The Paladin

by David Ignatius

  Dunne stood motionless for a moment, and then he bent down over Adrian White and gave him a kiss on his forehead, which was moist with sweat.

  Dunne gathered his things. He put the DO NOT DISTURB sign in place on the outside knob. It was nearly nine p.m.

  “See you on the other side,” said Dunne. He closed the door, went to his car, and drove back to the main highway. He stopped at a gas station, filled the tank, and bought a six-pack of Red Bull.

  43 Darien, Connecticut – June 2018

  The sun rose on the bubbles of wealth that glisten along the Connecticut shoreline, where many of the great hedge funds manage their trading thirty miles from the unpleasantness of Manhattan. Michael Dunne had driven through the night, traversing New York State on a buzz of caffeine. He arrived just before three a.m. and got a room at a simple hotel off the interstate. He slept five hours and awoke refreshed, with a sense that he was nearing the threshold of what he had been chasing for nearly two years – not simple revenge anymore, but something more powerful: knowledge.

  Dunne called Halcyon Capital Partners and asked for the chief executive, Lewis Spoon. A skeptical assistant said her boss was busy. Dunne identified himself as a former officer of the Central Intelligence Agency who was calling on an urgent matter. She asked what this urgent business concerned, precisely, otherwise she couldn’t disturb the chief executive.

  Dunne rolled the dice and made a guess: He said he was following up a contact that had been made by a group of investors represented by a London lawyer named Tom Goldman. He wasn’t acting with Goldman’s group, Dunne said, but to investigate their activities. After a delay, the assistant put Dunne through. The CEO didn’t bother with pleasantries.

  “I hope you’re calling to say that Tom Goldman has been arrested,” Spoon said. “What he proposed is outrageous.”

  “Not yet,” said Dunne. “I’m in the neighborhood, as it happens. Could I come see you this morning?”

  “Wait a minute,” said Spoon. He put Dunne on hold while he jiggered his schedule for that day. He came back on the line.

  “I can see you now. Do you know where we are?”

  “I have an address in Rowayton.”

  “Tell the guard your name. Michael Dunne, correct? He’ll get you past the gate and the dogs. I’m in Building Number Three, up on the hill.”

  Dunne put on a blue suit he had carried all the way from Pittsburgh and his last clean shirt.

  * * *

  The gate swung open to the campus of Halcyon Capital. Three buildings with the austere, graceful lines of a Frank Lloyd Wright compound were set along a creek that sluiced down a gentle hillside to a pond lined with ferns and dwarf maples. The landscape was like a Japanese garden, groomed to appear raw and also perfectly ordered. Atop the hill stood Building No. 3, whose floor-to-ceiling windows overlooked the cove and the yacht club of the next dukedom east along the shore.

  Spoon was standing at the door, in blue jeans and an open-neck shirt, rolled-up sleeves, a man rich enough to dress however he wanted. Halcyon Capital had more than $150 billion in assets under management as of that morning.

  Spoon appraised Dunne: the swirl of red hair, ruddy complexion, lean body, deep circles under the eyes.

  “You look the part,” he said. “Come inside. Rosemary will get you some coffee.”

  Dunne took a seat on the couch, facing the big window. Several dozen sailboats were bobbing at their moorings in the anchorage across the bay. American flags flapped in the breeze at each dock and green lawn. It was easy to be patriotic if you were this rich.

  Dunne had a fleeting thought: This is where all the money ended up, when they bled places like McKeesport dry.

  Rosemary arrived with two steaming cups of coffee while Dunne was still settling.

  “Let’s have it, Mike,” said Spoon.

  “I need information about Tom Goldman and his group. They’re dangerous. I need to know what he pitched you. Then maybe we can stop it.”

  Spoon laughed. He was used to getting information, not dispensing it.

  “I thought you were going to explain all that to me, Mike. Officially, I don’t know anything. Goldman made me sign a nondisclosure agreement before we talked.”

  “Did you report the conversation to the FBI?”

