Fraudulent Transfers Read online

  “Hmm, yes it does,” I said. “Good luck with that. However, keep us out of it, will you?”

  “I’ll try, but don’t throw away your Jonathan Swisher and Sarah Hollister passports. I may be calling on you for further clandestine operations, now that you’ve demonstrated aptitude for this line of work. Listen, I need to run to catch a BART train to the airport. I’ll call you when I’ve made it to Dallas. I expect by then we’ll have further news about what has happened to Tomas Padilla, Roland Kwan, Peter Bordeaux and Seymour Wheeler, and possibly some of the other people involved with Bounce. Oh, and enjoy your stay in Belize. It’s eight degrees and snowing in Denver right now and forty-five degrees, raining and windy here in San Francisco.”

  Chapter 32

  Veronica and I finished the chardonnay as darkness descended on Ambergris Caye. At that point, it occurred to both of us that we hadn’t had anything to eat since breakfast at the Riviera Grand Cayman some ten hours earlier. So, even though there was no one in sight, we locked the door to our cabana and walked (weaved might be a better term) into San Pedro looking for a place to have dinner. We soon found what seemed to be a sports bar of sorts, with a single black and white TV showing old World Cup soccer games from a video cassette player. More importantly, however, this place sold pizza. We ordered a large pepperoni and pineapple, and a half liter carafe of the house white wine, of unknown origin but definitely not Cakebread.

  After dinner, such as it was, we returned to our cabana, locked the door, saw to Veronica’s request for another Sea Scent Body Lotion-enhanced back and front rub, and quickly fell asleep to the sound of small waves gently lapping on the beach and the cry of seagulls looking for a bedtime snack.

  Thursday morning, now accepting of the idea that we were actually on vacation, we agreed that we would power off all mobile devices for a few hours and enjoy our time together on Ambergris Caye. We began the day with a leisurely breakfast at the Seahorse Lodge dining room and then walked into San Pedro in search of swim suits. I found a dark blue one, made in Cambodia, that provided dignified coverage of aging male body parts from navel to mid thigh. Veronica initially tried on an all white bona fide Southern California-style bikini that I thought looked great. She, however, rejected this with a restatement of her previously expressed conclusion that “those days are over.” She settled instead on a more conservative two piece affair, in black, that still looked great.

  Our next stop was a bookstore where I picked out a Dick Francis mystery I hadn’t read and Veronica bought a new John Grisham novel.

  Our final stop in San Pedro, before heading back to our cabana to put on our new swim suits, was a dive shop where we rented snorkeling gear and received instructions on a good place for snorkeling that would be near the Seahorse Lodge.

  The snorkeling was fun for the first twenty minutes or so, with brilliantly colored tropical fish swimming all around us. Then, however, a school of barracuda arrived on the scene and seemed to take a particular interest in Veronica. She decided they must have been sent there by Seymour Wheeler and motioned to me it was time to retreat to the beach.

  The rest of our time on Ambergris Caye was spent reading, napping, kayaking, riding bicycles, more snorkeling, drinking wine at sunset on our little patio and avoiding any risk of dry skin through further applications of Sea Scent Body Lotion. The housekeeping staff graciously restocked our supply of this product each morning, without inquiry as to why it was being consumed at such a rapid rate. We also found a nice restaurant at one of the upscale hotels on the north side of San Pedro, and had dinner there Thursday and Friday night. I was now using a McConnell Jones and Knight credit card but with the expectation that our food and beverage charges could be included in my bill to Front Street Bank.

  Saturday morning, knowing it was time to return to reality, we packed our bags, checked out of the Seahorse Lodge (Ed had prepaid for our stay) and arranged for a ride to the San Pedro airport. This time, the courtesy vehicle was an old Chevrolet Suburban that had managed to survive salt air and a blazing sun near the Equator for twenty-plus years. Our driver, Billie, was a spry looking brown-skinned man in his seventies who told us he had lived his entire life on Ambergris Caye and had no desire to go anywhere else.

