Mystery and Suspense:The Tipping Point: A mystery thriller full of intrigue about greed, fraud and murder... (International Mystery: Book 1)

by Walter Danley

  Vida was at her desk when the postal carrier brought the Certified Mail—Return Receipt Requested envelope to her desk. Company policy prohibited the mailroom from signing for certified mail, so the postal carrier came to the twentieth floor to make the delivery. The letter was addressed to Arnold Chaplain, CEO. She signed for the letter, noticing the Securities and Exchange Commission, Boston, Massachusetts, return address.

  Entering Arnold’s office, Vida interrupted, “Mr. Chaplain, I think you should look at this real fast. It looks important.”

  Arnold read the contents. “Thank you, Vida. You’re right, it is significant. Is Ed in yet?”

  “No, sir, he’s not. Mr. Hockney is in New Jersey hosting an investor seminar today and tomorrow.”

  “Okay, leave him a message to call me ASAP, and then leave Herb and Ben’s office the same information. But first, call Borstad in Denver. I want to speak to him as soon as possible.”

  “Yes, sir, right away.” She waddled back to her duty station.

  Arnold reread the letter and his brow furrowed with confusion. As an experienced attorney, this was not the first SEC letter he’d read. It was, however, the first SEC letter that named him as a potential defendant in a government investigation. The letter specifically named Arnold, as well as Hockney, Rubens, Meyer, and Borstad, but that wasn’t what was perplexing Arnold.

  The letter made precise reference to CapVest sponsored funds by name, among them was the Capital Vested Funds series, three public partnerships out of the dozen named in the letter. The offerings for CVFs were made intrastate, to Washington state residents only. Investors outside the state were not offered a prospectus or the opportunity to invest. So why is the SEC interested in these funds? They were outside the Fed’s jurisdiction; if nothing else, the Fed is encroaching on the state of Washington’s jurisdiction.

  By morning’s end, Arnold had talked to the other four partners and confirmed they had received the SEC letter. It summoned them to meet with agents of the SEC. They would come to Bellevue at a time mutually convenient, but in no case later than two weeks hence. The letter went on to suggest—and rather strongly, Arnold thought—should a convenient time not be available during the next two weeks, the Commission would proceed against each individual under the United States Code: Title 18, Chapter 96—Racketeer Influenced and Corrupt Organizations Act. Nice letter, but clear in its implication—the SEC had reason to suspect fraud. Wainwright and Shaw did blow the whistle. Sonuvabitch!

  First, Arnold notified the firm’s outside lawyers, scheduling a meeting with them before the meeting with the SEC, which they were asked to attend. He thought briefly about telling Andrew Thompson, corporate General Counsel to attend, but, no…he’s too buddy-buddy with the Musketeers. I’ll let him know what he needs to hear later. Hell, if his pals blew the whistle, they all will know more about the meeting than I do. Next, he called the number on the Boston letterhead to say all parties and legal counsel would be available to meet on the fifth, the first Tuesday of December. The time was set for 8:30 a.m. at CapVest. That gave the Five one week to prepare. Next, Arnold began to study the trail of evidence on the financial statements, verifying it had been modified as requested of Borstad.

  Arnold met with the managing partner of their outside law firm that afternoon to discuss strategy. Arnold maintained the SEC visit was ill advised, that no partner had any idea why they would want to talk to them, and this was all a very bad mistake. It may have been an action initiated by an unhappy investor. Arnold didn’t tell them the source of the complaint was Wainwright and Shaw. They talked for several hours, the lawyers describing in detail the threat of an RICO conviction. They never arrived at a conclusion because Arnold Chaplain didn’t tell them the fraud was real and all named partners were guilty.

  The very large conference room was packed. First, the Bellevue Five arrived in the boardroom twenty minutes early, because they assumed some last minute strategizing would be needed. As they took their seats, no one had anything to say. Next, three of the firm’s outside lawyers arrived. Each was attired in his six-hundred-dollar-per-hour, three-piece suit, sporting imported leather attachés. Trailing after them came three legal secretaries, at the modest rate of two hundred dollars per hour, and two paralegals at three hundred each into the ever-more-crowded room. They looked court-ready and were prepared to give their best counsel to their important clients lined up at the conference table. Before the meeting even started, the lawyers clocked ninety minutes, as it took that long to drive across the bridge from their Seattle offices. The Bellevue Five were already over four grand behind for a meeting yet to start.

