The Capitalist

by Peter Steiner

  Lorraine went back to her desk and sat down. She thought of all the people who had their money with Larrimer. She stared straight ahead; her vision grew cloudy as her eyes filled with tears. Lorraine Usher felt sorry for herself of course—she had all her savings with Larrimer. But she also felt sorry for all the others who had invested their money with Larrimer and lost it. And then her sympathy went pinwheeling outward. She thought of the millions, even billions, suffering fates far worse than hers.

  The phone would stop for a moment and then immediately start again. She came to imagine it was the suffering of the world calling. She could not bring herself to answer.

  Lorraine had worked for Larrimer, Ltd. for most of its twenty-five years. She had saved assiduously over the years until she had $150,000. As a favor to her, Larrimer had waived the investment limit so she could invest in his fund. Some favor. Now she knew why. The file drawers behind her were full of the names of clients. There were associations and charitable institutions among them. But mainly it was individuals who had invested with Larrimer, just as she had.

  “You had better go home, Francine.”

  Francine Maypoll looked at Lorraine uncomprehendingly. “What? Why?”

  “I think Mr. Larrimer is gone. I think he stole all the money. He’s gone.”

  “Gone?”

  “Gone.”

  “How do you know?”

  “I just know.”

  Once Miss Maypoll was gone, Lorraine went back to her office and sat at her desk. She turned in her chair and looked at the file drawers. She got a yellow pad from the supply closet, opened the top drawer, and pulled out a handful of files. She began making notes.

  At the end of the day, she put the thick folder of pages she had filled into her purse. She got up from her desk, put on her coat, and left the office, carefully locking the door behind her. She had briefly considered taking something of value as compensation for all she had lost, one of the remaining prints perhaps. She decided against it. She was not a thief.

  IX

  QUITE A FEW OF LARRIMER’S INVESTORS—some of the endowment and fund managers in particular—while not exactly thieves themselves, could be said to have behaved in a thievish way. In fact by their behavior, they confirmed one element of St. John’s philosophy: that in order to function as it was designed, capitalism needed its constituent population to generally harbor and exercise larcenous inclinations. Capital could not grow if people did not want to get their hands on other people’s money.

  Even lending money for interest was, ipso facto, a larcenous enterprise. Laws and regulations had been put in place to keep banks and other lenders from charging more than was seemly. But what was seemly, and who decided what was seemly? Anyway, even with strict laws in place, banks found ways through and around the laws, thanks to teams of skilled money managers and lawyers, who behaved, in fact, not unlike Vikram Rob and Abdur Pandit and agents and factory owners and bankers and lawyers across the suffering world. They managed to charge preposterous interest rates on consumer debt and make it seem a benevolent and virtuous act.

  “We can help you manage debt,” they said.

  “We are helping society to grow and prosper,” they said.

  “We are working for you,” they said.

  “We have your interests at heart,” they said.

  “We are building a more prosperous world, the world of tomorrow,” they said.

  “Why rob a bank when you can found one?” A character in one of Bertolt Brecht’s plays had said something like that, and most bankers would secretly have agreed.

  The small EisenerBank in Zurich, Switzerland, while not exactly founded by thieves, had been founded with them in mind. It lent money, to be sure, and actually at reasonable rates of interest. But its main profits came—as did Richard Smythe’s—from laundering money. The EisenerBank found lucrative investments for its clients and collected a percentage of each investment’s worth. The difference from Richard Smythe’s enterprise was that the EisenerBank was prevented by Swiss law from asking where the clients’ money came from, although there could be very little doubt that they knew.

  Seeking the best returns for the bank’s customers, Lorelei Steinhauer, the president of the EisenerBank, had invested a substantial amount of the bank’s holdings with Larrimer, Ltd. When it became clear that St. John had absconded with the money, Lorelei went into hiding. After all, some of her clients were mobsters—Saudi, Indian, and above all Russian—to whom she had promised that their money would grow.

