Free to Trade

by Michael Ridpath

  ‘I would, but…’

  ‘Yes?’

  ‘I know this may sound corny, but I don’t want to put you in danger.’

  Tommy took me by the arm and looked me in the eye. ‘You’re right, it does sound corny. Look, if you really are in danger, maybe I can help you out. It’s no good. You’ve got me hooked on this thing. I can live with the risk. Let’s get that cup of coffee.’

  ‘OK, I give in.’

  We found a Greek coffee shop, ordered two cups, and I began.

  ‘About a year ago, Bloomfield Weiss sold us twenty million dollars of a private placement for a company called Tremont Capital NV. Tremont was supposed to be guaranteed by Honshu Bank. It turns out that this guarantee never existed. Neither Honshu Bank, nor Bloomfield Weiss have any record of it. The only security we have for our investment is an offshore shell company.’

  ‘That’s bad,’ said Tommy.

  ‘What’s worse is that two of the three people who have discovered this are now dead.’

  ‘Wow,’ Tommy whistled. ‘Was one of them Greg Shoffman?’

  ‘Yes,’ I replied. ‘The other was a woman called Debbie Chater who worked for us in London.’

  ‘Do you know who did it?’ Tommy asked.

  ‘No. Debbie fell into the River Thames. I think she was helped. Who by, I just don’t know. But I’m going to find out.’

  ‘So who is behind Tremont Capital?’ Tommy asked.

  ‘I can guess,’ I said.

  ‘Who sold the deal to you?’ Tommy asked.

  ‘Cash Callaghan.’

  ‘And Dick Waigel structured it?’

  ‘Dead right,’ I said.

  ‘Jeezus,’ Tommy said as he leaned back in his chair. ‘Well, I am not surprised by that snake Waigel. But Cash? I can imagine Cash bending the rules, but I wouldn’t have thought he would go that far. What scum!’

  Tommy gulped his coffee, trying to take it all in. ‘So Shoffman and your Debbie Chater are dead? Who’s the third person?’ Tommy paused, and whistled again. ‘That’s you. Man, you had better watch yourself.’

  ‘I know,’ I said. ‘And you can see why I was reluctant to make you the fourth.’

  Tommy laughed, ‘Don’t worry about that. They don’t know I know. I’ll be all right. So what happened to the money?’ he asked.

  ‘I don’t know,’ I said. ‘That’s why I wanted to take a look at Waigel’s files. Let’s have a look at that diagram.’

  I pulled it out of my pocket and spread it out on the table of the coffee shop.

  It consisted of a series of boxes, one underneath the other. Connecting them were arrows, all pointing downwards. They showed the direction of the flow of funds in the transaction.

  The first box was labelled ‘2 investors’. That was presumably De Jong & Co., and Harzweiger Bank.

  An arrow with $40 million written by it, pointed down to the next box, labelled ‘SPV’. That must stand for ‘Special Purpose Vehicle’, which was Tremont Capital. This represented the $40 million raised by Tremont from the private placement.

  The next box down was labelled ‘Swiss bank a/c’. That would be the account referred to in Dietweiler’s letter.

  Next came a more puzzling box – ‘Uncle Sam’s Money Machine’. I had no idea what that could be. Below this were a series of boxes marked ‘high return investments’. By the arrows were the numbers ‘$150 to $200 mm’. I could see the power of ‘Uncle Sam’s Money Machine’. Forty million dollars went into it and $150 to $200 million came out of it. A money machine indeed.

  Underneath the diagram were some notes explaining things a bit further.

  ‘Yrs 8–10 sell investments. Sell or break money machine. Take the profits out of SPV in dividends. Estimated dividends $50 million. Bond repaid if possible.’

  ‘What do you make of that?’ Tommy asked.

  I thought for a minute or so. ‘Well, I don’t know what “Uncle Sam’s Money Machine” is, but I think I understand most of the rest.

