A Summer Squall

By Robert Randolph

Thomas Sherwood is in trouble. A high-dollar financier, he's lost the bulk of his fortune in an international swindle, and his business partner has mysteriously disappeared from his fishing boat in the middle of the ocean. Sherwood retreats to the small farm in South Carolina he inherited from his grandfather. Hoping for a break from his new reality, he instead discovers his grandfather's handwritten memoir—and within it, a shocking family secret. Following the clues set forth in the memoir, Sherwood sets out for England to learn about his family's history.

Randolph's first novel is a thrilling page-turner about high finance, high living, and high crimes that will catch you in its grip and not let go.

• Language: English
• Publisher: BookBaby
• Release date: Dec 10, 2018
• ISBN: 9781543956993

Book preview

Copyright 2019 by Robert Randolph

Print ISBN 978-1-54395-698-6

eBook ISBN 978-1-54395-699-3

This is a work of fiction. Names, characters, businesses, places, events and incidents are either the products of the author’s imagination or used in a fictitious manner. Any resemblance to actual persons, living or dead, or actual events is purely coincidental.

for Carol

Contents

Preface

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Chapter 14

Chapter 15

Chapter 16

Chapter 17

Chapter 18

Chapter 19

Chapter 20

Chapter 21

Chapter 22

Preface

The idea for this book came to me during one of those summers we spent at the big house on Vancouver Island in British Columbia. The house sits on a cliff overlooking The Strait of Juan de Fuca, and one day, as I sat looking down, I saw two boys in a small sailboat. That scene sits at the core of the book that began to germinate in my mind.

The story is based on an absurdly exaggerated experience I had with my grandfather, and the settings include thinly disguised places I have visited on vacations. Writing this book has been entertaining, rewarding, and sometimes frustrating, but mostly, it’s been fun.

Thanks to my friend and neighbor Pete Coppel for spending many mornings, sharing gallons of coffee, and using lots of red ink on the infant manuscript. Some of the best ideas in the book are Pete’s.

I would never have finished this book without the constant encouragement and positive reinforcement of Dan and Johanna Boyles. Dan believed in it even when I didn’t.

Finally, thanks to Steve Harrigan, best-selling author and the other grandfather of my two grandsons, for unselfishly giving me his time and professional counsel.

Robert Randolph

Austin, Texas

January 9, 2019

Chapter 1

He walked slowly, head down, hands in his pockets, wearing only a tee shirt and drawstring shorts. Dragging his bare feet through the sugar-white sand, a somber look on his face, he approached the entrance of a rambling shack that sat next door to his ailing company’s beach house on the island of Anguana, the most eastern point of the Caribbean Islands in the Lesser Antilles. His name was Thomas Sherwood, five feet ten inches tall, one hundred-seventy-five pounds, blond, forty-three years old, never married, and with no visible means of support.

Over the shack’s front entrance hung a weather-beaten sign that read: Beach Bar, the same name that appeared on his tee shirt. Built of driftwood, flotsam, and jetsam, Beach Bar was owned by reggae singer Freddie Banks who was also the bar’s star attraction. The makeshift structure had open walls, faced the sea, and topped most lists of best beach bars in the world.

Taking his usual seat in a rickety wooden chair at a rickety wooden table, he directed his vacant stare toward the sea, the faint sound of a steel drum band playing in the distance, the steady trade wind ruffling his disheveled hair, now in desperate need of a trim.

He liked the sound of the sea, and he enjoyed the feel of the warm sea breeze against his unshaven face. It gave him a sense of motion, like when he stood at the helm of his thirty-seven-foot sloop now docked twenty-five hundred miles away at the Houston Yacht Club. The thought of sailing, his favorite pastime, helped direct his mind away from his current predicament.

It was late January, and the temperature in this part of the Caribbean was in the mid-eighties, where it stood almost year-round. Turning to an over-nourished waiter named Harold, he nodded, and eventually Harold waddled his way with a cold Red Stripe beer just like he had done every day for the past three weeks, moving at his usual sloth’s pace, a pace locals called island time.

People who knew him from work for the past twenty years wouldn’t recognize him. The Thomas Sherwood they knew was clean-shaven, wore Brioni suits, Brunello Cucinelli shirts, and black cap toe oxfords all day, every day — possibly to bed at night, for all they knew. Their Thomas Sherwood was an over-the-top ambitious, competitive, organized, impatient, aggressive, time management fanatic who was wildly successful in business. He met all requirements of the classic type A personality: a workaholic, always in motion, seemingly unable to sit still. He was that kid everybody knew in school who always had his hand in the air with a question for the teacher, or the one sitting out in the hall with instructions to stay there until he could sit still and be quiet.

