“In the ski business we call projects like Cummington Farms ‘monuments.’ To make money, you can’t spend too much on the building. All the floors and windows at Cummington Farms had to be replaced. If the Rockefellers or Donald Trump were funding the place, the work would have been perfect. The big horseshoe shaped building was completely rebuilt almost from the ground up. The system of trails they built were one of the nicest cross-country trails in the United States when they were completed. Craftsmanship run wild. The design was stunning. Ski people from all over the Northeast came in to see Cummington Farms.”
Visiting the Berkshire Ski Basin
( Written November 3, 2002)
West of the Cummington store, Route 9 opens up and straightens out. Straight ahead are the swampy barrens of Windsor, West Cummington, and Dalton. On the way west is a falling down wreck of a ski area on the side of the highway. The heater motor on my BMW 2002 wakes up with a screech and starts to deliver a little symbolic warmth. Passing the Creamery swimming hole, memories beseige me of an idyllic summer in the seventies when I was staying at the Cummington Community of the Arts, working on a novel. A cabin of my own.
The Community of the Arts has been dead these many years, but it’s still a radioactive nexus in my head, 3300 gigabytes of rickety gentle improbable memories. A midnight peace march on a back road that woke up the neighborhood. Many of the buildings are still there, now privately owned.
On Route 9 you have to watch out for the oncoming. Rolling convoys periodically storm through. OVERSIDE LOAD FOLLOWS says the signs on the little Ford Escorts driven by retirees picking up some extra money. Then come the loads, big boxes on trailers drawn by semis, loads sticking out half way out into your lane, running at seventy to seventy-five when there are no Staties around. Someone’s living room, then a bedroom, followed perhaps by the all electric kitchen, all flying red flags. A Leggo home in American modern, headed for some house lot and foundation hole in New Hampshire or Vermont, or the Rte 495 crescent east of Worcester. Anywhere but up here. The hill country of Western Massachusetts stubbornly resists development. The highpoint for population and industry in Cummington was just after the civil war.
It’s mid-afternoon and the whiskery old hills are a wintry sunset gold. There’s a little snow on the ground and it won’t melt until tomorrow. I’m on an expedition. Want to talk to the woman whose husband founded the Berkshire Ski Basin, and who might know where Edwin Waszkelewicz is. Of all the people who were involved in the Cummington Farms development, Ed was the only one who really took it on the chin. Lost his home, lost his wife and family, lost damn near everything, all of it foreclosed on by Dick Covell and Heritage Bank. It’s not easy to spot what’s left of his old ski area. The little buildings and the ski-lift are now almost lost in the weeds and young trees.
Ruth Brown and her dog Blackie live about a hundred yards off the highway, on the shore of the Westfield river, in the heart of the West Cummington village. Her husband built her a nice modern house here, all on one floor, light and airy. Look out her picture window and you look up at the slope that her husband and other men cleared in the sixties. The State of Massachusetts and the Federal Aviation Administration now own almost everything on the south side of the highway.
Ruth looks at the writer on her doorstep and warns me that if I am looking for stories about the old days in West Cummington, she is no local. She and her husband came from Newtonville in the nineteen fifties. We sit down and talk. I tell her my interest was in the Basin. We talk about the eighties.
She remembers Edwin Waszkelewicz, who bought she Ski Basin from her. She feels sad for him.
“Whatever happened to Edwin?” she asks. I said I hadn’t been able to find him, that as far as I know he had lost everything.
“A nice man,” she says, “He was sick of cutting hair, he wanted a new life.”
She had put the ski area up for sale about three years after her husband died. Goggins & Whalen Real Estate had the exclusive. When Edwin came up to see her and talked to her about buying it, she and her sister-in-law Gladdis weren’t sure about this young man, so they traveled down to Connecticut and saw that yes, he was respectable and had a nice hair salon and lots of customers. But when his venture with the Basin collapsed, it left her with nothing. Barbara Gardenier had the first mortgage on the property. She got paid. Ruth had the second and got nothing.
“She went to Florida,” she says with a wry grin. “Me?”
She leaves it unsaid.
“But it was a shame,” she says,”that we who had poured our lives into our ski area ended up with nothing but bills to pay and some social security. It always seemed that we put more money into that damned place than we got out. But when we started the Berkshire Ski Basin, Mount Tom didn’t exist, and people came here all the way from the Hartford Ski Club.”
When I pressed former Heritage banker David Shearer on why they gave $200,000 in venture capital to this hairdresser from Connecticut to buy the place, he somewhat grumpily told me that the board approved it.
Ken, she tells me, was a good friend of her husband and a big time lawyer who loved to ski at the Berkshire Ski Basin. When the place closed and Bowen lost his skiing, Waszkelewicz’s plan to revive the Basin must have come like a gift from heaven. Maybe Bowen swayed the loan board to vote for it, maybe not. Very few people at Heritage Bank learned to say no until it was too late. No one acted like a banker. Staff went along, boards went along, the bank blew with the wind, and ballooned up like a galleon under full sail. A hairdresser got his chance to run a ski area, Mike Smith and Fred Fierst got their chance to run two ski areas. For a little while.
The big money that the partners in Cummington Farms Associates dreamed of making from the Basin and the Cummington Farms acreage was in selling second homes to New Yorkers. Edwin would turn out to initiate a short-lived shotgun marriage between the downhill slope up in West Cummington, and a cross country skiing resort nine miles away owned by an investment group headed by a friend and neighbor, Jean Dawson.
Edwin was Jean Dawson’s hairdresser., Jean was Graeme Dawson’s widow. Graeme founded the cross-country resort, and was the MarlboroMan on TV. Many times when Jean had her haircut done, she’d talk nostalgically to Edwin about the glory days when she and her husband and children were running Cummington Farms. In the seventies, cross-country skiing was very popular and there were balloon fests and all kinds of excitement and on good years it had thousands of visitors each year. Her talk started him dreaming of a new career. One fatal day his dream took him north to the Goggins & Whalen office in Northampton. Cummington Farms and the Berkshire Ski Basin were for sale.
The Cummington Farm property was too expensive for him, but he thought he might be able to finance the purchase of the Berkshire Ski Basin. The Basin was an old-fashioned small facility; for years it had been run on a shoestring by Ruth Brown and the Forgea brothers. Minimum wage, equipment held together with spit and bailing wire, but a friendly kind of communal atmosphere among the staff. Ski Basin loyalists, mostly families, came back year after year. Waskeliwicz dreamed of a joint venture with the Dawsons. He felt that using the appeal of winter sports, (downhill skiing at the Basin, cross-country skiing at Cummington Farms), and summer sports, ( golf courses at the Basin and at Cummington Farms), would be a magnet that would draw well-to-do New Yorkers up here, and enable them to sell second homes to them. His plans later became the genesis of the Cummington Farms project. Ed had a golf course architect go up and look at Cummington Farms, and he thought it would make a good golf course. He had him draw up some plans.
When Edwin walked through those front doors at 109 Main Street looking for money to buy the Basin, he got the red carpet treatment from Dick Covell, the president of the Northampton Institute for Savings (NIS). Ruth Brown’s mortgage with NIS was in default, and the prospect of getting rid of that default through selling the ski area to someone new probably gave a bad idea a little plausibility. Covell introduced him to David Shearer, his head of commercial lending.
Shearer heard him out, but had his doubts about lending him money. Edwin had neither experience nor collateral. A NIS appraiser found him standing by his cubicle one morning. He didn’t look too happy.
“Should the bank give money to the Berkshire Ski Basin?” he asked.
The appraiser was surprised that he was there asking him, and the way he was asking it made him think that Shearer didn’t like the idea. So he gave him his honest take on the situation.
“Look at it this way,” he said, “Does it have snow-guns? No. Is it going to make money? I don’t think so. Some businessman from Springfield wants to go skiing on a Wednesday. Just to take off the day has cost him money, let alone all the money for the equipment. So is he going to the Ski Basin because its only forty minutes away when he could go to Mount Snow, ski on some challenging slopes and have everything perfect? You tell me. Being close by is not that important anymore.”
Shearer nodded, and went away, presumably to go to the Board of Investment meeting and be on the losing side of an argument. The bank gave Waszkelewicz the money to purchase the ski area and Covell sent him over to Northampton lawyer Donald Todrin to help him work up a business plan and financing. In l984 Don Todrin had offices up over where Sylvester’s Restaurant is today. With some partners, he had built and owned the shopping center on Bridge Street across from Northampton’s post office, and with partners owned other buildings including the busy bar, Rahars.
Donald Todrin was and still is, a surfer of sorts, a big buoyant charming man who gleefully rode the waves of America’s boom and bust cycles. In those days he usually had more things going on than he had time for, but he liked to keep the welcome mat out. He did a pro forma for Waszkelewicz to promote the Berkshire Ski Basin. A pro forma and personal financing statement he wrote up for Heritage Bank for another development scheme eventually got him indicted and got him his favorite toy, an ankle bracelet wired up by the FBI.
Soon it feels to Edwin like it’s a partnership, Todrin and Waszkelewicz, both working together on this Berkshire Ski Basin venture. He buys an initial 49 acres from Ruth Brown, then an additional 353 acres further up the mountain from the Gardeniers for $60,000. Todrin is going to become his 10% minority partner for coming in, and cuts himself in for $5,000 out of one of the NIS notes for advertising help for the Basin, The following November he co-signs a $49,000 note for him.
The plan Waszkelewicz submitted to the bank envisioned the Berkshire Ski Basin as “a year-around resort with 1000 feet of lighted trails; chair lifts to the top of the mountain ; artificial snow-making; condominiums, and at the top of the mountain, a 9 hole golf course.” By 1984, Don Todrin had already one career behind him. And that career and the way it ended was enough to make quite a few Northampton people steer in the other direction when they saw his smiling face on the street.
His claim to fame was being a partner in “American Dream” brand of rolling papers that promoted and manufactured mentholated rolling papers for marijuana smokers in Florence. In the seventies, he and his partner Michael Garjian were the “rolling paper kings. ”
Along the bumpy turbulent exhilarating way to the dissolution of “American Dream”, the firm was bought by a. Minneapolis venture capitalist. Donald Parsons, a brilliant guy who owned the Minneapolis Penguins and a whole string of small banks. For a while he put them in a luxury high-rise office building overlooking the coastal waterway in West Palm Beach, Florida. “American Dream” rented the top two floors of the Comeau building, a 1926 art deco palace.
Donald Parsons as a banker believed in working the system for everything he could get. He would shop around for a property appraiser who would give him the inflated appraisals he needed. I was told he had a 120% mortgage on his 152 foot yacht, which meant that the bank, presumably one of the banks he had a financial interest in, paid him the whole purchase price plus 20% for the privilege of helping him own a huge yacht. Don Parsons told these two young guys that were running “American Dream” that the world was a corrupt amoral place where the strong survived and the weak went down the tubes. Successful businessmen had to have strong nerves to hold off their creditors and stay in business when times were rough. Tough guys weren’t afraid of bankruptcy. Parsons would meet with all the lawyers for the people his corporation owed money to and secretly put them all on retainer. Then these lawyers that he bought and paid for would talk to their poor clients and convince them to be “reasonable”. “Accept a dime on your dollar, it’s all we’re going to get. ”
Parsons was eventually shut down by David Kennedy, Secretary of Treasury, and American Dream was dissolved when the State of Florida passed a drug paraphernalia law. The governor himself called Don and told him that he was going to run him out of business.