  Thirteen nervous people sat on the left side of the long conference table with their backs to Lake Washington. There was nothing to discuss, and they had nothing to do but await the arrival of the Federal government.

  The day was dark and overcast outside the windows and again threatened rain. Outside was less gloomy than inside the conference room. Stacy Simpson was escorted to the conference room at exactly 8:30 a.m. Due to her brace, her step was uneven, and so Lacey Kinkaid and a man wearing a blue suit with brown wingtips accompanied her closely. Herb Meyer recognized Burke’s former attorney. He was the only one on the left side of the table who had previously met Lacey. He remembered from Boston that she was more than just pretty—she was also a shrewd negotiator and competent advisor.

  Stacy stood by her seat at the center of the right side of the table while she introduced Lacey, identifying her as an attorney representing the estate of Thomas Burke, shareholder and co-complainant in this matter. She turned to the gentleman in the blue suit and identified him as Supervising Special Agent Greg Mulholland, Federal Bureau of Investigation. Mulholland smiled as he flashed his credentials at the table’s center but did not speak. The Five all leaned in to verify the credentials were authentic—as if they could tell with their limited frame of reference. None of them had seen FBI credentials before and each hoped these were the last they would ever see.

  Stacy opened her briefcase and took out some files, stacking them in front of her, closing her case and setting it on the floor. She sat opposite Arnold Chaplain. After she was settled, she stared unsmiling and emotionless into Arnold’s gray-blue eyes. Mulholland took the chair on Stacy’s right side, facing Ed Hockney, while Lacey sat to the FBI agent’s right, across from Herb Meyer. Ragnar Borstad and Bennie Rubens sat across from empty chairs. The paralegals, secretaries, and lawyers sat outboard of the conference table, dictation pads at the ready.

  Stacy said, “Mr. Chaplain, would you please introduce your party to everyone?”

  Arnold did, and then said, “We are here voluntarily at your request, but have not been offered an explanation for this meeting. Please provide us with documents relative to why you called us together, Ms. Simpson.”

  “Oh, my letter made it clear why you are here. We will wait for our other complainants to arrive.” And the tension mounted as they continued waiting.

  No one spoke as the room waited for the two empty seats to be filled. Five pairs of eyes stared at the clock above the door, which seemed to be absent of movement. The Five squirmed in their chairs and waited.

  Finally, Bennie spoke. “It might help if you could give us a thumbnail sketch of what you think this issue is, Ms. Simpson.” Stacy looked across the table and smiled, but said nothing. Then the door opened and Tommy Shaw and Garth Wainwright entered.

  “Good morning. I hope we haven’t kept you waiting,” Tommy said.

  Wainwright scanned the room, unsmiling, eyeball to eyeball with each of the Five, and sneered. “I hope we did.” They took seats to Stacy’s left; Wainwright across from Borstad, Tommy faced Bennie.

  Stacy sat up straight in her chair and reached down to unlatch the knee joint of her leg brace. “Gentleman, the Enforcement Division of the Securities and Exchange Commission is prepared to file an RICO action against this firm, Capital Vested Corporation, and five of its officers, directors, and shareholders: Chaplain,
Hockney, Rubens, Borstad, and Meyer. Also to be named are John Does I through VIII. In addition, we will name All Cities Properties in the indictment. The government will prove a criminal conspiracy was formed by these shareholders and was operated from various business offices of Capital Vested and All Cities, located in Washington and Colorado. This criminal conspiracy operated for more than five years.”

  One of the lawyers spoke to Stacy. “This is highly irregular, Ms. Simpson. Procedurally, this interview is not being—”

  Arnold interrupted him. “Why have you chosen to conduct this interview?”

