six or seven years ago, you rented an apartment for me. I had forgotten about it until I began making inquiries as to who was buying real estate right now. You know, by the way, they’re aren’t many buyers out there—most of us are just trying to keep our heads above water. Anyway, two different people mentioned your name, and it sounded familiar to me. Because you had rented that apartment. I was a small landlord at the time, just starting out, and you probably don’t even remember the incident. The old tenant was supposed to leave on the 31st, and the new tenant was supposed to move in on the first. Well, the old tenant didn’t leave on time, and the new tenant showed up with a U-Haul ready to move in. She was extremely agitated that she couldn’t move in, and I had no other apartments available for her. I was ready to put her up at the Howard Johnson’s at eighty dollars a night, which I really couldn’t afford at the time. But than you spoke up and offered to let her stay at your apartment until the old tenant moved out because your roommate was away or some such thing. And the thing I remember is this—you never squeezed me for anything. You could have convinced me to give you half the eighty dollars for every day she stayed with you—I would have paid it and still come out ahead. But you didn’t. And I said to myself: ‘That man is a mensch. That man understands that what goes around comes around.’ Well, Mr. Prefontaine, it has just come around.”
Pierre faked a cough, hid his grin with his hand. Of course he remembered the incident. But his motives were purely selfish—the young woman was attractive and fun-loving and new to the city, and there had been an instant chemistry between them. Carla was her name. “I’m glad to hear my gesture was appreciated.”
Felloff put down his fork. “Very well then. Here’s the deal. The RTC is taking over Fenway
Place in a few weeks—I’ve agreed to cooperate, and the lawyers are just finishing up the details. Their plan is to immediately have an auction to sell the entire 245 units. It’ll be one of those sealed bid sales—you know, everyone submits a bid in writing, and the high bid takes it. But here’s the catch—they’re willing to give 90 percent financing to the high bidder. So, really, anyone who’s got five or six hundred thousand sitting around could probably do this deal, assuming the high bid will be around five or six million.”
Pierre shifted forward in his seat. Howie could come up with five hundred thousand for the right deal, and to be able to buy this project at twenty thousand per unit would be a steal. If Felloff was right, it could be a home run deal. “What makes you think it will sell so low?”
“Please allow me to answer that later. First, let me tell you what I am proposing. I am proposing that I help you do this deal, and in exchange you hire me as a consultant.”
“What do you mean by ‘help me’? Can’t I just bid without you? And what salary would I be paying you?”
“Those are all legitimate questions, and they tell me that you might be interested, correct?”
“That’s a fair statement.”
“Then I’d like to bring my attorney in to explain some things to you about this deal. He’s waiting in the hallway right now. Is that okay?”
Pierre nodded. He was a little apprehensive about meeting with Felloff’s attorney, and it was strange that he was waiting in the hallway. But what the heck, it wouldn’t hurt to listen.
Felloff buzzed his secretary and told her to send the attorney in. He was a large, tanned, handsome man wearing an Italian-cut suit. The aroma of expensive cologne accompanied him into the room. “Mr. Prefontaine, my name is Mitchell Siegelman. I’ll be straight with you right away. I know very little about real estate, and even less about Boston real estate, since I live and work in New York. What I do know a lot about is litigation. I am a litigator; that is, I spend most of my time in the courtroom. Or, more accurately, trying to keep my clients out of the courtroom. It probably seems strange to you that a New York litigator would be meeting with you to discuss a Boston real estate deal, but it will make more sense as we go along.”
Pierre was impressed by the lawyer, as he knew he was supposed to be. The attorney was smooth and charismatic, although a little too slick and a little too theatrical for Boston’s Puritan-rooted sense of propriety. He was full of himself, but apparently with good reason. Pierre could see where a jury would be swayed. “I’m here to listen. Do you mind if I take notes?” Pierre asked.
The lawyer smiled at Pierre—the proud father beaming at his brilliant boy. “Normally, I would think that’s a terrific idea, Pierre. Oh, do you mind if I call you Pierre?”
“That’s fine.”
“Thank you.” The attorney bowed slightly to Pierre. “But I’m afraid on this one occasion I will have to ask you not to. Again, it’ll make more sense later.”
Pierre put down his pen and sat back in his chair. “All right, I’ll just listen then.”
“And one more request. I need you to sign this confidentiality agreement. It’s very simple, but it does state that you won’t repeat any of this conversation to anybody.” Pierre read it—it was as simple as the lawyer said it would be. He shrugged and signed it, his curiosity now peaked.
“Thank you very much. I’m going to tell you this story from the beginning, but first of all, I’m going to tell you why I’m telling the story instead of Sebastian, who clearly knows it better. If Sebastian were to tell you things that would be incriminating to him, you could be called as witness at a later date and, in all likelihood, be allowed to recount your conversation with Sebastian on the witness stand. However, if I tell you a story about Sebastian, and you were later asked to testify as to what I have told you, your testimony would be inadmissible as hearsay. This is a very basic summary of the law, but I gather you generally understand the distinction between me telling the story and Sebastian telling it.”