“We went to the edge of the cliff many times with American Dream. ” said Garjian. He grew increasingly unhappy with how things were going. Monday morning business meetings were stormy and he decided to take a leave of absence for ninety days.
“While I was gone, Don ended up loading our inventory and our BMW into a truck, and both the car and the inventory went to one of our largest distributors, and there it stayed. Don got a job with that same distributor. I filed a (court) action in Palm Beach. ”
Todrin went back to Massachusetts and graduated from law school at Northeastern. He came back to Northampton and reinvented himself for the eighties as a small town lawyer living with his wife Diane in a beautiful Victorian at 109 Bridge Street. The Northampton real estate market was heating up and he got into the wheeling and dealing right away, being a co-developer of the strip mall opposite the Northampton Post Office. He represented Waszkelewicz In return for an interest in the property, he co-signed a note for him and did his radio commercials.
But up in Cummington the weather for skiing is miserable, two of the warmest winters on record. Ed puts out a lot of money for equipment, including snow-making, but it wasn’t cold enough to make snow. He couldn’t make payments to the bank and fell behind on his taxes. The second season there was an early cold snap and the Ski Basin opened up on December 9th. But then for the all important Christmas vacation vacation, it rained. Then it turned cold again. During the February school break, it rained again. . “We kinda broke even. ” said Waszkelewicz.
“Eddie was a nice guy, maybe in his forties, well dressed. All of the rest of us were wearing barn jackets and jeans, and he’d be dressed in a suit and tie. He thought he could turn the place into a Stratton. He put in snowmaking machinery, which was tremendously expensive, and not worth it for a small slope like the Basin.”
“The Basin was never going to be Mount Snow or Berkshire East. There were better mountains with better equipment in all directions. What the Basin did have was a very loyal group of people that kept coming to the Basin year after year. People liked it that the Basin didn’t serve alcohol and catered to families. He got off on the wrong foot right away. He didn’t know how to cope with the antique machinery, and he ended up buying a lot of new stuff he didn’t need. Under the Browns, we all walked around with a roll of electrical tape in our holsters. Anything break? We’d tape it. Denny Forgea kept the machinery running, and his brother Bernie managed the place. We were all working for less than minimum wage, but it was a friendly place. If someone had to study for a test, Bernie would put them up at the top where things were quieter. Someone who was leaving said to Bernie, “Damn Bernie, I’m going to have to get a social life now.”
“Eddie got off on the wrong foot right away with Bernie Forgea by calling him up and telling him to come over and trying to order him around like a country bumpkin. That put Bernie on edge right away. He said the hell with that, you come over here. I’m working. He was up on his roof when he arrived. He stayed up on the roof. “
One of his ski lift operators.
The third year when the snows finally came, the bank wouldn’t give him any more money. Edwin said that David Shearer took the $6,000 out of one of his notes, and sent him over to get some engineering help from Huntley Associates to prepare a plan for his development. Huntley told the bank that a full scale engineering and market study was needed. Huntley Associates and Sno-Engineering did feasibility studies. The Sno-Engineering study dated January 9,1987 was not optomistic. “The existing ski development is basically very limited…and
“by no means can the Berkshire Snow Basin be considered to be economically viable within the regional competitive network.” The state filed a lien for taxes. Ed went before the town of Cummington asking for their OK for his venture. Any large scale development up on Bryant Mountain would have to get special permits and variances from the planning board. The local people liked having the jobs and tax money that the Basin represented, but many of them didn’t like the idea of second homes up there. The development would more than double Cummington’s population, and the development would be about 10 miles from their fire station. When the town sent out questionnaires seeing what voters thought about his idea, the message was mixed. 1/3rd were against it, 1/3rd were for it. 1/3rd were undecided and wanted more information about his development plans.
And this is where things start to get murky. Ed told me that the town didn’t tell him about the vote, but the bank evidentlyknew about it. Then Dave Shearer gets fired by Dick Covell. Millions in cash was now flowing into Heritage Bank’s IPO (Initial Public Offering). The bank never pays Edwin’s back taxes and the State slaps two liens on the Basin. On August 6, l986, Ed Waszkelewicz gives up, and gave Goggins and Whalen the exclusive right to sell the land. The asking price is $1.1 million. He had hopes that the bank would find him a partner. No one materialized. On October 6, 1986, Cooley Shrair (Heritage’s law firm) notifies Waszkelewicz he is in default on the mortgage.
There were no offers, but there were people at the bank and Goggins & Whalen that were interested in purchasing the Berkshire Ski Basin. Young Mike Smith, Pat Goggins’ brother-in-law, and NIS’ head of commercial lending, was pushing the development potential of the ski slope and its adjoining real estate. On November 26, Mike informs the bank’s board of directors that the bank has paid for the Sno-Engineering study and the bank is going ahead with foreclosing on Waszkelewicz.
Cummington Farms began life as a gentleman’s farm and summer home of Alexander McCallum. He owned McCallums, the big Northampton department store that would later get resurrected as Thornes Market. McCallum thought that modern dairy methods could generate jobs and prosperity for the poverty-stricken hilltowns. He bought up several farms in Plainfield and Cummington, and in l917 he turned the acreage into a modern dairy farm, complete with a huge beautiful barn with a great cantilevered roof and a whole network of outbuildings built around a large court. The floor in the barn was a soft mixture of cork and concrete to make the walking around and the standing around life for the cows a little easier. The beautiful farm and its high silo were visible for many miles around.
“McCallum’s folly” some locals called it. This ambition of McCallum’s had been cooking within him for many years, but when the farm was fully completed in l919, he would have only a few years to live. He had poured hundreds of thousands of dollars into the venture, but his estate ended up selling it in 1924 to the August family, who resold it for $15,000 to a group of people who turned it into a summer camp for Jewish children from the New York area.
For the next fifty years the 300-acre property passed through five owners. The years were hard on the magnificent old buildings, and the place was remote. Route Nine passes about four miles to the south, and access was by two narrow ill-maintained roads. Most of the buildings weren’t heated during the winter, and rot, field mice and weather took its toll. Graeme Dawson family from Connecticut bought the property in l975, added another 300 acres, and for the next ten years,Actor Graeme Dawson , Jean and their children Dale, Drew and Dave ran it as a cross-country skiing area and resort for The Franklin Group. There were hot air balloon events and concerts. In the l977/78 period they had snow from early December to St. Patrick’s Day, and about 45,000 ski visits. They had good years and bad years, but there were too many bad years, and the Dawson kids eventually threw in the towel trying to keep the place going. Three years after Graeme Dawson died, his widow Jean walked into the Goggins and Whalen office in Northampton and put the property on the market.
Dale Dawson remembers having dinner at Fitzwillys with her mother and Goggins realtors Denny Nolan and Charlie Dole to talk about the price they were asking, and their insistence at not taking any paper back. They wanted a cash sale, with no strings and no delays while people got permits.
“We told them that the land wouldn’t perk and that rezoning in Plainfield wouldn’t be easy. After years in the hilltown real estate business, it wasn’t anything new to them. Actually I liked both of these guys , and trusted them and I remember kidding with them about their big shot boss. ”
The principals in what would become the Cummington Farms development included real estate brokers, architects, and insurance people, most of them professionals backed up and impeded by consultants. They came from Northampton, Amherst, and Hatfield, places that are not bothered with ledge. You can usually dig a cellar in Northampton without blasting powder. But up in the high bogs and meadows of Cummington and Plainfield it was a different matter. The garden that flourishes in Northampton perishes up in these cold bony hills. The Northampton and Amherst planning boards were loaded with friends of developers and people who earned their living from development. In Northampton the operational word about building permits is “YES.” Not so in the hill towns, baack in the eighties.
Just sign here, please
Dale’s mother didn’t expect any company that quiet Sunday afternoon in the fall of l986. But all of a sudden the phone rings and one of the real estate agents was on the line. It was Charles Dole from Goggins & Whalen. He and the other agent, Dennis Nolan, wanted to talk to her about the offer that their boss was willing to make for their resort. They were driving down that afternoon to her home in Connecticut to see her with the details.
The first customer that they had found for the family was a group of trail biking enthusiasts who wanted it for their hill-climbing meets. The town of Plainfield wasn’t crazy about that idea, and a general uproar ensued. No more bites as spring turned into summer and summer turned into fall. Was no one interested? For the amount of time they were putting into cleaning and fixing up the property for potential buyers, there weren’t enough people being brought in. After bringing them the motorcycle group there was a long silence from up in Northampton. There were no bids at all. She started to give up on being able to sell the old farm.
The call from Charles Dole carried the news that realtor Pat Goggins and some other people were interested in buying the property. When Dole outlined the conditions, however, she got discouraged all over again. There were a lot of strings to the offer.
One Sunday the two agents handling the property showed up at mid-afternoon with a purchase and sale agreement for Jean to sign. She might be able to live with the price they were offering, but what the two men were describing was not a straight sale, but a complicated agreement that would mean that the Pat Goggins partnership would lease the land from Dawson and her partners while they got its financing and permits. She knew her partners would never go along with this arrangement. She told them that the Franklin Group wanted a simple sale, with no paper taken back, no entanglements and no promises. The two agents poured on the charm and the heat, however, and eventually Jean agreed to sign the one page purchase and sale agreement, more or less to get rid of the two pesky salespeople.
“Well, I’ll sign it for you. ” said Jean, “But it doesn’t mean anything. It has to have the signatures of our partners to be legal.”
“Don’t worry,” says Charley Dole, “This is just to get the paperwork started.”
Jean is sure that their investors, three fairly conservative business people from Hartford, will never go along with this arrangement. She sees the two men out and goes back to her life. After Jean signed the paper, she heard rumors that there were other people interested in Cummington Farms. I heard from several sources that the Anheiser-Busch family were interested in its possibilities as a horse farm, but I was never able to confirm it. I know a firm called Farmvest out of Connecticut had looked at it, and a teacher named Robert Sadowski of Plainfield wanted to buy it with his parents and make a three faceted operation out of the property. Logging, skiing in the winter, and a camp for kids in the summer. It was a relatively modest proposal that might have worked. Sadowski was in Quebec when I talked to him, setting up winter ski-doo tours for Americans. He laughed and cursed when he found out I wanted to talk about Cummington Farms.
“God help me, don’t remind me of that.” he said, “I threw away a year of my life trying to pull that proposal together, only to have it go down the tubes.”
Sadowski gave Hilltown Real Estate two $20,000 checks to give the Dawsons as good faith money, and offered $550,000 for the place on June 6. Time went by. Goggins & Whalen said they had the exclusive, and after negotiations, Hilltown made a second offer to Goggins and Whalen and Sadowski met with Denny Nolan, to say, yes he was serious about buying the place. According to the Dawsons, Goggins and Whalen never delivered the offer to them in Connecticut.
“When I finally met with Nolan and they saw I was serious,” said Sadowski, “Goggins decided to make his move and I was out of it.”
Pat Goggins had become interested in buying the land himself. Tom Beggs at the University of Massachusetts saw the drama with the bikers unfolding in the Daily Hampshire Gazette. Plainfield was in full revolt against the idea of having biker meets in their town, and it became clear to everyone that the Dawsons were leaving the resort business.
Tom Beggs was a skier and formerly was marketing director at Mount Snow. He told his architect friend Bill Gillen that it would be a shame if the area lost Cummington Farms as a cross-country skiing area. Shortly thereafter he got a call from Gillen.
“I’m here with Art Pichette and Pat Goggins and we’re going up to Cummington Farms. Come on up,” said Gillen.
