by Jeff Buick
“Detective Sam Morel from the major crimes division,” he said.
“Taylor Simons,” she said, scrutinizing his ID. “Please come in.”
“Thanks,” he said, entering the house. He went through the introductions again as Alan Bestwick appeared. “Someone from the District Attorney’s office will be here shortly. The FBI as well.” He thought it best to warn them before the doorbell rang and more warm bodies began showing up.
“Well, I suppose that’s a good thing,” Alan said, leading Morel into the living room. He and Taylor sat beside each other on one of the couches, and Morel chose a wingback. “Is this normal procedure?”
“Yes and no,” Morel said, settling into the chair. It was uncomfortable. “The DA’s office is on the front lines in consumer and corporate fraud. We secure the site and then share the information with them. They handle some of the investigation and all the prosecution. Having someone from the District Attorney’s office is normal, but the FBI isn’t.”
“Then why are they coming?” Taylor asked as the doorbell rang.
“That’s probably them,” Morel said. “I’ll let them explain, if that’s okay.”
“Fine,” Alan said. He disappeared into the hallway and returned a minute later with the two FBI agents. A woman dressed in a gray pantsuit and carrying a briefcase accompanied them. Sam Morel nodded to the woman and she returned the gesture.
The woman introduced herself to Taylor. “Julie Swimaker. I’m with the District Attorney’s office.”
Taylor shook her hand. “Detective Morel said to expect you.”
Hawkins and Abrams flashed their creds and took a seat on an empty couch. Hawkins started the conversation. “Mr. Bestwick, Ms. Simons, fraud cases such as this one would usually be handled by the San Francisco DA’s office, but the FBI is involved in this investigation because we have evidence that suggests this fraud is country wide. We have confirmation of similar scams being run in New York, Chicago, New Orleans, and we just received a call that the perpetrators were also active in Dallas. Since the crime is in more than one state, jurisdiction is federal.”
“I understand,” Alan said.
“What we need from you are the details of your involvement with NewPro,” Hawkins said, taking a small tape recorder from his pocket and placing it on the coffee table. “I’m going to tape this conversation, if that’s okay with you.”
Alan and Taylor both nodded, and Hawkins hit the record button.
“Who introduced you to NewPro, and how did you first meet?”
Alan glanced at Taylor and gave her a nod. She replied, “I met Edward Brand, the president of NewPro, when he came to my advertising agency about seven months ago, looking for a firm to handle an upcoming ad campaign. His business idea was brilliant. He had researched a number of products that had been off the shelves for a long time. Products that had household names.” She named off about fifteen of them from memory. “All of these products had one thing in common: Their manufacturer had dropped them, and let those household names get stale. The companies that held the trademark didn’t care. They had other consumables on the market that were generating enough income to satisfy their shareholders and had little desire to reintroduce an old product to a new market. In fact, a lot of the companies had let their exclusivity to the product expire. They couldn’t care less if NewPro walked in and retabled the product.”
“Edward Brand wanted your company to devise a marketing strategy to reintroduce these products,” Hawkins said.
“Yes. It would have been a substantial account. The up-front costs to our firm, just for initial design concepts, research and planning were high. I asked him for a hundred thousand-dollar retainer. He wrote the check on the spot. When it cleared the bank and the money was in our account, we did a creative presentation for him. He loved it. He wanted a few minor changes, but went with the concept as we designed it. The total cost of a nationwide advertising campaign would have been over twenty-eight million dollars. I asked for another hundred thousand-dollars so we could begin to secure print and television space. Again, the check was in my hand inside two minutes. I was impressed with how he did business.”
“How did you come to invest in his company?” Swimaker asked.
“That’s a good question,” Taylor said, scratching the top of her head. “I don’t think there was ever a defining moment. It wasn’t like he ever said, ‘Hey, why don’t you guys invest in my company’ or anything like that. There were a lot of times when Alan and I would sit around and talk about what an excellent idea Brand had. He was organized, focused and well financed. NewPro had the legal rights to at least twelve of the products I mentioned, and was in negotiations for a handful more. They had manufacturing plants in New Jersey, Pittsburgh and Seattle ready to begin production given about three months’ lead-in time.”
