The API Story Part 2

1970 rewritten 12/2010* 4,993 Words

Howard Yasgar

After Dave passed away in 1970, we had a dilemma as to what to do with API.

Don, and I had a lot of decisions to make, and problems to resolve, our futures were at stake.

Both Don and I both knew his father was a terrible businessman, and he had run the Company badly.

We had to decide whether we should continue running API, or should we start a new company.

We discussed the possibility of our leaving the company and starting a new one from scratch.

The reasoning was that Don's mother knew nothing about the business, except what Don's father

had told her, and Dave lied to her, just like he lied to me and everyone else.

So, Don's Mother was convinced that the company API was worth a fortune, all the while her husband Dave was pocketing money, and barely paying the bills, and he was constantly falsifying the financial and inventory records

Trying to convince Don’s mother of the reality of the situation was not worth the aggravation it would cause, as she would just call us liars, because in Don's mother’s eyes, her husband Dave could do no wrong.

Fortunately, Dave had a brother that was in the wholesale Automotive business in New York.

He knew about the automotive business and came to Florida to assist Sadie in settling Dave's estate.

He came by the Company to see us and we told him the true facts.

He walked around the Company, and I could see he knew what he was looking at. But I had no idea what he would say to Don's Mother.

I learned later from Don, that his uncle had told Sadie that the Company was not worth the money

she thought, and it would be a liability to her especially if Don and I left.

I then suggested to Don that we offer his mother $35,000.00, payable over a period of 5 years.

This was far more than the company was worth, but it would save us the cost of moving to another building and buying shelving etc., and it would be a nice gesture to her, as she would have some income.

Don’s mother accepted the proposal, and Don and I then had to decide what to do with the company, as the Company owed a lot of bills that Dave had not paid.

The various vendors were calling daily, and the list of liabilities appeared endless

It was no wonder Dave had a heart attack.

There was a lawsuit from the former building owner, claiming thousands of dollars in damages, and there were various taxes due, and other bills from vendors that we had no knowledge of.

We contacted the business accountant that Dave was using and found that Dave had lied to him also and had overvalued all the inventory.

The accountant didn't like to hear this, but he saw an opportunity to really work us over.

First, he tried to obtain several thousand dollars up front for his services.

When he accountant saw that we were not going to do it, he then ransomed the company’s

accounting books for $3,500.00, and we ended up having to pay for it.

We started calling all the Companies that were owed money, to inform them what had happened.

All of them were happy to hear someone responsible was taking over the business.

Everyone was willing to negotiate payments one way or another, to help us.

We brought in an outdoor trash dumpster and we threw away all the products on the shelves that never made us any money.

Dave had listed the stuff as valuable merchandise, which was inflating the value of the company.

The fact that I own 20% of the Company stock meant nothing at this point, so I suggested to Don that we split up the company 50-50.

Don agreed, and doing this turned out to be one of my major mistakes.

The problems with Don started immediately.

Although Don had no mechanical ability whatsoever, he started giving orders to everyone. He even started to tell the shops mechanics what to do.

I would tell them to do something and Don would tell them something else.

It wasn't funny at the time, as he was acting like a real idiot, the power had gone to his head and he

wanted total control, and he wanted everyone to know he was the owner.

The employees were all on edge, as they saw he didn't have a clue as to what he was talking about.

Finally, I had to sit him down and explain that a Company could not function with two people giving orders. and considering that he didn't even know how to turn a screwdriver, he shouldn't be telling the shop how to do things.

I then told Don we should divide the responsibilities, with me running the shop and Don running the office. This turned out to be my second biggest mistake.

Slowly, but surely, API began paying its bills and we started making a profit.

The main thrust of API was now calling on trucking fleets, and our strongest area was the rebuilding of starters, generators and alternators.

Don and I would go out on sales calls and we both did well.

In the 1970's the city of Miami was flooded with Cuban refugees, and many mechanics were doing rebuilding work.in their homes. So, it started becoming increasingly difficult to compete with them, as they would repair starters and generators for cash, and they paid no insurance or taxes.

At one time it appeared that every Cuban we knew had converted their Florida room in their house into a starter and generator rebuilding shops.

It became evident that we would really have to specialize in something that they couldn't do to compete with them and to survive in Miami.

I made a list of all the specialty areas that a Company with our abilities could possibly hope to do.

