by Joe Nobody
While the destruction of the Houston Medical Center hadn’t been uplifting news for the markets, the event had raised a mere speed bump on the American financial highway. The destruction of a large swath of the Houston Ship Channel was a completely different story.
A significant percentage of the nation’s petroleum was refined, stored, and distributed from the now-damaged port. Law enforcement wasn’t commenting regarding the source of either incident, and that left a big, fat unknown in everyone’s mind. Financial markets hated the unknown.
Pushing his chair away from the desk, he ambled to the window and gazed out at his BMW parked three stories below. The neighborhood wasn’t terrible, at least not nearly as bad as the residential areas most of his clients called “Home.” Still, he liked to keep an eye on the gleaming machine. If there are many more days like today, he thought, it won’t be car thieves I’ll need to worry about. It’ll be the bank coming to repossess my ride.
He’d started his financial services business with a wholesome heart and noble intent. The south side of Houston was full of Latino families that had no idea how to leash the power of the stock market, mutual funds, and investment pools to grow their meager savings. While many were undocumented and struggling to stay under the radar, even the people here legally knew little about how the Anglos made money. He’d worked four years at a local bank while he put himself through college to earn a business degree. Eventually it came to him that he could kill two birds with one stone by opening a new, small business. He’d help his community while making good money himself.
Three months after signing a lease and opening his business, Fredrick realized he’d completely misjudged his friends and neighbors. Between a deeply seated distrust of the unknown and a general acceptance of the poverty cycle, the fledgling firm suffered from a lack of customers. Cooks, dishwashers, and yard crews didn’t care about making 8% on the few hundred dollars they had stuffed inside their mattresses. They were worried about tomorrow or next week, not 20 years in the future. He could talk until he was blue in the face, and they would just politely nod, smile, and then do nothing. It was financially and morally devastating.
He had burned through his savings in less than three months and was updating his resume to seek his old job back. He was down to the final week in his office before eviction, when a middle-aged Latino man appeared in his modest reception area. The fellow was not extreme or flashy, but well dressed and extremely polite. He introduced himself as Mr. Vega.
Later, as Fredrick replayed the meeting in his mind, he realized Mr. Vega hadn’t revealed anything about himself. Each well-rehearsed line of inquiry designed to give a sense of a client’s net worth and seriousness had been deftly fended off. It had been the customer who had grilled and pumped the salesman.
Nothing happened for two days after the interview. Fredrick’s pipe dream of landing a big, wealthy client and keeping his business open was beginning to evaporate. And then, without warning, Mr. Vega again appeared at the office.
“My business is a cash trade,” the older man opened. “Any business generating large amounts of paper money draws an unwarranted scrutiny from the U.S. Federal government. And while my firm is prepared to pay a reasonable level of taxes, we wish to keep as much as possible of our enterprise under the radar. Can you help me manage, transfer, and conceal these funds from prying government eyes?”
Fredrick’s initial reaction was revulsion. What did this man think he was? A common criminal? The last thing I want to do is soil my good name by associating with some local drug dealer, he thought, preparing to escort the fellow from the premises. But before he could act, Mr. Vega continued, “I know what you’re thinking. You believe my firm is associated with some sort of illegal activity, but that is not the case. Any funds we invest with you will be earned by entirely legal businesses. We are really no different than any other corporation – we want to reduce our tax burden as much as legally possible.”
“Why don’t you want the IRS to know about the cash then?”
“Because they will report it to the countries where our investors are based. This will cause a secondary wave of taxation, in addition to the escalating level of bribery and other nefarious costs associated with local graft.”
Still, Fredrick wasn’t convinced. Out of curiosity, he asked, “How much are you talking about investing?”
Mr. Vega spread his hands, moving each up and down as if to simulate scales. “At first it will be modest sums… no more than five million dollars per month. If our relationship remains beneficial to both parties, that amount could increase dramatically.”
Fredrick’s mind screamed at the amount, his face immediately flushing pale. Mr. Vega didn’t smirk outright at the reaction – that would have been rude. But his eyes relayed the fact that he found humor in the response. “Of course,” he said matter-of-factly, “if that amount is too high, we can start at a lower sum.”
“No,” Fredrick stammered, “No, that wasn’t what I was thinking. I was trying to decide where I could invest such amounts without drawing attention to our activities,” he lied. In reality, his thoughts had moved on to how much commission he would be earning.
“I, like any other client, would require the final approval where our funds are to be invested. I know that all such endeavors come with a certain amount of risk. Still, I would expect you to provide a creative, well thought-out list of alternatives from which I can choose.”
The younger man leaned back, his mind whirling at the prospects of representing a man such as Mr. Vega. Before he could comment again, his potential windfall stood and announced, “I will give you some time to think over my proposal and to prepare a presentation on how you would manage my money. Would Friday be too soon for us to meet again?”
“No, that would be excellent. I look forward to seeing you in a few days, sir. I’ll focus all of my efforts on this project.”
Mr. Vega turned to leave, but then paused. His voice became so low Fredrick could barely hear his prospective customer. “I am a man who values his privacy. I assume everything we have talked about today will remain confidential.”
