In for a Ruble tv-2

by David Duffy

  I was wearing my winter uniform—black turtleneck and dark gray flannel trousers. I’d handed in my black leather jacket downstairs. I had a comfortable pair of English-made loafers on my feet that probably cost less than Leitz’s socks. In the spring I trade the turtleneck for a T-shirt, the leather and flannel for linen, and I don’t have to worry about what to put on for another six months. The injuries I’d suffered last June—some at the hands of my old friend and nemesis, Lachko Barsukov, some at my own—had healed, and I’d worked myself back into pretty good shape, despite too much vodka and beer. I was showing no flab on my six-foot, two-hundred pound frame. Since Victoria left, no one was around to complain if I was carrying extra weight, but staying in shape is a vanity like any other—and one of mine, the result of a half-starved youth when making it through the day was no better than a fifty-fifty bet. Victoria said she liked my brown eyes—they had a curious sparkle—straight-ahead nose and squared-off triangle of a chin. My hair, once bushy and black, had thinned to the point of a sixty-year-old by my late twenties, in my mind the result of the same youthful malnourishment. I’d shaved my scalp and kept it that way. Today, it was probably showing some red from the cold air outside. I hadn’t worn a hat.

  Nobody said anything for several minutes, an unusual occurrence in America—or anywhere. Leitz looked at me, I looked at the paintings. Foos might have taken a cat nap. Three men, content to take silent stock. Nine times out of ten—ninety-nine times out of a hundred—someone has to fill the void. Not today. I’m used to this treatment from Foos—we can go days without much more than grunting at each other—but Leitz intrigued me by saying nothing. When he was ready, he broke the silence.

  “Thank you for coming to visit. Foos told me a little of your background. You’ve had an interesting life.”

  “Sounds like he’s told you more than he’s told me.” I smiled to show I meant no offense. Leitz smiled back.

  “I require all of my clients to sign confidentiality agreements which my lawyers drafted expressly to prohibit people from talking about me or my business. Foos is one of the few who abides by his word.”

  “With him, you didn’t need the agreement.”

  Leitz chuckled. “I told my lawyers the same thing.”

  Foos said, “You guys going to talk business or shall I go hang with Jenny while you get acquainted?”

  “Patient too,” Leitz said. “How much do you really know about me, Mr. Vlost?”

  “Call me Turbo. Only what I read in the papers, which Foos tells me not to believe.”

  Leitz chuckled again.

  I took the bait, maybe because the pictures had me interested. “You run a hedge fund, a family of funds, actually, with assets of some twenty billion. You’re very successful. So successful that a few years ago, you returned half the money you manage to your clients, whether they wanted it back or not. You said you couldn’t keep earning the kind of returns you and they were used to. I’m guessing that also meant you couldn’t keep charging the fees you and they were used to, which are supposed to be the highest in the industry.”

  He nodded but said nothing.

  “That pissed a bunch of them off, which must be a peculiarly American irony—wealthy people getting angry because someone gave them their money back.”

  He smiled and nodded again. “So far, you’re very well informed.”

  “You have a reputation for secrecy. Your investors have no idea what you’re doing with their money. You’re known for being mercurial, I’ve seen less complimentary terms used too. You get away with it because of the returns you generate. You’re what Wall Street calls a rocket scientist. You use your mathematical skills to make big bets in the financial markets and you’re right more often than you’re wrong.”

  “That’s essentially correct, except the word ‘bets’ connotes gambling. I don’t gamble, not with my clients’ money. The markets are highly efficient, but they’re not perfect. I develop mathematical models that identify small inefficiencies. My investments count on these inefficiencies correcting themselves in time, which they almost always do. The investments are market neutral—I might go long in a convertible bond and short the underlying stock, for example—so I don’t care whether the market goes up or down.”

  I heard this before. I’d also heard there’s no such thing as a free lunch. “Care to explain that little collapse back in 2008?”

  He sighed the sigh of someone who’s been asked the same question too many times.

  “In the early days, we and a few others had the playing field mostly to ourselves, and we did quite well. Imitation being the purest form of flattery, it didn’t take too long before other smart people figured out what we were up to and piled into the game. Some tried to copy us, either by imitating our moves or developing their own models and software, and a number pursued other strategies. Too much money chasing not enough deals. Made finding new inefficiencies harder and less profitable, the reason, as you say, we reduced the size of the funds we manage. There was also too much leverage. Cheap credit’s like an addictive drug—the users keep taking more and more to achieve the same high. Eventually they OD. Cut off the supply, same thing happens. When the shakeout came, a lot of people got hurt. We actually made money. We were up twelve percent in 2008 and forty-three percent in 2009, thirty-five percent last year.”

  “Sounds like competition to me.”

  “I have no problem with competition. It makes my job more difficult, but that’s the nature of capitalism. My problem is theft.”

  Foos grunted his approval—we were finally somewhere.

  “My business is all computers,” Leitz said. “They run the models, access the markets for information, crunch the numbers, identify opportunities. Everybody works this way. The amount of information to be gathered and processed is way more than any individual or group of individuals could handle. The competitive advantage therefore is in the modeling and the software—and the cost of capital.”

