Chapter 24 The AFG Laundromat He strut into our showroom with a swagger that John Wayne might envy. Usually a swarm of smiling sales people would be on him in less than five seconds like flies on dung.
But it was a late Friday afternoon and happy hour had beckoned.
There were just two of us left and Caesar Perez was busy closing a prospect and I was on the phone with a local business owner asking me to compare the performance between a Scarab and a Cigarette. So to cut the conversation short I jumped right to the price differential and sure enough, he decided he needed to "think about it" and "would get back to me". This allowed me to tend to the strutter who was clearly annoyed that nobody had attended to him since he walked through the door three minutes ago. "Does anyone around here want to sell me a boat?" he snapped. "Sure sir, how many would you like and where would you like them delivered?" I replied which managed to evoke a small but genuine grin from the man. I introduced myself as one of two sales managers of Champion Marine and he presented himself as "Ed Chism" in such a way that he just expected me to know he was the President of a local investment banking firm and a former U.S. diplomat. To me he merely represented my monthly bonus if I managed to sell him a boat. And for an extra $2,500, I was certainly going to make the effort.
The most distinguishing aspect of Ed Chism aside from his head of silver white hair, was his dress.
The man was impeccably dressed from head to toe in
strictly designer clothes ranging from a crisp Armani blazer to his Gucci belt and Bally shoes.
He was not a flashy dresser
excellent taste in clothing.
mind
you,
just
one
with
His jewellery only confirmed his wealth from his
gold Philipe Patek watch to a diamond ring that was at least 2 carats, maybe even 3. For me a lowly yacht salesman, I perceived that this "walk-in" would not be one to quibble and haggle over a few dollars when buying his boat.
"I want something fast, sporty, and doesn't leave me exposed to the sun all day. I don't want some battleship that won't fit under bridges and drink gas by the 491
drum". He clearly new what he wanted but there were still some narrowing down to do. "Do you want inboards or outboards?" I asked referring to the engines. "Outboards for sure. That way if there's a problem with an engine, I can just pop on a spare and go while the bad one is being repaired" "How big?" I asked. "30 to 40 feet would be okay I suppose,
let's see what you got."
With that I
toured him around the boat yard and marina for almost an hour as he inspected a handful of boats. I noticed that he kept gravitating towards a Wellcraft Scarab, one of our best sellers so I offered to take him for a spin in it.
I knew the performance of this boat with it's twin Yamaha
250 hp engines would either make him smile or piss in his pants.
We made small talk as I gassed safety gear safety
on the boat.
of Florida's
bathtub, the marine
up the boat and made sure we had
Even though
Intercoastal
Waterway
patrol lurked out there
we
wouldn't
leave
the
which was as calm as my daily
in order to hit their
quota of safety checks especially near the end of the month. The man was eccentric to be sure, but I would not know his true arrogance for months to come. My guess was that he was about fifty years old. His tanned swarthy complexion confirmed he had plenty of leisure time as he confessed to being an avid tennis player. There is no shortage of golf courses and tennis courts in Miami, but exorbitant green and court fees relegate them to the ranks of the wealthy.
The 492
man was polite, articulate and well polished. the guy.
It was hard not to admire
His image exuded wealth and I would soon learn that his
wealth was directly derived from his image and not vice versa. Less than twenty
minutes
later we
were flying at 50 knots down one of the few unrestricted speed areas and old Ed wore a smile from ear to ear. I knew I had a sale when he asked me "How much does this go for?"
Back
at the office we talked about options and accessories and this guy was like a kid in a toy store adding every bell and whistle that he could think of which was just fine with me as I envisioned $40,000 basic boat soon hitting $60,000.
the price tag for this
I think Ed Chism was the
only owner of a 30 foot Scarab with a ten mile radar on it, other than smugglers.
He ordered some custom upholstery and killer stereo
system and left me with a $10,000 deposit.
His boat would be ready
in two weeks and he returned with another $47,000 check and his 20 year-old son Ed Jr. when he picked it up.
By direct contrast his son
was quiet and reserved but dressed very much the same as his dad.
The
owner
of
Champion
marine
was
upset
that
Chism
didn't
finance like most everyone else as it eliminated his back-end money from the finance company.
So he offered me another $500 bucks if I
could talk Chism into using the marina at $200 a month versus buying a trailer for his boat. That took me an extra fifteen minutes but I walked away with a healthy $3,500 commission on that boat which earned me another $2,500 in bonus moneys for one of my best months. Only my
493
wife was happier than I that day.
It was days like this that made it
easier to forget the hell I went through just a few short months ago. I now concluded
that God was rewarding
me for enduring those 38
months of captivity. Mr. Chism left the office a proud new boat owner but he forgot to take his warranty papers with him. I looked at the address on his check and discovered
his office was right down the street from us, less than a
quarter mile away.
I decided I would just drop off the papers at his
office after work. His office was in the Barnett Bank Building at 2875 N.E. 1'91st Street on the sixth floor. The building looked like many other South Florida office buildings but did not present the lush conspicuous wealth of Brickell Avenue's financial district. I still had no idea what Chism did for a living and for all I knew, he could have just inherited his wealth. As I entered the lobby I was greeted by a friendly young girl who was clearly the receptionist. I was told that if I didn't have an appointment, I'd have to make one, and I just said that I was dropping of some papers. By then Ed Jr. walked by and spotted me and welcomed me inside the main office.
It was
about a 2000 square foot office by my guess with about four cubicles in an three
open
work
area and
enclosed executive offices,
the middle one had it's door closed but venetian blinds open. see
Ed
phone.
I could
Chism inside on the The office was full
of
computers, two fax machines, and a handful of employees in casual 494
dress. File cabinets seemed to fill up a good deal of space as well. The office like Chism himself was not flashy but just very clean and in a contemporary styling with one or two paintings and plants. No marble floors, mirrored walls or fancy light fixtures.
It was clearly a
work space.
Ed Jr. brought me a Coke from
the small kitchen area and engaged me in some chit chat as the receptionist told Chism Sr. I was waiting for him.
About then, a beautiful, busty, but older woman walked in and greeted everyone with a smile and kiss. She I would learn, was Mrs. Chism. Terry, who like her husband and son, was dressed out to the nines in all designer clothes and a plethora of jewellery.
She
was
quite attractive and had a very pleasant
personality. I liked her instantly and "Fulo" her son soon introduced us. I never in my life heard the name "Fulo" before but from that moment on, that was Ed Junior's new name for me. Terry and I hit it off talking while her husband still burned up the phone line.
I detected her Spanish accent so I practiced my rusty Spanish
with her and she remarked that I did well for a gringo. Terry was from
Panama
I soon learned
that
and that she moved out of Panama during the
1989 U.S. invasion. She indicated that she had worked for the government of Panama but gave no details just yet. So I assumed she had some general service
position,
like a Customs
different subject matter.
clerk or the like, and we moved
on to
By the time her husband emerged from the office,
she had invited me to dine with her and her husband at Turnberry Country Club which was less than a mile away. Of course I accepted, I was intrigued by this family which seemed to own the world.
Chism first attended
to his wife and signed some papers for her before
ushering me into his office, which was rich in mahogany bookcases and a matching
desk. There
was a picture of him standing
next to President
George H. Bush and some Army brass. There was another picture of him with General
Noriega and his wife on his desk but I noticed the absence
of typical family pictures like the wife, kids, and dog.
The few pictures he
did have were
not meant for his viewing pleasure
but as sales tools to
impress
that entered
leather-bound
people
his office. Ditto for a
deluxe 495
Bible that sat conspicuously
on the credenza behind him. In days to come,
I'd learn first hand the critical role that Bible would play in the sales process of American
Financial Group.
Indeed,
wait for me to ask as he explained
I myself was impressed.
"I worked
with
the
Panama
Commission as a diplomat before I started up this company". too worked for
the
U.S.
government
years
ago
and
He didn't Canal
I told him that I explained
my
background minus a certain 38 month period in my life.
I gave him his warranty papers and then just had to ask "What does this company of yours do?" Now he just smiled, leaned back in his chair and then forward as if to share a secret. Proudly he responded with words that I simply refused to believe "Tony, we are money managers for some of the wealthiest
people
in the world and we earn them between 20% to 35% per
annum tax-free". He noted my skepticism "Don't believe me?" he added. Before I could respond he handed me a computer print-out that indicated he had some $50 million under management and that the gross annual return was about 45%. Instead of reassuring me, I grew even more leery at seeing the higher number. "We don't do this for free you know!" he exclaimed as he tried to justify the higher earnings.
Quickly I calculated that if this document was genuine, this guy was earning a 10%
commission on $50 million a year. $5 million a year was not bad by any
standards and I commented to that effect "Yeah but we have overhead you know. We spend over a million a year to wine money here".
and dine our clients
to keep their
I didn't want to seem nosey but I couldn't resist asking since
each account seemed to have at least $500,000 or more in it, "Where do you find all these wealthy
people
and convince
them
to invest with you
instead of Morgan Stanley or Merrill Lynch.?"
Now
he just
gloated
and
replied "Those big brokerage
suckers who think 10% or 15% a year is a good return.
houses prey on
They have no idea
that they are getting less than half of the profits earned with their money. Our clients know better. They are experienced
players. For the most part 496
they are personal
friends
of
mine,
my wife's
and
people
from government.
We started of with less than a dozen clients only four
years ago and now we have almost a hundred" he boasted.
we
know
"Yeah, but how
can you pay them such high returns and tax-free no less?" With a grin he just said "If you have a $100,000 to invest I'll show you!" his
minimum
was
"program".
Not wanting to have to admit that I just got out of prison and didn't
you have anything
required
that
$100,000
have an extra $100,000
investment
He explained
to participate in his
lying around, I went along with him and asked "Do
I can take home and read?"
He reached into his desk
drawer and pulled out a little booklet of about 20 pages that he handed to me.
On the cover it simple said "American Financial Group" and "Regulation S Program".
Not wanting to appear
stupid,
realized how all the money was made.
I just
nodded
if I suddenly
In reality I never heard of "Regulation
S" and didn't have a clue as to what it could possibly excuse me now Tony because
as
be.
I have a client coming
I understand my wife invited you for dinner tomorrow
"You'll
have to
in a few minutes.
night so we can talk
more then if you like" "Great." I said as I shook his hand and left with the little booklet that would change my life forever.
That night after I played with my daughter and she thoroughly wore me out, picked
up the
blue gold and
white
booklet
from
Group and began reading what at first I concluded
I
American Financial had to be a scam.
According to the booklet "Regulation S" was a section of the U.S. Securities Act enacted by former President Bush to lure foreign investment dollars Wall Street.
It was the "bait" for billions of investment dollars according to
AFG since it allowed foreigners significant
into
to buy stock
in American
companies
discount of 5% to 25% below actual market value.
at
I never
heard of such a thing and it all seemed "UnAmerican" to me. After all why should foreigners be able to by shares in IBM,
Lockheed, or Mattei for $5
or $10 less per share than me - a genuine American? true because if it were, Americans reading the booklet continued
would be outraged.
insisting
It couldn't possibly be But as I continued
it was fact and pointed out that 497
minimum returns to the investor over the past three years had averaged 24%. I then was treated to two pages of bios on David Siegel and both were impressive.
Chism and his fund manager
Chism it seemed had a distinguished
career with the U.S. State Department and U.S. Army spending most of his life in Panama
as a diplomat.
Siegel
it was noted was
stockbroker and CFO of a few companies with a stint analyst.
