Game Theory--A Katerina Carter Fraud Legal Thriller

by Colleen Cross

  “It’s too weird, Jace. Svensson’s push is for a common currency—like the Euro—only on a global scale. Edgewater exploits and profits from the very discrepancies Svensson seeks to eliminate with his model. It makes no sense.”

  “Maybe Zachary has some ideas. Since he’s so smart.” Jace smirked.

  “I doubt it, Jace. Zachary insists that all trades are based on his proprietary trading model. He says they don’t use any outside research. There is one more thing I can’t figure out.”

  “What’s that?” Jace asked.

  “How is Nathan pulling this off? Zachary says he enters his trades into the system himself. But when I checked, those trades aren’t being pulled into the accounting system. It’s like it’s not connected to anything.”

  Jace never got a chance to answer.

  They both froze as a loud crash followed by shattering glass came from downstairs.

  Kat dropped her pen. Heavy footsteps thudded on the front stairs. She jumped up and peered out the study window. A dark figure ran down the walkway to a black sedan idling at the curb. She couldn’t tell whether it was a man or woman as they slammed the passenger door. The car’s tires squealed as it tore away from the curb.

  She ran to the hallway with Jace close behind. They both slammed to a stop on the upstairs landing when they smelled the gasoline.

  Chapter 16

  Kat and Jace stood on the landing, transfixed by the scene below. The remnants of a homemade Molotov cocktail smoldered on the center of the hallway rug. Gasoline fumes fused with smoke, and glass from the side window covered the wood floor.

  Suddenly the bottle exploded.

  Fire shot out in all directions. Within seconds their view of the front door was obliterated by the rising smoke. Flames licked the stairway banister.

  Gasoline burned Kat’s nostrils. She jumped as a second explosion followed, ballooning into a fireball.

  “Oh my god. Uncle Harry—get out here! Hurry!” Kat spun around, about to head to the guest bedroom.

  But Harry was already in the hall. “What’s happening?” Harry rubbed his eyes. His eyes widened when he saw the flames. “Holy crap!”

  Kat ran into the office to call the fire department. But the cordless phone wasn’t in its cradle. She cursed and ran back into the hall, wondering where it could be.

  “I’ll try and smother it.” Jace raced down the stairs, pulling off his sweatshirt.

  “Jace! Be careful.” Kat watched from the top of the stairs. In less than a minute, the flames had grown to several feet across. It was too late to do anything. Soon it would block the stairwell, and their escape.

  She turned. “Harry—let’s go!” She waved and descended the stairs with Harry right behind her.

  “Let me give you a hand, Jace.” Harry pulled his golf shirt over his head and headed towards Jace.

  “No!” Kat grabbed her uncle’s arm and pulled him back. She turned him towards the kitchen and away from the fire. “Keep going, Harry, out the back door. Jace, you too. Just leave it.”

  The fire now engulfed the entire front hall, too big to be smothered. It was out of control.

  Suddenly Kat remembered the papers upstairs. Nathan’s spreadsheets and the customer statements. She had the original copies.

  If she ran upstairs now she could get them in time. No—that was stupid. “Jace, leave it!”

  Her face flushed from the heat.

  “I can put it out.” Jace winced as he pulled his scorched sweatshirt up from the rug. He inched over and dropped it on the fire. He stomped on it with his boots, trying to extinguish the flames.

  Kat stopped at the kitchen door. Jace’s actions might have worked a minute ago, before the flames doubled in size. Now it had little effect, other than being dangerous.

  “It’s too much, Jace. Let’s go.”

  Jace jumped back and shielded his face just as a third explosion increased the flames. Flames now blocked the staircase they had just descended. Jace turned and fell in behind Kat, waving her on.

  Kat veered into the kitchen, only to find Harry motionless by the stove, wringing his hands. He seemed lost. “We’re going out the back stairs, Harry. Just follow me to the kitchen door.” Kat grabbed the cordless phone off the kitchen counter as she exited, trying to stay calm. She opened the kitchen door and filled her lungs with the cool, clean air. She punched in 9–1–1 and descended the stairs, pulling Harry behind her. When she glanced back, her heart stopped.

