Death Benefit

  “Have you heard of the Nobel laureate Tobias Rothman? Or Junichi Yamamoto? What they’re doing at their research lab up at Columbia Medical Center?”

  “No,” Russell said, feeling that the ceiling was pressing in on him.

  “Through a contact who follows biotech patents I’ve learned that Rothman has mouse organs, entire organs, that he has grown from iPS cells that he’s transplanted back into the same mice that donated the cells. Any day now he’s going to do it with human iPS cells if he hasn’t already. He’ll be able to grow pancreases. For humans. To make insulin. Pancreases that are custom made for a patient so no rejection. You know what that’s going to do?” Gloria pointed to the graph she had drawn over and dragged her finger from Russell’s bell curve to her red version.

  “That.”

  Gloria sat back.

  Russell had done the real math in his head. Thanks to some particularly aggressive salesmen in Texas and Florida, they were extremely long on diabetics’ policies. Gloria had in fact undershot—they were almost two-thirds of their policies. Meaning they might be on the hook for almost $600 million in additional premiums. Who knew if the science was going to work and when, and not every patient was going to be helped, but still, if she was right, their paradigm would be in tatters. Was there any way they could dump those policies? Could they securitize them anyway? Would anyone invest in the company with this much doubt about the nature of the risk? These questions were occurring to Russell; Edmund just wanted to get the hell out of there.

  “Think of LifeDeals as a swimming pool,” said Gloria. “There’s water pouring out already and there’s going to be a lot less of it pouring in than you planned in the near term. You guys are going to be left high and dry with no life preserver.”

  Gloria was enjoying herself.

  “You want some advice? I doubt it but I’m going to give it to you anyway. Hurry up and securitize and sell those tranches ASAP, before others start to see that the ground under LifeDeals is going to be more like quicksand than bedrock. Once that happens, your bonds are going to go begging. Some of the money that comes in from the bonds you might be able to squirrel away if you’re clever, and I know you are, but you certainly aren’t going to get back your seed money. Unless you want to break the law. Which brings us neatly full circle. Perhaps you’ll end up going to jail this time.”

  “Russell, we gotta go,” Edmund said, as Russell gathered up his papers. Edmund and Gloria held each other’s glare. Gloria had played her hand, and she could see it had hit home.

  “So sorry you guys have to run, but I have to go to lunch anyway,” she said.

  Gloria handed Russell some more of his papers. She’d already decided to strengthen her position against LifeDeals significantly later that day. Edmund was right in part—she had wanted them to tell her about their business plan, and she assumed Edmund would be arrogant enough to tell her too much. Now she’d seen their model, and it was even worse than she could have hoped. Or better. Maybe she’d cost herself some money, but she already had more than she could reasonably spend in three lifetimes.

  That look on Edmund’s face was priceless.

  Edmund and Russell were silent as they waited for the elevator. Russell stole a look at Edmund’s face, and it bore an expression he had never seen. It looked like grief. They got in the elevator.

  “Hold these a second,” Edmund said to Russell, handing him his case and his coat. Edmund stepped forward and slammed the elevator door hard with the fist he’d made of his left hand. He cried out and grabbed his hand. The pain, when it came, was a relief.

  10.

  COLUMBIA UNIVERSITY MEDICAL CENTER

  NEW YORK CITY

  MARCH 2, 2011, 1:00 P.M.

  Pia had quickly learned to feel at home in what Dr. Yamamoto liked to call the “bathroom,” the organ bath facility where the mouse kidneys, hearts, lungs, and pancreases were being nurtured. She had spent the morning in there, harvesting reams of data on the pH levels in the baths and using a handheld tablet to look at the histories of a few organs that had failed. They were later found to have very subtle variations in acidity or alkalinity from the rest of the samples. Pia’s task was to monitor the baths, and she tried to figure out how she might rig up some kind of electronic alarm to her cell phone like Rothman and Yamamoto had that would alert her when a bath developed a slight variation in pH.

