Carmell's first Consumers Christmas fell short of merry. The bottom line was redder than Rudolph's nose; Carmell realized he might be staring at "a good-size six-figure loss" by the end of 1986. He had already cut the work force by more than half. But customers were starting to sound a common chord, and they weren't caroling. They'd start by reminiscing about the old days. Hey, they'd interject, am I going to get a TV this year? Boy, cracked another, I sure could use a new set of tires.
Carmell treated them as jokes. "They'd laugh," he says, "so I'd laugh with them." When all the chuckling stopped, though, they dropped their money elsewhere. A customer who spent $9,000 per month decided $1,500 would be enough. Some customers stopped ordering.
At the end of 1986, sales stood at about $5 million, down 25% from the year before. The company was "very unprofitable," says Carmell. "It was becoming painfully clear," adds Borovsky, "that the only reason a lot of people bought from Consumers was the gifts." What could Carmell do? "First, I was asking, 'Is it only one incident?' then 'Is it just city customers?' " he says. "Finally, I realized that only the former owners knew where the bodies were buried."
Still, Carmell and Borovsky plowed onward. Instinctively, perhaps, they were fortifying the company to survive the showdown with its ugly past.
In January 1987, Carmell hired an accountant to help generate accurate financial statements. Borovsky set about computerizing the business, using a new $100,000 system. In the fall, Carmell continued paring down the company, closing on Saturdays and cutting out truck repairs.
Then "everything suddenly started falling into place," Carmell recalls. The cost cutting was kicking in; he had saved a total of about $1 million, for instance, in payroll costs. "I now knew who my clean customers were," he says. And he worked hard to win more business from them.
Carmell continued talking to visitors from the FBI and checked in with the U.S. Attorney's office periodically. Remember, he would say, we're not tied to the past.
Maybe not, but the past was close behind. That October, David Carmell felt the first approaching footsteps. After a World Series game, a local TV station aired a report about the ongoing investigation. The reporter mentioned Consumers. Carmell heard the words "politically connected" and "clout-heavy." He heard no mention of a new management.
Carmell was furious. What if some of his investors had been watching? What would he tell them? What about his customers?
He picked up the phone and threatened the TV station with a libel suit. "You gave the impression that the company is still doing business that way," he shouted at the news director. "It was inexcusable, sloppy gutter journalism." He got a public apology.
Carmell started to feel strong. Though the TV broadcast cost it some business, Consumers came through fine; it was turning the corner toward its first profitable year under his management. Some big contracts were pending. "Our costs were in line," he says. I felt we could survive anything." The past couldn't touch him now.
Or so he thought.
* * *
When the call came, Carmell was in the warehouse.
Mr. Carmell, the woman said, I'm from the U.S. Attorney's office. He braced himself. Tomorrow, she said, the government will go before a grand jury to ask for an indictment against Fred Taich. Anton R. Valukas, the U.S. attorney for the northern district of Illinois, will hold a press conference.
Carmell had just a few hours to prepare an offensive against whatever was coming. Months earlier, he had vetoed the costly idea of hiring a public-relations firm. So he ran for the phone and called the two local newspapers, the four major TV stations, and the news-radio station. I hear that the previous owners of Consumers Tire & Supply are likely to be indicted tomorrow, he said, and I want you to make it clear that the company is under new management. Carmell had kept major customers abreast of the FBI's inquiry. Now, he alerted as many as he could of the impending indictment.
That night, he assigned relatives to watch -- and videotape -- different news shows as well as scan newspapers. His aim: to make sure all accounts acknowledged that the company was under new management. Borovsky, for one, couldn't help but feel angry. "Here we were, a couple of young guys working our asses off," he says. "Just when we had it turned around, we were going to get slapped in the face."
The story broke fast. Valukas announced the indictments around noon. Along with 15 others, Fred Taich and his son, Arthur, were charged with federal bribery-related counts. Between 1982 and 1986, the indictment charged, they had received more than $2 million in city business by giving away more gifts than the average "Wheel of Fortune" broadcast: tires, auto repairs, radar scanners, water heaters, shop tools, sporting equipment, luggage, jewelry, vacations to Europe and the Bahamas -- gifts worth more than $85,000. One official received $62,500 over a year and a half. "The form of payment varied depending on the city official," says Pierre Talbert, an assistant U.S. attorney.
Fred Taich often bribed an official, then recovered the bribe by submitting false invoices. Usually, in fact, he recovered the bribe plus 45% to 100% more. To help finance the payoffs, Taich also skimmed around $25,000 a year off of cash receipts.
