Game Theory--A Katerina Carter Fraud Legal Thriller

by Colleen Cross

  “Those aren’t investments,” Whitehall scoffed. “It’s personal property.”

  Kat glanced over at Victoria. Her perfectly sculpted shoulders slumped and her eyes closed momentarily. “A few bottles of wine, maybe. But she made a two-hundred-thousand-dollar profit last year on her wine investments alone. And her real estate portfolio is eight figures. That’s some hobby.” Her analysis had dispelled the dependent housewife myth—now it was up to the judge to decide.

  “It hardly compares to a hundred million.” Whitehall’s tone was flat and defeated.

  “What else isn’t she telling us?” Kat turned to smile at the judge, but his head was down, reading the newspaper Kat had noticed earlier. He had hidden it under a file folder on the side of his desk.

  Whitehall flushed as he strode back to his seat without saying anything. Flying by the seat of his pants, probably assuming he’d never be questioned. Unprepared. She had him and he knew it.

  “That’s just one of the dozens of sales she’s had over the last year. Or didn’t she tell you?”

  His face reddened to a deep crimson. Even from twenty feet, Kat saw his knuckles whiten as he dug them into the weathered oak table.

  Silence.

  “Why don’t you ask her yourself?” Kat pointed with her pen. “As you can see here, she actually owes Mr. Barron, instead of the other way around.”

  No answer.

  Zachary fidgeted.

  Kat felt her face flush. Had she pushed things too far?

  “Not a chance, Ms. Carter. Your numbers are bogus.”

  Kat took a deep breath and flipped to her final chart. She was about to explain why Whitehall was wrong when the courtroom doors swung open with a bang. She looked up, startled.

  “Kat!”

  Uncle Harry stood in the doorway and waved his keys.

  “You’ve got to help me! I’ve lost the Lincoln.”

  Uncle Harry—again forgetting the accident.

  Kat motioned for Harry to sit down. Judges were unpredictable. This was exactly the sort of thing that could turn the tide against her client.

  Uncle Harry threw his hands up in the air in an exaggerated flourish, but then slumped down in a seat in the second row. She hoped he could stay quiet for the next few minutes.

  “Friend of yours?” Whitehall raised his eyebrows.

  Kat ignored him.

  Harry’s voice rose again, an unfortunate result of the room’s acoustics.

  “Damn towing companies! Why can’t they leave a note or a phone number or something?”

  The judge motioned to the bailiff standing at the back of the room.

  “Your Honor, I’m sorry. Give me a minute, please.” If she hadn’t already blown it, she surely had now. She strode towards Harry as fast as possible without breaking into a run.

  “Where, Uncle Harry? On the curb?” Kat whispered as she patted his arm. “Ten more minutes. Then we’ll search for your car.” The Lincoln was safely parked in Harry’s garage. She’d disconnected the garage door opener as an added precaution since he’d refused to part with his car keys.

  “They could at least call me.” He pouted and crossed his arms.

  Whitehall turned to face the judge. “Your honor, do we really need to listen to more?”

  “No counsel, I don’t think we do.”

  Whitehall gloated.

  Kat returned to the witness box. She glanced at Victoria Barron, who was smiling into a handheld mirror, checking her makeup.

  Victoria’s smile faded when the judge spoke.

  “Judgment for three million in matrimonial assets to be divided equally. Case dismissed.”

  Zachary Barron snapped his file shut and straightened, suddenly at full attention. Like someone had flipped a switch.

  Kat should have felt good, but divorce cases always got her down. How could two people fall in love, then hate each other within three years? Money brought out the worst in people. They would die for it, lie for it, and even kill for it. She’d seen it countless times in her line of work.

  That’s why she’d never get married. Not even to Jace, despite his proposal. They’d had heated discussions about it, even broke up over it two years ago. They’d been testing the waters as a couple again for the last year, and she wasn’t screwing that up by getting married.

  She shoved her papers into her briefcase and made a beeline for Harry.