  Our short fifteen minute flight from San Pedro to Belize City on Maya Island airlines was uneventful, although the shakes and rattles of the small propeller-driven plane reminded us of our first few minutes onboard Gus’s floatplane. The flight from Belize City to Mexico City on TACA airlines was modestly more comfortable. The plane this time was a small regional jet with four across seating and limited overhead bin space. With the help of a flight attendant, and only minor irritation to other passengers, we were able to squeeze our roller bags into the overhead bins.

  The American Airlines flight from Mexico City to Houston was on a six across Airbus A320 and thankfully the person in front of me did not recline his seat, even a little bit, allowing me to actually move my knees. This flight left Mexico City, and arrived in Houston, thirty minutes late but still in time for us to meet our connecting flights.

  Veronica and I said our goodbyes with a long hug and a kiss at the point in the terminal where we needed to go our separate ways. We wished each other a Happy New Year (today was New Year’s Eve) and agreed we would talk on the phone tomorrow after Veronica was back at her San Francisco hotel and I was back home in Colorado Springs with Fletcher. As I watched Veronica walk away, I found myself wiping tears from my eyes. I realized again that she had become the joy of my life and I was irrationally afraid of losing her.

  Veronica’s flight to San Francisco from Houston left on time and arrived on time. Not so with my flight to Denver. Although we boarded the plane on schedule, we then sat at the gate for more than an hour because a blizzard had come roaring down out of the mountains and was pounding DIA. By the time we arrived at DIA, I had missed my connecting flight to Colorado Springs and no further flights were scheduled until the next morning. Having encountered this inconvenience several times before, I knew the best play was a one way car rental from DIA to Colorado Springs. Although the price was exorbitant, it was less than staying overnight at a hotel near the airport and flying home the following day. Due to the storm, however, and the fact that it was New Year’s Eve, rental cars were in short supply. After being shut out at several rental car counters, either because they were closed or they were out of cars, I finally found a friendly and helpful woman at Thrifty who told me she had a single car remaining, a minivan, and she would let me have it for a one way trip to Colorado Springs. Deciding it was unlikely at this time of night, and especially on New Year’s Eve, that anyone I knew would see me driving a minivan, I accepted the offer. The minivan was rear wheel drive and had all season tires, not winter tires, meaning it was useless in snow. Fortunately, however, the storm had now passed and the main roads had been mostly plowed and sanded, so the drive to Colorado Springs along E-470 and I-25 was not as life threatening as I had experienced on other occasions. Only the spray from other vehicles freezing on the windshield made the drive problematic. As frequently happens, this storm, coming out of the mountains west of Denver, stayed north of Colorado Springs due to a 7,000 foot east/west ridge of land known as the Palmer Divide. I-25 was therefore dry for the final twenty miles of my trip, from Monument Hill to Colorado Springs.

  By the time I made it home, it was almost midnight. I parked the minivan in the second bay of my garage, to be sure none of my neighbors would see it, grabbed my roller bag and headed for the front door. Cooper had turned the porch light on as a welcome home beacon. (Either that or I had forgotten to shut it off when I left.) As soon as I was in the house, I bumped the thermostat up from 50 to 70, and turned on the gas fireplace. The outside temperature, I noted, was twelve degrees. My threat to Cooper not to pay him for house sitting duties if he deleted my beer inventory had been effective. I therefore pulled a Coors Light out of the refrigerator and drank it quickly. Everything was in good shape at my house, althoug
h it was strangely quiet without Fletcher padding around. Cooper left me a note telling me there were no serious issues while I was gone other than the violent death of a guppy in my aquarium, the victim of an unprovoked attack by the angel fish.

  Sunday morning, New Year’s Day, I put my mountain bike in the back of the minivan and returned the minivan to Thrifty at its downtown location. No one was on duty, so I parked and locked the minivan and deposited the keys in the front door mail slot. The roads were dry and the traffic light for my ten mile bike ride back home, the last three miles of which is all uphill. My body let me know I was now back at 6,200 feet and no longer at sea level.

