Chapter 13 - WHEN THE ACCOUNTING FINALLY HAD NUMBERS INSTEAD OF STORIES
The independent review took four months.
Its findings were far less dramatic than family gossip.
And much more damaging.
My improperly retained distributions totaled:
$614,800.
Of that amount, approximately $286,000 had been used in capital pools supporting the Lark settlement.
The remainder supported legitimate company operations and debt service without proper authorization from me.
Lauren’s retained distributions had also been used.
Robert had contributed personal funds too.
No one person secretly funded everything.
The problem was that Robert treated all family-controlled capital as interchangeable.
The expired proxy had been used five times.
No evidence showed Susan or anyone else forged my handwritten signature.
The governance failure was still serious.
Company records were inaccurate.
Related-party transactions had not been properly approved.
Some personal expenses had been coded as marketing or shareholder support.
The wedding charges were repaid.
Several Robert-and-Elaine expenses were reclassified as shareholder advances.
Repayment schedules were created.
Bay Atlantic agreed to reopen financing discussions under conditions:
Independent board chair.
Outside CFO.
No related-party transaction without disinterested approval.
Corrected shareholder records.
Sale of one noncore asset.
Robert could remain involved only in a limited founder role.
He hated it.
He accepted.
Harbor House received three bids.
We sold to a New England hotel operator that agreed to retain most employees.
The price was painful but sufficient.
Debt dropped dramatically.
Prescott Hospitality no longer needed Ethan.
Or me.
Or Lauren.
It needed professional management.
That was healthier.
I had a choice regarding the $614,800.
Take repayment immediately and strain cash.
Convert some into formally documented additional equity.
Or accept a repayment schedule.
I chose a three-year schedule with interest.
Not because Robert deserved generosity.
Because the company had employees who had done nothing wrong.
This time the choice was mine.
Documented.
Priced.
Finite.
Lauren did something similar with her remaining claims.
Robert stepped down as chief executive.
An outside hospitality operator named Dana McCall became CEO.
Dad kept the title of founder and a board seat without unilateral financial authority.
Elaine lost the informal company expense account she had used for years.
She complained for two weeks.
Then survived.
Lauren did not return to the company.
She accepted a job with an independent events firm in Boston.
“I have a boss.”
“Tragic.”
“She makes me submit expense reports.”
“Cruel.”
Lauren smiled.
“I like her.”
Graham and Lauren remained married.
Barely, for a while.
Their first year included more counseling than honeymoon photographs.
But Graham’s anger had never been that Lauren’s family had financial problems.
It was that Lauren reflexively hid uncomfortable facts.
She worked on that.
Ethan and I did too.
My habit was different.
I hid things because I did not want to need support.
Different direction.
Same secrecy.
One evening Ethan found me reading the final audit report in bed.
“Is it over?”
“Financially? Mostly.”
“Family?”
I closed the report.
“Not even close.”
He kissed my forehead.
“Good thing there isn’t an audit deadline for that.”
May you like
I smiled.
For the first time, I believed him.
