Chapter 20
Despite the US government’s efforts, there were still banks in the Caymans where it was possible to open an anonymous bank account. The Cayman National Bank was not one of those banks. However, when it received an application to open an account in the name of U.S. citizen Vanessa Hodge there was no reason to be suspicious. Attached to the application were notarized copies of her driver’s license and passport together with her address and a mailbox where she wanted bank statements and correspondence forwarded. The initial deposit of $150,000 was transferred a few days after the opening of the account. It was not an amount that attracted any undue attention.
Brock Borchard was bitterly disappointed. They had cleared nine million on the Pirates game, but he had expected a lot more. He didn’t want to admit it, but the problem was that he hadn’t known enough about football betting. He’d read somewhere that a hundred million was bet on the Super Bowl and had mistakenly presumed that weekly games would carry the same sort of money. Dirk had told Devlin Cooper that he’d only need to throw one game per season, but that was clearly not enough. It would have to change, and he would need to throw at least two and probably three to make it worthwhile. Borchard had watched the game and was reluctantly forced to admit that Cooper was a class act. He’d taken a brutal pounding to hide what he was doing, and despite the betting plunge, most of the media had bought it. Some commentators said that he’d played with concussion and that Coach Deacon had made a big mistake by not replacing him. Borchard had never considered this, but it didn’t worry him. He reasoned that Cooper was too smart to allow himself to be badly hurt.
Todd arrived at the office early on Monday morning but had no idea how he was going to get Philco’s results. He did know they would come from Vanessa’s computer, so he made his way to her cubicle on his usual pretext that he had a query about Hallstrom’s. For once she wasn’t her vibrant self, and Todd asked her what was wrong.
“I’m out at Philco for the next couple of days,” she said, “and it’s not a happy place. Profits are significantly down, and senior management is playing the blame game. It’s very political and not a pleasant place to be.”
“That’s a surprise. The financial media’s always going on about their pipeline of new drugs.”
“That’s true, but most are in their early stages of testing. A study was just completed on Philflox, the most advanced of their cancer drugs, and it found there was no significant improvement in overall progression-free survival. Their chemists, scientists, and doctors are under severe pressure. As far as they’re concerned, we’re just nuisances wasting their time.”
Todd said a silent prayer of thanksgiving. He didn’t need to know what the sales or results were. The information that Vanessa had provided was more than enough, and it was obvious what its impact would be. “The plight of the auditor.” Todd laughed. “Aren’t you glad all clients aren’t like that?”
“I suppose so. What is it you wanted to see me about?”
“It’s unimportant,” Todd said.
Phillip Cromwell hadn’t expected the irate phone call from the mayor’s office. One of the firm’s young auditors had been asking questions and even suggested that funds from The Disabled Children’s Fund had been channeled into the mayor’s reelection campaign. Cromwell had been quick to assure the mayor’s office that it was only the action of a young, overzealous employee and that she would be replaced by someone more experienced and worldly. He put his elbows on his desk and rested his head in his hands. Then he shouted for Gary Jenner, the audit manager responsible for the Fund. He was beyond angry. By the end of the day, there wasn’t an employee or partner of Montgomery Hastings & Pierce, who hadn’t heard about the bawling out that Cromwell had given Jenner. The following morning, a bitter Garry Jenner called and tendered his resignation.
Vulture Inc. indirectly controlled numerous companies in Switzerland (through firms of accountants and lawyers) and those companies had opened and traded eight CFD accounts with different Swiss CFD providers for about three months. Virtex Software’s stock was trading at eighty dollars when Dermott Becker issued instructions to his subordinates in Switzerland to acquire five hundred thousand Virtex Software CFDs for four dollars per CFD. The two million dollar order was the equivalent of buying stock to the value of forty million dollars. The subordinates spread the order over the eight CFD providers, and the order sizes were consistent with the previous trading. After Virtex had announced its December results the stock climbed to ninety-six dollars and the CFDs were worth ten million. Becker closed all positions for a profit of eight million.