  “Nope. My general counsel wanted me to, but I figured, why should I? Probably it was all bullshit, and if not, why make enemies? And there was that nondisclosure agreement. I could get sued.”

  “That agreement was dictated by a criminal, Mr. Spoon. Nobody will make you keep it.”

  “You obviously don’t know much about business. But before I tell you anything, you need to answer me a question. Why did you get fired from the CIA and spend a year in jail? I checked, while you were on your way. That doesn’t inspire confidence.”

  “I violated an agency rule, on the orders of my boss. I spied on an American. Illegally, they said. They went after me, and I signed a plea agreement and went to prison. But that’s not why it happened. I got in their way, so they removed me.”

  “Who is ‘they,’ please.”

  “George Strafe, my former boss at the agency, is working with the man who came to see you, Tom Goldman. They run a network of the smartest hackers in the world. The chairman is a Swiss woman who owns a boat as big as a football field. I got in their way. Like I said, these are dangerous people. They create their own reality. They chew people up.”

  “You lost your family in all this, is that right?”

  Dunne nodded.

  “And you want to get them back?”

  “That’s probably impossible. I just want to stop more bad things from happening.”

  Spoon walked to his desk and buzzed his assistant. He asked her to summon two people to join the conversation. They arrived several minutes later, ascending the walk from Building No. 2. They took chairs, just back from where Dunne and Spoon were sitting.

  “Michael Dunne, ex-CIA, meet Frederica Schwartz, my general counsel, and Anthony Spezos, my chief information officer. Mr. Dunne has come to see me about the unusual meeting I had last week with the lawyer from London who wanted us to help him invest money in a scheme to profit from market irregularities. We said no, emphatically, as you will recall.”

  The two assistants nodded.

  “It turns out that Mr. Dunne here used to work with the people who organized that dubious effort. He is what you would call a whistleblower. He wants to go to the authorities, which I gather means the FBI. And I’m, what, curious about this whole thing. Freddy, is there any legal reason why I shouldn’t talk to him?”

  “Technically, yes,” answered the general counsel. “But the nondisclosure would be very hard to enforce if the underlying proposal would violate the law. Let me amend that: It would be impossible to enforce.”

  “Thank you. I like lawyers who tell me it’s okay to do what I want. Mike, I’m a soft touch, whatever people say. I feel sorry for you. Plus, I want to know more about this racket. So, I’m going to explain some of it to you, with help from Tony, who understands the AI part. And then you can do whatever you want with it.”

  “Thank you.”

  “I want one promise from you in return, which is that you will keep my name and my firm out of this, forever, period. That’s the deliverable for me in this transaction: that Halcyon gets buried, if any bad shit happens. Do we agree?”

  “Yes, sir.” Dunne put his hand on his heart.

  “Okay. Here’s what your friend Goldman proposed to me. He said he had the ability to ‘anticipate’ certain market-moving events, meaning create them. The events would be very disruptive.”

  “Did he say what would happen?”

  “Oh, yes. He said that records of trades in the market might disappear, electronically, so that firms like mine couldn’t be sure what they were holding. The financial turmoil would be devastating, but the events wouldn’t be real. People who bought assets at the bottom would get huge returns. He wanted to invest about a billion dollars wit
h us, and have us leverage that, so the bet would be closer to a hundred billion.”

  “Holy shit,” said Dunne.

  “Precisely. So, I asked Goldman how he knew about all this scary stuff and he said he had contacts in the hacking world, Russians and Ukrainians and other people in the dark web who had gotten wind of the plan, and he was offering me a chance to benefit from it. Otherwise, he said, I’d get crushed like everyone else.”

  “What did you say? I mean, a hundred billion dollars is a lot, even for you, right?”

  “I told him to fuck off. I said we didn’t need his protection. We were already prepared for exactly what he was describing. We’re not stupid. Anticipating risk is part of our business. Explain it to him, Tony. This is the part where my head hurts.”

