by Mike Cooper
ALSO BY MIKE COOPER
Clawback
VIKING
Published by the Penguin Group
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Copyright © Mike Cooper, 2013
All rights reserved. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author’s rights. Purchase only authorized editions.
Library of Congress Cataloging-in-Publication Data
Cooper, Mike.
Full ratchet / Mike Cooper.
pages cm
ISBN 978-1-101-62273-5
1. Auditors—Pennsylvania—Pittsburgh—Fiction. 2. Financial crises—Fiction.
3. Avarice—Fiction. 4. Pennsylvania—Fiction. I. Title.
PS3603.O58284F85 2013
813'.6—dc23 2013001603
This is a work of fiction. Names, characters, places, and incidents either are the product of the author’s imagination or are used fictitiously, and any resemblance to actual persons, living or dead, businesses, companies, events, or locales is entirely coincidental.
For Sonia and Elliot
ACKNOWLEDGMENTS
I’m enormously grateful to the many people who helped me write this story. Advice, fact-checking and all kinds of support came from Yuri Berkovich, Samantha Cameron, Lynne Heitman, Ross Hoham, Joel Johnson, Josh Kendall, Sophie Littlefield, Claudia Ramirez, Vladimir Simine, Kyle Steele and Kim Ablon Whitney.
Linda Landrigan published Silas Cade’s first short stories.
Julie Miesionczek is the best kind of editor: thoughtful, enthusiastic, funny. She and the team at Viking took a rough manuscript and turned it into a book.
Heide Lange, agent extraordinaire, along with Rachael Dillon Fried, Jen Linnan and Stephanie Delman saw the potential in Silas and brought him to the wide world.
Finally, my wife and children provide the encouragement that makes everything both possible and worthwhile.
CONTENTS
Also by Mike Cooper
Title Page
Copyright
Dedication
Acknowledgments
PREFACE
CHAPTER ONE
CHAPTER TWO
CHAPTER THREE
CHAPTER FOUR
CHAPTER FIVE
CHAPTER SIX
CHAPTER SEVEN
CHAPTER EIGHT
CHAPTER NINE
CHAPTER TEN
CHAPTER ELEVEN
CHAPTER TWELVE
CHAPTER THIRTEEN
CHAPTER FOURTEEN
CHAPTER FIFTEEN
CHAPTER SIXTEEN
CHAPTER SEVENTEEN
CHAPTER EIGHTEEN
CHAPTER NINETEEN
CHAPTER TWENTY
CHAPTER TWENTY-ONE
CHAPTER TWENTY-TWO
CHAPTER TWENTY-THREE
CHAPTER TWENTY-FOUR
CHAPTER TWENTY-FIVE
CHAPTER TWENTY-SIX
CHAPTER TWENTY-SEVEN
CHAPTER TWENTY-EIGHT
CHAPTER TWENTY-NINE
CHAPTER THIRTY
CHAPTER THIRTY-ONE
CHAPTER THIRTY-TWO
CHAPTER THIRTY-THREE
CHAPTER THIRTY-FOUR
CHAPTER THIRTY-FIVE
CHAPTER THIRTY-SIX
CHAPTER THIRTY-SEVEN
Hey Little Brother —
You’re surprised, right?
Because if you already heard, for sure you would of tracked me down. I know it.
The state split us up when we were babies. Least you were a baby—I was one or two. Of course I don’t remember, but my family told me later. I ended up staying with them the whole way through. I guess that wasn’t how it went for you. New Hampshire DHHS gave me a little information—I had to hire a lawyer and file all these papers but they came through with the basics. I wrote to your last parents, and they gave me this address.
Also they told me a little about you. CPA—how about that! And in Vegas, too. Guess I know what kind of accountant that makes you, huh? Working for the casinos. I was out there, few years back. But not too long. Back east is home for me.
I fix cars, do a little welding, that kind of thing. Racing sometimes, on the weekend—dirt track, kind of like you got out there. Not the Speedway of course, more like Battle Mountain. I do all right. Got two alimonys to pay though, you know how that goes.
You and me should talk sometime. Catch up. We don’t have any other blood relatives, not that I heard about anyway. It’s just you and me.
I looked for you on the google, I don’t know, computers aren’t my thing. You call me instead. I got some ideas.
Your big brother,
Dave Ellins
CHAPTER ONE
What the big accounting firms forget is, if someone’s rigging the books, they’re already lying to you. And the longer they’ve gotten away with it, the better they’re going to be.
A good audit isn’t a playdate with calculators.
It’s a hostile interrogation.
The Clay Micro offices were on the second floor of a converted industrial building. Pittsburgh’s local rust belt was right outside but state development funds had paid for a nice rehab, all exposed brick and granite columns. Across a range of cubicles I could see interior glass overlooking the line floor.
“Sir? Sir?” A young woman behind the chrome reception desk, wireless earpiece blinking, tried to wave me down. “Do you have—?”
