Business

Can maverick rise from financial ruin?

Published on: 11/13/2005

On a clear October day, the view from the roof of the historic Middleton Building on Gervais Street is picture-perfect.

To the east, the downtown skyline stands tall. To the west, the Congaree River shimmers through the trees. For developer Wade Caughman, all of this - the brownstone building, the view, the opportunity - is ideal.Caughman looks at the empty government office complex and rough old parking lot and sees luxury condominiums, a putting green and an Olympic-sized pool. He envisions people living in an urban setting within walking distance of bars, restaurants and even the grocery store.

"Everything is right here," Caughman said. "I mean, you couldn't ask for a better setup."

As Columbia pushes downtown development, Caughman and his partner Wes Taylor, a local architect, have some of the most visible projects. In the past year, the two have bought property along the Congaree River and in the Vista for more than $10 million.

People are paying between $250,000 and $1 million to hold a spot in the future developments, called City Club and Congaree Park.

While success is possible, real estate is a gamble - especially with interest rates on the rise. And no one is sure how Columbia residents will respond to high-end homes downtown.

No doubt, risk is involved.

And Caughman knows it is easy to slip.

He has fallen before and lost almost everything.

A MODEL TIME

Wade Caughman, 38, grew up in West Columbia. He graduated in 1986 from Airport High School, where he played tight end on the football team and pole vaulted for the track team.

After high school, Caughman earned a two-year degree from Anderson College and enrolled at the University of South Carolina to study marketing and business.

But Caughman left the classroom for the fashion world.

While in college, a friend talked him into signing up with Millie Lewis Model and Talent in Columbia.

He became a regular in department store ads in local newspapers. Then, he gave New York a shot and from there worked in Milan, Italy, and Athens, Greece.

Caughman says the cut-throat casting calls - and he went to hundreds - prepared him for rejection and failure in business.

"You go on a casting call with 500 other people," he said. "They look at your little book and say, 'Thanks. Whatever.' It's every day in that business. Two or three times per day."

Still, getting Caughman to talk about his modeling career is as difficult as landing one of those contracts.

"It's almost embarrassing for him to say he was a model," said his wife, Sheila Caughman.

But the time overseas gave Caughman more than thick skin. He came home with broadened horizons.

Sheila Kneece Caughman, 37, has known her husband since elementary school. Even as a teen, he stood out, she said.

"In middle school, I didn't know what a Polo shirt was until Wade and his friends started wearing them," she said.

Sheila and Wade started dating in college, and the relationship was on and off while Wade pursued modeling. When he came home from Europe in late 1991, they got serious.

Wade needed a job and began helping Sheila and her father with a video-production company they co-owned. Wade eventually bought her father's half of the business. The couple renamed it Verve Communications because they liked the meaning of the word "verve" - enthusiasm.

The couple married in 1992.

REVVING UP BUSINESS

The video business struggled for years to find a niche in Columbia's business world. The Caughmans found small success with Verve Communications, but later Wade stumbled with a T-shirt company called Reality Action Sports Apparel.

In 1997, the Caughmans changed lanes, dropping videos and T-shirts for motorcycles.

Wade Caughman first opened a Vista shop where he sold Harley-Davidson parts and used bikes on consignment.

In July 1998, Caughman opened Downtown Ducati in the Vista, selling high-end Italian motorcycles. He eventually sold his Harley shop.

With Ducati, Caughman's business dealings became as fast and as risky as the motorcycles he sold.

Caughman became one of the top sellers of Ducatis in the United States. He won trips to motorcycle shows in Italy.

Vince Chiaro, a spokesman for Ducati North America, said Caughman's Columbia store sold an average of 70 motorcycles a year, making it a successful dealership in the Southeast.

Mark Gillotto, former mechanic for Downtown Ducati, said Caughman's marketing skills were top-notch.

"He always made sure the advance work was done to promote the business," Gillotto said.

Because of his success in Columbia, Ducati awarded Caughman franchise rights to a store in Miami. In 1999, Ducati Miami opened in South Beach.

The next year in Miami, Caughman opened a Vespa scooter boutique next door and began selling Vespas in his Columbia store. At the Miami, opening, musician Lenny Kravitz made a guest appearance.

THE DEBT MOUNTS

For as much as $16,000, the Italian bikes offered glamour and speed to customers.

But Caughman said the overhead for the stores was incredible.

He had to pay upfront for the bikes to stock the stores. Also, Vespa required its boutique owners to invest thousands in store design and furnishings, he said.

In Miami, the Ducati store ran into zoning problems, forcing Caughman to find a second location to do maintenance work.

To finance the motorcycle ventures, Caughman began selling shares to investors, many of them in Columbia. He said eight people bought stock in his business.

But the Miami stores were draining Caughman and his Columbia store.

