Octopus

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by Guy Lawson


  The Last Circle described how Danny Casolaro was found dead in a motel room in Martinsburg, West Virginia, in August of 1991. He’d spent the preceding weeks in close contact with Nichols and had warned his brother that if something happened to him it wouldn’t be an “accident.” Both of Casolaro’s wrists were mutilated by a dozen deep gashes—wounds that seemed inconsistent with suicide. There was a shoelace around his neck and a razor blade in the bathtub, along with a can of Old Milwaukee. On a side table there was a suicide note: “I know deep down inside that God will let me in.”

  Sam read The Last Circle with saucer eyes. The mystery of the death of Danny Casolaro had caused a media sensation at the time. “The Man Who Knew Too Much?”

  Time magazine asked. Features speculating on the circumstances appeared in Vanity Fair, the Washington Post, and the Village Voice. Lou Dobbs of CNN became obsessed with the story. HBO began to develop a television series. Spy magazine ran a three-part story strongly implying that Nichols had gotten away with the murder. The author of The Last Circle made it clear that Nichols was an extremely dangerous and violent man.

  Dawn rose at the Trump house. Sam was enthralled. Had Casolaro committed suicide? Had he been “suicided”? Had he staged his suicide to look like a murder to posthumously justify his conspiratorial beliefs? Robert Booth Nichols had never been charged, despite obvious suspicions. Indeed, Nichols had never been charged with any crime, despite decades of apparent illegal conduct as an arms dealer and an international hit man engaged in shadowy !nancial activity. This was proof, Sam believed, that Nichols was connected to the CIA—and the Octopus. Sam decided he had to meet Nichols. Sam had to see the Zapruder !lm and judge its authenticity with his own eyes.

  But there was another reason to seek out Nichols—one with a direct and urgent application to Bayou. Casolaro and the author of The Last Circle hadn’t grasped the signi!cance of the story they were chasing. With his devious turn of mind Sam had seen a way to use PROMIS to front-run the market trading stock. The computer program was tracking the movement of money inside banks all over the world. It was inside the Federal Reserve. It was inside the leading !nancial institutions. And none of them knew it. If Sam could get PROMIS, he realized, he’d be able to watch money transfers in real time. He’d be able to watch how the Fed secretly surged money in and out of the market. By integrating the program into his trading system, Sam wouldn’t have inside information: He’d have signals intelligence. He would be a one-man National Security Agency. He’d be ahead of the market by minutes, hours, even days.

  He’d be able to actually do what he had long claimed Forward Propagation did. He would be able to see the future.

  “A lightbulb went o" in my head,” Sam recalled. “The PROMIS software was the answer to everything I’d suspected about the markets. I’d seen how the markets were manipulated after the crash of 1987. But I didn’t know how they did it—how the money actually #owed into the market. If I had PROMIS I could track the movement of money. I could see how the Fed operated. If money was going into semiconductors, then I could get there ahead of the market. The same for consumer goods, or oil and gas. I would be at the #ux point. I would be able to see the volume going up before the stock moved. If I could get this tool, I knew I could kill it. I would slay the market. I was going to make so much money it wouldn’t even be fun. It would be the ultimate inside trade.”

  Turning o" his computer and retiring to bed, Sam resolved to track down Nichols and get PROMIS. The Octopus was dangerous, he could see. Danny Casolaro had been murdered because he threatened the cabal, Sam believed. Nichols was involved somehow. He was clearly a con!dence man of some kind and extremely dangerous. But Sam was not going to be cowed. He would take the risk. He had balls—big balls, balls of steel.

  * The author Cheri Seymour published the book in 2011 (Trine Day).

  † The world’s most powerful investment bank is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Matt Taibbi, Rolling Stone, April 2010.

