By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Comerica Bank Vice President Joseph Lynch, whom Spano has referred to several times as his "personal banker," informed the Lenco group that Spano had insufficient funds to honor the check. The company then agreed to enter into a payment schedule with Spano to allow him to pay off the debt. On June 13, 1997, a $500,000 check toward the debt bounced.
Beyond the bad checks, Lenco's attorneys maintain in their suit that the purchase order from Nordstrom was a fake. A source contacted at Nordstrom's headquarters in Seattle who asked not to be named said the company had "never issued that order," and had "never even heard of John Spano."
Lenco's lawyer, Anderson, is stymied that such an apparent ruse happened. But he says his clients felt confident in Spano's ability and, more importantly, his net worth. "It wasn't just a case of accepting him on face value," Anderson says. "He produced documents that appeared to be genuine. He had the order from Nordstrom, with their store logo and address right there. He had letters from banks attesting to his worth. Our people acted on what they thought was a good risk. They did their due diligence, and everything pointed toward a worthwhile business arrangement."
It comes back to the letters. Throughout the course of his business machinations, John Spano always seemed able to produce correspondence vouching for his finances.
At least two letters from Comerica's Joseph Lynch attested to Spano's vast wealth. And an April 15, 1997, letter from T. McCullough Strother--a Dallas lawyer retained by Spano to serve as trustee of the inheritance Spano said was left to him by a relative--assured Islanders owner John Pickett that 10.4 million pounds sterling would be drawn against the trust funds and delivered to Spano's New York lawyer. Spano, according to the federal criminal complaint filed against him in the Eastern U.S. Judicial District of New York, used the Strother letter to reassure Islanders officials that the money he owed them was forthcoming.
The November 14, 1996, Lynch letter to Pickett states that Spano "maintains a net worth in excess of more than $100,000,000." That letter, Lynch has told federal investigators, was based on three unverified documents he got from Spano--a March 1996 financial statement showing his net worth to be $55 million; a document from a Cayman Islands bank reflecting $39 million in holdings; and a November 11, 1996, letter from a Clive Jones at Lloyds Bank confirming the existence of a $107 million trust account. (A Lloyds Bank spokesman in London told Newsday last week that no employee named Clive Jones could be found at Lloyds.)
Other sources interviewed for this story--including Innamorati, Stars President Lites, and Staubach executive Leslie--tell of seeing a similar letter from Lynch, which convinced them to do business with the quiet but confident Spano.
Still another letter, dated June 8, 1997, and purportedly written by Lynch to Pickett's representative, certifies that a $17 million check for the team will be covered by Augusta Leasing (another of Spano's alleged companies). The check bounced, and according to the federal complaint, Lynch denies ever writing the letter. U.S. Postal Inspector John LaPerla, the author of the affidavit in the complaint, states that the letter is an "obvious forgery."
If Spano indeed faked the letter, he did so carelessly. LaPerla says that two different type fonts were used in the letter--one for the body and one for the signature block. And the fax machine mark at the top of the page bearing Lynch's fax number "differs in format, content, and font style from that used by Comerica Bank." The mark, LaPerla notes, is an identical match with that of the Bison Group, owned by Spano.
In an interview, the Stars' Lites said he could not locate the letter he received from Lynch more than two years ago vouching for Spano's wealth. "But in all honesty," Lites says, "when he came to us with an officer of the Comerica Bank, we took the offer very seriously. It's a very reputable financial institution, one of the leading banks in Texas. The letter said [Spano] had $55 million...and substantial other assets. He was bringing partners into the deal. That was enough due diligence for us."
Lynch has refused to comment on the Spano case.
It is no doubt mind-boggling to anyone who has ever sweated out approval on a home mortgage application--where loan officers are known to raise their eyebrows over a single missed VISA payment--that Spano was able to borrow millions and build his reputation long after his checks began bouncing. Yet one former banker told Newsday last week that it isn't so surprising. Banks rely heavily on other banks when verifying information about clients, said Bill Covington, former head of the sports lending desk at NationsBank in Charlotte, North Carolina. Even a faxed letter is considered credible if one bank executive will vouch for it to another.
As for those who chose to do business with the young upstart Spano, do not underestimate the power of desperation--as in the case of NHL Commissioner Bettman and Islanders owner Pickett. Facing year after year of slumping revenues--and perhaps even the prospect that the team, like so many other pro franchises, might flee to a better market--the hockey executives saw the young and optimistic Spano as a lifesaver. After it became clear that Spano's offer had disintegrated, reporters learned that the NHL paid a former FBI agent less than $750 to investigate Spano's background. The Spano fiasco led to the NHL's recent announcement that future potential team owners will now be investigated by the international accounting firm of Ernst & Young. The league has retained a prestigious New York law firm to evaluate candidates as well.