There was the aircraft Industry, the heavy-duty truck business, the forklift business, the golf cart business and the marine business as well as a few others. See

Finally settled on the marine business and we called it API Marine (See the API Marine Story).

Back in the 1960's when we were operating in Hialeah, we had started receiving a sales flyer from a company in Chicago called INSCO.

They had several pages of odd ball surplus automotive electrical, most of which had been discontinued by the Prestolite Company.

The parts in the flyer were sold as new surplus, which was a totally new concept to me.

As API did a lot of rebuilding of Prestolite parts, consequently this flyer became like a bible to us.

The flyer contained all kinds of industrial and hard to find electrical parts, it was wonderful.

So, in 1975, I walked around our shop and our warehouse, and I gathered up anything that I thought would be interesting to other rebuilders.

There were no computers in those days, so everything had to be searched out by looking up things

in books and catalogs.

As my desk was very small for such a big project, I put sticky paper on all the walls of the office.

This allowed me to stick all the items on the wall as I typed them up.

The first flyer in Feb of 1975 had 12 pages. (See the Rebuilders Supply Story)

The orders started coming in, and our new company Rebuilders Supply of Miami was born.

We then started buying all types of automotive electrical parts and eventually our catalog grew to more than 80 pages.

In the 1970’s the rebuilding of automotive parts was a new and growing business in America, as well as in Central and South America.

Soon our catalog started attracting the importers parts from overseas, and they started to come in droves to see us.

Each customer came to see us with their attaché cases filled with U.S. Currency.

It got to the point that we didn't have enough office space for each person to sit and count their money.

My partner Don enjoyed selling to the Latin customers, because he spoke fluent Spanish.

We now had used up all 14,500 square feet of our building, and we require more space.

We found that the export market would buy anything we had if the price was low enough.

So now our problem was, we needed to develop better sources of supply.

We started letting our new and dear friend, Barney Kaplan, collect for us, any surplus electrical parts he could find in Detroit.

In Chicago we developed relationships with George Lustig, of Fleet Supply who was a buyer of surplus truck brake and electrical, and Abe Greenstein who bought tons of radiator hoses and fan belts for us. They shipped all the stuff to us by tractor-trailer load.

We eventually, but against my partner’s wishes, bought the building we were in, and then we purchased several other properties in our neighborhood.

We needed storage for all the surplus that was coming in. as well as parking for our employees.

Also, by this time, we were starting to look for auto parts we could import from Taiwan.

At the time, we found that our Marine Business also needed a source of small parts, like castings and pieces that could not economically be made in the U.S.

All throughout the 1980's, my wife Katherine and I made trips to the orient looking for new suppliers. we went several times to Korea, Japan and Taiwan, eventually finding Taiwan to be the most promising.

We started doing business with a company in Taiwan called PAAL.

Paal was a Company that eventually made lots of marine parts for us and they introduced us into the Military parts business. (See the Paal Taiwan Story).

My son Jack had been in the Typesetting Business in Miami for several years, and he had started a Business with several school buddies as his partners.

Eventually he decided to come work with us at API, and he closed his Company.

Jack then started a telemarketing division of Rebuilders Supply and he took over printing the Rebuilders Supply catalog.

The telemarketers he employed were quite a collection of oddball characters, a quality that was needed to be a telemarketer.

In 1978 API was assembling starters for a customer that was using them to assemble kits.

The kits were used to convert old Caterpillar diesel tractors over to electric start.

The Company we were dealing with was called U.S. Tractor Co.

There were two partners, one fellow was named Willy Silva, a pudgy blond-haired Cuban who looked more Anglo than Latino.

Willy wanted to close U.S. Tractor company and go work with another Company that made Generator Sets for export to the Dominican Republic.

But before he closed U.S. Tractor down, he wanted to have a secure income for his partner who he was abandoning.

The partner’s name was Geronimo Lazo, he was the fellow that had actually invented the Caterpillar kits. Geronimo was a real smart mechanic but spoke no English. (see the Caterpillar Kit Story)

As a solution, Willy suggested that he turn the Caterpillar kit business over to us, as long as we agreed to let his ex-partner, Geronimo, sell us the aluminum adapters used in the kits.

This would give Geronimo an income, and ease Willy's conscience.

So now, API started manufacturing and selling Caterpillar tractor Conversion kits.

We advertised in “Rock & Dirt” a yellow trade journal paper that goes to the industrial and tractor market.

We continued to use Geronimo Lazo as our supplier, until his death in 2007.

