“And what do you do in this line of work?”
“Well”—Schermer shrugged—“as the name implies, I’m basically trained to identify fraudulent business practices or financial transactions, embezzlements, misappropriation of assets, questionable bankruptcies, and so on.”
“And how do you do that?”
“Well, it gets a little complicated.” Here he paused for the jury and gallery to chuckle with him. “But basically I analyze both physical and computerized accounting records to document I and E to—”
“Excuse me, Mr. Schermer, what is I and E?”
“Oh, sorry. I live in a world of jargon, I’m afraid. I and E is income and expenses. So I basically analyze I and E and movement of assets. I also reconstruct I and E to find hidden or illicit income. Stuff like that.”
“Money laundering?”
“Yes. That’s more or less my subspecialty.”
“Good. Thank you. Now, Mr. Schermer, have you had occasion to examine the financial records of Bay Beans West for the six months ending November first of last year?”
“Yes, I did.”
“And did you discover accounting irregularities?”
“I did.”
Hardy, sitting back in his chair, knew that this was not going to be a high point for the defense. His only early hope had been that the financial testimony itself would be so dry and technical that the jury’s interest would flag after five minutes or so. But Schermer’s chatty and agreeable style looked like it was going to trump the material itself. A quick glance at the jury verified this view.
“Could you summarize these irregularities for the jury?”
“Well, there wasn’t just one kind.”
Hardy thought he might as well get in a lick or two if he could, and he objected. “Nonresponsive, Your Honor.” And much to his surprise Braun sustained him. Irrationally buoyed by the tiny decision, he straightened in his chair, pulled his yellow legal pad over in front of him, perked up. But only slightly.
Stier turned back to the witness. “Starting from what you consider the most significant irregularity, can you tell the jury what your analysis uncovered?”
“Well, I always start in this kind of a retail business with the cash register, since it will have a record of the primary sources of income.”
For most of the next two hours Schermer put on a pretty compelling course—complete with charts and graphs and regressive analyses of cash flows—that to Hardy’s perspective, and he was sure to the jury’s, proved that BBW was not run, to say the least, according to strict adherence to established accounting procedures. It wasn’t simply the personal checks that Maya had written to cover expenses or the lack of traceable reimbursables. During the course of his testimony, in the six months before Dylan Vogler’s death, Schermer identified no fewer than sixty-seven individual transactions—cash in or out, payroll discrepancies, simple checking errors, food and beverage cost, and use analysis—that painted the business, and of course Maya as its owner, in at best an unflattering light.
And at worst, of course, as a sophisticated criminal.
And all this before it got personal. “Mr. Schermer.” Stier had put away the latest graph and now stood again in front of the witness in the center of the courtroom. “At the time of Mr. Vogler’s murder, what annual salary was he drawing as manager of BBW?”
“Ninety thousand dollars.”
Though jurors had heard about the salary before in Stier’s opening statement, still this number seemed to nearly knock a couple of the jurors out of their chairs, and sent a ripple of noise through the gallery as well.
Stier, knowing he was on to some juicy testimony, pressed ahead. “And what was the approximate gross income of the coffee shop over the past fiscal year?”
“Well, going on the tax records the business filed, the shop brought in, gross, four hundred sixty-one thousand ninety-two dollars and fourteen cents.”
“Now, Mr. Schermer, was the salary of Mr. Vogler typical of other employers working similar jobs in the same business?”
“No. It was approximately double the city average.”
“Double. And were other employees at BBW similarly compensated, in terms of multiples of the city’s average pay for those jobs?”
“No. They made about the norm, which was essentially an hourly rate slightly above minimum wage.”
“Let’s take the assistant manager, for example, Mr. Schermer, an employee named Eugenio Ruiz. Did he work for an hourly rate, or was he on salary?”
“He was hourly, making twelve dollars and eighty cents an hour, plus tips. About five hundred dollars a week at forty hours.”
