The Chameleon Conspiracy dg-3
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There has never been a shortage of new cases coming to my office from various U.S. government agencies. Major insurance fraud, telemarketing scams, banking fraud, and money laundering related to other white-collar crimes are the usual stuff. They expect us to find the perpetrator and recover the loot if either is located outside the United States. Once U.S. borders are crossed, foreign rules apply, leaving the U.S. government with little or no in de pen dent investigative and enforcement power. When a U.S. state or federal criminal case has foreign aspects, U.S. law-enforcement authorities can get police-to-police assistance from the more than 170 countries belonging to Interpol. Additionally, around forty-eight countries have bilateral MLAT, or Mutual Legal Assistance Treaties, with the U.S. for helping each other obtain evidence in criminal trials. That’s the easy part.
Civil cases are even trickier than criminal cases. They are hamstrung by legal, bureaucratic, and political constraints that make it tougher for federal agents to pursue debtors for money outside the U.S. than it is for private creditors. The MLAT, limited to criminal cases, tends to be practically useless. Foreign courts take pride in their country’s sovereignty and loathe attempts by foreign governments to twist their arms. And they aren’t always eager to help the U.S. recover dirty money that might be bolstering their own country’s economy.
That’s how I got my office. The sign on the office door read TAT INTERNATIONAL TRADE, INC., intended to mask our identity as the New York extension of the Office of Asset Recovery and Money Laundering of the U.S. Department of Justice. We have the expertise and the bud get to go after white-collar crooks wherever in the world they are playing, and mostly winning, mind games designed by the culprits’ lawyers, accountants, and investment consultants to keep us from getting their clients or the money. Most of the time we outsmart them and beat them at their own game. FinCEN, the Financial Crimes Enforcement Network, is the much-larger U.S. Treasury intelligence agency that searches for assets within the United States. But they do their job from behind a computer monitor, while we go out to the streets of Geneva, Liechtenstein, the Cayman Islands, and all the other locations favored by the money launderers of the world.
I like my job. It offers complete independence outside the U.S., yet affords the entire might of the U.S. behind me. That is, provided I conduct myself as a straight arrow. This only gets tricky when dealing with what I’ll call cultural differences. David expects me to operate as legally and ethically as if I’m operating within the U.S. But I’m not. I’m dealing with dubious and shady characters in off-shore tax shelters, far from the reach of U.S. law enforcement. For them the phrases comply with the law or rules of ethics are good for a laugh. They’re over there to avoid the law, so it’s a bit far-fetched to expect us all to abide by it.
Fairly early in the game, I saw the futility of convincing my superiors that we couldn’t win the war of minds against lawless targets by behaving like nineteenth-century gentlemen. Fighting international crime and terrorism effectively, recovering stolen money, and disrupting terror attacks against the U.S. can mean resorting to Machiavelli. He put it best when he wrote in The Art of War, “No enterprise is more likely to succeed than one concealed from the enemy until it is ripe for execution.”
“Do you expect us to apply Machiavellian methods or act like the criminals you chase?” David had once asked, hearing me air these frustrations. I’d known that he sympathized with what I was saying, but unlike me, he had clearly defined lines he would not cross.
“Of course not,” I’d said.
But we both knew damn well that insisting that I comply with each and every U.S. rule fit for U.S. domestic cases, as well as with the foreign country’s laws, was like sending a one-legged man to compete in an ass-kicking contest. Adhering to ethics is vital in intelligence gathering, because it constantly reminds you that your opponents can operate without any.
“What’s the alternative?” David had said with a sigh.
It was a rhetorical question. We both knew the State Department would be knocking on David’s door once some country started whining that I had bent the rules.
“David, there haven’t been any complaints,” I’d protested. He’d raised his eyebrows. “OK, just one. But I was exonerated, remember? I have a clean conscience.”
“No, Dan, you have a bad memory.”
But he hadn’t continued, so I went on. “There must be some places where I can have some leeway. I’m not asking for permission to break foreign countries’ laws, but this strictness is crippling me.”
“You know we can’t do that as a matter of policy,” David had said calmly. “But…”
He’d let it hang in the air. “But you’ll look the other way if it’s not egregious, and if I don’t get caught,” I’d said.
He’d smiled, and that was enough for me. I’ve always been a deeply religious follower of the eleventh commandment as it applies to intelligence agents: Thou Shalt Not Get Caught.
CHAPTER THREE
That gray November day marked my introduction to the Chameleon case. Inside my Manhattan office were four newcomers that were impossible to ignore-battered brown cartons on the floor. A Post-it on the top carton read, “Dan, read these files and talk to me. David.”
The FBI had decided to take a fresh look at a universe of high-dollar bank and other fraud cases that were committed within the past fifteen-or-so years, had seen indictment, involved scamming $15 million and up, and were never prosecuted, for lack of defendants.
Why now?
I suspected the FBI was dumping these cases on us because they thought terrorist financing might be turned up. The perpetrators of these stale high-dollar cases had similar MOs, had been out of the country for a while before the scams, and had all vanished afterwards.
A single page would keep me busy for six days reading bank statements and about other fraud cases.