The men walked the property, and decided that they wanted it. Beggs told the Gazette that they “walked the site and clambered through the buildings, ignoring how run-down they seemed.” The original people in the Cummington Farms effort were Pat Goggins and Arthur Pichette. They were later joined by Gillen and Tom Beggs. Goggins and Pichette were the driving forces for the CF project.
The million dollar lawsuit
On November 17, l986, after some unsuccessful attempts to pull together a meeting with the Dawsons and the Franklin Group, Pat Goggins and Art Pichette, aided by his brother Attorney Richard Pichette, sued Jean Dawson and the Franklin Associates for a million dollars. It generated headlines in the Gazette and the Union and Jean Dawson and her partners found themselves inundated by calls from reporters. Jean Dawson told me that the next time she would see that one page purchase and sale agreement she signed, ten other pages would then be attached to her agreement. The agreement included a $50,000 commission to Goggins & Whalen. That raised eyebrows in Boston. It’s one thing for an independent real estate agency to take a commission for arranging a sale, it’s quite another for an agency to buy a property themselves and take a commission out of the financing package. But Charley Dole and Denny Nolan had done a lot of work in vain scrounging for sellers; they wanted their commission.
In February l987, Goggins and Whalen obtained a “Lis Pendens” that enabled them to take possession of the property and padlock the buildings. By suing them in Northampton Superior Court, Pat Goggins and his partners had home court advantage through his political and personal connections with Luke Ryan and other Northampton judges.Lis Pendens under common law is rarely granted. It can enable the purchaser to take the property in litigation subject to a final disposition on the case. It prevented the Dawsons from selling it to another person, and enabled the developers to take possession of Cummington Farms. The partnership immediately moved to padlock all the buildings.
As it turned out, it was a major mistake for Jean Dawson to sign that purchase and sale agreement, and her partners were very unhappy with her. A contract can be on the back of an envelope and still be valid, and if it can be argued that the person signing has authority to bind the partnership, the document could be enforced. Dale and her mother filed a complaint against Goggins & Whalen with the Massachusetts Board of Registration of Real Estate Brokers and Realtors. Mr. Occipinti of the licensing board talked with them and Occipinti scheduled a public hearing on the Dawson’s complaint.
Various kinds of action could be taken by the board, including taking away Goggins & Whalen’s commercial real estate license. Probably the most potent threat to Goggins & Whalen, however, was that a public hearing that would have given the Dawsons a chance to talk about their case with reporters present. Three days before the Board hearing, Pat Goggins contacted Dawson and offered to drop the lawsuit and purchase the Cummington farms property for $630,000. An agreement was reached that the Dawson complaint would be dropped.
“It appeared to have been a very poorly advertised auction,” said Tom Beggs, one of the partners “Only two people made bids, both of which were very low. Maybe they were all smarter than we were and knew that there were so many problems with the place.”
The bank bought Berkshire Ski Basin for $275,000. On July 1, Smith told the loan committee of Heritage’s board of directors that he was meeting with a potential buyer of the Berkshire Ski Basin. Smith was evidently referring to a meeting that afternoon with Art Pichette to discuss a joint venture between the Bank and the Cummington Farms people. Smith told the Heritage Board of Directors that he would now entertain bids from interested parties, and “was optimistic that no loss would be incurred.”
The Board might have thought that this sounded like a good deal. It wasn’t. Some innocent guy sitting in on the board meeting looking at Smith’s appraisal and listening to him talk might have thought that gee, this Berkshire Ski Basin must be a hot property. He was never told that the bank officer was in business with the key people in this potential buying group.
Aiding Mike Smith in his ventures during ths period was Tom Butova, a property appraiser at Smith & Reynolds. Appraisers would play a key role in the Mike Smith and Heritage partnerships by writing optimistic property appraisals based on a “development approach. ” They wrote value as built out, and assumed that borrowers could build the buildings in a workmanlike manner, and that the land values would continue to rise. There was a lot of boilerplate in his appraisals, and very little hard information. Bubbles in the real estate market are fed by optimistic appraisals. Appraisers seldom had economic independence or an effective system of self-policing. A big part of the story behind all the millions of dollars lost during the Heritage era was bad paper from Smith & Reynolds, down in Springfield. Whenever Mike or his friends got in a bind and needed an appraisal that would bump up the potential value of a development so Heritage Bank could lend them more money, he put in a quiet call to Butova. Butova did a lot of work for Heritage during this period, and the FBI wanted to see almost all of it.
The sale of the Ski Basin made Mike Smith look good to Covell and the Board of Directors, but it would prove to be a real millstone around the necks of the associates, who bought it at the artificially inflated price established by the Smith & Reynolds appraisal. According to notices of foreclosure prepared by Cooley Shrair on June 4, 1987, the Basin debt was $320,000 plus accrued interest of an additional $38,000, or $358,000. On June 17, 1987, two days before the auction, Tom Butova estimated the value of the 485 acres of land and their four buildings to be $350,000 when the projected project was built.
If someone at the lending meeting had been awake, they might have noticed the close synchronicity between the appraisal and the debt load. Up- front costs brought the acquisition costs for the Cummington Farms partnership to more than a half million dollars.
I was killing time gossiping about cars and people one fall day in Leeds. This guy worked in a gas station in Williamsburg on the road to Cummington. In his idle moments, which he had quite a few, he watched Pat Goggins drive by on his way to Cummington Farms. Up in the morning, back in the afternoon. He says that when he started the operation, Pat was driving a Jeep, when it was all over with, he was driving a Land Rover.
The Land that wouldn’t perk
Cummington Farms Associates, the entity that would lead the Cummington Farm effort, was formally organized on May 27, l987. The partners as of this datewere Pat Goggins, Peter Whalen, Arthur Pichette, Dennis Gray, Christopher Riddle, John Kuhn, William Gillen, and Thomas Beggs. Pat Goggins, Arthur Pichette, and Thomas Beggs were the lead partners.
Tom Beggs was the only member that had some experience in the ski resort field, having worked at Mount Snow as marketing director. Starting in July of l986 and continuing for the next four years, the Cummington Farms Associates (the Associates) met at least weekly, usually in the conference room at Goggins and Whalen on King Street in Northampton. Peter Whalen and Mike Smith attended regularly beginning in August of l987. On the first of November, Tom Beggs wrote his partners that opposition to their development was being organized in the hilltowns. He recommended that Pat Sackrey, Hampshire County Commissioner and hilltown activist, be brought on board to help them deal with their public relations problems. Mike Smith also weighed in on the question, telling Pat Sackrey that “He didn’t want to do this” unless she was involved. Her involvement in the project may have made their public relations problem worse. Having two of the county commissioners ( Goggins and Sackrey) involved in the project might compromise the county’s ability to play any kind of regulatory role. Tom Beggs told me that there was nervous laughter when the matter of Mike Smith and Pat Goggins sitting at the same table came up for discussion. Everyone should have known that there was a conflict of interest here. Every time Mike made out a official bank check to the Associates he was lending money to himself and his brother-in-law.
The new owners of Cummington Farms had a little more than a month to withdraw from the agreement if they were unhappy with the land they were acquiring. The deadline was July 15, l987. On July 14th, the people from Huntley Associates who had done the soil testing were there at the meeting. The testing procedure for parcels to see if they were porous enough to support septic systems is usually done in two stages. First, a backhoe scooped out holes varying between seven and ten feet deep. Then someone looked at the types of soil they have excavated and would make a judgement on the permeability of the soil. If the soil looks hopeful, they would conduct a so-called perk test, which involves digging a small hole a couple feet deep with a posthole digger. They then would dump water in the hole and measure how fast the water goes down. Generally it is measured in inches per foot. Pichette told the membership that five of the thirty-two pits tested by July 9th were positive, but the FDIC looked at Huntley’s soil logs and found that none of the holes had tested positive.
So they had one day to get out, and here, if you believe the FDIC analyst, Pichette and (perhaps) Huntley were telling everyone that they could go ahead with the development scheme because the land had perked. In reality, the property was reported to be largely ledge, clay and hardpan only a couple feet below the surface. Costa’s study said, “Prior to the July 15, l987 deadline,32 deep hole explorations had been completed without any successful any successful perk tests”. “Only a small area 1 kilometer square west of the pond tested positive. None of the frontage areas perked.” Why did Pichette push the group to go ahead with a big development on this land when it wouldn’t perk? Why didn’t they back out at this point?
Arthur Pichette, who merchandised his services as a real estate consultant, bears a heavy burden for facilitating not only Cummington Farms, but also other Heritage disasters during this period. The FDIC study suggests that he and Goggins were afraid of a lawsuit by the Franklin Associates who were viewed as spoiling for a public fight with Goggins & Whalen over issues relating to how the Associates got the keys to the property. Maybe the partners in Cummington Farms that had put up the initial $30,000 deposit were afraid of losing their deposit money.
So, I think we need to have sympathy for the minor partners in this venture, who seem to have been sandbagged. Ultimately, I think, Goggins and Pichette chose to go ahead because one of their partners had seemingly unlimited financing. Heritage Bank was a partner in the venture, and Mike Smith was sitting there at the table making out checks and no one at the bank had caught on to what he was doing. The sheer magnitude of all of the obstacles the partners faced meant jobs and fees for everyone in the extended family that the development group became. Relatively inexperienced people found themselves with challenging jobs. There were many potential benefits: Commissions for Goggins, fees for Pichette, a marketing contract for the firm of Beggs & Sackrey. Art Pichette’s brother won big fees for his law firm, and Pat Sackrey’s son got a high-octane start in the construction business.
On August 12, 1987, less than thirty days after the deadline for pulling out, the group got bad news. Nordic Group International and the Berkshire Design Group delivered a three-hour presentation on the site. They had been out walking their land in Cummington and Plainfield. It was typical hilltown land, with ledge close to the surface, swamps, rocky hills, a pond and lots of forest. There was a severe mosquito problem in certain areas, the barn complex was dilapidated, wetlands were more extensive than first thought, and some of the cross-country trails were on abutters land.
The Associates knew that they had a lot of work ahead of them. They needed a topographic map and reliable boundary information for openers. They only had 550 acres, not the 700 acres some of the partners thought they had. Because of the wetlands, the partners needed to do a so-called EIR study (Environmental Impact Restriction), do a market study and site analysis. They needed to do more percolation testing, a study of the pond, etc. It must have been a staggering to-do list that they parceled out among the hard-working, overtaxed people who were the principals. Gillen & Company, Goggins, Smith and Pichette were already involved in many other partnerships.
It was hard to back out, however, when you had a cheerful optimistic young guy working with you like Mike Smith, someone with deep pockets who kept handing you checks. Smith presented the plan for the joint venture to the Heritage Executive Committee on October 21, l987. He didn’t dwell on the problems that the venture faced, only on the potential the place had. He indicated that approximately 150 homes could be built on the property resulting in a projected profit of $6.3 million. He forecast that they would have permits in about six months.
In reality, by the time Smith made his presentation to the bank, all the indications were that there would never be any homes developed at the site. Even if the local people had wanted these second homes and given them all the permits they needed, the capital needed to build these homes in remote Plainfield with all the infrastructure costs they faced was well out of reach for a group that from its very inception barely had enough cash to buy stamps. At the closing of the $1.5 million loan, when all the disbursements had been made to the bank, the sellers and the lawyers, the Associates only had $280,000 in cash to draw on. A month later, the working balance was down to $160,000, and Smith said that $80,000 of this had to be set aside for interest payments. At the November 6th meeting, the partners decided to cover themselves in case the venture crashed and ended up in bankruptcy court. They set up a separate corporation to handle operations, and thereby protected the partners in the real estate venture from recovery action by creditors.