The debt took its toll not only on the businesses but also on Caughman's family life.

By 2000, the Caughmans no longer could afford their home in Elmwood Park. They sold it, but banks wouldn't loan them money for another house. The couple eventually moved into a townhouse owned by Sheila's parents.

The Caughmans had one daughter, and Sheila was pregnant with their second. Sheila was often sick during the first months, and Wade was splitting time between Columbia and Miami.

When Wade was home, he was exhausted.

"I kept thinking, 'We've got to find a way out of this sinkhole we're in,'" Sheila said.

She began questioning Wade's business decisions. She wasn't sure the marriage could withstand the financial stress.

"I loved him," Sheila said. "He's exciting. He's fun. We had a good time together. I just didn't like his choices."

On Nov. 17, 2000, Sheila learned exactly how bad business had become.

Wade was resting at home after being out of town. A Downtown Ducati employee called to tell him federal marshals were there confiscating motorcycles, computers and furniture. At the same time, marshals were seizing property in the Miami store.

"When I found out, I was paralyzed," Sheila said.

According to documents filed in U.S. District Court of South Carolina, Transamerica Commercial Financial Corp. claimed Downtown Ducati and Ducati Miami had not paid back loans or interest to buy the stores' inventory and had failed to hold money for Transamerica in trusts.

Within two weeks, Caughman worked out a payment plan with Transamerica, according to court records. Both stores re-opened another two weeks later.

But the trouble was not over.

Debt continued to mount in 2001 as Caughman tried to hold off creditors and investors looking for a return on their money.

Gary Hill, a Columbia pharmacist who had invested $35,000, knew Caughman was juggling. "He was trying to put off creditors."

According to Caughman and records filed with the Richland County Clerk of Court, he owed more than $1 million. Among the debts were:

* $426,863 to Piaggio USA for Vespa scooter inventory. Court records dated Feb. 15 this year show Caughman has paid the debt. Piaggio spokesman Ben Billingsley would not comment on it.

* $120,160 to Columbia developer Ben D. Arnold for a loan plus interest to the Ducati and Vespa stores in Columbia and Miami. Court records show a settlement was reached in April 2003.

* $61,009 to Norman J. Arnold, Ben Arnold's father, for a loan plus interest. The debt has been settled, according to court documents filed in April 2003.

* $38,559 to Ideal Solutions, a Greenville company that did Downtown Ducati's payroll. Earlier this month, Caughman said he was sending the remaining $6,000 owed by overnight mail. Steve Ivester, president of Ideal Solutions, said he received the final money owed by Caughman on Nov. 4.

* $29,351 to Angora Columbia Enterprises for a lease of a warehouse on Fernandina Road. This debt was satisfied, according to court documents.

STARTING OVER

Caughman says his financial woes were, in part, due to bad timing.

In the wake of the Sept. 11, 2001, attacks on New York and Washington, people stopped buying luxury items such as motorcycles, Caughman said.

"It just got to the point where there was no cash flow," he said. "You couldn't juggle anything any more."

Caughman sold his Columbia and Miami motorcycle shops in May 2002, said Chiaro, the Ducati spokesman.

By the time it was over, the Caughmans owed $1 million but were out of work, out of a home and out of money.

Everyone - attorneys, bankers, friends - suggested they file for bankruptcy, but Wade Caughman refused.

"I didn't believe in it," he said. "If I can create the debt, I can pay it back."

First, though, he needed a job.

While in the motorcycle business, Caughman had met a California entrepreneur, Mike Malamut, who had been successful finding cars for businesses for a fee. Caughman looked up to Malamut and decided to start a similar business in Columbia.

"Hopefully, I was able to provide insight so he wouldn't trip over himself too many times," Malamut said.

Caughman dusted off the Verve name and went to work under the name Verve Autogroup. He worked the phones to drum up business. He drove long distances to pick up cars. He washed them before delivering them to buyers.

Caughman said he began paying off his debts.

Today, the auto company employs three others, including his younger brother, Paul Caughman.

A NEW PLAN

But Wade Caughman did not stop with an auto business.

In 2004, Caughman dreamed up an idea he thought would work - building homes downtown on the Congaree River.

Caughman recruited an old acquaintance, Wes Taylor, an architect with LTC Associates, to be his business partner. They set out to find a piece of property.

Caughman researched property records and discovered his childhood dentist, Dr. O.A. Ethridge, and another dentist, Dr. George Fann, co-owned 15 acres on the Congaree River in West Columbia.

"He just called up and wanted to talk to us about the land," recalled Ethridge, who said he hadn't seen Caughman since he was a youngster.

Many developers had approached the dentists with offers over the years, Ethridge said, but Caughman and Taylor were the first to put together a plan to meet the dentists' price. They paid $3.7 million for the property in the summer of 2004, according to Lexington County court records.