  Where the hell was Jace? He should have been right behind her and Harry. Only he wasn’t.

  “Wait here. Talk to them.” She pushed the phone into Harry’s hands and ran back.

  “What do you mean, wait here?” Harry held up his hand. “Don’t go in there, Kat.”

  She turned back. “I have to find Jace.” The downpour drowned Harry’s pleas, or maybe she blocked them out.

  “No!” Harry screamed louder and wrung his hands together. “Wait for the fire department.”

  But Kat was already up the stairs. She crossed the threshold only to be met with thick smoke. She gagged and ducked, hoping to find fresher air lower down. Why hadn’t Jace followed her outside? He had been right behind her. It was obvious the fire was too big to be extinguished—what was he thinking? She crawled along the kitchen floor, low against the thick smoke.

  Harry was right—going back had been a mistake. But a few seconds could make all the difference before the fire department arrived. Her Edgewater papers were one thing, but she couldn’t leave Jace. She coughed as the smoke invaded her lungs. It stung her eyes and she blinked away tears.

  She crawled through the kitchen into the hallway, unable to see more than a foot in front of her. While the flames had died down, the thick smoke permeated every inch of the corridor, making it impossible to see.

  She inched closer to where she had last seen Jace, her breath heavy with exhaustion. She couldn’t get enough air.

  Then she heard the fire engine’s sirens coming down the block as she gasped for breath. The truck screeched to a stop outside. Doors slammed and men’s voices drifted up through the broken window. She still felt hope until the fire truck’s flashing lights penetrated the darkness. The hall was empty. Jace was gone.

  Chapter 17

  Kat shivered and pulled the wool blanket tight around her shoulders. She sat on her front steps, listening to the water drip down the eaves troughs. The rain had abated, and the fire was out. She coughed in spasms, a result of the smoke inhalation. Harry sat beside her and nodded his head while the fire chief chastised her for going into the house. One by one, neighbors returned to their houses and extinguished their lights, relieved the fire hadn’t spread.

  Jace trudged across the lawn, past a pair of firefighters busily packing up their equipment. His right hand and arm were bandaged and wrapped in white gauze. He had smashed the living room window and jumped through it into the front yard. Kat rose and descended the stairs to meet him.

  She hugged him, grateful he had escaped the fire. “Don’t ever do that again, Jace. I thought you died in there.”

  He pulled back to study her. His eyes narrowed. “You shouldn’t have gone back in. I can take care of myself.”

  Kat disagreed but didn’t say anything. She was just relieved he wasn’t more seriously injured. She locked her arm in his un-bandaged one. Together they climbed the stairs to the front door. She stood just outside and peered into the front hall.

  “Why would someone do this?” Kat studied the smoldering remains of the Molotov cocktail. It appeared homemade, a blackened rag still sticking out of the broken wine bottle’s neck.

  Jace didn’t answer. He squatted down and studied the damaged floor.

  A burnt black circle was all that remained of the antique British India rug. It had been as old as the house. The stairway banister and hallway wainscoting were blackened and charred, and the floorboards Jace had so painstakingly restored now sat under puddles of water. The firefighters had quickly extinguished the blaze,
but the damage was done.

  “I don’t know.” Jace stood and turned to her. “Maybe it’s a case of mistaken identity. They hit the wrong house.”

  “Most of our neighbors are over seventy, Jace. I can’t imagine them as targets for anything.” The pensioners in their Queens Park neighborhood did mocktails, not Molotov cocktails.

  “Someone’s got it in for you guys.” Harry came up behind them. He peered inside at the mess. “Maybe I shouldn’t stay.”

  “What’s this?” Jace poked at a metal canister with the toe of his boot. It lay partially hidden under the hallway armoire, unnoticed by the arson investigators. He bent down and picked it up. He unscrewed the lid and pulled out a scrap of paper.