Philco’s stock was trading at sixty dollars when Becker got the news that the company’s result was far less than market expectations. He was quick to take a short position selling one million Philco CFDs at three dollars for a total outlay of three million dollars. When Philco announced an abysmal result, its stock sold off rapidly and fell to forty dollars. Again, Becker acted quickly closing the CFD positions for a profit of twenty million.
Todd Hansen’s five hundred thousand betting loss had produced a profit for Vulture Inc. of twenty-eight million in just four days.
Becker was pleased with Vulture’s first foray into insider trading using CFDS. His only disappointment was that while Virtex and Philco were significant companies, Vulture’s CFD positions had had to be small so that they wouldn’t attract unwanted attention from the authorities. He salivated about doing the same thing with huge companies like Apple and Microsoft where Vulture could take CFD positions in excess of a hundred million dollars while barely creating a ripple.
The last instruction Becker issued to his Swiss subordinates was to ensure that the proceeds received from the CFD providers disappeared into the labyrinth of Vulture controlled bank accounts.
Chapter 21
The board meeting of Vulture Inc. should have been a celebration. ACME Investments Inc. had acquired the assets and businesses of Webb Transport Inc., Fillwell Axles Inc., and Superior Spares Inc. at rock bottom prices and far less than net asset value. Instead, it was a tense affair. Harry O’Brien was still sulking about the twenty million charged to his loan account. Worse, he was nursing his wounds, knowing that the others were trying to get rid of him.
Arthur Ridgeway, looking to ease the tension, said to Borchard, “Nice little killing with Devlin Cooper, Brock.”
“Crap! Nine million? I was expecting a lot more. We’re gonna have to do it again before the season’s over. Maybe in the playoffs?” Borchard said.
“Did you see the pounding Cooper took to make it look like he was trying?” Lydia asked. “Even so, there were some in the media who still thought it stunk. We agreed one game per season and even thinking about the playoffs is crazy. Fifteen seasons at ten mil a season is far better than doing it twice in one season and getting caught.”
“I’m with Lydia,” Becker said.
“Me too,” Ridgeway agreed.
“What do you think, Harry?” Becker asked.
“He’s Brock’s asset,” O’Brien said. “Why don’t we just let Brock manage him?”
“Yeah,” Borchard said. “Harry’s right. He’s my asset. I set the whole thing up. It’s nobody else’s business what I do.”
“No, Brock, he’s not your asset. He’s our asset. What Harry said was churlish and stupid,” Becker said. “Let’s put it to a vote. All those in favor of exploiting the asset more than once per season.”
Two hands rose.
“All those against.”
Three hands went up.
“That resolves that,” Becker said. “Be patient, Brock, next season will come around soon enough.”
Borchard didn’t like being told what to do and was more surly than usual. “Dermott,” he said, “you told us we’d make a fifty mil out of the insider trading scam. We didn’t even make thirty. What went wrong? What happened?”
“We were conservative and kept our positions small,” Becker said. “I was particularly anxious to ensure we di
dn’t tip the authorities off. The last thing I wanted was to have our accounts frozen. We could’ve made fifty, but I didn’t know how the CFD providers were going to hedge their positions. Any large stock purchases by them might’ve tipped the SEC off.”
“So ya were exaggerating,” Borchard persisted.
“No, I wasn’t. We’ll make far more than a hundred mil out of our auditor friend before we’re finished. We now know the CFD model works.”
“Have you paid the hundred and fifty thousand into the girl’s account?” Ridgeway asked.
“What? What are you talking about?” Borchard asked.
“We opened up a bank account in her name in the Caymans. Forged identification and signature,” Becker replied.
“It’s cheap insurance,” Ridgeway said. “We don’t think we’ll have any problems with the authorities. However, if they do get suspicious, we want to protect our asset. If it looks like he’s in the firing line, we’ll leak details of the bank account to the SEC. That’ll soon refocus them on the girl.”