“Did you visit any of the manufacturing facilities?” Hawkins asked.
She turned slightly to face the two FBI men. “We did, but not until a bit later, after we decided we might want to invest in NewPro.”
“Sorry, getting ahead of the game,” Hawkins said.
Taylor forced a smile, and Alan reached over and clasped her left hand. Her emotions were kicking in, and the brave face she had put on was beginning to crack. “I think the idea of getting involved may have surfaced when he talked about his intent to take the company public a couple of months before the products were scheduled to hit the shelves. He expected the Initial Public Offering, or IPO, would raise about four hundred and eighty million dollars, with an error margin of about three percent. The prospectus was already filed, and getting registered on the New York Stock Exchange was almost a rubber stamp.”
“We looked at the prospectus very closely,” Alan interjected. “It was extremely well done. There was no reason to suspect it was false.”
Hawkins nodded. “We pulled a copy of it. It was professional. And very believable.”
Taylor continued. “Brand’s projections for the company’s stock were amazing. Sixty million common shares would hit the market, priced at eight dollars a share. The IPO would sell out in less than a month and then, if someone wanted in, they would have to pay resale prices on the shares. According to the models he was using, the share prices would double in about six to nine months.”
“Did you see the models he was using?” Hawkins asked.
Taylor nodded. “Yes. We had full access to them once we expressed an interest in buying in. At first we thought we might invest a couple of million, but as time progressed and we realized what a gold mine NewPro was sitting on, we decided to up the ante.”
“Who decided?” Julie Swimaker asked. “One of you, or were you influenced by Brand?”
Taylor swallowed. “I did. Alan was the cautious one, but I thought the opportunities NewPro presented were too good to pass on. If Brand’s company had been legit and if they had met the targets he was projecting, we could have cashed out in two years with more than twenty million dollars and full ownership in G-cubed. It was almost like winning the lottery.”
“Almost,” Sam Morel said.
“When I see something I consider to be risky, I check it out,” Taylor said. “If it falls within my boundaries of acceptable risk, I go for it.”
“We felt it was manageable,” Alan agreed.
Taylor continued, “That was when we asked to see the manufacturing facilities. Brand told us we could pick any one of the three, or all of them if we wanted. We decided on New Jersey, mostly because we thought a few days in New York would be a nice break.”
“And the facilities were believable?” Julie Swimaker asked.
“Absolutely,” Alan answered. “The building was about forty thousand square feet, with a lot of equipment. There were packaging and labeling areas, lots of conveyors to move the product, and a large loading dock to get the product onto trucks and into the stores. The facilities were impressive, but what really sold us was the guy who showed us through. He explained the equipment, even going
into how much money they had saved by buying used rather than new. I think that was one of the deciding factors for us. They were sitting on a gold mine, yet they were being very cautious about how they spent their seed money. In retrospect, we suspect the equipment was used because they leased the space with everything already in place.”
“I pushed Alan to invest heavily after we got back from New York. He had about a million-three in accessible funds, and I had about three hundred thousand. It was my idea to lever the extra money from the equity in G-cubed.”
“Your company must be in good stead for the bank to loan one hundred percent of its value. That’s unusual,” Julie Swimaker said.
“We had a very good relationship with our banker,” Alan said, then added, “unfortunately.”
“So your idea was to invest in the company before it went public, then reap the benefits of the IPO?” Julie Swimaker asked.
“Yes,” Taylor answered. “We knew there would be a lock-up period of two years from the IPO, but that didn’t worry us.”
“Lock-up period?” Sam Morel asked. “What’s that?”
“It’s one of the Blue Sky laws put in place to protect small shareholders when a firm first goes public. The large shareholders are required by law to hold their shares for two years from the IPO. That prevents them from driving up the price of a stock that’s based on a false prospectus and dumping their shares at an inflated figure right after it goes public. The two-year period gives the company time to establish its true value in the marketplace.”
Alan added, “It was the two-year lock-up that influenced our decision to invest. Brand couldn’t sell his shares for two years, and that gave us confidence in the company.”
