The silence just reminded her of Jace. He could be hurt, or worse. What if she never saw him again? The thought washed over her like rain.
Every inch of the house had so much of Jace in it. Especially the carved woodwork and wainscoting he had spent hours restoring, now bearing the scars of fire damage. A few strands of the ruined rug were all that remained, scattered across the floorboards now warped from water damage.
Kat swallowed the lump in her throat. Arguing with Jace about his World Institute exposé seemed so pointless now.
She dropped the mail on the bird’s eye maple side table and headed down the hall for the kitchen. Worrying wouldn’t help. She needed to do something. But what? Reporting Jace missing hadn’t spurred the RCMP into action, and she couldn’t afford to wait.
The kitchen was also undisturbed. No one had been here, including Jace. The same dishes sat in the sink, and the newspaper still opened to where Jace had left it. The Sentinel. Now the newspaper stirred feelings of anger rather than indifference.
Her sense of urgency returned when she remembered her missing laptop. If Nathan and Victoria hadn’t dissected its contents yet, they would soon. She’d better change her passwords and retrieve her data from her remote data storage before Nathan or Victoria figured that out. No doubt they’d destroy all her files.
Kat bounded upstairs to the study and powered on the desktop computer. While she waited, she called Marcus, the building super, and left a message about her broken office door.
Finally the computer booted up and she logged in. She breathed a sigh of relief and quickly changed her password. She clicked on her Edgewater file, noting the last access date was early yesterday evening, before she went to bed. Her files were untouched and safe, at least for now. She selected all of her laptop files and copied them onto the desktop computer, as well as to her portable hard drive.
As she waited for the files to copy, she realized she needed a computer at the office, since both hers and Harry’s were gone. She grabbed Jace’s laptop from the desk along with the portable hard drive and shoved both in her bag. Now she could finish and pull off the Edgewater report for Zachary. She checked her watch. Exactly forty minutes until her meeting with Zachary.
Thirty minutes later Kat was back at her office. The door was still broken, so she jotted a note for Marcus, hoping he’d just go ahead and fix it. She really didn’t feel like speaking to him in person right now. She returned Harry’s key to his desk drawer.
In a flash she realized what else was missing. Harry had kept a key behind his kitchen calendar. It was the key to the metal strongbox in Harry’s second drawer. Both the key and the box were gone. Harry was too thrifty to pay the bank fees for a safety deposit box, preferring to keep important documents in the metal strong box. The box contained his passport, will, and legal documents. It also contained his house deed.
Harry’s second drawer had been open when they reviewed his checkbook. She was certain the box had been inside.
Kat’s stomach dropped at the realization.
Harry could only retrieve the box if someone brought him to the office. That meant Hillary had been here with him.
Then there were the realtor’s comments—that the house belonged to Hillary, not Harry. A growing sense of dread enveloped her. She’d better talk to a lawyer. Harry needed protection.
Kat booted up Jace’s laptop and called Harry’s cell phone while she waited. It went straight to voicemail. Either powered off or a dead battery. Kat’s sense of unease grew. It had been close to twenty-four hours since Harry and Hillary had left the resort. Too long. Hillary would tire of Harry within hours. Where were they?
Kat copied her Edgewater files from the portable hard drive onto the laptop. That’s when she saw it. Buried in her Edgewater investigation files was a document that wasn’t hers.
Her heart skipped a beat as she studied the file. The file was updated last night, after midnight. That was after she went to bed, after Jace went next door. She held her breath and clicked it open.
It was Jace’s real estate story, the one that was pulled from the Sentinel just before press time:
Global Financial Implicated in Real Estate Fraud
Global Financial, a holding company, used fraudulent real estate appraisals that overstated the value of dozens of downtown Vancouver commercial properties. The holding company purchased properties, which were then flipped several times to numerous straw buyers at ever-increasing prices. As the buyers were all related, these prices were artificially inflated.
