Now, at long last, I can tell all.

This is the post you have all been waiting for.

(You who are still here waiting, that is.)

In this post I will tell, sparing no details, how I went from the guy I was, to the guy I am. I will break some personal rules; for the first and last time, I hope. I will talk about money. I will talk about things that are, frankly, difficult and bitter and emphatically Not Happy. I will talk about (peripherally) issues relating to having a kid with special needs.

But, if you've stuck around this long, you have a right to know.

This WILL be a tsunami of text, so get a soothing beverage.


Around August of '08, there were distant rumblings of trouble. I'd heard them before and was always in a position to ride out the troubles. So I hear the rumblings, make the same defensive maneuvers as before and wait.

Up until Jan. '09, all was more or less fine. At least all seemed that way.

I get a call from we'll-call-him-Leo. Leo had been a friend of my dad for epochs. They had served on the boards of various philantropies together. Leo was in the real estate business. Leo had, for a very long time, made certain real estate "derivative" investments available to my Dad, who had been getting a very comfortable 18% annual return. Very early on, Dad introduced me to Leo and after looking things over took the plunge.

At first -- we're talking 1993-4 -- all was a grand, sweet song. There was nothing in Leo to raise an eyebrow. I started pouring most of my income into his derivatives AND suggesting to some of my clients they do likewise. (No commission or anything, just providing what I believed to be a good suggestion.)

My thinking for doing this was pretty clear; we have a boy with Autism and I have no idea what His Future will require when we're not around. He may be fine and fully self-sufficient, or he may not. So, something that affords me 18% annualized return is hailed.

Eventually Leo tells me there are even bigger opportunities, if I'd like to start some joint ventires with him. At this point it has been 10 years, and I decide to take a chance. We start off with a small real estate project, and within 9 months doubled my investment.


So we take on more ambitious projects. #2 is a large parcel adjacent a high-traffic thoroughfare, #3 is an even larger parcel in an area where the first "clean coal" electric power plant in Florida will be built and #4 is a major apartment complex in an area where all other apartments have gone condominium.

Very cool.

We buy #2 for $2.5M in early 2005. We buy #3 for $6M in early 2006 and #4 for $9.5M in late 2006. By 2007, with the general economy slowing, I push Leo to sell #2. We meet with a series of real estate agents and Leo selects one. I'm not crazy about him but, hey, Leo knows what he's doing, he's the pro at real estate, he's the Something Something Magazine Man of the Year, etc.

Weeks pass and no news from the agent. So I pester Leo to ask. Cutting to the chase, a year goes by and nothing. No suggestion to lower the price (it had been listed for $7M), no suggestions on ways to market it, no anything.

We then discover there are some significant problems with #3. Starting with the
swamp wetlands on the property. And the zoning irregularities. There are also (surprise) problems with #4. The occupancy rate (given the location in the epicenter of the real estate collapse, not surprising) drops from 98% to 60% as condominiums are suddenly allowed by law to revert to apartments, and the guy (we'll call him Manny) whom Leo got to manage this project is proving pathologically useless. So I start cutting $40K checks every month for the mortgage, as Leo and Manny assure me these are just temporary bumps.

Keep in mind that at this point, I trust Leo implicitly.

Then comes the call (remember that?):

Leo calls me. He is going into bankruptcy.

Besides the various projects, I also have $1.75M in Leo's derivatives which all of a sudden have evaporated. My clients, who were thrilled with Leo's 18% returns, are now incandescent with me. Almost all of these clients leave. My consulting practice, for all intents and purposes, collapses.

Then, of course, the bankruptcy trustee steps in.

What I did not know is that a bankruptcy trustee is not a government attorney. No. He is a private attorney (almost invariably from a medium-to-large firm) and he charges the bankrupt company fees. He also hires a law firm to represent him (His firm. Of course.) and they also charge fees.

In the middle of this, Leo calls me with the news there is an offer for #2. No, not $7M. $2M. If you figured out this was a loss, you're sharp indeed. But we have no real choice. The real estate market is disintegrating. We sell and eat the loss. Losing only $500K was the last bit of good news in nearly three years.

Anyway, the trustee starts his process.