  Then there was the Greenwich Fund, a mutual fund founded and directed by Summersby van den Heuvel. After an initially promising flurry of subscriptions, the fund’s client roster began to shrink as it became clear that Greenwich’s portfolio was doing poorly even in an easy bull market. Van den Heuvel had no experience managing money. But he was from a wealthy Greenwich family and had been able to raise considerable amounts of money from family and friends and neighbors.

  In fairness to Summers, as he was called, he was slightly less lazy than the fund’s other directors. He at least wanted to improve earnings, and not only in order to improve his and his fellow directors’ 3 percent management fee. He was concerned for the people who had invested their money with him, since they included his mother, his sister, and any number of cousins and uncles. How would it look if their holdings diminished while in his care?

  Summers had looked around and found Larrimer, Ltd. and its amazing returns. He invited St. John Larrimer to lunch at the Millennium Club in the City. The deal was arranged before the second cocktail. Greenwich would pay Larrimer a 1 percent management fee, and Larrimer would take over the investment of the entire forty million dollars still left under Greenwich’s management.

  The change in Greenwich’s fortunes was immediate. Within weeks the fund rose to the top 10 percent of the value-investing sector of funds. Forbes magazine did a feature article on the turnaround at Greenwich. Financial advisers and investing newsletters started recommending Greenwich, and new money came cascading in. A charity devoted to impoverished Holocaust survivors invested its entire endowment with Greenwich.

  Even allowing for the 1 percent that Greenwich paid Larrimer, Summers’s and the other Greenwich directors’ fees increased exponentially. Before long Greenwich had eighty million dollars under management. The number had risen to almost a hundred and twenty million when the dam broke and St. John went missing.

  X

  THE FRENCH VILLAGE Saint-Léon-sur-Dême sits surrounded by small farms in the narrow Dême River Valley. Saint-Léon was called Dombona in Roman times, but was later renamed to honor Saint Leonardo di Carronna, martyred during the second crusade while plundering a mosque in what we today call Jordan. He had ridden his horse up the steps and into the mosque and was stuffing silver chalices into his saddlebags when a Saracen warrior beheaded him from behind. Leonardo was elevated to sainthood in 1180 by Pope Alexander III.

  That irony about the town’s namesake suited Louis Morgon. He had come to believe that most saints were anything but and that virtue was ephemeral at best. Louis was a retired state department and then CIA official who had made Saint-Léon his home for the past forty years. His relatively brief US government career was far behind him now.

  That career was, in a life with plenty to regret, the thing he regretted most. It had torn him from his family, which was bad enough. But it had also led to the death of several people, and though they were by no means innocents, their deaths still troubled him. He had come to believe that intrigue of the kind he had engaged in had caused and continued to cause a great deal of the world’s misery and suffering.

  Louis still had nightmares that made him cry out in his sleep. When she was there with him, Pauline would hold him until he woke up.

  “Louis, Louis. It’s all right. I’m here.”

  “Where?”

  “Here. It’s all right.”

  “I fell down on my face.” He wiped his hand across his lips. “My mouth was full of sand.
”

  “I know.”

  “I could feel it in my own mouth. It was me.”

  “It wasn’t you. You’re all right.”

  It was early morning. The first gray light was showing through the window. He looked around. The familiar sight of the barn and the poplars silhouetted against the dawn was reassuring. He lay in Pauline’s arms. When she awoke again, the sun was high in the sky and she heard Louis rattling around down in the kitchen.

  They ate breakfast on the terrace. They wore their jackets with collars up and wrapped their hands tightly around the steaming coffee bowls. The croissants didn’t need butter, but they slathered butter on them anyway, and blackberry jam, which Isabelle Renard had made.

  “What time is your train?” said Louis.

  “One-thirty,” said Pauline.

  “From Saint Pierre or Vendôme?”

  “Saint Pierre. I have patients coming first thing tomorrow. Listen, there’s a Max Beckmann show at the Pompidou. Why don’t you come with me?”