These
company's
credentials
were
as
of impeccable
an experienced a
CIA economic
pedigree, and the
track record was one that would make any mutual fund manager
green with envy. For a moment
I caught myself thinking it just might all be true. to myself.
What if it was?
I thought
But then the reality of my life hit me and I recall what my father
pounded into my head years ago as a kid who was a continuous sucker for magazine ads promising pills to make me two inches taller, gadgets
that
would
pack
ten
pounds
or
exercise
of muscle on in ten days - "If it
sounds too good to be true it probably is". I concluded
that this "Regulation
S" fell into this category and tossed the enticing booklet into the trash on my way to bed. Out of courtesy I would still keep my dinner appointment with the
Chisms
and
if I was lucky he might be able to refer some of his rich
clients to me for a new boat. Despite what I felt about his operation, I decided not to burn any bridges me over $100,000
just
a year.
yet.
This
God works
decision in strange
would
eventually
earn
ways as I was about
to discover first hand yet again.
When I arrived for my dinner date at the beautiful
Turnberry Country Club
restaurant, I noticed that Terry was absent and I assumed she might be powdering her nose in the washroom. him, told me that Terry's attend
to her.
But "Eddie" as he now insisted I call
mother was not feeling well and Terry decided to
But as the evening
wore
on I realized he had probably
planned for us to be alone all along as he tried to sell me, a salesman into investing in his Reg S program.
Once again I was too embarrassed to say I
didn't have the $100,000 to invest so told him that our family funds were in a trust fund that was
locked
up under contract for another two years. 498
Clearly
dismayed,
our
conversation turned to his new boat, boating, and
dozens of questions he had about handling, docking, and maintaining a boat. I learned that he never had such a boat before and sensed he was intimidated by all it's power. By the time we finished our seafood dinner, I had agreed to spend four hours every Saturday morning teaching him how to safely and properly use his boat.
As a former Search & Rescue lifeboat coxswain
and boatswain mate in the U.S. Coast Guard, I myself had received the best training in the world, and driving a boat for me was like driving a car for most people.
Besides, he offered to pay $500 for each four-hour lesson.
Chism was a quick study and after only six lessons he was proficient at the helm,
learned
all
and soon discovered
the
channel
markers
every watering
of
South
Florida's Intercoastal,
hole between Miami and West Palm
Beach which we frequently visited on our weekend outings.
When you
spend four hours alone with anyone on a boat at sea, or puttering at idle speed down the Intercoastal, there are only four things one can do ... listen to music, drink, check out the bikini-clad babes on other boats, or talk.
We
did all three but mostly the latter. Chism it seemed did not have many true friends, a fact he readily admitted his friends friends
to me when
he once remarked that
suddenly appeared with his wealth and that his handful of real
were
all still in Panama.
He spoke with high regard of his former
boss Colonel McCauliffe of the U.S. Army, and boasted how he really ran the show at the Panama Canal while all the Army brass were playing golf and tennis all day.
With each boating excursion and every beer, "Eddie"
would reveal more and more about himself, his, life, and his problems.
I shared
my
imprisonment,
life
with
him
also,
but
never
once
revealed
my
which always remained a shameful event in my life despite
the fiasco that put me behind bars.
I always guarded this time of my life
from all but my wife as a secret since
I was convinced nobody would
ever believe I was jailed as part of a government cover-up. I came to this conclusion after seeing how my own mother reacted when I clued her in as to why I charged with bribery.
She never outright said she didn't believe 499
me but I sensed her reluctance to seek help on my behalf. spoke with Ty West and Johnathan Kwitny, and received
Only after she
a threatening
call
of her own did she finally realize the scope of the mess I fell into.
After a only three weeks, my Saturday mornings with Eddie turned into full-day excursions
that would usually take us to Fisher Island, the most expensive
piece of real-estate in Florida where the rich and famous and Fortune 500 CEOs keep residence week-ends.
like Oprah Winfrey
in the winter or come to play on
We'd sip tropical drinks and "check out the landscaping"
Eddie would say.
Indeed, Fisher Island would make any man think he
died and went to heaven.
Nowhere
else on Earth have I seen so many
gold-diggers
and trophy babes in one place at one time.
everywhere
hanging out of $500 designer bikinis.
people were there with their families
Tits and
hangout
The
beach-front
Bistro
but we occasionally
ass
Of course, quite a few
as well and this was great place to
network and fish for business, a glaring fact that Chism seemed missed.
as
at Fisher Island became
to
have
our favorite
headed North for some of the dockside
restaurants and bars like Shooters and others all the way up to Jupiter.
We
often spotted celebrities like Don Johnson, Claudia Schiffer, David Bowie, Sly
Stallone,
Madonna,
and even Princess Stephanie
on one occasion.
South Florida is a great big playground for Americans of all walks of life, but especially so for the wealthy who command ownership of all the waterfront real-estate that starts at $1,000,000 for a 50' by 80' bare lot. A one bedroom condo at Fisher Island starts at $1.5 million.
But the economy was booming
and stock markets were rocking. I heard on the TV news that something like 100 new millionaires were being made every day on Wall Street, and being exposed to the good life of Fisher Island, made me want to become one of them.
My family deserved
better than what I provided for them and I felt
compelled to make-up for the lost time and income of 38 months in prison.
500
In
less
than
a
month
Eddie
had
introduced me to everyone in his company including
his
partner
David
Siegel,
a
quiet guy on most occasions, but with a sense of humor that could suddenly knock you right out your chair with an unexpected joke. By far David had the best jokes I ever heard. He was balding in his 50s and looked like a college professor behind his spectacles. He would be the one
to convince me that
"Reg S" was indeed both real and legal. He did this by actually giving me a copy of the recall at how stunned
legislation
I was to realized
that created
Reg S and
how easy it was to amass a fortune
with Reg S at such minimal risk. The law only required that a foreigner their
I
hold
Reg S shares for 41 days, after which time they could sell for an
incredible tax-free profit of 5% -10%.
If they repeated this cycle every 41 days,
they could legally earn 40%-60% a year - all tax free in the U.S.
Siegel
quickly pointed out to me however that AFG clients held their shares for 90 days so as not to raise any red flags with regulators who to think that investors were
"abusing
was a young
adorable personality.
cute
everyone called
was
and
her "The BAP" which
American Princess".
Anna
was
no
be
inclined
or exploiting" the law.
Anna Dalcaumune the receptionist She
might
vivacious
friendly
I heard beauty
girl that had an
and
I noticed
that
was short for "Brazilian queen
magnetic personality that made her everyone's friend.
but just
had
a
Nancy LeDuc was a
quiet woman in her late thirties who I understood to be David's assistant. David's
son
Phillip
was
Fulo's
age
and
was
the
company's
onl
501
licensed
stock-broker.
Fulo of course, was the company's
handling all disbursements,
comptroller,
bookkeeping, and daily financial transactions. He
was quiet, reserved, and very intelligent. He seldom spoke but used his words wisely. He was respected in the office – for being the opposite of his arrogant father.
Once it sunk in that Reg S was both real and legit it dawned on me that this little company had the goose that lays the golden eggs and Eddie was well aware
of this fact and
especially
after the fourth
often
would
or fifth
gleefully
beer
gloat
on our
about
boating
his success,
trips. But I was
puzzled why he had so relatively few clients considering what he had to offer investors.
I was even more puzzled why he almost never invited our wives
out with us, and why he never called Terry nor she him throughout an entire Saturday, no matter how long we were gone or how late we stayed out.
I
was determined to find out one day as we were tooling down the Intercoastal.
"Eddie, why aren't you selling Reg S to the public?" we? We're
I asked.
"Why should
pulling down $5 million a year net and my wife and I have
everything we need." Somehow this answer didn't seem genuine coming from Eddie
and
I concluded
he was just
testing
me. "Really Eddie, what's
keeping you from making a few hundred million every year with Reg S?" He reached for another cold Coors Light and looked me in the eye as he explained.
"Selling something
like this to strangers is not easy - just think
how skeptical you were when I told you about Reg S. Besides, I do other business on the side that makes me good money too." But he responded with a question of his own "What could be sold to the public Tony?". experience,
"Like what?" I asked. makes you think this
As someone with ten years of sales
I already knew anything in this world could be sold, it was just a
numbers game - a matter of getting to a "yes" after deflecting all the "nos" of 502
buyers.
I was convinced Reg S would appeal to intellectual investors all over
the world in search of a high-yield, low-risk investment, especially one that not only had the blessings pf the U.S. government, Sam himself! skepticism
but was created
"Eddie, if you put a package together
by Uncle
that eliminated the
right from the start, you'd have a line of people at your office
door waiting to sign up". I explained. "And how do you propose we eliminate the skepticism?" he asked with real interest. "By including a copy of the actual Reg S law and testimonial letters of your existing clients." was the only response I got from
Eddie followed
"Hmmmmmmm"
with a few minutes of
silence.
"I'm
going
to mention to this to David" he finally remarked
back home into Fort Apache
Marina, where a gorgeous,
as we pulled
buxom, brunette
waved and smiled to us as we tied up the boat for the night. I had never seen her before, but would soon learn she grew up less than ten miles from me in Brecksville, Ohio.
She was a real looker wearing short shorts and a halter
top with no bra.
In the cool evening breeze her nipples stood at attention
and
she
around
bounced
her way towards
her shoulders.
Eddie a kiss.
with
I was shocked
"Tony, this is my friend
her long brown hair draped
when he leaned over and gave Kimberly Burkett".
greetings and I knew better than to ask any questions.
She had a beautiful
smile, great tan, and a trim firm body. Her huge breasts might
explode
at any second. Suddenly
We exchanged
my previous
looked
like they
assumption
Eddie was a happily married man evaporated that evening.
that
The three of
shared a drink at the Ft. Apache bar together and then as usual, I cleaned up the boat as Eddie drove away in his white Mercedes with Kimberly.
My wife was not pleased with these day trips I was spending with Eddie instead of her and our infant daughter Nicki.
I actually felt guilty about it too, 503
and I tried to compensate for the lost day by taking an extra day off work to spend with them since that extra $500 a week from Eddie gave me a little financial buffer.
That night we had an argument about these Saturday
adventures and I persuaded Eddie that we'd have to take the wives out now and then or I'd have to cancel out on future
excursions.
But Eddie
inadvertently came to my rescue the next day when a letter was delivered to me in an American Confidential".
Financial Group
It took
envelope
me by surprise
marked
and wondered
Upon opening it, I realized that Eddie was offering
"Personal
&
what it could
be.
me a job to help him
market his Reg S program.
I was making good during
the summer
money at Champion months
and about
Marine, about $5,000 a month
$3,000
during the winter
months.
More than that I was having a ball working around the waterfront on boats all day long.
But the lure of real money was irresistible as I reached for the
phone.
"I got your letter Eddie, but what exactly did you have in mind?"
aksed.
"I'm not real sure myself, but David and
I
I want to talk with you.
Can you meet us for lunch at Prezzos?" Of course I could - and did.
"I told David about our conversation
and we agree that some big money
could be made if we can draw some big players and since we've already gone through our circle
of friends, taking
this to the public might be a
good idea after all, but. .." "But what?" I asked. "But we need to keep a low profile and do this discreetly"
he replied.
"Why so?"
His ostensible
explanation was one that I would initially buy into "Because if word gets out that foreigners
are making this kind of money off the
companies, the American public will be so angry forced to shut the program
down".
recalled my own initial reaction to
backs
that the
of American SEC will
be
It actually made sense to me as I
Reg S.
"So David and I want you to 504
design a package like we discussed and then find a way to market this overseas so we can limit our exposure in the U.S."