Borchard didn’t like any of his co-directors but every meeting he learned something new. They were so devious. “Very clever,” he said.
“On another matter,” Becker said, “our Philadelphia financial controller has been talking. He’s okay when he’s sober, but he’s an alcoholic. Our people in Atlantic City said he was in the casino, incoherent and mumbling about gangsters and insider trading.”
“Shit! That’s all we need,” Lydia said.
“No one took any notice of him,” Becker said.
“That’s not true,” Borchard said. “Our people did. They could just as easily have been FBI and SEC investigators. I can send Dirk in disguise to keep an eye on him. He’ll get close enough to find out how bad his blabberin’ is?”
“No!” Ridgeway growled. “Every time that thug watches someone, they end up dead.”
“Hang on, Arty,” Becker said. “I wouldn’t mind Dirk running a backup check and letting us know what he’s saying and whether anyone’s listening.”
“I don’t want anyone else getting killed,” Ridgeway said.
“Me neither,” Becker replied. “Brock, get Dirk to head to Atlantic City on Saturday night, but he’s not to lay a hand on Carroll.”
“Fine.” Borchard sneered.
Book 2
Chapter 22
It was 7:45 P.M. on Wednesday when the white van pulled up out the front of Vanessa Hodge’s apartment building. Five minutes later, Vanessa and her girlfriend, headed off for their kick boxing class. It didn’t take long for Ferguson and Fraser to enter Vanessa’s apartment. Ferguson carefully lifted the set of drawers next to her bed while Fraser taped the two mailbox keys underneath the bottom drawer.
Dirk Vaughan disguised himself as an old man with long gray hair, a mustache and horn-rimmed glasses. He wore black pants and shoes and an overcoat that was purposely one size to large. His Star City player card created in a false name by one of his lackeys earlier in the week had $2,000 on it. The undernourished, pasty faced Les Carroll entered the casino at 7:30 P.M. like he had on every other Saturday night for the past three years. Vaughan watched Carroll go to the cashier’s window and then take a seat in front of a $100 poker machine. There weren’t all that many customers who played the $100 machines and those who did were well looked after. As Carroll sat down, a long-legged brunette, who he apparently knew took his complimentary drinks order, and he settled in for the night. Vaughan strained his eyes but couldn’t see what Carroll’s starting credits were.
It wasn’t often that Vaughan was intrigued by human behavior, but Carroll was the financial controller of a large corporation. Despite this, he was playing a game that he had to know was impossible to win. Vaughan understood drug addiction but didn’t understand how anyone could be addicted to losing money on poker machines. After about three hours, Carroll had consumed at least a dozen drinks and had a guy of a similar age on his left and a plump, obviously talkative woman on his right. The machine on the other side of the woman was not being used, and Vaughan hobbled over to it and sat down.
Carroll played at a rapid pace barely waiting for the reels to stop spinning before sending them on their way again. The more he drank, the more frenetic the pace, and Vaughan knew that this was what the casino and the drinks waitress wanted. No sooner had he finished one drink than the waitress was there with a fresh one ensuring he remained lubricated. Even though it wasn’t Vaughan’s money, he played slowly in keeping with his age and sipped orange juice. Carroll and the plump woman engaged in a lively inebriated discussion mainly about their bad luck and near misses on huge jackpots. It was only when the woman said something about losing ten thousand in one night a few weeks earlier that the conversation changed.
“Thas nothing,” Carroll slurred, “I’ve dropped more than a hundred on some nights. I wass playing the $1,000 machines, but I weaned myself off them.”
“Wow, you must be loaded.”
“I wass.” Carroll laughed scornfully. “They gave me credit and nex thing ya know I wass doing things I never shoulda done.”
Vaughan’s ears perked up and even though Carroll’s words were garbled he knew what was coming.
