The Billionaire Who Wasn't (5 page)

The booze business in early 1958 had become very competitive, and the two Cornellians looked for other things to sell. In April, they went to the World's Fair in Brussels and got ideas for expanding their inventory, adding such items as perfumes, cameras, toy trains, transistor radios—the latest thing in technology—and German beer mugs, which they had inscribed with insignia such as the marine emblem, Semper Fideles.

The key to success was getting on board the U.S. ships, which were generally off limits to civilians. Feeney and Miller had to compete with salesmen from France, England, Holland, and Belgium, trying to flog everything from perfume to suits. Approaching a ship “cold” was difficult. But by dressing as respectable Americans and speaking “American,” they could usually talk their way past the shore patrol to get on board and meet the supply officer, whose permission was necessary to sell items openly to the sailors. They sometimes “banged” the ring—the distinctive gold Cornell ring with azure stone engraved with the letter C—to make friends with Cornellians among the ships' officers, who would then invite them on board for lunch. They tried to find out from contacts in the United States if there were any Cornellians on board ships about to sail for the Mediterranean, especially supply officers who had trained at the Hotel School. In Naples, Feeney once got around a strict embargo on civilians boarding naval ships by climbing up the gangway with the garbage collector and telling the supply officer, “I'm here about the trash.” “There were stories that Chuck would be on the beach and somehow he would be in a little boat and next thing in a bigger boat and next thing in the officers' quarters on a carrier selling to guys,” recalled Chuck Rolles, who served in the navy. “He wasn't supposed to be there but nobody knew how he got there or how he got back.” Cornell contemporary and ex-marine Fred Antil remembered hearing stories about Feeney turning up on the gangplank of an aircraft carrier and the admiral asking, “How the
hell do you always know where we are?” and Chuck replying, “Admiral, who do you think sends you?”

Finding out where the ships were going was often the biggest problem. As a security measure, the U.S. Navy would schedule visits to Naples or Barcelona, then change the destination at the last minute. Often the best sources of information were the hookers in the ports. Miller courted a young woman in the U.S. consulate in Nice who tipped him off about movements of the Sixth Fleet. She told him once that an aircraft carrier and a destroyer were due to dock in Rhodes, Greece. Miller took the train to Naples, another train to Brindisi, then an Olympic Airways DC-3 to Corfu, Athens, and on to Rhodes. On the last leg, he found that he wasn't the only trader who possessed classified information about U.S. fleet movements. There was a “skinny Chinese guy” from Hong Kong named Smiley Chow, who sold bespoke (custom-tailored) suits to the navy. When they arrived in Rhodes, the two had to share a hotel bedroom. Miller saw that the tailor had a huge bundle of U.S. dollar bills sewn into his shorts. He also had an army knife, and said, “So don't get any ideas!” Smiley Chow told Miller he would make more money selling suits than liquor, and that there was a better place to make money. Like the priest in Barcelona, he told Miller, “You should go to Hong Kong.”

The orders, and the money, piled up. Feeney boasted to Miller that they were on their way to making a million dollars. They called themselves the Young Turks. Out on the road the two American salesmen stuffed cash and U.S. Treasury checks into their pockets, and when they got a chance, lodged them in an account at Lloyds Bank in Geneva, Switzerland, where, said Miller, operating a U.S. dollar account was “less complicated” than in France. It also had tax advantages. Making money while paying minimal or no tax was part of winning in the game in which they were engaged. When Miller brought his parents to Villefranche, his father saw a pile of U.S. Treasury checks on a desk in the little garden house Miller had rented. “Heavens, how much money is in that pile of checks there? Must be thirty or forty thousand dollars,” his father said. “He couldn't imagine it,” said Miller. “I got quite a kick out of that.”

CHAPTER 4

Cockamamy Flyers

With World War II becoming a distant memory at the end of the 1950s, American tourists began turning up in Europe in large numbers. For the first time since before the Great Depression, members of America's growing middle class had disposable income and did not have to confine their purchases to necessities. The cocktail was their social lubricant and television advertising was pushing up the demand for liquor. Chuck Feeney discovered one day that these vacationers with their cameras and gaudy jackets could buy duty-free booze abroad and bring it home, as long as they resided in one of fifteen American states. They were permitted by U.S. Customs to import a five-pack of liquor—five one-fifth bottles amounting to one gallon—once every thirty-one days, without paying duty. “I all of a sudden realized, shit, you can sell this to anybody, anywhere,” said Feeney. “It didn't matter where you bought it or where you shipped it from, as long as you declared it when you got back into the States.”

