Absolute Risk gg-2

by Steven Gore

  She lowered her hand and spread her arms.

  “There was much joy in the corridors of Sloan Hall when he was led out of here in handcuffs.”

  She leaned in toward Gage and whispered, “He was right though. What they do up there is dreck, complete and utter bullshit. Intellectual compost.”

  Gage sniffed the air. “I don’t smell it.”

  “That’s because hot air rises. You’re safe down here. Islamic finance has no need for derivatives, no matter how stringed and entangled. Sharia law requires hard cash.”

  “I’m thinking that if Ibrahim was an Islamic radical,” Gage said, “whatever financial gimmick he used had to be something that Muslims would be comfortable investing in.”

  “You mean separate from whether or not they knew the money would end up in the hands of terrorists.” Goldie frowned. “Unless they knew the whole thing was a sham from the beginning. After all, jihadist ends can be used to justify nonjihadist means.”

  “Except I don’t think that any of the investors were charged with terrorist financing,” Gage said. “I suspect they thought that it was a legitimate investment, or at least made a convincing argument to the prosecutor that they thought it was legitimate.”

  Goldie nodded, and then said, “And you want sly little me to explain to you what the argument was.”

  Gage smiled to himself. Goldie always seemed to know how to finish his thoughts, the same way Faith did. When they had dinner together, they’d all speak in half sentences.

  “I don’t know what he did,” Goldie said, “if by that you mean the terrorism part-but I have an idea about how he did it.” She grinned. “And that’s exactly why you came knocking on my door.”

  “Don’t make it look so easy to guess my motives,” Gage said. “It’ll damage my self-confidence.”

  “I doubt it.”

  Goldie clapped her hands, then rubbed them together.

  “This is what I think he was up to. Back then, Muslim businesspeople in the U.S. were looking for an offshore tax avoidance structure that was consistent with Sharia law. That means that they’re not allowed to make money on interest. It limits the kinds of investments they can make. But-”

  Goldie rubbed her hands together again.

  “But what if they could surrender ownership of the assets for a while, let those assets earn whatever money they’re going to earn-and by any means they’re going to earn it-and then have the assets returned to them? ”

  Gage worked out the implications of the theory himself: It was the perfect way for someone to finance a terrorist organization without being held criminally responsible. The money was out of their legal control while the crime was being committed and then whatever hadn’t been spent was returned to them afterward.

  “I think that Ibrahim realized that the perfect vehicle is what’s called a hybrid company,” Goldie said. “It’s also called a Manx trust-not after the cat, after the island. The Isle of Man. Since the U.S. taxpayer has no control over the company-none, zip, nada-he’s not even a shareholder-he doesn’t have to report to the IRS any profits he makes until the company is closed down and the assets are returned to him.”

  “And if they put the money in the hands of an expert in Sharia law,” Gage said, “they could even ensure that the profits won’t be tainted.”

  Goldie smiled and nodded. “Exactly. A Muslim tax dodge.”

  “And a terrorism financing gimmick.”

  Goldie shrugged. “Why not? The boss who runs it can be anywhere that has an Internet connection. Pakistan. Saudi Arabia. Sudan. He just e-mails orders to whoever manages the company’s money on the Isle of Man.” Goldie spread her hands. “So what if the boss gets indicted in the States, the U.S. will never get him.”

  “And the investors in the U.S. can claim they didn’t know what was going on.” Gage then realized that the plan came with a built in criminal defense. “And you have two branches of the government working against each other. The IRS saying the American investors don’t control the company and the Justice Department claiming they do. No way a jury would convict them. And even if it did, an appeals court would have to overturn the verdict.”

  Goldie squinted up at the ceiling for a moment, then asked, “Would that apply to whoever suggested the structure in the first place? Like Ibrahim?”

  “As you said, why not? Ibrahim could also claim he didn’t know what the structure would really be used for-and I suspect that’s why the U.S. Attorney couldn’t pursue the case.”

  Goldie raised her hands as if trying to restrain his movement down a path.

