The Takeover

by Stephen W. Frey

  The Civil War ended and the Federalists disbanded. But seven members of the society remained active. Secretly, because they believed they would be more effective acting anonymously, these seven men formed a new society. They had already learned a tremendous lesson: men acting in concert, with purpose and dedication and with a common goal, could influence the masses. This small group would carry on where the Federalists had left off and over the years would come to be known as the Sevens.

  In 1893, Dr. Franklin Pearse died in Boston after a long battle against cancer. He died without heirs. His two children had died of scarlet fever in their teens, and his wife had succumbed to pneumonia the winter before his own death. During his life he had managed to save two hundred fifty thousand dollars, which at that time was a substantial amount of money. Having no heirs, Dr. Pearse donated his savings to his alma mater, Harvard University.

  Along with the money was a note admitting that he was a Seven. The money, at that time the largest individual donation in the school’s history, was dedicated to a scholarship fund for minorities, at Dr. Pearse’s request.

  On the night of Dr. Pearse’s death, at exactly seven minutes before midnight, the bell in the tower of the university chapel tolled seven times. Harvard had recognized the Sevens.

  The remaining six members of the society tapped a new member, a third-year student active in school politics. The older six members were rejuvenated by the newest Seven. The younger man immediately realized the opportunity he had before him.

  The older men were all prominent individuals, several with significant Wall Street connections. The young student convinced the older men to use these connections to raise money secretly for the Sevens, realizing that Wall Street’s Harvard alumni would revel in the opportunity to contribute to a secret society that could manipulate policy at their alma mater. And the youngest member increased the Sevens’ visibility at the university simply by painting the numeral seven in white paint on the ivied brick buildings.

  At the graduation ceremony of 1896, the Sevens made their first official donation to Harvard: one million dollars and seven cents, a huge amount of money at that time. The crowd was awestruck, and the newspapers covering the event barely mentioned that the keynote speaker was the United States secretary of state. Instead, the papers described in detail how an envelope had floated down from a fourth-story window of Grant Hall in the middle of the secretary’s address, and how it was attached to a string in such a way that it dangled before the secretary as he spoke to the assembly of parents, students, and university officials from the porch of the building. The speech was interrupted while officials cut down the envelope, opened it, and announced to the crowd the contents. The crowd cheered for fifteen minutes, and the six older men and the graduating student watched with contained satisfaction.

  After World War II, the Sevens became more politically active, allying themselves permanently with conservative ideology. They maintained the tradition of spectacular monetary gifts to the university, the amount always including a seven. But they focused their efforts primarily on influencing governors and Congressmen unfriendly to mainstream Republican political views.

  A Seven was a Seven for life—there had been only forty-nine in the history of the society. At the initiation ceremony the man was branded on the inside of his upper forearm with the image of a tiny seven, truly legible only with the aid of a magnifying glass. Also at the ceremony a Seven took a blood oath of secrecy to which he committed himself for life and an oath to support all other Sevens in any way possible. Members were identified at death with a “7” at the end of their New York Times obituary and by the addition of their name to the others before them on a plain, unidentified plaque in the foyer of the Harvard Chapel, the importance of which anyone even remotely connected with Harvard knew.

  The society never numbered more than seven members. When a member died, he was replaced within days by the top candidate from a long list of potential members who were constantly reviewed. New members of the Sevens were no longer tapped from the student body, as had been the tradition until 1945. The operations in which the Sevens had become engaged were too sensitive to be entrusted to a young person still unsure of his political persuasion. New members were individuals already in senior positions of large corporations, prominent law firms, government agencies, or Wall Street’s most elite investment houses. They were worth huge amounts of money, were devoutly conservative in their political views, and were graduates of Harvard University. Those were the requirements.

