By Patrick McConville
May 24, 2019
“If you can keep your head when all about you
Are losing theirs…”
The world is so focused and self-important that it’s difficult for us to imagine that one that existed before it. Our current keepers of memory came of age after the Second World War. The world many of them came into was suburban, connected by freeways that would link us together. Few remember when Long Island was the wilderness beyond Manhattan. Count Frank Steinman among the few.
Born in 1933, Frank was raised in Riverhead, New York. Riverhead sits at the mouth of the Peconic River. Today, it’s been absorbed by the quaint escape for City dwellers known as ‘The Hamptons’. He refers to Riverhead as “a hick town.” It was “out in the sticks.” In fact, the Riverhead of Frank’s youth has more in common with the agrarian hamlets you’d find in Iowa than a town one hour outside of New York City.
It was the wilderness, lush with green forests. In these forests, Frank would go on weekend hikes with his father, Elias, and brother, Leonard. One day, Elias noticed a line of trees were tagged with spray paint. A week later, another line appeared deeper into the forest. Wide enough to drive several lanes of trucks through. Elias noted the location and returned to his law office. On the wall of his office was a topographical map of Riverhead and the surrounding area. He marked off the spacing and connected it to an article he’d read recently in the New York Times about a high-speed road that would connect Long Island to Manhattan. It even had a futuristic name: the Expressway. Frank’s Father guessed that these markings were where the government was placing this major roadway. Elias purchased the land. Within a few years, the Government bought the land from Elias Steinman to construct the Long Island Expressway.
Elias Steinman had vision. As a small-town lawyer, he was comfortable with his place in the world, but knew that the world around him would expand by the time his sons were grown. Not only was he certain progress would find Riverhead, but he applied his gut instinct and acquired wisdom to determine the precise path in which progress would come. This vision was the greatest inheritance he passed along to his sons. The ability to sense what’s coming next and the courage to act.
“If you can dream—and not make dreams your master;”
Vision has sustained Frank Steinman since childhood. Too young for World War II and Korea, but too old for Vietnam, Frank fits neatly in this gap generation. As Frank describes it, he watched the world change, “From a pre-World War I existence” to a “World War II”. The pre-World War I existence was most obvious to him during his four years at Trinity College in Connecticut. As a Jewish countryboy amid the WASPs, Frank provided the school with “diversity.” He parlayed his time at Trinity into a place in the Macy’s Executive Training program. Shortly thereafter, he did his mandatory stint in the US Military. His experience in the woods as a kid developed the survival skills that allowed him to finish 8th in a unit of 800 in his PTD skills. After leaving the Army, Frank took a job at Lehman Brothers in New York City. There, he spent the next 15 years trading on Wall Street for Lehman, Oscar Gruss & Son and First Manhattan.
“If you can think—and not make thoughts your aim;”
By the time Frank turned 35 in 1968, “I finally started getting my shit together.” He took his first trip to California in 1966. On the flight out, he’d charmed the Flight Attendant into driving down Pacific Coast Highway from San Francisco to Los Angeles. Driving down PCH in a convertible with a beautiful woman at his side, Frank was fully aware that he was “living the California cliché.” But he loved every minute of it. When the market soured in 1974, Frank left New York and moved to California. “I’d saved enough money to last me a year,” Frank noted. There wasn’t much of a plan. He rented an apartment in Marina Del Rey previously owned by Ed McMahon. He made some contacts in casting, winning a place on the game show, HIGH ROLLERS hosted by a pre-Jeopardy Alex Trebek. They phased Frank out after winning five consecutive days. His winnings bought Frank more time in California, where he found himself selling real estate at Fred Sands in the Marina.
Not knowing many people in Los Angeles, Frank socialized by playing tennis at the 8 courts in his complex at Mariner’s Cove. There, he met his first friend on the Coast: John Vincennes. Like Frank, Vincennes was a recent transplant to Los Angeles after having worked on Wall Street. Unlike Frank, Vincennes had his fingers in many business ventures. The most profitable of these ventures was his ownership in a retail store called Computerland.
