Game Theory--A Katerina Carter Fraud Legal Thriller

by Colleen Cross

  “Why else would the money vanish? Nathan is a thief.” Zachary spat the words out.

  Apparently not on good terms. How did father and son manage to work together every day? A recent grudge, or a long-standing one?

  “Any proof of your suspicions?” Kat leaned back in her chair, studying Zachary. Forensic accountants were a little like financial shrinks. Her psychoanalysis was based on open-ended questions. When people talked freely, they always revealed more.

  “No, but you’ll find it. I’m sure of that.”

  “If there really is a fraud, why all of a sudden now? Why not five or ten years ago?”

  “The more successful I am, the more resentful he gets. It can’t be the money itself. He’s got all he needs. You can’t even spend the kind of money we’re bringing in.”

  Harry was back again. Only this time he didn’t wait in the hall. “Kat—sorry to interrupt. You gotta help me. We need to get to the bank before it closes. I need a loan.”

  “Uncle Harry, give me a minute.” Kat felt bad asking Harry to wait, but a paying client was sitting right in front of her. She turned back to Zachary. “If Nathan is stealing, maybe it’s his way of evening the score with you. Like you said, billionaires like Nathan don’t need more money.”

  “You’d think he’d be grateful. The funds grew astronomically when I joined Edgewater. My proprietary trading model picks winners, and our performance is better than anyone else’s. He gets to bask in the glory without any effort.”

  “What’s so special about your model? Why couldn’t he do it without you?”

  “Currency speculation is part technical analysis and part gut feel. My model crunches the numbers—GDP, government debt, interest rates, and other economic data. Then it uses game theory to evaluate every possibility.”

  “Game theory?” Kat remembered the mathematical model from school. Players either competed or cooperated to maximize their own individual payoffs.

  “In the simplest terms, it means everybody’s out for their own personal gain, even at the expense of others.”

  “I know what it means, Zachary.” Kat fought to control her annoyance. “My question was about how it factors into your model.”

  “You don’t need to understand the details.” Zachary dismissed her with a wave of his hand. “My model determines the likelihood of any event happening or not, based on how rewarding it is to the players involved. Then I make my bet and corner the market. My bet alone will move the currency, because our fund is so big. But the real payoff is when traders follow, thinking it’s a sure thing. It becomes a self-fulfilling prophecy, making Edgewater even bigger profits. The other traders still score, as long as they get out before I sell my position. Then fortunes reverse.”

  “You’re manipulating the currency.”

  “Absolutely not. I’m just taking a position. A huge one, perhaps. But I’m no Pied Piper; other speculators don’t have to blindly follow me. Just because they do doesn’t mean I’m manipulating them.”

  “But most of those followers will lose. Like a hot potato, the big players or insiders reap profits at the expense of those who buy when they’re ready to sell. Whoever’s late to the game suffers. Is that fair?” Zachary and his father were each billionaires in their own right. They had more money than ninety-nine percent of the world’s population. What more did they need?

  “There are no victims here. They know my motives are to make a profit.”

  “Thus weakening the currency further.”

  “It’s a free world, Kat. Free choice, free will.”

  “And then the government intervenes?”

  “In theory. They buy up their currency to prop it up. But they can’t really control it—the currency markets do. The markets trade about four trillion dollars per day—run mainly by speculators like me. Government reserves are less than a tenth of that.”

  “Huge,” Kat agreed. “So you place a bet, say, that the U.S. dollar will drop. What happens next?”

  “All currency trades in currency pairs. Say I bet against the U.S. dollar. I’ll sell it at the same time I’m buying another currency—or betting it will go up. Let’s say that’s the Euro. The U.S. dollar will drop because I’ve sold more than other people are buying. The Euro will rise against the U.S. dollar simply because I’ve just bought a huge position in it.”

  “Supply and demand,” Kat said. “An exclusive game only a few can play.”

  “Anyone can play.”

  “Only with enough money. You need a huge amount to move the market. Smaller players can only be followers.”

  “Technically, yes. But people who follow me can potentially make a lot of money.”