  * * *

  —

  Granville Winthrop scanned the room as he drew on the large cigar. Turner Prescott, managing partner of Cleveland, Miller & Prescott; Devon Chambers, former chairman of E. I. DuPont & de Nemours & Company; Wallace Boreman, chairman of the National Southern Bank; William Rutherford, former head of all European operations for the CIA; Wendell Smith, president of the Federal Reserve Bank of New York; and Bailey Henderson, president and CEO of the Financial Chronicle. Powerful men. All of them.

  They were a homogeneous group. Caucasian, wealthy, and conservative, each had a wife and children. None was divorced, though several had mistresses. Each man belonged to an extensive list of civic groups and charities. And each hailed from a privileged background. Except for Rutherford.

  Rutherford had attended Harvard on what amounted to a football scholarship (Ivy League schools supposedly did not give athletic scholarships but instead called this money financial aid to athletes) because he was not skilled enough to attend a football powerhouse such as Alabama or Notre Dame, and his family was not wealthy enough to afford Harvard. After a storied career as an all-Ivy League linebacker, Rutherford entered the army, where he rose quickly to the rank of lieutenant colonel. He was transferred to the CIA and four years later was promoted to head of all CIA operations for Europe. Rutherford spoke Spanish, Russian, French, and German fluently. He was skilled in the martial arts and versed in all intelligence-gathering technologies. He was steel tough, and the taking of another man’s life did not bother him in the least.

  In 1981 Richard Seale, acting administrator of the Sevens, had died in the Air Florida crash at the Fourteenth Street Bridge in Washington, D.C. The Sevens contacted Rutherford, who immediately accepted their generous request to join the society. His only job in life would be to run the Sevens’ day-to-day activities, to assist Granville Winthrop, the number one. And he would earn more money in one year than he had in his entire army and CIA careers combined. Rutherford resigned from the CIA, effective at once, to join the Sevens and brought with him the services of Phoenix Grey, a man who knew more about killing than God or Satan.

  The Sevens were meeting this evening at Prescott’s twenty-five-acre estate in the Worthington Valley, a lush stretch of Thoroughbred horse country twenty miles north of Baltimore. They were meeting at Prescott’s house, both because his wife remained in Martha’s Vineyard so they could meet undisturbed and because Prescott had to be back in the courtroom at nine the next morning in downtown Baltimore.

  “Gentlemen, let us bring the meeting to order.” Winthrop’s deep voice was naturally commanding. The room fell silent. “I thought it important that we meet one last time before the Pleiade Project enters the public arena.” Winthrop paused. “I trust you have all heard of Chairman Filipelli’s terrible accident Saturday in Montana.”

  The other six men nodded and snapped their fingers. Initially they had not all agreed that the assassination of Carter Filipelli was the correct course of action to follow. But as it became apparent that the President and Filipelli were serious about increasing the estate tax rate to 90 percent, the men agreed that the Pleiade Project must be successful, at any cost. If Filipelli had to die, so be it. He and the President were trying to steal what they and their families had worked for generations to build.

  “Good. Devon, please give us an update on the takeover of Penn-Mar Chemicals.”

  Chambers drew
in a long, labored breath. The malignant cancer in his lungs was growing progressively worse each day. Of the men in the room, only Winthrop and Rutherford knew how truly bad the cancer had become. Rutherford, at Winthrop’s direction, had ordered Phoenix Grey to break into the office of Chambers’ doctor to make copies of Chambers’ file. Chambers would be dead by October. That was what the file said. Even Chambers did not know how little time he had. The doctor had been unwilling to tell him yet.

  Chambers began. “We will announce our public offer to purchase on Wednesday. It will be in the Wall Street Journal, the business section of the New York Times, and, of course, the Financial Chronicle.” Chambers nodded at Bailey Henderson. “We will begin the tender offer at seventy-five dollars a share.”

  “Do you think DuPont or Hoechst will make a counteroffer once we announce our tender?” Prescott gazed over his half-lens glasses across the antique table. He looked crisp in the matching madras bow tie and suspenders.