The Community says no
Pat Sackrey had done a lot of preparation for the joint town meeting held on June 14th, 1988. On the docket was a proposal by the partners in Cummington Farms to build 120 so-called second homes in Plainfield and Cummington. The locals saw second homes, and they thought “New Yorkers moving in.”
She had sent out personal invitations to Cummington and Plainfield residents, she had got co-sponsorship of the Cummington Planning Board. 175 people showed up. Blanche Beyer from Cummington captured the mood of the people when she said that after driving through Lenox and Stockbridge, “I’m thankful that I live in Cummington. This will destroy the entire complexion of the community.” (Daily Hampshire Gazette, June 15, l988 Cummington Farm Owners meet with Towns, Deborah Hoechstetter)
Despite what Pat called a lot of “silent supporters,” the clear majority of the two town meetings opposed the development. They needed a two-thirds vote to approve it. Bill Stapleton, a Heritage vice-president, attended the meeting and took notes. It was a fundamental turning point for the project, which from now on would face a tougher climate at the bank. Smith’s optimism, assurances and even his appraisals of the value of his Cummington Farms collateral would be challenged.
During the late summer and fall, the Associates met less often. The weekly meetings gave way to two meetings a month. There was a discouraged mood afoot. Pichette said that it was going to be “some time” before they would get permits to put up houses. On September 21st there was a meeting with State Representative Jonathan Healey and citizens of Plainfield and Cummington. There was “palpable relief throughout the room” when Pat Sackrey said the Associates would consider reducing the number of housing units in return for a state agency like DEM purchasing the development rights. On November 2nd, however, Pat Goggins met with the DEM in Boston and reported that the outlook for doing anything with the agency in the near future was pretty slim. The state was facing a big budget shortfall. Smith was looking for another bank to participate in the financing. On November 28th, Goggins and Pichette pushed the concept of developing more cabins in place of the vacation homes. These cabins would be owned by the partnership, so it could not be argued by the towns that they would become permanent homes. The associates agreed to develop a site plan with 35 cabins and no houses. There was no meeting of the Associates in December.
In January of l989, they went back to weekly meetings, perhaps pushed by Smith, who was beginning to feel some heat at the bank. The merger that created Heritage Bank meant that he was no longer reporting to his mentor, Dick Covell, but to outsider Richard Fridlington, who was an old-fashioned banker who did things by the book. He was starting to get some real supervision, and he didn’t like it much.
The Bloom comes off the Condo market.
1989 was the year that the roof began to fall in on Mike Smith, Dick Covell and Heritage. Suddenly, all over New England condominiums weren’t selling.
“Sometime around the beginning of l989,” said Nancy Goldstone in: The Bank that corrupted Holyoke , Lears, December l991, “the country in general and Massachusetts in particular began to get full. There were warning signs beforehand, whispers about a coming disaster in the savings and loan industry, the investigation of Ivan Boesky and Drexel Burnham Lambert, the October l987 stock market crash…. The white clapboards that had been selling faster than cut-rate lingerie at Filene’s basement went unsold. Nobody wanted a condominium.” By the end of l988, the partners in Cummington Farms had seen enough of the opposition from Plainfield and Cummington voters to know that their plans for 120 houses would never be approved, and dropped them. They never notified the bank, however. Perhaps they assumed that Mike Smith had told his boss and the executive committee what was going on. Perhaps they feared that telling the bank that they were abandoning their plans would lead to trouble. They concentrated, instead, on rebuilding the inn. By October of l988 they had a big payroll and significant advertising expenses. They had spent over $3 million by January and were paying about $27,000 a month in interest. To justify the escalating commitment to the project, Smith got yet another appraisal from Paul Butova, this one showing that the project as completed would be worth about $3 million. The partners grappled with the need to do more promotion of the Ski Basin. The crowds weren’t coming.
On January 13th, Smith finally looked at all the money going out and stopped being “Mr. Nice Guy.” Between October and January he had advanced another $927,000 to the partners without board approval and he had loaned the operating company $263,000. He told them no further funds would be available from the bank. The partnership would be responsible for meeting the $100,000 a week they were spending. Once permits for the expansion of the inn were obtained, more money might be available. The partners had to come up with $700,000. Faced with this ultimatum, the partners decided to expedite applications for a special permit to develop Cummington Farms as a 40-room inn with 35 two-bedroom cabins. The next week’s meeting just dealt with how the partners were going to come up with their money. Pichette, Goggins and Whalen said they could come up with their $77,000. Gillen and Gray came up with their money, but Gillen grumbled about whether he was going to get his money back; Smith said there were no assurances, and the stockholders had a lot of questions about their project.
“Everyone was tapped out.” said Beggs, “Bill Gillen’s home and office must have turned up as collateral on 20 loans for different projects.” Goggins and Whalen said, ” Sure Mike, we’ll come up with the money”, but their funds would come from Heritage remortgaging their offices so they could make their capital contributions.
Pat Sackrey agreed to loose another chunk of her home equity to the project. Heritage gave her a loan in January, rewrote it in February for $11,000 more, and then rewrote it again in March for another $11,000 to get her $38,500 obligation. Property values in New England were spiking, and the partners were harvesting Pat’s land for its gain in equity every month.
Architects Kuhn and Riddle said they wanted out of the project, and Tom Beggs told the partners he couldn’t come up with his share and unleashed an emotional barrage that stunned some of the onlookers. He said they’d spent too much money on marketing, and the budget did not warrant a marketing director being hired. Pat Sackrey’s son had been hired as director of the operating company, and he hired his mother to be the director of marketing, which cut Beggs out of the work. Beggs had been the partnership’s point man dealing with the frustrations of operating the Ski Basin and had hoped to be the marketing head. The partnership of Beggs and Sackrey broke up.
According to Shirley Stevens, treasurer of the bank, Mike Smith disappeared for a while in March or April of 1989 to his condo in St. Johns in the Virgin Islands. A lot of people were working out at Cummington now. They had a payroll to meet and bills to pay, and very little income was coming in.
Heritage and their companion banks were on a building spree, putting almost half of their total capital and reserve accounts into condominium construction and conversion. Bank of New England, Vanguard Bank, and Shawmut all had their Mike Smiths and Dick Covells, ambitious aggressive loan people concentrating on landing the big deals. And soon they would all be history. New England was going to have more banks fail than any other area of the country. In the conservative Middle West the savings & loan failure rate was minimal. It was boom and bust in New England. Our fishermen, bankers and the development industry did not like regulation; do not like the whole concept behind restraint. It’s live free or die.
On January 28th, Cummington’s accountant came in with their report. Their operating company had suffered a $462,000 loss in the first ten months. Cycz and Pascucci had doubts about the ability of both Cummington Farms and its operating company to survive.
On February 10th, the Associates priced the completion of the inn/cabin complex. $1 million had been spent to date, but it would take another 4.9 million to complete the project, bringing the projected total investment to $8 million, a healthy price tag for an inn with 19 cabins. Mike Smith signed agreements to let Beggs, Riddle and Gray off the hook without talking it over with anyone at the bank, who now had three less people to enforce guaranties on.
The first strong indication to Fridlington, Mike’s boss, that Smith had “overstepped his bounds” was in early February of 1989. The finance department discovered that $950,000 had been advanced to Cummington Farms in excess of approved loan amounts and a report to that effect went to their weekly management meeting.
Fridlington called in Smith and wanted to know what was going on. Smith admitted that he did not believe he could get the proper approvals so he went ahead and advanced the money on his own. Fridlington and others, shocked by this revelation, found many more over-advances. They told Covell what was going on, and Covell wanted a memorandum from him on the state of the project. On the thirteenth he gave him that memo, which argued they were making good progress toward building a 79-room Inn, with a conference facility, health club, and a center for cultural events, and the associates were now covering their monthly operating costs. What he didn’t admit was that the only reason they were paying into the project was the steady string of unsecured loans he was giving the partners. On the fifteenth he got called on the carpet.
And what a carpet. Heritage was now ensconced in the top floor of its new building in Holyoke and the appointments were regal.
Life in the Tower
“You know, I worked with Dick Covell and my impression was that he was a much more effective administrator when he was here in Northampton with NIS than he was at Holyoke. You see, he was very much of a ‘hands-on’ type of guy. When he was at 109 Main Street his office was right there, in the back of the lobby. It’s when he got up there in his Taj Mahal that he lost his connection with the bank.”
Former Board Member
Heritage moved to an ultra-modern, boat-shaped tower in Holyoke in June of l989, at long last consolidating their offices in one place. Dick Covell wrote a preface to the 1989 annual report comparing the creation of his new bank to the founding of the United States. He compared the amalgamation of the seven banks to the more “perfect union”. He saw the “strength and vision of the resulting entity“ in the “bold distinctive design of our new corporate headquarters.” The landlord, thrilled to get Heritage as their prime tenant, put about 1.4 million of their own money into outfitting the executive offices. The new offices were meant to be the crowning touch that would make Heritage Bank a truly first-class acquisition for one of the big New York banks.
One sunny morning in l998, I had a couple of empty hours in my work schedule, and so I decided to drive down to Holyoke and try to see the old Heritage offices, which by then were occupied by Pioneer Health, an organization that monitors health care for insurers. Heritage Bank occupied the top three floors of the high-rise building sheathed with imported pink granite and plate glass. It was on the west side of I-91, not far from the Mass Pike, and overlooked the Holyoke Mall to the east. It was the perfect location for a powerhouse regional bank.
That morning the elevator doors closed behind me, and I was going up in the glass-walled elevator. Oh, the things that mother doesn’t tell you about the corruption of America. This is how it happens. You sell out Joe Sixpack who trusted you and bought your shares so your can buy an atrium lobby with the dark bronze glass, marble on the outside of the building, a Japanese garden with its pond and walkways, the contract restaurant on the first floor that flips over every three years, the access to Route 91, and all those parking spaces. I stepped off the elevator into eerie darkness. It was a vast waiting room. In the distance a young blonde sat behind a raised dais that looked vaguely ecclesiastical. She lifted her eyes to mine.
“Yes?” she said. I told her that I was writing a book on the fall of Heritage Bank, and that Heritage Bank was once headquartered here, and I wished a tour of the offices.
There was dead silence. “A tour?”
I rephrased the request; there was more silence. She went to consult someone, and then came back. Eventually a man’s head popped out of a doorway.
He was intrigued with my request. He confessed that his company felt a little guilty about the ostentatious headquarters they had inherited. The offices had been vacant for some time, and Pioneer Health got a terrific bargain by a landlord desperate to get an anchor tenant.
We began the tour. First, he showed me his office and his desk, piled high with papers, and the wall of cherry cabinets, where he had stowed his CD player. The inner reception area was huge. The furniture Pioneer Health had placed in the area was dwarfed by the scale of the place. It was here that the prospective big time borrower must have waited, hat in hand, to see Dick Covell or one of his people.
We moved on to the inner areas. Deep velvety carpets. The whole area was superhumanly quiet. My tour guide led me into the conference room, where the board of directors met. Along the room’s north end was a mahogany wall that rolled back at the touch of a button to reveal a screen and built-in projection apparatus. There were arched ceilings and lots of hidden lighting. My guide said that Pioneer had shortened the huge conference table Heritage had left behind; it was now ten feet shorter. We looked into the smaller conference areas, which had built-in screens and computers that rose at a punch of a button out of custom cabinets. It was all first class.