“Oh, yes, of course it will, Mr. Vega. I’m a professional.” Fredrick responded, trying to casually dismiss the concern.
The older man stepped closer to the broker, leaning just slightly forward, his eyes cold and cruel. For the first time, Fredrick felt a profoundly genuine fear of the man. “I’m very serious about this. Just so there is no misunderstanding, I wish to reiterate my feelings. I would appreciate it if you didn’t mention this opportunity to your mother, or sister, or either of your two brothers. Not a word. Do we have an understanding?”
The young broker was so taken aback by his client’s display, he didn’t realize until much later that the man had rattled off an accurate inventory of his immediate family. How did he know that? How connected was Mr. Vega? What was such a man capable of?
By the time Friday rolled around, Fredrick was exhausted from a lack of sleep. While the countless hours of research had taken their toll, in reality it was his excitement that kept him from resting. The prospect of leveraging such amounts of money was more than he had ever dreamed. When he presented his options to Mr. Vega, the man had seemed pleased. After they had shaken hands, his new client exited briefly, only to return with two suitcases full of money. It had all happened that quickly.
As of last week, Mr. Vega had invested over 14 million dollars through Fredrick’s firm, most of the money diverted to a varied assortment of mutual funds and safe offshore investments. The start-up business was no longer in any danger of failing, and the trust between the two men had grown with success.
Fredrick learned two very important lessons from his dealings with Mr. Vega. The first was not to ask questions of his client. The second was that having money beat the shit out of being poor. Watching the seemingly endless piles of cash pass through his establishment, the young man found himself wanting more and more. He quickly discovered an appetite for
the finer things in life, including the BMW that was parked below. Lately, he’d begun thinking of previously unimaginable purchases, and it seemed like the time before his next commission check couldn’t pass fast enough. Greed, he mused. He had always thought he was immune.
At least that was the situation until this past week. Now, he was wondering if he would earn any commission this month at all. The thought of returning to desperate poverty made his mind work overtime, trying to think of any way to escape the unacceptable situation. Vega was so successful - the only person he knew with serious money. Airplane money.
Mr. Vega always seemed one step ahead of the less-experienced man. When the client first noticed the new BMW, he had simply nodded and smiled. “I see you are developing a desire for luxury items, and this is good. It motivates people to work harder and become creative in their endeavors. I’m paying you for information, perspective, and research,” Mr. Vega said. “Information is like any commodity, it has value. Our account is opening doors to you that wouldn’t normally be accessible. I will pay extra commissions for valuable insight. Always keep that in mind. Our investors have an appetite to know the unknown, to hear the unspoken. They reward well.”
“I wonder if he’d be interested in having an inside source next to Houston’s highest ranking FBI agent?” Fredrick whispered to the empty office. “I wonder if that would pay enough to offset my soon-to-be zero commission check?”
Returning to his desk, he re-opened the laptop and signed into a VPN, or virtual private network server. Until Mr. Vega had shown him the technology, he had no idea such a thing existed.
From there, he loaded a special email client. The address he selected contained a two-digit code, which changed every Sunday night at midnight. It was the week of the year.
Despite all of the precautions, the message Fredrick typed looked identical to other marketing emails he sent monthly. Only one word in the last sentence was slightly different, a misspelling of the term “portfolio.” That was a signal, a secret code for Mr. Vega to contact him. He’d never used it, and as he closed the laptop again, he hoped his client would be interested in purchasing the information he had for sale.
The new message in his secure inbox wasn’t an unheard of event, but rarely was it good news. Sighing at the potential of having to solve yet another problem so late on Friday afternoon, Mr. Vega opened the message and scanned the contents.
The young investment banker wasn’t so incompetent after all, he mused after reading the misspelled word. He glanced at his watch and judged the hour, deciding it was reasonable to believe “Freddie” would still be at the office.
Opening his briefcase, he pulled out one of many cell phones clipped to the calfskin interior and dialed the number.
“San Jacinto Investments,” the familiar voice answered.
“You requested that I call?” Mr. Vega said calmly, guessing the nervous young broker wanted to tell him about the decline in their investment portfolio.
“Yes, Mr. Ve…. Err, Sir. I have some information that I thought might be vital to your investors. Actually, it is a potential source of information.”
The older man thought about the statement, the odd phrasing and hesitation of the voice on the other end peaking his curiosity.
“Do you remember where we had lunch two weeks ago?”
After a brief pause, “Yes.”
“Can you meet me there in 20 minutes?”
“Yes.”
After disconnecting the call, Vega regretted the decision. He’d been managing the legitimate operations for the Gulf Cartel for three years without any hint of the authorities knowing his connections. Meeting naïve investment bankers, after hours, in public places, wasn’t wise.
The organization had grown to such proportions that illegitimate proceeds had been funneled into legal businesses, ranging from venture capital funds to huge retail outlets and even car dealerships. In the eyes of U.S. law enforcement, those operations were still tainted – the benefactors of ill-gotten gains. A complex game of financial cat and mouse became part of the U.S.’s war on drugs.
