by Brad Parks
ALSO BY BRAD PARKS
Say Nothing
Closer Than You Know
THE CARTER ROSS MYSTERY SERIES
Faces of the Gone
Eyes of the Innocent
The Girl Next Door
The Good Cop
The Player
The Fraud
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Excerpt from The Last Act © 2019 by MAC Enterprises, Inc.
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ISBN 9781524744823
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CONTENTS
Also by Brad Parks
Title Page
Copyright
THE WHISTLEBLOWER
Excerpt from THE LAST ACT
About the Author
One glance was all it took.
Did Mitch Dupree know, in that first skim of the contract, he was gazing at something that would irrevocably change his fortunes, send his life into a different orbit?
Of course not. He was a bank compliance director, not an oracle.
At that early stage, he just thought the whole thing was seriously screwed up. His predecessor, freshly retired, must have been asleep when he approved it. Or dead above the shoulders.
Either that, or he had knowingly committed professional malpractice serious enough to get him tossed in jail. No one with even a rudimentary understanding of US banking laws could have okayed this Mexico thing.
Or maybe Mitch was missing something. Yes. That had to be it. This was only his second day on the job. Once he dug a little deeper, got a few more answers, it would all make sense.
So he bookmarked the matter, setting it aside for when he could give it his full focus. He was still trying to get the lay of the land.
And there was a lot of land to cover. The Latin American division at Union South Bank stretched from the Mexican border to the tip of Chile, from the Rio Grande to the Strait of Magellan. There were scores of deals involving USB and its Central or South American partners, spread across nineteen countries, five time zones, and two continents. Mitch, as compliance director—really, a one-man compliance department—was responsible for all of it.
In some ways, this felt like the job he had been working toward his whole life. A dream job is what he told his wife, Natalie. He had double-majored in Spanish and international relations at Georgia Tech, cut his teeth for a few years in Coca-Cola’s South American operation, then earned an MBA in finance and accounting from Emory—always with an eye on global banking. Coming out of B-school, he hooked on with USB’s compliance division, but on the domestic side. He worked his way up for a decade, keeping his Spanish sharp by chatting with restaurant workers and day laborers. When the opportunity finally came open to oversee compliance for Latin America, he leapt at it.
It took him a few weeks to return to the thing in Mexico, which he had come to think of as the Mexican Conundrum. Like it was a drink with too much tequila. Or a bacterial disease.
By that point, he had come to understand his predecessor, Roger, had been considered “old-school”—which, in this case, was a euphemism for incompetent. The guy seemed to believe not in the letter or spirit of the law, but in some antebellum code of honor whereby a gentleman didn’t pry too deeply into another gentleman’s affairs.
Which was fine. If it was the 1810s.
Since this was the 2010s, and the regulatory environment had become a smidge more demanding, Mitch needed more answers.
It just made no sense. USB had established a relationship with a consortium of Mexican casas de cambio—currency exchange houses—that allowed anyone with a wad of cash, be it pesos or greenbacks, to walk in and make a deposit that, for a small transaction fee, would be routed to an account at USB.
No automatic reporting of transactions above ten thousand dollars. No inquiries as to the source of the funds. No ID required beyond a sloppy signature on a deposit slip.
It was a clear violation of the US Bank Secrecy Act. Practically an invitation to a criminal enterprise—like, say, a Mexican drug cartel—to launder money. Because when that cash landed in an account at USB, it was instantly transformed from wrinkled and wrong to fresh and clean. You could do anything with it.
Once he was sure he hadn’t misunderstood what was going on, Mitch took his concerns to Thad Reiner, the vice president who directed the Latin American division, the man who hired Mitch.
Reiner at first looked at him blankly, like, Yeah, and what’s the problem?
In disbelief, Mitch explained their very basic obligations under the law, something it seemed Incompetent Roger had never done. Banks were considered the first line of defense against illicit behavior. In most cases, they were trusted to be the only line of defense. The first rule of bank compliance was, therefore, to Know Your Customer, a rule referenced often enough it had its own acronym: KYC. A compliance director could spend his entire life reading KYC regulations, going to KYC conferences, consulting KYC experts.
This, Mitch opined, was the most epic KYC failure he had ever seen.
That’s when Reiner explained that Mitch had it all wrong. There was no money laundering going on here. This arrangement had been put into place primarily so laborers who came to the United States could send money to their families back in Mexico—or, sometimes, vice versa.
These were mostly peasants. Many of them had been born into desperate poverty and lacked documentation. If USB cracked down too hard, it would be depriving Mexican women and children of the money they relied on to survive. It was no exaggeration to say they’d starve.