  “That’s only if I’m right about what he was up to,” she said.

  “But you think you’re right.”

  “It’s a little like reading tea leaves, but I’ll tell you why I think I am.”

  Goldie then leaned toward him as though to pass on some gossip.

  “I gave a seminar at the Harvard Law Islamic Finance Project eleven years ago. It was right after I got hired to run our center. I spotted Ibrahim walking in near the tail end of my presentation-have you ever seen him?”

  Gage shook his head.

  “Very distinctive guy. About five-five, solid build, mustache. Looks like a character out of Casablanca or The Maltese Falcon.” She flashed a smile. “You sort of expect him to appear in black and white and wearing a fez.”

  Goldie reached again to the bookshelf and withdrew a Sloan School of Management brochure dated ten years earlier. She opened it toward the middle, then turned it toward him and pointed at a portrait.

  “That’s him,” she said.

  “Can I keep this?”

  Goldie nodded, then said, “I think he must’ve showed up to meet somebody who was attending the seminar. He looks at me, or maybe just my name plate on the table, and gives me a funny look. The kind I usually get from Muslim men, like ‘What’s a Jewish girl doing in a place like this?’ Then he sits down in the back row. A couple of minutes later, I’m talking about the problems of control and taxation and how to deal with profits versus capital gains, and I spot him taking notes.

  “After he got arrested, the FBI came by and interviewed everybody. The two who talked to me asked questions about Islamic finance and about the prohibition against making money on interest and about offshore structures. They didn’t use the phrase ‘hybrid company,’ but they described the structure and asked about all the different places in the world where one could establish one. I later heard rumors that Ibrahim’s gimmick was connected to the Isle of Man. And back in those days, that was the main reason people set up there.”

  “But not anymore?”

  “Nope. After the Ibrahim story broke, the IRS changed the rules. All the U.S. lawyers in the offshore tax planning business were pissed. They’d been making a hundred grand off of every hybrid they set up, tens of millions of dollars a year for a dozen years.”

  “A cash cow.”

  “Without the overhead of running a dairy. And there wasn’t a one of them who wouldn’t have jumped at the chance to put a bullet in Ibrahim’s head.”

  “Or already has?”

  Goldie raised her eyebrows. “That crossed my mind. Maybe it wasn’t a lawyer who pulled the trigger, but somebody had to have. Ibrahim was a guy who needed, if not to be seen, to be heard. He needed to be recognized as a genius.”

  “So you don’t understand his silence.”

  She shrugged. “Nobody does, but then again, dead men don’t do much talking.”

  CHAPTER 22

  Gage’s encrypted cell phone rang as he drove from the MIT campus toward the western edge of Boston. It was Alex Z calling from San Francisco. “I checked Ibrahim for friends and associates,” Alex Z said. “And there weren’t many outside of a Muslim men’s group that met at his house. A member has a blog and mentioned Ibrahim’s first name and MIT, so it was easy to ID him.”

  “Find out if the U.S. Attorney up here filed tax fraud cases against any of them. I need to know who was involved. Ibrahim’s was the on
ly name I found in the news articles.”

  Gage heard the rapping of Alex Z’s fingers on his keyboard.

  “Ibrahim sounds like a real multitasker,” Alex Z said, “Terrorist financing, abstract financial theories, and tax evasion.”

  “I’m starting to think they’re all part of the same package,” Gage said, “or maybe different passages in the same maze.”

  “I just entered one of the names in the Federal Case Index,” Alex Z said. “Hold on… nothing.”

  “Try the rest and call me back.”

  The snowfall let up as Gage headed back across the Harvard Bridge and down Massachusetts Avenue. He cut right at Symphony Hall and drove into the multistory garage, then up the circular floors until he located a dry space between two vans. He climbed out and knelt down next to the car to check for a GPS tracking device. He worked his way around the perimeter and the wheel wells, then checked the engine compartment from below and above.

  Nothing.