  CHAPTER ELEVEN

  The Shadow Market

  The Dorchester Hotel in central London was the setting for Sam Israel’s !rst encounter with Robert Booth Nichols. Jack O’Halloran had made the arrangements. The pretext was to get Nichols’s assistance in obtaining the CIA’s latest technology on !ngerprint recognition for the identity card KYCOS was developing. For half a million dollars in cash, Jack O’Halloran had told Sam, Nichols could arrange for a briefcase to be left on Bayou’s doorstep containing top-secret biometric software—no questions asked. But Sam had insisted on a face-to-face meeting. Israel hadn’t told O’Halloran that the real purpose was to get PROMIS from Nichols. It emerged that Nichols had had unsuccessful dealings with O’Halloran in the past, so he’d insisted on a fee of $25,000 to be paid up front. Sam didn’t know it, but as he arrived in London he was about to step into a di"erent dimension in the time/space continuum, an irreality !lled with deception, double-dealing, and cascading delusions.

  At the Dorchester, half a dozen men gathered around a long glass table in the lobby.

  Two engineers had been #own in from Prague by KYCOS to consult on the technical aspects of the !ngerprint ID system. Jack O’Halloran was present, along with a young Irishman who worked for him. Sam represented the money, as the largest investor in the company. When Nichols arrived, O’Halloran greeted him as an old friend.

  Introductions were made. Sam took a seat on the couch at the end of the table next to the mysterious character.

  In person, Nichols was much as Sam had imagined—only more so. To Sam, Nichols exuded an air of mystery and menace. As Nichols sat, Sam caught a glimpse of the gun Nichols was carrying in a shoulder holster—a very unusual occurrence in London, where arms are closely regulated. Nichols was six-three, more than two hundred pounds. He was now sixty years old, tall, pale, with a paunch and the deep, gravelly voice of a lifelong chain-smoker. The world-weariness of decades living as a real-world Jason Bourne was evident in the lines around his eyes, in his soft jowls, and in his guarded manner. He was dressed in a blue suit—not shabby but not well tailored, with frayed cu"s. “Clark Gable with big ears” was how Nichols had been described in The Last Circle. The depiction was accurate, Israel thought, though it didn’t capture the air of danger surrounding the CIA operative. It seemed to Sam that under the wan complexion and cagey but correct manner Nichols revealed nothing—except the fact that he was obviously capable of extreme violence.

  As the meeting convened, Nichols talked in general terms about how CIA computer systems could be applied to thumbprint identification.

  It was evident to all present that Nichols was far from tech-savvy. The young Czech programmers, sensing Nichols’s lack of sophistication regarding computers, began to list the challenges. Nichols assured the group that he knew the right people in the intelligence community to talk to.

  As the engineers talked about modalities, Israel leaned over to whisper in Nichols’s ear. “I need to talk to you privately,” Sam said.

  “Aren’t you part of this group?” Nichols asked.

  “This has nothing to do with them,” Israel said. “I’m here to see you about something different.”

  “What is it?”

  “PROMIS,” Israel said. “The computer program.”

  Nichols looked surprised—but he nodded in acknowledgment. He whispered that he would meet Israel outside. Nichols told Sam to wait !ve minutes and then excuse himself. Claiming he had another appointment, Nichols took his leave. Following instructions exactly, five minutes later Sam exited the Dorchester through the front door and turned left. On Park Lane, he spotted Nichols waiting in a cab. Sam got in. Nichols was talking on his cell phone. He gestured that the call would take a minute. Israel noticed Nichols was holding a piece of paper with numbers in columns. Sam could hear the voice on the other end, but he couldn’t understand what they were discussing.

  Nichols hung up.
He quickly returned the piece of paper to his briefcase.

  “Where are you staying?” Nichols asked.

  “Claridge’s,” Israel said.

  “We can talk there,” Nichols said.

  “I want PROMIS,” Israel said, too impatient to wait to speak. “I know you’re involved in the computer program. I know about you, and I want PROMIS.”

  Sam didn’t mention reading The Last Circle. He wanted to create the impression that he had access to confidential, even classified, information.