By entering the Caterpillar tractor Electric Start Kit market, it gave me the opportunity to invent an alternator kit to replace the generators on the older models of Caterpillar tractors.

The alternator kit was a huge success for us, and we still get orders for the starters and alternators to this day in 2010.

Eventually, my partner Don got a divorce from his second wife. (See Don’s Divorce Story).

By 1985 our company was still growing, and we started noticing a salesman that was working for

one of our suppliers, his name was Jim Fungaroli. He was working for Ace Electric company, a division of the Echlin Corp.

In the late 1980's Echlin Corp was a large electrical parts company started by a fellow named Jack Echlin from Connecticut. Jack Echlin started making contact points for automobiles, and eventually his company Echlin went public and expanded into all types of automotive parts.

To expand their market, Ace started opening distribution warehouses in strategic areas of the country.

We at API represented Ace in Miami, running it from a separate warehouse. and soon we had the opportunity of expanding our distribution of ACE products in Orlando and Tampa.

We eventually hired Jim Fungaroli, the salesman that worked for Ace. He appeared to be a nice fellow and an excellent salesman. We offered him a job as sales manager of our entire company.

Jim had said that he was also watching us, and he had wanted to come and work for us.

The first time we took Jim and his wife out for supper, he ordered everything on the menu including

two shrimp cocktails. His wife was a Country girl that only ate Hamburgers at every meal. This should have been a warning to us of things to come.

Jim worked for us for several years as we expanded the Ace warehouses to Orlando and Tampa.

We had agreed to pay Jim a bonus of 2% of the gross on major sales to large Companies, and Jim did a real good job of selling.

Then we started to analyze Jim’s sales and found he was selling at no profit, and he was earning 2% on top of it, which represented a loss for us.

Then he started to fire all our long-time employees and replace them with his own people. It soon got to the point that I didn't recognize anyone in the office and they also didn't recognize me.

Then one day Jim suggested we replace our office manager and secretary, her name was Jenny.

Jenny had been with our company for many years.

Jim had a list of reasons as to why we should replace her.

Don and I had a private conversation with Jenny and found out she had caught Jim padding all his expense accounts and that’s the reason he wanted to fire her.

Unknown to us, Jim had gone to all the long-time employees and told them that my partner Don wanted to fire them, but he told them not to worry, as he would protect them.

All the employees then became Jim's allies.

Jim was using more dirty tricks than I had ever seen, and he was using all of them behind our backs.

One day, it appears Jim had realized the jig was up.

Over the weekend he entered the building using my partner Don's alarm code, and removed everything from his office including our computer information, customer list etc.

We then learned that Jim had conspired with one of our major suppliers to go into competition with us.

Jim took several of our key employees with him and opened a business just a few blocks away from us.

We had no alternative but to bring a lawsuit against him.

However, like most lawsuits, you end up with lawyers taking advantage of your vulnerability, and even if you win the case there is little chance of collecting any money.

The lawsuit eventually cost us $47,000.00 before we realized how bad our Attorney was and stopped letting him bleed us to death financially.

We would have eventually won the case in court but it just wasn't worth it.

Jim ran his Company called “Elmar Sales” for several years, eventually he bankrupted it, and the supplier that had backed him, also lost many thousands of dollars. I couldn't be happier to hear

The good news.

I heard that Jim went on to open a couple more Companies, including an airplane, eventually bankrupting all of them and losing the plane.

All the problems we had with Jim took their toll on us financially, and we spent a lot of time and energy dealing with them.

The sales in our Miami Ace Warehouse were dropping, and I know the reasons why.

Ace Electric let it be known that they were not happy that we were also running Rebuilders Supply

which they thought was now competing with them.

They felt our Rebuilders Supply company was taking away business from the Ace Warehouse in Miami.

Nothing could be further from the truth, however talking to the Ace representatives was an effort in futility.

Our Rebuilders Supply Company sells surplus items, and a big portion of our business was export, which was not competing for local business with the Ace Warehouse in Miami.

The real problem was that Miami had become about 70% to 80 % Hispanic, and most all the local repair shops did business much the same as it was done in the countries that the owners came from.

They purchased nothing for future needs; they bought only what they needed for the job they were

working on that moment.

In an American shop, if some small low-cost parts are needed, they would buy a box of 50 or 100 pieces, but in a Latin shop they would buy one or two pieces as they needed it.

An American shop would open a charge account and pay monthly.