Once the property values had been substantially inflated, the accused obtained large mortgages against the properties and then subsequently defaulted on the mortgage payments. The extent of the fraud is still being determined, but is estimated at more than four hundred million dollars. No one at Global Financial could be reached for comment. The company’s address of record is 422 Cedar Street, but a complex web of holding companies makes it difficult to trace the ultimate ownership.
Kat almost fell off her chair. 422 Cedar Street was the address of the vacant lot she had visited earlier. The same address Nathan Barron used for Edgewater’s auditors, and where Fredrick Svensson’s payments were sent. That connected Jace’s real estate fraud to Edgewater and Research Analytics, which was directly connected to the World Institute. No wonder Jace’s story was crushed.
Had Jace made the connection too? Unlike her, he hadn’t visited the vacant lot. She doubted he would have paid attention to the address, knowing she had already checked it out.
She shivered. World Institute membership wasn’t the only thing Gordon Pinslett and Nathan had in common.
It might explain why Jace was specifically targeted. There was just one problem. The only people who knew Jace was at the resort were Roger Landers, Hillary, and Harry. Hillary was too self-absorbed to worry about, and Harry wasn’t an issue.
That left Roger Landers. In just two days, Jace had emerged as new competition on the story Landers had been writing about for years. At least that’s how it probably appeared in Landers’s eyes.
Knowing Jace, he likely asked Landers, a fellow journalist, for feedback on his mortgage-fraud story once he uncovered the Beecham connection. Had Landers betrayed Jace? Why hadn’t Jace come to her?
Kat shivered and drew a sweater around her shoulders. It sounded farfetched, but was it?
Then there was the issue of Fredrick Svensson, formerly a World Institute member, also tied to the same address. Someone had silenced Svensson. Would Jace be silenced too?
Chapter 42
“Where the hell have you been?” Zachary paced back and forth in Kat’s office, his face flushed with anger. “I’ve been trying to reach you for two days. First you tell me I’m financially ruined, then you don’t return my calls. Do you have any idea what I’ve been going through?”
Zachary faced billion-dollar losses, but Kat faced a hell of her own. Not knowing where Jace was, or how to even find him. It was all her fault. None of this would have happened if she hadn’t asked for Jace’s help.
“I’m sorry, Zachary. I would have called you, but I couldn’t.” Kat told him everything, starting with Research Analytics and ending with Nathan and Victoria.
“You couldn’t pick up a phone?”
“I tried but—” Didn’t he care that his father and ex-wife were having an affair?
“I have no idea where you are with your investigation, what’s going on at Edgewater—whether there’s enough money to last another day or another hour. You’ve left me paralyzed.”
“Well, I could have been killed, Zachary. And Jace is still missing. Fire me if you want—I don’t care anymore.” Kat broke into a sweat. Why had she expected him to understand in the first place? Edgewater and the World Institute was way more than she bargained for. As a matter of fact, she should be mad at Zachary. If he weren’t so oblivious to his environment, none of this would have happened in the first place.
“Fine. Tell me what to do and I’ll do it. But don�
��t keep me out of the loop.”
Hadn’t he listened to anything she had just said? How on earth was she supposed to call him when she was drugged and dumped on a bench without money or a phone to call on?
“The short answer is—you’re broke, Zachary. You’ve got to halt all payments and redemptions, and freeze the bank accounts if you can.”
“How much time have I got?”
“None. You need to stop things immediately.” Kat outlined Nathan’s faked results, starting with the doctored client statements and their overstated investment returns, then the siphoning of funds to Research Analytics and its ties to the shadowy World Institute.
“How can Nathan get away with this?” Zachary leaned forward and pounded the desk. “Why didn’t the auditors notice?”
“I mentioned this the last time we talked—those auditors actually don’t exist. Beecham is a company Nathan made up, and Research Analytics appears to be a front for the World Institute. Nathan’s been taking money out of client accounts and funneling it through Research Analytics. He hides the client transfers by doctoring their investment statements. Don’t you ever read any of the administrative stuff? You should.”