  “Why should I give it to you?” Nichols asked.

  “I’ll pay for it,” Israel said. “I don’t give a shit. I’ll do whatever it takes.”

  “What do you want it for?”

  “To trade with,” Israel said. “I run a hedge fund. I’ll be able to keep track of the market. I’ll be able to watch how the Federal Reserve is moving money and trade ahead.

  Volume precedes price.”

  “Who are you?” Nichols asked.

  “I run a fund called Bayou,” Israel said. “I’m a trader.”

  “No, I mean who are you?” Nichols asked. “Are you a$liated with an intelligence agency? How long have you been on Wall Street? Who are your relatives? What are your ties?”

  “I’ve got my own questions,” Israel said. “I’m going to ask you some nasty questions.”

  “Go ahead,” said Nichols.

  “Did you kill Danny Casolaro?”

  “No.”

  “That’s a lie.”

  “I’m not going to lie to you,” Nichols said. “I’ve killed people. But not Danny. You can ask me questions and I will tell you. Some things I can answer. Some I can’t.”

  Nichols’s cell phone rang. He took the call, speaking in a low voice to avoid Israel overhearing what he was saying. After Nichols hung up, another call came in, and he again talked in a hush. Israel was able to make out the words “payout” and “the program” but not the substance of the conversation. When Nichols hung up, Israel asked what he had been talking about. Nichols was reluctant to say. All he would reveal was that he was doing business with a prince from Saudi Arabia—business that involved a trading program. London tra$c was at a standstill. Nichols’s cell rang yet again. This time as Nichols spoke he opened his briefcase to retrieve the document he’d consulted earlier. Nichols scanned the page and swiftly closed the briefcase. For a split second Sam caught sight of the columns of numbers.

  “What is that?” Israel asked.

  “Nothing,” Nichols said.

  “Let me see it,” Israel said.

  Reluctantly, Nichols clicked open his briefcase and handed over the document. “It’s a payout sheet,” he said. “From a trading program.”

  Israel looked at the !gures on the page. On the left were numbers arranged to show amounts of money invested—!gures in the low millions. On the right side was a column displaying the pro!ts made. The returns were astronomical. An investment of $5 million in the “trading program” became $20 million in a matter of days. There was no indication of what was being traded, or where. But the results were astounding.

  “These are the returns?” Israel asked, incredulous.

  “I’m doing this with the Saudis right now,” Nichols said.

  “What are you trading?”

  “Bonds,” Nichols said.

  “What kind of bonds?” Sam asked.

  “This is something that could bene!t you greatly,” Nichols replied. “But it is very difficult to get into this market. Nearly impossible.”

  “What market?”

  “High-yield buy/sell trading programs,” Nichols said. “The market is only open to the biggest players.”

  “So how do I get in?” Israel asked. “I know how to trade anything.”

  “Do you have one hundred million in cash?” Nichols asked.

  It seemed to Israel that Nichols had tossed out the huge number as a way to brush him off. But Israel wasn’t deterred. He leaned forward.

  “I do,” said Israel. “I’ve got one hundred million in cash.”

  “Do you have $150 million?” Nichols asked.

  “Yes.”

  “Do you have two hundred million?”

  “That’s pushing it,” Israel said.

  “You should forget about PROMIS,” Nichols said. “I know how to put your money to work. I know how to make you a lot of money.”

  Turning onto Brook Street in Mayfair, the taxi arrived at Claridge’s. Passing through the revolving doors and entering the lobby, Sam and Nichols stepped into the quintessence of London sophistication and money: The art deco hotel was frequented by royalty, celebrities, and socialites taking tea under the massive Chihuly chandelier.

  The Israel family had stayed at Claridge’s for generations, and Sam moved with ease and entitlement through the plush surroundings. Sam had taken a suite on the third #oor. The elegantly appointed sitting room had a co"ee table with matching stu"ed chairs for the two men to hold their meeting. They ordered room service and got down to business. For the next three hours, Israel and Nichols got to know each other. Nichols asked Israel how he knew about PROMIS. Sam talked about the Israel family and his history as a Wall Street trader.