“But NewPro never went public,” Taylor said. “They just disappeared in the middle of the night.”
“This is sure starting to look like a shell game,” Morel said, shaking his head.
“What?” Taylor said. “What’s a shell game?”
“It’s a con. A guy sets up a board in a back alley or a street corner—wherever—and puts three half shells on it. You know, walnut shells, something like that. Then he puts something under one of the shells. He moves them around and you have to guess which shell it’s under. But he always makes one move that you don’t see. Your chances of picking the correct shell are a whole lot less than one in three. They’re almost zero.”
“What’s going to happen now?” Alan asked dejectedly. “What can we expect from your investigation?”
Hawkins answered, “We’ll be working hand-in-hand with Ms. Swimaker and the rest of the San Francisco DA’s office to try to track down Edward Brand and his associates. We’ll run a complete forensic audit on the company, concentrating as much as we can on hard evidence, like the information they gave to the SEC on their stock exchange application. We’ll coordinate the investigation with the district offices in New York and the other centers we think are involved in this scam. Right now, Mr. Bestwick, I can’t give you any assurances or guarantees. But we’ll try.”
“Thanks,” Taylor said. She was verging on tears. “Anything you can do is appreciated.”
Taylor and Alan shook hands with the FBI agents and Julie Swimaker as they left the house. Sam Morel lingered for a minute after the others had departed.
“The FBI is going to take over the investigation,” he said. “But that doesn’t mean I can’t stay up to date with what they have and keep you in the loop. Sometimes these guys tend to hold things a little close to their chest. If it’s okay with you, I’ll call and let you know what they’ve got.”
Taylor touched him on the arm. “Thanks, Detective Morel. That would be helpful.”
“Not a problem,” he said. He grasped her hand for a second, then left.
Alan closed the door and caught his wife as she fell into his arms, the tears bursting forth. Her body was wracked with convulsions as she cried. Her knees collapsed, and her feet slipped out from under her on the hardwood. Alan clutched her tight and slowly lowered himself to the ground, leaning against the front door for support. They lay on the floor in each other’s arms for ten minutes, silent and unmoving.
CHAPTER FOUR
Detective Sam Morel glanced back at the old Victorian house. The paint was new, the wedding-cake trim impeccable and the small garden well tended. By all appearances, a beautiful home where the cares of the world refused to rest. Appearances could be so deceiving.
Sam Morel was no fool. He knew exactly what a two-year lock-up was, and he was well versed in the Blue Sky laws, which had been instituted after the turn of the century and brought into the limelight during the Depression. By asking the question in front of the FBI agents, he had relegated himself to a nonentity in their eyes. That was just fine. It was so much easier to operate under the radar. He was now positioned to work hand-in-hand with the FBI, getting access to all the current information in their files while their expectations of what he could produce would be minimal.
He was also well versed with a man named Robin Malory and his company, Morgan Fay. Robin Malory was a Fortune 100 castoff. He spent twenty-eight years of his life scratching his way to the top, only to receive the kiss-off when he was finally in line to be the next CEO. He left the firm and started Morgan Fay, a company that specialized in revitalizing old brand names and bringing them back to market. Morgan Fay had received SEC approval and had gone public. The stock price had shot upward, and for the first seventeen months had performed admirably. But the truth behind the company’s success was far different.
The truth was a four hundred million–dollar scam. Morgan Fay was being manipulated by a management company called Avalon Partners, and creative bookkeeping was the order of the day. Not to the scale of Enron or WorldCom, but four hundred million was hardly small potatoes. Sam Morel could see a lot of differences between the Morgan Fay case and NewPro, but he suspected the brainchild of Edward Brand’s company was none other than Morgan Fay. And that gave him an inside track to how Edward Brand and his accomplices thought. Knowing how a criminal thinks was important.
Morgan Fay was a company that existed on testosterone and guile. When Robin Malory said something was possible, or plausible, people assumed it was. It wasn’t until the forensic auditors had marched through the front doors of Avalon Partners that the scope of what had happened became apparent. If Sam Morel was correct in his thinking, Edward Brand was another Robin Malory. Christ, the man had taken on an alias that mocked the very scam he was perpetrating. Edward Brand, revitalizing brand name products. The guy had balls.