"Basically, it was nothing magical down there," Ethridge said. "These guys just worked hard and came up with a good plan and made it work."

Caughman said he and Taylor were able to finance the project through bank loans, approved after the men had contracts from buyers to purchase several of the lots.

Lots pre-sold quickly through word of mouth , Caughman said.

"We didn't even put a sign up on the place," he said. "We sold off a color copy. We literally had people walk in the door and say, 'What's left?'"

Caughman and Taylor were on a roll.

Next, they bought the Middleton Building on Gervais Street for $5.1 million for the City Club development of flats and town homes.

And, in a twist of fate, Caughman and Taylor bought the property in the Vista where Downtown Ducati once was located. They paid $2.1 million this past spring for the space where Motor Supply Co. restaurant and Rust, a whiskey bar, are located.

Eric Nord, Caughman's former landlord and a former creditor, was moving to Miami. He had seen Caughman and Taylor in the restaurant one afternoon and, half-joking, suggested they buy his land.

Next up, the two plan to build a condominium complex at 400 Meeting St. in West Columbia.

As an architect, Taylor has experience designing projects, negotiating zoning requirements and working within budgets. He brings technical know-how to the partnership.

Caughman brings enthusiasm and salesmanship, Taylor said.

"You know with Wade, he believes so much in what he's doing," Taylor said. "It's not about selling to him. He wants to share a lifestyle with people.

"He gets excited every time he talks about it. There's no way I could do that. That's not my personality."

PAYING BACK

The high-profile developments and seemingly good fortune also have brought scrutiny of Caughman in business circles.

Caughman and Taylor drew criticism late last year when they cut down trees and undergrowth to clear the Congaree Park land. Regulars on the riverwalk said the developers had destroyed a picturesque view to open space for construction crews.

More recently, West Columbia Mayor Bobby Horton said Caughman's work crew accidentally cut trees on the publicly owned riverwalk. Plus, many of the weeds and vines that created a canopy over the walk were rooted on Caughman's land, and he had a right to cut them, Horton said.

Caughman and Taylor made things right by planting new trees, the mayor said.

As for Caughman's image in the community, his style sets him apart.

His spiky hair, hipster shirts and red leather watchband are a contrast to the khaki-pants-and-blue-blazer set.

Taylor said people have told Caughman, "Don't you think it would be better if you presented yourself differently?"

"He says, 'No, that's not me.'"

Caughman's failure with the motorcycle venture also is well-known in the business community.

Today, Caughman continues paying his debts.

Ivester, the president of Ideal Solutions, said he is glad Caughman did not walk away from the $38,559 debt owed his company by filing for bankruptcy.

"He's been paying us in advance," Ivester said. "He'll send us checks in advance."

Developer Ben Arnold would not comment on Caughman.

Hill, the pharmacist who invested $35,000, does not hold ill feelings. He believes Caughman is a hard worker and is credible. Hill says he would invest with Caughman again.

"Everything he does is top-notch," Hill said. "It's just amazing what he's done."

Hill said he has been repaid $5,000 of his $35,000 investment and expects to get more.

Caughman said he has repaid debts and his investors as he earns money through his developments and Verve Autogroup.

"I don't pay myself much. I take care of my family," he said, without offering a specific amount. "We're not starving anymore.

"If I've got to sell pizzas, I'm going to pay them back."

Malamut, the California mentor, did not invest in Caughman's projects but said he admires Caughman for repaying everyone.

"It takes a special individual that's able to crawl their way back from the bottom," Malamut said.

Still, some say Caughman's success in the real estate market is not a done deal.

Nord, Caughman's former landlord, is not convinced Columbia will buy into the idea of urban living. That could be bad news for Caughman, Taylor and numerous other developers building on that belief.

"They may or may not come out on top," Nord said. "The real estate market is not always kind."

But Caughman thinks it's the right time for Columbia.

"Columbia's got all the opportunity in the world," he said. "People talk about what Columbia doesn't have. There's a chance to do something about it. When people visit, I want them to say, 'Wow, I can't believe Columbia has something like this.'"

Caughman lives by the motto: "Whatever it takes."

In 1993, Caughman's church gave its members coins stamped with that slogan, and he carries his brass coin in his pocket as a reminder to work hard and to do the right thing.

His wife, Sheila, said mistakes have taught her husband harsh lessons.

"God has given him his MBA in the real world by having him fall flat on his face," she said.

Today, the couple has three daughters - Micah, 7; Jaden, 4; and Ava, 1. They live in a house in Springdale. The family spends weekends playing along the riverwalk beside the Congaree Park development.

The Caughmans own a lot in Congaree Park, but will not build for years, Sheila Caughman said. First, every debt must be paid.

"It will be our reward."

Reach Phillips at (803) 771-8307 or nophillips@thestate.com

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