  “I can’t. But do we have time for a walk before the train?”

  They drove the old Peugeot to Rochecorbon, which was almost to Saint Pierre. They walked east along the left bank of the Loire and then up into the vineyards above Vouvray. The sky went from brilliant blue to gray and back again. At its brightest and bluest, it suddenly started to rain. They looked up; there wasn’t a cloud in sight.

  “Are you worried about money?” Pauline asked; she didn’t know why.

  “Only a little,” said Louis. He lived from his modest savings.

  “It’s getting worse,” said Pauline. The bank collapse and market crash had hit with full force in the United States. And the housing market was falling off at an alarming rate.

  “It will come here too,” said Louis.

  “I know. But your money’s there. Some of it’s with Jean-Baptiste.”

  “Only a little,” said Louis. “Anyway, so is yours.”

  “Not all of it,” she said.

  “It should be safe,” he said. “Well, relatively.”

  “Show your paintings, why don’t you?” she said. “You might sell some.”

  “What does Jean-Baptiste say?”

  “About your paintings?”

  He laughed. “About our money.”

  Later that same day, when Pauline opened the door to her apartment and saw the light on the answering machine blinking, she knew somehow that something bad had happened. The message was from Thierry, her middle brother. His voice sounded strangled. Jean-Baptiste, the money manager, their youngest brother, had killed himself. He had cut his wrists in his New York office.

  “He bled to death,” said Thierry.

  “Oh, God,” said Pauline. She pressed the phone to her heart and wept.

  Jean-Baptiste was thirty-eight. He had managed a small portfolio for family and friends. He had lost much of the money, including all of Thierry’s and some of Pauline’s.

  Louis had lost two thousand dollars that he had only recently placed with Jean-Baptiste, mostly because he loved Pauline and she loved Jean-Baptiste. Pauline had not lost a great deal of money either. But she had lost a brother. “He was just a boy,” she said. “I’m going to New York,” Pauline said. “To bring him back.”

  “Shall I go with you?” said Louis.

  “No,” said Pauline.

  She and Thierry flew to New York together. They did not speak much during the flight. Sometimes they held hands.

  “What is the purpose of your visit?” said the customs officer at Kennedy Airport. When Pauline hesitated, the officer looked up.

  “Business,” she said finally.

  He stamped her passport. “Welcome to the United States,” he said.

  XI

  PAULINE AND THIERRY TOOK A taxi into Manhattan.

  A young man from the French Embassy helped them collect Jean-Baptiste’s body for shipment back to France.

  Jean-Baptiste’s secretary, Diane, had found the body. She helped Thierry get permission from the police to take personal items from the office. She went along to the building, but would not go up. “I’ll be here in the coffee shop,” she said. A policeman escorted Thierry into the office. They ducked under the yellow tape across the doorway. POLICE LINE—DO NOT CROSS.

  The carpet by the desk was stained with Jean-Baptiste’s blood. Thierry collected a few personal items: photos of their dead parents; of Thierry and Jean-Baptiste on a sailing vacation, arms around each other; Jean-Baptiste with Thierry’s children; Jean-Baptiste with Pauline.

  “May I look in the files?”

  “No,” said the policeman.

  Thierry shrugged. He put the pictures in a cardboard box and left.

  A different policeman went with Thierry and Pauline into Jean-Baptiste’s apartment in Brooklyn. It was a small one-bedroom. You could tell that Jean-Baptiste didn’t spend much time here. Yet you could also feel that it was Jean-Baptiste’s.

  “I know his clothes,” said Pauline. “His shoes. His umbrella.” There was nothing remarkable about any of it, and yet he was everywhere. His books, his computer, his letters. His scribbled notes. “All of it.” She paused. Louis waited silently with the phone to his ear.

  “I’m in the Park East Hotel looking out at Central Park,” she said. “Do you remember the view?”