Thad told Mitch to think of his kids, Claire and Charlie. Imagine if they hadn’t been lucky enough to be born in such fortunate circumstances. Imagine if Mitch had been forced to go to another country to make a living. How would he feel if some assholes in a glass tower took food out of his kids’ mouths?
Besides, it was up to the casas de cambio—the CDCs, as they referred to them in-house—to know the customers. This was an arm’s-length relationship, and the arm was long enough to absolve USB of getting too finicky with the paperwork. If the CDCs were comfortable with these transactions, that was good enough. Where USB was concerned, the CDC—not the person making the deposit—was the customer. Thad said USB had run the thing past federal regulators, and they had given it their blessing.
Still, Mitch was insistent. Regulatory opinions were notoriously fickle. The current regime in Washington could easily be replaced by one following different mandates, and suddenly the regulators would decide USB couldn’t outsource its legal obligations. Mitch’s recommendation as compliance director was unambiguous: Either clean this up or shut it down.
Thad thanked him for that opinion, then explained that the CDC transactions had totaled nearly one hundred billion dollars the pr
evious year. USB took in anywhere from one to one and a half percent of that in fees. And it was almost entirely profit. Most of the overhead—all those locations, employee salaries, and lights that needed to be kept on—was borne by the CDCs. It was like having free branches all over Mexico. This was the single most lucrative arrangement in the Latin American division’s portfolio.
As compliance director, Mitch was expected to protect this golden goose, not slaughter it.
Thad’s last words before sending Mitch on his way were, “Seriously, Mitch, don’t rock the boat on this one.”
And, okay, Mitch could go along to get along.
But he wasn’t going to let the issue drop entirely. Quietly, he was going to make sure his objections were noted in the record. It went to another acronym that was absolutely critical for a bank compliance director.
CYA.
Cover Your Ass.
* * *
***
They were a family.
Mitch must have heard that sentiment expressed a dozen times during his first few weeks in the Latin American division, expressed by everyone from Thad Reiner in his corner office, to the other executives whose offices ringed the twenty-seventh floor of USB’s downtown Atlanta headquarters, to the groundhogs who filled the vast cubicle prairies in the middle of the floor.
The other divisions at USB, like the one Mitch came from, were Darwinist dens of survival, duplicity, and avarice, where the only way to get ahead was to make a ladder out of the bleeding backs you had stabbed and scrabble desperately toward the top, all the while hoping someone below didn’t grab you by the ankle and pull you back down into the hemorrhaging masses. When USB wasn’t having shake-ups, it was having layoffs or restructurings. It was like the bank’s primary output was the misery it produced by making employees reapply for their jobs every six to nine months.
Not so in the Latin American division.
Because, you know, family.
Once people arrived there, they tended to stay. They treated one another with respect and dignity. They were more interested in the entire division succeeding than in who got the credit for it. They were the embodiment of every team-building, trust-falling, happy corporate culture cliché ever created; and perhaps the most surprising thing Mitch discovered during his orientation was how many people seemed to believe every Kool-Aid-drinking drop of it.
Before long, so did Mitch. Insulated from the ritualized insanity that plagued the rest of USB, the Latin American division was essentially a bank within a bank. It was afforded almost total autonomy to do as it pleased.
As long as it was profitable.
Make that: handsomely profitable.
The family that gets paid together stays together.
So there was pressure, sure. But the sun was always shining somewhere south of the border, and therefore the family could find new places to make hay.
As compliance director, Mitch came to see himself as the family crossing guard. It was his job to make sure no one got run over by some regulation they didn’t see coming. And, the Mexican Conundrum aside, he felt like he was doing his part.
It was amazing how quickly the time on the job flowed by. First months, then years. It never got boring. There was constantly fresh business coming across the transom, things that required him to learn a new set of regulations or understand different issues.
Now four years in, he was starting to think he might stay until retirement, just like his predecessor had. There were pay raises when you didn’t even ask for them. There were end-of-year bonuses. There were no annual performance reviews or other prescheduled bureaucratic colonoscopies. They didn’t even log your personal days. If you needed a little time for something at your kid’s school or whatever, it was off-the-books. No one eyed the clock. Just get your job done.
Much of this benevolence flowed from Thad Reiner, the proud papa in this big happy family metaphor. He was a former wunderkind, having risen to VP level by the age of thirty-seven, the youngest person heading his own division at USB. There was talk back then he was being groomed for bigger things.
His career had since leveled out. Rumor was he had turned down promotions that would have taken him out of the Latin American division. He liked the family that much.
He was now in his late forties, like Mitch. If you blurred your eyes, they even resembled each other: both slightly short and somewhat round (due to a shared affinity for beer and barbecue); both with goatees and dark hair, albeit with differing amounts of gray (Thad more than Mitch).
