The 9th hole is a beautiful Par 5, dogleg to the right. There were four fairway bunkers on the left about 240-260 yards out. A small creek ran along the entire right side of the fairway until it turns left in front of the green, creating a small lake that protects the green on three sides. A waste area directly behind the green leaves only a small target for someone trying to reach the green in two.
It was definitely a three shot hole for Bradford. He hit 3-wood off the tee, stopping 15 yards short of the first bunker. Good position. A little short, but still alive.
Buzz could reach the green with two big shots and he decided to go with driver. It was a good choice as his drive split the fairway and rolled past the third bunker, leaving him 230 yards to carry the water and 250 yards to the pin.
Bradford was away, with almost 300 yards to the pin. He hit 5-wood trying to get into the 100-110 yard range. Mission accomplished.
Buzz took his time. He had caught a bad lie. His ball had rolled into the front of a sand filled divot, making it difficult to make clean contact with a fairway wood. It would be easy to hit the ball fat, and with water in front of the green, going for the green would be a risky play. Buzz had a tough decision. Surprisingly, he accepted the bad break and decided to lay up with a 6-iron. His cursing just added a little flavoring.
As the players walked toward the 9th green Bradford thought back to his first international financing deal, which was the start of his current problems. Things seemed so simple then.
Dave’s mortgage business grew rapidly. His success with Oyster Bay and the Lake Buena Vista Holiday Inn was quickly followed by six other deals ranging from a $2M refinance of a Best Western Hotel in Georgia to the purchase of a $22M office building in Memphis, TN. He closed $75 Million dollars of business the first year.
In March Bradford received a call from another broker about an opportunity in Cozumel, Mexico. His client wanted to purchase a golf course and develop the surrounding property with condominiums and timeshares. The total project was approximately $45M.
Dave’s first instinct was to say no; international financing was not his focus and he had more than enough domestic business to keep busy. Instead, Dave heard himself asking the broker to email him an executive summary. He had never been to Cozumel.
Bradford started to look for lenders that did financing south of the border. The news was not good. Most lenders still remembered Mexico’s peso devaluation in the 80’s and the money they lost. Today’s business climate in Mexico and Central America looked better, but Western bankers and elephants have a lot in common. It wasn’t just big teeth.
The four lenders Bradford used for his domestic deals don’t do business in Mexico. The Royal Bank of Canada and Credit Suisse claim to be players, but really only work with select customers. The deal had to be squeaky clean. Banco Popular and other large Mexican banks make few loans of this size. They simply don’t have the money.
He had better luck with the niche lenders. Several companies that specialize in golf course financing did business in Mexico. Two other groups specialized in timeshare developments and had closed deals in Mexico and the Caribbean. Mary helped with the research and was getting pretty good at surfing the web. Her help was invaluable. So far we had avoided the problems some couples experience when working together.
The Executive Summary was excellent and painted a clear picture of the dilemma. It would have been an easy deal in the U.S. The borrower, Don Majors, had $5M in cash equity plus 2,000 hectares of land that had been donated by his Mexican partner. The land was valued $10M, as-is.
Timeshare sales were fueled by offering discounted green fees to cruise ships. “Take a 45 minute tour and play our championship golf course at half price – Buy a condo or timeshare unit and play for free the rest of your life.” It was a catchy marketing plan; particularly when you saw the number of cruise ships that visited Cozumel each year.
Fifteen million dollars equity for a $45M loan is pretty good assuming they make the loan payment. The existing golf course was profitable, but did not have sufficient cash flow to support a $30M loan. Interest payments would be at least $200,000 per month. They needed $7M additional equity to make it work. The deal appeared to be at a dead end until fate stepped in and delivered an angel.
Mary and Dave became close friends with Fred and Judy Shelton as well as Buzz and Jill. The six friends were having dinner at Bern’s Steakhouse in South Tampa when the conversation turned to scuba diving. All three men, and Jill, were PADI certified. Mary and Judy were quite happy to float on top of the water with a snorkel.
Buzz had dived everywhere and he regaled us with stories about shipwrecks, sharks, moray eels, giant sea turtles all the other beautiful creatures you see at depths of 40-120 feet. We agreed that some of the best coral formations were here in Florida and the Caribbean.
Dave mentioned he was thinking of going down to Cozumel on “business” and that generated four offers to help. Both Buzz and Fred thought Cozumel offered some of the best diving in the world if you got away from the commercial cruise ship destinations where novices had destroyed most of the coral.
“What are you doing in Cozumel?” Fred asked.
“Mary did most of the preliminary work. You tell them Mary.”
“Dave’s being too kind, but, okay, here goes nothing. This group is trying to buy a golf course and build about 400 condos and timeshare units on some adjacent farmland. They are only 10 miles from the cruise ships so they plan to offer golf discounts to tourists willing to take their 1-hour sales tour. Is that about it, Dave?”