  * * *

  Anthony Spezos, the chief information officer, had a prominent nose and dark, thinning hair. He looked over the top of his black reading glasses toward Dunne as he spoke.

  “People think of Halcyon as a financial company, but we’re really an artificial intelligence company,” he began. “I helped create the neural networks that beat the best Go players in the world, and then Lewis hired me to create something similar that could make money.”

  “I gave him his own fund within Halcyon,” said Spoon. “It’s up ten billion dollars since we closed the fund last year.”

  “My trading edge is that I understand how machines think,” continued Spezos. “Computer brains are like humans’. They think slow and fast. The slow part is recognizing patterns. In the last facial recognition challenge, the winner took two hundred twenty-four seconds. Three years ago, it was twenty-nine hours, so ‘slow’ is getting faster, but still… Slow AI is machine learning, where the machine crunches every iteration, every trade, every crop and weather report, and everything else that’s digitized – and tells you the probabilities based on past outcomes.”

  “Okay,” said Dunne. “What’s thinking fast?”

  “The fast part is machine reasoning, intuition, let’s say, based on the machine learning. That’s more complicated. The models use smaller slices of data that still generate high-quality results. It’s like unsupervised learning, compared to rote learning. This fellow Tom Goldman claimed his operation could combine the two.”

  “We weren’t interested,” broke in Spoon, “because we’re already doing it. Tell him how we work analysts’ calls, Tony.”

  The lawyer interjected. “Just to be clear: This is proprietary, Mr. Dunne. If you share it with anyone, we’ll sue you.”

  “Got it,” said Dunne.

  Spezos, the computer scientist, leaned forward in his chair and continued.

  “With the boss’s permission: Every quarter, most big publicly traded companies have conference calls with financial analysts, where they try to set expectations for quarterly earnings, so the market doesn’t freak out when the numbers are announced. What we did was to feed recordings of several thousand of those calls into computers, with algorithms that could correlate the words, pauses, inflections, and voice modulations of a CEO with what he said later in the call, good or bad, that would move the market.”

  “What use is that?” asked Dunne.

  “When we listen to earnings forecasts now using this little system, we can predict what will be said at least ten seconds ahead. Ten seconds. That’s all we need to make a killing on all the other traders.”

  “You can see into the future?” Dunne turned quizzically to Spoon.

  “Yeah, basically,” answered the chief executive. “It’s less valuable now than it was a year ago, because other people have figured out how to do it. To make money, you need two things. Correct thoughts about what’s ahead, and unique thoughts. What we have is correct, but it’s not unique anymore, so Tony will figure out other ways.”

  Dunne was dazzled by the Halcyon money machine, but he was impatient, too. His clock was ticking.

  “What was Tom Goldman’s ‘unique’ thing? How’s he planning to make money in a way that nobody else has?”

  Spezos and the lawyer both turned to Spoon, who spoke quietly, with a combination of admiration for the Consortium’s trading panache and horror at its consequences.

  “They’re going to create false events,” said Spoon. “And they’re going to wipe out the records of real events. They’re going to create a panic, profit from it, and then restore order. It’s brilliant, but incredibly irresponsible.”

  “What did they want from you?”

  “Money to leverage their bets up to that hundred billion. Market presence. Insurance. They proposed a trial run, soon, to convince us that it would work. A proof of concept.”

  “How soon?” pressed Dunne.

  “Next week. We said no.”

  “Why did you say no?”

  “Because we already have the technology. Or, Tony does. We can reconstruct every single position we hold, even if there’s a cyberattack or a dirty bomb on Wall Street or some other disaster that destroys all the electronic records. We can reengineer them, cross-referenced and time-stamped, so that everyone knows they’re legit. That’s part of what Halcyon sells its best clients. Their money will be safe, even after Armageddon.”

  “That’s reassuring, I guess.”

  “It’s business, Mike.”

  “When is the trial run scheduled?”

  “This Monday, I think. Is that right, Freddy?”

  “Yes, sir. Monday morning at ten. After the markets open.”