  “I do,” he said. “Two years ago. It seems like a lifetime.”

  “Have you heard of St. John Larrimer?” She pronounced it Saint John.

  “Who?”

  “St. John Larrimer.”

  “No,” said Louis. “Who’s that?”

  * * *

  Jean-Baptiste had studied economics at the Sorbonne, then gone to work for BNP, a French bank, in their international investments department. He worked hard and was soon promoted to a position where he was managing a small portfolio. He invested astutely and got good returns.

  “You should be in business for yourself,” said Thierry.

  “Who on earth is going to give me money to manage?” said Jean-Baptiste.

  “I will.”

  When Jean-Baptiste started his own business, Thierry turned some of his investments over to him and was soon glad he had. His returns increased, and more important, Jean-Baptiste flourished. He seemed to have found what he was meant to do. Pauline gave Jean-Baptiste some of her savings as well, and so did other relatives and friends.

  Jean-Baptiste was grateful to everyone for their trust in his abilities. He decided that he really ought to be at the center of the financial world if he was going to find the best returns, and, with the encouragement of his clients, who were his family and friends, he moved to New York. He made new contacts and discovered new opportunities.

  He had not been there very long when he learned of St. John Larrimer’s extraordinary earnings record. Some of Larrimer’s methods were proprietary, but from what Jean-Baptiste could see, the exceptional earnings seemed real. When he happened to meet the man himself at a party the following week, it seemed like destiny. St. John exuded confidence. He lamented the disappearance of honor and integrity from the business of money management and investing. “When I began, over twenty years ago, your word was your bond. Those days are gone. Bernard Madoff ruined that for everyone.”

  “Yes, but he must have begun with the best of intentions,” said Jean-Baptiste. “Don’t you think?”

  St. John thought for a long moment before replying. “I don’t think so,” he said. “No. I find it inconceivable that he did. No, no. It’s just impossible. A human being doesn’t undergo that sort of transformation without having harbored evil and malevolent intentions from the beginning.”

  “But his family would have known, wouldn’t they? His wife, his sons?”

  St. John gave Jean-Baptiste another long look. “You just can’t know what’s in a man’s heart.” St. John invited Jean-Baptiste to visit his offices and see his trading room. He introduced him to Jeremy Gutentag, who gave him a tour of the premises. St. John gave Jean-Baptiste his prospectu
s and the last several issues of his monthly report. Jean-Baptiste studied Larrimer’s publications. He read articles in Fortune, The Wall Street Journal, Mutual Fund, and Fund Market Trader, and everything else he could find on the subject of Larrimer, Ltd. Everyone, even the SEC, gave Larrimer a high rating.

  Jean-Baptiste understood money and investing, but he was an innocent when it came to people. The fact that Larrimer spoke French and held dual American-French citizenship seemed significant to him. The proprietary nature of Larrimer’s trading strategy also aroused his admiration rather than his suspicion. The problem was Jean-Baptiste knew nothing of greed or malevolence. He was in some ways, as Pauline had said, just a boy.

  To his way of thinking, earning money by investing in shares and bonds and commodity futures and currency and every other financial entity was only possible if every transaction was based on mutual trust. He trusted those in the business to be honest; he had no choice but to trust them. After all, the financial entities they traded in—including currency itself—were all abstract constructions. They had value only because they were exchanged, and that value was determined by implicit agreement. Which meant trust. Without trust, there could be no honest value, and every exchange became predatory and false. Without honesty and mutual trust, the financial system was nothing more than a shell game.

  After carefully weighing the risks and benefits, Jean-Baptiste decided to put a large portion of the money he was managing into what he perceived to be the superior system. Being a cautious investor, he kept some money in US treasury bills and bonds, municipal bonds, money market funds, and other guaranteed investments. But his job was to increase the savings of his family and friends to the best of his ability, and if Larrimer, Ltd. offered a better and more dependable means of doing so, then he really had to take advantage of it.