“Look at all this,” said my tour guide, “Not a hollow-core door in the place.”
He gave me a quick peek into one of the executive offices, and it was huge, truly fit for a king. Douglas Auctioneers had the liquidation sale here on June 29, l993. Paintings, prints, photographs and sculptures— 450 pieces, in all went under the gavel. The main attraction at the previews was the opportunity potential bidders had to gawk at the luxurious appointments, like the custom-built walnut and cherry furniture, the golden chandelier and the antique china cabinet in the executive dining room. People trooped through Dick Covell’s bathroom, oohing and aahing at the fancy features and gold hydra-headed fixtures in the shower. My guide showed me one of the bathrooms, but not the ones in the executive suites. This was a bathroom for the secretaries, but it too, was gorgeous. Only months after the bank moved into this building in June of 1989,the bank began to disintegrate. When Mike Smith left the bank, a healthy percentage of his customers stopped paying Heritage.
In the Covell memorandum that he dictated after meeting with Smith, he said that Smith had admitted in making “a serious error in judgment” relative to the Cummington Farm over-advance. That same day, Smith went over to Vanguard Bank to ask them to come in on the project. He had a close relationship with Dave Martin, who had provided financing for a condo he owned in New Hampshire. Vanguard told him they needed more detail on the project. They were in a fragile state too.
In February a big team of FDIC auditors came in and found that things were not well with Heritage Bank. Following the audit, Smith said that a routine meeting with Fridlington, Roy Scott, and Covell turned into a tense discussion of why so many of Mike’s loan accounts had been termed “adversely classified” by the FDIC. Their conclusion was that the files were in disarray and the “bank was out of control.” Mike, who was a big guy who knew how to throw his weigh around got into a verbal battle with Roy Scott, who shared the title of President with Covell. Mike Smith told the FBI later that Covell liked it because “he didn’t back down” when he was attacked by Roy Scott.
On March 1st there was another tense Smith meeting with Dick Covell after more information trickled in on borrowings by partners in Cummington Farms Some of them were complaining qbout the pressure being put on them to come up with monthly contributions. Smith argued that he had a Paul Butova appraisal that the project was worth $4 million and that “the bank appeared to be the only party concerned about the project.” He argued that their loan policy was “not flexible enough and that he should have a $2 million lending limit.” Then the Executive Committee gave Smith a rough going over on the eighth of March. All the officers were excused except Smith and the auditor. He brought along one of Paul Butova’s appraisals to present. Smith and Reynolds projected that the project would be worth $4 million when completed. The officers barraged him with questions, and directors “expressed concern over the amount of the loan.” But they did go along with him, and increased the loan from $2 million to $2.9 million. Then they excused him and “the directors discussed certain confidential matters.” After the meeting Covell and Fridlington met with Smith to lay down the new law. Fridlington or his assignee would work with Smith on Cummington Farms and other loan relationships where close friends or relatives were involved.” Smith was a proud man, contemptuous of Fridlington and “the new people” that came into the bank from Community Savings after the merger, and that edict must have come as a hell of a blow. Fridlington wanted him fired for what he had done, but Covell overruled him.
A Reprimand for Smith
Dick Covell ultimately made the decision not to dismiss Mike, but reprimanded him and let him stay in his position. He still had his checkbook. Covell’s memo to himself said that none of the directors recommended dismissal for Smith, but agreed that disciplinary actions “were warranted at some point, in the form of lesser compensation or reduced bonus.”
In March, Smith reported to the associates on the results of the board meeting. He was disgusted with the bank, and the bank wasn’t too happy with him. He had never told them that the Associates had abandoned their plans for the 120 homes. The bank would not lend them any more money (but they did). They thought the project was over-funded by one million dollars. (It was.) The partners discussed ways of raising money, and on the 31st discussed their $14,000+ weekly payroll, and ways of cutting it. Just the phone bills for the operation were running between $1,000 and $3,000 a month.
On April 28, Heritage had a board meeting in the country, to visit the Cummington Farms project. John Sackrey made a presentation of the construction project; his mother presented their marketing plan, and David Berenson the food service operation. Gillen, Pichette and Whalen came. Before the Heritage Executive Committee meeting on May 10th, Goggins and some of the Associates lobbied Covell hard for money to finish the project. Goggins went into the back room with Covell. There is some evidence that the Associates threatened to file a suit against the bank under the lender liability laws. At the meeting itself, Pichette said, “It is clear that recent events have caused considerable consternation and concern regarding the project’s future.” The bank directors voted to give the associates an additional $2.35 million to complete phase one of the project, provided that the loan was secured by additional collateral, acceptable to the bank, of a value of at least $1 million. Because Dick Covell did not fire Mike Smith, he still had the Heritage checkbook. He was the bank and the bank accepted a lot of worthless paper. The bank bought back the Basin at Butova’s inflated price, and poured a lot more money into the project. Pat Goggins and Peter Whalen, under the new restructuring plan, now held 63% of the project. Smith was negotiating the purchase of a one-third ownership in Goggins and Whalen at the time the loan was being restructured. As a one-third owner, Smith would acquire a beneficial interest in the project. In the final days, as the project was gasping for air, Smith was named comptroller of Cummington Farms. In a Massachusetts Annual Report for Goggins & Whalen, filed on March 16, l990, Smith was a director of the corporation and David Shrair was the clerk.
The cash in hand to the Associates after the closing went fast. Four months later only $12, 100 was left. Smith stubbornly kept fighting with the bank for more money for Cummington Farms. A whole load of beautiful furniture had been delivered to the inn, and there was a bill for $219,400 due. Smith wrote the furniture company that Heritage had set aside $219,400 to pay the bill, but the check was never sent. The thunderclouds were forming. Board members were angry following the release of an internal memo that documented substantial deficiencies in 57 Smith loan files. According to Smith, David Fogel angrily asked him “How could you fuck up so bad?” To Smith, it all came as a stunning surprise. He saw himself being blamed unjustly for all the substandard loans. The first strong indication to John Fridlington, Mike’s boss, that Smith had “overstepped his bounds” was in early February of 1989. An auditor in the finance department, George Dimetras, discovered that $950,000 had been advanced to Cummington Farms in excess of approved loan amounts and reported that to their weekly management meeting. Smith got called in by Fridlington and asked to explain his behavior. Smith admitted that he did not believe he could get the proper approvals so he went ahead and advanced the money on his own. Fridlington, shocked by this revelation, found many more over-advances. They told Covell what was going on.
The Cosbys come to Cummington Farms
(Tim Cronin worked at Cummington Farms from October 1990 to January 1991, when it closed.
“Those were hard times for me. I was new in Northampton, going to Holyoke Community College studying hotel and restaurant management, and living hand to mouth. I saw an advertisement in the Gazette for a front desk job, and was interviewed by Pat Sackrey, who at that time was in charge of room reservations.
The place was beautiful. The rooms were really luxurious, and many of them had living rooms and lofts with king size beds and views. They were nicely decorated, with decorative stencil work running around the walls. The owners had kind of grandiose ideas about what they were going to do with the place. I was shown plans for adding 50 more rooms in a new building, putting in a swimming pool and a 18-hole golf course. During the summers they were going to use the network of cross-country trails for jogging and running.
I started in October, when the leaves were changing. It was very quiet, those three months. I worked the 2 to 11 and during the week there was usually no one staying there. No one at all. The only person who ever called most nights was my girlfriend. I’d leave the desk now and then and wander around outside. The restaurant was usually dark and empty. There was a chef, maybe one line server, but no customers.
The worst part of it was that there didn’t seem to be any plan by the management as to how they were going to bring customers in. The calls I remember receiving were from people from New York, New Jersey or Connecticut, from people who had seen the ad in the New York Times. People would inquire as to the basic rate. At the time I think it was $124.00 a night for the European plan. They ran it more or less like a bed and breakfast. There was no cable, but the guests could rent movies from the front desk. I only remember one night being busy; it might have been Thanksgiving. I had to bring my own meal. They never supplied any.
Winter arrived. It was cold in some of the rooms, there were electrical problems, and one night a pipe exploded in the lobby and ruined all the stuff we had in this old-fashioned cart where local merchandise was displayed. There was no snow. They were trying to get the place going, but they were very disorganized. If a customer wanted more information, there was no basic brochure to give them on the hotel. Pat Sackrey kept saying one was coming, but after awhile I knew it would never arrive. Out on the highway there was only one tiny sign like you’d have for a tag sale, and no sign at all where the road forked at the top of the hill. People would get lost and end up in Plainfield. It was a rough sell to the sophisticated clientele they were reaching out to. People wanted to be close to restaurants, activities and nightlife.
Christmas arrived. I had to work Christmas Eve and Christmas day, the whole bit. We had all of Bill Cosby’s uncles and aunts and cousins there. I remember all the kids coming down and looking for videos. The Cosbys had them over for Christmas dinner to their place in Shelburne, but they needed places for them to sleep. Really nice people. Bill and his wife came over to check on everything, and I think they felt a little sorry for me being all alone in that ark during Christmastime. I think they brought me over dinner.
To take the curse off things, I invited my girlfriend up for Christmas Eve and we slept in the most expensive room in the house, the silo room. Beautiful place with a gas fireplace, a sitting area and a circular staircase. $240 a night. Boy, was the place cold. My girlfriend was shivering. The snow was drifting under the door and you could see your own breath. I got a ceramic heater going, but it was still cold. I ran around and found a second heater and plugged it in. All the lights went out. And I mean all the lights, everything in the whole wing. Just one set of breakers for everything. I imagined all the Cosbys sitting there in the darkness, wondering what the hell was going on. I ran downstairs with a flashlight and found the breakers and turned every one of them back on. I tried the heater again, and it blew out the juice again. . Three times the lights went out. Finally I gave up on heating the place. I found some towels in the maid’s room and stuffed them under the door and we huddled that night under three or four blankets, shivering and giggling. It was a long cold night.
They closed not long after that, some time in January. The final day they gathered us together in the small conference room by the dining room. Pat Goggins was there, and Pat Sackrey and Peter Whalen were there. They told us that the lack of natural snow had killed their finances. They would have to close the inn. They wished us well. A month later we had a major snowstorm and a couple more storms after. I half expected them to reopen, but that was it. After it closed, I heard that all the subcontractors got nothing.
The Bankruptcy Game
It was, perhaps, the end of an innocent era in the hilltowns. It never occurred to small businessmen in the valley that a venture backed by so many prominent people could go out of business without paying their bills. They didn’t understand that they were participants in a game, and advising the partnerships were canny people. Lawyers David Shrair and Irving Labovitz were advising the Cummington Farm partners, and they knew the game. If you play the bankruptcy game aggressively you can end up on top. All the people who have been calling you looking to get paid will be whisked away with a simple letter from the court saying the aforesaid debtor has no assets. Then you can hold onto your development, and stay in the ballgame. With good legal advice you can keep your home and your vacation spot on Cape Cod.
Tough guys accept bankruptcy as a fact of life. There’s a macho culture among developers who know how to play the game. The more ruthless will siphon off money from a weak development and put it in another, more lucrative venture, and deliberately crash the first one. These guys see filing for Chapter Eleven not as an ending of an unsuccessful venture, but as a opportunity to keep going, shed their debt load, and then get more money from a new set of banks, sometimes using a different front man.
The partners in Cummington Farms created a paper organization to hold the assets and shield the principals. In February of l989, feeling the cold wind blowing on his ventures, Pat Goggins sold all his property to his wife.