It sounded good to
me but I was not going to abandon my income at Champion marine for a 4% or 5% commission that he offered me in his letter, when I was currently earning
a 20% commission.
"Look Tony, there's
I explained
this as diplomatically as I could.
plenty of money here for everyone,
so convince
us
with a package that will sell and we'll work out the compensation thing later". I knew I could impress them with a great sales package so I did not pursue the matter further just yet.
I could sense that my life was about to take an
unexpected turn.
At home
my wife
security
of my yacht
allowed were
had her doubts. sales
She
income,
had grown which
was
accustomed
not a fortune,
us to live comfortably without financial worries.
less than $2,000
to the but
Our monthly bills
and I never failed to bring home at least a $2,000
more than that every month.
But that weekend,
her attitude would change
when we she got to meet Eddie for the first time and be exposed to his personal wealth. The Mercedes, the jewelry, the boat, all led her to believe this man was the epitome of success, and she wanted me to share in that wealth as well. feeling
But, despite the aura of wealth, my wife also had a gut
that Eddie was one who could not be trusted, and she reluctantly
told me that she did not really like nor trust the listened
to
her, but greed
man.
I should
have
is a powerful creature and compelled me to
follow a path to what I believed to be certain wealth and security for my family.
Chism and Siegel loved my package design that included performance charts, testimonial letters, a Q&A page, and flow charts of investment capital.
A few
comical analogies were made and concluded with one that inserted a bit of urgency for the prospective investor. The header said "Timing is Everything" 505
and below was a cartoon of Colonel George Custer waving
off an assistant
who was trying in vain to introduce Custer to Mr. Gattling, who was trying to get an audience with Custer to demonstrate the world's first machine gun. Custer's
remarks were "Not now Captain!
Indian war plans? Whoever months! ".
Of course
outnumbered Sitting
it is tell them to come
the following
and slaughtered
Bull and his warriors.
provoke a little second
Can't you see I'm busy with my
month
at the infamous This
thought in the
back and see me in six
Custer
and troops were
battle of Little Big Horn by
little bit of history was minds of prospective
designed
to
investors
who
eliminate
the
might otherwise procrastinate.
Another
cartoon
of a
huge
elephant
was
inserted
to
expected objection of a prospect who would say "Why should such a small company
I never heard of when
huge companies
I invest with like Merrill
Lynch and Goldman Sachs send me on free vacations every year to invest with them?" "Bigger Isn't Always Best" the header stated and it was explained that success of Reg S depended on fast and precise decisions that huge bureaucracies
of the major brokerage houses just couldn't process quickly
enough to be effective -
like turning an elephant loose in a crystal shop to
take inventory.
All the
potential
objections
were
addressed
in the
package
which
repeatedly emphasized that not a single investor had ever lost money with AFG, which in fact was true at that time. Of course the necessary disclaimers had to be included
by law and Eddie supplied
the banking and other
references along with the testimonial letters.
The package had grown to about 30 pages, ten more than what they had been using, and they were both genuinely impressed. But a good package 506
was only half the problem as they quickly reminded me. "How are we going to discreetly get this package into the hands of qualified investors?" out full page ads in the in-flight magazines of foreign have
a
captive.
boredom of a flight. foreign
financial
audience
read everything
We're also going to put publications
another and just smiled. said "Welcome
who
aboard
airlines
out
and newspapers".
"By taking where
you
in sight to fight the news
releases
to
They looked at one
Eddie extended his hand across the table and the USS AFG Captain".
This "Captain"
nick-name
would be Eddie's name for me for a good year. But my wife and I had decided I would need an iron-clad contract from Eddie, and both Chism and Siegel agreed to give me one as well as a non-circumvention
agreement,
which
gave me an even greater degree of security and comfort to my wife.
The contract we executed would make me a millionaire in less than six months since it gave me five percent of the up-front moneys invested and ten percent on the back-end $100,000 US,
profits.
that the minimum investment
was
I could make $25,000 from each and every $100,000
recruited into AFG. and friends
Considering
I
Since I already had a database of luxury yacht buyers
Like multi-millionaires
Tom Coury, Pierre Gonyou, and Princess
Amina Mohammed, I was confident thatthis would be a very lucrative gig for me. But as time would teach me, any contract is only as good as the people who sign them.
And this would soon become the costliest lesson I would ever
learn in life.
I was brought into the office and given one of the four cubicles, right across from Phillip Siegel.
Nancy
now she was noticeably
LeDuc was sitting in this space before and
absent.
Phillip told me simply that "she no longer
works here". But a few days later when Nancy stopped by the office to collect a few items of hers, I asked her what happened. Her reply was
brief but 507
mysterious "You'll understand in a month or two".
Nancy was probably a
fortune teller in a previous life for her prediction would come true.
Eddie handed me a box of AFG business cards he had printed up for me. To my surprise
I was now the "Executive
Vice President"
of American
Financial Group, a title he said would make my job easier since according to him "People feel better and more important when they think their dealing with top management".
I also
noticed
that he gratuitously
"MBA" which he explained was just "another sales tool".
gave
He claimed that I
had to have one if investors were going to take me seriously. comfortable
with this but deferred the conversation
to
me an
I didn't feel
when
we
could
discuss it privately away from the employees.
The very next day while I was preparing
a mailing to some yacht buyers
overseas, Eddie sent for me to come into his office. When I did noticed he was on the phone and motioned for me to close the door. When I did, he switched the phone to speakerphone old and very good was
a prank,
friend
but as the
General
and in Spanish introduced Manuel Noriega".
conversation progressed,
me to "my
At first I thought it I was
introduced
as
"Captain Tony
DiMarco" and some minor chit chat led me to believe that it
might really be
Noriega
on the other end of the line, especially
mentioned some things about his spent
time
in
surroundings
that
only
when
someone
he who
solitary confinement at MCC Miami (like me and Noriega)
would know. Finally when the voice instructed Eddie to have some papers delivered to Frank from speaker,
Rubino's
office and asked
I was convinced
it really was
Rubino was known to be Noriega's lawyer.
him to pick up the phone Noriega
since Atty. Frank
I remained in the office as I heard
Eddie assure his friend that he was "doing everything
possible to get a new
508
trial or sentence reduction" and was going to meet with a federal judge for dinner to propose "some ideas".
He also said that he "spoke with one of the Bush people" and they can't do anything until after the election. this last quarter."
But the good news is that you made 23%
He ended the conversation
by telling Noriega that he
and Terry missed his company and that they pray for him every night.
I was
shocked by what I was hearing, knowing full well from my own experience that every call coming out of MCC Miami is monitored. up,
I casually
everything
remarked,
"If that's really
Noriega,
When Eddie hung you must know that
you talked about was recorded Eddie". "Not so my friend." He
rebutted and further explained "Legal calls can't be monitored by law and when he calls me about confidential matters he always makes a three-way call through Frank Rubino's office.
If it's a personal call that has nothing
to do with business, then he just calls me direct collect". asked "You guys still keep in touch huh?". feel sorry for the guy Tony.
I just nodded then
"We talk at least once a month.
You k now our government
I
really fucked this guy
over and if you met him, you'd see he's not the monster Bush made him out to be." "Really?" was all I could think of to say. With that Eddie reached into his desk and pulled out a VHS
video tape and through it in my lap. "Take
this home and watch it and you'll see what I'm talking about" tape read "The Panama Deception" and provocative
and
I have to admit
The label on the it was
a very
enlightening documentary that changed my views .drastically
about Noriega.
In fact many people who also saw this video say it should be George H. Bush who should have been jailed instead of Noriega.
But that's another story,
and I just recommend that every American grab a copy of this video at their local video store and draw their own conclusions.
Eddie also shared a few 509
old photographs with me of him with Noriega and if you didn't know who Noriega fraternity
was,
you'd
party -
think
you
smiles,
were
women,
looking
and
at college
chums
at
a
beer everywhere. Terry was even
in a few of the playful vacation a nd casino pictures.
They could ha ve come out
of anyone's family photo album. Then Eddie showed me some photos of some beautiful waterfront real-estate that he claimed was gifted to him by Noriega out of friendship and was now boasting that some major Hotel chain (I seem to recall that it was either Marriott or Club-Med) had offered him $30 million for the property.
He assured me that one day he'd get $50 million for it
because it had over a mile of sandy beachfront.
He added that he'd keep at
least five or ten hectares for his own retirement home.
The following week Kimberly appeared in our office as pretty as ever but in more modest clothing that only exposed her long tanned legs. Eddie made an announcement Although
she was
that
she was
pleasant
now
his new "Executive Assistant" .
and nice to me and everyone else,
I sensed
that she was not wanted there by David, Phillip, the BAP, and especially Fulo. But I said nothing and decided to play dumb even when Kimberly would call in sick the same days Eddie would take off early or fly to New York for a "business
meeting".
working very well.
From the rumblings in the office, the ruses weren't
The office now grew extremely tense every time Terry
would stop by and would have to exchange greetings with the new girl in the office.
Terry was such a nice person that we kind of all just wished that
Kimberly would somehow just go away. person, because s he was.
It wasn’t that Kimberly wasn’t a nice
It's just that her affair with Eddie was bound to
cause problems sooner or later. David’s response was classic “Oh joy.”
That weekend Eddie and I went to Fisher Island again but in getting there we took the long
route since it was windy and the open ocean seas were 510
choppy and comfortable
breaking
at eight feet or so.
ride in anything
This
would
less than a cruise ship.
not make for a
The longer routing
down the intercoastal caused Eddie to drink more beer than usual. Since I usually drove the boat, I either restricted myself to one can of beer or stuck to ice tea. By the time we arrived at FI it was about 1pm and Eddie already had a good buzz going.
You can always tell when Eddie was drinking because
he'd become very talkative and delve into various unpredictable
areas he'd
normally never discuss. Today was the day he would tell me the history of AFG whether I wanted to hear it or not.
Fisher Island was Eddie’s favorite playground, We came here by boat usually twice a month to play tennis or simply drink and socialize.
He reverted
back to the days of the 1989 invasion when
betrayed by Bush & Company".
"kidnapping".
way.
was
Eddie was clearly still angry and bitter that
his good friend was not only deposed from power, in such a humiliating
"Noriega
but removed and jailed
Eddies insists it was nothing
less than a
After yet another beer he dropped the bombshell on me "I 511
warned him but it didn't help much."
"What?" I asked in disbelief. "Yeah,
I told him a few hours in advance when they were coming, but the Seals blew a hole in his jet and troops had the city sealed off. He was trapped. We found him a boat but we had no way to safely communicate get him to the boat."
From what I was now hearing,
shared one loyal friendship together.
with him or
I deduced
I can't imagine
risking
that they charges
treason for anyone other than my own flesh and blood family.
of
Eddie
clearly could be a good friend in time of need, and in a certain way I admired what I perceived to be loyalty.
I would soon learn that money had something
to do with it as well.
After ordering two shrimp cocktails and two rum and cokes at the bistro, the tale of AFG's origins continued.
Noriega
making a clean escape and had given two large stuffed with $10 million of cash to
it seems fully anticipated Samsonite luggage
bags
Chism to discreetly hold for him until
sent for once he found safe haven abroad in Cuba. But when plans failed and
Noriega
was
captured,
Chism
feared
that under the
influence
of
injected drugs, Noriega might divulge how he became aware of the invasion plans. As it turned out the Chisms, were already under suspicion by the U.S. authorities who suspected Terry. "Why would they suspect Terry?" I asked. Eddie took a deep breath and then forced was once
Noriega's mistress
himself to tell me that "Terry
and worked
and then as his personal secretary.
in his
Treasury
department
Now that she's married to me and it's
known by everybody that we still socialize with the
Noriega family, they
would naturally label Terry a suspect - wouldn't you?" "Yeah, I guess so. So what
happened?"