And then a few states legalized marijuana. Public opinion polls shifted, and talk began circulating in Washington – the discussions focusing on making recreational drug usage legal, and taxable. This was an unwelcome harbinger to the cartels. While pot was only a small portion of their income, it was their foundational, entry level offering. The trade in weed opened doors, recruited both future employees and the customers of more profitable product lines.
So the cartels had adapted, dumping their mountains of cash into layer upon layer of investments, hoping to create a web so complex that not even the largest government entities could unravel the money trail. Small enterprises, such as food trucks and payday loan operations now resided in their portfolios, as did entire regional banks.
The problem was managing such operations. Vega grunted, thinking about his job. The Gulf operation now had more accountants and investment managers than enforcers or collections experts. Tattooed street muscle and ex-Mexican Special Forces operators were now being replaced by Harvard MBAs and Ivy League managers. But recruiting was problematic, and that’s why they used small, struggling investment firms like Fredrick’s.
Still, they had to keep a low profile. Vega didn’t fear the DEA or the FBI; he worried about the IRS and Department of State. Using a network of tiny, individually owned companies like San Jacinto was risky. It only took one mistake… a single misstep, and the authorities would descend in droves to seize assets and issue warrants. It was essential to keep a barrier between the illegal and legal assets of the organization.
Sighing, he deleted the email and then ran a small utility that would scramble his computer’s hard drive beyond recovery by even the most sophisticated forensic software. He would meet Freddie, and if it turned out to be a wasted effort, he would wait two weeks, redirect the portfolio to another firm, and sever the relationship. They had to remain dynamic – it was their best defense.
Ten minutes later, he discovered the eager, young broker waiting in the restaurant’s reception area. His hand was damp, a good sign to the savvy Mr. Vega. After they were seated in a remote corner and ordered appetizers and beverages, the cartel manager got down to business.
“This meeting is most unusual, Fredrick. I hope we are here to discuss more than the recent decline in the U.S. markets and our assets.”
“Actually, sir, I was hoping to discuss anything but the performance of your funds,” the kid replied with a nervous grin.
Good, thought Vega. He has a sense of humor despite being scared shitless. “Go on.”
“My girlfriend lives with her sister, who happens to work at Houston General Hospital. A few days ago they admitted a new patient… a badly injured man who happens to be the FBI agent in charge of the entire Houston office.”
Vega connected the dots instantly, but did his best to maintain a poker face. “Go on,” he replied calmly.
“You had indicated that your investors were interested in hearing the unspoken. I believe this situation can provide an ongoing source of confidential information.”
Why does he think I’m concerned about the FBI? Vega wondered. I expected him to be suspicious of us, but to be so bold to come right out with such speculation is odd.
“I’m sorry, Fredrick, but I fail to see the connection between the FBI and our relationship?” the older man replied. “As I’ve stated before, the proceeds you invest for me are all from legitimate enterprises.”
Again, Fredrick surprised his host. Waving off the concern, he said, “Oh, I’m not talking about insider information of any criminal investigation. Did you read the Houston Post’s article about ‘God’s Gun?’?”
“Yes… yes I did. I thought it was typical of over-hyped journalism designed to sell papers.”
Freddie grunted, “So did I, but my source now informs me that the super-weapon is indeed real. It was directly involved in the ship channel incident, as well as the m
edical center explosions. And here’s the best part – they believe the man who built the weapon might have escaped.”
Patting his mouth with a napkin, Vega leaned back in his chair and smiled. Inside, he was preparing to change from the skeptic to the negotiator. What Freddie was offering was indeed of interest to his superiors, but he didn’t want to give the man across the table even the slightest hint of any value.
“While that is interesting dinner conversation, I still fail to see why you think this would be valuable to my business associates?”
“Because of the energy potential and other uses of the technology,” Fredrick explained. “I may be making incorrect assumptions, but I judge you a man of significant resources, both human and capital. If the owner of God’s gun is desperate and on the run, it might allow the acquisition of that weapon, which could lead to all sorts of immensely profitable endeavors.”
He knows who and what we are, but is playing coy, Vega thought. Very smart. The recent string of events around the Bayou City Houston hadn’t escaped the cartel’s attention. The Port of Houston was one of the key entry points for illicit cargo, and the repercussions of its closure were already being felt throughout the organization.
Beyond the mere economic impacts, the level of destruction at both locations was something that had raised more than one eyebrow within the organization. In-fighting among competing cartels in Mexico was a constant drain on resources, more and more profits being absorbed by the never-ending turf wars. Just to hold on to existing territories and markets required a small, very expensive army. And then there was the government itself.
Often appearing weak and unstable, the Mexican federal government was a juicy target. More than one of the big bosses had dreamed of one day taking over the entire country. Drugs, human smuggling, and prostitution were profitable, but nothing made as much money as government. The estimated amounts of bribes and graft in Mexico City alone made the Gulf Cartel’s activity look puny by comparison. Throw in taxation, government-owned businesses, and the currency manipulation of central banks, and you had a recipe for a serious moneymaker.