  “If they get the timing right.”

  “Of course. Timing is everything. Or they can just invest in Edgewater’s hedge fund instead.”

  “Isn’t the minimum investment five hundred grand? That’s too rich for most investors.”

  “Maybe.” Zachary stood. “I can’t worry about other people. I focus on what I do best—making money.”

  “You sure you don’t want to talk with Nathan first? Maybe there’s a logical explanation.”

  “No point—he’s never around. He’s off on one of his sailing trips, or maybe big game hunting in Africa. He doesn’t tell me where or when he goes.”

  Zachary probably liked it that way. He ran the business without much interference from his father. Most fraud was kept quiet. No one wanted to take responsibility for theft on their watch, and unless it significantly impacted their business and the profits of their shareholders, management usually forced the perpetrator to quietly resign. Retribution was rare: usually the money was already spent.

  Kat scribbled a few notes on her legal pad. “What if your suspicions are confirmed and I do find fraud? What happens next?”

  “I’ll destroy him.”

  Chapter 7

  Kat and Harry waited in the tiny windowless office while the bank manager retrieved Harry’s bank records. An inbox stacked six inches high with files and paper-clipped documents sat on the left side of the worn wooden desk. Beside it a brass nameplate read Anita Boehmer. Several diplomas and a child’s drawing hung on the only wall. Three glass partitions with half-open venetian blinds enclosed the rest of the room.

  No wonder Harry was so distressed. According to his bank statement, he was flat out broke. Kat pointed to a transaction halfway down the page. “It says here that you already have a loan.”

  “It does? Let me see that.” Harry traced his finger beside Kat’s. “Ten thousand dollars? That’s got to be a mistake.”

  Kat thought so too. Uncle Harry was frugal to the point of madness. He shopped at thrift stores, re-used Saran Wrap, and had worn the same pair of re-soled shoes for as long as Kat could remember.

  She scanned the rest of the statement. A number of checks for amounts in the thousands were listed as well. She flipped through the stack of cancelled checks. They were all made out to cash. Her pulse quickened. This was completely unlike Harry.

  Anita Boehmer returned with a couple of manila folders. She dropped them on her desk and smiled at Harry. She sat down in her high-backed chair behind the desk. “I see what the problem is.”

  “So do I.” Harry crossed his arms. “Your records are wrong. I didn’t take out any loan.”

  “I’m afraid you did, Mr. Denton. I remember, because I approved it. Last month. You said you needed money for renovations. Don’t you remember?”

  “That’s impossible,” Kat said. Harry never financed anything. And he certainly didn’t renovate.

  “Here’s the loan agreement.” The bank manager pulled it out of the file and turned it upside down so Kat could read it. Sure enough, it had Harry’s signature at the bottom, signed a month ago. Harry really had taken out a loan. But why? Where was all his money going?

  Kat studied the document. It was his signature, though his big loopy y was shakier now. “That is your signature, Uncle Harry. I guess you forgot.”

 
; Harry uncrossed his arms and leaned forward to study the document. “No, I did not.” His voice rose as his face reddened.

  She patted the top of his hand. It felt brittle and trembled under her touch. “Look at the signature.”

  “Let me see.” Harry jerked the paper away from Kat. “It does look like my writing. But it can’t be. It must be forged.”

  Kat sighed. Harry was being paranoid again about someone stealing from him, another Alzheimer’s delusion. But his signature was right there on the form, in blue ink. The real question was why he needed the money. And who drove him to the bank. She turned to Anita. “This is completely out of character for Harry. Didn’t you think to ask him why he’s taking out a loan for the first time in his life?”

  “Katerina, I am very sorry, but we can’t interrogate everyone who asks for money. We take them at face value unless there’s a glaring error.”

  She was right of course. Harry’s dementia wasn’t obvious. Until you talked to him for about two minutes. Surely the loan application had taken longer than that. Didn’t Anita notice how often Harry repeated himself? It was too late to do anything about that now.

  Kat refocused on the bank statement. She pointed to the next line on the statement. The same ten thousand dollars transferred out the next day. “Anita, where did this money go?”