“So two thousand a month, about twenty-four thousand dollars a year? As opposed to Mr. Vogler’s ninety thousand dollars?”
“Yes, that’s about right.”
“Mr. Schermer, in your professional opinion, was Mr. Vogler’s salary as a percentage of the coffee shop’s gross income defensible as a viable business practice?”
Hardy knew he could object, but also knew that it wouldn’t do him any good. Schermer, with the credentials of a recognized expert witness, was allowed to give his opinion. The jury didn’t have to believe it, but the court would permit the testimony. He sat, his hand on Maya’s arm, and both of them seethed.
“No,” Schermer said. “It was an irregularity of a dramatic nature.”
“So would the business running on this model be sustainable over the long run?”
“In my opinion, no. Not given the business’s gross income and this salary.”
“And as a forensic accountant, does this type of irregularity raise a red flag for you of a certain kind of financial malfeasance?”
“Yes, it does.”
“And what is that?”
“Most commonly, it would be money laundering.”
“Could you explain to the jury how that works?”
“Certainly.” Schermer turned in his chair to face the panel. “Let’s say that there is an unreported source of illicit income in a coffee shop such as BBW, such as the sale of marijuana, for example. An employee can ring up any number of coffee drinks on the cash register and not actually pour any of these drinks. So that in the course of a day you might have an extra two or three hundred dollars, or more, or less, on the till. Then you simply supply the cash into the register that you’ve made on your illicit business and entered as regular coffee income, and it becomes part of the business’s legitimate cash flow. Now the dirty money is so-called clean, or laundered, money, and since you can account for the income, it can be redistributed as dividends, profit sharing, or salary.”
“Or salary,” Stier repeated, loving this. And so, it seemed, was the jury. “Now, Mr. Schermer,” he went on, “is there any way to reliably identify the existence of this sort of money-laundering scheme?”
“Yes, there is. That’s what my work essentially entails.”
“Can you explain?”
“Well, in our example above, I think we can all see that there is actually less coffee poured than there is a record of. So by comparing the amount of raw coffee beans actually bought by the business with the income that would be produced by the sale of that coffee, cup by cup, we can pretty accurately determine if there is a discrepancy.”
“And did you find such a discrepancy in your analysis of BBW?”
“Yes.”
“And to what extent?”
“Well, based on the actual amount of coffee beans bought, by weight—we’ve seen this on one of our graphs, if you remember—the maximum gross income from the sale of coffee drinks over the past fiscal year should have been no greater than about three hundred and seventy thousand dollars, as opposed to a reported four hundred and sixty-two thousand.”
“So, a difference of ninety-two thousand dollars? Almost precisely Dylan Vogler’s salary?”
“That’s correct.”
“Thank you, Mr. Schermer, no further questions.” He turned to Hardy. “Your witness.”
&nb
sp; But Braun interrupted. “Mr. Hardy, as it’s getting close to noon, I suggest we hold off beginning your cross-examination until after our lunch recess. Is that acceptable to you?”
“That’s fine, Your Honor.”
“All right, then.” Braun tapped her gavel. “Court’s adjourned until one-thirty.”
35
Stier might have simply decided to ignore the Ruiz murder as a factor in Maya’s case, but as head of homicide, Glitsky could not do that, even if he was of a mind to. Which he most assuredly was not.
Over the past several months, while Abe had been perpetually brooding over his son’s accident and ultimate prognosis and his own karma, Hardy had grown unhappily accustomed to his new, low-affect persona, to the point that now—meeting with him behind a curtain in a private booth at Sam’s—the full flower of evident rage emanating from his friend’s demeanor struck him as perhaps actually dangerous. To Abe’s own health, maybe, but more to his inspectors, the source of this anger.
“And, if you can imagine,” he was saying with a guttural intensity, “now Schiff is all bent out of shape because I didn’t put them on Ruiz. After what they’ve done to Vogler and Preslee, they should be happy they’re not busted down to robbery, or even patrol. Learn a few of the basics over again.”