  Chambers turned stiffly toward Prescott. Even this slight movement was terribly painful. “I don’t know, Turner. I’ve contacted my old friends at DuPont. Their strategic-planning people have looked at Penn-Mar several times over the past twenty years. It dovetails awfully well into their operations. They aren’t currently looking at Penn-Mar. But if an offer was to surface, they could easily jump into the game.” He paused to breathe. “They have three billion dollars of cash on the balance sheet and, with a double-A long-term debt rating, plenty of capacity to borrow on top of that. I’d say it’s a pretty ‘fair bet that they will look very hard at topping our offer at seventy-five. Of course, a combination of DuPont and Penn-Mar would raise serious antitrust objections from the Department of Justice. As far as Hoechst goes, they’re a wild card. They may not have the ability to raise money as fast as DuPont. And once we start our offer, they would have only twenty days to react.”

  Winthrop began to speak.

  “There’s one more thing.” Chambers interrupted him. “I wanted to bring this to everyone’s attention. When I was at NASO at the meeting with Barksdale, Prausch, and Falcon, Falcon mentioned the fact that West and Case had died under suspicious circumstances.”

  The rest of the men glanced at Winthrop. They were all leery of Falcon’s involvement, but they were more leery of Winthrop.

  “So what?” Winthrop was defiant.

  “I think he may try to find out more about these unfortunate accidents.”

  “Let him.”

  “But…”

  Winthrop exhaled a large cloud of smoke at Chambers, who began to gasp for breath immediately. “You keep up your end of the bargain, little man. That’s what I’m worried about.”

  Chambers nodded and reached for the green pills in his coat pocket. His face turned crimson as he held the cough in. He could not show weakness at this point.

  “What about the financing, Wallace?” Winthrop pointed at Boreman, who was stuffing a ham sandwich into his mouth.

  Boreman broke into a sheepish grin. “Excuse me. Today has been a long day. I got in this morning at five-thirty New York time from Japan. This is the first thing I’ve had to eat since a piece of crap omelet I forced down while on the plane.” Boreman wiped his mouth with a cloth napkin. “The financing is basically in place. The equity and the junk bonds are ready to go. The bank debt too. There are just a few more details to work out with a couple of the Tokyo banks. Earlier this evening we received commitments from three American banks, three French banks, and two Japanese banks for three billion dollars apiece. That is another twenty-four billion dollars of senior bank debt along with four billion from NASO. As I said, there are just a few more things to iron out with the Japanese. Anyway, the transaction now has a total of thirty-eight billion dollars of financing. With that amount of money we could go up to almost ninety dollars a share if we had to. And we still haven’t heard from two other banks, Credit Suisse and Credit Lyonnais.” Boreman paused. “We had to give away some equity warrants to get the banks to commit so fast, but what the hell, after Turner is finished in the courtroom, Penn-Mar’s equity isn’t going to be worth a nickel anyway.” Boreman waved what was left of the sandwich in Winthrop’s direction. “I have to hand it to Granville on this one. Falcon did a tremendous job convincing these people that this was a strong transaction.” Boreman did not want to make the same mistake Chambers just had.

  Winthrop nodded approvingly as he exhaled cigar smoke at Chambers again. The others knew better than to complain about the thick smoke. Winthrop was not happy. He was unaccustomed to driving himself anywhere—his chauffeur usually took care of this detail but couldn’t tonight because of the need for ultimate secrecy—and he had become lost in the rental car on the way from Baltimore’s Amtrak station to Prescott’s country home.

  “Could we review once again what all this will do to NASO’s financial position?” It was Bailey Henderson’s turn to question Boreman.