"I guess
I panicked
a bit.
headed for the border at 2:00 in the morning.
I took
the cash and
I drove all the way to Mexico
City, opened an account and deposited the money. You can't imagine how nervous I was driving around will all that money".
He said he returned from 512
Mexico
City to avoid further suspicion
before
his absence was noticed.
But both he and Terry were already on a list to be questioned by the CIA and they were picked up and interrogated by Army Intel and CIA investigators.
Apparently they were able to convince investigators
that it wasn't them and
Terry and Eddie decided to leave Panama for good and start a new life. Although
he didn't tell me where Terry went, he stated that he and another
Panamanian named Carlos Castillo went to Mexico City, and using Noriega's money opened a business together.
Although
I cannot recall the original
name of the company (U.S. agents seized my notes and records), I recall that the office was
located on either
Calle Reforma
or Calle
Liberatador
in
Mexico City. This office would later appear in some AFG literature as their "Latin American
Headquarters Office".
This
company
would
eventually
become American Financial Group when Eddie decided to set up operations in Aventura, Florida, an upscale
suburb
of Miami located
about twenty
miles North of downtown Miami on the waterfront.
Terry
and
Waterways
her
elderly
developments
mother
picked
and the Chisms
out
Correctional
Center
Eddie said he and Terry were
condos
now called Aventura
their friend Noriega took up residence in myoid Metropolitan
some
residence
-
in
The
home as The Miami
about 30 miles away from the Chisms.
upset about the plight of their friend
but
realized they were in no position to do anything to help him. They decided the best thing they could do for him was invest the $10 Million which
now
became the seed capital for American Financial Group.
513
Above is AFG ‘s Favorite client and former partner General Noriega
At first Eddie said generate
substantial
supplement business
he searched income
for a
and
business
he experimented
briefly then switched
venture
that could
with a
nutritional
to selling instructional self- help
disks and booklets showing people the benefits of accelerated mortgages.
But
until he ran into his old friend David Siegel, he would remain as ignorant as I was about Reg S.
Only now that he was under the influence would Eddie admit that David Siegel was the brains and financial wizard behind his operation and without him he'd be lost.
He would
never make such an honest admission if he
were sober, as he always made himself the center of the AFG universe in the eyes of investors and prospects.
During my forty years of life, I have
never met a person with a bigger ego than Eddie Chism. happy
he had to feel important
and have the
assurance
For him to be that
others
perceived him to be a successful man of wealth and influence. Everything 514
Eddie Chism did was to bolster this public image. While his son and David drove the same Mercedes and Jaguar
for
more
than a year,
Eddie Sr.
made sure to change cars every three to six months, asked me to "borrow" various
yachts
from old clients to impress clients and prospects, and even
tried to convince David
to
obsessed with perpetuating
buy a company
helicopter
and jet.
He was
this image and would admit to me this day at
the bistro "We can't sell shit without the right image Tony.
If people see
and smell success in us, they will buy anything we're selling - bank on it".
I figured that since Eddie was in a talking mood he might not object too much if I asked about Kimberly and his marriage. He just smiled at hearing her name and gave me brief but candid explanation "Great piece of ass Tony she makes me file like I'm 18 again, know what I mean?" Terry seems like such a sweetheart Eddie".
"Yeah,
"It's not the same Tony.
but This
may sound strange, but I love my wife. This thing with Kimberly is just for sex. She's a FTF." FTF Eddie?"
He said as if I'd understand, but I didn't.
"What's an
"Friends that fuck - come on don't tell me you don't have an FTF?"
I shook my head and Eddie just started laughing. "Then we'll have to find you one!" Actually I was quite content with my wife so I tried to change the subject but Eddie wanted to make sure I understood his relationship with Kimberly, a girl who was half his age. "Kimberly
has a boyfriend
you know, some stockbroker
named Billy, so don't think this is a one-way street I'm driving down" he quipped.
I let the conversation fade out and was about to bring up another
subject when he beat me to it.
"You have good ideas Tony, and I think by this time next year you'll be a very rich man."
"Sounds good to me Eddie."
He ordered another rum
and coke for both of us and we made a toast to Regulation S. Only in America could such a law exist. 515
On the way home that night Eddie still had a buzz going and he brought up his pal Noriega again. "I feel badly for the guy Tony. You know he was on the CIA payroll for years, and soon as he starts saying "no" once in a while, they suddenly make him into a drug dealer." Eddie remarked. According to Eddie the CIA had gotten some feedback that Noriega wanted all U.S. troops out of Panama and that did not sit well with
the
Bush
administration.
Furthermore,
Noriega fully expected that America would honor agreements signed by President Jimmy Carter on September 7 1977 to return ownership and control of
the Panama Canal back to Panama in 2,000 and was rejecting bribes to cancel the agreement from the Bush administration. According to Eddie, a man named Donald Gregg who was on in one of his Noriega/Bush
photos
(pictured
here),
offered
Noriega $50 million cash and some properties in California and Florida to annul the Carter treaty and Noriega refused to sell out on Panama. It was this refusal to cooperate that was the turning point for the Bush/Noriega friendship that was more than a decade old.
On the way home that night Eddie still had a buzz going and he brought up his pal Noriega again. "I feel badly for the guy Tony. You know he was on the CIA payroll for years, and soon as he starts saying "no" once in a while, they suddenly make him into a drug dealer." Eddie remarked. According
to
Eddie the CIA had gotten some feedback that Noriega wanted all U.S. troops out of Panama and that did not sit well with the Bush administration.
"I'm
working behind the scenes to get him a new trial or an early release - the man is harmless".
"Obviously someone in the government doesn't agree with
you Eddie". "Yeah, but you'd be amazed
how people can suddenly change 516
their minds for a few bucks. that".
Everyone
has their price Tony - remember
I didn't ask him to elaborate, as I was too busy looking for boating
traffic. Navigating the Intercoastal at night on a weekend was a tedious affair that required a good deal of concentration.
Almost half of the boaters out
here were drinking all day as we were, and some forget to stop when they board their boats.
Fortunately
Eddie
had these killer halogen floodlights
on his boat that were as bright as a 747's landing lights.
After a few minutes of silence, I realized Eddie had dozed off and we made my way back to Ft. Apache where I had to wake him or let him get eaten by mosquitoes.
As I cleaned out the boat I realized Eddie had drank twenty-two
beers and two rum and cokes today compared to my two beers and two rum and cokes.
It was then that I realized, Eddie was a much nicer guy when
he was drunk than sober, which is quite a switch for me. Most people I knew became obnoxious assholes when they had too much to drink but Eddie just mellowed and talked more freely than he ever would. mind
you, and
this would
He was no alcoholic
be only one of two times that
I'd see him so
blitzed. The other would be the night Terry found out about Kimberly.
These boating outings served to bond our friendship and there soon weren't any subject we couldn't talk about.
But I soon came to learn that there
were two Ed Chisms - the Ed Chism that I and his other personal friends knew and the Ed Chism that clients and prospects would get to see. With is employees he ruled with such a stern hand that "Hitler" everyone showed and
by
Phillip.
He
was
clearly
doted
on the
guest
was
often
called
a perfectionist t h a t aggravated
in the office without exception. But when up for an appointment,
he
he suddenly
a
became
client
or prospect
Prince
Charming
ad nauseaum and even treated the employees
with a rare respect that would go out the door with the guest.
I recall 517
after one particular meeting, David Siegel asked me for a nomination form. Confused,
I asked
Eddie for a fucking
him what he was talking Oscar!"
best - impressing people.
about. "I'm going to nominate
Indeed Eddie was very good at what he did You either loved him or hated him, and I would
ultimately do both.
Despite my impressive title, I had absolutely operational
or administrative
called all the shots
and
no say or input into
policies, but neither did anyone
was. the epitome
AFG's
else. Eddie
of a micro-manager. He would
delegate a task to someone, and no matter how simple it might be, dictate every phase of the chore and then inspect the project along the way with the scrutiny of a drill sergeant. He had to see every fax that came into the office no matter who it was sent to, and even went so far as to tell Fulo what to write
in the
"memo"
sections
of company checks.
It is safe to say that
nothing took place at AFG that did not have the input, consent, nor blessings of Ed
Chism.
There was a reason for this I suppose. After all, Chism had
nothing better to do. All the real work was done by others and unless there were clients or prospects to woo and court, Eddie really had nothing to do. Looking back I feel that by involving himself in everyone's work he justified himself as the company's President, again fulfilling that annoying need of his to be recognized by others as a person of importance. 518
Eddie named his boat "Galapacos" which I thought was an odd name for a boat. Working around boats for years in the Coast Guard and now at Champion Marine, I'd seen plenty of creative and cute names but this one seemed so out of place. Fulo would later tell me that the boat shared the name of one of AFG's many offshore bank accounts. The Galapacos account was held in Nassau, Bahamas. AFG also had accounts in Switzerland, Panama, Montreal, Cayman Islands, and London.
Of course they also had local accounts at Barnett Bank
in various accounts for petty cash and payroll purposes. (In 1997/98
I would
provide the pertinent account numbers to the FBI) But all the major bucks went off-shore where their profits would be both tax-free and kept secret from any prying eyes of the
IRS or government securities regulators. They bought
their stock shares and those of their clients York
and
Dallas
with
through
Bear
Stearns
of New
the assistance of a young broker named Todd Boyd.
It was Phillip Siegel's job to handle these transactions negotiate the discount rate of the Reg S shares. S shares had a very special
allure -
as well as help
For investors and AFG, Reg
they were
all unregistered
shares.
Sale of unregistered shares do not have to be reported by public companies to the SEC, IRS, or anyone monies, ultimately
Reg S shares witness
else.
provided
first-hand
with
For someone
who wanted
to launder
the perfect vehicle to do so as I would the
Noriega
and
many
other
AFG
accounts.
When it was time to sell the shares and collect a handsome profit, AFG turned North to Canada and used either the services of Nesbitt Burns or Levesque in Montreal and Toronto.
The unregistered
shares
were sold
not through
AFG but other accounts that could not be linked to AFG by anything more than an innocuous fax number on a telephone bill.
David Siegel handled all
the
each and every nickel of
selling,
but
Chism
himself
directed where
519
proceeds and profit would be destined. AFG what
became
a well-oiled
had
have
review
paperwork documenting
the company files
process.
After
all
and
refined
Reg S machine that would pump out millions
of dollars a month in invisible shares and money. would
designed
Only the client and AFG
the transactions.
at will to get
an good
I was allowed
to
understanding
of the
I could not be expected to sell something
I didn't
understand.
Without going into protracted details here, consider that an investor gave AFG $1 million to invest. That money would be sent off-shore by AGF and temporarily
parked to collect compound or simple interest while a suitable
Reg S deal could be located and negotiated. There was no shortage of companies looking for low cost expansion capital. Most however were micro or small cap companies that few people ever heard of. But so long as they were stable and generating enough for AFG.
revenue and actively trading they were good
That $1 million would typically be invested in two or three
different deals to spread what little risk there actually was. rates averaged
Typical discount
15% which also represented the average quarterly profit. So
by year's end, a total gross profit of 60% could easily be achieved.
AFG would pay their client the promised 17.5% to 35%, a rate that varied according
the amount
of the
client's
chart, and the client's own negotiating skills. clients collected
an AFG published
Only a handful of the shrewdest
more than 30% per annum. But the lion's share of profits,
fell into the coffers of AFG. 100% technically
investment,
legal.