The personal computer seems almost antiquated now. Ask the average millennial if they own one, and, confusing it with a clunky desktop that only runs Quicken, they will say “no”. The reality is that the personal computer is alive and well. This author has a desktop, a laptop, a smartphone, a tablet and an onboard computer in his car. Two of my sons have Kindles. People view these objects as “devices” when in fact, they are computers. In 1978, the word “computer” conjured up space age images of counting machines used at NASA’s Mission Control. There was nothing “personal” about them.
In 1978, Vincennes approached Frank after a weekend tennis match with an opportunity. “I’ve been looking at this franchise called Computerland. I’m considering buying their franchise for LA. And what they do is sell personal computers.” The notion was unheard of to Frank, “You mean you can buy your own computer?” Vincennes confirmed. Looking back on it, Frank thought the concept seemed a little crazy. “A store where you can actually walk in, lay your money down and walk out with your own computer? It was mind-blowing.” As crazy as it seemed, Frank quickly identified a business that sold personal computers as “the future”. Like the time he walked in the woods with his father and stumbled upon the surveyor’s path of the Long Island Expressway, Frank sensed a revolution on the horizon. And so he staked his claim.
Frank bought a 25% interest in Vincennes’s Computerland franchise. When they opened the doors on their storefront in the heart of the Aerospace Industry on Hawthorne Boulevard, the line of customers wrapped around the block and into the street. Nearly every one of the prospective customers resembled “Bill Gates”, according to Frank. Once inside, the line grew 50 people deep to play a demo of Hangman on the Apple 4K. After that first day, Frank realized the growing market for these machines. Personal computers had loyal devotees. “Propeller heads,” Frank refers to them now. Today, we call them “Geeks”. At the time, the personal computer market in Los Angeles was wide open. There was one store in Santa Monica that sold PCs. As far as competition was concerned, that was it. Their Computerland location eventually reached $6 million a year in sales.
By 1982, Frank started paying more attention to Computerland than his management position at Fred Sands Real Estate. 21% interest rates brought home sales to a standstill. It was time for a change in vocation.
“If you can meet with Triumph and Disaster
And treat those two impostors just the same;”
Frank Steinman is not a technical man. In his 20s, the Army made the mistake of assigning him to Motion Picture Projection Repair at Ft. Huachuca, Arizona. Upon realizing Frank’s technical ineptitude, they reassigned him to Special Ops. Machines were foreign to Frank. People were not. Frank understood human beings. Very well. The luminaries of the Personal Computer are often the developers and coders who understood the tech. Bill Gates. Steve Wozniak. Steve Jobs didn’t write code, but he focused on design and marketing, letting people know just how “cool” the device was. Frank Steinman had been born at least 20 years before these luminaries, but by 1984, he was nearly their peer. How?
A futurist named John Naisbitt wrote a seminal text in 1982 called Megatrends: Ten New Directions Transforming Our Lives. The thesis of the forward-thinking text explored the societal transition from the Industrial Age to the Information Age. Like the surveyor’s markings in the forest near the Peconic River, Frank used this text to sense the coming future. He was going to best position himself to be find a piece of real estate along this Information Superhighway.
His sales pitch involved industries that seemed fanciful a decade before, but developed into multi-billion dollar businesses: microwaves and wine. “Just as you couldn’t imagine that everyone would use a microwave to bake a potato and buy a variety of wines, you don’t know what this thing (the personal computer) is going to do.”
But, he continued to inform prospective customers… “It’s going to do a helluva lot more than any of us can possibly imagine.”
Reflecting on it, Frank is modest with the hint of pride from a man whose name history may have remembered had fate not interfered, “I’m patting myself on the back as we’re saying all this now, but I really saw it. I was a nontechnical pioneer.”
After a 1982 tennis match at Mariner’s Cove, Vincennes removed an object from his gym bag and presented it to Frank. A thin 5 ¼ inch square, made of plastic and aluminum: a floppy disk. Using his 175 IQ, Vincennes had drawn up a schematic for a computer program. He had recruited a few of the “propeller heads who hung around the store like a communal tap” to translate that schematic into code. The result was a program called The Home Accountant, a virtual ledger and precursor to Quicken Books. “Let’s start a software company,” Vincennes told Frank.