Pierre guessed it was a little more complicated than that, but he understood the basic distinction.
“Because of that, I would like Sebastian to leave to room.” Felloff hoisted himself out of his chair and ambled out of the room. “And, of course, being a lawyer I have yet one more caveat before diving in. And that is this: What I am about to tell you is purely hypothetical. None of it is true. It is all merely a figment of my fertile imagination. In other words, if somehow the government is able to get around the hearsay problems and compels you to testify against Mr. Felloff, I will in clear conscious stand on the witness stand and swear that you and I both knew that this conversation was a purely hypothetical one.”
The attorney paused, then smiled at Pierre. “Do you have children?”
Pierre nodded. “A little girl.”
“Ah, then you must read her bedtime stories.”
“Every night.”
“Good. Then think of what I am about to tell you as nothing more than a fairy tale. Do I make myself clear?”
Pierre nodded again. Last night he had read Valerie the story of the wolf dressed in sheep’s clothing.
“Now, here, finally, is the story. Please make yourself comfortable—it’s a long one:
“We know to be true that Sebastian borrowed approximately seventeen million dollars on the Fenway Place project. And we also know that it is now worth far less than that amount—say eight million for argument’s sake. Along the way, Sebastian paid himself fees that reflected his unique expertise in residential development—fees that totaled in the neighborhood of three million dollars. Now, the bank approved all these fees, but in hindsight, it seems rather, shall we say, awkward for Sebastian to have pocketed this amount of money when the bank ended up underwater by nine million dollars.
“Well, about six months ago, Sebastian saw the writing on the wall and realized that the project would not be profitable and that the bank—or, more accurately, the federal agency that would eventually take over the bank—might try to recover the three million he took in fees, and perhaps more. Remember, Sebastian personally guaranteed the seventeen million-dollar loan, and was technically on the hook for the nine million shortfall. So he did something smart. He called me. My job is to make sure the government gets as little money from Sebastian as possible.
“So, what if, to make our story more interesting, six months ago, Sebastian started hiding his money. All of it, not just the three million from the Fenway Place deal. And when I say hiding, I don’t mean putting it under the mattress. I mean putting it into Swiss bank accounts or gold coins or other untraceable assets.”
The lawyer paused. Pierre nodded, then he continued. “But hiding his money is not enough to protect Sebastian, because there’s plenty of evidence from a year ago that these millions existed—brokerage accounts, that sort of thing. So, in our little fairy tale, Sebastian not only needs to hide the money from the government, he needs to convince the government that the money was spent and is now gone. Otherwise the government would just keep looking for it. The government, by the way, I have found to be not very efficient in these matters, but extremely persistent. So Sebastian began taking weekly trips to Atlantic City—not to gamble and lose, but to support his story that he had gambled and lost. Big-time wagers, high-roller stuff, enough to piss away millions. Every trip, he bought a hundred grand worth of chips on his credit card and spent the night at the blackjack table. He lost a few bucks, but at the end of the night, instead of cashing in, he stashed his leftover chips in a safe deposit box.”
Pierre nodded again. After a few months of these trips, Felloff would have been able to accumulate millions in chips.
“To make things look even better,” the lawyer continued, “our friend then checked himself into a drug rehab center—again, not because he had a drug problem, but because he wanted the government to believe his story that wads of money went up his nose.”
The lawyer took a sip of water, nodded at Pierre as he continue
d. “When it finally came time for Sebastian to sit down with the government a couple of months ago, after they had taken over the bank, most of Sebastian’s millions under this fictional account of ours was gone. Poof. Disappeared. Wasted on blackjack and cocaine. The government screamed and hollered, and spent tons of taxpayer money on a private detective, but Sebastian was careful and in the end all they could find was the half million dollars Sebastian purposely left for them to grab, along with the Fenway Place property.”
Pierre offered a comment. “I can see why he hired you.”
The attorney raised his index finger. “But I’m not done yet. Before sitting down with the government, let’s for a minute imagine that Sebastian did one other thing. Remember, he did not know if he would be successful in hiding his money. If not, his back-up plan was to give the government the millions he owed, but in exchange be allowed to repurchase Fenway Place. Under this scenario, he would want to keep the price for Fenway Place as low as possible—say, five million dollars rather than eight million dollars. Are you with me so far?”
Pierre nodded. He was impressed that anyone had the foresight to plan six months ahead for a potential financial calamity. He knew he didn't. He knew he hadn’t. Hypothetically, of course.
“So, under our fictional tale, Sebastian planted some warts on the project—you know, things that lowered the value of the project in the government’s eyes but could be removed by Sebastian later if he ended up repurchasing it. ‘Removable warts,’ he called them. I might instead call them poison pills, like the things companies do to themselves to make them unpalatable during attempted takeovers. For example, the project is currently defending a seven-figure lawsuit brought by an abutting property owner alleging contamination from leaking underground fuel oil tanks. But what if, hypothetically, the abutting property owner happened to be a corporation controlled by Sebastian?”
[Boston Law 01.0] Unlawful Deeds Page 20