The Cummington Farms Associates and the Rostoffs, who bankrupted the Hotel Northampton, had the same M.O. through l990-1995. Big fees for the lawyers, peanuts for the creditors, and all kinds of maneuvering to sell their properties to friends and partners, people you can make quiet side agreements with.
Element one: get a buyer right away. When you file for Chapter 11 you are in a strong position if you can say to the judge, “Look your honor,we have a buyer in the wings.” Judges hate to get involved in the minutia of running bankrupted businesses. Both the Rostoffs and the Cummington Farm group lined up a buyer for their property before they had filed their Chapter 11 application. The Cummington Farm Associates found a Holyoke home for troubled kids, NEARI (New England Adolescent Research Institute) which was willing to buy the developed portion of Cummington Farms for $3.5 million. NEARI was already a Heritage client, and had been steered to the Associates by their bank officer, John Fridlington, who knew that NEARI needed a bigger facility. However, the deal fell through after a stormy meeting with Plainfield voters when they opposed NEARI’s planned use of the facility to house and treat emotionally disturbed children. Their rejection then opened the way to its eventual sale to Peter Laird.
On March 20, 1990, Pat Goggins gave prominent bankruptcy attorneys Hendel Collins & Newton a $10,000 check as a retainer. Both the Rostoffs and Cummington Farms would use Hendel, who would bill the court $225 an hour for his time, and his time would be worth every penny they paid them. He would tell the Judge that his clients were fine people, and the Judge would believe them. How could he know any different? He was in a Worcester high rise, up in the clouds in a clubby world where only lawyers and judges tread.
From March of l990 on it was war, and the warriors were the four teams of lawyers hired by the Associates. They had to fight off the creditors with their liens, deal with a vacant and deteriorating facility, and shepherd the project through Chapter 11 and Chapter 7, when the case would be closed out. Pat Goggins and the Rostoffs didn’t stint on attorneys. They hired the best. The mud that Mike Smith lived in got tracked into a lot of legal offices in Northampton and Springfield during this period. There were a number of references during the Labovitz trial to the amount of cash pouring through Mike Smith’s accounts. His lawyer produced his checking account records, pointed to the number of thousand dollar cash deposits, and wondered how the hell the prosecution could tell an alleged Labovitz bribe from all the other cash transactions going on.
So it all comes down to a reality check, that this, my friend, is America, and some of the successful lawyers in any town U.S.A. end up being married to dirty people, and doing their dirty work for them. Us little guys with our house closings and wills and tax problems won’t pay the rent on the offices. The Rostoffs, the Pat Goggins and the Mike Smiths of the world do.
The ventures headed into the courthouse. When human affairs go bust, the lawyers take over. They do the talking and maneuvering, the civilians sit in back of the courtroom and sweat. Checks are made out; Notices for appearances are filed. Things that seemed straightforward turn out to be complex and loaded with thorny complications. More lawyers need to be hired to investigate things. And everything that is done must be recorded and billed. Fierst & Neiman worked intensely for Goggins, Smith & Company during the l990-92 difficulties. And Craig Brown from a Springfield law firm shows up on March 30, l990, billing at a rate of $150 an hour. Four teams, in all, were working for the partnership, and some of them were also doing some special work for Mike Smith on the side.
When Mike Smith cleared out his desk and walked out of Heritage Bank for the last time, he came back to a town that was busy making him into a hometown hero fallen on rough times. There were hugs for the big guy, a huge farewell dinner for him on July 25th. Buddy Duseau held up a big picture with Einstein on one side and Mike Smith on the other. Judge Michael Ryan and Pat Goggins co-hosted, the Rostoffs were there, every one in town that was anyone was there. A reporter who attended noticed, however, that it was a stag affair Only one woman was present, Patricia Sackrey.
The 19 room inn, and its development and operation for four months had cost a total of $7.3 million. The bank had put in about $5.1 million, and the unsecured creditors had put in about a million dollars into the development through their sweat equity, supplies and equipment. The partners had put very little of their own money into the venture.
When the dust settled on the case, the Federal Bankruptcy Court in Worcester shipped the files to the Federal Records Center in Waltham, where they were shelved away. The lawyers involved got more than $100,000 for their work, and were the only clear winners.
John Doherty of the U.S. Trustee’s office made a half-hearted effort to organize a committee of creditors in the Cummington Farms affair, but evidently only a few people showed up for his meeting. He told me point blank that when the secured debt was as substantial as this one was, organizing a committee of creditors is “not worth the trouble”. His assumption was that the creditors will get nothing, and the bank will get anything that is left.
The case sailed all the way through the court with the people who had bankrupted the venture controlling who the property was sold to. It seemed as if there was no one working for the creditors to get top dollar. The court probably never knew that real issues existed in this case. “Equitable subordination” is the issue that should have been aired in court. The secured debt should have been subordinated to the mechanics liens and the unsecured debt. It was, to a remarkable degree, the bank’s venture. They gambled five million dollars of their shareholders money on the hunches of a young bank officer, and they never supervised him or the project. The bank, through the NIS Development Corp., was part of the development team from almost the very beginning. The lending officer for Heritage ended up being the controller of the project, and as of October of l989 held substantial equity in the project through his 1/3rd ownership of Goggins Whalen and Smith. He played a key role in shaping the venture. If a single factor doomed the venture, it was the Mike Smith’s insistence that the partners take on Berkshire Ski Basin. It cost them a half million up front, wasted uncounted hours of work by the associates and hundreds of thousands in losses before it was resold back to the bank.
“You have people work for you, you pay them.”
When I left Northampton about 1:00 on a December afternoon in 1999 to interview Pete Marcoux, it was balmy and in the forties. In the Northampton banana belt it’s a little foggy and damp, but up in the mountains of Cummington it was cold and the ruts are frozen rock solid. A lot of the roads up in Cummington are abrupt and economical, like Harlow Road. You go up the hill, you go straight up it; you don’t monkey around with switchbacks or cutting across the hill’s face. The south side belongs to the Harlows, the north side to the Marcouxs. The Harlows have a tall, new-looking contemporary house wedged into the hillside.
Pete and Michele’s house is conventional and practical, built for cold wind and trouble, your basic modern ranch built close to the ground, close to the road, close to the hilltop. The garage is under the house so you go direct from the wheel to the mudroom with indoor-outdoor carpeting. There are sheds to protect his woodpile from the weather. A big house trailer is peeking out of the garage. Pete looks like what he is, a heavy equipment operator in his forties who is surviving. His wife runs a cosmetics business out of the house, and when I was there she was sitting at a table mixing up some chemicals on a table covered with little bottles. He is big and tall and patient and like his equipment he takes a while to warm up. He lost about $27,000 when Cummington Farms stopped paying their bills, and lost another $10,000 to a lawyer who unsuccessfully tried to get Pete’s money back.
Pete happened to be busy somewhere else the first time they wanted a big job done, so he sent his brother over with a crew of five or six guys to do the work. Later Pete and his crew dug and finished off the septic system, cut trails and did landscaping work. Cummington Farms Associates were paying every week and all of a sudden they stopped paying him.
“All of a sudden they forgot to write the checks. Right up to the end my brother thought we were going to get paid. I knew they weren’t going to pay and that’s it. We got out of there.”
He doesn’t understand when I ask about the impact of CF not paying their bills.
“You have men work for you, you pay them. That’s it. You have to pay them. If I didn’t, I’d be lower than the skunks that were running that operation. But it came at a bad time. I had some big payments already. I had a son get killed. I had just bought a ton of equipment and we were going into business together. I bought backhoes and trucks and whatever, and my payments on all this were $8700 a month. And so this came on top of everything. I worked like a son of a bitch for a long time. I was lucky, in a way, because I mainly got burnt for the labor. Other people, like Hathaway, put a lot of money in for materials. We should have realized that things weren’t going to do real well with that Cummington Farms project. You would just have finished something, like landscaping and grading a section of land, and get it down so it was just right, and you’d come back the next week and someone would have driven a heavy truck right through your work and tore it up.
“It was like no one really knew what was going on or cared. You knew that when that resort you were working on was all done, they wouldn’t want any people from the hilltowns to come there. When all of us had finished working there, we were going to leave and that was it. We wouldn’t have been able to afford to eat there anyway. John Sackrey seemed ok. He was the only one we ever dealt with. I mean he obviously knew more about what was going than he was telling us, but that was his job. I take people at their word. Someone tells me something, I assume they are telling me the truth. I’m still a jerk as far as that goes. But that’s the way it goes.”
“I guess it wasn’t news to us that the land wouldn’t perk. The septic system was about 1/2 mile from the buildings, and there was ledge between the main complex and the leach field. They had to bring in Pioneer explosives and dynamite it. It was a huge system. I remember us digging 36 trenches for the leach field. It had a 20,000 gallon tank. So here Peter Laird inherited this huge brand-new system that conforms to Title 5 and I built it for him. Does he thank me, maybe pay me something for all the work we put in? No. What they tell me is they were going to hire the people that worked there and give them a chance to get their money back.”
He laughs and looks at me.
“You imagine that?” he says, “Double or nothing, get your money back by working again? I guess that ís why I never got invited back, because I didn’t like that idea. They’re still using the septic system that we built. The only enjoyment that I got out of that project was when they first got it running and they forgot to turn some valves off and the pressure built up and there was this huge geyser in the middle of the parking lot. Serves them right. I knew this old guy that sold them the pumps from the septic system. They stiffed the company, and he felt so bad about what happened that he came out of retirement and started working for them again to pay them back. He didn’t have to. I remember we went to this big Lions club dinner over there at Cummington Farms, a Christmas party. Everyone was there. I really missed the chance of my life. I should have got up and banged my glass with my fork and said, ‘Well, everybody, this dinner is on me.’
And it was. We were all using my leach field. I didn’t say anything, but I wish I had. We saw Pat Sackrey there. She ís going around from table to table showing off. I ask her when they were going to pay me. They couldn’t. ‘Well,’ she told us, ‘You can come and eat dinner and eat here for free as much as you want to.’ Great. I sat there and tried to figure out how often I would have to eat there to get my money back. They closed about four months later.”
“I went in to see Pete Whalen in his office to try to get my money back. I talked to the receptionist and she told me that they were occupied in some kind of meeting. I could see them coming and going. I had a young guy with me and I decided not to show off, you know? Not start yelling or showing off my temper. I went there to be nice; I stayed nice. We left quietly. I called him later, and he admitted that he had seen me out there, but didn’t know who I was.”
“But young Pete Whalen felt badly about what happened. He was ok to me later. I don’t understand those people, though. A dollar doesn’t mean the same to me as it does to those people. The way I see it, you do need money to survive. If you have a few bucks extra, that ‘s ok. We got a good enough house and a big enough piece of Marcoux mountain. I always have enough work to keep me busy. I keep my business small. I have a part time guy, and another guy who works for me from time to time. I’m a survivor. The people who were in my business and bombed out in the early nineties ended up buying big expensive buildings. They went in over their head. But I keep going. I’ve never had a slow period. I keep working, doing driveways, house lots, septic systems. Somebody’s got a $300 job, I’m happy to do that. A big deal job comes along, you try to do that, but you don’t tell the guy with the $300 job ‘no’. I really like working for the town, because someone else is giving the orders. I don’t like being the boss, and we’re able to take a pretty good vacation every year.”
The Swift River Inn.