Zachary sighed. “I know. But I can’t be everywhere. Besides, the deal was that I concentrated on the trading while Nathan managed the back office. At least I was making stellar returns with my proprietary trading model.”
Kat sucked in her breath. “About that trading model of yours—it doesn’t quite work the way you think.” Now he’d really want to fire her.
“What are you talking about?”
“I recreated all your trades for the last two years. It’s not the twelve percent average return you advertise for your hedge fund. It’s much lower—a loss, actually.”
“That’s ridiculous. I don’t believe you.”
Kat passed her analysis to Zachary. “Over the last two years, you’ve actually lost five percent. But there’s more. None of your trades were processed.” She paused, waiting for Zachary’s reaction. “Not one. Nathan didn’t put them through.”
Zachary rose, angry. “That’s insane. I’d have to be an idiot not to notice that. How could all this be going on under my nose?”
The fund performance seemed to bother Zachary the most, even more than hearing he was broke or that Nathan and Victoria were romantically involved. Kat couldn’t believe Zachary was so unaware of his father’s deceit, but his surprise appeared genuine.
She handed Zachary a thick file of bank statements. “See for yourself. The only transactions you’ll find are investments into and out of the funds by clients. Nothing else. No records of buying or selling dollars, yen, pounds, or any other currency.”
Zachary opened the file and flipped through it. His shoulders slumped and he didn’t say anything. He looked defeated. “This can’t be happening.”
“It’s a Ponzi scheme, Zachary. There’s no trading. As a matter of fact, there’s not much of anything going on, except Nathan siphoning off all the money. No wonder everything ran smoothly when he was away on his frequent trips. It’s because no real trades were taking place.”
Zachary Barron’s face reddened. “A Ponzi scheme? That’s impossible.”
“I’m afraid it’s true.” What seemed impossible was Zachary’s unawareness of the massive fraud operating under his eyes. “Nathan has been withdrawing money from client accounts and paying it to Research Analytics. In fact, he’s been doing it for years.”
She watched Zachary for a reaction. “As long as there are lots of new investors, the scheme works. Nathan simply pays the redeeming investors with new investor money. The scheme works fine if more money comes in than goes out. And it did work until the recession hit. Suddenly investors lost their jobs, had to cover loans or losses in other investments. They needed cash and were forced to redeem even their best-performing investments. Like Edgewater’s hedge fund.”
“How could this happen to me?” Zachary stood in front of the window, his back to Kat.
“You had no reason to question anything. No one does when things are going well. Nathan’s doctored statements gave clients a twelve percent return, so no one ever redeemed their investments. Why would they? The returns were better than anywhere else. That is, until the financial crisis. Then a lot of your investors faced a cash crunch of their own. That caused them to redeem even their high-performing investments. Like Edgewater. That’s when the bank balance dropped.”
“It can’t all be faked. Surely you’ve missed something—a bank account, some accounting records. Prove it to me.”
Kat pulled out the cut-and-pasted client statements. “Here are the client statements. Nathan’s been operating this fraud for at least ten years—probably since before you joined the firm. As long as new investor money was greater than the amounts redeemed, everything worked.” Kat swallowed. She was telling the world’s number one hedge fund manager that everything about his success was a lie.
“I don’t get it. What about all my currency trades? I’m entering them myself—right on the trading terminals.”
“It’s all a sham, Zachary. An expensive, elaborate fraud. Those terminals? They’re not connected to an exchange. It’s a sophisticated software program running on Edgewater’s local-area network. Money’s no object when you’re covering up a billion-dollar fraud.”
Kat had found the software on the trading terminals after a search of Edgewater’s computers. Her suspicions were further confirmed when she found no vendor for the custom-developed software program.
“You’re telling me it’s all a shell game?” Zachary slammed the report down on Kat’s desk and strode to the doorway. He turned to face Kat. “I just don’t know what to believe. Either you’re completely incompetent, or I’m the biggest idiot in the world.”