The computer-generated sticker label with a bar code on the first file’s front read “U.S. v. Albert C. Ward III, aka Harrington T. Whitney-Davis, case #86-981.” I pulled out a fresh yellow pad and a sharp pencil. I would get the facts first. I started with the FBI report. On its front page was Albert C. Ward III’s enlarged black-and-white photo and bio. Ward was born in Milwaukee, Wisconsin, on March 27, 1959. He attended the Milwaukee Trade and Technical High School’s Evening School, and graduated in June 1977. Ward had worked at several minimum-wage jobs in the greater metropolitan area of Milwaukee until hired by a local security company. Following a two-week training session, Ward was given a patrolman’s uniform and was assigned to the North Lake Drive area.
After two uneventful years as a patrolman, Ward was promoted and became a night-shift-duty manager. His supervisors described him as a highly motivated and effective employee who sought adventure. They also indicated in his job-evaluation report that there were a few instances when he had been too aggressive toward his fellow employees, including one incident in which he’d punched a coworker. Ward had been arrested, but was later released when the employee refused to press charges. No intracompany disciplinary recommendations were made.
In 1980 Ward left that employment and applied for a passport. He left the country in May 1980, on board a Panamanian-registered freighter sailing from Seattle to Hong Kong. Ward had filed no tax returns after 1980. A search for family members came up empty. There were no records of his reentry into the U.S. His name and Social Security number had nonetheless started reappearing on credit reports in 1985. A national-database search showed that Ward had lived in eighteen different locations throughout the U.S. since 1985, mostly in Michigan, Massachusetts, Wisconsin, New York, and Florida. An inquiry with landlords and neighbors at these addresses had yielded very little.
Those who remembered Ward described him as a reclusive, nonconfrontational, and quiet person who kept to himself. One neighbor mentioned that Ward listened to strange music. A landlord who lived close by described visitors to Ward’s apartment as people who didn’t fit in the neighborhood, and who’d come
during odd hours of the night.
It was the one unusual detail in an otherwise routine and bland report, but there was nothing to substantiate a suspicion or lead me anywhere. Criminals flock with people of their own feather. And the music? My son listens to music I’m convinced was recorded with a knife grinder, a train on rusty rails, and an empty tin trash can dragged on the pavement. But that didn’t prove anything other than odd taste in music.
The rest of the information detailed Ward’s history of indictments, using and discarding aliases. His modus operandi was a good old hit-and-run. Amazing, but true. He had always slipped out of the hands of the law.
Ward’s earliest recorded sting happened in a small town in South Dakota. Ward appeared there one day in 1985 as Harrington T. Whitney-Davis. He rented a nicely decorated office in a building housing a local savings bank and incorporated Fidelity Trustees of America, Inc. Ward came to the savings bank, introduced himself to the bank manager as manager of a new branch office of a national financial company, Fidelity Trustees of America, Inc., and suggested business cooperation. Of course, neither company had any connection whatsoever to the reputable Fidelity financial and securities companies.
It hadn’t taken long to convince the bank manager to market “limited edition” treasury securities offered by the fancy-name, trust-inducing company of Ward, now Harrington T. Whitney-Davis. No hard sell was necessary. Ward had told the manager that the savings bank would act only as intermediary, selling the securities to its customers, assuming no risk, while collecting hefty commissions. Ward’s business had come at the right time. The bank manager was being pressed by his board of directors to improve the bank’s balance sheet and was looking for ways to expand its product line. The manager quickly agreed, and the savings bank started offering these supposed treasury securities to the bank’s customers as a solid investment vehicle. The promised interest rate of 14 percent gave a significantly higher yield than the interest paid by the usual securities issued by the U.S. government, or deposits insured by the FDIC.
The problem was that the securities Ward offered were fictitious. There’s no such thing as a limited-edition treasury security. It was a scam in the fullest meaning of the word. All that Ward had to do was use his pompously named corporation and generate official-looking stationery confirming that the bank had purchased Ward’s bogus securities on behalf of a bank client, or even on behalf of the bank itself.
During the first three months, the bank sold $14.4 million worth of Ward’s limited-edition treasury securities. In the beginning, when customers wanted to liquidate their holdings, Ward’s company promptly paid the bank, which in turn credited the customers’ accounts. There was no reason for anyone to suspect that anything was wrong. The bank had collected nice commissions. The manager and the board of directors were happy. So were the bank’s customers. Through word of mouth, sales increased even further. To emphasize the exclusive nature of the investment, the bank manager had decided that the securities would be sold only in units of $10,000, and only to the bank’s customers. If you were banking elsewhere, you had to first open an account at the savings bank to be allowed to purchase these wonderful securities.
Other banks in town, which saw their business volume shrinking, wondered why they couldn’t offer the same securities to their own customers. Following a few phone calls by other bankers to the South Dakota Department of Commerce and Regulations’ Division of Banking, which regulates financial institutions, and to the Federal Home Loan Bank Board, which at that time regulated federal savings banks, questions arose. A federal bank examiner called the bank manager for an interview without telling him why. The manager mentioned the call to Ward, whom he knew as Harrington Whitney-Davis.
