As far as Brooks could make out, basket trading was an elaborate method by which banks and hedge funds conspired to hide profits from the government: A hedge fund would put its money in a bank. The bank, in turn, would open an investment account with the same hedge fund for exactly the same amount of money.
While it looked like the hedge fund was trading the bank’s funds, in reality it was trading its own money. That was step one.
The next step involved time. Each account would remain open at least a year. For tax purposes, that meant they were considered long-term investments. Inside the accounts, however, the hedge fund was executing millions of trades, most of them a few seconds long.
In the cases Upton’s subcommittee had found, the largest perpetrator of this hedge fund tax fraud scheme was named Valerian Investments. Its subsidiary was called Amadeus. And it was big. In one example, Valerian made twenty-nine million trades in a single year, the average trade, three seconds, long enough to enjoy a small uptick in a stock price. Then the stocks were sold back, as Valerian’s computers took advantage of the speedier trading software it had designed. The trades themselves were legal. But loaning money to a bank—pretending the money was the bank’s and the hedge fund was simply investing it—was illegal. It was tax evasion. If Valerian had admitted that it had been trading in its own funds, it would have had to pay much higher taxes.
Over the course of four years, Valerian had made thirty-six billion dollars in profits with basket trades involving a single bank, Ralston Bancorp. By claiming the money belonged to Ralston, rather than to Valerian investments, and claiming that the money was held for more than twelve months rather than just a few seconds, Valerian had evaded some $7.1 billion in taxes.
When it was done investigating, Upton’s subcommittee declared the scheme the single-largest tax dodge ever uncovered by the United States Senate. The panel had gone so far as to list various government programs that Valerian’s seven billion dollars in taxes could have paid for. Instead, Americans had had to cover those costs themselves with their personal income taxes.
Yet almost no one had ever heard about it. In the wash of news and acrimony in Washington, the subcommittee report had not attracted much attention. A press conference and a tiny story inside the Wall Street Journal. An AP wire story in the Tucson and Phoenix papers.
And even though it was the largest and most profitable private equity investment fund in the country, the name Valerian Investments was largely anonymous. Valerian dealt exclusively in institutional investment funds that exceeded one hundred million dollars in assets. It didn’t advertise on television. Most Americans had never heard of it.
Two other hedge funds and two other banks had engaged in basket trading schemes as well, according to Upton’s subcommittee report, but on a smaller scale and for not as long. They also had stopped, Brooks found, after being caught by Upton’s Senate subcommittee. And they’d settled with the IRS.
But not Valerian. It had persisted in using basket trading. And sued the IRS to fight the tax finding. The case was taking years to wend its way through the courts.
In short, Valerian had a very large bone to pick with Wendy Upton.
That was the first item Brooks had identified. The second was the key link.
Valerian’s subsidiary hedge fund company, the Amadeus Corporation, had hired Vigilas to do investigative work in another dispute, this one with the California state tax authority. It was a possibly meaningless link, perhaps no more than an innocent coincidence. But maybe it was more: for it connected the hedge fund Valerian, a powerful force with a grudge against Upton, to Vigilas, which was a subsidiary of Gray Circle, the group that seemed to be hunting Upton’s background and apparently setting her up in a honey trap.
Brooks would never have known if she hadn’t remembered the reference to Amadeus in the Grid. And if she hadn’t thought to look among the hundreds of tax subcommittee reports and hearings about basket trading.
Now Brooks just had one more thing to check. It took only a moment.
When she was done, she leaned back in her chair and rubbed her eyes.
Valerian Investments was the most profitable hedge fund in the United States. And it was owned by a man whose name Brooks had seen on Rena’s whiteboard:
Wilson Gerard.
Though the exact amount had never been pinned down, according to what Brooks had found so far Gerard was believed to be the single-biggest financial donor to GOP candidate Jeff Scott.
Ellen Wiley wasn’t in the conference room any longer. She’d gone down to her office to take a phone call. Brooks grabbed her laptop and headed to Wiley’s office, out of breath from running the stairs when she arrived.
“Ellen,” she gasped, trying to get the words out, “I think I’ve found our blackmailer.”
Thirty-Nine
Easton, Maryland
The text message they sent to Samantha Reese was long and complicated. After trying to understand it, Reese handed her phone to Rena.
He scanned the message quickly, continuing to focus his attention on Sara Bernier.
“Who hired Gray Circle?” he asked. He tried to hide his excitement about what the text told him. Randi might have finally broken open what they needed. She certainly had given him a lot of new information to explore. Now Rena needed to get Bernier to confirm it.
They had eaten, sitting on a deck by the creek to let Bernier relax. That would make it harder for Bernier to claim she was being forced to be here. She had sat unguarded and lingered over a leisurely lunch. She was trying to calm herself down and learn as much about them as she could. But that only served their purposes more.
Now they were back in the cabin sitting around a small table. Rena was asking questions. Reese’s people were outside where Bernier wouldn’t see them. The sun was beginning to set.
Bernier stared back blankly at Rena.
He rephrased the question: “Do you know the client?”
“No.” She answered too quickly.
“Would you like to know the client’s name?”
She paused, unsure how to answer. Rena was signaling to her that he now knew who Gray Circle’s client was. That must have been in the text he had seen, Bernier reasoned. For the last two hours, it had been clear to her he didn’t know.
What else did he know that he had not known before? Bernier tried to recalculate.
