The year was 1991. I had spent 20 years digging ditches and I thought enough is enough.
The economy was in the crapper. The great real estate boom of the 80s was over and all the big water and wastewater lines had been constructed to the far reaches of the city and beyond in Austin. The future didn’t look so swell for our business.
I needed a break. I thought it was time for some new scenery, so to speak.
I had two groups of employees by that time. The old and the new. It was time for the old to retire, so they did.
The younger group, about a dozen guys, were placed with another contractor through connections I had.
I became interested in a concept on doing concrete precasting that had been used in Europe for years, but had never found its way here yet. It was called a Gang-Form Wet Cast Precast System. It allowed for making a wide variety of products with only a small amount of labor.
I went on a one year crusade to find ways to use this equipment and to find every kind of product imaginable that could be made. I spent days at the UT Engineering Library, reading stacks and stacks of papers written on the subject of precast concrete.
I learned about every kind of concrete batch design, how concrete could be made stronger, lighter, better with admixtures (chemicals).
I went to England to watch these machines work. I visited the manufacturing plant in Ireland where they were made. I had a great feel for what could be done.
I lived and breathed precast concrete for that year. But I knew I needed more money than I had, to really make this venture success. A friend, Jim had a cousin, an attorney, in Dallas that was great at putting deals together. Mike was a guy from a small west Texas town that got in on the ground floor of something that was making huge sums of money for many people. Mostly friends and family from the small west Texas town.
His niche was simple. He would buy packages of student loans that the government had backed that people were no longer paying on. An new agency, the RTC (Resolution Trust Corp.) had been created to handle bank failures of the late 80s and these defunct student loans were being handled there too.
They were grouped up, with several loans in a package.
Mike had devised a system of analyzing these packages and would find the ones that were “rich”. Let’s say these if he bid on a package of these loans for $100,000, that was the amount paid to the government. Whatever the purchaser could collect above that amount was their profit. So if $120,000 was collected then the $20,000 was the profit for only making a few phone calls. Pretty lucrative.
Mostly, this was being done in a matter of a few months. Great sideline for attorneys and others in the know.
Except Mike looked at it differently. He would go in an look at the packages and find doctors and lawyers and other professionals in mostly small towns that wouldn’t want their names splashed around in the local newspapers if he had to sue. Therefore his collection rates were much higher than the average. More in the neighborhood of an 80% collection rate. Now you are talking serious money being made.
He was going to friends and family, letting them invest on a 50/50 deal with him. So 50% of $80,000 was $40,000 on the persons $100 K investment. That’s like 40% interest. But not 40% really, because that was happening in 90 to 120 days. Several times a year.
Mike became the Golden Boy of that town. People couldn’t get in line fast enough to hand him more money.
So having access to all this money, he was looking for other ways to invest for the people, knowing the student loan deal wouldn’t last forever.
TexCrete was formed, Mike and Jim owned 50% and I retained 50% of the stock. The new business was setup in Waxahachie, Tx.
We started purchasing the equipment and getting setup. Mike’s younger brother Gerry was brought in to help setup and operate the business with plans for us to range out with multiple plants. We had bargained for and received exclusive rights to this machine for Texas and all adjoining states. We were the first to ever buy one of these machines in the US, so to get their first deal they were willing to do whatever, so they would have a marketing tool.
We decided that producing patio stones that looked just like slabs of rock was our best first product. After a few months of building and outfitting the plant, we went in to production. By that time we were lined up to sell to several of the Home Depot’s / Lowe’s type establishments. They neither were here at that time. It was Builders Square and Furrows and a couple more. Our big account was Walmart. Walmart’s in the whole state of Texas. That was big.
Before we really got underway we started to sense things were not exactly right. Mike wasn’t coming with the money as was promised. We had product delivered all over everywhere so it seemed like things were rolling. Without operating money to keep expanding and moving ahead, things would get dicey in a hurry. And that they did.
To wrap up this, his little student loan business had run its course and there was nothing else that even came close to being as lucrative. The golden boy could and should have paid everyone up and said, “it’s been fun, but no mas“. The power of handling large sums of money and the accolades he was getting for making the whole town rich were intoxicating.
During the time we were setting up this new plant and going it to production, Mike, the Attorney, ventured off into real estate investing for those people. He had his own title company business. When the deals were no longer viable, the real estate bust in Dallas was in full swing, he got inventive again. This time with much more dire consequences. He would drive down a street and if the house numbers jumped from 204 to 208, he would simply fabricate a house at 206 on paper and sell it to one of his clients. He did this many times. The only problem, was when some of those folks made the 3 hour drive to inspect there holdings and there was no house, well let’s just say the cookie began to crumple in a hurry.
By this time Gerry, the brother and I spent most of our time trying to find Mike. One day we were forced to close the doors. The business itself hadn’t cost investors, but we knew that would be the next thing.
I started meeting with FBI agents, helping them unravel the mess our boy, Mike had created. What was most confusing, he was the last person you would have ever expected it from. He was married, doted on his wife and 2 young sons. He was very active in his church. A model citizen.
He spent the better part of a decade and a half in prison. He left many of the townspeople’s finances in ruins. Even his own mother and dad. It was estimated by the FBI that his Ponzi Scheme had resulted I about $50 million going up in flames. I actually think it was much more.
I happily returned to Austin, with precast concrete out of my system. In short order I reassembled my young guys from before and begin my second half of my contracting career. Now the young ones have gotten old and some will be ready to retire one day before long, God willing.
There is more to this story. The day to day happenings around Texcrete for the year or so that it operated. Maybe one day I’ll write a few of them.