Intrigued, Frank validated Vincennes’s foresight, “There’s nothing like this on the market.” With Megatrends on his mind and real estate bottoming out, Frank recognized the computer business as his place on the Information Superhighway. They realized that you cannot get the average consumer to buy a personal computer unless they have something to do. Frank Steinman and John Vincennes were about to provide them with something to do. A partnership was formed that day. Frank would handle Sales and Marketing. Vincennes would cover production and technical development. Frank left his job at Fred Sands. Continental Systems was born.
$30,000. That was the start-up capital Continental had to play with. Inflation has a way of making small numbers 35 years ago seem larger, but either way, it wasn’t nearly enough money to start a software company. Frank was in charge of Sales and Marketing.
For sales, Frank hired four of his best realtors from Fred Sands to make up his sales force at Computerland. This quartet was distinctly different than the all-male clientele: they were female. At first, the women were apprehensive, concerned that they didn’t know enough about computers to sell them. “You don’t have to know anything about technology,” was Frank’s response. “All they (distributors) care about is selling the computers. They don’t care about the software. The money is in the computers. So what we’re doing is taking simple program that will allow anyone to sit down and actually operate a computer. And they’re going to buy the computer, and our program with it.” Like Frank, they knew sales. They understood customers. Sure enough, their sales strategy was wildly successful.
For Marketing, Frank recruited a young married couple that had just started an advertising/PR Company, Holden & Seele. Continental Systems was their first client. $30,000 was not enough capital for a traditional marketing campaign. It would buy next to nothing in terms of advertising. Applying some of the innovative strategies acquired through two decades in Sales, Frank asked the nascent PR firm to “get me on morning talk shows in the 12 biggest markets in America.” The plan was for Frank to personally appear on these morning talk shows to extol the virtues of the Personal Computer and what makes it as essential as a refrigerator or washing machine. Holden & Seele delivered. Frank did a media tour, appearing on these 12 Morning Shows, 30 radio programs and reaching 64% of the U.S. Population.
From the first day Computerland opened, Frank realized that if he was going to make the Personal Computer “personal”, he would have to make it accessible beyond the tech savvy. Frank worked up a “routine” for conventions and TV appearances. A typical appearance transformed as such:
The Hosts of GOOD MORNING, HOUSTON or whatever city they were in, would say, “Those darn computers. How are they affecting our lives? Frank Steinman from Continental Systems, get on in here and help us out.” Frank would walk out onto the set, take his place on the couch and start his pitch, “Boy, don’t look at me. You know what? A computer screwed up my reservations for the flight out here.” They would look at Frank, perplexed as to why he was speaking ill of the very product he was supposed to be hocking, “Really?” Frank would push further, “Oh yeah. And last month, a computer screwed up my bank statements.” The Hosts would cut him off, trying to clarify, “Wait a minute. Isn’t this your business?” With them hooked, Frank would answer, “Our business is different because the Home Accountant is so simple that even me, the oldest and least computer savvy guy in the computer industry can operate it.”
And how did this go over? “Well, we hit the bell,” Frank smiles. Within nine months, the Home Accountant climbed to the top of the Billboard charts to become the best-selling computer program in the United States. What made the pitch and this media tour successful was Frank himself. If Steve Jobs focused on making the computer “cutting edge” and “cool”, Frank focused on making the personal computer “universal”. The computer was meant for everyone. It would not just benefit the young. Continental Systems’ top seller was The Home Accountant. Kids wanted to play Pong not fill out Form 1040s. Clearly, the sales reflected that the untapped resource: average adults who wanted to use the computer for practical reasons.
Frank Steinman’s greatest gift to Continental was his ability to sell the product. The computer world was for science and business. It was very conservative and downright nerdy. Frank saw an opening. Frank played to the narcissism of the “Me Generation” transitioning into the “Yuppie Generation.” At conventions, Frank was quick to use catchy slogans on t-shirts to spread awareness of the Continental brand. These were often puns pertaining to personal finance (“Let’s Get Fiscal”) promoting the Home Accountant. His approach to broadening the appeal of the personal computer boiled down to the most fool proof axiom of marketing: sex sells. Frank commissioned a print ad featuring attractive models that looked like they’d just been pulled from aerobics class, wearing the t-shirts Frank brought to trade shows and not much else. Frank sat in front of a desktop computer, in the middle of the ad, surrounded by throng of beautiful women half his age. Sales reached 25,000 units a month. Continental’s the Home Accountant became the Top Selling Business Software according on the Billboard charts.