  There was a thoughtful pause, then Stacy said, “As you can see, Mr. Shaw and Mr. Wainwright, together with the Estate of Thomas K. Burke, are the co-complainants in this matter. They asked our office to—how can I put this?—ahem…modify the standard procedures, for your benefit and the interests of others. I understand they spoke to you and Mr. Borstad about their concerns and were ignored. At a later date, they gave you another opportunity to correct the fraud, and you again ignored them. These complainants gave you opportunities to do the right thing and you looked the other way. That is too bad.

  “Mr. Shaw and Mr. Wainwright are aware that any enforcement action by the government will put Capital Vested out of business. Seven thousand people will lose their livelihoods. Many, perhaps even most, will become a burden to their families, the community, and the government. Shaw and Wainwright believe the past good works of this firm are not sufficient to withstand the bad notoriety and scandal associated with litigation. I’m sure their assessment is correct. The investments made by the thousands of your clients will be in jeopardy and capital losses are likely. All of this because of the greed of you men,” Stacy said as she eyeballed each of the Five.

  “The SEC has the evidence needed for the prosecution of this matter. You all know what evidence we have. What you don’t know is we also have a confession, tape-recorded from Mr. Borstad. It seems the weight of guilt was too much to bear, so he felt compelled to share his burden with Mr. Wainwright. Mr. Wainwright was wearing an FBI wire, authorized by court warrant at the time. The Bureau recorded the confession and it is admissible in Federal Court.

  “Your attorneys will be able to explain in detail the penalties associated with a RICO conviction. The shorthand version as it applies to each of you is this: you will forfeit all worldly possessions, and you will still owe the government money. You will then spend the rest of your life in a Federal prison. Whatever the Federal government pays prisoners to make license plates will be forfeited to the debt you will still owe. Oh, and when the government is through with you, you will be subject to civil suits that impose treble damage awards to those you defrauded. Those thousands of investors will litigate each of you into oblivion.

  “Which brings me to ask, how do you plan to pay the fees of these fine gentlemen here?” Stacy pointed to their lawyers across the table from her. “I doubt McKenzie, Walsh and Stone will be doing any pro bono defense. That’s another problem to deal with, I suppose, for you will have no funds to defend yourselves. In short, gentlemen…you’re screwed!”

  Lacey took the lead. “In the interest of trying to avoid a—let’s call it a CapVest meltdown—and to save the company, the employees, and the investors’ capital, Mr. Wainwright and Mr. Shaw have a proposal. Consider it a third chance to do the right thing. If you men, in your infinite wisdom, should find their proposal acceptable, the government is willing to sign off on that agreement. There will be no RICO indictment or prosecution. You walk. But before we get to that, Supervising Special Agent Mulholland, if you will, please.”

  The man in the blue suit and brown wingtips stood and walked around the table, handing each of the Five a document in a baby blue wrapper. None spoke as they received their copy of the document. At the end of the table, Mulholland said, “Gentlemen, you have been served,” and then resumed his place next to Stacy.

  She continued to address the stunned Five. “You have been served a summons ordering you to appear in Seattle Federal District Court next Wednesday, one week from tomorrow. You will be arraigned at that time and place. Be prepared to show cause, individually. Now, please pay particular attention to the Wainwright and Shaw proposal. It is your one shot at staying out of prison.” Turning to Wainwright, she said, “Gentlemen, the floor is yours.”

  Wainwright’s belly felt like it was about to erupt as he made eye contact with each of the Five. He did not blink or turn away, but neither did any of the Five show a defensive tell. They understood perfectly well this was their only shot to survive. None of which made Wainwright feel any more comfortable with what he and Tommy were about to propose. Wainwright sucked in a deep breath and began.

  It took the Musketeers less than an hour to present the alternative plan to RICO. Everyone paid close attention as the two partners outlined the plan. Most of the Five took notes, as did the lawyers and secretaries. When they finished with their proposal, Tommy asked if there were any questions.

  Bennie raised his hand. “So if we each contribute to paying back the sixteen million, plus penalties and interest, sell our stock back to the company, and retire, we stay out of jail. The government will forgive and forget. Do I have that right?”