  Dr. Rothman had come and gone a couple of times. Pia knew from speaking with Dr. Yamamoto that the team was running complex and time-consuming studies concurrently, both here with the baths and in the biosafety level-3 lab on the other side of Rothman’s complex. Rothman’s work on salmonella had made his reputation, and he wasn’t about to abandon it, even if it meant working at superhuman levels of energy and concentration. He treasured his access to the highly virulent strains that NASA provided him with, and with the space shuttle program winding down, he didn’t know when he might get more.

  Lesley and Will had left the room to find Dr. Yamamoto. It had been decided that in addition to helping Pia, they would initiate their own study of the effects of slight variations in the temperature of the baths. Unfortunately their study had reached a quick impasse, and they preferred to consult Dr. Rothman’s associate rather than the man himself.

  Dr. Rothman entered the room, moving to the last row of baths.

  “We seem to have a problem with number nineteen,” he said, apparently into thin air. Pia joined Rothman, who was fiddling with the monitoring unit under the bath.

  “The blood flow is compromised. There’s a blockage, so we may have to section the organ to see if the problem is developmental or some kind of embolus. There are few journeys longer from in vitro to in vivo.”

  “How long before you can start human trials?” Pia said.

  Rothman flinched a little and looked around at Pia, apparently in surprise. Had he been talking to himself?

  “We’re a little closer with the kidney than with the pancreas. The kidney is basically a filter. Quite simple. But the pancreas is very complicated. It’s fascinating to me that one gland would have so much to do, and such important tasks.”

  “Hormones and enzymes,” Pia said.

  “The islets of Langerhans. I always loved that name. They were discovered by a twenty-one-year-old German named Paul Langerhans in 1869. I remember when I was a teenager and first heard the term I thought they were named after some actual islands someplace.”

  Pia had rarely heard Dr. Rothman sound so jovial. He seemed to revel in his lair. Pia thought it fitted his temperament to enjoy the name of the hormone-producing cells of the pancreas that pumped insulin and glucagon into the bloodstream to regulate sugar levels. Or at least, they were intended to.

  “Of course it was necessary to locate the pancreas adjacent to the duodenum so it could inject its enzymes into the digestive system. The ampulla of Vater, another of my favorites.”

  Rothman was referring to the junction of the bile duct and the pancreatic duct where food passing through the intestine was mixed with the agents necessary for its digestion and to control the level of acidity.

  “But it’s so deeply buried in there. It’s very elusive. That’s why pancreatic cancer is so hard to detect and so lethal. The organ has such a large blood supply cancers tend to spread very quickly.”

  Rothman’s mind was wandering. He seemed so uncharacteristically relaxed.

  “Its organogenesis is very elusive too. All the hormone- and enzyme-producing cells have to be genetically coded to create the gland, and we’re just coming to grips with the process.”

  Rothman had moved to a different bath.

  “The mouse pancreas is remarkably similar to ours. We’re making strides here, but I want to speed things up.”

  Some scientists were working on implanting glucose sensors and insulin pumps into patients. Others were examining gene therapy solutions, with patients ingesting a medication containing a virus to cause the production of insulin in the presence of glucose. Rothman w
as tackling the issue the only way he knew: by swinging for the fences. Pia loved that confidence and ambition. She felt some of it had rubbed off on her in the time she had spent with Rothman over the last three years. She also knew how other people saw him. They saw that confidence as arrogance of the worst kind, but it could be arrogance only if the conceit was deliberate. It wasn’t just that Rothman didn’t care what other people thought, he didn’t notice either.

  “I wanted to thank you, Doctor,” Pia said.

  “For what?”

  “For offering to lend me money to pay the Sisters.”

  “The Sisters helped you in the past, but the past is the past. You don’t need them anymore. You need to move beyond all the problems foster care caused you, just like I did.”

  “I’m trying to,” she said, referring to rising above the legacy of her childhood experiences. But about not needing the Sisters anymore, she wasn’t so sure.