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
By 1983, Continental Systems was working out of a warehouse off Imperial Highway, just south of Los Angeles International Airport. John Vincennes served as the CEO and Frank was the President. Continental had expanded to over 100 employees. Among those 100 was a CFO Vincennes installed without consulting Frank. The CFO was a septuagenarian who had long served as the head of a retail furniture company throughout Southern California. His name was Edward Coleman. To Frank, his surprise hiring seemed as unwelcome as it was unnecessary, but it pertained to Operations and he deferred to Vincennes’s will. Frank notes that the software business was unusually collegial at the time, “There were a handful of software companies. We all knew each other. There wasn’t any real competition because everyone filled a certain gap. One company handled Spreadsheets. Another company focused on Printing and Database work. A simple program like ours handled home finance…It was a fun time to be in the business.”
This was good for the software producers, but consumers were eager for simplicity. Distributors like Computerland routinely bundled these various programs on the PCs they sold, but the market was prime for a company that would combine all of these programs into one essential software. One Saturday morning, Vincennes and Frank waited in a side office to meet an insurgent software developer taking the industry by storm. The receptionist paged them, “There’s a Mr. Gates out here for you.”
Bill Gates was there to meet with Continental as he was putting together the programming buffet known as Windows. Vincennes and Frank went out to the Warehouse floor and were surprised to see a man who appeared like a nonplussed 14-year-old surrounded by a phalanx of lawyers and assistants. Before they could even sit down, Gates launched into his pitch, “He starts waving his finger at us, ‘OK. You guys are the top selling program in accounting…I can just see this thing on Windows. Here’s how it was going to work.’” Vincennes interrupted him and let him know there was a catch. “Bill said, ‘What’s the problem?’ John replied, ‘We’re part of the MacIntosh development team and we have a noncompete. We’re not allowed to do that.’”
As it was until the mid-2000s, the Hardware on Macs was incompatible with PCs. Like alternating current versus direct current a century before, the two formats duked it out for supremacy. Eventually, Macs gave in and started using Intel technology (CHECK). That was when Apple computers finally went mainstream.
‘MacIntosh’ was all Bill Gates needed to hear. “He got up and stormed out,” Frank laughed, looking back on the meeting.
By 1984, Continental was approached by A.G. Becker Paribas about going public. At this point,
Continental’s reach extended beyond The Home Accountant to other software programs as well a publishing arm focused on desk reference handbooks sold in Computer stores. Since his days as a trader on Wall Street, Frank had longed to take a company public on the Stock Exchange. He had witnessed the Initial Public Offering of many corporations and was eager to experience it for himself. This was his Long Island Expressway.
Today, IPO launches are met with much fanfare. A CEO will ring the bell on NASDAQ to open trading the day of the IPO’s launch. It was different then.
Frank explains the Brokerage Company taking the Company going public out on a road show. “It was unbelievable. You hit two or three cities a day and then you meet with your analyst and let them know you’re going public.” The road show took them through Europe. “They flew us First Class. Merrill Lynch was the underwriter so they foot the whole bill. We stayed at the Ritz and put on our Dog & Pony in London and Paris, then flew to have lunch in Geneva before flying to Glasgow to meet investors for dinner. Next morning, we had breakfast in Glasgow, lunch in Edinburgh, and hopped on the Concorde and flew to New York for a late dinner.”
Yes. That Concorde. The supersonic jet capable of traversing the Atlantic in three hours’ time. The plane traveled at such a high velocity that Frank placed his hand against the window and felt heat. The experience was otherworldly. “The second you step into the lounge area to board the place, you felt the electricity of the powerful people in that space. I’ve never stepped into a situation where I felt more insignificant,” Frank noted with reverence. “I still get chills just remembering what it was like to be in that room. Everyone in that room was a powerhouse…and then there was me,” Frank laughed, self-deprecatingly.