The amazing thing of it all, was that it was all
But as time went on I'd learn that a legal profit of
25% to 30% was not enough for Ed Chism and company.
Obviously Eddie
had downplayed his true income to me in earlier conversations.
To the IRS
he reported earnings that were a mere fraction of the millions they were 520
making.
Chism despised the IRS and would often insult me for just working
there years ago.
Reg
S
was
foreigners
originally
only.
designed
by
the
Bush
Administration
for
After all the original intent was to lure foreign capital into
U.S. markets, which on the surface seemed like a noble effort. Others say Reg S was implemented
to help crooked
politicians
safely launder
their
payola behind the shield of secrecy that Reg S provided. Either way, Reg S was totally off-limits to U.S. citizens - legally. annum would
make any American
Tax-free profits of 25% per
businessman or
investor
drool
uncontrollably with greed, and Ed Chism knew this better than anyone else. And Chism was not a man that would turn investment because
it was
discovered which
born
he found
ultimately
and
grown
in America.
money away simply As
a clever way to accommodate
would
time
American
passed
I
investors,
represent about 60% of AFG's portfolio, and this is
where Eddie crossed the line. This
would
also
be a
turning
point
for
myself as well as I would ultimately decide, that despite the great income, I did not ever want to see another prison cell for as long as I lived.
As
I prepared
to take out the
full page ads in a handful of in flight
magazines with Avianca, Varig, Viasa, Avensa, KLM, Lufthansa, and Singapore Airlines, Eddie called me into his office. "How Small?" was my reply.
"There is a small problem" he said.
"Well, Eddie and I was thinking
that the
advertisements should not really carry the name and contact information of American Financial Group." generate
thousands
Puzzled, I asked why. "Because these ads will
of inquiries
and we do not have the staff here to be
dealing with dozens of curious callers every day who hang up after we tell them there is a $100,000 minimum investment". simply insert a line in the
ad that
said
To me that was not a problem, we'd "$100,000
minimum
investment 521
required" and made the suggestion to Eddie.
"Still, we want to keep a low
profile and use another company to do all the qualifying
and marketing.
Once we know we have a real player on the hook, you pass the line to me so to speak, and I'll reel them in onto the AFG boat." He explained. ostensible explanation
His
at that time didn't raise any warning flags for me,
but I would later conclude as David Siegel would confirm years later, that Eddie
did
securities
not want when
to
run
he was
government regulators.
the
risk of
not a licensed
being
charged
broker,
Instead, he persuaded
with soliciting
nor invite scrutiny of
me to put my company on
the line as a "broker and marketing agent of AFG".
My company
was The Globus
Group, and frankly
it was set up as a
consulting company for selling yachts and other liquidation items like blue jeans, perfume, and shrimp from Ecuador that my wife's family raised on their shrimp
farms
on an international
basis.
Like
I said, I didn't see
anything sinister in Chism's plan so I acquiesced and The Globus Group ran the ads.
In our contract, it was agreed that AFG would cover half the costs
of all such advertising which was purchased mostly on credit of 30-90 days net terms. appears
A sample in the exhibits
of the
ads which ran in both Spanish
section
and English
at the end of this book under Exhibit Q.
Eddie also installed a special line in AFG's office which he dedicated exclusively to handle the inquiries generated by these ads and we decided to make it a fax line so we could determine both the location and perhaps qualifications of the prospect, since most people faxed in their inquiries on company letterhead, and we could then get basic information of the company from the Internet.
My resources only allowed me to run one ad per month in one magazine since each full page color ad was about $25,000.
I was directed to focus on
South America to take advantage of Chism's selling skills in his fluent Spanish. 522
When the faxes started coming in, at about 30 a day I would normally sort through them and throw out any that came from a u.S.
area code since I
assumed they were Americans traveling on business to South America and therefore would not be legally qualified for Reg S.
But one day after returning
from Moe's Bagel Shop where I had a quick lunch, I realized with surprise that my trash basket which was almost full in the morning was now empty.
This was
very odd since the cleaning lady did not come into the office until late night after we all went home for the evening. office and theirs' were not emptied.
I looked at everyone else's trashcans in the I didn't know what to think but I had an
incoming call which distracted me from further investigation.
But the following day my wife called me to tell me that her brother was angry with me for not responding to his fax. "What fax?"
I asked. She told me that her
brother had faxed me a price list and specification sheet for the shrimp I was trying to sell to Red Lobster's buyers for her family. sent from her brother's AFG.
home late at night to the special fax number at
I never saw it. I called
apologized
and
Apparently the fax was
explained
that
my brother-in-law
in
Ecuador
and
it probably didn't go through since I never
received it. But he insisted he had confirmation
and even told me that it
was received at 9:07 pm. There would be nobody in the office at that time so surely I'd see the fax when I came to work in the morning, since that fax machine was located right next to my own desk at AFG.
Recalling the previous trashcan incident, I was now growing suspicious and angry.
Someone
in the office was going through my faxes.
I decided I
would question everyone in the office until I got to the bottom of this since it ultimately cost me to lose the side deal with Red Lobster who had wanted a quote by a deadline that I missed because of the missing fax.
We had a
new girl in the office, Adriana who would became our new receptionist so 523
I asked her first. She knew nothing. Phillip was next and he outright said it was probably Chism and relayed to me how Chism even opened everyone's mail that came to the office!
I was shocked at the incredible invasion of privacy but Chism would later tell me that "this is my office, paid for with my money, and anything and everything
that comes into this office is my business". With this new
information from Phillip I approached Kimberly just to see what she might say. "Hey Kimberly, "Yeah,
there
did were
you see any faxes four or five
-
they're
on. my machine
this
morning?"
on Eddie's desk" she said so
casually. "why are they on Eddie's desk and not mine?" I asked.
"Because
Eddie told me to collect all the faxes every morning and put them on his desk." She explained.
Chism had not come into work yet so I went to his
desk and sure enough found a stack of faxes sitting there.
I sorted through
them and took the ones that were ad inquiries and others addressed to me. I was outraged at this secret screening process and would let Eddie know it.
But my confrontation
with Eddie
was
not what
I expected
it to be.
I
thought he would concede that I should see my own faxes first and then give him copies. Not so. insolent for questioning gave
me that
He blew up in a rage at me screaming that I was
his authority as the President of the company and
"my company"
speech,
which
apparently the others heard
before as they would later recite parts of it by heart for me.
Since the office
was small, and Eddie didn't bother to close the door, everyone in the office heard our argument.
I left the office early in protest after I covertly
unplugged all the fax machines in the office. I wanted to show Eddie what it was like not getting his own faxes.
I also took all my files of prospects with me as
I was not sure I'd be coming back and wasn't about to let such a dictator enjoy the fruits of my labor. This would be the first of many blow-ups I would have 524
for Eddie and I would learn that only Phillip and
I would
have the balls to
stand up to this office bully who had everyone else in the office intimidated.
I shared this problem with my wife that evening and she grew nervous that I might quit this new job Champion Marine,
Marine. Marc
and maybe
not be able to get my old job back at
What we didn't know was that the owner of Champion
Osheroff
was
being
indicted
for
securities fraud
and
Champion Marine would soon be closing down. But what made me return to work at AFG the next was simply my investment of time, money, and energy I put into the marketing campaign which was easily about 300 hours and $3,000 in just my first two months.
I decided to go back and solve the fax
problem by just forwarding the fax phone line at AFG to my fax at home where I and only I would see my faxes. That's when I discovered that over 50 faxes a day were coming in from our ads and most of them were from Americans. Eddie
had been cherry-picking
my faxes for the last two months,
according to him, he was just trashing
all the American
leads.
but
As time
would tell this would prove to be a lie. He was secretly courting the Americans to invest through off-shore Bahamian companies that he'd even set up for them!
By the third month I had got to meet about two dozen including several from
Venezuela,
of
AFG's
clients
Colombia, and Panama including Carlos
Castillo, Milton Bello, and Gustavo Soto amongst others.
In going through
the AFG files, I noticed quite a few past and present politicians, judges, and diplomats
were AFG clients including some Americans - who all had
offshore companies.
I knew better than to question Chism about this as it
would only invite yet another blow-up and I was still trying to smooth things out over the fax incident.
525
One day after work I stayed late awaiting a conference call from Albert Hee on the West Coast. Only Chism and I remained in the office when I heard a knock on the door.
I went to the reception area and found a Latino woman
in her mid forties asking for "Sr. Chism". I asked her for her name so I could advise Chism he had a visitor. "Just tell him his 6:00 appointment she told
me in Spanish.
again turned
into Prince
is here"
I relayed the message to Chism and he once
Charming
to greet his guest and ordered
make some fresh coffee for both of them as if I was a waiter too.
me to
I brought
the two of them their coffee and Chism apparently wanted to impress me yet again as he introduced me to "Dona Noriega" the wife of General Noriega. I recall seeing
her in a few of the photographs
Chism had shown
previously but today she look older, tired, and nowhere
me
near as elegant as
she was in the gown and jewelry she was wearing in the photographs.
After
exchanging some greetings I went back to my desk to wait for my conference call as I passed the time by browsing the Internet.
Eddie walked
over to my desk and handed me a Louie Vitton or
Fendi
(can't remember which since they were both brown and tan) duffel bag that was stuffed with $100 dollar bills, most in bundles that had a "Barclay's Bank" band on them and others that just had rubber bands. "I'm finally getting that raise?" I jokingly asked, not knowing what the money was for or why he was bringing it to me. "Do me a favor and count this out for me. Make sure there's $100,000 here" he remarked as he returned to his guest in his office where I heard an occasional laugh or two. I complied with his request and counted out the money twice to be sure.
There was actually $110,000 in the bag and I assumed that Eddie was
testing my honesty for some reason.
There was also a manila envelope in the bag as well and my curiosity got the best of me. It was not sealed so I looked inside of it and saw about thirty legal 526
documents all in Spanish and something that appeared to be a bond or stock certificate. There was also a petition asking that Gen Noriega be given a new trial and copies of about a dozen letters of businessmen and a Congressman suggesting the same.
I was about to
read the Spanish certificates when
Chism called for me. I put the cash and the documents back in the bag and took everything to his office and handed it to him with a little note that simply said "There is $110,000 here".
Chism took the bag, removed one of the bundles
that he put into his top right desk drawer and then handed the bag back to me with yet another "request". Please carry this down to Dona Noreiga's car for her and see to it that she is not followed when she leaves".
I took this to mean
that he wanted her to have an escort down to her car since she had a lot of money and could easily be mugged, so I did not object.
Down in the parking lot, she led me towards a silver BMW that had a younger, more attractive woman in here early to mid twenties sitting behind the wheel waiting for her. For some reason, I seem to recall the name Carmen.
I opened the
passenger door for Mrs. Noriega and asked her if she wanted me to put the bag in the trunk for her. She smiled and said that was a good idea. So the driver popped the trunk for me and I placed the bag in the trunk whose other occupants were some sneakers, a tennis racquet, and a box of files that had "Para Rubino" (For Rubino) scribbled in marker on the side of it. incident and
as per Chism's
request
I watched
They drove off without
them drive down to the
traffic light to make sure they weren't being followed. They weren't. I went back upstairs only to find that making a call with a calling card. and he had to use mine? line
and
argument.
now
I beginning
Chism was on my phone line and
There were a dozen phones in the office
He knew I was awaiting an important call on that to
think
he
was
just
trying
to provoke
an
But as I approached him he waved me off and said he'd be off in
less than two minutes, and thankfully he was.