He asserts in court that Leo, Inc., was insolvent since 2002 and that Leo knew this, therefore, by law, every transaction Leo, Inc. conducted was fraudulent and the creditors who held whatever documents saying they had invested $X now had those documents declared, essentially, meaningless. Leo, Inc. owed $45M, and had assets valued at only $17M. The trustee was also going to go after Leo's personal assets and the assets of any other enterprise in which Leo was involved.

This, by the way, took a year. During which time, the Trustee & Co. have racked up $4.5M in legal fees.


So the trustee subpoenas my wife and me. The associate in charge of us, a smarmy 30something with orthodontic braces, ill-fitting suits and a trillion dollar wristwatch, starts off by saying what a fair and compassionate guy he is.


He starts producing a trillion documents dating back nearly 10 years, conveniently out of context. He starts digging up stuff on my Dad, who cannot testify as he is in the final stages of Alzheimer's. He calls in my wife and browbeats her to tears.

Because (AHEM!) "as will be proven" everything Leo had done since 2002 was fraudulent, we were not entitled to standing as "creditors with perfected interests" and they had successfully gone after Leo's other assets. Including #3 & #4. So even more of what passes for my net worth turns to vapor.

Then the trustee's attorney sends a nastygram alleging all manner of awfulness. My wife takes it badly. I want to call his bluff but, frankly, not having my wife dissolving into tears every night makes our attorney negotiate for a settlement. Our "somehow non-perfected interest" claims (which were NOT, which is why they were so eager to swat them away as they would have to be paid in full, and not at the minuscule percentage at which other creditors would be repaid) are waived, we pay $25K, and they drop their claims.

So, gritting my teeth, I assent. The motion goes to the court, the judge approves, and it's a done deal. Only then it turns out the trustee's attorney had "made a mistake" in the statement of their claims against us...he was, in fact, bluffing. (Brazenly, as it turns out.)

In the interim, something landed on my lap, something that I soon realize could be turned into a world-class, all-natural/organic skincare.

And we begin this quest, to rebuild at age 47, my professional life. Making, of all things, makeup.

Now you know.


Mean Mama said…
Platitudes are useless--this is just awful. However, we are pulling for Team Garcia!
Stomper Girl said…
Blimey. That is not a good story, but I hope the make-up business goes well for you and pulls you out of the mire xx
Major Bedhead said…
Holy cow, Joke. I'm so sorry you've been thru such a wringer. No wonder you've been so cryptic and quiet.
Jen said…
Honestly, most of this sailed over my head (except for the future fears regarding the ambiguous independence level of an autistic child). But at the end I see there is mention of make up that I, Jen, can buy.

Mean Mama said…
And may I add "Keep the faith"--this turn of events will be a powerful lesson to your sons on how to deal with changing fortune. How to step up and do whatever it takes to keep your family going. Good luck, my friend
Suse said…
Yikes, etc. What a time you've had.

Oof, that sounds so trite, but really, words fail me. All I can say is I look forward to the skincare revolution!
Frogdancer said…
Holy cow!!! That's absolutely awful. I'm surprised you're still able to be coherent.

When finances turn ugly it's the most stressful thing in the world.. well... that and when romance turns ugly.

I SO hope that the skincare thing turns out to be a go-er. You deserve it after all you've been through.
shula said…
Jesus, Mary and Joseph.

That is all.
Poppy Buxom said…
Holy shit!




That is all.

p.s. Well, not quite all. But I'm assuming this is a family blog.
Paola said…
OK. I am not your oldest follower as you know but I have checking here daily, because of how you write and how you appear through you writing.
Your "coming out" is extremely personal and humble IMO, I don't know how many people would have done this on the web.
Says a lot about you.

Thank you.
Mary said…
So whilst I was going through all my stuff - you were also going through so so much - and yet you were compassionate, warm and strong- for me. I will never forget that.

The Jesuits would be proud -
Anonymous said…
Um, wow. Delurking to say my prayers and hopes are with you. I've always enjoyed your writing and check in periodically to see if you are back. Hope you can see your way to posting again. Best of luck in your new endeavors.
Oh dear this is horrible!!
What about your mother & dad? It is so horrible that anyone in their position would have to be dragged through court as well.
Prayers all around!
so this has been top of my mind since I read it. After an initial messy head explosion I'm still trying to even comprehend what you've been through. 'Horrific' does not even touch the sides.

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