  ‘The forty million dollars raised by Tremont Capital from the private placement is placed in a Swiss bank account. From there it is used to purchase, or perhaps build, the mysterious money machine. There the money is somehow turned into two hundred million dollars. This money is put into high return investments. After eight years or so, these are sold. The proceeds, which by that time are presumably quite large, flow back to Tremont Capital. The forty million dollars is then repaid. Any profits from the investments, over and above the interest costs on the private placement, are paid out by Tremont Capital in dividends. Waigel estimates these to be fifty million dollars. So, Waigel and his accomplices borrow forty million dollars, use this money to generate a further fifty million dollars in profits for themselves and then give the original forty million dollars back, with nobody any the wiser.’

  ‘Why do they do that?’ asked Tommy. ‘Why don’t they just keep the forty million dollars?’

  ‘That’s the clever bit. By giving the money back, no one will know that a crime was committed. They can carry on living normal lives, and perhaps try the same trick again, forty million dollars richer. If they were to get greedy and not repay the forty million dollars they had borrowed, then an investigation would be started, and they would run the risk of getting caught.’

  ‘They raised twenty million dollars from De Jong. Where did they get the other twenty million dollars from?’ Tommy asked.

  ‘From Harzweiger Bank in Zurich,’ I said. ‘I spoke to a Herr Dietweiler there, who pretended they had never bought the deal. He must have got some kickback for getting involved. That must be why they use accounts at Harzweiger Bank, where Herr Dietweiler can keep his eye on the funds.’

  ‘OK. So how do they manage to make all this money out of borrowing forty million dollars. What is this “Uncle Sam’s Money Machine”?’

  I shook my head. ‘I don’t know. It seems to be the key to the whole thing. I don’t know what the hell it is.’

  ‘Perhaps it’s a government agency?’ suggested Tommy.

  ‘Maybe,’ I said. ‘But I don’t see how anyone ever got rich by giving money to a government agency.’

  ‘Uncle Sam could refer to the army,’ said Tommy. ‘A lot of people make money out of that. Defence contractors and such like.’

  ‘Could be,’ I said. We discussed the possibilities for several minutes without coming to a satisfactory conclusion.

  ‘So – how can I help?’ Tommy asked.

  ‘Are you sure you want to?’ I said. ‘You know what happened to Debbie Chater and Greg Shoffman.’

  ‘Hey, I don’t have a job, and I need something to do. This beats selling bonds. And the more I stir up that sticks to Bloomfield Weiss, the better.’

  ‘Well you could try to find out a bit more about Greg Shoffman,’ I said. I told him about my attempts to discover more about his disappearance. ‘I would like to know who killed him. Just as important, I would love to know what he found out before he died. He may have turned up some useful evidence against Cash and Waigel. I would do all this myself, but I won’t be in New York for very long. If you come across anything, call me at the conference in Phoenix.’

  Tommy said he would do his best, we paid for the coffee, and we left.

  I liked Tommy. For a moment I was concerned that I had needlessly put him in danger by telling him what I knew. No, that was silly. I knew more than Tommy. And I wasn’t in any visible danger.

  I got back to my hotel room, hot and sweaty. The red light on the phone was on. I left it there and jumped straight into the shower, letting the cool water lower my blood temperature. Feeling much better, I went to the phone and rang the message desk. Hamilton was coming into New York the next day. He wanted to meet me for lunch at a fashionable Italian restaurant on the Upper East Side. It would be good to see him. Everything was jumbled in my mind. Talking it through with him, I knew it would all fall into place.

  The next day was my last in New York before flying to Phoenix. I was scheduled to see a couple of
investment banks in the morning. At one of them a persistent little man called Kettering insisted on lecturing me on the opportunities in South American debt, even though I had no interest. He regaled me with a mixture of scolding and abuse. He succeeded in making me feel stupid for not agreeing with him about the financial wonders of that continent, but also irritated the hell out of me.

  Tired and battered by the morning’s hard sell, I decided to walk from the investment bank’s offices up to the restaurant. I needed the air, even though it was only New York’s hot atmosphere, which managed to be both dusty and clammy at the same time. I sauntered diagonally through side streets and up the main avenues, slowing myself down, just looking.