  “Transferred out to another bank. All we have is the bank and the account number. I’m afraid you’ll have to contact them. Sorry.”

  Kat circled the transaction with her pen. If she could identify the recipient, she would be one step closer to finding out what was going on.

  Chapter 8

  Kat followed Harry up the creaking steps to her front door. Kat and Jace had purchased the old Victorian at a tax sale last year. The stairs were just one of many repairs listed on their never-ending to-do list.

  While their renovations weren’t on hold, the for sale sign was. Kat and Jace originally planned to fix and flip it for a quick profit, but they had grown attached to the Victorian house. It was one of the oldest houses in their Queen’s Park neighborhood, conveniently located just two blocks from Harry’s.

  “Jace? We’re home.” She paused to inhale the restorative aromas of basil, oregano, and tomato.

  “In here. Hope you’re hungry.”

  Kat followed Jace’s voice into the kitchen. He stood at the stove, stirring the source of the wonderful smell. Kat’s gaze drifted from his muscled arms to his form-fitting black t-shirt. Even in an apron he looked hot.

  He winked at her. “Spaghetti?”

  “Love some.” She kissed him, wishing she could stay. “You seem happy.”

  “I am. My real estate fraud story is running on the front page. Tomorrow’s paper.”

  “Hmmm, wonderful. Does that give you rock star status at the Sentinel?” Jace had uncovered a real estate fraud involving dozens of high-end properties on Vancouver’s affluent west side. The ruse used inflated appraisals to flip properties.

  “Not quite. But I’m in McCleary’s good books again. He thinks I can get a series out of it.” Jace’s hard-nosed editor was notoriously difficult to please.

  “Good news.” Kat glanced over at Harry. He sat at the kitchen table, head slumped forward onto his chest as he snored.

  She lowered her voice and told Jace about the bank loan and the never-ending search for the Lincoln. But not about his Alzheimer’s. Not yet. Saying it out loud made it all too real. “Harry’s problems are much worse than I thought.”

  “Can’t the bank find out where the money went?”

  “No, and I don’t know what to do. It’s obvious Harry can’t manage on his own anymore. First the fire, and now this.” She felt a catch in her throat and turned away, hoping Jace hadn’t noticed. Living alone was becoming a serious safety issue.

  He dropped the spoon on the counter and circled his arms around her waist. “He could move in here. We’ve got lots of room.”

  “I—I don’t know, Jace. It will be a big change for you.” Kat pulled away from his embrace. Jace didn’t know what he was offering, what he was getting himself into. Overnight he would be plunged into Harry’s paranoid world. A world that worsened with every passing day of dementia. It might be too much for Jace.

  “It’s no big deal. We’re at Harry’s place all the time anyways.” Jace tapped the spoon against the rim of the saucepan. “It might even be easier on both of us.”

  Kat tiptoed over to the kitchen table to avoid waking Uncle Harry. She detoured around the section of the floor that creaked, but it was no use. Harry jerked awake just as she pulled out her chair. “Sleepy?”

  “Now, why would I be sleepy? It’s barely lunchtime.” Harry rose from his seat and shuffled towards the bathroom. “I’m going to freshen up.”

  It was actually after six, but Kat didn’t bother to correct him. “I know. I’m already hungry.” Harry had already forgotten his day at court and Kat’s office.

  Jace carried over two heaping plates of spaghetti and set them on the table.

  “I can’t stay long, Jace. I’m starting on the Edgewater case tonight.”

  “Now you’re working nights? Zachary Barron doesn’t waste any time, does he?”

  “Guess not.” Kat picked up her fork and twirled some pasta around it. The portion on her plate could feed a small army. “Anyways, it will be good to get a head start and see what this case is all about. Especially while Nathan Barron’s out of town.” She filled him in on the Barrons—Zachary’s suspicions and Edgewater Investments.

  Harry emerged from the bathroom. “You’re telling Jace about my bank loan? Geez, the bank’s robbing me blind. Would you believe ten thousand dollars, Jace? Criminals!”