  “Somebody has to provide the modeling and software. Or have the computers learned to do that themselves?”

  He laughed. “No, that’s where we mortals still add value, at least for the time being. But we’re hostage to the electronic executioners of the strategies we develop. We can’t operate without them. So we go to substantial lengths to make sure they’re secure. A few months ago, we were subjected to an attempted break-in, electronic.”

  “Brute-force attack,” Foos said. “Somebody used their own computer to run the possible password combinations for one of Sebastian’s employees. Could’ve worked, but fortunately he changes passwords every week and the bad guy’s computer was a little slow. Whoever it was tried again, twice, but I suggested some improvements in encryption and a few other areas, and they didn’t get very far. Things should stay copasetic in the near term, but there ain’t no panaceas in this business.”

  “This related to the TV bid?”

  “I’m assuming it is.”

  “Anything like this happen before?”

  “No.

  “Any idea who’d try it?”

  “Another bidder, or prospective bidder. Lots of rumors out there. Competitor, maybe. Disgruntled investor. Someone with a grudge against hedge funds. Plenty of those out there too. Maybe just a hacker.”

  “No hackers anymore who aren’t in it for profit,” Foos said.

  “You do anything recently to piss anyone off?” I asked.

  “Like make them take their money back? No.” He laughed.

  “Tell me about the TV bid.”

  His face darkened. “What do you mean?”

  “Why you’re in it. This is hardly a bet—sorry, trade—based on market inefficiencies.”

  The darkness lifted, replaced by inquisitiveness. “Don’t take this the wrong way, but how much do you know about capital markets?”

  “Marx identified three essential elements of capitalism—capital, labor, and markets. I’ve studied their interrelationships, albeit perhaps from a different perspectiv
e than yours.”

  He chuckled. “Fair enough. But Marx left one element out—cash.”

  “I appreciate cash. It’s why I don’t keep much money in the markets.”

  He laughed again. “Good for you. Then you’ll understand where I’m coming from. A different perspective, as you say. Everyone focuses on TV networks as businesses in long-term decline. Competition from cable channels, the Internet, video games, not to mention good old evolving demographics. No question about it, long-term outlook sucks. That’s a technical term. Not a business most companies, especially growth-oriented public companies, want to be in anymore.”

  “So?”

  “Cash. It’s still a cash-rich business. You have any idea how much cash one network throws off in a year? Billions. Now think about two. Then think about two, merged, redundancies and overlaps removed, market share enhanced, if only because there are now three where there were four. In cash flow terms, one plus one equals three, maybe three and a half. You got cash like that, you got options, in a capitalist way of thinking, of course.”

  “In any way of thinking. I’m still keeping most of my money in the mattress. How come nobody else figured this out?”

  “I’m sure they have, especially now that I’ve shown a spotlight on it. That’s why I expect competition. Cash flow is a commodity, like any other. The difference between success and failure in this deal is price, how much you pay to acquire that cash flow. I think my analysis is better, more productive, than anyone else’s is likely to be. If you were getting into the game, it would be helpful to know what the other guy’s planning to do, wouldn’t it?”

  “So you think that’s what’s going on?”

  “Timing suggests it is. So does the amount of money involved. It’s enough to attract someone with the kind of resources this guy seems to have.”

  “And you want me to find this guy?”

  “That would be ideal, of course, but I’m not naïve. I’m more concerned about security. Foos says we’re secure, and I believe him. He also says, no panaceas, as you just heard. I want you to put yourself in this guy’s shoes and see if you can find a way in.”

  CHAPTER 3

  I still didn’t want the job. Foos was staring straight at me, all but imploring—take it, you need something to do. He was trying to kill two birds with one stone—help Leitz and give me something to occupy a troubled mind. Well-meaning friends can be a real pain in the ass.

  Nowhere near the pain I’d been in since Moscow, though. I’d gone in December hoping it would change my mood. Not much traction before the family roof caved in once again.

  I got reacquainted—more accurately, acquainted—with my son, Aleksei, as we started to fill in the thirty years since the time I’d left him and my ex-wife. “Abandoned” is his word, “thrown out” is mine, but we’ve agreed to disagree. That we found each other was fate at work, especially since Polina and I didn’t talk after the split, and I’d moved to New York back in 1992. There was a price to be paid, of course—if you’re Russian there’s always a price—in this case, the death of his mother. I didn’t feel guilt or sadness. She was a tortured soul, and she’d done more than her share of harm—mostly to me. I didn’t see why he should either, since she truly had abandoned him, but try telling that to a son about his mother.

  This was all maybe manageable, although Aleksei wasn’t making it easy. My attempts to find some kind of roadmap to rapport were running into a major roadblock—the Cheka, known today as the FSB, known to most as the KGB (its longest running incarnation), known previously by multiple names and acronyms, but all anyone needs to know is that they all stand for state security. The specific problem was my connection to the Cheka, my employer for twenty years, which my son presumed was as strong as ever, despite ample evidence to the contrary. That made the kick in the gut Sasha delivered, the one I was still trying to work through, all the more devastating.

