A small voice inside me called out, No, Howard, this is just hubris. Remember your values. Remember what Cowen did for you. You don’t really need $100 million. It’s not healthy to be losing money this way. Start turning the business around now. Grow a little slower, but be profitable. Stand on your own two feet. Just be loyal. Stick with Cowen. Raise another $40 million or so and become profitable.

Hubris had gotten the better of me, though. Who’s got time to listen to some small voice when you’re Superman? When there are locomotives to outrace, tall skyscrapers to bound over, when there is a stock market to impress?

Howie, Jim, and I met and decided that we were ready to do a secondary stock offering, perhaps combined with a bond offering. If we were backed by one or two of Wall Street’s largest investment bankers, we could have $100 million—even $200 million—to play with. We were so hot, we felt that raising money was like taking candy from a baby. With a cushion like that, who cared that IDT was still losing money, hemorrhaging in the cash flow department? We’d squash our competitors and eat them for lunch. We were on a roll.

Underwriters, it seemed, were there for the taking. Unlike our Initial Public Offering, which we’d pulled off by the skin of our teeth with only Cowen and First Albany behind us, this time we had our pick. I magnanimously included Cowen in the secondary offering, although I let it be known that I was doing this out of loyalty, not good business sense. I had become so arrogant that I cringe to remember it. Some big firms didn’t want to be bothered with Cowen and pulled out of the offering. But the rest were so eager to be part of our deal that they were willing to accept anything.

It wasn’t easy telling Joe and Maria we were going to get a new lead underwriter, but we had destiny to answer to.

We engaged one of the largest and most prestigious of these underwriters to raise $100 million for us. (This meant that we were willing to issue more stock to raise additional capital.) Of course, this dilutes or lowers the ownership percentage of those already owning stock, but in theory positions the company for even greater growth by acquiring expansion capital. Usually stock sold in secondary offerings costs much more than that sold originally, since the company has already “proven” itself. The underwriters spent the next few months, from September to November 1996, doing due diligence, examining every aspect of the company’s operations. They were thrilled with our prospects. A successful secondary offering seemed all but assured. The underwriters, however, did one more thing before signing off on the offering. They hired one of the country’s premier private investigation firms to see that the firm and its principles were “completely clean.” This, they assured me, was merely routine, pro forma.

Private investigators, I know, summon up images of seedy Humphrey Bogart types down on their luck working out of beat-up offices over pool halls. Just hire one of them and for fifty bucks they’ll bribe the desk clerk, open the motel room door, and burst in taking photos as unfaithful spouses grab up the bedspread and scramble for their clothes.