by Eric Hodges
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The latest document was a rather substantial loan with some interesting fine print, preceded by a lien on his property that was held by a trust. The dates of the two documents were within a day of each other that led Wheeler to the conclusion they were related.
The loan was issued by the Northwest Commercial Bank for a rather substantial sum, with the details present on the document. The interesting fine print indicated a balloon payment was due in just a few weeks. It was only a few years old putting it into the era of creative, low or no down payment loans that were too good to be true.
The other lien holder on the property was just noted as the Cleveland Trust for a mere $300,000, an amount considerably less than the loan. In the notes at the bottom of the single page it said it was ‘For services rendered.’ No other details were provided. Except for the coincidence of dates there was nothing more to be learned here, but that could not be the whole story. There had to be more and Wheeler needed the internet to find it. He returned the books to the counter to see if there was a Public Library in town.
It appeared there were lunch plans being made behind the counter of the library between the two clerks, but the matronly woman in a flowered dress noticed Wheeler in front of the counter and said “Good morning, may I help you?”
“Hello, do you have an internet computer that I may use?” Dressed as a working guy in a plaid shirt and jeans, and obviously too old to be doing term paper research, Wheeler wanted to be extra polite and not noticeable.
“Sure, we have one just past the children’s section” she waved her open palm toward the back.
“Thanks” he said and went to the back to find it.
He recalled his old skill set of using search sites and subtle wording to get all he could out of the public information. He knew whatever information existed was on the Internet somewhere, so he started with the Cleveland Trust because the Northwest Commercial Bank probably was just a bank. The Cleveland Trust was a holding company that held no assets but there were several hints that it held paper for the principals, who were listed in the information about the trust. The principals were a law firm and an accounting firm that were both corporations located in California. This was a classic tax dodge he recognized from his reading of detective novels, but it was not a very good one. The really good ones have the trust owned by another trust, which is owned by an offshore corporation that is registered in the Cayman Islands but located in Switzerland. The layers of the really good ones require the U.S. court system to unravel if it could be done at all.
He tackled the law firm first, getting names of the board of directors from the State Board of Corporations. There were only three members of the board, two of which had the same last name. If it was a small enough operation, it only required three people and it was probably the wife of one of the partners who was 'volunteered’ to be the third member of the board for legal reasons. While he was there, Wheeler looked up the accounting firm and found the same set up; two partners and a wife, and yet he was shocked at the coincidence he had uncovered. The three names were the same for both corporations! What did James Wix, Carol Wix and Vern Davies have to do with Walt Carter? The only reason James Wix and Vern Davies could have to be two corporations is to pass assets or financial paper or licenses from one to the other.
In this case, the accounting corporation and the law firm owned the Cleveland Trust which in turn, held a lien on Walt Carter’s farm. Somehow, Walt Carter had borrowed money from Cleveland Trust and they put a lien on his property to make sure they get the money back. The coincidence of timing of the Cleveland lien and the Northwest bank loan meant that Walt needed more money than he could just get out of the farm from the bank. What did he do with the money and how could he float a loan that big? Wheeler stared through the computer screen letting his mind wander. He didn’t get much traction but he needed to talk to Alice and Bob. The clock his head had just ticked past noon and his stomach growled demanding lunch.
On a whim, Wheeler looked up the addresses of those corporations and the home addresses of the players and was not surprised to find them all conveniently located right in there in Eaton County. The offices shared the same street address in Eaton but with different suite numbers and he presumed by the zip codes, the homes were just outside of town. Okay, they were all local, Wheeler deliberated, but there is still no connection. He had one last thread to follow on the internet, the taxes.
He could not get the actual tax return from the Walter Carter estate but he could get the filing information. It was there on the state web site so realtors and investors could verify that the taxes had been paid and the returns had been filed. Mr. Carter’s return had been punctually filed last year by the illustrious accounting firm of Davies and Wix, LLC. He really had to talk to Alice and Bob.
Fortunately it was still the lunch hour and Wheeler guessed the normal place for lunch was the only diner in town and he could see them enter as he pulled up to the curb, practically following them in with impeccable timing.
“Hi guys” he said, sitting next to Alice and across from Bob at a small, square table. They had just gotten menus that were being ignored.
“Ahh, the mysterious stranger returns” Bob said as a greeting “You’re just in time.”
Wheeler made coffee motions to the busy waitress across the room and Alice asked him “OK, spill it, what’s with the urgent research project and what did you find out?”