Morel pulled into the parking lot off Vallejo Street and hoofed it into the Central District station. He took the elevator to the fourth floor and picked up his mail on the way by the reception desk. His office had a window, but the view was nothing spectacular, another building and a bit of the street. It provided enough light to keep his plants alive. That was something he cared about. His personal life was a mess, his ex-wife in rehab for her drinking, his daughter three months into a trial separation with her abusive husband and his son sitting on a beach somewhere in India wasting his life smoking pot every day. At least he had his plants.
He checked the soil, and his finger came away slightly damp. They’d be good over the weekend, but Monday would be watering day. Morel dropped into his chair and smoothed his hands over his scalp, feeling his thick gray hair on his fingertips. He was a dinosaur, one who believed in holding doors open for women and paying for dinner and a movie. But he was a staunch supporter of equal pay scales for the sexes. He was a technological dichotomy as well, and he knew it. He understood computers and was well versed in the newest forensic methods of hunting a criminal by following even the faintest electronic trail. But he was the first cop to call for a CSU team to physically search the crime scene for tangible clues. His contact list on his e-mail server was full, but he carried an address book with the same numbers written in by hand. It was as if he couldn’t quite make the break from paper to bytes. Whatever it was that drove him,
he got results.
Corporate fraud in San Francisco was handled mostly by the District Attorney’s office, but there was always a need for an investigative presence outside cyberspace. When Assistant DAs, like Julie Swimaker, showed up at a crime scene, they always looked for Sam Morel. He was their contact to SFPD, the one who secured the area and ordered the crime scene unit. He was the cop; they were the law. Julie Swimaker and the other Assistant DAs knew Sam Morel, and they knew he was no idiot. Morel could only imagine what Julie was thinking when he asked the question about the Blue Sky laws. That didn’t matter. What did matter was that the FBI agents working the case thought he was incompetent. That meant that they would share information freely, under the assumption that he wouldn’t have a clue what to do with it. That worked just fine for him.
Morel checked his Day-timer for a number, then picked up the phone and dialed. A man’s voice answered. “Billy, it’s Sam, how are things?”
“Fine. What can I do for you?” The voice was guarded, the kind of voice from a man who knows he’s talking to a cop, doesn’t want to, but has no option.
“There was an operation that shut down three days ago. My guess would be fifty to sixty computers, servers, printers, copy machines, desks and all the stuff that goes with a complete office. I want you to watch for it, call me if you see it come through the back door somewhere.”
“That’s easy,” Billy said, relieved that Morel’s request was generic and not specific to the hot merchandise he traded daily. “I’ll keep my eyes open.”
“Thanks. You get something that might be it, call me right away.”
“Done.”
Morel hung up and searched out another number. The FBI was smart about some things, but they didn’t always see the whole picture. That picture included getting rid of the equipment that had been used to keep the office up and running for the past seven or eight months. Putting it into storage was dangerous. It kept all the equipment together, and with that many computers and servers, a forensic audit was bound to turn up something. Dumping it in a landfill was akin to lighting a neon sign asking to be investigated and arrested. That left letting it filter out to the second-hand market. Not all at once, but a bit at a time. He didn’t have to explain that to Billy; the fence knew how these things worked. They would release them in a few batches; a handful of computers here, a couple of servers and printers there. Nothing that would raise too many eyebrows. The market for resale computers and office supplies was an interesting one. But it was who they would release them to that was the key. The papers were full of used computer equipment, but no self-respecting thief would ever leave a phone number where the police could simply call him, set up a meeting, then bust him with the gear. They relied on fences to middle the merchandise, and Sam Morel knew those fences. Billy was one in the know, and Sam relied on Billy a lot. In return, Sam made sure no one ever touched his source. Tit for tat. Lots of rubbing each other’s back going on. That was how things worked on the street. And that was the part of the equation the FBI often missed. They stuck out like a fat man in a marathon. They didn’t like to work the sordid little details in case they got their suits dirty. It wasn’t that Morel didn’t like the feds—he was indifferent.