  “Let’s go outside.” She linked arms with her uncle and steered him out to the lobby. It was the second time today Harry had thought he’d lost his Lincoln. “Uncle Harry—maybe it’s time you—”

  Harry held his arm up in protest.

  “Will you stop it, Kat? It’s my God-given right to drive. I drive better than all those other yahoos on the road. They’re the ones creating problems.”

  “Driving’s a privilege and a convenience. But when we get older, sometimes it’s better to be—”

  “Don’t use that ‘we’ tone with me, young lady! I might be old, but I will not be patronized!”

  Harry’s rising voice echoed in the cavernous marble foyer. Groups of lawyers, plaintiffs, and others turned and stared, most giving her suspicious glares.

  “Don’t be upset, Uncle Harry. I’m just worried about you.”

  “I know.” His voice cracked. “But it’s frustrating. What’s happening to me, Kat?”

  Harry rubbed a hand over his bald head.

  “It’s okay, Uncle Harry.” Kat touched his arm. “You’ve just been busy. We all forget sometimes.”

  Aunt Elsie’s unexpected heart attack right after the Liberty Diamond Mines case had hit Harry hard. Dr. McAdam figured the stress accelerated the decline in his mental health. Now Kat was his only family to speak of. What might be next on the dementia journey scared her too.

  “It’s easier to take the bus. No car or parking tickets to worry about.” Kat squeezed his hand. “I can drive you wherever you need to go.”

  “After you drove your car into the Fraser River last year?” Harry pulled his hand away. “No thanks.”

  His long-term memory was still remarkably intact.

  “Kat—wait.”

  Kat spun around. Zachary Barron emerged from the crowd and marched towards her. People parted on either side, opening a path for him like he was royalty. A clean-cut man in an Ermenegildo Zegna suit whispered success and power. Kat’s arm-in-arm journey with Harry a minute earlier had been more like a jousting match, as she elbow-bashed and zigzagged through the crowd.

  Zachary couldn’t possibly be mad about the settlement. Or could he? Save a client a hundred million and they’d still find something to complain about. He hadn’t even seen her bill yet.

  “Kat? We need to talk.”

  “Sure. You do realize you got a very good result. It’s hard to—”

  “It’s not about the divorce.” He glanced around to see who was within earshot, then leaned closer. “You handle fraud, right?”

  “Yes, of course.” Corporate fraud and divorce were both big areas of her forensic accounting practice. But Harry was agitated; she had to calm him down and distract him from his Lincoln.

  Harry. Kat spun around, but he had vanished. The lunchtime crowd had swallowed up Harry’s path. Her eyes searched the crowd, a life-sized Where’s Waldo? puzzle. Nothing. A wave of panic washed over her. How could she find a short, balding octogenarian in the sea of people?

  Out of the corner of her eye, she saw him. A flash of gray hair, a beige raincoat. Harry—or at least someone who resembled Harry—disappeared around a corner.

  “Zachary—can I call you later this afternoon? Something’s just come up.”

  She pressed speed dial on her cell, trying to call Uncle Harry and corral him back. Even if he had his phone, he probably wouldn’t answer, but it was worth a try.

  “It’s urgent,” Zachary said. “I’ll come by your office this afternoon. Two o’clock.”

  It was more of a command than a question. Kat glanced up from her cell phone to protest, bu
t Zachary Barron was gone.

  Chapter 5

  Kat and Harry picked at the remains of the Chinese takeout she’d ordered after finding Harry on the courtroom steps two hours before. The food seemed to settle her stomach and it felt good to finally be back at Carter & Associates after this morning’s courtroom drama. Her office’s hundred-year-old brick walls wouldn’t withstand a strong earthquake, but today they felt like a fortress. The sketchy neighborhood and rustic furnishings felt comfortable, especially with her uncle finally safe and sound.

  “She’s back, Kat. It’s like she never left.” Harry’s eyes shone as he spoke.

  Hillary’s return was one of Harry’s delusions Kat could do without.