  “Certainly.” Boreman took another bite from the sandwich. “Currently, NASO has approximately 15.2 billion dollars of equity and subordinated debt capital. NASO will commit thirteen billion to the Penn-Mar transaction, which, after Turner makes public the information about Penn-Mar’s massive environmental problems, will become worthless overnight. Let me remind all of you that NASO also has another six billion of loans to real estate partnerships controlled by the Sevens. NASO will announce that they are worthless only hours after Turner lets loose his bombshell regarding Penn-Mar in Baltimore federal court. That’s nineteen billion dollars of bad loans and lost investments announced in a few hours. The bank’s capital will be erased in one day, and NASO will disintegrate. People all over the world will be screaming for their money, and the bank won’t be able to give them a dime. We’ll request emergency aid from the Federal Reserve, and it won’t react immediately.” Boreman nodded at Smith, who smiled broadly. “Wendell is now the de facto chairman, and he’ll hesitate sending NASO any capital. That hesitation will send the markets from panic to meltdown. And of course Bailey over there will be reporting all of this—”

  “And exaggerating the hell out of everything,” Henderson cut in. “My reporter will make it clear that banks that are secured lenders to companies with environmental liabilities can be held liable for the environmental damage—and that Penn-Mar’s environmental liabilities could run into the hundreds of billions. That ought to make NASO’s depositors feel even better. Depositors at the other banks in the deal too.”

  Winthrop could barely suppress his excitement. They were drilled perfectly. They were a team. Each one knew his assignment. It was like clockwork, and repetition was the key. There was no substitute for repetition.

  Henderson continued. “The next day, the day after we report NASO’s destruction, the Financial Chronicle will report that the investment firm that manages the President’s money, Lodestar Investment Management, entered into some questionable purchases of Penn-Mar stock just prior to the takeover by Veens & Company. Effectively trading on the inside. The story will be written so that the reader will infer that the President influenced Lodestar management into making the purchases because he had inside information. Has the memo been loaded onto the computer at Lodestar yet?”

  Again Rutherford nodded.

  “Bottom line—in the space of twenty-four hours, gentlemen,” Winthrop said, “the President will be ruined. The financial markets will be in chaos and the economy will be in disarray. And the President will be fighting insider-trading charges. As a result, our candidate, Mr. Whitman, will win the Presidential election just a few weeks later, and then we’ll all feel a lot better about the country’s future and our own net worth.” Winthrop snuffed out what was left of his cigar in a crystal ashtray on the table. “What about our friends here, Rutherford?” Winthrop pointed at Boreman and Chambers.

  “It’s all set up,” Rutherford said. “The world will think Wallace Boreman couldn’t handle the fact that NASO went belly-up, so he
committed suicide by driving off a cliff. The car will explode when it hits the bottom of the ravine and the body will be burned beyond recognition, but the license tag will match Boreman’s registration. It’s the body that will be someone else’s. With our three-billion-dollar cash hoard, we’ll set him up for life. It’ll be sort of like the witness protection program, only Wallace will be living like a king. The ranch in Wyoming has already been purchased.”

  Winthrop knew this, but he wanted the others to hear it.

  “As for Devon,” Rutherford continued, “I don’t think he will have a problem. Turner is certain that no legal claims can be filed against him. There will probably be fraudulent conveyance claims filed by the existing creditors against Penn-Mar, but nothing personal against Devon. He may have to go to court to give testimony, and then again he may not.” Rutherford stared at Chambers.

  Chambers glanced at Rutherford. So Rutherford knew about the cancer. Bastard. But intelligence was his business. That was why they had brought him on board when Seale died in the airplane crash.

  Winthrop lighted another cigar and turned toward Prescott. “What about Veens & Company? Are you certain that trail is covered?”

  “The day we win the takeover of Penn-Mar, Veens & Company will be merged into Penn-Mar, and Penn-Mar will be the surviving entity. All records of Veens will be erased.”

  “And Falcon?” Bailey Henderson leaned forward. “What exactly will happen to Falcon?”

  Rutherford coughed. The smoke from Winthrop’s cigar had enveloped the room. “We have arranged for Andrew Falcon to be found guilty of insider trading. Last Wednesday, Mr. Falcon purchased thirty thousand dollars worth of Penn-Mar shares, though of course he did not know about it. They’ll send him to prison. A very tough prison. He’ll be killed by another inmate.”