“That’s perfect, except to say that the deal looks pretty dead right now. I don’t think we can help them unless they come up with more money. It’s a shame because the project will work. The cruise ship business will be enough to make them profitable, plus they will make money from the timeshares and condos. Anybody have an extra $7M?”
Everyone spoke at once. Fred offered to sell Judy’s earrings. Jill offered to sell one of Fred’s restaurants.
Buzz got the floor; “Jill and I took a cruise to Cozumel last year and took the golf excursion. We paid $125 per person plus $25 to rent clubs. The golf course was okay - nothing special. The equipment was crappy. There definitely is an opportunity for someone offering a quality package.”
“Yeah, he hit three drives out of bounds on the back nine, and blamed the driver,” piped in Jill.
Dave came to Buzz’ defense after the laughter and ribbing died down. “It’s interesting you mentioned that Jill; the business plan addressed exactly that point. Golfers would have the choice of top equipment including Callaway and Wilson. I guess they knew what they were talking about.”
“Why don’t we all go there,” Mary asked? “We can do a little diving and snorkeling and meet with the owners. Maybe Dave can get him to pop for a few free rounds? Anybody interested in a three or four-day weekend in Cozumel? Mary suggested going a week from Wednesday and returning Sunday.” Nobody questioned her new math.
Saturday night everyone wanted to go, but as it turned out, Jill couldn’t get off work and Buzz decided he couldn’t make it either. He sounded disappointed. Did he decide that he couldn’t go, or did Jill?
Fred called me Monday to confirm. “We’re looking forward to it, Dave. We love Cozumel. We’ll be able to show you around. By the way, I hope you don’t mind, but I mentioned your deal to Mario. Mario knows someone that might be interested in providing some equity. He asked that you call him this afternoon.”
“Thanks Fred, I don’t mind. It sounds like you just earned your tax deduction for the trip. I’ll let you know how the conversation goes with Mario.”
“Mario, Dave Bradford. How are you today? Fred mentioned he talked with you about the Cozumel deal.”
“That’s right. Fred said it was an interesting project, but they were short about $7M. If an investor came up with $7M, what would it buy them?”
“That’s up to the investor and the developer to negotiate, Mario. I would guess that $7M eq
uity would get him 8%-10% interest on the money, plus 30% to 40% ownership or a preferred percentage of profits. But that’s up to them, Mario. The loan would need to be subordinated to the mortgage debt. Do you know what your friend has in mind?”
“I’ll get back to you tomorrow if he is interested. Nice talking with you again, Dave.”
Mario got back to Bradford the next day. His friend was interested. Dave arranged a conference call with Don Majors and Mario’s investor the following day. Things progressed smoothly and their partnership agreement was finalized and the financing secured before we left for Cozumel. It would take another 60 days to close, but everything was in place.
Bradford’s share would be 1% of the loan amount and 3% of the equity raised. He paid the other broker a $100,000 finder’s fee. Mario was also entitled to a commission but preferred to have Bradford in his debt rather than accept a referral fee. In retrospect, Bradford should have paid him the fee.
Cozumel was more beautiful than Dave expected. The first day Mary and Ginny fended for themselves while Fred and Dave met with the client, Don Majors, and reviewed the property. Dave had been asked by the lender to do a site inspection to verify that everything was as shown in the loan application. It was. They didn’t golf, but took a tour of the golf course while Don pointed out the proposed locations of the condominiums. By early afternoon Dave had created a preliminary draw schedule. The loan totaled $27M but would be dispersed over 18 months as certain criteria were met.
The next two days Don and his wife insisted on being their personal tour guides. It didn’t hurt that they had a 40-foot boat and loved to snorkel. They knew the locations where the tourists didn’t go. Don was also a diver with spare SCUBA equipment. The men did a couple wreck dives, but the snorkeling was so fantastic, they spent most of the time with the women floating lazily on the surface.
Mary and Don’s wife were the same age and got along like old friends. Dave was glad to see Mary so happy. By Sunday they were ready to go home, but promised they would be back. “Fred, how about you; did you and Ginny have a good time?”
“We did, but four days is just about right. I’ll be happy to get back. If Mario asks, I’ll tell him it looks like his friend made a good investment. The project looks good and Don looks like a solid guy. Do you agree?”
“I do, Fred. It’s the kind of deal I wish I had the money to invest in.”
“Be patient, Dave. Your opportunity will come.”
”I tell you Romano, Juan and Diego are gone. We found pieces of the boat floating about 20 miles south of Key West, and some clothing, but no bodies. It looked like an explosion. Juan never made it home and we have heard nothing from Diego since that night. We have divers trying to find the boat, but they don’t have much hope. The water is 150 feet deep and the current is strong.” Carlos finished his report and waited.
Romano looked at Mario and then back at Carlos. It was just the three of them. Sam and Ron had told what they knew, answered a few questions, and had been excused. He was not pleased.
“Let me summarize; we are out $32M, we think that we have a rat that tipped off the Narcs, but have no idea who. Coincidentally, we lost a boat, and both Juan and Diego have disappeared. Anything else?”