I still have no idea who he was 527
calling and why he used my line and not his own. My conference call finally came and
I had to explain the entire Reg S process to Albert Hee and a
friend he claimed was the financial planner for the President of Indonesia or Malaysia.
It's been a while and since
my files were
seized
I can't recall
which.
They were contemplating
a $10 million investment with AFG.
I
noticed
Chism hovering around my desk during the call and I was growing
annoyed
to the point where
I had to pass him a note and tell him he was
distracting me and to please leave me alone to work.
He simply tossed the
note in the trash and moved from five feet away from me to ten.
After I hung up with the parties Chism expected me to debrief him and I simply said this was a preliminary call and the people just received their packages. I'd follow-up in a week. To avoid further interrogation I changed the subject to Mrs. Noriega and Chism began a ten minute speech about how he had more than doubled Noriega's account in less than three years and that the Noriega family generated over $5 million in referrals for him because he was such a trusted friend and proficient money manager. with my daughter and did abruptly
not
have
time
I was dying to go home to play for
his self-glorification,
ended the conversation and headed home.
so
I
After the fax incident
with Chism, I had lost a lot of respect for the man and our friendship began it's slow erosion that would end over the next year.
I tried my own hand at the Reg S game since 10% of the profits were mine I was quite motivated. My first deal was a small one of only $500,000 for a company owned by a friend Elvin Feltner of New York, It was a small company trading on NASDAQ under the symbol of AFTY called Affinity Communications which bought and brokered television stations across America and then obtained cable access for their programming. It was no Viacom but it taught me the ropes of Reg S and then Elvin also did a Rule 144 loan deal with AFG a bit later. 528
I originally at Champion Marine met Elvin when he walked into the show room and none of the sales people wanted to attend to him because he was dressed in clothes and shoes that were probably 20 years out of style. As the sales manager I had to attend to him. The guy that nobody wanted to take care of
eventually
bought
a
$500,000 yacht as a gift for someone in the Phillipines..
Over the years Elvin and I developed a good friendship and I would often seek his advice on matters. He was an honest and ethical business man who always complied with the letter of the law.
Towards the end of 1994, I wanted to follow-up on a lead that Phillip had gotten from a friend at Bear Stearns in Texas named Todd Boyd. For some reason Phillip was not following up on the lead and he would later tell me the company was “too big for Reg S and they would not give much of a discount.” I asked if I could give it a shot and he said “sure but it was a waste if time.” I decided to take Phillip’s word for it and I crumpled the paper that bore the name and number of a caller named “Ken Lay” with a Houston telephone number and threw it in the trash. But two days later this fellow Lay called our office and I ended up taking the 529
call. He said he was the President of an energy company called “Enron”. He was a bit put off that nobody had called him back so I explained that they probably would not be interested in giving us a 15% discount on a block of shares so we assumed it would be a waste of everyone’s time. But he rep lied “Our company doesn’t need or want a Reg S deal – its for a company we are looking to acquire and the 15% would be reasonable if you could do a block of $30 million.” He replied. Frankly AFG never did any one single Reg S deal this large and the largest one to date was $5 million. I told him I’d see if we could swing it and to give me a call after I checked with our CFO.
I mentioned the deal to David and I could tell he was more than a bit skeptical, but he said “Knock yourself out kid, but it sounds like bullshit to me.” David assured me he could find a player for $10 million but not for anything bigger, So when Lay called back I told him that we could handle a $10 million Reg S and Ken dropped the discount rate to 10% accordingly, but he sweetened the deal. He proposed a guaranteed buy-back of the shares after 180 days with a guaranteed ROI of 12%. Because my notes were stolen from me by the Feds, I can only recall that the company involved had the word “Portland” in its name. Ken called me back on a conference call about 2-3 days later with his pal from Portland, whose name I cannot recall after all these years, and as I said, I lost my notes. I mentioned that this was a rather bizarre Reg S deal they were proposing, and I guess they sensed I might not pursue the deal so Lay explained it this way to me…”We want to acquire Portland but we need a more appealing NAV and offset some of their liabilities so I can sell this deal to my shareholders. We can do three $10 million Reg S deals over the next year and give you the buy back guarantee on all three deals.” This deal sounded really fishy to me but I could find nothing negative on Enron or this Portland company so I kept listening. Ken even suggested that he could arrange some “nice warrants” for me and even pay our fee in Portland shares since the acquisition “would make the share fly”.
I must admit this deal was getting me 530
aroused. It was simply too good to be true. It then dawned on me that this might be some SEC/FBI sting operation and if I said yes to the warrants or shares, it might be construed as “insider trading.” I began to get a little paranoid.
My paranoia was tweaked when I received a call from someone claiming to be an Enron executive. I would later discover that the call came from Cliff Baxter, a senior VP at Enron. He “warned” me not to entertain the deal with Lay since I was unaware of their real intentions and I might be looked upon as an “accomplice”. I told Baxter to “get specific or say goodbye.” He said he was bound by non-disclosure agreements but that if this deal went down he would be forced to notify the SEC and I would be listed as a witness for sure. Why was this guy trying to kill their own deal? I thought to myself. He was clearly sincere and torn with
DUE TO THREATS MADE AGAINST MY FAMILY 2 PAGES HAVE BEEN WITHELD UNTIL MY SITUATION IS RESOLVED
AND
MY
FAMILY’S
SAFETY
IS
GUARANTEED. By now one of our news releases was published in the Arab News and quite a few Latin American newspapers espousing the many benefits of Reg S investments.
Now the inquiries came fast and furious and over the next
few months,
I would
Financial
Group
have generated
including
389 qualified leads for American
some of the wealthiest
Austrian Bank and the Finance
people and even an
Minister of Bolivia and a group
of Saudis
that would ultimately end both my employment and friendship with AFG and Ed Chism. 531
Whenever Eddie got up and closed the door to his office it was because he was either going to make or receive a confidential phone call that he insisted would be absolutely private. Eddie was an extremely punctual guy but one day he was late coming back to the office and his private line was ringing off the hook. It was from 202-456-3345 and I made the mistake to answer this call. When I said “hello” I just heard the following “Just listen and don’t ask any questions. You need to liquidate Katherine and Manny’s accounts immediately and more are likely soon. I’ll call you back by next Monday and do not make any more calls to Don, he is hot right now” Whoever the caller was he obviously assumed I was Eddie since nobody else dared to answer his private line which had a special ring tone. When Eddie came back to the office, I gave him the message and he went ballistic that I answer his phone and warned me that if I ever did that again I would be fired on the spot. I tried to justify my actions by saying anyone who would ring 20 times must have an urgent call and I didn’t want him to look bad to a client. It didn’t work. Eddie was fuming mad.
My first client recruited for AFG was Michelle and Patrick
McGenney and
her husband from "Mexico" as Chism would insist I say, after I learned they were
really from the Dallas, area and
owned an advertising
agency. They originally
bonafide
U.S. citizens that
told me they were foreigners
(since our advertisement clearly said the program was not available to U.S. citizens)
but after asking
to have an information package
sent to a Texas
address they claimed to be "visiting"
I grew suspicious
concerns
I'll handle this, you keep fishing".
with
later learned
Chism. "Don't worry, that the
McGenneys became
and
shared
my I
an AFG client when Chism
handed me my first commission check for some $9,000 and change ($10,000 less taxes). through the
I didn't say anything at first but I stayed late one night to go McGeneny file, and sure enough they were
U.S. citizens
and
Chism had opened up an off-shore IBC for them in the Bahamas through his 532
cousin Juan David Morgan (of Morgan & Morgan Trust) and a long time friend (Eduardo Garay of Morymor Trust) called Karma Ltd. I was just made a passive party to a criminal act, and I was angry. care about the law nor the consequences prison, I did.
I confronted
come correspondence Mexico which department".
him the
from
Chism obviously didn't
of it. Having spent 38 months
next day, and
McGenney
Chism showed
that showed
he said was good enough His compliance dep ar tm e nt
in me
a return address in
for him and his "compliance was his son. Because
I had
already deposited the check and did not want more legal problems of my own, I remained quiet for now. But within a year I would great deal more to both the FBI Agent of
the
Miami
recommend
Better
Business
report this and a
Maury Berthon and James Stanley
Bureau. Stanley
would
be the one to
that I notify the FBI since he said he could not do much more
than register a complaint.
My next big hit came from Canada through some Colombians who had a local Miami financial Richard
advisor.
Callahan
coming
of Coral
Gables
in for their preliminary
Charming
took
expense.
The Sanchez
million
The Sanchez
us all to
at
family was and
and their financial advisor
had received
meeting.
dinner
per month with AFG
family
our
package and were
It all went very well and Turnberry
where
Prince
he spared
no
looking
to invest between $2 to $7
everyone
was excited especially me.
Plans were made for a second all-day meeting to be held at Fisher Island and Chism would invite his off-shore team of Morgan and Garay and the entire office staff less the receptionist.
It was a catered affair held on May 17,1995.
(See Exhibit R) There was no
shortage of food and drink and again all went very well.
Fulo shared some
concerns with me about the origin of funds since they were dealing with 533
Colombians who after all had a notorious reputation in Florida for money laundering.
But as soon as Fulo openly breached the subject, Chsim Sr.
cut him off, pulled him aside and reamed him out saying he was showing "bad
manners"
Whether discussed assured
and that
he himself would handle that sensitive
he did or not is anyone's again
although
me all was
guess. I never
Callahan,
kosher.
heard
a respectable
issue.
the
matter
Wharton
graduate
It appeared the deal was sealed.
However,
a month later when I heard no news I asked David for an update. the deal fell apart but would not tell me why.
He told me
I called Callahan who wasted
no time in telling me that they did some due diligence checks on both Siegel and Chism and discovered that David had his broker's license revoked a few years back for a $17,000 stock fraud.
This came as a shock to me because
David had always been the one most concerned about legal matters and compliance in the office, even joining my protest on the McGenney deal.
I
confirmed the situation with Mr. Sanchez himself who assured me he did hold the information against me or Richard.
Vince
Martinelli,
Otto
Neustadtl,
and
Basuly
recruits which came my way through Pederson
who
I had
known
since
Lieberman
were
my next
brokers of mine including Dr. Erling 1992
from
the
Earthguard project.
Chism told us they invested only $100,000 but we'd later learn it was several million dollars. Martinelli I would later learned brought in an Austrian bank and a number of other clients that I was to be paid a split-commission Martinelli.
But the
big
score
came
with
when Pederson called to say that
some Saudi bankers and businessmen were interested in investing $50 to $100 million dollars.
I thought he was exaggerating at first but when I got
a call from Tom McCormick and Zuhair wasn't.
Tom was
an American
Sindi of Dhahran
engineer
working
I realized
he
under contract
in
Saudi Arabia whose home and family is in Fort Lauderdale. Tom McCormick Introduced Saudi Group to Dr.
534
Erling Pedersen and myself. I pres ented the deal to AFG, and promptly was circumvented.
Through
his high level work
befriended
some
he
of the wealthiest
Saudis including one or two within the
Royal family,
just successful Sulieman
but most were
businessmen
Alsuhaimi
like
who claimed
he built one third of all the highways in Saudi Arabia.
Then there was
Michele Yagchi a Swiss banker and financial of
advisor
Saudis,
Mohamed Bashir
to
and
Tarek
Fadaili, and
amongst others.
a
number al-Tamini,
Farid
Zauok,
Mohamed
Attef
To make a long story short, they all saw the Arab
article and wanted to participate. Pederson
would
open
a
News
Tom McCormick, his son Mark, and Dr.