But a Hispanic shop operated with cash out of their pocket, paying daily.

This was the way business was done in Latin America and I saw the change in Miami.

But for us to try and explain it to executives from the Mid-West was wasting energy. As they had no concept of what a cultural change was going on in Miami.

We eventually closed our Ace Warehouse that was in Tampa, and we sold our Ace Warehouse in Orlando.

Then we gave our Miami ACE Warehouse back to the Ace Corporation.

This was bittersweet, as I had enjoyed building the business up, but disliked dealing with dumb

corporate executives, and I was relieved to get away from them.

Ace then opened their own warehouse in Miami, spending many thousands of dollars in

renting a large building. Putting up shelving and stocking it.

They then hired several Miami Latins to run the business. It was obvious that they were going to show us how to do it the right way.

Within a year they completely closed the Warehouse down.

Between the minimal purchases from the Hispanic shops in Miami and the theft from the employees, they probably lost more than a Million Dollars showing us how to run a warehouse in

Miami.

I would have loved to have said, I told you so.

By the 1990's the Automotive market was changing. cars and parts were coming in from Japan and

I could see the end of an era coming. The writing was on the wall that the Automotive Business was changing.

The CEO of Echlin told me that they had saturated the Automotive market and the only way they could grow was through acquisitions. This was their new and disastrous concept.

The big Ace Electric Division was dying a slow death and was eventually sold for its assets only.

Then Echlin was sold to Dana Corporation and eventually Dana Corp went bankrupt.

Now by 1989 warning signs were coming up at API that we were no longer on sound financial ground.

While I did not personally get involved with the day-to-day finances of API, I always kept a mental account of affairs in my head, and I sensed something was wrong. When we should have had plenty of

money in the bank, we didn’t.

Soon, we couldn’t pay our bills, so to compensate I started liquidating various lots of merchandise to raise money, but I soon discovered that some of the lots that I intended to sell were missing.

One evening, my wife Katherine and I were invited to my friend Miguel’s birthday party.

We went to Miguel’s apartment and knocked on the door.

The door was opened by an American girl we didn’t know.

She invited us in and it was obvious she was drunk or under the influence of drugs.

As she ushered us in, she purposely waved her ring finger in front of my wife’s face.

She made sure we could see she was wearing a very expensive ring.

As she waved the ring in front of us, I couldn’t believe what she said to my wife.

She said, “My husband Don is rich, he makes a lot of money.” She was my partner’s new wife.

That evening, my son Jack and I brought home all the canceled checks for the past 10 years.

My son Jack, my wife Katherine and I, sitting at our kitchen table, combed through the checks and we couldn't believe the amount of money my trusted partner Don had embezzled.

We discovered that when my partner Don traveled overseas for business, he always traveled with his

friend Eddie.

Eddie was the owner of the local topless go-go club, where Don hung out.

I had always thought it was nice that Don had a friend to travel with, as Eddie always appeared

to be a nice guy, until I learned from studying the checkbook, that API had paid for all Eddies travel expenses.

Eddie thought Don was a little crazy, because he hung around the topless club so much and he said Don seemed to love it.

I was really disheartened, as I had chosen to overlook the warning signs, and all the red flags that had come up regarding Don's spending.

I knew that Don had a lot of expenses, which included the cost he had of keeping his wife in drugs.

I knew that after Don's second divorce, he had started dating the divorced wives of all his friends and several of them had asked me cut off his source of money.

Some appeared to be nice women, and a couple of them called me up to ask if I could shut down Don's source of money.

They were embarrassed to go out with him as he would throw money around like a real asshole. He would get drunk and buy drinks for the whole bar, then when he went to the restroom, the bartenders would pour another round for the house and Don would pay for it.

I told them that unfortunately there was little I could do, and really there was nothing I could do.

I knew Don was not quite normal, in many ways he was just like his father, but I didn't think he was a crook.

With evidence in hand I went to three different attorneys, always receiving the same advice.

If you are 50-50 partners with someone, they had the right to steal, and it was not illegal, a crime has not been committed. I had no grounds to have Don arrested on a criminal complaint.

Every day I came to work and sat next to Don, knowing he had embezzled millions of dollars and I didn't or couldn't say a word.

On my last-ditch effort, I went to see an attorney named Stanley Haves.

We used Stanley for some corporate business in the past.

Stanley listened to my story and said that while I couldn't bring criminal charges against Don, I could sue him with a Civil Suite.

