by SL Beaumont
“Some discrepancies have come to light concerning your Common Reporting Standard filings with Her Majesty’s Revenue and Customs,” Adam replied.
Diaz’s eyes narrowed, and he stood with his hands on his hips. “Avery, get the solicitors on the phone,” he said, without taking his eyes off Adam. Adam, in turn, held his ground and didn’t flinch.
Diaz pointed to an empty meeting room. “In there.”
Nathan and the team filed into the room.
“Gather everything you need,” Adam instructed them.
Kat loitered behind Adam to hear what else Diaz had to say.
“Exactly what discrepancies do you think there are with our filings?” Diaz asked through clenched teeth.
“We believe there are several missing client records,” Adam said.
Kat watched as Diaz’s face and stance relaxed. He took a step back and smiled. “I’m sure that’s just a missing file, something that wasn’t attached to the return.”
Adam pulled a face. “Perhaps. We need access to your client database so that we can check your client numbers against your return. I don’t have to remind you that filing a false return with HMRC is a criminal offence.”
“Avery, get the Compliance team down here. Now,” Diaz ordered.
But it appeared that someone had already made that call, as a tall, slim woman in a sharp black suit stepped from the elevator.
“Tamara, filing discrepancy, sort it,” Diaz said. He turned and stalked back to his office.
“So that’s Eddie Doors,” Nathan muttered to Shamira.
Shamira nodded. “Sparkling personality,” she murmured.
“I’m Tamara Marshall, Head of Compliance for CIP. What do you need to see?”
Adam once again explained the filing discrepancy, and Tamara made a phone call bringing one of her team and his laptop into the meeting room.
“Luka should be able to bring up the last returns,” Tamara said. Luka’s hands were shaking as he logged on to the system. He pushed his glasses back up his nose and glanced around at those assembled.
Nathan slipped into the seat beside him and opened his laptop. “Hi, I’m Nate.”
Luka gave him a grateful smile and offered a limp handshake.
“Luka, can you log me on to your network? I will be able to get this done quicker if I can look at your client list at the same time.”
Luka glanced at Tamara, who was standing to one side with her arms folded. She nodded. Luka leaned across and typed a long string of code into the browser on Nathan’s computer. A ‘Welcome to CIP’ message displayed on the screen. Nathan navigated the home page and found the link for CIP’s Investment Portfolios. He clicked on it, and a login box popped up on the screen.
“Does your warrant allow you to look at that?” Tamara asked. “That’s highly sensitive.”
Adam ignored her and passed a piece of paper to Nathan, who glanced at it and typed Henry Smyth’s email address and the password that Adam’s hacker had obtained, into the login box. An incorrect password box appeared. Nathan tried again, using lower case letters, and a new screen displayed four icons, each with a name underneath.
Tamara Marshall took a step towards the door, but Adam nodded to one of the police officers to block her exit.
“This shouldn’t take long,” he said.
“I don’t think your warrant allows you to access our fund information,” she said with a note of defiance in her voice. “Or hold me hostage. Unless you intend to arrest me.”
“There is no need for the drama, and I think you’ll find that it does,” Adam replied, and turned back to Nathan. “Kat, explain these to me.”
Kat leaned over Nathan’s shoulder and read the names of the four funds. “CIP Growth Fund, CIP Balanced Fund, and the CIP Conservative Fund. Those three are CIP’s key public offerings. I don’t know what that one is,” she said, pointing to an icon of a fleur-de-lis. “Fund 4.”
“Open it,” Adam said.
Nathan clicked the icon, and the trading system opened on his screen. He followed the links for funds under management, which displayed a total of £500,500,250. He let out a low whistle.
“Now, let’s look at the client list.”
Nathan navigated to the client tab. An alphabetical list of names filled the screen.
“Search on the ones we couldn’t find,” Adam instructed in a low voice.