  “Where did they want you to go for the demonstration?”

  “A trading room for one of the Swiss private banks. It’s on Avenue of the Americas. What was the number, Freddy? Nineteen hundred block of the Avenue of the Americas, 1978, I think. Correct?”

  The general counsel nodded.

  “What’s the name of the bank?” asked Dunne. But he knew. He’d known, really, for a long time, but he had been thinking slow.

  “Maison Suisse,” said Spoon. “It’s a private bank based in Geneva, but it has big trading operations.”

  “I know it,” said Dunne. “I used to have a friend who worked there. Who runs that bank, by the way?”

  “It’s odd, for a European bank. The CEO is a woman. Very beautiful and mysterious. People say she has more secrets than her clients, and that’s why they trust her, but what would I know? I’m just a country boy here on the Connecticut shore. Her name is Adele Kruse, I think. Wait a minute. I think she had another husband. Adele Kruse Hecht. That ring any bells?”

  “Possibly,” said Dunne.

  44 Darien, Connecticut – June 2018

  Rosemary brought in more coffee, and some cookies and pastries. Dunne was too hungry to be polite. He ate a cranberry Danish, and then an oatmeal cookie. The breeze was stiffening on the water. Small boats were hoisting their sails, casting their moorings, and beating out toward Long Island Sound.

  This was Dunne’s one chance. Persistence and luck had brought him into this room, with a man who could help him accomplish what he had feared was impossible. Seize the moment or it would be gone.

  “I think I can stop Goldman and Strafe before this goes down Monday morning,” said Dunne. “But I need to ask a big favor.”

  “You’re already overdrawn on that account,” said Spoon. “What is it?”

  “Do you have a private jet?”

  “Of course. Three of them, to be exact.”

  “Can I use one of them to fly to California tonight? The Orange County airport first, and then San Jose. And then back here to New York.”

  “Westchester County, you mean. That’s where the planes are kept. Why do you need to go to California?”

  “To pick up one person who can help me. And to pick up two other people who are in danger. My wife and daughter. The family I lost, when things went bad.”

  Dunne opened his wallet and removed a picture of a radiant woman with a smile that, when the picture was taken, had only known joy.

  “This is my wife, Alicia.”

  He took out a se
cond picture, of a child whose delicate features matched those of her mother, but with the added exotic touch of red curls.

  “This is my daughter, Luisa.”

  Spoon shook his head. “Beautiful. I’m sorry for you.”

  “It’s going to happen again, if I can’t protect them. Except this time it will be worse.”

  “What can I do?” Spoon opened his arms.

  “I told you: Lend me your plane. If I try to fly commercial, I’ll get stopped by someone. I’ll never get to them.”

  Spoon didn’t answer. Dunne looked at the floor. The chief information officer doodled a geometrical pattern on a piece of stationery. The general counsel leaned toward Spoon and whispered something in his ear.

  “Would you excuse us for a moment? Freddy is telling me why I shouldn’t do this, and I want to talk it over with her.”

  * * *

  Dunne paced outside for ten minutes. Spezos excused himself and returned to his neural networks down in Building No. 2. Rosemary offered more sweets, but Dunne refused and asked for a Red Bull, and when told they had none, a Diet Coke. Eventually the door opened, and Spoon waved him back in the room. He was smiling, the look of a billionaire who had decided to make a risky bet, contrary to legal advice, because it would make him happy.

  “I’m going to do it,” said Spoon. “Freddy says I’m nuts – that I absolutely should say no – but that’s her job. I’m going to hire you as a consultant, starting now, and give you identification for the pilot to put on the manifest. That will cover our ass, slightly.”

  “Thank you,” said Dunne. “Most people would say no.”

  “Don’t start with that,” said Spoon gruffly. “You’ll make me change my mind. I’m doing this because it’s the right thing. And, also, because it will save my clients a lot of money if I don’t have to reconstruct all their positions. You’re taking all the risk, and I stand to profit. Why wouldn’t I do that?”