He waited for the waitress to finish pouring his coffee before he started with the story. “Before I disclose any juicy morsels, what can you tell me about Davies and Wix, the lawyers in town?”
Bob responded “Well let’s see, they do have offices here in town and I’ve heard they do mostly property development, commercial and occasionally residential work. Their big deals are complicated and they have developed stuff that had never been done, that is kind of a big deal for such a small town” He paused, thinking of something and turned to Alice. “Alice, do you remember the truck stop out where the highway meets the freeway? There was some kind of city ordinance against industrial operations at night or something.”
“Of course, I remember” Alice picked up on the story. “The city ordinance prohibits industrial noises at night to keep the evenings pleasant or something. Davies and Wix bought a few acres at the junction and had the city limits moved so their square was technically outside of the city. Rumor was they made a bundle when they sold it to an oil company to operate it.”
Wheeler drifted away from the conversation for a moment, thinking. The waitress, Julie, according to her name tag, came over to take their lunch order. The truck stop information did not do anything for him yet.
“Remember the scandal with the last mayor,” Alice continued, looking thoughtful “His name was Wilson, or Winthrop or something, wasn’t it?”
“Oh, yeah” Bob replied “It was Weston, I think.”
“That’s right!” Alice said just like she was on a game show. “He was accused of co-mingling city money with his own” she smirked. “A polite phrase for embezzlement, the jerk. He hired Davies and Wix and it became just confusion on his taxes that they cleared up, letting him off the hook.”
“And what a surprise,” Bob added, “he didn’t get re-elected.” Bob feigned shock with a broad grin. All of them had a good laugh at that one. Wheeler thought he still didn’t have enough dots to connect as Julie returned with lunch expertly balanced on one arm, holding the coffee pot in the other. Wheeler covered his quandary by paying attention to his pot roast, giving up on fitting the pieces together. Now it was time for the locals.
“I found some interesting details about the Carter property” Wheeler said not sure where this was really going. “It seems Walter took out a rather substantial loan on the property and there was a lien placed at the same time.” Bob and Alice looked on with blank expressions so Wheeler tried to prime their pumps. “That is a common combination for new home buyers that don’
t have enough for the down payment, so they borrow it to make the bank think they are more solvent than they really are.” Alice was seeing the inconsistency but Bob was still blank.
“But Walt owns the property outright,” Alice tried to help Bob. “His family probably paid off any mortgage 75 years ago. He didn’t need a down payment.” She and Wheeler now shared the same expression of curiosity and wonder.
Wheeler continued the story “The other thing is that the lien is registered to Davies and Wix with no information about it except that it was for ‘services rendered.’ What services could they have provided?”
After a moment, Alice asked “When did all this take place?”
“Both of the documents were recorded in June of 2007.” Wheeler gave her a minute to let her work something out in her head. The pot roast was quite good.
“2007, 2007” she said slowly. “I remember” she said suddenly “that was when they put in the Indian Gaming Casino. The construction went on for more than a year and there were all kinds of strange people in town.”
“Oh yeah” Bob joined in “I was so busy I actually had a backlog of work that whole time. Does that have anything to do with anything?” They were all thinking and eating in slow motion. Luckily the lunch rush was just a few tables with people at them so they didn’t feel rushed.
“If the lien, which was $300,000 by the way, was actually for services rendered like the paperwork says, what could they have done for Walt Carter that would be worth that much money?” Wheeler was thinking out loud more than making a point.
Alice looked up from her pot roast and asked Wheeler “How much was the bank loan for?”
“Five and a half million dollars”
Bob whistled and exclaimed “Wow, I didn’t think that place would be worth anywhere near that much. I wonder what he did with all that money.”
“It sure is funny the timing matches the casino construction” Alice said. “They started all the building in late in 2007 and opened up in early 2009.”
She paused looking pensive, then added “Say, what does this have to do with anything?”
Wheeler hesitated, debating with himself how much to tell them. He decided to go ahead “The attempted fire-bombing of your shop, Alice, and our strange visitor at the house last night don’t add up to a disgruntled lover, no matter how jilted he is feeling. Somebody has gone too far with this and I have a strong sense there are bigger forces at work here than we know.”
Something tugged at his mind but it was just out of reach, something he had read. Alice and Bob looked on with sober expressions not knowing if they should be worried. “I have to check on something, I’ll meet up with you later” and he darted out of the diner.