In January of 1984, Vincennes and Frank were hard at work with Ernst and Whinny (SP), the underwriters at Merrill Lynch, and a bevy of lawyers. The end result was the Prospectus for the IPO. Everything was working according plan until a subpoena arrived. Two of the programmers who wrote the Home Accountant were suing for royalties. To stop it from holding up the IPO, Continental settled for $2 million. As a 25% owner of the company, Frank forked over the $400,000 under the impression that it would be paltry compared to how much he would be worth once Continental went public.
In preparing the company to go public, they restructured it. The Board of Directors consisted of a partner from Merrill Lynch (Steve Koeffler), the President of Warehouse Records (Lou Kwiker), the kind of record store that was devoured by the big box stores of the 90s, Jerry Magnin of Magnin Stores, John Vincennes, Edward Coleman and Frank. During the restructuring, the other Board members determined that a specific Board Member was not worthy of his current position in the Company. They asked John and Frank to get rid of Edward because the other board members deemed him unfit to be Chief Financial Officer of publicly traded company. The Board asked John to kick Edward upstairs into a different position so that Arrays could install a high caliber professional as CFO. Vincennes agreed. Vincennes pitched it to Edward as a better deal than his current position. Frank paraphrased the conversation as, “Look Edward. Forget this daily grunt shit. Let’s get someone else to do that. We want to make you Vice Chairman.” The new title would come with a $25,000 a year raise on top of his stock in the soon to be public traded company. The 74-year-old Edward seemed to read the writing on the wall. The Board was pushing him into “Emeritus” status. Frank assumed that would be the end of it.
By now, Continental Software had officially been rebranded as Arrays, Inc. This would be the name of the parent corporation on the New York Stock Exchange. The IPO launch was fast approaching and with it, all the momentum of a company on the cusp of the zeitgeist. Everyone wanted in. H&R Block was interested in acquiring Arrays so that they could put the Home Accountant in all of their stores. Textbook makers MacMillan Company wanted to acquire Arrays’ Book division. These prospective acquisitions would have added a $50-60 million valuation for the company.
The day Arrays went public is forever etched in Frank’s memory. He was at the Polo Lounge in the Beverly Hills Hotel on January 9, 1984. The Lounge was largely the same as it appears today, just with different clientele and cigarette haze. Frank was having breakfast with their lawyer, Bruce Allen and Vincennes as they waited for news from New York. A concierge brought the house phone to their table. The call was for Bruce Allen. He answered. Frank watched as Allen went through a checklist of confirmations and then OK’d the transaction. Frank recalls, “Watching the phone go from his ear to the base felt like forever. It moved in slow motion.” That was because Frank was acutely aware that once the phone was officially hung up, his share of Arrays, Inc. would be worth $4 million. The phone hung up. Frank was a millionaire. It was the most high-flying moment of his six-decade career as a businessman.
With the company now public, Arrays was officially big business. By early 1984, were now big players in the computer world and the world took notice. Six months later, their fortune would turn. One morning, Frank received a phone call from the Manager at their Computerland branch on Hawthorne. Vincennes was on vacation and one of the associates I’d brought in from Fred Sands to Computerland was managing the store in John’s absence. She told Frank, “ ‘You know, I was paying some bills and I noticed that Vincennes has been writing some very big checks to himself.’ She was my friend.” Frank thought the same of Vincennes. This news floored him. It was hard to believe. “She said, ‘Well, you ought to come down and look at these books.” Frank drove down and examined the ledger. He recalled that he first found out about Edward when his personal accountant stopped receiving Computerland’s profit statements. When he asked Vincennes what happened to his accountant, John told Frank that he’d hired Edward Coleman, who was more experienced and would handle the accounting. Frank trusted Vincennes. What Frank read in the books floored him. “I saw he (Vincennes) was writing these big checks to himself. $10,000 here. $10,000 there.” Frank immediately called his brother, Len, an attorney in New York City and holder of 10% interest in the store. Len hopped on the next plane, landed at LAX and went straight to Frank’s office in El Segundo. Consulting the books, Len confirmed Frank’s suspicions. As soon as Vincennes returned from vacation, the Steinman Brothers confronted him about the missing money. Frank recalls, “I said, ‘John, what the hell is going on here?’ He said, ‘I was going to even it all out at the end of the year.’ I didn’t buy it. It didn’t sit right.”