  “What is it?” Kat asked. “Maybe you should leave it there.”

  Jace ignored her. His face darkened as he read it, then shoved the paper in his pocket.

  “Let me see that.” Kat held out her hand.

  Jace shook his head. “It’s nothing.”

  “What do you mean, nothing?” The metal canister must have been inside the Molotov cocktail. “I live here too. I want to know what it says.”

  Jace shrugged and pulled the paper from his pocket. He handed it to her.

  Kat read the typewritten note. Stop the story. “So it is about your article. But didn’t the Sentinel pull it?”

  “They did.”

  “Is there another story I don’t know about?” Kat shivered as she handed the note back. She pulled the blanket tighter around her shoulders.

  “No, that’s the only one I was working on. But it didn’t go to press. No one even knows about it.”

  “No one except people at the Sentinel. The same people who fired you.”

  “You think someone at the newspaper firebombed us? That’s crazy, Kat.”

  “Maybe it’s not the Sentinel. Somebody could have leaked your story. To the people you’re accusing, maybe?”

  “Why would they do that?” Jace glanced at the paper before stuffing it in his pocket.

  “Who knows? Maybe the same reason your story got pulled. That still means the Sentinel is connected to your story somehow. They must figure you’re going to publish the article anyway.”

  “You know, that’s actually not a bad idea. The Sentinel’s not the only game in town.”

  “It’s not worth it, Jace.”

  “Why not? I’ll sell the story to someone else. There’s obviously more to it, and they’re not going to muzzle me. Maybe I should dig a bit deeper and see where it goes.”

  “And be targeted again?” Kat wished she’d never mentioned it. Jace was like a bloodhound on a scent. He’d never stop until he found out who was behind the firebombing.

  “Whoever it is has to be stopped, Kat. Especially violent attacks like this. If I don’t stop them, what’s next? Will everything controversial be stifled? This is how oppression starts.”

  Kat sighed. She wanted to know who was behind the attack too, and she wanted justice. But sometimes it was better to let sleeping dogs lie. It was something she’d learned growing up in the Denton household.

  She certainly didn’t feel like arguing after everything that had happened. She changed the subject. “Did you find out anything about Edgewater’s auditors last night while I was at their offices?”

  “Matter of fact, I did,” Jace said. “Beecham & Company is a registered company, even if it does operate out of a vacant lot.”

  At least that was progress. Fire or no fire, she still had a job to do.

  “So it does actually exist.”

  “Beecham exists alright, but in name only. It’s owned by a holding company. Which in turn is owned by Nathan Barron.”

  Kat’s worst fears were confirmed. “That explains why the auditors didn’t pick up on the fraud. There are no auditors. It’s all a sham.”

  Of course Nathan Barron couldn’t risk a legitimate auditor uncovering his fraud. But with billions at stake, why hadn’t he covered his tracks better? An address at a vacant lot and a disconnected phone number was just plain sloppy.

  “Don’t millionaire investors check these sorts of things out more than the average person?” Jace asked.

  “You would think so, but with twelve percent returns year in and year out, maybe not. Zachary tells me investors are practically tripping over each other to invest in the fund. And another thing—someone else in Edgewater’s records has the same address as Beecham.”

  “Really? Who?”

  “Fredrick Svensson. I need you to help me find out what they’re paying him for.” That, and how on earth Zachary could trade with no money. Something didn’t pass the smell test.

  Chapter 18

  Kat and Jace sat in Kat’s downtown office, exhausted from last night’s fire. Aside from the broken window, the fire had undone hundreds of hours of painstaking restoration to the carved banister and wainscoting. Luckily there was no structural damage, but it was just too hard to look at right now. By the time they finished cleaning up and boarding the window it was early Saturday morning. They’d come to the office to escape the smoky air still lingering downstairs.

  “Tell me I’m not crazy, Jace.” Kat pointed to Edgewater’s trade confirmations for the last two months. “Edgewater’s broke, and there aren’t any trades to begin with. How could Zachary not know that?” Kat grimaced as she sipped her coffee. It was ice cold.