The Thomas Sherwood sitting in Beach Bar that afternoon had a completely different look and a completely different manner. This one was unkempt and contemplative, his positive, confident look replaced by a vacant, befuddled one. It was the look of a man who had lost all hope, lost all ambition, a man who was all alone with his thoughts and all alone in the world.

Unexpectedly, he sensed eyes staring at him, and turning toward the bar, he saw a tall, slender, brown-skinned man dressed in a white linen suit, white shoes, and white cotton shirt with an open collar. Around his neck hung a single gold chain that held a round gold medallion in the shape of a lion’s head. The man leaned against the driftwood bar, legs crossed, one hand in his jacket pocket, smiling at Thomas through dark, penetrating eyes.

The eyes seemed familiar, like those of someone Thomas had spent time with in the past, yet he couldn’t remember the place or circumstance; it bothered him. He wracked his brain to recall how, or even if, he knew the man, and he watched those eyes as the man uncrossed his legs, removed his hand from his jacket pocket, and began a slow graceful walk in his direction.

The eyes belonged to a man named Rafael Segredos, son of Robert Segredos, current head of the powerful Segredos Group headquartered in Sao Paulo, Brazil. The fabled Segredos family had been a moving force in worldwide banking circles since the middle ages, and Rafael had continued his family’s tradition by taking his share of the family fortune, buying a private Caribbean island located near Anguana, and forming a bank there. He named his island Cantaloupe Island, and his bank, Bank of Cantaloupe Island.

Rafael had hired a battery of lawyers to write the strictest bank secrecy laws in the world, and because of its tax-free environment, its unwillingness to disclose any customer information to the outside world, and a unique style of bank account he developed, Rafael had built Bank of Cantaloupe Island into one of the largest private offshore banks in the world, possibly the very largest. No outsider knew its size for sure, because it was privately owned and there were no reporting requirements.

To the outside world, Rafael Segredos was an enigma. Both because of his legendary family’s shadowy history and his personal reclusive nature, rumor and intrigue always swirled about him, suggesting he had a connection with the underworld, but there was no proof, and there had never been an incidence of scandal. Financial publications constantly dogged him for interviews, but he had never granted one, and his refusal to do so only added to the mystery surrounding him and his burgeoning bank. He was aggressively private and secretive by nature, just as his Portuguese name Segredos implied.

As he walked in his direction, Rafael puzzled at Thomas’s appearance. The three-week growth of beard, the disheveled hair, and the beach boy getup were the antithesis of the man of sartorial splendor he had encountered when he had last seen Thomas in Davos, Switzerland, two years earlier. Even more intriguing was Thomas’s vacant stare and forlorn demeanor. Rafael stood in front of Thomas and gawked, at a loss as to how to begin their dialogue.

Thomas felt uncomfortable, the way you feel when someone whose name you should know but can’t remember confronts you. He knew he had met this person in a totally different environment, but he couldn’t remember where. At last Rafael said, I’ve been watching you. You look a lot like somebody I know, an investment banker from Houston named Thomas Sherwood. Although Rafael spoke impeccable English, Thomas detected a slight accent, one he guessed had a Portuguese influence.

Yes, I’m Thomas Sherwood, but how do you know me?

"Oh my God. It is you. We met two years ago at the World Economic Forum in Davos, Switzerland. You were there with your business partner. I believe his name is Dickie something-or-other. I’m Rafael Segredos."

Yes. Yes. Rafael, I apologize for not remembering. Please forgive me. I have a lot on my mind right now.

Rafael continued to look at Thomas, continued to drill him with those dark, curious eyes, trying to guess the reason for his scruffy appearance. Thomas first tried staring back but soon realized he couldn’t compete with those relentless eyes, so he gestured to the chair opposite him and said, Have a seat.

Are you here on vacation? Rafael asked.

Not exactly.

Do you live here on Anguana?

Sort of. Dickie and I own the house next door, Thomas said, pointing toward his company’s beachfront house sitting just across a short stretch of sand from Beach Bar.

That’s wonderful. You have a perfect location here. So, why the dejected look?

It’s a long story.

Well, I’ve got nothing better to do than hear it. I came here this afternoon to hear Freddy and his band, but I just found out they don’t play until this evening. How long have you been on the island?

Three weeks.

Ha! That explains the beard, Rafael said with the first smile he had shown since their meeting.

The men sat in the rickety wooden chairs at the rickety wooden table drinking Red Stripe beer and engaging in non-stop conversation. They relived their meeting in Davos and explored their mutual interest in investments, Brazilian Jazz, and the islands of the Caribbean. It soon became clear to both that they shared many common interests.