  She shuddered as she remembered her first week living with the Dentons. She had arrived home from school to find Hillary by the fireplace, grinning. She stood in front of the roaring fire, Kat’s photographs in her hand while she beckoned Kat over with the other. Then she dropped them into the flames, one by one. The pictures of her mother gone forever. All she had left were memories, and those faded further with each passing year.

  “Really?” Kat played along. Despite her feelings, reminding Harry it wasn’t true only caused mental anguish. No one wanted to know they were losing their mind.

  “Yup. Great, isn’t it?”

  Kat reached for a second egg roll. “When did she come back?”

  “A while ago. She’s moving back home. I wish Elsie was here to see her. She would be so proud.”

  Harry manned the front desk while Kat sat cross-legged on the couch, feeling more relaxed after a quick run. She’d moved a treadmill into the spare office so she could still fit in a workout despite keeping an eye on her uncle.

  “Proud?” Proud his daughter had the nerve to show her face after what she did?

  “She’s got a new job.”

  “Doing what?” Hillary had never worked a day in her life. Unless you counted cheating and manipulating people out of money a career. She’d convinced Harry and Elsie to lend her all their retirement savings, promising to pay it back. They never heard from her again. Some things were better forgotten.

  “Can’t remember. But it’s something really important.”

  “I’m sure it is,” Kat said. If it wasn’t, Hillary would be quick to embellish, or more likely, fabricate the whole thing.

  “And she’s looking forward to catching up with you.”

  Kat felt a stab of fear. Nothing about Hillary came without a cost. But that was silly—Hillary now existed only in Harry’s imagination.

  “Business lunch?”

  Kat snapped to attention at the man’s voice. She wasn’t expecting anyone for another hour.

  Zachary Barron stood in the doorway, staring at her. She was suddenly conscious of how she appeared: stringy auburn hair, dried sweat on her face from the run. If he got any closer, he’d smell her damp, stinky running clothes. She chewed her mouthful of Chow Mein as fast as she could, and then Harry rescued her.

  Harry swung around the reception desk, surprisingly fast for an eighty-year-old.

  “I don’t think we’ve met. I’m Harry Denton, Kat’s associate.”

  Harry held out his hand. Zachary shook it and had the good grace not to mention their meeting earlier in the day.

  The nameplate on the office door read Carter & Associates, but in reality Kat had been associate-less since opening the office two years ago. Nevertheless, Uncle Harry had always drummed up excuses to come by, so Kat had made it official.

  At least his presence at the office allowed her to keep an eye on him, important since he had lost interest in just about everything and everyone else. His buddies at the curling rink swept the ice without him now, and weeds were all that grew in his once well-tended garden.

  As their time together increased, she became acutely aware of his declining mental state. No matter what, she enjoyed having him at the office and figured the people contact was good for him.

  “Mmmm, sorry.” Kat swallowed a mouthful of noodles. She stood up and wiped her hand on her shorts. “I don’t usually—”

  “No need to explain. I’ll make this quick.”

  Quick riches, quick marriages, quick divorces. Was there any other way with Zachary Barron?

  “Didn’t you say two o’clock?”

  “I don’t really do appointments. Can we talk or not?” Zachary asked.

  Chapter 6

  Zachary Barron sat on the edge of the leather armchair opposite Kat’s desk, his designer suit and tie at odds with her office’s shabby chic décor. He seemed oblivious to the furnishings and the million-dollar view outside.

  Kat’s office windows framed a view of the Vancouver harbor, spectacular even in the rain. The docks were deserted, though. The giant cruise ships that sailed the Alaska Inside Passage run were gone for the season. The only waterfront activities today were a dozen plump seagulls scavenging for food.

  Zachary leaned forward, his elbows on Kat’s desk. “I want you to investigate my partner.”

  “Your partner? But isn’t he your—”

  Zachary’s mouth hardened into a frown. “Nathan Barron. Yes, he’s my father. That doesn’t make him any less capable of fraud.”

  “He founded Edgewater.” Kat knew about the father and son’s tangled web of inter-related companies from Zachary’s divorce proceedings.