“Here to see the chief.” I smiled and finished removing my cap—I’d stretched it out an extra two seconds. Long enough to keep my hand, and the hat itself, in front of my face while I crossed the ceiling camera’s field.
“Is he expecting you?”
“Sure.” I kept moving.
“Because I don’t—”
“Thank you, Sharon.” And I was in, headed for the executive suites at the end of the wing.
Hearing her name puzzled the receptionist an extra moment, even though I’d simply read it off the nameplate on her desk. But she was fast enough to dial up help. Two young guys in suits arrived at the CEO’s office the same time I did. Not security but willing to pitch in. One had a coffee cup in hand, and it spilled down his shirt as I shoved past and banged open the door.
The CEO twisted around in his leather chair, reading glasses falling off his nose, staring in pasty surprise. “Wha—?”
I slammed the door in the face of my pursuers and said, rather loudly, “False invoices for ten point one million in Q4. Your boss sent me, Brinker.”
Then I opened the door again, stepped to the side and waited.
I’ll give him this, Brinker was quick. He gestured at the two eager beavers bursting in and said without hesitation, “It’s okay. I need to talk to him. Back to work.”
And five seconds later we were alone. That told me something about his style. He confirmed that our conversation was going to be harder than necessary when his next words to me were, “You’re full of crap. The audit committee passed on those statements, and I’ve got signatures. Understand?”
I sighed.
“You think I’m an accountant,” I said. “Here to cross-check invoices, review the bank recs, that sort of thing. Right?”
Brinker picked up his glasses and laid them on the
gleaming hardwood desk, perhaps comforted by its vast size and weight. The office had that hushed, opulent feel of a hundred-grand interior design contract. Thin gray light filtered through the windows, which must have created a glare problem on his plasma monitor, but which lit the room pleasantly.
“You can pound sand,” he said. “That’s what I think.”
I drew my Sig Sauer P226 from its around-the-back holster. It’s a nice workaday handgun, pricey to be sure, but heavy, reliable and intimidating. The suppressor made it look like something out of Hitman. Brinker, showing nice reflexes, immediately dove under the desk. Without really aiming I shot out the monitor, his telephone console and for good measure the framed Harvard diploma on the wall.
Destroying the phone must have triggered an intercom or something. The door flew open as Brinker pulled his way back up from the floor, glaring. The two young men outside peered in suspiciously, but between the suppressor and the high-class soundproofing I doubt they’d heard anything. The Sig was already back under my jacket.
“Sorry, private meeting.” I pushed the door shut again.
“All right.” Brinker brushed broken plastic from the desk. “You’re not an accountant.”
“Actually—well, never mind. Ready to talk about revenue recognition?”
He was a tough nut. After several fruitless minutes, I opened the door and called out, “Where’s the supply closet? We need a paper cutter.”
The two men were still in the hallway, along with the receptionist. The three of them stared back at me, uncertain.
I looked at Brinker. “You want them to hear what we’re talking about?”
He frowned and said past me, “Just do what he says. Sharon, you.”
“Uh, sir, are you sure—?”
“Don’t worry.” The son of a gun was getting confident again, which began to annoy me. When Sharon brought up the paper cutter—a nice big one, a grid-marked platform with a two-foot swivel blade—I locked the door and dumped it on Brinker’s desk.
“Drop your pants,” I said, and opened the blade.
—
When I left Brinker’s office, it was clear that little work was going on. Brinker had yelled some, even though we compromised on his finger instead—and I let him jerk it away at the last instant, so he lost only the tip, not even any bone. The soundproofing had muffled that noise, too. Still, his employees kept their distance. They knew something was up, but they couldn’t be sure who I was, why I was there or what they ought to do in response. Small clusters of them peeked over cubicle walls, falling silent when I passed.
“Just routine,” I said with a big smile. “Nice day, huh?” Spreading cheer everywhere I went.
I wasn’t having fun. This was just getting the job done, as efficiently as possible. I arrived at the CFO’s office.
His name was Nabors, and he was waiting for me. Brinker must have called to warn him. “It wasn’t my fault,” he said, the moment I walked through his door, talking fast. “He told me to do it. I didn’t want anything to do with the entry. I knew it was wrong. I wanted to take the writedown, show it just as generally accepted accounting principles require, but he said we couldn’t hit the bottom line like that all at once.”
“Slow down.” Nabors was a weasel, with slicked-back hair and a crisp white-over-blue shirt. His office was smaller than Brinker’s, of course, and his desk and paneling were light colored—ash, maybe, or birch. “Tell me what I need to know and I’ll let you live.” I thought that was funny, but he didn’t.
“The board reviewed the financials.” Excuses continued to tumble out. “I was sick and couldn’t check all the subledgers—”
“That’s enough.” He finally shut up and I watched him for a minute in silence, frowning. When the strain of keeping the words in became unbearable, he opened his mouth and I immediately said, “Don’t talk, listen.”
He stared at me, quivering a bit.