Thomas delayed any discussion of himself by asking, What about you? What brings you here?

I live on the next island that way, Rafael said, pointing out to sea. I actually own the island, and I named it Cantaloupe Island, you know, like the jazz standard by Herbie Hancock.

Rafael told of how he now lived on his island and spent most of his time running the bank he founded there. He told of how he had developed the strictest bank secrecy laws in the world and how those laws had allowed the Bank of Cantaloupe Island to become a tax haven and off-shore banking mecca, attracting billions of dollars in deposits of international money from those seeking absolute anonymity in a tax-free environment. Remembering Thomas’s background in banking and finance, he asked, How much do you know about blockchain technology and cryptocurrencies?

Uh, not much, Thomas answered.

Well, I’ve developed a bank account that combines the best features of commercial banking and cryptocurrency. It has allowed me to attract billions in deposits.

You mean numbered accounts?

Yes, of course numbered accounts, but much more. If you ever come to Cantaloupe Island, I’ll give you a tour of the bank and explain, said Rafael, making Thomas feel as if he were being offered a confidence that Rafael had denied to the world at large. Rafael added that he owned several helicopters and would make one, with pilot, available to Thomas whenever he wanted to visit Cantaloupe Island and take a tour of it along with the bank. He made it clear that it would be a tour directed by Rafael personally.

Rafael’s tone turned serious as he again looked directly into Thomas’s eyes and asked, Why are you really here, and why are you so gloomy? You’re not the same person I met in Davos. Tell me what’s going on, Thomas.

For some time, the only sound was that of the constant roar of the sea combined with the faint rhythm of a distant steel drum band. Thomas’s eyes took on an even more reflective mood, and again he turned toward the sea, his thoughts going to his business partner, Richard Adami, known to his family and friends as Dickie.

At last, he began to speak, softly, and slowly at first, his demeanor subdued, as if the subject matter caused him pain. "I must begin with a little background to help you understand. I met Dickie in college, at the University of Texas McCombs School of Business in Austin. We both majored in finance and attended several of the same classes.

"Dickie was raised in Houston’s posh River Oaks area by parents with money. I was raised in far West Texas by parents with little. But despite our different backgrounds, we became fast friends. We shared interests in business, sports, and fun. In Dickie, I saw money, and I saw family standing — a way of life I had never known. I think my first thought was that I could use our relationship to my advantage and possibly promote my own success. I have always been an opportunist, and I saw my association with Dickie Adami as an opportunity, both socially and financially. But as our friendship developed, I grew to genuinely like and respect Dickie as a person and eventually to love him like a brother.

After graduation, we formed an investment company we named Cactus Investments, LLC, a limited liability corporation we launched with a generous loan from Dickie’s parents. We started with a small office in the penthouse of One Main Place, a prestigious downtown Houston office building. We worked hard, played hard, and built our company in the field of high-yield investments, primarily energy exploration and commercial real estate. Much of our company’s worth came from high-yielding mezzanine loans. As a banker, you probably know them as mezz loans, a hybrid of debt and equity financing that gave Cactus the option to convert its debt to equity in the borrowing entity, and we picked some spectacular winners.

My dad made lots of money in Brazil on mezz loans, Rafael said.

Thomas nodded, and continued. We both worked hard to build our little company around the highest standards of ethics, fairness, and full transparency, elements that are hard to find in a private company today. We both knew that one of the reasons for our dramatic success came from the trust placed in us by our customers, our investors, and our lenders. We were proud of our reputation for integrity and honesty, and we always expected the same from others.

That’s admirable, added Rafael.

"Because his family had financed our company, Dickie became CEO and I became President. Corporate documents were sketchy by design. All major decisions were made by mutual consent of the two of us, most made on the run, in brief meetings, or during phone calls between us. We agreed on almost everything. We saw the world from the same logical point of view and made business decisions in the same methodical, practical way.

As the company grew and flourished, we hired more employees and appointed a board of directors, choosing seven solid business leaders in the community to help us develop new business and to give advice and diverse perspectives. Although directors were allowed to buy shares, their collective percentage was negligible. Dickie and I always kept over ninety percent of the company, and our ownership was always split between us, fifty-fifty.

It sounds like you two got into the right business at the right time, so what’s the problem? Rafael asked, trying to get Thomas to move along to the reason for his depressed attitude.

Hold on. I’m getting there.

OK.

"It all started one day three months ago when Dickie called me and said, ‘OK, here’s the deal of the day. It’s a participating loan to a gold mining company that just found the elephant, Tommy, and our loan will allow them to fully develop the new mine. And — this is a big and — we can get our usual two and twenty, plus a ten percent rate.’