Nathan glanced at Kat and typed her father’s name into the search box. Philip Munro’s name popped up on the screen. Nathan tried the names of Munro’s friends who had also invested in CIP, and they were all there. He turned to Adam.
“Can I download this to compare with the other list we have?” he asked.
“No,” Tamara said before Adam had a chance to answer.
Adam raised his eyebrows at her. “Court order, remember.”
She sighed and folded her arms across her chest.
“Search for those names in the other three funds,” Kat said.
They all watched as Nathan continued typing on his keyboard.
“Not in any of them,” he said after several minutes of running searches.
There was a tap on the meeting room’s glass door, and Avery Willis beckoned to Tamara, who held her hand up indicating that she would have to wait.
“Luka, have you got the latest CRS return?” Tamara asked.
Luka nodded.
“Good, print it, and then you can all go,” Tamara said.
“Huh?” Nathan said, leaning forward and peering at his screen as though he couldn’t quite believe what he was seeing.
“What?” Kat asked.
Nathan looked up at Tamara. “Do you invest Fund 4 mainly in cash?”
Tamara shook her head. “This is the first I’ve heard of Fund 4; it must be a demo or test fund, you’d need to talk to Roger.”
“Not a test fund if that’s the only place that missing names are showing up,” Kat murmured.
“Hey, look at this,” Nathan said. “Of the five hundred million in the fund, one hundred million is in equities, two hundred million is in bond funds, and only twenty million in cash. By my calculations, that’s a gap of one hundred and eighty million. How can that be?”
Adam frowned and glanced at Tamara, who looked perplexed. “That makes no sense; you must be reading the report wrong. Let me look.” She squeezed between Adam and Kat and turned Nathan’s laptop towards her. After several minutes she stepped back. “I don’t know what to say. Fund 4 must be a test fund.”
“Can we follow an individual client’s portfolio over the past year?” Kat asked.
“Sure,” Tamara replied. Luka jumped up and offered his chair to Tamara, who sat down and started typing on his laptop, producing a report showing the Fund 4 client list.
“That one,” Adam pointed, selecting a name at random. “Mr. M. Worthington.”
Tamara brought Mr. Worthington’s portfolio up on the screen.
“So he first invested two years ago with £200,000. You can see that he is invested in a mixture of shares, bonds and cash. His growth is added each month, here.” Tamara tapped the screen. “And eight months later, he added another £250,000. That’s his closing value today.”
“So today, his portfolio is worth £566,000?” Kat asked, reading off the screen.
Tamara nodded. “Looks that way.”
“But how is that even possible? That’s like a 12% return each year, and the last two years have been tough across all markets. No one is seeing returns of that magnitude,” Kat said.
“The team here contains some of the smartest money managers in Europe,” Tamara said. “And there will have been several derivative products working in the background to hedge the currency and credit exposures.”
“What are the returns like in your other funds over that time period?” Adam asked.
“Of course, you can’t compare across our funds, because they are all made up of a wide variety of different investments,” Tamara said.
“Humour me,” Ada
m said. “Let’s look at the CIP Growth Fund.”
Tamara turned back to the screen and ran a summary performance report for the CIP Growth Fund. The return each year for the last three years was a modest five to six percent.
“That’s more what I’d expect to see,” Kat said. “Can we compare total funds under management to the sum of each component for this fund?”
Tamara ran another report and brought it up on the screen. The total was equal to the sum of the component investments.
“Now that’s also what I’d expect to see,” Kat said. “Tamara, can you run that report for each of the other funds?”
Tamara nodded and ran the reports. The Balanced and the Conservative Funds produced the same result, but when she reproduced the report for Fund 4, the gap of one hundred and eighty million was still there.
Adam looked at Kat and frowned. “What are we missing?”
Tamara, thinking the question directed at her, sat back in her chair. “I don’t know, but I have to agree, this is odd. As I said, it must be a demo fund for testing out new strategies. Even so, it should add up. I’ll have tech support look into it; something can’t be calculated correctly in the background.”
