THE RISE AND FALL OF PINNFUND USA
Perched atop a flagpole at one time square sat the New Years Eve ball, ready for its traditional drop, for this drop, marking the end of the millennium, the famous orb had been sold to Waterford, legendary Irish glassmakers, and re-spangled. It was now the Waterford crystal ball. Such advertising was emblematic of the 1990s: from Tiger Woodss hat to movie titles on NASA rockets, panoptic exposure seemed valuable at any price. Awaiting the Waterfords fall, bodies had backfilled midtown Manhattan all day until, at 11:59, nearly one million gleeful voices began counting down the bails light-pulsing descent, synchronized to the (now-forgotten) Anthem for the Millennium. In that moment, most revelers believed the Y2K scare was bogus and the new year would arrive intact, granting not so much a new age but, what was truly hoped, continuity with the one passing, its incontinent dot-corn profits a testament to the prodigal investor. Everywhere people were betting that the American good life had another good act to go.
Earlier that day, ten blocks east of Times Square, San Diego mortgage lender Michael Joseph Fanghella was readying to part with a small portion of his 1990s easy money. In his executive suite at the Palace Hotel, Fanghella (his pronunciation stresses the second syllable Fang-hell-a) was phoning an escort service, Nicis Girls, for a New Years Eve date. Nicis Millionaire Club, of which he was a member, promises girls for an intimate evening, a romantic weekend, or maybe even a lifetime. The introduction rate for these spectacular ladies begins at $10,000. Fanghella used Nicis often and liked, in particular the high-profile porn stars: As one of San Diegos nouveau riche, the 48-year-od, with his wife Patrice and the companys chief executive officer, Keith Grubba, owned a subprime mortgage lending business in Carlsbad called PinnFund, USA, purportedly processing and profiting from $4 billion in home loans each year, Such bounty allowed Fanghella his pick of Nicis petals as well as other women he met at his multi-city party-centrals, the Spearmint Rhino Adult Cabaret in Las Vegas or San Diegos Deja Vu strip club, where he was known to spend $10,000 per week. He lavished on escorts, prostitutes, porn star, and their coterie whatever they desired, from jewelry to Las Vegas junkets from fine wines to limo rides. The massive amounts of monies Pinnfund was moving to fluid home mortgages would cover it all.
An hour later, ascending in the Palace elevator, came Kelly Jaye Cook. A former Atlanta Hawks cheerleader and one of Playboys Girls of the NBA Cook had made adult movies for Sin City and Vivid Video where, as Kelly Jaye she starred in Blonde Angel and Bud Girls 4. After a dozen films, she quit hard-core for more lucrative Pursuits:
magazine spreads and a Playboy strippers pictorial; modeling in bathing suit and high heels at car shows; appearances on Saturdays at adult video stores, earning $2300 by signing slicks posters of her movie boxes(She looked good on a box, said one Vivid star); dancing (porn wages pale next to strippers tips); and being an escort, the professional date.
Cook herself was not unattached. For one, her divorce from Ken Cook was not yet settled. For another, she was, during the fall of 1999, living in an apartment on West 90th Street, which she and her boyfriend, Charles Spagnola, rented. Cook had been living in Laguna Niguel, a bedroom community above Laguna Beach, with Spagnola, a Garden Grove criminal defense lawyer. Then, after 18 months together, they had separated, apparently due to a fight and because Cook wanted to work in New York.Cook let Spagnola stay in her house on Westfield Drive in Laguna Niguel.
For his part, Fanghella had more than a few worries.
According to his wife Patrice, his personal life had been on a downhill spiral for several
years and it was getting worse. After l6years of marriage, living since 1996 in Rancho Santa Fe, Patrice described the violence that led to their separation in late September 1999. She stated that her husband has verbally, physically, and sexually assaulted me. at one point threatening to kill himself and her in front of their daughter. He has, she continued, consistently shoved me, pushed me, slapped me, [and] spit on me. (She also admits to her downfall being in love with him and thinking hed change.) In July 1998, an intoxicated Fanghella wrecked his Jaguar and spent a night in jail. In 1999, arrested again for drunk driving, he landed in jail for four nights. His license revoked, from then on he traveled by limo. In September, Patrice initiated an intervention at PinnFunds offices to force him into treatment for his drug and alcohol addictions; his response (though he finally agreed) was to trash his office. During his subsequent 24 days in rehab at Scripps McDonald Center in La Jolla, his conduct was so volatile and belligerent that he was kicked out of the program. His doctor at Scripps warned Patrice that her husband posed a very real physical threat and danger to [his] family and she should obtain police protection. Finally Fanghellas favorite pastime the pursuit of sexual stimulation had mushroomed to a third addiction. Patrice separated from him after this admission of his promiscuity that, while in New York, he was living with Lisa Spagnuola (no relation to Charles Spagnola); that he was seeing a woman named Denise Marohl; and that he was cavorting with four regular prostitutes. -
Icing on the dysfunctional cake, PinnFund had grown so big, so fast that he was continually anxious about its finances and jettisoned the anxiety by indulging in female toys whenever he wanted.