At this point, Frank and Vincennes had been friends for a dozen years. Frank had a choice: report his friend/business partner and create a major scandal within his company had just gone public or trust that Vincennes would pay back the money. He opted for the latter and put Len back on a plane to New York. The feeling of betrayal was unshakable.
His terrible day was about to get monumentally worse. Frank returned to his desk, crestfallen at his business partner having stolen from him, when another life-changing call came in…from the Los Angeles Times.
A reporter (Al Delaguch) was calling to confirm a story. Frank was confused, “What story?’ The Los Angeles Times, along with the New York Times and Wall Street Journal had received a letter via fax. The letter stated that John Vincennes and Frank had given falsified financial information to the auditors at the time of Arrays’ public offering. All of this was news to Frank, who quickly asked where this information was coming from. “From your CFO,’ the reporter said.”
“Edward?” Frank was shocked. He never trusted Edward, whom he described as “Louie DePalma”, Danny DeVito’s despicable cab dispatcher from TAXI, but he never expected Edward would sabotage the company like this and devalue everything they had been working for. “I said, ‘What the hell are you talking about?’ He (the Reporter) said, ‘Do you have a comment?’ To this day, the conversation makes Frank incredulous. “I said, ‘Are you kidding? That never happened.’ And she said, ‘Well, we’re putting it in the paper tomorrow.’” It was all flashing before his eyes. Everything they had been building, from Computerland to Continental to Arrays, was being set ablaze in an act of financial arson. Worse yet, Frank Steinman’s good name was about to be tested by fire. Frank asked him, “The paper? Can you prove it? Why are you printing it?” The Reporter responded, curtly, ‘The letter is the story.’ The only response Frank could muster was not something the LA Times could print, “Holy shit.” Telling the story opens up the wounds that 35 years haven’t been able to heal, “It felt like someone slammed me in the gut.”
Frank immediately called Edward to clarify. A sullen Edward claimed that Vincennes and Frank had spent unauthorized money by going to a convention in New Orleans with their wives “on the company dollar.” Though what really bothered Edward was, “You didn’t invite me or my wife.” The pettiness driving Edward’s self-sabotage was incomprehensible to Frank. “I told him, ‘Edward, that convention was a different level. You don’t like to go to those things anyway.” Edward complained that they spent company money on their wives. Frank responded, “You know what? You’re right, but that was a business decision. All the other CEOs brought their wives. That’s why we brought them. To socialize.” Edward responded, “Yeah, but that shouldn’t be on the company dollar.” It didn’t matter that Frank and John were going to pay it back. It didn’t matter that he was cutting off his nose to spite his face. Edward was simply angry at having been left out.
Once Frank and Vincennes sat down to meet with Edward, they convinced him to retract the statement, the damage to Arrays, Incorporated had already been inflicted. The blood was in the water and the sharks were circling. Class action suits started piling in. A prominent suit came from a Palm Springs investor and Entertainment Lawyer named Seymour Lazar. “There was an ambulance chasing firm in San Diego that wanted to put us all in jail for things we didn’t even do,” Frank recalls. Between the Class Action Lawsuit and Edward’s letter, the Securities Exchange Commission opened a Fraud Investigation “where they conduct a forensic exam.” The forensic exam is like a financial colonoscopy. It was September of 1984. The company had been public less than six months.
As the SEC subpoenaed the Board of Directors to testify, something strange occurred. John Vincennes vanished. John was last seen telling his wife he was going to pick up a pack of smokes. He disappeared. After he left, Vincennes’s wife entered a room that he kept to himself. It was loaded with safes. One of them had millions of dollars in South African Krugerrands. The rest were empty. When called to testify, Edward, who stepped down from Arrays, Inc. shortly after starting this firestorm with his spiteful letter to the media, had a mental breakdown that rendered him, conveniently, in a catatonic state that lasted as long as the investigation. Frank was the only member of the Company leadership left standing to face the Fraud Team. Amid the scandal, stock in Arrays, Inc. devalues from 10 to 1. It opened at $8 a share in January of 1984. By the summer of 1985, in the thick of the SEC Investigation, shares were less than a dollar. The H&R Block deal was taken off the table. MacMillan & Company rescinded their offer until the situation was cleared up.
