By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
Glatstein is a serious financial player in Dallas. His company makes Mason Rich look like a lemonade stand--640 employees, more than 200,000 customers, and an annual net income of $14 million on $182 million in revenues. Glatstein suffers gladly neither fools, felons, nor financial shenanigans. For example, in 1991, when the Zale Corporation skipped one interest payment on a large number of bonds that Glatstein's customers in his former investment firm were holding, he and a battering ram of lawyers walked into a bankruptcy court 31 days later and filed an involuntary bankruptcy petition against Zale; 22 days later, Zale was on its knees and in Chapter 11.
Earlier that year, as fate would have it, Sam Feldman had found himself sitting on a plane next to one of Glatstein's investors. The two men began to talk, and soon the investor knew that Feldman was the president of a fast-growing type of finance company that was interested in raising some money for expansion. Consequently, on December 31, 1991, Glatstein and a group of investors he assembled gave Mason Rich $550,000, which was the seed money to begin marketing and growing the company. Although Glatstein knew nothing about the factoring business and had only one previous experience investing in a private company, one of his employees had thoroughly researched the factoring business, and even more importantly, Glatstein had made a few calls to Mason Rich's big-name investors--people whose names he recognized, such as investor Howard Rachofsky, Sam Feldman's cousin; Donald Zale, Feldman's best friend's father; and investment portfolio manager Gerald Ray, another Feldman cousin.
"I knew Gerald," says Glatstein today. "I knew Howard. I call them up. I called Don Zale."
Glatstein wanted information on Sam Feldman--the partner doing all the negotiating with Glatstein and the investors. Fielding--as Feldman liked to remind anyone who would listen--wasn't around very much; he was always off at Dallas City Hall playing councilman.
Glatstein was satisfied with what Mason Rich's investors told him. Feldman's only blemish was his real estate bankruptcy. "We didn't let it hold us up because so many people went into bankruptcy--in the boom to the crash," Glatstein says. "We didn't like it, but we felt like he would do what he said he would do."
Basically, what Feldman--and Fielding, of course--were supposed to do was use the new investors' substantial infusion of money wisely, produce a reasonable rate of return, and provide regular financial statements to the investors.
Instead, within months of getting the money, $250,000 worth of bad Miller invoices had piled up--and more were on the way. "I find out about it, and I thought I was going to have a fit," Glatstein recalls. "What the devil is he doing over there? I said, 'Sam, tell me about this.' Sam was the one we were dealing with--I really didn't even know Paul. And Sam said, 'There are five invoices of $50,000.' I said, 'Why would you factor the second invoice without collecting the first?'"
But, factors say, that kind of overlap is the nature of the business. Besides, bad invoices are an unfortunate but common pitfall in the factoring business. "This is part of the risk of the business, my friend," says a factor who does not want to be named. "You don't ease into a fraud. It's like being hit by a flying Coca-Cola machine. 'Where did that come from?' If you did see it coming, you'd have tightened up on this guy."
In this case, there were two guys whom Fielding wishes they had tightened up on--Raymond Jones and Miller's Louis Winsett. Because it became quickly apparent through a lawsuit Mason Rich eventually filed against Miller that Jones and Winsett were at the heart of the problem.
In Winsett's deposition, he pleaded the 5th Amendment to all the key questions involving the invoices. In a motion Winsett's lawyer filed just before the Miller case was set to go to trial in spring 1995, the judge was asked to forbid the lawyers from giving "any mention, reference, comment, statement or allusion to any criminal investigation, whether ongoing or not, that relates to Mr. Winsett."
Winsett, who had somehow found the money to build a $900,000 palace of a home on six acres in Mansfield on a beer plant employee's salary, was quickly fired from Miller. Raymond Jones quickly filed bankruptcy. Fielding, half crazy with frustration, went to the Dallas County DA's office to try and press criminal charges against both men--but no one was interested. Feeling more and more hounded and oppressed by both Glatstein's screaming and the unresolved Miller lawsuit, Fielding and Feldman even paid a desperate two-on-one visit to Winsett's criminal lawyer, asking him to help them get their money back. The lawyer saw them to the door.
Miller Brewing Company never did let the case go to trial--it settled out of court, and the case was dismissed in late 1995. Fielding says Miller paid the entire amount that was owed.
Shayne Moses, a Fort Worth lawyer who handled the case for Miller, declined to comment.
Anyone who has seen Paul Fielding talk money at City Hall--intricate public financing arrangements, bond indebtedness, tax abatements--would think that Fielding is either an economics professor or a titan of private industry. Add a few other ingredients--the regal manner in which he carries himself, the fact that Mason Rich is a fancy-sounding name, and that it does something financial that hardly anyone understands, and you become certain he is a financial ace.