“Like what?” the woman asked.
“I had no choice. I hadda ta give ‘em inside information. They said it wass my only way out,” Carroll said, specks of saliva coming from his mouth.
The woman drew back on her chair and started playing her machine again. It was clear to Dirk that she didn’t like being spit on or listening to the ramblings of a drunk.
“I hadda to tell ‘em about me company. Hadda to give ‘em inshide information.” Carroll moaned. “They made millions. Said I’d only hafta to do it once but they recorded me. Gangstas thas what they are.”
The woman wasn’t listening. “I’m having no luck,” she said. “I’m going to find another machine.
Vaughan had heard more than enough and a few minutes later called Borchard and told him what Carroll had said.
“What do you want me to do, boss?”
“How drunk is he?” Borchard asked.
“Staggering and he’s getting worse.”
“It’d be opportune if he had an accident. But it has to be just that. An accident. If the opportunity arises, take it, but if it doesn’t, let him go. We can wait.”
It was 1:30 A.M. when Carroll stumbled out of Star City and took a cab on the three minute trip to the railway station. Vaughan quickly jumped into the next cab. After the 1:53 to Philadelphia departed it would be another five hours before the next train to Philly. The station was swarming with late-night revelers heading home. Carroll was swaying in the front row of a crowd about five deep in the middle of the station. Vaughan nonchalantly worked his way among the crowd until he was standing at the back of two commuters who were directly behind the unsteady Carroll. There were plenty of revelers in a similar condition, and no one paid Carroll any attention. As the train pulled into the station, the driver sounded its horn to warn those on the station to get back. While it was still sounding, Carroll appeared to lose his balance and fall in front of the train. Pandemonium broke loose, and one woman let out a dreadful shriek while men pushed to the front of the platform in a vain attempt to see if they could help. Vaughan watched as the ashen-faced driver leaped from the cabin and ran along the platform to where Carroll’s crushed and mangled body lay. One man who knelt down and saw the body put his hand over his mouth but couldn’t stop the vomit squeezing through his fingers. Vaughan worked his way to the back of the crowd and slowly hobbled from the station.
FBI agent Chas Grinich had become aware of the death of company director, Richard Frampton when he had been investigating share transactions in companies in which Frampton had been a director. Something about Frampton’s sex-related death didn’t ring true to Grinich.
The stock transactions just prior to releasing price-sensitive announcements in Miami based high-tech public company Xenex Inc. were near identical to those that had ta
ken place with the companies associated with Frampton. Grinich had been increasingly wary when investigating Xenex, and when he found out that Valerie Gibson had died in suspicious circumstances his instincts told him that it was more than just coincidence.
Two months after Les Carroll’s death, Grinich was searching his database looking for companies where senior executives had met their death in suspicious circumstances. Les Carroll’s name was one of those that appeared. Carroll had been an addicted gambler with heavy debts in Atlantic City. An easy mark. Grinich was almost sure that he would find dubious stock trading in the company that had employed Carroll. He wasn’t wrong, and Carroll’s demise proved beyond any doubt that someone was running a massive insider share trading scam.
The pattern of trading and the death of the apparent source in each of the three corporations were nearly identical. The scam was clever and the transactions though many brokers were singularly not enough to raise suspicion. Grinich threw his legs up on his desk and put his hands behind his head. He wondered how many other company executives were leaking inside information about their employers. He knew there had been stock manipulation and also suspected murder.
Chapter 23
Aaron Lord had just turned thirty but was already one of SEC’s most senior and talented investigators. Qualified in law and finance he was a securities expert but that wasn’t the reason he had progressed so rapidly in the SEC. That was because he had an almost religious fervor about him when it came to prosecuting white collar criminals for what he saw as their sins against society. He had short cropped blonde hair, piercing green eyes, and an almost perfectly square head that sat atop a bull neck. He looked and was tough.