On March 20, 1990 Pat Goggins gave prominent Springfield bankruptcy attorneys Hendel Collins & Newton a $10,000 check as a retainer. Both the Rostoffs and Cummington Farms would use Hendel, who would bill them $225 an hour for his time, and his time would be worth every penny to both groups. He would tell the Judge that his clients were fine people, and the Judge would believe them. How could he know any different? He was in a Worcester high rise, up in the clouds in a clubby world where only lawyers and judges tread.
From March of l990 on it was war, and the warriors were the four teams of lawyers hired by the Associates. They had to fight off the creditors with their liens, deal with a vacant and deteriorating facility, and shepherd the project through Chapter 11 and Chapter 7, when the case would be closed out. Pat Goggins and the others didn’t stint on attorneys. They hired the best. The mud that Mike Smith lived in got tracked into a lot of legal offices in Northampton and Springfield during this period. There were a number of references during the Labovitz trial to the amount of cash pouring through Mike Smith’s accounts. His lawyer produced his checking account records, pointed to the number of $1,000 cash deposits, and wondered how the hell the prosecution could tell an alleged Labovitz bribe from all the other cash transactions going on.
Fierst & Neiman worked intensely for Goggins, Smith & Company during the l990-92 difficulties. And Craig Brown from a Springfield law firm shows up on March 30, l990, billing at a rate of $150 an hour. Four teams, in all, were working for the partnership, and some of them were also doing some special work for Mike Smith on the side. The Associates were designated “debtor in possession ”, which gave the surviving partners,(Pat Goggins, Mike Smith and Pete Whalen) a leg up in selecting a party to buy the property when they emerged from Chapter Eleven. Fred Fierst and Ken Neiman were the original legal odd couple. Ken Neiman was east coast, Fred Fierst was west coast. Ken was out of New York, Fred was out of the L. A. area. Ken was slim, curly haired, and sardonic, Fred smooth, elegantly dressed and distant. Ken started in practice in advocacy law for the Center for Social Welfare Policy in New York. The two men opened a small office. in the early eighties, and later they moved to bigger quarters on Main Street. When the dust settled on the case, the Federal Bankruptcy Court in Worcester shipped the files to the Federal Records Center in Waltham, where they were shelved away. The lawyers involved got about $100,000 for their work, and the people that bankrupted Cummington Farms got a second chance to make the economics work. Fred Fierst got a chance to run a resort.
Peter Stern in his threadbare Springfield offices handled the Chapter 7 closeout for both bankruptcies, and was on the other side of the great divide. On one side of the mountains lucrative billable hours rain down on the Chapter 11 lawyers, but when Stern got the files the skies are clear and all the money is gone, or buried in a safe place. He’s the guy that certifies that were no assets left in the corporation and closes it out with a stroke of his pen. He collects his modest fee, and things are all over.
My wife and I started a catering business, Keenan Cuisine, in the late eighties, working out of our home. By l991 we doubled our gross receipts for three years straight and were going into the winter with more business booked than we could reasonably accomplish. Something had to happen to help us grow. About this time, we got wind of an informational meeting at Cummington Farm Village. A crowd of about 200 hilltowners showed up. At the meeting a consultant named Scott Hyel told that Peter Laird of Ninja Turtles fame was going to purchase the property as a kind of economic development resource for the hilltowns.
Attorney Fred Fierst had evidently persuaded Peter Laird to buy the place to take the Cummington Farms partners off the hook. He was Laird’s point man for the project. It sounded perfect and we went for it. It was an attractive facility, and being their vendor meant that we were able to use it to fulfill the half-million dollars in contracts we had signed.
Peter Laird did a nationwide search for a general manager for the resort, and when he ignored all the people who had responded and decided to give his personal secretary the position, well it was incredible. She was about twenty-eight years old, a Mount Holyoke graduate with zero experience in the field. It was very strange. Spending $20 million dollars on this place and giving it to a kid to manage it. Stranger still was the fact that neither Paula* (not her real name, MAK) nor her assistant, were around weekends, when most of the people were there. We did the best we could.
My wife Jane was the food and beverage director and I was the chef. Our first couple of weekends in the dining room we did about sixty meals over three days. In less than a year we were doing over a thousand meals in the same three days. Our staff grew to over a hundred, all of whom came from Franklin County. Within four months of opening for dinners we had every major restaurant owner in the area eating in our restaurant.
People came from all over. The dining rooms were buzzing. Businessmen from New York were sitting next to farmers from Cummington. The prices were high under the old group to keep the locals out. We kept the prices reasonable, from $5.95 to $12.95. Hilltowners were opening their wine bottles between their legs, just like the continentals. George Schultz came up with his wife. Peter Picknelly came. All word of mouth. We had great music playing , local musicians. People loved it. It was a destination, an adventure, it was a warm and inviting place up on the roof of the world. But it wasn’t easy. We were working 7 days a week, 12 hours a day, and no one from te Swift River administration was there to help on weekends, when the place was really busy.
Since the managers refused to set foot on the property on the weekends, there arose a certain clannishness among our staff. Many of the dining room staff never knew who the manager was. And all the time there were battles over issues like the price of soup. They never let us look at the books so we had to keep a separate set of our own just to be able to run our department. One night we had two hundred and fifty people in the dining room, and we lost all the water pressure.
A catastrophe. They had never gave us keys to the place. The managers were on call for emergencies, but no one would come, so I had to shoulder the door. I found out what was wrong and fixed the tank and got the water going again. The next day I got an official reprimand for malicious damage.
Well, in the early years there would often be frictions and misunderstandings. We were all playing this complex three dimensional chess game with each other. Fred Fierst would get a phone call from someone and come up and would say soothing things, you know, ‘bear with her’, so on and then he’d say, ”Lets go skiing and then after the skiing we would sit around drinking with him and he would pontificate about how he was a great lawyer.
“You know, Phil,” he would say, “I think I have the greatest law practice in the world.”
Well, I was civil to him. We’d see him on weekends. He’d come up with a table of fifteen and play to the gallery. There ís something about owning a restaurant. All the big time lawyers and sports figures and celebrities do it.
Then they brought in this psychology teacher from Quisagamond Community College to find out where all the disharmony was coming from. Eventually our manager was called into Northampton and it was decided that she wasn’t happy at Swift River.
So, as you might guess, this consultant gets himself appointed as acting general manager. One day we are called into Northampton. There is Fred Fierst, sitting in his office with this new guy. Fred is always elegant. In the office he usually has his jacket off and his sleeves rolled up to show us how hard he works. The shirt is white Egyptian cotton, monogrammed, starched and ironed perfectly. When he is riding out in his vintage car he’s got his Armani suit. When he would drive out to see us in the country in his big new car, he looked straight out of an Orvis catalogue with his madras shirt and his khakis and no socks with his loafers.
In the conference room. Fred tells us, “I think that you have worked very hard, but you don’t get along with management.”
Get along with management?
So Jane fires back. Your numbers are not correct,” says Jane, who came to the meeting all prepared. “I don’t understand what you are talking about,” says Jane. “You are violating my contract.”
In the winter of 1993, though, there was a search for a new general manager. The place is still losing money. This guy shows up driving a 540 SEL Mercedes, top of the line. He parks in the fire line and stalks into Jane’s office. A big bald guy named Robert Cowan.
“Ah, you’re Jane O’Connor,” he said, with this hard look. “Missy, you and I are going to have some fun times together. This office is now my office. You have a half an hour to get out.”
We both knew that this was it. They had hired someone who was probably going to cook the books and end up firing us. I had this strong feeling that this guy was going to take Fred and Peter to the cleaners. He announces that his plan is make the place a Best Western Hotel, and announces that he was going to bring in his own chef to evaluate our operation. Then he brings down practically his whole family to work at the Inn. Both of his sons. One was a heavy equipment operator, the other was a systems analyst. The one son got paid $5,000 to dig a swimming pool. They never bothered to get a permit for the work, and it was pitched all wrong, toward the building. And a daughter of his was working there too. He sells Fred Fierst on getting a computer system for the Inn that was designed for a 300 room hotel, not a 19 room inn. He also builds a tubing hill that is supposed to bring thousands of people into the place.
In May and June Jane noticed that he was interviewing chefs. Then she noticed that this guy came back for a second time. I went in and confronted him. “You hired that guy, didn’t you?” I said. He admitted he had. So we said to him,”This is it, we’re all done’. No no, he didn’t want us to go, he just wanted Phil to work for the new guy.
It was all over. We quit. Later Fred called us.’ How are you? says Fred. Salt in the wounds. Well, they finally caught on too late about this new general manager, and fired him. He wanted our help and our testimony in federal racketeering court case they were filing against him.
“I don’t know” says Jane, “I was born Roman Catholic and was told that if you worked hard and were straight, you’d make it in America. If I wanted the trees decorated with bittersweet at Christmas, I got up and did it. I never asked anyone to do anything I wouldn’t do myself. We never really landed back on our feet. Our oldest was already started at B.C. when the bottom fell out. He finished barely. We couldn’t find comparable employment anywhere. I get sad when I think about that mission statement that Scott Hyel drew up for Swift River Inn, him seeing the Inn as a renewable resource, generating jobs and business for the hilltowns. For a while it was happening.”
Snow is in the air
New manager works to make Swift River Inn profitable said the headline in the Daily Hampshire Gazette on March 15, l993. Robert. Cowan was beaming the day that Jeff Holland took his photo for the Gazette. He was standing outside the Inn; he had his checked tweed cap on, sunglasses, a sweater and a Lands-End type jacket. In the background there was a couple going off for their cross-country trek.
He told the reporter, who handled local news for the Gazette, that he had been “in the hospitality business for thirty years. ” The words “in the business” tends to indicate that snow is in the air, that someone is waxing fulsome in front of a young impressionable reporter. He tells her “He’s changed many new or distressed businesses around New England into money-making operations, and expected to do the same at Swift River. ” My saintly old grandmother when she told me about our family history used the same phraseology. Uncle John was in the transportation business for twenty years (he was a cabdriver), so and so was in the hotel business (as a chamber-maid). We were a family of princes and princesses. .
Well, reading the lines and between the lines, you find out that Cowan’s father had run a restaurant in Maine, and he worked there as a kid. Phil Keenan said that Cowan had told him that his father was a mean-tempered hard-drinking chef that terrorized everyone who worked for him, and that Cowan still was very much in awe of his old man. He and his family had owned the Sheraton White Mountain Inn in North Conway for ten years.
What the article doesn’t tell you is what happened when Robert Cowan was running the Sheraton. And I don’t know what happened. I don’t know all about his success stories in saving marginal businesses. I do know that Robert Cowan was a member of the Heritage club, and I think that was how he got the job turning Peter Laird’s operation around. Mike and his boss loaned a lot of money to doubtful characters. The easy money attracted many people that took their money and defaulted on their obligations.
In March of l989, Heritage bank give Robert F. Cowan a loan of $14. 5 million. The collateral address was the Sheraton White Mountain Inn in North Conway, N.H, and the loan was one of the Heritage loans that Fleet Bank decided it didn’t want. Following the takeover of Heritage, Fleet looked at the commercial loan portfolio, took the strongest loans, and left the weakest for the FDIC to deal wth. Four years after the multi-million loan, Cowan was in Northampton, working for Laird for $200 a week. And it is this improbable transition that makes me think that the Cummington Farms group was still involved in decision-making at Swift River in l993. Who else would look to the Heritage “family” for a rescuer? Giving Cowan such a responsible job at such as niggardly wage was a guarantee that funny business is going to take place. Otherwise it wouldn’t be worth his time.