Hardy smeared butter on some sourdough. “Maybe you could drop by the courtroom after we’re done here and share some of these thoughts with Braun. She needs to hear them.”
“I’m not saying your client’s innocent, Diz.”
“No. Of course not. You just asked me here to talk secretly because no one else would have lunch with you. And I can’t say that I blame them. Although I’m a little surprised about Treya. You’d think, being your wife and all, she’d at least feel sorry for you.” He popped the bread into his mouth. “Why did Schiff want Ruiz? And Bracco, too, I assume.”
“Why do you think?”
“Obviously, because it’s BBW again. And if that’s the case, they’ve got doubts about Maya.”
“No, they don’t. Not even one. Don’t even ask them.”
“How about you?”
“Not so much doubt about Maya, Diz.” Glitsky tipped up his water glass and chewed some ice. “I just don’t know how they moved the case even this far along.”
“You don’t know? I know. It’s Jerry Glass and Schiff. They got the whole thing out of whack. As a righteous murder, much less two, it hasn’t made any sense from the beginning. Not that Maya couldn’t have actually done these guys, but there’s never been any case, evidencewise. You know this.”
“Well, at least I’m thinking it now. I just wonder what else is going to pop that’s going to make the detail look even more incompetent.”
“You mean like Lori Bradford?”
“Close enough. Have you talked to her?”
“Not yet, but Wyatt Hunt did. I put her on my witness list, which is great for the good guys, but not for you.”
“Schiff and Bracco knew all about her and decided she wasn’t important.”
“That’s what I gathered. I think, though, she might be.”
Glitsky sat back as the tuxedoed, ultimate professional waiter drew back the curtain and took their orders—Hardy’s every-time-he-came-here sand dabs and a Crab Louis for Glitsky. When he’d gone, a small silence settled, until Hardy said, “So. You didn’t invite me down here to help me get Maya off.”
“True.”
“So?”
“So the bottom line is the case is starting to look like a loser for us. Certainly the Preslee side.”
“As it should be.”
“Okay, granted, maybe. That’s the problem when things start out so sloppy and get all political.”
“I’m more or less aware of that, Abe. What do you want?”
Glitsky took a beat. “I want to know if you’ve got something I need to know on Ruiz.”
“Like what?”
“If I knew, I wouldn’t need to ask, would I?”
“If I do know something, how’s it going to help my client?”
“It probably won’t.”
Hardy broke a grin. “Wow, you really make it tempting. What do you have so far?”
“Essentially, nothing. If he hadn’t worked at BBW, we’d be at absolute zero.” Glitsky chewed another piece of ice. “As you may have surmised, this goes a little up the food chain.”
Hardy considered for a second, remained deadpan against the urge to show his surprise and pleasure. “Kathy?”
A nod. “Backstage, of course, and always deniable. But through Clarence, then Batiste.” The DA and the chief of police, respectively. Serious high-level pressure from above. “Her mayorship has made her case, especially after hearing about this Lori Bradford fiasco yesterday, that somehow a solid investigation into another BBW-related murder will set Maya free. I’m not so sure of that. It might help on Vogler, though I think she’s going down for that, and she won’t need it on Preslee. But whatever, Kathy thinks Ruiz is going to open a door, and she’s more or less dared us to do something on it, and fast, or maybe a head or two will roll.”
“Yours?”
“Not impossible. Maybe even the chief’s too. Who, you remember, serves at the mayor’s pleasure.”
The waiter knocked, opened the drapes, and delivered their plates. As the curtain closed, Hardy said to Glitsky, “So where were we?”
“Kathy West and Eugenio Ruiz.”
Hardy forked a bite of fish, taking his time. Finally, he made his decision and came out with his answer. “I might have something.”
“Might. I like that.”
“I knew you would. Hence my careful locution. I might have something if you’ve got something to trade.”
“Probably not. But what?”
