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John Ford could only be encouraged by the splendor of the Bankers Capital Management offices on the 69th floor of the Texas Commerce Tower. Mike and Pat Graham's investment banking firm certainly looked like a place where successful deals were born. The large, comfortable waiting area was drenched in oak and handsomely furnished. As Ford sank into a leather sofa, his eyes took in the carefully arranged displays that symbolized other Bankers Capital projects; Ford recalls most vividly the huge crystal bowl of oranges that represented a Mexican juice deal supposedly in the works.
Ford, who is from London, was educated as a Spanish and Portuguese linguist. But he had used his knowledge of Latin America to build a successful trading company, which, for obvious reasons, had an operation in Houston to launch further expansion into the Southern Hemisphere.
In February 1987, Ford and his partner, a Houston oilman, secured an option to buy a small Miami company called Calypso Shipping, which specialized in transporting supplies to the Caribbean islands. Ford says he "loved that little company," which had been so profitable that the owner was willing to sell it for less than it was worth to reduce his capital gains liability. Meanwhile, Ford's partner had heard good things about the Grahams, so the two chose Bankers Capital to raise the $1.2 million to buy Calypso.
Ford acknowledges he and his partner "twitched a bit" when Mike Graham, after his first meeting with them in mid-March at Bankers Capital, asked for $50,000 up-front. Ford had heard stories of con men who lived off such advances while doing nothing in return. But Graham didn't fit the profile. For one thing, two impressive diplomas hung from the walls of his private office: a doctor of philosophy degree from the University of Texas, and a master's from the respected business school at Southern Methodist University. (Graham attended neither institution, according to the schools' records.) For another, Bankers Capital had some potent connections. Ford remembers meetings were often interrupted so that Mike Graham could take a phone call from "the governor" -- that is, Mark White, who, after leaving Austin a couple of months before, was doing legal work for Bankers Capital.
And then there was Mike Graham himself.
"He had a way of drawing you in," Ford recalls. "It was all so simple: 'Don't worry about it. It's done, that's done.' How it was going to be done and who was coming up with the money, I don't know. But very often, he said he was going to meet with banks, and my deal was at the very top of his agenda."
Ford took Graham to Miami, where they inspected one of Calypso's five ships. On the flight back to Houston, Graham's enthusiasm was overwhelming. He raved about Calypso's potential, called the deal "wonderful" and insisted Bankers Capital would have no trouble raising the necessary funding.
The $1.2 million never materialized, of course, but Ford and his partner were led to believe otherwise on at least three occasions.
The first was in mid-April, when Graham announced that three investors were forming an offshore corporation that would back the Calypso acquisition, with the closing scheduled for April 24. Two weeks after that date came and went, Graham said he and another Bankers Capital principal, Ray Santos, a prominent Lubbock physician, would go to Miami to "personally finance" the deal and close it by May 14.
On May 15, Graham announced that a group of Iranians had agreed to give him a "personal guarantee" that Bankers Capital could fund the purchase through a Hong Kong bank. Ford and his partner were beyond skepticism at this point, but on May 26, Graham called Ford's partner and said, "The deal is done. I'll call at ten tomorrow morning with further instructions." But after that, Graham did not call, nor did he take Ford and his partner's calls.
"The tragic part of all this was that, of course, the option given to me was for a limited period of time," Ford says. "I had a most marvelous situation that came about by trust and good feelings between people. The owner just said, 'John, it's yours,' and I think I had roughly three months to fund it.
"Well, I let the gentleman down because I never came up with the money. Michael Graham waited until my option ran out and just literally let it die. It was a marvelous opportunity that went away, thanks to Michael Graham and his gang."
In a sense, both Ford and Bankers Capital Management were fortunate. Ford was only out $50,000, admittedly not chicken scratch, but insufficient, really, to merit hiring a lawyer at additional cost to get it back. Graham was never held accountable for the Englishman's losses, just as a number of others would decide to wash their hands of Bankers Capital Management rather than prolong the agony of further dealings with its principals.
That's what the owner of a Houston pipeline company did. He lost $108,000 to Bankers Capital, which he had hoped would raise the money for a 200-mile pipeline and gas distribution system from Huntsville to Houston. His company was fairly new at the time, the owner says, but had had some success. The Huntsville line, he says, "would have made the company take off like crazy."