  I walked along a deserted side street, high buildings on either side. Thin eerie music echoed off the walls of the canyon. A group of short square men, wearing what looked like shawls and bowler-hats, clustered round some rugs, acoustic equipment and a set of primitive drums. They had dark, wind-beaten skin and high, hardened cheekbones. There was just me and them alone on the street. I stopped to listen. The music had a magical quality to it, evoking sheer mountainsides, swooping birds of prey, the age-old loneliness of the Andean altiplano. I don’t know how long I stood there, bewitched by the music. Eventually they paused, and only then acknowledged my presence, smiling shyly. I bought one of the tapes they had laid out on the sidewalk. The cover was a picture of the group looking very serious, with the caption ‘Las Incas’. I walked on, the music still swirling and swooping inside my head. Within a minute I was back in the blaring bustle of Third Avenue.

  The restaurant was light and airy. Skylight and metal tables suggested an informal garden trattoria in Italy. The other diners’ sober suits or chic dresses confirmed what it really was: an expensive New York restaurant currently enjoying its brief turn as the place to be.

  I saw Hamilton lost in a sheaf of papers. He looked quite out of place amongst the other tables of smart diners. As I drew up a chair, he glanced at his watch and frowned slightly. I looked at my own and saw it was 12.33 p.m. Three minutes late. Who but Hamilton would care?

  Stuffing his papers into his briefcase, he asked ‘How are you finding New York?’

  ‘Oh, I like it,’ I said. ‘It’s so,’ I paused, ‘unexpected.’ I told him about the Peruvian band I had encountered on my way.

  Hamilton looked at me, slightly puzzled. ‘Yes, I see,’ he said. And then, with an edge to his voice. ‘You have seen some investment banks, haven’t you?’

  As usual with Hamilton I felt slightly foolish. Of course Hamilton was not interested in my thoughts on New York as a city, he wanted to know what was going on on Wall Street.

  I told him the highlights of what I had heard. He questioned me closely about one or two conversations I had had which I had thought were completely unimportant. He probed me with questions which I realised I should have asked and hadn’t, digging to discover who was buying what. My self-confidence began to wane as I realised that by Hamilton’s standards I had done a superficial job of finding out what was really going on.

  The waiter had been hovering throughout this interrogation, nervous of interrupting Hamilton. Finally he saw his chance and, after forcing a hurried glance at the menu, coaxed an order from each of us. Hamilton stuck with a Caesar salad, which seemed a bit Spartan to me, given the exotic attractions of the menu. Reluctantly, I gave up the starter, and after a swift glance, asked for a complicated-looking meat dish. Hamilton ordered a large bottle of mineral water. I looked enviously at the next table, where a couple were enjoying a long, relaxed meal and were already on to their second bottle of Montrachet. Why come to a restaurant like this and gallop through a lettuce and a glass or two of water? Oh well.

  ‘How have your other investigations gone?’ Hamilton asked.

  I told him everything I had found out: how Waigel had been evasive about his involvement in the original deal, about Shoffman and his disappearance, and about the diagram I had found in Waigel’s office.

  Hamilton listened carefully to every word. When I had finished I looked to him for a response. He was silent for what seemed an age, gently stroking his beard. Then he smiled. ‘Good work, Paul. Very interesting. Very interesting indeed.’

  After my poor showing earlier in the conversation, I was pleased. ‘So what do you think Uncle Sam’s Money Machine might be?’ I asked.

  ‘What do you think?’

  I had thought about this hard over the last twenty-four hours, but had not come up with anything. ‘A government defence agency? Some sort of computer? Some kind of government bond fraud?’ I guessed wildly, looking to Hamilton for a reaction. He didn’t seem too impressed with these ideas.

  I shrugged. ‘I don’t know. What do you think?’

  Hamilton paused. ‘We have no way of knowing. We don’t have enough to go on yet, but it’s a start. Well done.’ He took a peck at his salad. ‘I think you are right, though. Finding out what this thing is, is the key to getting our money back.’

  ‘How did you get on in the Netherlands Antilles?’ I asked.

  ‘It was a bit difficult, since I didn’t want to tip off Van Kreef, Heerlen that we are suspicious. Rudy Geer was very helpful. My cover was that the recent tax reforms had caused us to look at the possibility of asking for a change in domicile for Tremont Capital. As part of the process, Geer had to check all the documentation.’

  ‘Did he find anything?’