Ward knew what the manager didn’t: it was time to take off. He disappeared immediately, together with more than $20 million. Angry customers demanded their money back from the bank. But the bank couldn’t help. In fact, the bank became one of the victims, having invested heavily in Ward’s phony securities. The end was inevitable. The bank became insolvent and was seized by regulators.
Ward’s next scam was more complex. He moved to Nebraska, assumed the name of Harold S. McClure, and incorporated Lincoln Premiere Equity, Inc., as an investment club for senior citizens. Of course, that name had no connection to any genuine, reputable business entity. “Harold” ran ads in the local newspapers claiming, confusingly but impressively, “Lincoln Premiere Equity’s CDs are purchased from federally insured banks to secure the Certificate of Deposit Program of the FDIC.”
Ward opened a bank account at a local bank and deposited the money he’d received from locals hungry for a high yield. A typical investor paid $100,000 and believed he was buying a federally-insured certificate of deposit. Ward used the money to purchase CDs, which to the bank manager’s delight he left at the bank. But there was a subtle little detail to this scheme. Ward used the CDs as collateral for loans he personally took out. The bank enabled him to pull off the scam, because many investors were deceptively induced by the bank to sign a contract naming Harold S. McClure as the “trustee” of their money.
The result was obvious. The victims lost all their money when “Harold,” now believed to be Ward, defaulted on the loans and disappeared.
The FBI believed that Ward then moved to Indiana, called himself Marshall Stuart Lennox, and incorporated Windsor, Hamilton amp; Pierce Investments, Inc. He rented a nice office and offered unsophisticated investors historical bonds, such as railway bonds. These were once-valid obligations of American corporations, but are now worthless as securities and only collected and traded as memorabilia. Ward marketed the bonds at prices ranging from $100,000 to $250,000-the same bonds that collectors buy for $25 to $100. Ward, or rather Marshall Stuart Lennox, described the bonds as “backed by the U.S. government” and “payable in gold.” To add credibility to the genuine bonds’ inflated prices, Ward attached valuations by “world-renowned experts,” confirming that the bonds were worth significant amounts of money, far above the price the investors were asked to pay.
One investor became suspicious, contacted the Federal Reserve, and was told that the U.S. government was not backing these bonds. When confronted, Ward smoothly replied, “The Federal Reserve simply doesn’t want you to cash it in, because if everyone did that, there’d be a run on the bank and the U.S. economy would collapse.” But within the hour, Marshall Stuart Lennox had disappeared.
Similar sting operations in various forms followed in other unsuspecting small towns in the Midwest. Complaints to both state and federal authorities mounted, but the investigations led to indictments that went nowhere, because the defendant was nowhere to be found.
For more than a decade, Ward was an enigma. Nobody knew where he was, or could even accurately describe how he looked. He had shunned the ordinary business-publicity photos, and the descriptions his victims gave fit a million other men. All the FBI had concerning Ward’s description was a high school photo more than twenty years old, and his fingerprints taken in 1979, when Ward had been arrested for assault. Ward’s legacy ended abruptly in summer 2001. That was the last time there were complaints about scams fitting Ward’s modus operandi. Had Ward died? No death certificate bearing his name or any of his aliases was issued anywhere in the U.S.
Had Ward left the U.S.? If so, how? His U.S. passport, issued in 1980, had expired in 1990. The State Department reported that this passport hadn’t been renewed. Had a new passport been issued bearing any of the aliases the FBI said he used for his scams? The State Department said no. Was Ward in prison on an unrelated conviction? Again, the FBI said no.
The mantra think outside the box rang in my mind. They were the words of Alex, my Mossad Academy training instructor, repeated in his Canadian accent. “Your rivals aren’t ordinary people. They operate differently, so why would you expect them to think like an average Joe? Put yourself in their skin. Then take one step forward.” Good, I thought, as long as we aren’t on a cliff’s edge.
When I cooled off, I remembered what Alex had always told our class: “When you find yourself at a dead end, start from the beginning. One step back may not be enough, because it will lead you to the same brick wall. Revisit all assumptions, and recheck all facts. One or more could be flawed.”
OK, Alex, I thought with a mental sigh, if you could only see how I apply your wisdom. I wondered what had happened to him. Ever since I’d left the Mossad, Benny Friedman, my classmate, had been the only lifeline to my professional past. For all I knew, Alex was still in the system, or maybe growing flowers in his village in northern Israel, enjoying retirement. I read the files again. Two hours later, I still couldn’t find anything I’d missed the first time. The only mention of anything foreign was Ward’s departure from the U.S. in 1980. But he returned sometime in 1985, as the credit reports showed. There went the international connection. I had no idea where to begin.
Think outside the box rang again.
The only thing left for me to do was go back and check the raw intelligence data the FBI was analyzing.
I was frustrated and intrigued at the same time. How could somebody evade the law for so long? It was clear that Ward knew well how to assume new names and identities. Was thinking that he had employed that skill to vanish, thinking within the box or outside it? I needed something to hang on to in this case, or the file would grow moss on my shelves, and I’d be getting polite but per sis tent reminders from David to report progress.