“If you find something based on what I give you, I want it too.”
Glitsky didn’t hesitate an instant, shaking his head from side to side. “I can’t do that.”
“Fine.”
“Diz.”
“No argument, Abe. You can’t do it, you can’t do it.”
“You mean if it helps your case?”
“I mean whatever.”
“I can’t. You know I can’t.”
Hardy chewed and swallowed. “Not my issue. My issue is my client.”
“What if it doesn’t help her?”
“I’ll be the judge of that. Sorry, but those are the rules.” He hesitated. “Look, if it’s any help, give it to Stier too. I just wouldn’t like to see whatever it might be disappear, the way Lori Bradford did.”
Hardy, by now unexpectedly hopeful at the possibility of having the resources of the entire police department working on his behalf, nevertheless didn’t want to push. He had the cards here and Glitsky either would recognize that fact or not. He took a sip of his club soda, pushed some buttered capers onto his fish.
“It would be discoverable,” Glitsky said.
Hardy shook his head. “Before that. Under the table—under this very table if you want—but before it goes through Stier and company. From what you say, Jackman’s going to back you and so’s Batiste.”
“They’re my troops,” he said. “Bracco and Schiff. I undermine their case . . .”
“I get it. Though one could argue that it’s already undermined and they deserve whatever happens. But again, Abe, not my problem. And, hey, what I have might be nothing.”
It took Glitsky another full minute, maybe more, Hardy eating with gusto and apparent contentment, tasting none of it.
Finally, Glitsky capitulated. “You want me to sign an affadavit, or is my word good enough?”
Hardy put down his fork. Took a steadying breath against the rush. “There’s a guy who may or may not be named Paco who knew both Levon Preslee and Dylan Vogler back in college and who showed up from time to time at BBW to buy his weed. But not since October.”
“May or may not be named Paco.” Now dismissively. “That’s what we’ve been negotiating about?”
Hardy shrugged.
“It’s what I got, Abe. Ruiz was looking out for him.”
“What do you mean?”
“Ruiz was going to get in touch with Wyatt Hunt if he came back into BBW. And by the way, it looks like the whole crew down there was getting cut in.”
“Yeah, we’re assuming that. We’ll be talking to all of them this time, instead of a select few. But this Paco, is he on Vogler’s list?”
“No.”
“No, of course not,” Glitsky said. “He wouldn’t be. How’d you find out about him?”
“Well, Ruiz, first. Then Maya.”
Glitsky’s eyes narrowed. “She knew him too.”
“Knew of him. The name. Back at USF. He hung out with Vogler and Preslee and—maybe—killed a guy in a liquor store they held up.”
This stopped Glitsky midbite. “Maybe.”
Hardy shrugged. It was what it was.
“Where?”
“I don’t know. Except it was probably in the mid-nineties—ninety-five or -six.”
“It might have been in the papers. There would have been an investigation. Maybe a suspect.”
“Knock yourself out,” Hardy said.
“Did Paco know Ruiz was looking out for him?”
“No idea. Anybody working there could have told him, though.”
Glitsky put down his fork. “You’re not making this up?”“Not any of it.”
After lunch Hardy stood and approached the forensic accountant in the witness chair, seemingly as relaxed as he’d been all morning. “Mr. Schermer,” he began, “you have given a great deal of technical testimony about accounting practices, working with numbers. Are any of these numbers subject to a margin for error?”
“Well, yes, of course. Some to a greater extent than others, but generally, yes.”
“Referring to the analysis you offered on BBW’s gross income versus the amount of raw coffee bought over the last fiscal year, would this have a greater or lesser margin for error than some of the other calculations you performed and shared with the jury?”
“Rather on the high side, I’d think. It is, after all, an estimate.”
“An estimate, with a margin for error rather on the high side. I see. And is there an industry standard that enumerates the margin for error in this kind of analysis?”
Hardy 13 - Plague of Secrets, A Page 33