The problem for Feeney was figuring out how to persuade the American tourists to buy five-packs of liquor from him and Miller, and then how to get it delivered to their homes. It had been relatively simple to ship liquor for the navy customers from bonded warehouses to American ports, where it was picked up by the incoming sailors. This was a bigger challenge. He took a flight to New York to figure out what to do.

He found the answer in the Railway Express Agency, the national small-parcel delivery service, since defunct, whose green trucks were a familiar
sight on U.S. roads. Railway Express was obliged by law to accept all shipments destined for anywhere in the United States. Feeney printed up tens of thousands of brochures to tell American tourists traveling in Europe the good news, that they could buy duty-free liquor from Tourists International—as he and Miller called their venture—and have it shipped to their doorstep, as long as they lived in one of the fifteen states: New York, Connecticut, Rhode Island, Massachusetts, Pennsylvania, New Jersey, Delaware, Washington, D.C., Ohio, Arizona, Idaho, Illinois, Missouri, West Virginia and North Dakota. He organized for a ship chandler in Antwerp to take the orders and transport the duty-free liquor in cardboard valises packed into containers to the U.S. ports, where Railway Express picked them up. Tourists who bought and paid for their liquor declared that they had unaccompanied baggage when passing through U.S. Customs, and when they sent the receipt back to Feeney's office in Europe, the liquor was dispatched. Those travelers who were prepared to cope with the form-filling and the wait got good value. A five-pack of Seagram's VO costing $47.75 in New York could be bought for $22.50 from Tourists International and delivered to their door. There were similar savings on Jack Daniels, Tullamore Dew, Jameson, Johnny Walker, Haig, and Bells.

The constant traveling did not leave Chuck Feeney much time for his personal life, but he and Danielle Morali-Daninos met up again, a year after their first encounter on the beach at Villefranche. Danielle came to New York for a vacation while Chuck was setting up his five-pack postal scheme. They later managed to spend some time together in England, and when Chuck came to Paris in May 1959, they decided to get married.

Danielle's family was Jewish and she would have been expected to marry a respectable Jewish Parisian working with her father. But like Chuck, she had an adventurous spirit, and Feeney had opened up a whole new world for her. Young, educated, and stylish, she brought to the relationship the sophistication of France. She had a vivaciousness that matched Feeney's restless energy. She and her family were in turn enchanted with the young American, who by then spoke fluent French and always seemed keen to help. They were married in Paris in October 1959, first in a civil ceremony at the town hall of the Sixteenth Arrondissement Prefecture of the Seine, and the next day in church, with Chuck Rolles as best man.

After their wedding, Chuck and Danielle drove to Switzerland in his turquoise Renault Dauphine to establish a permanent European residence
there. He had to have what he described as a “perch” someplace in Europe. They found an unfurnished apartment in Ebikon, just north of the medieval town of Lucerne, took a yearlong lease, and put in a bed and a sofa. But they did not spend more than half a dozen nights there. They drove on to Lichtenstein, Feeney's real destination. The principality, barely as big as Washington, D.C., and landlocked between Switzerland and Austria, had strict residency laws that prevented them having an official perch there. “But it was a tax haven,” said Feeney, “and people like us went there to do business.” Banking and tax regulations were almost nonexistent. Chuck and Danielle checked into the four-story Waldhotel in Vaduz, the thirteenth-century capital on the banks of the Rhine dominated by a castle on a rocky outcrop. However, they found they had to pack their bags and check out again once every seven days, when the police called to ensure that people posing as tourists were not overstaying.

Feeney set up the first world headquarters of Tourists International in two small rooms in the hotel, which was located among fir trees overlooking the Rhine Valley, and hired two young resident Englishwomen to come every day to do the typing and paperwork. They got a brass plate made saying “Tourists International” and displayed it among dozens of shadowy “offshore” companies registered at Obera House, Altenbachstrasse 534, so they could have an official business address.