I nodded. “You drive a Porsche Cayenne Turbo, right? License plate says S-8. That’s cute.” SEC Form S-8 reports a company officer’s exercise of stock options. “Before I came in this afternoon, I wired an M67 fragmentation grenade into the front axle linkage.” He looked confused, so I continued. “It’s simple. You can start the car and even drive it, but the first time you make a left-hand turn, the tie rod pulls the detonator, and . . . boom.”
“But—”
“So here’s what you can do. Calling the cops seems like a bad idea because they’ll have some questions you really don’t want to get into.” I paused, and after a moment he nodded hastily. “Maybe you could disarm it yourself. Of course you only get one try . . . or maybe you know someone you could call, has some expertise? No?”
“All right, all right,” he said. “Just let me tell it, okay?” And it was that easy.
The problem I’d been hired to solve was right out of Fraud 101. Clayco was a big, privately held manufacturing company. A few billion in sales, plus or minus. This division, Clay Micro, made some sort of computer-controlled hardware and contributed maybe a tenth of that.
Every quarter they’d send in their numbers, to be consolidated companywide. Recently central-office accounting staff had noticed some odd trends in the division’s reporting: receivables up 120 percent, even though revenue was flat, along with negative cash flow and a sudden writedown of inventory.
In other words, the division was almost certainly booking nonexistent sales.
Companies do this all the time, of course. Usually they’re just puffing up results to meet their targets, and the fake sales are simply reversed early in the next period. Not exactly legal, but tolerated.
The cash flow and inventory issues suggested worse, however: that someone inside the division was actively stealing. That Clayco’s top management could not accept—but they sure didn’t want it to come out publicly, say in an external auditor’s annual report.
That’s why they hired me instead.
Brinker had already admitted that the false invoicing was necessary to prop up net income, because they’d found millions of dollars of worthless silicon in the work-in-process inventory. Some kind of problem at the fabrication plant they’d contracted to make the chips, undiscovered until too late. According to Nabors, he’d documented the problem, all the way through a journal entry, when Brinker decided to cover it up instead.
“The chips were made by someone else?” I asked. “Why wasn’t it their problem?”
“We’d already accepted the stock and built the machines. Contractual obligation.”
“How much was the writedown?”
“Seven million or so.” He looked defensive. “They were the core processors, and Manufacturing lost hundreds. Not cheap.”
I thought about it. “The false sales were more than ten. Why’d you overcompensate?”
“We didn’t want it to be too obvious.”
I shook my head. “I don’t know how you thought you’d get away with it,” I said.
“It was just . . . smoothing the earnings, see? We knew we could journal it out over the next five or six months. We just didn’t want to take the bad news all at once. The market hates surprises.”
“Not so much as your boss.” We went round a few more times, and Nabors’s story didn’t change. When I got up to leave he started to relax, tension draining from his shoulders.
“What about my car?” he asked.
He’d helped me out, but he was also a liar, a cheat and a coward. And rich, not coincidentally.
“You’ve got GPS on your phone, don’t you?” I said.
“Huh?”
“So figure out how to get home with only right-hand turns.” I walked out.
—
Sometimes, investigating something like this, you work the chain of command: start with a specific event, and each revelation takes you one step up the ladder, closer to Mr. Big. But today I seemed to be going in the opposite direction. Based on Nabors’s account, the problem started on the production line.
I fou
nd the director of manufacturing downstairs, in a design lab off the manufacturing floor. He was standing with several technicians at a bench cluttered with blinking equipment and discarded circuit boards. When I came in, he jerked his head toward an office in the corner—no windows, just cheap partitions separating him from the lab. His gunmetal desk overflowed with paper.
Like he’d been expecting me. Everyone was gossipy today, talking behind my back.
“The chips,” I said. “Seven million dollars of bad inventory.”
“No.” He crossed his arms, closed his mouth firmly and waited.
Finally I said, “No what?”
“No, it wasn’t seven million. Only five point three.” He grimaced. “No wonder you’re here, they get the numbers wrong like that.”
“Hmm.” I might have scratched my head, but something about this guy made me not want to move my hand too far from my weapons. “So . . . why do you think I’m here?”
“Uh-uh.” He shook his head. “I’m not saying anything else.”
“Why not?”
“I heard what you did upstairs.”
“And?”
“Let me tell you something, okay?” He spat into his wastebasket. Now that I noticed, the small office smelled of chewing tobacco. “I like this job, but I started out in the rough. Worked my way up from the shop floor, except for three years I spent on the docks, putting automation into the cranes. Putting crane operators out of work, that meant.” He looked back at me. “Putting longshoremen out of work.”
“So?”
He shrugged. “So you don’t scare me. Go ahead and try.”
I’d done some background research on all the division’s managers. Just for situations like this.
“I know where you live,” I said. “And that means I know where your wife lives, too.”
He grunted. “Hah. You can save me the lawyer’s bill. We’re getting divorced.”
“And your son? Working for A-1 Parking downtown . . . I could find him easy.”