  “You’re really sure he’s not in on it? Of course he’d be crazy to hire you if he was.” Jace winced as he propped up his injured right arm on his knee.

  “Exactly. But why didn’t he notice that his trades weren’t going through? Edgewater Investments seems to be nothing at all like how he’s described it. It’s about to implode.”

  “Could the trade confirmations be faked too?” Jace asked.

  “Yes, but doesn’t Zachary talk to other people? Other traders? His broker?” Despite the fire, last night’s work had paid off. With proof the money was diverted, Kat figured she could meet Zachary’s deadline. If she could follow the money through to its ultimate destination, Zachary would have an airtight case against his father. But this latest question had her stumped. “Doesn’t he execute the trades on a computer trading platform? It’s an elaborate ruse if that’s all faked too. I’ll have to watch him do it.”

  “You said Edgewater paid Research Analytics about two hundred and twenty million last year?” Jace scratched his chin.

  “That’s right.”

  “That’s almost exactly Research Analytics’ total revenues for the year. I downloaded their annual report,” Jace said. “It was surprisingly easy to get.”

  “That means Edgewater might be their only customer.” Kat thought back to Beecham’s vacant lot address and the hang-up phone call. Research Analytics was probably a front too. But a front for what? What was Nathan hiding, and why did he need all that money?

  Kat rose from her desk and grabbed a thick file from atop her filing cabinet. “These are copies of all the bank deposits over the last year. Almost all of the deposits are clients investing their money. No trading that I can see.”

  “Further proof no trading is going on.”

  Kat nodded. She perched on the arm of Jace’s overstuffed armchair. “Unless there’s a bank account I don’t know about.” She opened the file. “The deposits are immediately transferred out again, almost as soon as they come in. All to the same account number at the Bank of Cayman.”

  “I bet that’s Research Analytics’ account.” Jace looked up at her. “Want me to confirm?”

  “Sure. I also want to review the inter-relationships.” Kat rose and dropped the file on her desk. She walked over to the whiteboard. “It helps to see who’s related to whom.”

  She pointed at the diagram sketched out on the board. A box labeled Edgewater sat at the top. The two boxes below were marked Research Analytics and Svensson respectively. Lines marked payments connected them to Edgewater. A line marked reporting ran to the right, connecting Edgewater to a box identified as Beech
am.

  “What’s all this for?” Jace stood and held his arm as he followed her to the whiteboard.

  “To get an idea of the cash and information flows. What do they all have in common?” Kat traced her forefinger along the top of the diagram.

  Jace raised his eyebrows but didn’t say anything.

  “We know how much Edgewater paid to Research Analytics. And how much money in total they have from their annual report.” Kat tapped the document on her desk. Together with the Cayman Islands Registrar of Companies and online searches, the diagram represented all the information she could glean on the company.

  She pointed to the Research Analytics box. “Almost all the money Research Analytics receives—about two hundred and twenty million annually—goes to one non-profit organization. The World Institute. Nathan’s a member.” Lucky for her, the World Institute had a website. A website that proudly listed its donors and members.

  She drew a circle below the diagram and wrote WI inside it. She drew arrows downwards from Research Analytics. “Research Analytics is simply a conduit from Edgewater to The World Institute.”

  “That’s a fortune. If it all goes to one place, why wouldn’t the donors just pay the World Institute directly?”

  “You mean like Edgewater?” Kat tapped the board.

  Jace nodded.

  “Good question. It’s non-profit, so there’s no tax advantage to funneling it through the Caymans or any other tax haven.”

  “Research Analytics is just a front.” Jace held his arm as he returned to his chair. “Edgewater’s money ends up in WI without anyone tracing it back there.”

  “Exactly. I’m betting some donors have something to hide. Maybe they want to remain anonymous.”

  “They’re obviously covering their tracks for a reason.” Jace shifted in his chair and winced. He rubbed his injured arm.

  “It’s that sore? You should see a doctor, Jace.”