  Kat raised her eyebrows at Jace, surprised Harry still remembered. “We were just at the bank. They said Harry took out a loan last month.”

  “Really?” Jace glanced at Kat. “What are you buying, Harry? Real estate?”

  “I didn’t buy anything. Those crooks forged my signature! You know what? I can’t wait—I’m calling the police.” Harry grabbed the kitchen phone. “What’s the number, Jace?”

  “Uh, Harry, why don’t we eat first?” Jace returned to the stove and spooned out another plate of spaghetti. He sat down at the table, opposite Kat and Harry. “We’ll call the police after dinner.”

  “Mmmm, this is good, Jace.” Kat hadn’t realized how hungry she was. Harry would forget all about calling the police in a few minutes. But that didn’t solve the problem of who orchestrated the loan. Harry couldn’t visit the bank on his own since he had to be driven. He rarely left the house at all anymore. He never went anywhere alone, except maybe the supermarket or coffee shop. Had he met someone at either of those places?

  “I busted a fraud ring, Harry. It’s tomorrow’s top story.” Jace grinned. “They bought houses and faked real estate appraisals to inflate the property values. They took out huge loans against the houses, then took off with the money.”

  Kat made a slicing motion across her neck. Loan was a four-letter word.

  Jace’s smile vanished and he mouthed sorry. But then he continued nonetheless. “They let the banks foreclose on them. I traced at least two dozen high-end houses on the West Side and exposed them. Until my story, they weren’t even on the cops’ radar.”

  “Humph,” Harry said as he twirled pasta around his fork. “You know, I feel a bit sick right now. I think I’ve had enough.”

  “Eat, Uncle Harry.” Kat studied her uncle. No wonder he felt sick—he hardly ate anything. His face was drawn and pale; that recent flu was really taking a toll. He needed all the calories he could get.

  “All right.”

  They ate the rest of the meal in silence. Despite her profession, Kat often felt money was the root of all evil, or most of it, anyways. This was one of those moments.

  “I’m just happy to have my story finished.” Jace set down his fork and checked his watch. “Now I can relax. Hey, the hockey game’s on. Want to watch the game, Harry?”
>
  “And watch a bunch of carefree millionaires chase a puck? No thanks.”

  Chapter 9

  Kat followed Zachary through the heavy wood doors that guarded Nathan’s office. She had timed her visit for after-hours so it wouldn’t raise suspicions among Edgewater’s employees.

  A massive, richly carved mahogany desk dominated the center of the room. To the left, built-in bookcases overflowed with leather-bound volumes and more recent hardcovers. In the right-hand corner, a dark brown leather sofa and chair faced a table with an alabaster chess set. The wall above was lined with pictures encased in heavy wood frames. The windows were framed with partially closed, heavy damask drapes.

  Despite being twenty floors up, Kat felt transported to the study of a nineteenth-century country estate. The air carried the faint scent of cigars. Even with Zachary’s presence, she felt uneasy, like she’d trespassed into a hunter’s lair. A hunter who might return at any moment.

  Kat’s shoes sank into the thick Berber carpet as she wandered over to study the pictures. Nathan Barron was in every one of them. Various locations, poses, and locales, but they all involved Nathan posing with something he had just shot or speared. Mostly bears, lions, other cats. A predator among predators.

  Kat moved down the wall to the last picture, which judging by the frame, was the most recent. A stocky sixty-year-old man stood beside a hippo. Shirtless, wearing just khakis and a rifle slung over his shoulder. With a grin that said top of the food chain. It sent chills through Kat.

  “Last year. Selous Reserve. Tanzania. It’s considered poaching to kill a hippo, but he doesn’t care.”

  Kat jumped at Zachary’s voice, then recovered. “I’ve got to ask the obvious. Why would a billionaire steal from his own company? He doesn’t have to do this.”

  “Simple. Nathan’s a cheap bastard. Edgewater is fifty percent mine. If he pays through Edgewater, he gets a fifty percent discount.”

  “And risk going to jail?” Kat didn’t buy it. Something more than money was driving the fraud. “Why? He’s already got more money than he can spend in a lifetime.”