Mario stood and walked back to the buffet table. “Two things, Romano. First, there is a discrepancy that has been bothering me. My sources inside the District Attorney’s Office are telling me the drug bust was $24M, not $32M. They swear that they recovered only six bags of heroin. We all heard Sam and Ron say they dropped eight bags. What happened to the other two?”
Romano was not pleased. “Carlos, what do we know about Diego?”
“Diego is as tough as they come, Romano. He has been with us over ten years. I don’t see him doing something like this on his own and I don’t see him working with the DEA. It’s possible he was bribed. We are looking in to it, but I‘ll say this, Diego is not someone you want as an enemy.”
“How do you figure it, Carlos?” Mario asked. “Is there any way Sam and Ron could be involved? I don’t see how. The DEA claims to have made the pickup somewhere around 2:00 AM. Sam didn’t get the pickup coordinates from your dispatcher until 6:00 AM after they left the dock.”
Carlos thought a moment before answering. “That’s the second thing I wanted to talk about. Someone tipped off the DEA. My guess is that your boys are clean. They don’t have the balls to steal the junk and then bluff it out. They are the type that would grab and run as fast and far as they could. Keep an eye on them, but I doubt if they are involved.”
“The dispatcher appears to be clean. I gave him the coordinates in code around 10:00 PM. He called the coded message to Diego about midnight and later called Sam around 6:00 AM. The dispatcher doesn’t know the code and isn’t smart enough to figure it out. I guess it’s possible the DEA intercepted the phone call, and broke the code. Obviously, we will need to change our procedures.”
“Juan probably exploded with the boat and either went down to the bottom or was eaten by sharks. It’s possible he was turned by the DEA, but I don’t see how he could have helped them. He didn’t know the drop coordinates. Besides, Juan would never leave his family. I doubt if we will ever see him again. It’s too bad. I liked Juan. What bothers me is that I can’t see the DEA blowing up the boat. Why would they do that?”
“Diego is another matter. Somebody on our end tipped off the DEA and it appears that someone also skimmed part of the shipment. If it was Diego, why not steal the entire shipment? The two missing bags have me stymied. There must be a third party, but I don’t know who it could be.”
“Okay, Carlos, thanks for coming on such short notice,” said Romano. “Have a nice trip back tomorrow. Let me know immediately if you find out anything more. In the meantime, let’s come up with a new plan to ship the goods.”
After Carlos left, Romano poured himself a drink and offered one to Mario. “No thanks, I’ll stick with water for now. Let’s talk about our bigger problem. Do you still want to go ahead with the casino project?”
“Yes I do, Mario. It’s even more important now. Will this set us back?”
“No question it changes our plans. We needed the $30M as equity for the construction loan. Now we need to borrow the entire $150M. Our bank won’t do it. The auditors would find it and raise too many flags. We don’t want that kind of attention.”
“I have another idea, Romano. Do you remember the golf course deal in Cozumel where we invested the $7M through that business associate of yours?”
“Sure, that has turned out great for us and is exactly the type of cash flow business that we need to develop. What’s that got to do with the casino?”
“Well, the guy that set up the deal for us is a friend of mine. His name is Dave Bradford. Dave’s a go-getter, with a strong financial background, and has been closing a lot of mortgage deals lately. He has a good reputation and might be just the guy we need right now.”
“What’s your idea, Mario?”
“Let’s set Bradford up as the financial front man for our projects and use his company as a shell to hide our investments. He can find us the money for all our projects, not just Mexico. Down the road, we might even hire his firm to oversee the accounting and financial controls systems we will need. He doesn’t need to know about our end of the business.”
“Okay, Mario, let’s do it. I like the idea of allowing someone else to take the heat if something goes wrong. Be careful. Take it one step at a time.”
Two days later there was a meeting in Zurich, Switzerland relating to the same subject. Five men were seated around an ornate conference table on the 3rd floor of a leading investment house. The American at the head of the table was finishing his report.
“Everything went as we planned; Mario’s bank financing fell through. They will come to us and, of course, we will help them out, in exchange for a small piece of the project. Eventually we will get majority control.”
Bradford’s’ ball was sitting up perfectly, 122
yards to a middle pin. Buzz was even with the red 100-yard marker. Dave hit pitching wedge a little fat and came up 20 feet short. Not too bad, but not great. Buzz’ sand wedge landed 10 feet behind the hole, and spun back to within a foot for a kick-in birdie. Dave knew he had to make his putt to halve the hole.
“Great shot, Buzz.”
No response.
Dave’s birdie putt was just slightly up hill and a little right to left. He hit the putt firm, too firm. It was dead center a foot from the hole, but caught the grain and veered right. It caught the right edge of the cup and did a 360. The ball hung on the lip in the front of the cup and refused to drop.
Buzz tapped in for his birdie and was two up at the turn.
Chapter 10
Par 4 – 410 yards
Mario’s Yacht – Fishing for Marlin