Paper chase

William Morgan says he's just an innocent document dealer snared in a campaign finance scandal. And if you believe that, he has some old railroad bonds he wants to sell you.

William R. "Bill" Morgan still remembers the phone call that led to the most mysterious presidential fundraising episode of 1996, which led to the strangest political story of 1997, which in turn promises to spawn several entertaining crime stories in 1998.

It came on the afternoon of October 22, 1996. As usual, Morgan, a 60-year-old "historical document" dealer, was working the phone at his company, Vaduz Limited Partnership.

"You've gotta understand," says Morgan. "I was on top of the world." He had reason to be feeling good. For the better part of a decade, Morgan had been learning the ropes of the antique bond trade. Finally, after eight years of false starts and failed deals that long ago would have snuffed the hopes of a less-dogged dreamer, his ship appeared to be steaming into port.

Just 12 days earlier, Morgan had returned from London, where he had retrieved two Chicago, Saginaw & Canada railroad bonds from safekeeping at Barclays Bank. From there, Morgan escorted the two "Saginaws," as these beautifully engraved bits of 19th century history are known, to Chicago. According to Morgan, who produced contracts and plane tickets to back up his story, once he arrived in the Windy City, he turned the paper over to a lawyer for Bayvest Capital Funding Limited, a foreign concern that had contracted to pay a mind-boggling $300 million for the two 125-year-old bonds. Morgan then hopped an American Airlines jet back to Dallas to await his payoff.

To be sure, the deal had its peculiarities. For one thing, the money wasn't coming in a single lump, but in 15 monthly installments of $20 million. And it was only to be paid out of the profits of Bayvest's own wheeling and dealing with the Saginaws.

But most curious of all was the price. While the bonds are lovely examples of intaglio printing, that hardly justifies shelling out nearly one-third of a billion dollars for them, or roughly four times the amount of the most expensive painting ever sold. (Vincent Van Gogh's Portrait of Dr. Gachet, auctioned in 1990 at the height of the art market, brought a mere $82.5 million.) And since they're not artworks of unheard-of rarity and value, then why would anyone pay $300 million for seemingly worthless paper issued by a railroad that went belly-up before the turn of the century?

This riddle underlies one of the wildest tales of the '96 campaign season, a bizarre story that reads like a Donald Westlake caper novel, full of outrageous schemes and charming rogues who, if nothing else, have cornered the market in moxie. The yarn culminates with the president himself nearly lending his name to what looks an awful lot like an international con game.

And it all began with that phone call to Morgan from one R. Warren Meddoff, a fellow document dealer from Florida, who suggested a way for Morgan to spend some of his windfall: donate $5 million to the Democratic Party.

But the best part of the story is the reason why a group of historical document dealers wanted political stroke: They needed it to breathe value into the reams of antique financial instruments they were peddling.

As Sen. Joseph Lieberman of Connecticut concluded during last September's campaign finance hearings, it is a "story which, if true, is hair-raising, and it is the ultimate indictment, among the many we have heard, of the existing campaign finance system."

When Meddoff's call came, Morgan was feeling pretty comfortable about his Saginaw deal. Bayvest was faxing him good tidings: On October 17, 1996, they sent word that Morgan could expect his first $20 million by month's end.

Still, Morgan had been in sales too long to spend the money before it arrived. So he continued about his business of buying and selling old bonds, which was how, five days later, he came to be on the phone with Meddoff, a document-dealer based in Fort Lauderdale.

"So, I'm talking to Warren," Morgan recalls. "And he says, 'How's that Saginaw deal coming?' And I said 'Warren, it looks like this one's real.'"

Dressed in a deep turquoise shirt, black jeans, a beautiful filigreed tricolor belt buckle and hand-made lizard boots that Vanity Fair reported cost $4,000, Morgan, a born storyteller, pauses for emphasis. "And then Warren said, 'You know, you've got a heck of a tax problem.'"

As Morgan knew, Meddoff wished to make political contributions. Big ones. Two years earlier, when Meddoff and one of his clients were trying to close a multi-billion-dollar contract to sell old German bonds to a former Eastern Bloc country, Meddoff and the client had promised both political parties $5 million donations to help grease the international machinery in which their deal apparently was snagged.

"For two years," Morgan says, "Meddoff had been worried about that obligation to raise $5 million. So he asks me, 'Would you consider donating $5 million from your first payment to the DNC [Democratic National Committee]?'"

For a number of reasons, not the least of which was his potential tax bill, Morgan wanted to help out Meddoff and his client. After all, as Morgan recalls, his bundle from Bayvest "was more money than I could spend." More than he needed for himself. More than he needed for his three kids, all of whom were grown and embarking on careers of their own. More than he needed to accomplish his dream of retiring to a Hill Country ranch and "welding the gate shut from the inside."

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