  “My sons are not as healthy as I would like. I feel very guilty,” Rothman said out of the blue, shocking Pia. He rarely said anything personal, especially something so very personal. The only other time was when he’d admitted having Asperger’s.

  “I’m so sorry,” Pia said. “I had no idea.”

  “Nobody does,” Rothman said, uncharacteristically wistfully. “I never talk about it. But it’s a big part of my race with stem cells and stem cell science.”

  Pia didn’t know what to say. What was suddenly clear was why Rothman had made such a deviation in his scientific pursuits after such success with his salmonella work.

  Rothman continued to watch the tiny pancreas suspended in the bottom of the bath. Pia could only imagine what flight of hope his mind was taking him on now. She could see him almost physically shake it off. He took one more look at the figures on the monitor and wordlessly left Pia’s side. It was amazing and distressing how he could turn on and off.

  11.

  NEW YORK CITY

  MARCH 2, 2011, 1:30 P.M.

  After leaving Gloria Croft’s office, Edmund Mathews, still steaming mad and nursing a sore left hand, turned east onto Lexington Avenue and found a Duane Reade pharmacy. He bought a bottle of Motrin and took four. His hand throbbed sharply, but he was certain he hadn’t broken any bones when he slammed the elevator door. Had he used his stronger right hand, he surely would have. Russell Lefevre often found Edmund’s behavior during crises to be unpredictable and alarming, but he knew Edmund had a laser-like focus that he could bring to bear at times like this. Edmund had the ability to break down complex problems and attack them piece by piece until he had it licked.

  Edmund had the car brought around and the two men sat in it double-parked on East Fifty-eighth Street. Russell swore he could hear Edmund thinking.

  “We have to get a head start on securitizing what we have,” Russell said.

  “Yes. For certain. And look at the diabetics whose policies we own,” said Edmund. “See if it mightn’t be cheaper to cancel some rather than carry them. And we should lay off some of our sales force until further notice.”

  Edmund had Russell call a contact at Goldman Sachs, a man named McDonald in the asset-backed securities division. McDonald had been interested in LifeDeals but was wary. Russell was still confident they would get one of the major players on board, and he hadn’t spoken to McDonald in a while. It happened that McDonald had a few minutes to spare an old client, and Edmund and Russell headed down to West Street in Battery Park City and Goldman’s global headquarters.

  That guy’s small-time, no vision,” Edmund said, after the unsatisfying meeting. Russell had answered all the questions the traders asked about securitizing their portfolio of life settlements sooner rather than later. But the traders couldn’t see what the hurry was. From their perspective the more policies they had to bundle, the better their product was going to be. And they hadn’t done the grueling legal legwork to create the complex CDOs to be in a position to take them to market. What Russell and Edmund had been looking for was reassurance after their meeting with Gloria Croft. As they left Goldman they admitted to each other that the reaction they’d gotten wasn’t exactly negative, it just wasn’t wildly positive either.

  In the car Russell and Edmund made another decision. As Gloria Croft had so devastatingly demonstrated, the main problem they were facing was with the mortality-rate bell curves that LifeDeals’ viability was predicated on and the damage that medical advances might do in terms of moving the curve to the right.

  “We need to go see Henry Green,” Edmund said. Henry Green was CEO of Statistical Solutions LLC, the company that had produced all the actuarial data, including the bell curves. Edmund got out his BlackBerry. This was a call he wanted to make.

  “Henry Green, please.... Okay, well, tell him Edmund Mathews is in the city and on his way over and needs to see him right away. . . . Well, I’m sure he’ll understand when you tell him. Our key data has flaws. There’s new information. We need to fix it.” Edmund hung up.

  “He’ll see us,” Edmund said.

  LifeDeals had put Statistical Solutions on an expensive retainer. Russell wanted to be armed with the best available statistical analysis when they went on the road selling their product. One supposed lesson from the subprime debacle was that investors wanted to know exactly what they were investing in. It might appear to be self-evident, but it wasn’t. Russell wanted to be able to show an investor the latest data, even individual policies, if they cared to see them.