  ‘It’s interesting. Van Kreef, Heerlen claim that they did see the Honshu Bank guarantee. When Geer asked them to produce it, they said they couldn’t find it in their files. This is of course a terrible thing for any firm of lawyers to admit, so Geer suspects it must be true.’

  ‘What do you make of that?’ I asked.

  ‘I don’t know. I suppose the most likely thing was that the guarantee was a fraud that was somehow removed from Van Kreef, Heerlen’s files. Perhaps by one of their own lawyers who is on the take. It is going to be difficult to kick up too much of a fuss without causing our concerns to get back to whoever owns Tremont Capital.’

  ‘Very interesting,’ I said. ‘Anything else?’

  ‘Well, it looks as though we will get a court order forcing Tremont Capital’s auditors to show us a copy of their accounts. Hopefully that will give us some clue as to where the money has gone. The court order won’t be granted until early next week, and they will have a couple of weeks to comply. There’s not much I can do until I hear back from Geer, and actually get my hands on those accounts.’

  ‘So, what now?’ I asked. ‘Do you think we have enough to go to the police?’

  Hamilton leaned forward, his blue eyes boring straight into mine. ‘We have to get that money back,’ he said. His voice was calm, his tone level but there was an edge of absolute determination to it. ‘You remember I told you about that lead I had in Tokyo? Well, I think we really might get it. And they are talking five hundred million dollars. That could transform De Jong.’ He sipped his mineral water, never taking his eyes from mine. ‘If they hear we have lost twenty million dollars in a fraud, our credibility will be blown, and no one will give us their money to manage. Even if it wasn’t our fault.’

  It was our fault, I thought. Or at least Hamilton’s. He had been sloppy in checking the documentation. A rare mistake on his part, but I was not about to try to get him to admit to it.

  ‘But if we go to the authorities, won’t they help us find the money?’

  Hamilton shook his head. ‘The police’s top priority is to catch the criminal, not find the loot. That’s why most cases of fraud in the City never get to the police or the public. If you can sort it out yourself, you have a much better chance of coming out whole.’ There was a slight smile on his lips, mocking my naïvety.

  ‘All right,’ I said, not really feeling all right about it at all, ‘So what do we do next?’

  ‘Well, you’ve done a good job so far. Keep plugging away, asking questions. There will be a lot of people from Bloomfield Weiss at the conference in
Arizona. See what you can find out there. In particular, see if you can find out anything about this “Money Machine”. I’ll do what I can in London, and wait to hear from Curaçao.’

  Hamilton saw the concerned look on my face. ‘Don’t worry, we’ll find the money.’

  Hamilton brushed away the dessert trolley, dripping with temptation, and paid the bill. We went our different ways, with me taking a taxi downtown to Harrison Brothers.

  The afternoon dragged. I was tired and edgy, and found it difficult to concentrate. I was nervous about going along with Hamilton. I felt out of my depth, and although I would normally trust Hamilton to do anything, I had nagging doubts that he was out of his depth too.

  Finally five o’clock came, and I could respectably leave. I was due to meet one of Harrison’s government bond salesmen at eight o’clock for dinner. That was three hours away, so I decided to head back to the Westbury. I walked to the Fulton subway station and boarded the Lexington Line Express heading north. I changed at Grand Central to get the Local.

  It was rush hour and the train was crowded. New York in early September is still very hot and very humid. The train was one of the few on the subway system which had no air-conditioning. I felt the sweat run down my body, soaking my shirt and even my trousers. My tie looked as though it would curl up in the heat.

  The train stopped for an age. Passengers were crammed together. Tempers were short. People were muttering under their breath, cursing the goddamn subway system. Even in these conditions, everyone was following the golden rule of the New York subway – never, ever catch another person’s eye. He might be a cokehead, a rapist, a serial murderer, a Jehovah’s Witness.

  I stared at the advertisements. There was poor Walter Henson, an architect famous throughout New York City for his haemorrhoid complaint. There, too, were big, black, ugly cockroaches crawling into a Roach Motel with the caption ‘Las Cucarachas entran pero no pueden salir’.

  The train lurched forward. My gaze wandered along the carriage. It stopped with a jolt.