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Authors: Lawrence Sanders
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managers; Clayton's plan to make every Starrett store autonomous; the new computer system that Sol couldn't understand. And finally he described all the dealing in gold bullion. Long before he ended his recital, Rushkin was toying with a letter opener on his desktop and staring at the other man with something close to pity.
"Sol, Sol," he said gently, "what you're complaining about are business decisions. Clayton is president and CEO; he has every right to make those decisions. Is Starrett losing money?"
"No."
"Making money?"
"Yes."
"Then Clayton seems to be doing a good job."
"Look," Sol said desperately, "I know I've got no proof, but something's going on that just isn't kosher. Like those gold deals."
"All right," the attorney said patiently, "tell me exactly how those deals are made. Where does Starrett get the gold?"
"We buy it from overseas dealers in precious metals."
"How do you pay?"
"Our bank transfers money from our account to the dealers' banks overseas. It's all done electronically. By computer," he added disgustedly.
"Then the overseas dealer ships the gold to the U.S.?"
"No, the dealers have subsidiaries over here. The gold is warehoused by the subsidiaries. When we buy, the gold is delivered to our vault in Brooklyn."
"How is it delivered?"
"Usually by armored truck."
"Good security?"
"The best. Our Brooklyn warehouse is an armed camp. It costs us plenty, but it's worth it."
"All right," Rushkin said. "Starrett signs a contract to buy X ounces of gold. You get copies of the contract?"
"Naturally."
"The subsidiary of the overseas dealer then delivers the gold to Starrett's vault. The amount delivered is checked carefully against the contract?"
"Of course."
"Have you ever been short-weighed?"
"No."
"So now Starrett has the bullion in its vault. Who do you sell it to?"
"To our branches around the country. Then they sell it to small jewelry stores in their area."
"Correct me if I'm wrong, but I presume because of its size, resources, and reputation, plus the volume of its purchases, Starrett buys gold at a good price from those overseas dealers."
"That's correct."
"And tacks on a markup when it sells to its branches?"
"Yes."
"Which, in turn, make a profit when they sell to independents in their area?" ' "Yes."
Arthur Rushkin tossed up his hands. "Sol," he said, laughing, "what you've just described is a very normal, conventional way of doing business. Buy low, sell high. You get complete documentation of every step in the procedure, don't you? Contracts, bills of lading, shipping invoices, and so forth?"
"Yes. On the computer."
"And the final customers-the small, independent jewelry stores-have they ever stiffed you?"
"No," Guthrie admitted, then burst out, "but I tell you something stinks! There's too much gold coming in, going out, floating all over the place. And some of those small shops that buy our gold-why, they weren't even in business a couple of years ago. I know; I checked."
"Small retail stores come and go, Sol; you know that. I really can't understand why you're so upset. You haven't told me anything that even hints of illegal business practices-if that's what you're implying."
"Something's going on," Guthrie insisted. "I know it is. We're buying too much bullion, and too many independent stores are buying it from us. Listen, what do they need it for? Everyone knows pure gold is very rarely used in jewelry. It's too soft; it bends or scratches. Maybe twenty-four-karat or twenty-two-karat will be used as a thin plating on some other metal, but gold jewelry is usually an eighteen- or fourteen-karat alloy. So why do these rinky-dink stores need so much pure stuff?"
Arthur sighed. "I don't know, but if their checks don't bounce, what the hell do you care what they do with it? Sol, what is it exactly you want me to do? Talk to Clayton? About what? That he's making money for Starrett by dealing in gold bullion?"
Guthrie opened his briefcase, piled the statement and
"Sol, Sol," he said gently, "what you're complaining about are business decisions. Clayton is president and CEO; he has every right to make those decisions. Is Starrett losing money?"
"No."
"Making money?"
"Yes."
"Then Clayton seems to be doing a good job."
"Look," Sol said desperately, "I know I've got no proof, but something's going on that just isn't kosher. Like those gold deals."
"All right," the attorney said patiently, "tell me exactly how those deals are made. Where does Starrett get the gold?"
"We buy it from overseas dealers in precious metals."
"How do you pay?"
"Our bank transfers money from our account to the dealers' banks overseas. It's all done electronically. By computer," he added disgustedly.
"Then the overseas dealer ships the gold to the U.S.?"
"No, the dealers have subsidiaries over here. The gold is warehoused by the subsidiaries. When we buy, the gold is delivered to our vault in Brooklyn."
"How is it delivered?"
"Usually by armored truck."
"Good security?"
"The best. Our Brooklyn warehouse is an armed camp. It costs us plenty, but it's worth it."
"All right," Rushkin said. "Starrett signs a contract to buy X ounces of gold. You get copies of the contract?"
"Naturally."
"The subsidiary of the overseas dealer then delivers the gold to Starrett's vault. The amount delivered is checked carefully against the contract?"
"Of course."
"Have you ever been short-weighed?"
"No."
"So now Starrett has the bullion in its vault. Who do you sell it to?"
"To our branches around the country. Then they sell it to small jewelry stores in their area."
"Correct me if I'm wrong, but I presume because of its size, resources, and reputation, plus the volume of its purchases, Starrett buys gold at a good price from those overseas dealers."
"That's correct."
"And tacks on a markup when it sells to its branches?"
"Yes."
"Which, in turn, make a profit when they sell to independents in their area?" ' "Yes."
Arthur Rushkin tossed up his hands. "Sol," he said, laughing, "what you've just described is a very normal, conventional way of doing business. Buy low, sell high. You get complete documentation of every step in the procedure, don't you? Contracts, bills of lading, shipping invoices, and so forth?"
"Yes. On the computer."
"And the final customers-the small, independent jewelry stores-have they ever stiffed you?"
"No," Guthrie admitted, then burst out, "but I tell you something stinks! There's too much gold coming in, going out, floating all over the place. And some of those small shops that buy our gold-why, they weren't even in business a couple of years ago. I know; I checked."
"Small retail stores come and go, Sol; you know that. I really can't understand why you're so upset. You haven't told me anything that even hints of illegal business practices-if that's what you're implying."
"Something's going on," Guthrie insisted. "I know it is. We're buying too much bullion, and too many independent stores are buying it from us. Listen, what do they need it for? Everyone knows pure gold is very rarely used in jewelry. It's too soft; it bends or scratches. Maybe twenty-four-karat or twenty-two-karat will be used as a thin plating on some other metal, but gold jewelry is usually an eighteen- or fourteen-karat alloy. So why do these rinky-dink stores need so much pure stuff?"
Arthur sighed. "I don't know, but if their checks don't bounce, what the hell do you care what they do with it? Sol, what is it exactly you want me to do? Talk to Clayton? About what? That he's making money for Starrett by dealing in gold bullion?"
Guthrie opened his briefcase, piled the statement and
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