Thad was easygoing, friendly, a bit nerdy. He absolutely adored Disney World—he took his wife and kids there every year, even now that the kids were well beyond the age of being awed by Mickey Mouse—and decorated his corner office with photographs of his brood at the Magic Kingdom.
He was just a good guy to work for. He sponsored a regular penny-ante Texas hold ’em poker tournament at his house and invited the whole division, even if all they did was hang out and watch. He knew the names of everyone’s spouses and kids. When he asked about them, he did it in a way that was beyond merely perfunctory. He really seemed to care.
That—and a certain amount of inertia—was the main reason it took Mitch four years to push harder on the Mexican Conundrum. He had been keeping an eye on it, and his worst fear about it appeared to be true: Someone had found the loophole and was exploiting it. There were numerous suspicious-seeming deposits coming from the west coast of Mexico. Particularly Colima, Jalisco, and Sinaloa.
Mitch read some articles and discovered that was the power base for what law enforcement was calling the New Colima Cartel. While relatively young, it was already being hailed as the worst of a new breed of criminal pestilence. They were far more militarized than previous cartels had been and, if it was possible, more ruthless. Headed by a former enforcer for the Sinaloa Cartel nicknamed El Vio—Spanish for “the seer”—New Colima had become the largest distributor of crystal methamphetamine in the world, having won its market share primarily through brutality. Assassinations. Kidnappings. Torture.
Lots of torture.
It was unsettling for Mitch, knowing he was playing a small role in enabling this vicious bunch of thugs. Because he understood that while cartels could do small things with dirty money in Mexico—bribing local officials, paying mercenaries, that sort of thing—it needed clean money for many of the big things that allowed it to spread poison across the United States. Like buying stash houses. Or businesses to use as fronts. Or planes to smuggle drugs into the country. It was making him feel like his CYA protocols weren’t sufficient.
Finally, after a little more procrastination, he asked for a formal meeting with Thad Reiner—an unusual step in itself, since most of the time they just popped their heads into each other’s offices. They agreed to meet on a Thursday at eleven A.M.
A good time for a serious matter.
The night before, Mitch had trouble sleeping. He kept thinking about his agenda for the meeting, what he would say, how Reiner might respond. He would be respectful in his tone, of course. But when Thad started to spin things, as he inevitably did when it came to the CDCs, Mitch was going to hold firm. He had to come out of this meeting with some kind of resolution beyond maintaining an unacceptable status quo.
Because, yes, they were a family.
But sometimes families needed to stage interventions.
* * *
***
First, some background.
One of the main tools in a compliance director’s box is the suspicious activity report—SAR for short. It’s a three-page form, published by the Treasury Department’s Financial Crimes Enforcement Network.
The SAR is essentially a signal flare to the government, a way for someone floating in the vast sea of federal regulations to say, Hey, something’s wrong here, you might want to check this out. It’s used by banks, insurance companies, investment man
agers, casinos—basically, any business that deals in large amounts of money and might be targeted by criminal elements.
In the case of the Mexican Conundrum, Mitch’s compunction to act rested in his knowledge of United States Code title 31 (Money and Finance), subtitle IV (Money), chapter 53 (Monetary Transactions), subchapter II (Records and Reports on Monetary Instruments Transactions), section 5318 (Compliance, Exemptions, and Summons Authority), subsection i (Due Diligence for United States Private Banking and Correspondent Bank Accounts Involving Foreign Persons), paragraph 3, which states that any director, officer, employee, or agent of any financial institution must “ensure that the financial institution takes reasonable steps to ascertain the identity of the nominal and beneficial owners of, and the source of funds deposited into, such account as needed to guard against money laundering and report any suspicious transactions.”
Hence the need for a SAR.
All those statutory aerobics aside, the document itself looks about as threatening as the application for a grocery store discount card. It consists of a series of boxes to be filled out and checked off. If you had completed as many SARs as Mitch had over the years, you’d start to wonder if perhaps they should be regulated as sleep aids.
Part I, “Reporting Financial Institution Information,” was straightforward.
Mitch worked for Union South Bank, a venerable saver and lender whose founding dated back to just after Reconstruction—the “union” and “south” serving as an unsubtle middle finger to those Yankee pricks up north. Throughout most of its history, USB had languished unremarkably in sleepy southern towns, run by men whose idea of risk taking was only ordering medium starch at the dry cleaners.
Then, coming out of the savings and loan crisis of the 1980s, USB found itself in a position to buy banks whose ruined balance sheets made them vulnerable to takeover. That’s when USB’s corporate DNA started changing, not unlike when a healthy cell comes into contact with a virus.