Rafael, I think you know that his reference to two and twenty meant Cactus could collect a fee equal to two percent of its loan amount in addition to a twenty-percent share of profits of the borrowing entity, a fee arrangement made popular by hedge fund managers on Wall Street.

Oh yeah. I’m very familiar with two and twenty, Rafael said.

I’d never heard Dickie so excited about a business deal. He went on to explain to me that our loan would equate to only half the mine’s appraised value and that Cactus could finance the entire transaction with a loan from our regular lender, Great American Bank. You know, we would hypothecate our documents to the Great American loan.

Sure! I know. I’m a banker, remember? Their loan is secured by your loan documents, which are secured by proven reserves in the ground. Plus, I’ll bet they got your personal guarantees.

Yep. Joint and several.

Ouch, winced Rafael.

Thomas continued his story, and for a few minutes, his eyes brightened with enthusiasm. According to Dickie, the gold mine had unlimited potential, a potential that could double or triple the size of our capital structure through our participation in the mine’s profits. He seemed to become excited, using his hands to make his points, and Rafael enjoyed seeing the return of the old Thomas. "Dickie ended his sales pitch to me by saying, ‘And here’s the clincher. The borrower will put up a letter of credit from Bank of America to cover the full amount of the loan, and the letter will stay in place until the new mine’s production covers our debt service by a margin of two to one. What do you think about that?’

"I said, ‘It sounds good, except we’ve never made loans on anything but commercial real estate and energy production. We don’t know a damn thing about gold mines. What’s the deal size?’

"‘Fifty million,’ Dickie said, as coolly as if he had said fifty dollars. I gasped. There was a long silence before either of us said another word. The large loan amount had taken my breath away. Finally, I said, ‘We’ve also never done a deal that big before. Why now? Are you sure about this?’

"‘Never been more sure. How is this different from what we usually do? We’re lending against reserves in the ground that will be proven before the letter of credit is released and we go at risk. Besides, I know the owner of the company. He’s a neighbor of ours. He’s one of the richest men in the world.’

‘If he’s so rich, why is he borrowing money from us?’

‘He’s doing me a favor. It’s his way of letting me — that is, us — in on a sure thing.’

‘Where’s this mine located?’

‘It’s about a three hour’s drive outside Johannesburg.’

‘South Africa?’ I asked.

‘Yep. That’s where the gold is.’

‘So Hugh is on board with this?’ I asked."

Thomas turned to Rafael and explained, By Hugh, I meant Hugh Brigstock, our loan officer at Great American Bank. He then returned to his story.

‘Yes, Hugh is on board and he’s excited. He has verbally committed the bank to lend us all the dollars, subject to their loan committee’s approval, of course, and subject to his inspection of the mine. He’s read the exploration reports and the appraisal, but before the bank gives final approval, he says we three have to go to South Africa and inspect the mine ourselves.’

I told Dickie I had never been to South Africa before and then asked him the name of the company.

‘Sunrise Mining Company,’ he replied.

I told Dickie I thought we should run the deal by our directors just in case one of them knows a reason why we shouldn’t make this loan, but I knew our board was merely a rubber stamp of what we want to do. For all intents and purposes, the brief exchange between Dickie and me meant that Cactus Investments would move forward on a fifty-million-dollar loan to a gold mining company that owned nothing but a hole in the ground in a remote area of South Africa; however, that hole had an appraised value of one hundred million dollars, and the loan was fully covered by a letter of credit from Bank of America, one of the biggest banks in the world.

Chapter 2

Thomas continued his tale of the gold mine loan, telling of how one rainy winter’s afternoon he, Dickie, and Hugh Brigstock of Great American Bank boarded an Emirates Airlines Boeing 777 at Houston’s George Bush Intercontinental Airport for a grueling twenty-eight-hour flight to Johannesburg, South Africa. The plane’s first-class suites included zero gravity beds and five-star food and wine, but those luxurious creature comforts didn’t offset the exhaustion the trio felt after the twenty-eight-hour flight.

Following a frustrating hassle through customs at O. R. Tambo International Airport, all three men were relieved when they finally arrived at their hotel sitting on a hillside just north of the city. It would make a good jumping-off point for their drive to the mine the following day.

Only a little less exhausted after an abbreviated night’s sleep, Thomas, Dickie, and Hugh met a Middle Eastern man in the lobby of their Four Seasons Johannesburg Hotel the following morning. The man wore khaki shorts, a pith hat, and hiking boots, the combination of which made Thomas visualize him in the display window of a Banana Republic Store. He was