Unaware of her dates disorders, Kelly Cook entered Fanghellas hotel room that New Years Eve afternoon: a passerby might have heard a Roy Orbison-like grrrrrrowl. What did Fanghella see? Waist belted tight. Hips like boards, that is, not much of them. Large, hard-jellied implants, anti-gravity floats. Wild mane, cornstalk yellow blond. A glistening. just-wet look. She was elevated four-inch heels were de rigueur. Perhaps she wore one of her favorite alluring outfits: python-print leather dress, audibly tight; python-print silk blouse, fingertip soft. Sexual enclosure, needing liberation. Would you mind walking in again, Miss Cook?
What did she see? An imperious man. Fanghella.
Probing brown eyes; luxuriant brown hair. Gap toothed, a tad pouty-mouthed. Natty, handsome, but more casual than rugged, one leg crossed over the other, torqued in anticipation like a man on the stand bearing testimony. An air of Napoleonic preoccupation, a trace of mistrust. So you are a mortgage lende, Mister Fanghella?
They spent an hour together. Fanghella said, talking, unusually interested in each other right away admittedly quick but nevertheless true? (Fanghellas words are taken, as are Cooks from transcribed and videotaped depositions. Almost everything about their relationship is in dispute except a mutual lust for the high life) Fanghella called Cook thoughtful, sensitive? While he had had dozens of opportunities to develop relationships with other escorts, Cook surprised him. He liked her vulnerability but believed she sold herself short. She didnt feel he said, she had any other ability to gainfully make money if she didnt go out as an escort or [be] in the porn industry? Cook said of that first meeting that because she and Spagnola had broken up, she was available, i.e, escort available. Cook said she wanted to accompany Fanghella that evening but had nothing appropriate to wear. Then well shop, Fanghella replied. First, Luca Luca. A rabbit coat. Next. Bergdorf Goodman (where cook had her sizes on file), shoes, a choker, earrings, a bracelet.
Cook said that from the first day I met him, I liked him. He was a fun guy to hang out with. But I wasnt romantic with him Did she and Fanghella have sex that first date? For the entire time she knew him. Cook said We never had intercourse Yes, she was nude with him, maybe four or five times. And yes, they would kiss and caress with no clothes on But they never had sex. And no, I didnt have oral sex with him? (One lawyer, wary of Bill Clintons notorious evasion, had asked.) Fanghellas story? Sex, yes. the next day he said: that was the point of hiring an escort.