A year later, a letter arrived for Feeney at the Waldhotel from Leon P. Sterling, a fellow Cornellian from New York state who had been doing his military service in Germany as manager of officers' clubs in the Stuttgart area. Like Chuck, Lee Sterling had fallen in love with Europe and was looking for a job to keep him there after his discharge. He had seen from the Cornell Hotel School alumni newsletter that the Sandwich Man was in Lichtenstein. He inquired whether there were any good hotel jobs in Vaduz. Feeney invited him to join the company instead. Sterling arrived in Lichtenstein by train on October 24, 1960. Shortly afterward, Feeney asked him to take over the Vaduz office. “He said, ‘This is what we are doing,' and then he left,” said Sterling. “That was something I learned about Chuck. He was the kind of fellow that would give you responsibility and then let you do it. He didn't hover, he wasn't around; he was out making more deals.”

Feeney was heading for Geneva to try to make a deal with an upstart American company that threatened his business. One of his salesmen had come across a full-color glossy catalog issued by a firm called Duty Free Shoppers
with an office on Rue de Rhône in Geneva and trading under the name of Transocean. The twenty-eight-page brochure offered American tourists “fabulous values” for items such as Le Galion and Molyneux perfumes, cashmere, watches, and other luxury goods, many at half the U.S. retail price.

Feeney believed this company was way ahead of the game. But he thought they might agree to insert his liquor brochures into their next catalog if they weren't selling booze themselves. On December 19, 1960, he arrived in Geneva, booked into a modest hotel in Longemalle by the lake shore, then phoned Transocean and asked for the manager. He was surprised when the manager answered the telephone himself and invited him to come over right away. Feeney made his way through the Christmas shoppers to the address on Rue de Rhône.

Duty Free Shoppers was the brainchild of Stewart Damon, a U.S. Navy exchange officer who had been based in Naples. Its goal was to sell duty-free goods to American tourists abroad. He and another entrepreneurial American, Harry Adler, had persuaded seventeen investors in New York to put up $95,000 worth of shares, and they arranged for manufacturers to package and ship their products. They printed half a million catalogs and opened the office in Geneva to process what they expected would be an avalanche of orders. Only a trickle came in.

Damon had returned to the United States that September to restructure the company, but he failed and then resigned, leaving Harry Adler in Geneva with debts of $3,700 and assets of $1,700 in perfume stocks. On the day Feeney turned up, Adler was paying some overdue bills and clearing out his desk. He and his wife and two small children were getting ready to fly back to New York on money borrowed from relatives. It was his last day of business.

Then this “blond, blue-eyed youngster appearing no more than twenty-ish” walked into the office and introduced himself as Chuck Feeney, recalled Adler. Not knowing the dire straits the company was in, Feeney, who was in fact almost thirty years old at the time, told him that he thought that his idea was tremendous and was surely very successful, and proposed to Adler that if they inserted his liquor brochures in their next catalog, he would give them a commission on all liquor orders that resulted.

“The irony of it all!” wrote Adler later in a personal memoir. “Here was another fellow who thought that the idea could not fail and was coming to us to help him distribute his cockamamy flyers. I really had no choice but to
be honest. ‘Dear friend,' I said, ‘Our distribution was a huge one-time gamble and is, at this time, a dismal failure.'”

Feeney was visibly shocked but not at a loss for words, said Adler. “He spoke very fast with a high-pitched voice, asking what is to become of this company, these offices, and what of the orders that were still in the pipeline?” The “engaging young fellow” then pulled out a Parker pen and started making copious notes in his back-slanted handwriting. Feeney said he would call his associate Bob Miller and would come back the next day to talk business.

Feeney was convinced that the principle was sound, and that the company could still survive and thrive with proper marketing. It was the logical extension of his own ventures into the world of duty free. The next day he proposed a deal to Adler. He and Adler would travel to the United States early in the new year, where Feeney would make an offer of up to $10,000 for the company stock. Tourists International would in the meantime hire Adler at $1,000 a month, with three months' salary in advance, to work for them. Adler could hardly believe what he was hearing.