Worse for Frank, before Vincennes’s disappearance and Edward’s coma, Arrays, Inc’s board took the preventative measure of asking Frank and Vincennes to vacate their Board seats until they could complete an Internal Investigation. With that decision, the Company could keep functioning, but Frank and Vincennes would be stripped of salary and insurance benefits for their families. Their two seats on the board were replaced by cronies of Edward, who still had a seat on the Board. At the same time, Jerry Magnin had a heart attack and had to step down, leading them to appoint another person hostile towards Frank and Vincennes. Within the span of a few weeks, Frank’s life had gone from dream to nightmare.
Ironically enough, the financials that Edward claimed were falsified could only have been provided to the underwriters by the CFO himself: Edward Coleman. As veterans of Wall Street trading, Frank and Vincennes understood the stakes of an IPO well enough to know that falsifying documents was the quickest way to torpedo a booming company.
“Or watch the things you gave your life to, broken,
And stoop and build ’em up with worn-out tools:”
Frank Steinman went from Jobs to Job in the span of a single year. The SEC Fraud Commission deposed the leaders of Arrays, Inc. With Edward incapacitated and Vincennes vanished, Frank stood alone to answer for the company, to settle the debts and assume responsibility for this runaway train. When Arrays went public, Frank was worth $4 million. Their shares had shrunk to one-tenth it’s previous worth. Frank was on the hook for $600,000 in legal fees to keep himself out of jail. His personal life was equally strained. His wife, Lois, filed for divorce and the State of California determined she was entitled to half of Frank’s earnings to provide for their daughter, Lauren.
Worst of all, his beloved father, Elias, passed away in the summer of 1985. “I was close to my Dad. He was my best pal,” Frank recounts. Jobs to Job…in one fell swoop.
“If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;”
“Have courage.” Those were the words Frank’s mother, Sophie, would leave Frank with every time he parted from her company. Sophie would tell him she loved him and push him to “Have courage.” She also introduced him to a poem that would become his personal mantra, “…If” by Rudyard Kipling. Frank followed his mother’s advice. In the fall of 1985, the SEC deposed Frank with his attorney by his side. “You have no idea what it’s like to sit in front of the Fraud Team at the SEC,” Frank recalls. “If you say one false word, you’re in the clink.” He was understandably nervous about his deposition. The SEC was investigating if there was a “material difference” between the numbers Arrays reported to the underwriters and the numbers from their actual earnings. Prior to the deposition, investigators scoured the Arrays offices on Imperial Highway, interviewing every employee and viewing every document. The charge boiled down to how the returns on a recalled product Continental had made for Commodore. If there was a difference was in excess of 5%, it would be deemed “material” and Frank would go to prison for Fraud. After grilling me and examining all of our records, the SEC found a material difference of only 2%. The charges were summarily dropped. Frank notes, ruefully, “The bottom line was there was nothing there because we (Arrays) didn’t do anything wrong.”
“If you can force your heart and nerve and sinew
To serve your turn long after they are gone,”
Arrays, Incorporated was in the clear. But it was a moral victory. The company was in tatters. The damage to their reputation was irreparable. The skeleton of Arrays was stripped clean and sold off to pay down debt. It was all gone…Frank’s company, his marriage, his friendship. All that Frank retained was his freedom, health and a mountain of debt to pay down before he could close the book on Arrays, Inc. Frank recalls,“That was so hard to unravel that company, (and) those people I hired. To see it all unwind. That was very heartbreaking. It was a very tough, tough time for me.”
As for that Class Action Lawsuit brought against Arrays, Inc. by Seymour Lazar, it was dropped. But in 2005, a federal grand jury in Los Angeles indicted Lazar on multiple counts of Mail Fraud and Money Laundering. Lazar was notorious for filing Class Actions suits against companies, specifically ones that went public. If anything went wrong, Lazar would sue them for fraud. Lazar was paid $2.6 million in kickbacks over the span of 25 years from the law firm Milberg Weiss to initiate these suits in his own names. The court found him guilty of Obstruction of Justice, filing a false tax return and making a false declaration. He was under House Arrest with an ankle bracelet until his death in 2016. In an interview with the Wall Street Journal, Lazar griped, “Did I hurt anybody? Who did I cheat? Did anybody get screwed?” If you’ve read this far, you know the answer.