Saudi
franchise
originally
called
AI-Turki
Development Company, but later changed to SAIC Ltd. of Globus/AFG so to speak and
reap a nice slice of he profits,
as would
I for discovering
this gold mine for AFG. Tom’s plan was to use Sulieman as a demo account and once he realized his 20% returns, he would ask Suliemann to introduce AFG to the third wealthiest family in Saudi Arabia – the Bin Laden family. I would also approach Prince Bandar through my good friend in Middleburg Heights, Ohio, Tom Coury who had built a friendship with Bandar over the years. But Chism had some plans of his own.
Before we could meet with the Saudis however, Tom asked me for a private meeting
at his waterfront
home in Ft. Lauderdale
which
I attended on a
Saturday morning at his patio table over a cup of coffee. It seem that Tom 535
saw right through Eddie and didn't much like him. But he admitted to me that his wife they
were
Nucia had met Stella Siegel as some proceeding
because
of
social
events
and
the assurances that the Siegels were
well respected in social circles. He also asked for my personal word that I would
look after his son Mark and teach all that he needed to know about
Reg S so that the two them would not get "embarrassed or screwed". gladly agreed
to. But there
was a problem and
That I
I could tell that Tom was
uneasy discussing it. Finally he just spit it out. "All these Saudis are Muslims you know and David is a Jew".
This was the last thing I expected to hear
from Tom. “Is this really a problem when it comes to making money?" I asked. "Well it could be Tony and here's why ... some of these guys truly believe it is there moral obligation and religious duty to support groups like the PLO, and if David learns of this he might try to fuck over my friends. What do you think?"
I told Tom what I still believe today "David is not a very political person
and I really don't know how devout a Jew he really is."
We agreed that the
only way to resolve the matter would be to ask David up front if religious difference would pose a problem for him. As it turned out, it didn't so long as they knew how to send a bank wire.
But as I said, Eddie had some plans of his own. Plans which he didn't bother to share with us after Tom McCormick s ud d e nly fe ll ill and died with a rare brain cancer in less than 3 months.
I was at the McCormick residence after
the funeral with Tom's wife Nucia and Mark and his brother when Zuhair Sindi called to express his condolences to Mark.
Afterwards
I was passed
the phone to say "hello" and I learned that not even 48 hours after Tom died, Chism had called him to ensure that their investment plans had not changed because
of Tom's
sudden
death.
I was
now losing what little trust a n d
r e s p e c t I had left for Chism but I bit my lip - hard.
536
The following week when I went to the office, I was informed that AFG needed more office space and that Globus and I should get another office space in the building and that AFG would pay for it. The story he gave me was that he was going to hire some in-house brokers to work the phones searching out more Reg S deals and something new they were loans.
Loaning
starting
money secured by restricted shares.
up -
Rule
144
As it turned out, I
leased the office right below Chism's on the fifth floor and after I signed the lease I learned that Chism now was only willing to pay half of the $1,200 rent.
But I still continued to spend at least three hours a day upstairs and I
began noticing that the office staff was becoming secretive with me and that the filing cabinets were now locked and had to be opened by Kimberly and only after Chism approved a "request".
It didn't take long for me to figure out
that something was going on that they didn't want me to know about.
I inquired about the Saudi deal and again thing saying
only that he expected
Chism downplayed
to get a $100,000 investment from
Zuhair Sindi but not much else since Tom died. busy preparing for a
the entire
I said nothing, I was too
meeting with Alfredo Frolich and his partner who
responded to one of our ads and would be arriving in fifteen minutes. get Chism's "props" ready including
his Bible
I had to
that he'd use to swear on
that he'd personally reimburse any investor who ever lost a dime because of him.
I then received what I thought to be a reasonable letter from a prospect named Nicholas
Vertodoulos
that
raised
numerous
points
and questions about
AFG and stated that if we could sufficiently calm his fears with answers, he would invest $1 million with AFG. Vertodoulos,
I myself
began
to
But after reading
Chism's
reply
to
grow suspicious that something just wasn't
right at AFG (See exhibit S) 537
Chism told
me
not to schedule
any prospect
meetings
for May 5th
through May 10th because he and Siegel had to go to New York "to meet with some clients and iron out some problems".
I agreed and wished him a
successful trip. But as fate would have it, I was in AFG's office on May 6th when a frantic call from Stella Siegel came in and I took the call. "Oh my God, please tell me you've heard from David?" she pleaded. Sensing the pure panic I had to ask her what was wrong. "Didn't you see the news - some terrorists bombed the American compound in Dharan!" she exclaimed "Yes Stella, but what does that have to do with David". "I can't reach him, all the lines are busy!" By now I deduced that Chism and Siegel were not in New York but Dharan meeting with my Saudi prospects behind my back. I did not let on to Stella how I was betrayed, but merely asked her what number she had for David. She gave me the number and I assured her that I would find out what happened to them and call her back. Sure enough the number she gave me was continuously busy, so I decided to call some numbers I had for Zuhair, since I assumed he had to be with them. Sure enough, when I got through to Zuhair, I learned both Chism and Siegel were with him and some other Saudis having dinner.
I asked to speak with David since I would have nothing nice to say to Chism. When David came on line I merely asked "How's the weather in New York David?" to which he quietly replied, "I'll explain it all to you when we get back. This wasn't my idea."
I was sure of that and advised David to call his wife
before she had a heart attack. Furious, office and went home.
I threw the phone clear across the
Chism could no longer be trusted at all and he wasn't.
His signature o n my "Mutual Non-Circumvention
Agreement" (See exhibit
T)
and our contract was now worthless to me.
538
AFG was laundering funds for Saudi Clients who may have funded this bombing at Khobar Towers. Chism and Siegel were only a mile away from this attack the day it occurred in May of 1995.
The key investor was
personal friends with the Bin Laden family. Within
three
combination
days
after
returning
from
lock had been installed on AFG's
asked Kimberly for the combination
AFG
a
new
electronic
office entrance and when I
she told me only to "talk with Eddie".
By now Eddie knew I had stumbled upon their ruse and was pissed. Putting the lock on the door just added fuel to the fire especially when he said I could not have the combination, but that Kimberley or Adriana would buzz me in whenever
I needed.
His reasons were bullshit (new clients paranoid about
privacy and confidentiality insisted that only David and Eddie had access to the files) but what could I do? "Which new clients Eddie - my Saudis?"
We just exchanged glares before I went to speak with David and told him how badly disappointed I was in him for going along with Eddie's ploy. David assured 539
me that no matter how much the Saudis invested, he personally would make sure that I got paid every dime owed to me and that in most probability, I would never have
to work again and could retire to a comfortable life on the
commission I would make.
I decided to
McCormick of the secret Saudi trip.
notify Dr. Pederson and
Mark
Mark already knew but Pederson did not.
Apparently only Pederson and I would be cut out of the loop since these were Tom McCormick's personal friends
and
Mark was
his
heir.
Mark also
assured me that he'd keep me posted of developments even if Chism did not. I could believe Mark, a real decent guy who proved himself to be honorable with another business transaction with my associate Tom Coury who pursued an oil deal with Mark.
In a feeble effort to patch things up, Chism invited me to go to the Lipton Tennis tournament with him and Terry at Key Biscayne and I accepted.
We watched
three matches and then we had dinner at Stefanos. Eddie assured me that the Saudis insisted on secrecy and that I was still very much a part of the deal and would make millions if and when the money rolled in. investing Eddie?" I asked.
"How much are they
"$5 million the first year on a trial basis".
I could
always tell when Eddie lied to me because he would look down, away, or cover his mouth with papers or a napkin like he was doing now." said.
"Great" I
Terry looked at me with eyes that told the truth but said "Don't worry
Tony, everything will be alright - I didn't marry a dishonest man". Deep inside I wanted to set her straight and let her know just how "honest" he had been about Kimberly, but I remained quiet.
I decided I had no choice but to
stay quiet for now and let the Saudi situation play itself out.
Some strange things began happening around September/October
of 1996,
two months before I would formally resign from my affiliation with AFG.
First
Eddie asked me to hand deliver a package to Atty. Frank Rubino's office 540
located in downtown Miami. He gave me emphatic and specific instructions to give it only to Frank Rubino himself even if I had to wait all day long for him. It was a large stuffed envelope
and it was closed with only a metal clasp.
After spending ten minutes looking for a parking space I just had to see what was in the package. What could be so delivered
that
to only a lawyer - Noriega's lawyer at that.
found maybe 100 pages of stock
important
certificates,
that
a newspaper
petition clipping
seeking from
a
a
had
to
be
hand-
I looked inside and new
Panama
trial,
some
newspaper,
some sort of land contract assigning a deed of some property in Panama and $10,000 in cash.
I went upstairs to Rubino's office and was told that
he just got back from court and was in a meeting.
I explained that I came from
Ed Chism's office with orders to hand deliver it to Rubino directly. went
into his office and
soon after
Rubino appeared
The girl
at the door with a
sandwich in one hand and told me to just give it to his assistant and he'd look at it after lunch. So I moistened the flap and sealed it closed before giving it to the girl and I left.
One day in 1995 Eddie’s private phone line was ringing continuously and only Phillip and I were in the office, and he was busy on the phone with Todd Boyd from Bear Stearns trying to solve a complicated problem. Getting tired of hearing the phone ring and ring, perhaps 20 times, I walked into Eddie’s office and saw it was from the 202-456-3345 number. Breaking Eddie’s rule about touching his phone, I answered it. As soon as I said “Hello” the caller must have assumed I was Eddie because he did not ask my identity and only spoke three sentences… “Don says the Harris and Noriega accounts have to be closed and liquidated immediately. Be sure to shred any and all documents, and delete all references to either from your hard drive. We will handle the email logs from here. Do you understand?” I simply replied “Yes” and he hung up. I made a huge mistake in relaying this message to
541
Eddie who went into a rage about me answering his phone. By now I was used to his explosive temper so by the end of the day I had blown it off.
It was shortly
thereafter
proverbial shit hit the fan.
that
Terry found
out about
Kimberly
and the
I didn't know it but fully one-fourth of AFG's clients
were close friends of Terry and her mother.
Even after Kimberly was
terminated at the office Terry still threatened a divorce and stake a claim to her half of Eddie's AFG empire.
She was still polite but nowhere as nice to
the AFG office staff who she assumed
had to know what
was
going
on.
Indeed, the Chism marriage seemed doomed. That night I spotted Eddie's white
Mercedes
patronize
at a local bar on Biscayne Blvd.
It was not like him to
a public bar that didn't require a membership.
I pulled in for a
minute originally to remind him that "I told you so", but after I saw how drunk he was, I somehow still felt sad for the man. "You fucked up Eddie" I said as I approached him at the bar. "Yes I did Captain" he said "I surely did". Eddie was too drunk to carry on a coherent conversation so I left him there after he refused a ride home saying "I don't have a home anymore".
I assume
he stayed at the condo he rented at Mystic Pointe, the little waterfront out
he used for his sexual
conquests.
Somehow
the
Chisms
hide-
patched
things up, perhaps because of legal matters brewing in Panama that required a united front form them. Who knows. All I can say is that Terry was a very warm, loving, and decent woman who deserved a whole lot better than Eddie. But frankly, ma ny might say the same about my own wife who went to hell and back because of me.
I got one or two more clients for AFG but my heart was no longer in it. I felt truly betrayed by Chism and was now at his mercy to get paid what was really owed to me.
I no longer had free access to the files and would actually
have to steal Kimberly's file cabinet key to make a copy during a lunch break. 542
I felt compelled to know just how much he was cheating me. Around this time the Venezuelan clients realized Eddie had been underreporting their earnings and they decided to pull their money out. In an effort to salvage the situation, Eddie offered to make them partners in a South American AFG operation and they bought into it, opening their own office on two or three floors up in the same building.