  Whoever had been hired to replace Gilbert hadn’t gotten on to him yet. He knew they would, and could, anytime they felt like it. All they had to do was wait for him to show up at the few places connected with Ibrahim, Abrams, or Hennessy-assuming they were following him because he’d met with Abrams, and assuming that they were following Abrams because of Hennessy.

  Gage walked the circumference of the garage, scanning the cars parked around the sculpture garden next to the street below and along the front of the Whole Foods Market. His phone rang again as he surveyed the parking places that had a view of the garage exit. If someone was set up to follow him when he left, that’s where they would’ve parked to be ready.

  “Bugs everywhere, boss,” Viz said.

  It was Hector McBride, Gage’s surveillance chief. Gage had nicknamed him Viz, for the same reason fat people were named Slim and slim people were named Fats. Despite being six-four and two hundred and thirty pounds, he was invisible to his targets. Even after a decade of working together, Gage still didn’t understand his magic.

  “Where are you now?” Gage asked.

  “I’m freezing my ass off in Central Park by the reservoir, and Abrams is at his office at the Fed. He doesn’t know yet.”

  “How bad is it?”

  “It doesn’t get much worse than this. There were multiple devices in every room, but not for fail-safe reasons. I think they were installed by different groups.”

  “That means that whoever got there second has got to know about whoever got there first, and left the bugs installed.”

  “That’s what I’m thinking. But they may not know who installed them.”

  “And the second group couldn’t disable the original ones without giving themselves away or provoking the first group to come back and reinstall other devices.”

  Viz laughed. “It’s game theory in practice. I should’ve paid more attention in college.”

  Gage turned away from the street and walked back toward his car. There were too many possibilities for who’d installed the bugs. Foreign governments. Hedge funds looking for inside information. Those looking for Ibrahim. Maybe even Abrams’s estranged wife-and he didn’t yet know enough to exclude any of them.

  “Interesting thing,” Viz said. “One set of devices are modified cell phones. The other set is hooked into his cable system. Both are connected into the electrical system and use lithium ion batteries. That means they’re always powered on and can be accessed from anywhere in the world, either by calling into the phones or through the Internet.”

  “Any way to follow the signals to whoever is listening?”

  “I could probably abstract some information out of the SIM cards-at least the numbers that have been called-and maybe Alex Z could backtrack the Internet traffic.”

  Gage paused next to his rental car and scanned the rest of the vehicles on the floor, then climbed in.

  “Call Abrams,” Gage said. “Tell him you need him at the apartment. Be cryptic in case they’ve also got his phones bugged. Meet him out front. Let’s assume they’ve broken into his computer, too. Have him give you access so you can get whatever information you need. DNS. Gateway. IP address. Then go with him to check his office and pass on whatever you learn there to Alex Z. Once he’s done with whatever tracing he can do, go back into the apartment and make a show of switching him from cable to satellite and set up something to interfere with cell service in the apartment. Once we figure out who they are, we can switch everything back on and feed them bum leads.”

  CHAPTER 23

  The salesman’s smile on Abdul Rahmani’s face flamed out when Gage introduced himself as a private investigator. He got up from his desk behind the counter at Ijara Automobiles along Boston’s Soldier’s Field Road, yanked his pants up an inch, and waddled over. “Why can’t you guys leave me alone?” “Who is ‘you guys'?”

  “FBI. IRS. That good-for-nothing Hennessy. And for the last couple of weeks, PIs.”

  “Like Tony Gilbert?”

  Rahmani nodded.

  “He won’t be coming by anymore.”

  “You his replacement?”

  “Not exactly. We’re on different sides.” Gage shrugged. “But I’m not quite sure what all the sides are.”

  Rahmani’s smile returned. “Join the club.”

  “All I know is that the spokes of the wheel revolve around Hani Ibrahim.”

  Rahmani spread his hands and raised his eyes toward the ceiling. “May Allah grant my wish that I never hear that name again.”

  “How about I’ll refer to him as Fred,” Gage said.