  Israel described his trading system at Bayou. Forward Propagation enabled him to be correct 86 percent of the time, Sam said. Bayou’s strategy was market neutral, so it didn’t matter if prices went up or down. Sam said that the whole system revolved around the combination of his proprietary computer program and his years of experience as a trader. Nothing was written down, Sam said. Nichols was fascinated by Israel’s talents, although it was evident that he wasn’t knowledgeable about Wall Street and the complexities of running a hedge fund. Nichols said that Sam’s skills as a trader would be invaluable to their efforts to get into the secret trading program.

  “I then asked if I could ask him some questions,” Sam recalled. “He said he would answer as honestly as he could. I went through his history with intelligence—Iran-Contra, his weapons-dealing background, the Cabazon reservation. I didn’t mention The Last Circle. He was unaware that the book existed, it seemed. He looked impressed and uncomfortable with how much I knew about him. I wanted to convey to him that I also had sources of information so I wouldn’t be at a disadvantage. It turned out that we knew people in common. My family had relationships with powerful people that he knew as well. Like Ferdinand Marcos and Clint Murchison, the Texas oilman who had doctored the Zapruder !lm. I !gured out that we’d met once before, in Las Vegas when I was out there with Freddy Graber in the eighties. Bob had been working with Robert Maheu at the time, the guy who was Howard Hughes’s right-hand man. Bob and I had a lot of commonality.”

  Nichols explained how the secret bond market functioned. The world Nichols described dwarfed the conspiracy theories evoked by Jack O’Halloran and by The Last Circle. According to Nichols the basic institutions of the modern world—the U.S.

  government, the Federal Reserve, the International Monetary Fund—were all a front.

  The reality—if Sam could handle the truth—was far darker and more dangerous than anything he could imagine.

  “There is a secret government operating within the world’s government,” Nichols said to Sam. “They run the secret trading program—the high-yield market. Only a few chosen people participate in the program. The returns are staggering. The proceeds are used to fund black operations, wars, to pay o" foreign governments. The proceeds are also used for good works in the Third World—to build hospitals, construct water treatment plants, cure diseases. It is the way that order is maintained in the world. The programs are top secret—highly, highly classi!ed. Getting approved to trade in the market is extremely di$cult. I don’t know if I can do it. But I know people who can give you a shot at getting in.”

  Nichols said the Saudi prince he had been talking to in the taxi was trading medium-term notes—or MTNs. But Nichols said the Saudi was not paying him properly. All he was getting was a small !nder’s fee, not the proper commiss
ion he was supposed to be paid for facilitating entry to the market. Nichols said he was tired of being taken advantage of by his clients. He was more than a simple broker. He was a guide for the treacherous trek into the shadow market. Nichols said he had the ability to lead Sam into the labyrinth of what he called the “Upperworld.”

  “Bob told me how the market really worked,” Sam recalled. “The Treasury bonds of the United States were supposedly created at the Federal Reserve. That was the public story. The bonds were issued at a discount—88 percent, say. The Fed then sold the bonds to their few select banks—primary dealers, they were called. Goldman Sachs, Deutsche Bank, Nomura, Union Bank of Switzerland, BNP Paribas. The largest !nancial institutions in the world had access to the premarket for the Fed’s notes. The prime dealers were given a discount to incentivize them to buy the notes. The rates varied but they usually got a discount of a couple of points. Their returns were basically guaranteed and riskless. The prime dealers were the insiders who got the sweetheart deal. The big banks then put the bonds on the market priced at 93, 94 percent, and those were bought up by the little shit-box dealers—TD Waterhouse, Ameritrade. The bonds were marked up 1 percent or more. That was when John Q. Public got to buy Federal Reserve notes—after the banks had taken their slice of the pie, at no risk.

 

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