“It’s not a test fund; it’s live. We know of several individuals who have investment portfolios with CIP, whose names only appear on the Fund 4 client list,” Kat said.
“Can I check one of them?” Tamara asked.
Kat glanced at Adam, who nodded.
“Try Philip Munro, portfolio number F4-06030119,” Kat said.
“Our portfolio numbers don’t start with F4,” Tamara said.
“This particular portfolio does. Can you try it?”
Tamara nodded and typed in the number. Philip Munro’s portfolio filled the screen. Kat handed her phone, open to a copy of her father’s report, to Tamara.
Tamara studied the two screens for a moment. “Did you get this from Philip Munro?” she asked.
“Yes.”
“He must be in one of the other funds,” Tamara said. “Let me show you.”
Adam nodded.
They watched as Tamara opened up each of CIP’s other funds and searched on Philip Munro’s name. There were no results.
Tamara’s hands flew to her mouth. “How is this possible?”
“What happens if, say, Mr. Munro wants to withdraw his funds?” Adam asked.
“He puts a call into his broker, who places the sale orders, and once they have settled, the funds are deposited into his nominated bank account,” Tamara said.
Adam nodded. “What happens if everyone invested in Fund 4 decides they want their money back today? Even if you sell all of the shares and bonds, there won’t be enough cash to pay everyone out.”
Kat gasped and shook her head as her eyes rose to meet Adam’s.
“Don’t tell me this is one giant Ponzi scheme?”
Chapter 18
The door to the meeting room was flung open, and Roger Chen strode in with a broad smile that didn’t quite reach his eyes.
“Hello, I hear we’ve missed something on one of our filings,” he said.
“Yes, the client compliance information for Fund 4 seems to have been missed for starters,” Kat said.
The smile fell from Chen’s face. “Fund 4? How do you know about that?”
“What is Fund 4, exactly?” Adam asked.
“It’s our private equity venture capital fund. Mainly high net worth investors who are looking for a little more risk,” Chen said.
“That’s the first I’ve heard of it,” Tamara said.
“Surely, you wouldn’t put retirees in a fund such as that?” Kat asked.
Chen’s mobile rang. He pulled it from his pocket and glanced at the screen. The colour drained from his face, and beads of sweat broke out on his brow. “You’ll have to excuse me for a moment, I need to take this call,” he said, backing out of the room and hurrying towards his office.
“Tamara, can you get Diaz to come and explain Fund 4 to us?” Adam asked.
“Sure,” she said, pushing back from the desk and following Chen down the corridor towards the executive offices.
Adam put a call through to DI Greenwood. “I think you need to get over to CIP; we’ve found something odd. The missing clients appear to be invested in a fund that very few people know much about, which is looking increasingly like a Ponzi scheme.”
He held his phone away from his ear as a loud curse came down the line.
Tamara walked back into the room. “I’m sorry, but it looks as though Diaz has left for lunch.”
Adam glanced at his watch. “Better get Mr. Chen back, then.”
They watched through the glass walls of the meeting room as Tamara knocked on Chen’s closed office door. There must have been no reply because she rapped her knuckles against the wood a second time. After several knocks, she tried the handle, but the door was locked.
She rushed towards the office manager’s cubicle near the elevator. “Avery, can I have the key to Chen’s office? Quickly,” Tamara said.
Adam hurried from the meeting room to join her. “What’s wrong?”
“He’s not answering, but I saw him go in there. He has heart problems…” she trailed off.
Avery produced a set of keys with some reluctance and led them back down the corridor to Chen’s office. Kat followed and watched as Avery knocked on the door and called out Roger’s name. There was still no reply.
Kat felt a shiver of discomfort.
“Turn the key,” Adam instructed. “But let me open the door. Step back, please.”
Avery did as instructed and moved aside for Adam. He turned the handle and eased the door open.
“Mr. Chen, are you okay?” he called. There was still no reply.