  Stacy said, “Yes, that is the essence of this proposal. But may I remind you that in three days, that offer is off the table and you will face the Federal government’s full force of process. I will expect one of two alternatives from each of you, individually. The offer must be accepted unanimously—that is, you must all select the same of the two alternatives. Let me be clear on that point: each of you must either call my office by close of business this Friday—three days hence—and accept the Wainwright/Shaw offered proposal, or each of you must appear the following Wednesday in Federal Court. I want that verbal commitment to be delivered by each of you personally, no ‘spokesman for the group’ and not from one of your lawyers.”

  There was muted conversation among the Five and their expensive lawyers for a few minutes. Stacy ended the tête-à-tête as she resumed admonishing the Five. “You can reach me at the same number you called before. That is a direct line to my office in Boston. Oh, there is one more thing I should mention. What was discussed today does not leave this room. A violation of this edict will result in the immediate arrest and detention of each of you in the county jail until the arraignment. Is that also clear?” Stacy looked into the eyes of each of the Five. She held the absolute attention of each man. “Good. Where I’m originally from, there is an old Texas saying: ‘You need to dance with the one that brung ya.’ I’ll leave you to figure out how Texas logic is applicable here. Thank you for your attention.”

  Everyone seated on Stacy’s side of the table stood and departed together. None of the entourage spoke until they were in the parking lot and Tommy said, “Stacy, the SEC should have the equivalent of an Oscar for your performance in there. Hell, you had me rocking in my Reeboks. Brilliant is too lame a word.”

  “Man, would I like to be the paint on the wall in there right now,” Wainwright said.

  “Garth, I happen to be in charge of the wall paint today. Please come this way,” Mulholland quipped.

  Wainwright noticed that Mulholland had put his arm around Stacy’s waist as they walked. It was more intimate than just helping her with the brace on her leg. That motivated him to walk close to Lacey and hold her hand. It felt good to him, and she accepted the gesture in kind. “Stacy pulled that off perfectly, don’t you think?” Wainwright asked.

  “It couldn’t have been better. Those crooks bought every word she said about RICO. They know they’ve been had. Of course, you and Tommy won’t be the most popular guys in that tower back there. How are you with that?”

  “You know, for fifteen years I almost worshiped Arnold. He was my personal hero, and I admired his ability to strategize a transaction so it was foolproof. He was the most cerebral person I’ve ever encountered. Somewhere along the line, that all changed. Doubtless, it was the drugs. I told To
mmy the same thing not long ago. The drugs were the tipping point. I’m sure that was when it all went haywire. One thing for sure, perpetrating a fraud is clearly not the CapVest Way.”

  Everyone followed the FBI agent as he headed toward a white van. As they caught up with the others, Wainwright saw the van’s sign lettering was for Kirkland Lock and Key, with a local phone number beneath the name. Wow! These guys do it up with a big ribbon.

  Mulholland led his posse to the sliding door on the driver side. The vehicle blocked the view of the group from the office building windows. He knocked a code and the door slid open. A man wearing headphones was sitting at a control station next to the door inside the van. They saw it contained reel-to-reel tape recorders, headphones, and other electronic equipment on wall racks along the opposite side of the truck. Mulholland introduced the technician. “Everyone, this is Special Agent Dominic Stratos, the best Greek the Bureau has. In fact, he’s the only Greek in the Sacramento office, where he heads up audio/visual resources. His help on this case continues to be invaluable.”

  Stratos didn’t speak; he was listening on the headphones plugged into a turning tape recorder. Mulholland stood and waited for several minutes until the technician removed his headphones and addressed his colleague. “We got some good stuff. They’re going to lunch now, but talked a good bit to the lawyers about RICO, penalties, and incarceration, that kind of thing. Hey, maybe you all should get into the van until they clear the parking lot.”

  Stacy and Lacey got into the front seats, and the three men sat on the carpeted floor. Stratos occupied the single stool. It was warm inside the van and smelled of body odor and salami. The back door windows were one-way black out, so they could see most of the parking lot clearly.