Chapter 5
The service-charge review produced its first hard number.
$2.74 million.
That was the total value of month-end transfers from banquet and service-charge clearing accounts into Fairmont Crest’s central operating account over eighteen months.
Most of the money returned within three to seven business days.
Employees were still paid.
Benefits still funded.
No evidence yet showed anyone had permanently stolen $2.74 million.
But temporary movement mattered.
At quarter-end, the company’s unrestricted cash balance appeared higher.
The lender’s existing credit agreements required at least $11 million in unrestricted liquidity at each reporting date.
On three quarter ends, Fairmont Crest exceeded that number by less than the amount swept from those clearing accounts.
Taryn stared at the schedule.
“Without the transfers?”
The controller answered:
“One quarter would have been about $900,000 below covenant. Another roughly $1.6 million below. The most recent one is still being reconciled.”
“Did the bank know?”
“Not in this form.”
“Did our external auditors?”
“They saw aggregate cash.”
Taryn felt sick.
Not because covenant breaches automatically destroyed companies.
Banks waived technical breaches routinely.
The problem was concealment.
Then Leonard joined the meeting with counsel.
He defended the process.
“Those accounts were not legally segregated trusts.”
Nobody claimed they were.
“Cash was fungible.”
Sometimes.
“The liabilities were recorded.”
Mostly.
“No employee lost wages.”
Still being checked.
Taryn asked the central question.
“Why move the cash only at reporting dates?”
Leonard stared at her.
“We manage liquidity.”
“Why reverse it afterward?”
“Because local hotels need operating balances.”
“Why was I not told?”
“You didn’t ask until recently.”
That answer irritated everyone.
Taryn had signed management certificates for earlier quarters.
She had relied on finance representations.
That did not make her criminally responsible for a process she did not know.
It did mean she could not pretend she had nothing to learn.
Melissa said:
“You need independent counsel on your prior certifications.”
“I know.”
Doreen called that evening.
Not through lawyers.
Taryn answered once.
“What?”
“You see how complicated this is now.”
“I see how simple the question is.”
“You are not a treasury officer.”
“I was the COO signing liquidity certifications.”
“Based on Leonard.”
“That stops being comforting when Leonard says nobody asked.”
Doreen sighed.
“Taryn, come back.”
“No.”
“Do the closing. Then resign.”
“No.”
“You can name your severance.”
“No.”
“You are hurting Lula’s future too.”
Taryn went still.
“Explain.”
“You have shares. Deferred comp. Family distributions.”
“My daughter is not collateral.”
“You know what I mean.”
“Yes.”
Taryn’s voice dropped.
“That is the problem.”
Then Doreen said something strange.
“If Friday fails, everything changes.”
Not:
The hotels fail.
Not:
We default.
Everything changes.
Taryn ended the call.
Later that night, Melissa called.
“We found Doreen’s personal financing.”
Taryn sat up.
“What financing?”
Doreen had borrowed $14.5 million six years earlier to purchase shares from two retiring relatives.
Collateral:
A large block of her Fairmont Crest voting shares.
The loan was current.
But it contained a valuation-maintenance provision.
If Fairmont Crest entered material lender default, suffered a qualified adverse refinancing event, or saw appraised equity value fall below a threshold, Doreen’s lender could demand more collateral.
If she could not provide it, pledged shares could be sold.
Taryn stared at the numbers.
“How many shares?”
Enough that Doreen could lose majority voting control.
The second clue had arrived.
May you like
Friday was not merely about corporate financing.
It was tied to Doreen’s personal grip on the company.