  My next stop was to pick up Fletcher. As usual, he was modestly glad to see me and gave me a four-on-a-scale-of-ten tail wag. But his disappointment at having to end his sleepover with Buttercup was obvious. She, too, seemed disappointed, and she gave Fletcher a gentle goodbye lick on the tip of his nose as we were leaving. Fletcher was given a report of good behavior for this visit. He and the family cat had resolved their differences and, unlike his last visit, no damage had been done to furniture. I opened the tailgate of my SUV for Fletcher to jump in, but he couldn’t do it. He just looked at me and whimpered. I had to pick him up and put him in the back of the truck.

  I called Veronica when we were back at my house. She reported it was a beautiful New Year’s Day in San Francisco, with the sun shining brightly, no wind, the temperature hovering around sixty degrees, and the Bay a bright blue. The 49ers were at home against the Atlanta Falcons, both teams contending for the NFL playoffs, and the partying had started early, or was perhaps continuing from last night. Veronica told me she would be back at her temporary office at the San Francisco Federal Reserve Bank in the morning, arranging for visits to several East Bay banks whose computer systems had been identified as being weak on security. She said she thought she would be able to return to Denver in ten days but she wouldn’t know for sure until she firmed up her schedule for the next week.

  “Jack,” she said, at the end of our call. “I really miss you. San Francisco is such a fun and lovely place, I wish you could share it with me. Happy New Year.”

  I then decided to put in a New Year’s call to RJ. He was doing OK, he told me. He had won his subdivision’s shuffleboard championship and was heading up a team to take on a neighboring subdivision’s team. He had also found a lake ten miles to the north and west of Tucson where he could fly fish for carp.

  “McConnell, those fish deserve a better reputation. They’re hard to catch on flies but once you hook up with one, you’re in for a fight.”

  I thought about going into the office Sunday afternoon to see what might have crept onto my desk in my absence but decided this could wait until tomorrow. I also thought about a trip to the Y for a workout but decided my bicycle ride back from the Thrifty car rental facility had been enough for today. I therefore spent the afternoon sitting by the fire and finishing my Dick Francis mystery. I then took Fletcher for a walk around the neighborhood, giving him an opportunity to reclaim territory lost during his stay with Buttercup. The four fire hydrants along our route that were of greatest strategic significance received special attention. Fletcher’s rear leg stumbling I had noticed before I left on my trip seemed worse during the last half of our walk.

  Chapter 33

  I made it to my office Monday morning by shortly after 9:00, two hours later than usual. As expected, there were several stacks of paper on my desk that hadn’t been there when I left. There was also on my desk, however, a large bouquet of flowers, together with a note that read: “Jack, thanks for your great work on the Williston and Turnbull case. I never doubted for a minute—well maybe for a minute—that this story would have anything other than a happy ending. Regards. Josephine.” It occurred to me that no one had ever sent me flowers before. And, since a thank you from opposing counsel is even more rare in this business than a thank you from a client, this was a special moment.

  I additionally had a voice mail message from Mike Lawrence thanking me for saving Front Street Bank from a lawsuit, and possibly worse. He told me that, not only would the bank pay my bill, including food and beverage charges, in a timely manner and without the usual forty-five day delay, he would also buy me lunch, at a time and at a place (within reason) of my choosing.

  As for the papers on my desk, Stephanie had put at the center of the desk, right in front of the flowers from Josephine and with a large yellow sticky note containing only an exclamation point, Judge Cloverton’s order in the Piranha Partners/Marchant case. In her order, the judge granted my motion for a preliminary injunction, instructing Piranha Partners that it could not take any further action to try to collect a debt from Olivia Marchant or her company, Mountain View Property Management, LLC, until the case had reached finality and the Court had ruled that a debt was in fact owing. Judge Cloverton then went on to state:

  “I have had no trouble in this case concluding that the defendants will, in the end, be the prevailing parties, both as a matter of defense and with regard to their counterclaims. The evidence presented by Piranha Partners in support of its claim that Mr. and Mrs. Marchant, in December of 2007, had engaged in a transaction intended to hide assets from creditors was wholly lacking in substance or persuasion. The fact that articles appeared in the Wall Street Journal predicting (correctly it turns out) a high rate of default on subprime mortgages prior to the time the Marchants exchanged ownership interests in their two business entities hardly serves to establish a fraudulent transfer. The Court has never seen a copy of the Wall Street Journal that didn’t contain an article predicting the collapse of the banking system or the real estate market or the price of soybean futures or something. The Court will not take judicial notice of the proposition urged on it by Piranha Partners that, by December of 2007, the sky was already falling and the Marchants would have known it. On the other hand, the Court found the testimony of the defendants’ expert witness, Mr. Lang, to the effect that the market for residential lots in Colorado Springs stayed strong well into 2008, to be very persuasive.

  “Furthermore, the Court wishes to add it was shocked by the evidence presented to it concerning the tactics employed by Piranha Partners in an effort to collect a debt from Olivia Marchant, a debt that, in all probability, she did not owe. The Court is putting Piranha Partners on notice that, based on the evidence it received at the preliminary injunction hearing, if this case proceeds to final judgment, it is highly likely the Court will enter judgment against the plaintiff on its fraudulent transfer claim and in favor of the defendants on their counterclaims for outrageous conduct and abuse of process. In addition, this case is one where punitive damages could be in order, as well as an award of attorneys fees against the plaintiff for having brought a frivolous lawsuit. If, with these thoughts in mind, the plaintiff still wishes to proceed with this case, it should, within the next twenty days, file a proposed case management order and set the case for trial.”

  I immediately sent a copy of Judge Cloverton’s order to Marvin Lang as an attachment to an email thanking him for his help with the case. I also sent a copy to Olivia Marchant and, twenty minutes later, followed up with a phone call. She was crying when she took my call, but this time these were happy tears. I told Olivia I thought the best thing for her to do at this point was to try to reach a settlement with Piranha Partners, and get this lawsuit out of her life. She gave me the authority I requested to negotiate with Piranha’s lawyer, Thomas Stringer.

  Monday afternoon, following a move-weights-around workout at the Y, I called Stringer and, surprisingly, he took my call.

  “Hi Tom. Jack McConnell here. I was calling to….”

  “I know why you’re calling, McConnell. To gloat. That bitch should be removed from the bench. This was a case where there were obviously adequate remedies at law for both sides and she never should have entertained a motion for preliminary injunction. And then, for her to go on and, in effect, finally decide the case based only on skimpy evidence
d presented at a preliminary injunction hearing, before there had even been any discovery, is outrageous. I’ve never seen anything like it, except maybe in Federal court where the judges think God sits, lower down, at their right hand.”

  “Well I understand what you’re saying, Tom, but the order is what it is and you’re stuck with Judge Cloverton, so I’m calling to see if we can get this case settled and behind us, for the benefit of all concerned.”

  “I talked to my clients, who are mad as hell and would like to take this case right up to the Colorado Supreme Court on a special writ. But, with some arm twisting, I got them to agree to a walk away. In other words, we agree to dismiss the plaintiff’s claim and the defendants’ counterclaims, with prejudice, and no money changes hands.”

  “That’s not going to work. But Mrs. Marchant has agreed we can settle the case for a payment to her of $100,000 and a joint dismissal of claims.”

  “McConnell, that’s fucking outrageous. My clients have already taken a multi-million dollar hit on their defaulted loan, and a good part of that money has ended up in Olivia Marchant’s pocket in the form of equity in Mountain View Property Management. There’s no way my clients will go along with that.”

  “They need to keep in mind that, if we take this case to trial, we’re going to be asking for $200,000 in compensatory damages and another $200,000 in punitive damages. And the defendants’ claim for attorneys fees will add another $60,000 or so to the claim. Buying out of this situation for a mere $100,000 is a bargain.”