That evening Faughella, Cook, a retinue of actors and their wives, and his entourage gourmands and a wine buyer, went to Café Boulud, where, awaiting the triumphal hour, they ate, drank and danced. And, according to Cook, many went in pairs to a private bathroom where she saw piles of cocaine set out for the Fanghella party. Though Fanghella couldnt recall if he had cocaine that night, he did remember that our dinner was approximately $120,000. We had some significant wines. A Pétrus61, a 1900 Châteaux Margaux at the close. The tip-Zagat, he noted, says one should leave 20 percent was almost $30,000. As everyone knows, midnight clanged in zone by zone around the world, and nothing crashed. At 7:15 the next morning, Cook left the Palace and Fanghella slept. Later that day he flew back to Carlsbad. Cook called Fanghella on January 4 from New York saying she wanted to see him. He told her he would fly her out to PinnFund headquarters and the Pair would then take a private jet to Las Vegas for a long weekend. Cook agreed, but Fanghella insisted that their relationship would not be escort and date. He wanted to date her regularly, expressing remorse that he would be stifling Nicis of one of their girls. Cook agreedno more star-for- hire once she arrived. It was at this time, Cook said,
that she told Fanghella about Charles Spagnola he was the man she had lived with for almost two years. But, for now, they were not together. Fanghella recollected that she told him sheand Spagnola were finished. Spagnolaa delicate, muted man, whose cheeks dimple and whose layered locks nestle thickly onto the collar of his Armani dress shirt has admitted to being, all along, Cooks boyfriend and attorney. He said that Fanghella visited their Laguna Niguel house and was shown the room, decorated in Barbie motifs, where Spagolas daughter stayed on week- Everywhere were pictures of Cook, Spagnola, and the daughter. Youd have to be blind: not to have seen it, Spagnola said. In mid-January Cook and Fanghella went to Las Vegas again, where Cook was shocked to see a vioent fight between him and an ex-girlfriend, Lee Ann. But still Cook and he and others partied, four days worth, in a suite at the Bellagio hotel. Next the pair went to Santa Fe. New Mexico where fanghella bought her two shearling coats, a pair of Ugg boots, an emerald ring, a tanzanite righ, an several drawings by
that she told Fanghella about Charles Spagnola he was the man she had lived with for almost two years. But, for now, they were not together. Fanghella recollected that she told him sheand Spagnola were finished. Spagnolaa delicate, muted man, whose cheeks dimple and whose layered locks nestle thickly onto the collar of his Armani dress shirt has admitted to being, all along, Cooks boyfriend and attorney. He said that Fanghella visited their Laguna Niguel house and was shown the room, decorated in Barbie motifs, where Spagolas daughter stayed on week- Everywhere were pictures of Cook, Spagnola, and the daughter. Youd have to be blind: not to have seen it, Spagnola said. In mid-January Cook and Fanghella went to Las Vegas again, where Cook was shocked to see a vioent fight between him and an ex-girlfriend, Lee Ann. But still Cook and he and others partied, four days worth, in a suite at the Bellagio hotel. Next the pair went to Santa Fe. New Mexico where fanghella bought her two shearling coats, a pair of Ugg boots, an emerald ring, a tanzanite ring, and several drawings by
John Lennon. Then came ski trips to Beaver Creek, Colorado, ski outfits, four fur coats, a gold rope chain, a portable DVD player. Returning to Southern California, Cook parked in her driveway a 1997 Jaguar XK8, the first of six cars fanghella would give her over the next six months. (Later hed present her with a new driveway in which to park those six cars.)
Perhaps embarrassed by the bounty, cook told him, You dont have to do this to have me hang around you. But it thrilled him, she said, to flash the AmEx card whether she wanted the stuff or not. More than once he told her, Kelly, I have more money than we could possibly spend in our lifetimes.
The way Fanghella spent money seemed not Cooks to question. Instead she encouraged him: on a cute Care Bear card she wrote, I love being around you. I think I may be a little boring for your full-time life but I would love to see what happens. The balls in your court, sweetie. Cook, though, had little idea how many courts, let alone balls, Fanghella was juggling. Two problems were gnawing at him. The first, Patrice had discovered her husbands fling with Cook and, fed up, filed for divorce. She wanted a large portion of the $182,000 a month that she, her husband, and their children had lived on in Rancho Santa Fe. To ensure alimony and her on-third share of PinnFunds value, Patrice had a forensic accountant catalog her husbands spending. One discovery was that fanghella had not paid any income tax since 1995; in fact, his 1040 listed the self-described millionaires 1999 income as $36,000. Patrice also learned that the IRS had been investigating her husband since 1997, so she hired a tax attorney to defend herself.
The other problem, Fanghella believed, was less serious. He had heard that someone was sending anonymous letters to several of the big mortgage warehouses from which PinnFund borrowed money to fund home loans. These letters said that two different sets of PinnFunds financial statements for the years 1997 and 1998, prepared by the San Diego accounting firm Levitz, Zacks and Ciceric, were being disseminated. One set was false, the other set true. Fanghella thought questions about these competing sets had been put to rest the previous summer when Levitz, Zacks had discovered its 1997-98 report was falsified and the firm had resigned. But Fanghellas chief financial officer, John Garitta, expressed concern. Who in PinnFund was circulating these letters and the phony report? Worse, who was falsifying it? Fanghella told Garitta the problem had been taken care of: the phony report and the letters were the work of a rogue investor in the company, and he or she had been terminated, that is fired. Garitta should let it alone. Besides, Fanghella assured him, most warehouses had received the true set: that set showed PinnFund had made a healthy after-tax profit of $10 million in 1998 and not lost more than $27 million, which the false one claimed.