Ignoring his attorney’s advice, Frank did not declare bankruptcy. He spent the next seven years of his life paying off the seven figures of debt he’d accrued on the Arrays adventure. This period of time still resonates vividly with Frank, who remains in awe of all that transpired, “But, boy, oh boy, what a ride.”
“And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’”
When the calendar turned to 1986, Frank Steinman was 53 years old. In the span of a year, Frank lost his business, his marriage and his father. “The only thing I kept was my good name,” Frank notes. When you reach the point of stories like this, the hero often fades into defeat. They belly up to the end of a bar and tell their story to anyone who’ll listen. F. Scott Fitzgerald famously noted, “There are no second acts in American lives.” Frank had arguably defied this logic with his life in California. But with the millions of debt the Arrays collapse saddled him with, one would expect the story to conclude there.
Expectations are deceptive, though. In 1986, Frank had reconnected with a woman he’d met on a job interview six years earlier. Deborah “Debbie” Gwynn dropped by the office at Fred Sands Real Estate seeking employment. Frank was smitten, but in a more academic sense. He’d just gotten married a year earlier. The timing was off. He called his brother to tell him that he’d just met a 10, to which, Len responded, “What’s it to you? You’re married.” Frank recalls, “I told him, ‘I know. I’m not doing anything about it. I just had to tell somebody.’ ” Debbie had a different reaction to the interview. When she returned to her sister’s apartment where she’d been staying, Debbie’s answer to “Did you get the job?” was, “Forget the job. I just met the man I’m gonna marry.”
While picking up the pieces of his life, Frank sat down with Debbie for lunch. She was 20 years his junior and engaged to marry a construction magnate, Ron DeBartolo, who’d recently finished his work building a Manhattan highrise synonymous with the hedonistic wealth of the 80s: Trump Tower. Again, the timing was terrible, but the spark was more palpable this time. At lunch, Frank told her, “I have to tell you, Beck. I fell in love with you the first time I saw you.” She replied, “Me too.” She flew back to New York and broke off her engagement to DeBartolo. Even though, he feared that Ron DeBartolo would cement him over as a gargoyle overlooking Central Park, DeBartolo was understanding and gracious enough to attend their wedding.
Reflecting upon this moment in their lives, Frank notes, “Here I was: a broken down, divorced, and hardened Jewish guy, 20 years older than her and she married me anyway. With no money.” To which, Debbie fondly teases, “I would have married you even if you had money.”
With the universe taking so much between 1984 and 1986, Frank was clearly due for a reward. Debbie and Frank have spent the past three decades married. She stood by him as he returned to Real Estate, earning enough to pay off his debt and provide for the two children they had together, Jamie and Isaac. And the prophecy of their first impressions still ring true. A rare instance of love at first sight lasting forever. His life with Debbie in Manhattan Beach has defied Fitzgerald’s logic by granting Frank Steinman a third act.
And he’s done it all without sacrificing his “mensch” status. May we all be so fortunate.
One must wonder where Frank found the resolve to ride out this personal storm without succumbing to bitterness. The survival skills were found in the wilderness walks he’d share with his father and brother on land that is now the Long Island Expressway. The courage was from Kipling’s words, gifted to him by his mother as a child, words that elaborated precisely what she meant when telling him “have courage”. Like a prayer or mantra, the poem “…If” has sustained Frank Steinman, from his days at Trinity College, through his time in the military and his work in Cuba during the 1950s, from his days on Wall Street and nights with the Hell’s Angels (stories for another day), or his time as an Attache for the Australian Olympic team in the 1984 Olympics or owning the patent on “targeted advertising” popularized by the company now known as DoubleClick, which was interested in buying them out for $5 million in 1995. He’s lived a CATCH ME IF YOU CAN sort of life, but without pretending to be someone he’s not. He’s been the same person every step of the way, absorbing wisdom and eschewing cynicism. A man with vision. A man who takes courage.
“If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And—which is more—you’ll be a Man, my son!”
-Rudyard Kipling, “…If”
Patrick McConville 