Milton
Bello, Gustavo
Soto,
Carlos
Mijares, and
Alfredo Ojeda were the principals of the new operation.
The presidential elections were coming up and Chism was determined to get Noriega a new trial or "time served".
I was hanging out upstairs with David
Siegel who was teaching me the basics of their new 144 Loan program so that I would be knowledgeable
enough to sell it to prospects.
David usually
stayed at the office later than everyone else, but tonight he had promised to take Stella to some social event and he cut our meeting short and left. I went over to say good night to Chism who I noticed was busy counting out cash on his desktop - a lot of it. "Hey Tony, give me a hand here would you?" I asked myself if he was counting out my commission to ask.
"What's up?" I asked.
I'm running
but I knew better than
late and need to count out
twenty-five bundles of $10,000 each." What is all this?" I asked. "Let's just say my insurance "This
premium"
is insurance
he explained. "What are you talking about Eddie?"
that the good general
served". "Are you out of your mind Eddie?
gets
his new trial or time
You can't bribe a federal judge!
Look what happened to Hastings a few years ago!
Maybe a state judge
but. .. " he cut me off with the palms of his hand and said "This isn't a bribe Tony, this is a campaign contribution, and you need to know that in the eyes of dear Lady Justice, there
is a difference." Indeed there was, one was legal
and the or not, even though they would often serve the same purpose. "Who are you picking to win, place, and show?" I asked knowing that Senator Dole's chances since recent polls were giving him odds of slim to none.
"Actually, 543
I'm playing both sides of the fence so I can't lose on this horse race." indicating he already paid his premiums to the other jockeys and this $250,000 was destined for the GOP. "But why waste your money on Dole?" I asked. "I'm not giving the money to Dole, it's going to the Bush people, it's their people who still control the Justice Department". I had no idea what Bush he was referring to since Jeb Bush was running for governor and that was the only Bush candidate I knew of at the time. I didn't ask for an explanation and got none. But I did remind Chism that there was a legal limit of $100,000 on corporate campaign contributions. "Legally this is not coming from AFG Tony, that's why I need the twenty five bundles. As I helped him count out the money, I noticed that he had letters already prepared and signed by different people from throughout Latin America and some were local Miami residents as well judging from the addresses.
Whether these people were real or fictional I still don't know. For all I know, even if these people were real, it didn't mean they knew they had become political sponsors. After we counted out the money Chism stuffed the bundles into an assortment of different envelopes with the letters, sealed them with a sponge (he would die before he ever licked an envelope) and neatly put them into a Burdines shopping bag which he then attempted to hand to me. "I need you to take this to a woman up in Boca Raton named Kathryn Harris. I'll have her call you with directions on your cell."
I was not going to be a part of this
and I weaseled my way out of the task. "I can't Eddie, I have to pick up my inlaws at the airport". It was a lie, but I was just not going to let myself get involved in Eddie's political ploys. He offered me $300 and then $500 to make the short trip but I finally just had to say "No". Not many people said "no" to Ed Chism and although I could tell he was steamed, he just nodded and said "Okay, I'll just have to miss my tennis match tonight".
I went home to my wife and
daughter to have dinner with them whose company I recently had been taking
544
for granted. I thought they wanted the better life that AFG would afford us, but all they really wanted was more time with me. Hindsight is always 20/20 I guess.
Only after Chism dumped Kimberly for a "new and improved" sex toy did AFG phone bills suddenly show up in my mailbox two or three days after I got a late night call from a girl who told me that "Eddie fucked you out of more than $2 million in commissions o n the Saudi deal" and promised coming in the mail.
me proof was
I always assumed it was Kimberly who called but I have
no way of knowing. She got engaged to her fiance Billy and
I have
heard from
was
Internet
nor seen her since.
porn with
Rory
Shur's
David once
told
me
she
not
doing
Metro entertainment company that was
also in the same building, but with his wild sense of humor that could have been a joke. We once had to take a client to Solid Gold, a local strip joint for some drinks, and when one of the dancers gave David a lap dance, his only comment came when the girl had her tanned ass swaying an inch from his face, "Pleas don't fart". Like I said the ultimate stoic David definitely had his moments. Sure enough the phone
bills (See exhibit U) revealed
over a hundred calls to Saudi Arabia during the last three months alone to various numbers which I soon matched up with the business cards I had from the Saudis (See exhibit V). I went to see a lawyer. I was not going to let myself get screwed out of this kind of money especially after Chism had yet to pay
his half of a huge
advertising bill that almost caused foreclosure on our condo and put me in bankruptcy.
Arnoldo Velez was the lawyer I turned to for help.
He
told me I would need more proof and statements from witnesses but was so convinced
I had a case that he would take on the case for a 30% cut
of the settlement. Somehow
Chism got wind
that
I was
speaking
with
lawyers and that mystery would be solved when I later discovered a bug in my office the day I moved out of the Barnett Bank bldg. For new digs on 545
Brickell Avenue, 1221 Brickell.
a more
affordable
executive
suite
arrangement
at
Chism decided to sue me first, as David would later explain,
"as a pre-emptive
strike designed
to deter me from suing
him".
He
would also put one of the girls in the office (Adriana) up to saying that I was sexually harassing her simply because I visited her in the hospital after a suicide attempt/car
crash. I had no yearnings
but only felt compassion
for
for this girl whatsoever,
her after she would
call the office and tell
everyone how lonely and depressed she was and beg for a entire
family
lived
when Adriana statement
in Peru.
admitted
Those
visit since
her
accusations eventually evaporated
that Eddie had prepared and asked her to sign a
against me. But I learned that
Chism hired a former
Secret
Service agent (Bill Ackerman) who had the office next door to me, to dig up dirt on me. It was probably Bill who planted the microphone through the pop-up ceiling tiles. stop with a law suit.
On or about
Maybe Chism sensed that I would not
He was right.
the first week
in my office
I didn't.
of December
I placed
a call to the
Miami
Better Business Bureau to see 1) what information they had on AFG, and 2) to inquire about making a complaint. who I seem to recall was a supervisor.
I spoke with a Mr. James Stanley He stated that AFG was not a
BBB member and therefore they had no information on the company at all. He advised
me that I would
order to achieve anything.
have to submit any complaint in writing in
On December 11th , Iprepared this complaint but
did not mail it in right away since I had reservations if they could really do anything to help me. I knew a formal complaint would kill any chance I had of getting paid by Chism. But my gut instinct told me I had to get away from AFG and Ed Chism before I went broke or ended up in legal problems because of what he was doing. Besides, the public needed to be warned about this man somehow.
On December 15th,
1996 I handed David and Eddie each 546
copies of my letter of resignation. (See Exhibit W) After waiting two weeks for my last commission checks that were promised me, they did not arrive and my demand for payment by registered mail was "Returned To Sender - Unclaimed".
After I resigned, I mailed in my complaint to the Better Business Bureau but only received a form letter thanking me for the notification and that they had no files on AFG. called the Better Business Bureau in Miami and tried to explain my situation but I was advised that a written complaint was needed.
I called
Mr. Stanley back in follow-up but he merely told me that since AFG was not a member of the BBB, all they could do was register a complaint. He further suggested that I might consider contact the FBI, FTC, or SEC which had more authority to investigate matters like mine.
Before doing so I got a call from Chism who told me he had my check and to come pick it up. Did he get correspondence from the
BBB because of my
complaint or was he worried about Arnoldo's law suit? I still don't know. But sure enough he had a check for me, but it was for $200,000, less than one-tenth of what
he owed
me. And
in small printing on the back of the check was a
statement that said "Endorsement and/or negotiation of this financial instrument constitutes full and final settlement of any and all outstanding commissions, debts, or other moneys due and outstanding". I immediately took out my pen and drew a big "X" right through the disclaimer at which point Eddie exploded, grabbed the check back out of my hand and snarled "Fine, you'll never see another penny from me!" About a month later, after much deliberation, I decided I might at least be able to collect my money in the form of a reward or govt. seizure since Arnoldo's law suit was getting bogged down.
I called the FBI and within a day or two,
special Agent Maury Berthon introduced credentials
himself to me discreetly with his
at my office. We sat down for a chat that lasted almost 3 hours.
Over the next two weeks I gave Berthon a box of what he would call “acti onable 547
evidence” in his report and in his updates to me. In that box of documents were 6 months of AFG phone bills showing many calls and faxes to federal officials, offshore-banks, and high profile clients in Silver Springs, Bethesda, Falls Church, Washington D.C. Georgetown, Falls Church, McClean, London, Manhattan, and even one number at the White House 202-456-3345 which was a relay number to send messages to a fellow named Donald Gregg. There were also a few incoming collect calls from the Metropolitan Correctional Center in Miami from General Manuel Noriega’s segregation unit. I also provided a complete client list and sample files to show the manner in which moneys were laundered and moved. There was absolutely no doubt in Berthon’s mind at the time that AFG would be going down in flames soon, and he assured me I would get the reward moneys for reporting them. The next time I would talk with Berthon, about 2 months later, he was in New Orleans and told me he was transferred and someone at the DoJ was “reviewing” the AFG case in Washington – i.e. someone in Washington was going to prolong a “review” and then sweep it under the carpet once they traced the telephone numbers. Donald Gregg by the way is a former CIA station chief from Vietnam and according to General Russell Bowen USA, was George H. Bush’s right hand man and according to Ed Chism was Bush’s unofficial “business manager” . Eddie also had several U.S. federal judges as clients as well Finta and I assume Nelson since Steve was always his proxy as confirmed by the $16 million cash drop-off I witnessed. How much of this information was purged from FBI files would be interesting to know.
I also informed Berthon how Chism had such an insatiable greed that he would even skim from his own clients since he knew most of them would never alert any law enforcement agency, nor make a court claim lest they draw attention to themselves for tax evasion. If Chism was cheating his own help, I could only imagine what he was doing to the investors.
Were the Venezuelans, the only ones who caught him in 548
the act?
If he wa s ski mmi ng
be able to file any complaints.
his American investors as well, they would not To do so would only invite legal prosecution
upon themselves for tax evasion since Reg S was off-limits to Americans.
At best their only recourse would
be to close their account with AFG and
hope Chism would pay them all that was due to them. But as Chism once said himself, "When they're earning over a 20% a year with us, would they really make a stink if they only made 22% this quarter instead of 25%?" He had a point. By skimming one or two points off of even half of AFG accounts one out of every three or four quarters,
he could easily steal a few million
dollars a year.
I recall that one woman called to report the "mistake" on
her statement.
I was transferred the call only because Eddie had been tied
up on a conference
call, Fulo was out, and she demanded
to speak with
someone. Since I was the only one left who spoke Spanish. I got the call. I twice got to speak directly with
Noriega by default as well.
information and gave it to Eddie when he was free. I recall
I took all her how outraged he
became that some client had "the audacity" to question his accounting.
He 549
reached for the phone, and with all his usual grace and charm called the woman back and flatly told her there was no mistake, earnings were down last quarter, and if she was unhappy she could take her account elsewhere and earn 9% - 15% a year in a terse conversation that lasted less than two minutes. If nothing else, Ed Chism had balls.
"The difference between greed and ambition is only a matter of perception" - John D. Rockefeller
550
551
552
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One of hundreds of Canadian AFG Victims – Louis Sapi He lost $400,000 to AFG because of DOJ inaction © Copyright 1995-2014 By Bruce A. Gorc yca – All Rights Reserved
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