Snow-tubing expected to take off at Swift River went the next headline. On December 20, Cowan has the reporter over again, and this time there’s a big article on the Inn’s new snow-tubing slope. Cowan relates how he was going through Amesbury on 495 in his Mercedes and he spotted this ski-slope crowded with people. He pulled off the highway, and studied the operation with his binoculars. Hundreds of people were sliding down the hill on inner tubes, and then being towed back up to the top with a special lift. The Amesbury operation was the brain-child of Brad Parks, the former Boston Bruins hockey player.
Cowan, in the expectation that a similar operation would attract twenty thousand more people yearly to Swift River Inn, many of them families, constructed the second ski-tubing hill in the United States. It was a substantial investment for Peter Laird. A lift was constructed, night lighting put in, and four slopes were constructed. 25 additional staff were hired to manage the place. Four thousand cubic yards of ledge was removed, and thirty thousand cubic yards of gravel, sand and rock was added. A four-foot high berm was added to the run-out area at the bottom of the hill.
Snow-tubing injuries reported at inn. The headline was smaller this time. Stephen Bengis, director of New England Adolescent Research Institute (NEARI), had already taken his share of lumps at the Cummington resort before the morning of January 2nd, l994. A petition of local residents opposed the NEARI bid to buy the resort and turn it into a school, and at a stormy hearing in the spring of l990, Bengis and his proposal came in for harsh criticism from local people.
On the opening weekend of the slope, Stephen and his family came out to try out the resort’s new ski-tubing operation. It was a sunny, beautiful day. Bengis went up the hill on the lift and walked to the push-off point with his four-year-old son. The run he was going to come down was about 15 feet wide, and dropped 94 feet in its 600-foot run. His wife stayed below, the way most sensible wives do. He sat down on his inner tube, put his son in his lap, and pushed off. It was a hair-raising trip that ended up in Cooley Dickinson hospital, and a long painful recovery from several crushed vertebrae.
“That ride I took with my son” said Bengis to me, “was absolutely terrifying, a kind of extreme sport that you don’t indulge in with your four year old son on your lap. The hill was icy, and we kept going faster. They told us to dig my heels in if I wanted to slow down, but there was nothing to dig my heels into. I didn’t know what to do. I thought at one point, well maybe I should try to turn the thing over and get rid of the rubber tube, but that would mean that my son would end up on the ice, trapped under me, face down. So there was nothing I could do but wait to see what was going to happen. ”
“I assumed that the place was professionally built and tested and that it was safe. I assumed that there was some kind of run-out area at the bottom where we would have a chance to slow down. There wasn’t, just a berm at the bottom. It acted like a ski-jump. We shot up fifteen or twenty feet in the air and came down in the forest, a couple feet from this stake. I could have been killed; my son could have been killed.
And my wife was watching this happen. It was truly awful. It was only later that I heard they had tested it with staff the day before they opened, and staff people had been injured. Two kids had been sent to the hospital the day before, but they didn’t give us any warnings. ”
“That place has bad karma for me, bad something.” he said. “They just are damned lucky that you can’t sue for punitive damages in Massachusetts.”
In a Gazette article, Cowan was quoted to the effect that the accidents on Saturday weren’t really accidents, “but more of a mishap.” That weekend their spokesperson, Brenda Burdick, apologized to the people injured, and the hill was shut down. Some months later, the operation re-opened. Sno-Engineering of Littleton N. H. had designed a whole new slope. The incline was 50 feet shorter, there was a curve midway to slow down the tubers, and a bigger runout area. There was just one slope versus the four in the original operation, to assure good maintenance. A member of the U. S. Bobsled team, staff, and reporters tested it out. Tzivia Gover made sure that she was covered by workmen’s comp before she went out on the assignment for the Gazette.
“Truth to tell,” said Gover, “it was actually a pleasant ride. The sun was shining, and I knew there were EMTs on the premises. Besides, I dragged my toes and came to a dignified halt at the bottom of the hill.”
At the end of the skiing season, Bob Cowan and seven out of the fourteen managers were “laid off”, and charges were later filed against the Cowan family in federal court under the RICO statutes that regulate interstate racketeering. Cowan said in them that the resort had been losing Peter Laird about $2 million a year. Late in the winter of l994, Sherwood Inc. (Fred Fierst, most likely) told Cowan that he had been working too hard and needed a vacation. Cowan alleged while he was gone, management went through his papers, talked to his staff, and then fired all the people that worked for Downeast Hospitality Services (his firm). This included his sons Michael and David, his daughter Susan Thigpen, and someone named David Nicoletta, who kept the books.
The allegations that Laird’s management group made were many, too many. It makes you wonder where Fred Fierst was when all of this was going on. Cowan had supposedly contracted to make the place a Best Western Hotel without permission, prepared expansion plans without permission, cooked the books to keep management in the dark, and filled the payroll with his relatives and cronies who redecorated the place one more time. And Laird’s management company never knew what was going on, never assented to any of it.
Much of their fury seems to be aimed at Michael Cowan. His firm, Maine Earthmoving, constructed the tennis courts, the skating rink, the swimming pool, and the ski-tubing hill. All kinds of work had been allegedly done without permits. Sloppy, potentially dangerous work, according to the legal complaint. A misgraded skating area, damage to trails. Evidently the boys with the dozers, desperately looking around for good fill for the ski tubing hill, had dug a deep “borrow pit” on the edge of Marcoux’s leach field, damaging it.
The suit by Sherwood engendered a countersuit filed by Michael Cowan in Maine. There was long distance legal bombardment between heavy artillery firing out of Springfield and Portland. Carol Kamm, lawyer for Laird, attacked “the ongoing obnoxious efforts of Maine Earthmoving and its counsel. . to compel depositions in Maine of Peter Laird and others. ”. On September 11, l995, the parties reached a settlement, and the matter was dropped.
Yet another management group was hired, but Swift River Inn closed for good in October of l996, after selling its development to Mount Bachelor Academy in Oregon, an exclusive private school for troubled kids. One night I had a long conversation with Tom Beggs, one of the original partners in the Cummington Farms Associates about what had happened to the development he and the others had worked so hard on and the bank had thrown so much money into.
“So what happened to Cummington Farms, anyway?” he asked. I told him it was now a high class reform school. There was a long anguished silence.
“A reform school?” he said. “They spent half a million on each room and its support system to make it into a reform school?”
After awhile I gave up looking for Edwin Waszkelewicz, whose ideas were behind the Cummington Farms development. I thought maybe he ended up back in the hair cutting business. Then one day in 2003 I picked up the Springfield Union and there he was. Still in land development, and back in hot water. He had bounced back after the Berkshire Basin fiasco. After going through bankruptcy, after all his assets had been seized by the bank and the state of Massachusetts, he moved to Ludlow, where he started life again as a builder, putting up modest houses in a Ludlow development called Southwood Estates. But then one day in 1995 he was up in Belchertown buying apples from Hillcrest Estates off Route 21. The views were terrific and maybe he should have known better to think big again, but he had the virus, he was a visionary, he saw on these hills a golf course and maybe some condominiums clustered along the fairways. Today the golf course is there, but someone else owns it.
The farmer was willing to sell to Ed. He and his two other partners in Cold Springs Development acquired land and got permits. They acquired 282 acres and prepared plans for an eighteen-hole golf course, a restaurant and a 150-unit condominium development. They had the permits they needed from the town, and were forging ahead, but they needed partners with deep pockets. Waszkelewicz had put about four years of his life and a half a million into the project. The projected construction costs were five million for the golf course, and $10 to $15 million for the condominiums.
And so he came back to Northampton, of all places, to talk with a prominent golf course pro, Jim Casagrande, and his business partner Robert C. Sears. They had offices on Hawley Street. They were enthusiastic about the project, and their company, Last Minute Concessions, bought a 51% controlling interest in the golf course and 16 % of the condominium complex for $1.7 million. By June of the year 2000, construction had started. Four-B Construction in Spencer was the prime contractor and Jim CasaGrande was president of the corporation.
But then someone complained to the Securities and Exchange Commission when their money that Robert Sears had put away for them in a Schwab account had vanished. Then the bank doing their due diligence on a potential loan for the project questioned where Sears had gotten the money to invest in the project. Soon the FBI and the U.S. Attorney were involved. Sears would plead guilty to forging his clients names on letters to Charles Schwab asking them to transfer money to his corporation. Many of Sear’s older clients had lost much of the retirement money. One person lost $500,000. The SEC slapped a lien on the property and obtained a $3 million judgment against Sears in 2000. Waszkelewicz had to fold his corporations and file for bankruptcy. When I interviewed him in his backyard in Ludlow, he was tired out and discouraged by the experience. He hoped that things would start to go his way when the legal settlement was worked out, but SEC and its clients were the big winners along with the firm that he had hired to do the construction. Robert Grenier of Four-B Construction bought the plans and property for $3.4 million. Waszkelewicz and his two partners ended up with only $125,000.
If you walk around our little town these days, the place is full of dramatic evidence of Dick Covell’s largesse. We’re a Heritage town, for better or for worse. It was our dream, this powerhouse of a regional bank that became a Ponzi scheme. Dick Covell took millions from local stockholders and put it, in his own words, “on the street.” Some of the biggest businessmen and lawyers in town became millionaires in those brief five years that Heritage burned in all its malignant glory. There are all these beautiful restored buildings around town that today are offices, restaurants and residences. Places like the old railroad station that became the Depot restaurant, the James house, the Cutlery complex, that odd little office building on Nonotuck Street with solid cement walls, the Hotel Northampton.
But there was that downside. All the contractors and suppliers left in the lurch, all the investors in the bank who lost everything, all the lower echelons in the bank given walking papers. An early indication that things would not end happily was apparent in Dick Covell’s first attempt to rebuild the Hotel Northampton. He trusted the guys from Boston, he didn’t see that when politics and banking mix you get the Whitewaters of this world. He was just a small town banker with a big ego who wanted to be a hero. And here was his heir apparent, a young guy who loved to hang out with guys who talk and act tough. This is the way the mob kills small town banks. Heritage is Enron writ small. It’s about the hubris that infects American capitalism. With white-collar crime, there’s a fine line between sharp dealing and illegal activity. When someone robs you with a gun, you’re in fairly good shape if the gun doesn’t go off. People are sympathetic, they look for the guy that did it, and usually put the guy on trial. But. if someone robs you with a phony appraisal or prospectus, things are different. Usually nothing happens, unless you have deep enough pockets to sue them in Superior Court.
The l985-l992 period was a terrific time for white collar crime in the valley. The FBI must have interviewed hundreds of people and gathered millions of pages of documentation in their Heritage investigations, but the indictments that were made were carefully selected and inoffensive. This is a law enforcement substation out here, and I doubt if Boston cares what happens out here in the boondocks. All the evidence that the FDIC and the FBI has is for naught if the U. S. Attorney’s office won’t indict.
And Springfield didn’t. It is often not clear to a DA that a crime has occurred, especially if the person who did it to you is a lawyer or a well-known person in the community. Maybe you were at fault. Maybe you were too trusting. I’ll always remember the look on the face of this State Cop in the CPAC unit when I showed him documents that said that the Northwest District Attorney’s landlord, when they were in the Hotel Northampton, were crooks, and they had defrauded small businessmen here out of millions. Total hostility radiated from the big guy, a classic “go away and drop dead” look from a big tough cop. He looked at me, and he saw trouble and aggravation. I understood from that moment on that law enforcement in this pretty little valley had made a deal with the powers that be. They would look the other way.