  Rahmani looked back at Gage. “And how about you tell me why you’re interested in Fred and I’ll tell you if I want to talk to you.”

  “Can I buy you a cup of coffee while I try?”

  Rahmani stared at Gage for a few seconds, his head rocking side to side, then said, “Let me get my coat and close up shop. Nobody’s car shopping today anyway.”

  After Rahmani locked the front door behind them, Gage gestured toward the empty lot. “Where are the cars?”

  “It’s kind of complicated.”

  Rahmani led Gage past storefront real estate and insurance offices and a liquor store and pawnshop to a Turkish halal cafe. He waved to the owner as he escorted Gage to a booth at the rear of the empty restaurant. The owner brought over coffee without waiting for their order.

  Gage leaned over the table in order to talk without the owner overhearing.

  Rahmani shook his head. “No reason for secrecy.” He pointed at the owner. “Ilkay got snagged, too.”

  Gage sat back and said, “From what I’ve been told, Hennessy-”

  “You mean the lunatic.”

  “Maybe, maybe not. He seemed to believe that Fred was innocent.”

  “So he told me, but it didn’t help me with my tax bill.” Rahmani pointed at Gage. “You know what they dinged me for? Sixty thousand dollars in penalties and interest. And what I spent on lawyers, you wouldn’t fucking believe. I had to get a loan to pay for everything.”

  “For using the hybrid company? ”

  “And for proving that I wasn’t guilty by association with a guy-Fred-who wasn’t guilty at all. Terrorist financing? Fred hated those people. Hated-hated-hated. He was barely even a Muslim, much less a radical one. The only reason he participated in the discussion group we had was so that he could tell us every week what hypocrites we were, and he never missed a chance.”

  “I thought the whole point of the hybrid was Islamic financing.”

  Rahmani laughed. “Fred meant it as a joke. He only went through with it as an object lesson for us.”

  Gage shook his head. “You’ve completely lost me.”

  “An example.” Rahmani laid his forearms on the table, palms up. “You know how Orthodox Jews aren’t allowed to turn light switches on or off on the Sabbath?”

  Gage nodded.

  “The way they get around it is to use a shade that you can rotate so that it blocks the light. They flip the switch on before sundown o
n Friday and leave it on until sundown on Saturday. By rotating the shade, they get light when they want. Ingenious. They also have elevators that stop on every single floor on Saturdays so nobody has to push a button.”

  “They invented ways to get around the rules.”

  “In fact, but not in spirit. It’s all bullshit.”

  Rahmani glanced at Ilkay standing at the counter reading a newspaper, and then lowered his voice.

  “Like my business. Muslims aren’t supposed to pay interest- riba — so instead of the customer financing the car through a bank, I buy it, lease it to them, and at the end of the lease, they give me a little extra and they then own the car.” He pointed in the direction of his office. “That’s what ijara means in my company’s name. Lease.”

  “And your bullshit is calling it profit, instead of interest.”

  Rahmani raised his cup, took a sip, and then said, “Exactly.”

  “How does Fred fit-”

  “I’ll tell you. One evening, Fred explains how a hybrid company works. He says that we’re not shareholders. We don’t own it. We’re what they call guarantors. We’re responsible for the debts-”

  “Or the profits-”

  ”-when the company closes down. In the meanwhile it’s completely out of our control. Com-pletely. Fred then asks whether it’s okay if the hybrid loans out money and earns interest and the value of the company increases, and then pays it all to us as profit when the company closes down.”

  Rahmani held up a forefinger. “Remember. It’s not our company when it’s earning the interest. The money is out of our hands and Sharia law doesn’t apply.”

  “And that also means,” Gage said, “that the profits at the end could be considered capital gains instead of regular income.”

  Rahmani grinned. “You’re good. Really good. Fifteen percent federal tax rate, instead of thirty or more. And we don’t have to take the gains until the company goes out of existence. It’s like a 401(k), except offshore and you can put in as much money as you want.”

  “It should’ve sounded too good to be true.”