  For his part, Henry Green was less than pleased to be hearing from Edmund Mathews at all, let alone when he was demanding a face-to-face meeting without notice. While Russell Lefevre wanted the full breadth and depth of research that Statistical Solutions offered, he gave the firm time to accomplish what was asked for. In contrast, Edmund Mathews would call up and want immediate answers to complicated questions. Green had had to drive his people hard, squeezing every last cent’s worth of work out of the company to comply. Edmund expected Henry to drop everything whenever he called.

  Edmund and Russell arrived at the Statistical Solutions offices in Chelsea in short order and within a couple of minutes were sitting with Green in his office.

  “Edmund, I gather you mentioned something on the phone about ‘new information,’” Green said hesitantly.

  “That’s right,” said Russell, who wanted very much to avoid having Edmund yell at Henry Green, which had happened in the past. “There’s new material and we need your expert opinion to see if we need to be concerned about it.”

  Edmund sighed at the understatement.

  “What my colleague is trying to say, Henry, is that you may have been wrong in some of your forecasts by amounts that could put us out of business. So I’d be very grateful, Henry, if you could get those geniuses you told us about who could have gotten jobs at Google to come in here and prove to us that they are in fact smart enough to tie their own shoelaces after all.”

  Edmund’s voice was rising in volume but the dam held, just. Henry Green pressed a number on his phone pad and picked up the receiver.

  “Yes, Laura, would you have Tom and Isabel meet us in the conference room right away?” Green hung up the phone.

  “Gentlemen, shall we?”

  Everyone Russell and Edmund could see around the office was young. Henry Green at least affected the look of a businessman with his dress slacks and dark shirt, but his messy hair was at least two inches too long in back. The numbers geeks, dressed in black, looked like they had just come in from an all-night party. Statistical Solutions was gaining a reputation for all kinds of data collection and algorithm solving, and a lot of their employees did indeed go on and work for Silicon Valley giants that paid for their dry cleaning and accommodated their dogs at work. To keep them, Henry Green had to be equally tolerant and generous. As long as they gave him six months of hard work, Henry Green didn’t mind. Statistical Solutions was strongly in the black.

  Anticipating that Russell wanted to speak, Edmund dove right in, addressing Isabel and T
om directly.

  “What do you know about stem cell research in relation to the treatment of diabetes?”

  “I know what stem cells are,” Isabel Lee said.

  “Did you build it into your projections?”

  “Build what in?”

  “The fact that a professor up at Columbia is making strides toward creating human pancreases outside the body to be used as transplants. If he succeeds, he’ll be prolonging the life of diabetes patients.”

  “Which is a good thing, of course,” Isabel said. Neither Isabel nor her colleague Tom Graham enjoyed working on mortality statistics for LifeDeals, even less when they found out what LifeDeals was doing with them. They’d mentioned their misgivings to Green, but he’d waved them off, saying they were not being paid to make ethical value judgments. Yeah, the concept of making money from people’s deaths is creepy, but the pay is good.

  “Yes, it’s a wonderful day for medicine and fat people, less good for my investors,” Edmund said.

  “Listen, we gave you full license to draw up parameters for us, using actuarial data and cross-referencing it with our cash-flow projections, and nowhere did we see any information about this,” Russell said, getting a nod of agreement from Edmund.

  “Russell, we built in increases in life expectancy and added tolerances for unexpected developments, but they were capped at five percent,” Henry said. “As we discussed, as you agreed. If there is about to be a major breakthrough like custom-made transplantable pancreases from stem cell research or fallout from the human genome project, we can’t be held responsible. You can’t anticipate once-in-a-century events.”

  “Then all this fucking statistical research is useless,” Edmund snapped, throwing up his hands in frustration. “It’s all nothing but mental masturbation.”

  “Na-ha,” Isabel said, not at all intimidated. “It’s good data for what we had. If there’s a paradigm shift, then numbers change and graphs have to be adjusted to reflect it. Simple as that.” She shrugged and sat back in her chair.