I could sue him for half the money he stole because it was mine.

Stanley said he couldn't represent me because he had worked for API, but he recommended

another attorney who I immediately went to visit.

From the check book only, we determined that a few million dollars were missing and that was just the easy stuff we found.

So that is what I sued Don for, because it was the easiest to see and identify, however this was only the tip of the iceberg.

Don had stolen Property Tax money and Employee's withholding taxes, and much more.

Once the civil lawsuit papers were drawn up, I had Don served at 6:30 AM the following morning.

At 8: AM Don walked into the office and said, “I got your law suit this morning, what do you want.”

I said, Don, you have embezzled millions of dollars over the years, I am only suing you for

half of the money you stole by falsifying checks. My share is 1.5 million and I want it.

Don looked at me blankly, reached in his pocket and tossed his keys to the building onto my desk.

I don't have any money he said, and he started to walk out of the building.

I told him to go see my attorney, which he did.

The attorney had Don sign Quit Claims to all the properties that we owned jointly.

There was no point in continuing the lawsuit as Don had no money to go after.

Now with Don gone, I was able to see more of what he had been doing,

. I found $14,000.00 in checks in his desk drawer, that Don had the secretary make out to me, but he

never gave it to me. He had cashed his checks and kept my checks in his drawer.

Don had stolen tons of merchandise, and I contacted the buyers that I suspected had purchased it, and they readily admitted to meeting Don on the weekends to buy the merchandise.

They all had paid him in cash.

I was told that after leaving API, Don went to work as a night manager at Eddies topless go-go strip club.

I then learned from the IRS that the money Don stole from the employees withholding taxes was a criminal offense, as it was the same stealing from the employees.

Now as the Officer of API Corporation, I was personally responsible, even though Don had stolen the money.

The IRS had little compassion, even though I was not involved with the day-to-day financials, I was

still responsible. They appeared to know that chasing Don for the money was a waste of time.

My son Jack was getting antsy about leaving Miami.

He said he wanted to move up North, and find a nice girl, get married and have lots of kids.

I asked him to stay a few months and help me get things straightened away, and he did.

I learned several important lessons from this crisis.

First do not go partners with a mentally deficient, or psychologically impaired person unless you own 51 percent of the stock.

As Don had cleaned out pretty much all the Company's money. I was starting to dig into my own assets to try and clean up the mess.

I learned that when faced with an immense financial loss, file for bankruptcy as soon as possible.

Do not try to fix the financial problem by draining your personal funds, because you will eventually run out of money and be personally bankrupt as well.

My attorney said file for bankruptcy, and in two years you will not even remember what happened.

I did exactly what he told me, and the court appointed a women attorney as trustee to handle the bankruptcy of API.

All the company's mail was directed to her office.

The Trustee had several liquidators of merchandise contact me.

They wanted to know if they bid to buy the remaining API inventory, would I allow them to use my building to hold their own auction.

I told all of them no, I said I needed the building as soon as possible, to start another business,

I wrote to the trustee asking her to please settle the case fast, as I needed the building.

In short order I received a notice that she had received no bids for the inventory, and I was free to do what I liked with it.

She also requested that I pick up The API mail which was collecting unopened in her office.

I did pick it up and found more than $6,000.00 in checks which I deposited to the API Marine

account.

Apparently the trustee never even looked at any of the mail. Who paid the Trustee, I have no idea.

Now left with a complete shop and several good employees, I needed to decide what to do with the

company.

I thought that the Military business would be a good field to get into as it appeared exciting.

My son Jack searched for the state records to find and register a suitable name.

Unfortunately, every name we thought of was already taken by someone.

So, Jack started working with the alphabet to find any combination of letters that sounded good,

and was not already registered by someone.

He finally came up with CME which meant nothing to us but no one had registered it.

So, I added the word Arma to make the name “ CME Arma” which was kind of insuring that no one else would use the name or copy it, so now we were “CME Arma Inc”.

I asked Jack if he would design a Computer Program that I could use to run a military part

business.

At the time, neither one of us knew anything about the complexity of the government’s part number system.

Jack asked me a lot of questions, and I took a lot of wild guesses, which gave Jack the information I thought he needed, and he designed a military program that functioned fantastically.

I have always marveled at the program that Jack designed as it has allowed CME to eventually dominate the military electrical parts business.

My son Jack wanted to go up North and start a family, and so he did, and now I am in the Military parts business.(see the CME Arma Story).