“I’m sorry, Zachary. I’ve checked and double-checked. I wish I was wrong.” Kat winced as she handed Zachary the Research Analytics file. “The money goes to Research Analytics first. Then it’s almost immediately transferred to the World Institute.”
“You’re telling me that Edgewater is part of a global conspiracy?” Zachary pursed his lips together like he was going to explode. But he didn’t.
“It appears that way. I also think anyone could fall for this. Stellar returns mean happy investors. Happy investors don’t ask questions or redeem their investments. As long as new money keeps coming in, Nathan perpetuates his fraud.”
Zachary dropped back into the chair opposite Kat. He said nothing, just stared vacantly ahead. Beads of sweat formed on his forehead.
“There is a silver lining,” Kat said. “Your divorce settlement was based on fraudulent representation. We might be able to get it overturned.”
Zachary pulled a handkerchief from his pocket and wiped his brow. “We’ll worry about that later. Where’s Edgewater’s money right now?”
“The money’s in the Caymans, at least if it’s still in the World Institute coffers. Whether it’s recoverable is another story. The bank secrecy laws in the Caymans make it difficult to trace.”
“Why would the World Institute even want Nathan as a member?” Zachary rose and walked to the window. “It doesn’t make sense.”
“Look at the money he brings in,” Kat said. “He gets to rub shoulders with the world’s most powerful people.”
Zachary scoffed. “Nathan’s not in their league. He’s only rich because of me. Where’s the proof of all this?”
Zachary still didn’t get it. Kat grabbed a stack of papers off the printer and handed it to Zachary. It contained a summary of her findings, but unfortunately not the documents retrieved from Nathan’s hotel room. “There was more, but it’s still at Hideaway Bay.” She described what she had read in the World Institute agenda and last year’s meeting minutes. “Jace is missing too,” she reminded him.
Zachary said nothing as he flipped page after page of the report. His surprise seemed genuine. Ten minutes later, he finally spoke.
“You actually followed Nathan?�
�� Zachary’s eyes widened.
“Not quite. I just followed the money—literally. It led me to him and the World Institute. Since the conference was nearby, it was only natural that I should attend.”
“Only natural.” Zachary raised his eyebrows. “You sure don’t mess around. What happens now?”
“We need Nathan’s documents—the World Institute agenda, minutes, and annual report. It’s the audit trail we need to prove Nathan’s fraud. Not only that—we need to prove you weren’t involved. Without those documents, people will assume you were part of it.” Kat didn’t tell Zachary how she got the documents. Sneaking around Nathan’s hotel room wasn’t exactly something she was proud of.
“I don’t even know where to start.” He rested his elbows on her desk and rested his head in his hands.
“Don’t worry about that part—I’ll figure it out.” Maybe Jace had somehow escaped with the documents? She felt bad for Zachary. His whole world and sense of worth was crushed. She saw the defeat in his eyes. “But there is something you can help me with. Jace is missing, and I think Nathan is somehow involved.” She hesitated. Could she trust Zachary? She had no other choice. “I also suspect Nathan might be tied to Fredrick Svensson’s murder.”
Zachary nodded. “If what you say is true, he would silence anyone about to expose him.”
Nathan’s world was so ruthless that mere differences of opinion could lead to murder. Svensson’s death seemed to lend credence to that theory.
Kat mouse-clicked on a podcast and turned the laptop screen around so it faced Zachary. In the clip, Svensson discussed currency reform. He was speaking at a European economic summit, just days before he left Sweden for Canada. It was his last public speech, ten days before meeting his demise at Hideaway Bay.
Zachary waved the screen away. “I’m familiar with Svensson. Did you see the story in the Herald? His note said he backtracked on his one world currency theory. Finally came to his senses.”
Game Theory--A Katerina Carter Fraud Legal Thriller Page 18