Adam stood to one side of the door frame and pushed the door open with his foot. “Roger?” He peered into the office. It was empty. He moved inside, checking behind the door and under the desk.
“He can’t have left, or we’d have seen him,” Tamara said, following Adam into the room.
“What is through these two doors?” Adam asked.
“Roger’s bathroom and private elevator,” Avery replied from the doorway.
“What?”
Adam opened the bathroom door to find the room empty. He turned his attention to the other door. He swung it open to reveal a closed pair of steel elevator doors. The illuminated red digit above the door indicated that the elevator was travelling past level G to B1.
“B1,” Adam asked, poking at the call button with his index finger.
“It’s the senior manager’s parking garage.”
“I know.” Adam stuck his head back out into the corridor and called to one of the uniformed officers. “Get your mate in reception to run down the stairs to B1 to see if they can stop Roger leaving. What does he drive?”
“Silver Mercedes,” Avery replied.
“Kat, you’re with me. Nathan, wait here with Tamara until DI Greenwood and his team arrive and take them through what you’ve found.” Adam issued instructions as he ran towards the main set of elevators. The glass doors were open. Adam and Kat descended to the ground floor, where they exited at a run.
“Why are we not going to the basement?” Kat called, jogging to keep up with him as he burst through the main doors and out onto the street.
“Because the exit to the garage is down the side street here,” he replied as they rounded the corner into the narrow lane where Adam had left his car. A silver Mercedes bounced up a ramp and crossed the footpath in front of them at speed.
“Come on,” Adam said, unlocking his car, throwing himself in the driver’s seat and sliding his mobile into a phone holder attached to the dashboard. Kat had only just closed her door as he accelerated away, the tires swishing on the wet road. A light drizzle had started to fall while they were in the building. Adam took the corner at speed. Up ahead, they could see the silver Mercedes half a block in front.
Adam tapped the screen of his phone
before he spoke. “Following a late model silver Mercedes, rego begins RXC 4, west along London Wall, require immediate support. The driver is Roger Chen.”
A few seconds later they heard a muffled voice announce, “All units near London Wall, an unmarked officer in pursuit of a silver Mercedes registration beginning Romeo X-ray Charlie number 4 requires immediate assistance.” Adam tapped end on the call.
Kat pulled the seatbelt across her body, clicking it into place, and held on to the door as Adam took a sharp left onto Princes Street. Dark clouds filled the sky overhead, and the rain began to fall again in soft sheets.
“Where’s he going?” Kat asked.
“I think he’s going to cross the river,” Adam said. “Hold tight, Kat.”
Kat took a deep breath, her heart racing, and concentrated on the road in front of them. They heard the honking of horns and screech of tires at the intersection ahead of them where the ancient thoroughfare of Cornhill met Cheapside. They slowed as they passed the imposing Bank of England building. The Mercedes cleared the intersection, but Adam had to weave his way through the traffic.
Adam glanced sideways at her. “You okay?”
She nodded.
Adam tapped his phone and spoke again. “In pursuit on King William Street; heading towards London Bridge.”
Kat could hear several sirens coming closer as they raced past the entrance to Bank Underground station. The narrow road widened as they crossed the end of Cannon Street and drove by a building site with massive cranes lifting long pieces of steel into place. The Monument column topped with a flame of remembrance for the Great Fire of London stood proud to their left.
“We’re catching him,” Adam said. “Look.”
The Mercedes had slowed several cars ahead. Adam leaned on his horn, and the vehicles pulled to the side. Coming towards them from the other side of the bridge were three police cars with their lights flashing and sirens ringing out. All of a sudden, the Mercedes accelerated and mounted the footpath, scattering pedestrians who turned and ran for their lives. The car hit the low concrete wall at the edge of the bridge. The driver’s door opened, and a dishevelled Roger Chen leapt out. He climbed onto the railing and held his arms out as if he were about to fly.