  I’ve been doing long-distance research for years into an unknown past—wondering if it was truly unknowable. The Gulag, where I’d grown up, did a few things well. One was eviscerate its victims’ lives. Another was keep records. The records still exist, in the archives of the Cheka. I’ve been working, in secret, with an archivist I know only as Sasha, who’s helped many people uncover their pasts. My mother’s history was relatively easy to reconstruct, from what I’d been told as a child and from Gulag documents. There was a brief period in the chaos of the early 1990s when things opened up, even at Lubyanka, and Sasha was able to unearth a little information about my presumed father, then the Cheka flexed its still considerable muscle, and the doors to the archives slammed shut. Numerous questions about my parentage remained unanswered. Sasha had managed a breakthrough last summer, but he and the new information ran afoul of Lachko Barsukov. Before I figured out that Lachko wasn’t my only Barsukov nemesis, Sasha had to go underground. When he surfaced and felt safe, I booked a flight to Moscow. I had a bad feeling about what awaited me there, and I wasn’t wrong, but I wanted out of New York, away from Victoria’s memory. For some reason, I keep thinking distance can dull the pain of the past.

  Sasha met me for dinner a few days after I arrived.

  “I never should be telling you this,” he said. “You’re not ready, nobody could be. There’s a chance I’m not right, but I can’t follow up. It’s a new world at Lubyanka since I got back. Everything’s locked up tighter than ever. You need special clearance. Orders from the Kremlin. Some say from the man himself.”

  The man would be Comrade Putin, whose positions in the New Russia have included president and prime minister, but whose power is more akin to that of general secretary of the Communist Party in the old days. Even after he entered politics, Putin remained first and foremost a Chekist.

  Sasha slid a piece of paper across the table and stared into his glass. “It looks like we were wrong, and this is your father, your real father.” He didn’t want to say it. I can’t blame him.

  I unfolded the paper.

  Two initials and a name.

  L. P. Beria.

  * * *

  I spent Christmas back in New York, researching what I could about Lavrenty Pavlovich Beria, thinking about Aleksei and trying not to think about Victoria. Not necessarily in that order. It’s funny—growing up in the Gulag, there weren’t any holidays to celebrate. When I was an adult in the Soviet Union, Christmas wasn’t observed. When I moved to New York, I lived alone, and I didn’t pay much attention. But this year, for the first time, as I walked the streets amid the holiday decorations and preparations, I felt lonely. I wasn’t sure what to make of that. For all I knew, Victoria didn’t even like Christmas. She’d lived alone much of her life too. All I wanted was to be able to ask her.

  Progress with Aleksei might have cut the blues, but he’d walked out on our second dinner together when he found out how deeply the Cheka runs in his lineage and declined to meet again. I couldn’t fault him. The Cheka was the one Soviet institution to make the transition to so-called Russian democracy with little loss of power. What was once known as the state within the state became in many ways the state itself once Putin took power, and it ruled with the same tools it had long used so successfully—fear, intimidation, violence, and making absolutely certain its own interests came first. As an officer with the Russian Criminal Prosecution Service, which wages a form of David-and-Goliath institutional warfare against its much more powerful rival, Aleksei viewed all Chekists as enemies for life. Like many, he also blamed the Cheka for the problems with the New Russia, and he wasn’t entirely wrong. Or even mostly. I kept trying to demonstrate that my departure from the organization was complete and total and twenty years earlier, but he inherited my stubborn streak, at least on that subject.

  All of which meant it was going to take time for him to figure out what he really thought of me—I understood that—but I wasn’t prepared to wait another couple of decades for the result. I understood equally well that to push it would shove him in the wrong direction. One more situa
tion whose outcome I couldn’t do a damned thing about, which just added to the general depression.

  Then there was Beria—the Soviet Union’s most brutal butcher, head of the Cheka from 1938 to 1953, serial rapist, Stalin’s favorite executioner—and the idea that he could be my father. He doesn’t look like a bad man—ski-jump nose, receding hair line, cleft chin, and rimless spectacles. Looks can be deceiving. But did I look like him?

  Since Sasha’s revelation, Lavrenty Pavlovich has taken to putting in periodic appearances in my consciousness, showing up unannounced, often in uniform, usually wearing a mocking grin. I’m not that familiar with apparitions, although lots of my fellow zeks saw them all the time in the camps. Murdered sons, daughters, or parents. Loved ones left behind. Relatives who’d vanished, just as they themselves had done. Sometimes the visions were causes of comfort, other times, fear. Beria didn’t comfort, he didn’t scare either. There was a time when the mere mention of his name could cause unchecked terror, but he’d been dead for sixty years. Old ghosts aren’t that scary. Mostly he mocked—with well-chosen words and that grin. The first few times, I was mildly concerned with my state of mind, but I put the visions down to too much vodka and the head injury I’d given myself last summer when, a day after being beaten senseless, I’d cracked my skull on a glass coffee table. After the first few appearances, Lavrenty Pavlovich and I reached our own détente—he showed up when he chose, and he mostly left when I told him to.