  “Twenty years ago. But the company he started is nothing like Edgewater today. Back then it was just small trades, mostly table scraps his university buddies threw his way. And business was drying up.”

  “What changed?”

  “Ten years ago I joined the company. I built Edgewater into what it is today.”

  Modest he was not. “How so?”

  Zachary leaned back and straightened his tie. “My proprietary trading model turned Edgewater into the second-biggest hedge fund worldwide. The financial results point to our success, but where’s the money? I had trouble settling a trade last week. The bank said we didn’t have enough money. How can that be?”

  “Maybe it was a timing issue?”

  “No way. For a multi-billion-dollar hedge fund, our business is very simple. We buy and sell currency using my proprietary model. Trades settle a few days later, and the brokerage fees are paid as part of the trade settlement. Besides office rent, salaries, and expenses, there’s nothing else to spend the money on.” Zachary handed Kat the most recent Edgewater annual report.

  “Nathan’s always handled the back-office stuff, and I’ve done the trading. I never paid attention to the administrative side until last week when the bank said we were short. Where’s all the money going?”

  Kat knew the preliminary year-end results: they had been part of the Barron divorce proceedings. She flipped the report open to the income statement page. Her mouth dropped open. She hadn’t seen the final, audited results until now. “Edgewater made two billion dollars after tax? Much higher than I thought.”

  Had Zachary timed the annual report’s release to favor his divorce proceedings? Whether he did or not, it had certainly worked out that way.

  “That’s my point. Where did the money go? Two billion in earnings, yet only a few million in the bank. Edgewater’s fully extended on our line of credit. Why is there so little cash when most of our trades are hundreds of millions of dollars?”

  “That doesn’t necessarily mean fraud, Zachary. It could be mismanagement.” Kat was suddenly aware of Uncle Harry hovering just outside her office. He paced back and forth, his forehead creased in a frown.

  “That’s supposed to make me feel better?”

  “No, but we need to consider all the possibilities. At any rate, I’ll check it out. When do you need this?” Kat hoped to stretch the deadline. She glanced out to the hallway. She needed a diversion for Harry pronto.

  “Yesterday. Without access to cash, Edgewater can’t operate for more than a few days.”

  “You’ve talked to Nathan about this?” Kat knew things were tense between father and son from
Zachary’s divorce proceedings. Her valuation of Edgewater Investments assumed an equal partnership. However, Nathan disagreed and was even contemplating legal proceedings against his son.

  “No. I want you to poke around first before I talk to him. I need all the facts.”

  “I can do that. What about investment losses? That could also wipe out your cash balances.” Kat craned her neck towards the hall just as Harry disappeared again.

  “Impossible. We’ve had a great year. At least three home runs, and double-digit returns. We should be tripping over cash. Instead, we’re practically broke. I’m not involved in daily operations—Nathan does that—but at the trading level, I know exactly what I’ve bet on, and the percentage return.”

  “What about redemptions? A few big investors cashing out could decrease your cash on hand.” Uncle Harry was back outside, clutching his checkbook. She should have known. He’d been trying to balance it for weeks, but had refused any help.

  Zachary scowled. “No, exactly the opposite is happening. Investors are scrambling to get into our fund. Matter of fact, new investments outnumber the redemptions by more than two to one. The Evergreen fund has stellar returns—all due to my trading model. Our investment return is way better than our competition’s.”

  Uncle Harry peered anxiously around the doorframe.

  “Uncle Harry? Everything okay?”

  “Uh, yeah.” Harry checked his watch and then disappeared down the hall again.

  Kat turned back to Zachary. “I’ll need access to your office and all of Edgewater’s financial records, payroll—anything else involving payments or receipts. And access to the accounting system.” She checked her watch. It was just after three. “I can start tonight.”

  “Great. I’ll be at the office till about ten. Nathan’s away again, so come by as soon as you can.” Zachary rose. “I should go.”

  “Before you leave—why are you so sure there’s a fraud? Nathan founded Edgewater. Why would he steal from it?”