Rena already had. Bernier, he now recognized, had been lying for several hours—whenever she thought she could get away with it. He doubted, now, that she had any real feelings for Upton. That was always going to be part of the cover story if she were caught. He was skeptical, too, of the name she had given them for the donor who had supposedly introduced her to Upton. Gray Circle would have never given up the name of another client, especially one who helped them. That was bad for business.
Rena thought Bernier might be telling the truth about not knowing who hired Gray Circle. That would be how a spy agency would have handled it—compartmentalizing information—and Gray Circle was run by former spies. If they ran their consulting firm as they had been trained to run their intelligence operations, Bernier would know as little as possible.
“Better not to know the client’s name? That how you feel?” Rena said.
Bernier hesitated, then smiled.
This time Rena knew she was lying. Her eyes gave it away. Once she had decided how to answer, she was too quick with it. He realized it was something she had done several times in the last few hours. He retraced his memory as quickly as he could, trying to recall what else she had been too quick to answer.
“Have you met him, Wilson Gerard?”
“No, of course not,” she said, but her eyes gave it away again.
Rena looked as if he were disappointed.
“What else was there,” he asked, “besides your honey trap and digging into Upton’s background?”
She shook her head. “I don’t follow.”
Rena leaned toward her and his voice softened. He shook
his head slowly. I have broken you now, his expression said. I know when you are lying to me. This is over. But he said nothing. Just his look, for several seconds. I have you now. I am disappointed each time you lie.
Then, as if he had all the answers he needed, he seemed to change the subject.
“Were there operations against other campaigns?”
“I don’t know,” she said, again too quickly.
After two more lies, Rena began to gather his things. “Sam can take you back now, if you want. We’re done. No police. But I wouldn’t tell your employer we know who the client is. They’ll think, Sara, that you told us. They’ll think we kept you all this time because you told us everything. Because we know everything now.”
He looked at her coldly.
“Really, I don’t know how much you want to tell your employer about any of what happened today. You could tell them the truth. That we got you into a car and talked to you for hours. Or you could say you lost your phone, or that it died. That you just needed a day away to yourself. Or that you were running from us. Or tell them you’ve developed genuine feelings for Wendy. That’s what you told us. Maybe stick with that.”
“What do you want?” Bernier said.
Rena looked at Reese rather than Bernier.
“Twenty-four hours. Give us that. Don’t tell anyone about today until tomorrow night, and we won’t tell them that you spilled your guts. Maybe you’ll never have to tell them anything. You guys can stay here, or head the rest of the way to the ocean in Bethany and spend the night. Or go back. It’s your call. I’ve got a car coming to take me back to the city. But if you give us twenty-four hours, none of this ever happened. And you’re off the hook.”
Then Rena left the house with Bernier inside.
Reese came outside with him. “So we’re kidnappers now?” she said.
He had a glint in his eye. “No, we were just ‘proactive,’ ‘engaging in out-of-the-box thinking,’ and ‘showing a can-do attitude,’” he said. He was quoting the Gray Circle website.
“Don’t get me arrested or sued, Peter,” Reese warned him.
“I don’t think we have to worry about that.”
Then he got into the passenger seat of the second black Lincoln sedan that had been following them all day and had been waiting down the road for the last few hours out of sight, and headed back to the city.
Forty
Austin, Texas
The door to the suite on the top floor of the W Hotel in Austin, Texas, swung open, and four people who seemed in the middle of more than one conversation burst in.
A young man carrying two suitcases entered first. He wandered through the large living room and into the bedroom behind it. Inside one of the closets he found the folding luggage rack and placed it where David Traynor would prefer it, at the bottom of the left side of the bed. He placed one of the suitcases on the rack, opened it, and began taking things out. He removed a pair of slippers and found the toiletries and placed them in the bathroom. He pulled out two suits and dress shirts and hung them in the closet. He found a pair of socks and underwear for tomorrow and placed them in the top drawer of the dresser.
The second person entering the suite, a woman in her thirties carrying an iPad as though it were a clipboard, was in the living room talking to the young man through the open door, complaining about something on the schedule tomorrow.
Two older men were already in the hotel suite sitting on a sofa. They appeared to be half listening to her and half finishing a conversation of their own.
Now a man in a suit with a conspicuous earpiece entered the suite, glanced around, and stepped aside for the candidate, Senator David Traynor, to follow. Traynor, the junior senator from Colorado, was on the phone. Once in the room he hung up.
“All set,” said the young man who’d been arranging Traynor’s room. He appeared to be about twenty-two. His name was Steve Lepler, and he was Traynor’s “body man,” the person who stayed with the candidate all day, carried his coat, and made sure the candidate had whatever he needed.
“Thanks, Steve,” Traynor said, and the boy wheeled his own suitcase out of the suite.
“David, we have to resolve something for tomorrow,” Lauren Parker, the woman with the iPad clipboard, announced. “At eleven tomorrow morning, after the speech on entitlements here at the hotel, we come back to the suite and you have double-booked time, a meeting with donors and an interview with the Texas Tribune.”
Traynor hadn’t had time to focus on the schedule during the flight from Dallas, where they had campaigned this afternoon, and Lauren Parker hadn’t been able to ride in the Escalade with Traynor into town just now because David had wanted to have private time with the mayor of Austin, who’d met him at the airport. The mayor wanted to talk about a local issue he thought Traynor should reference at the speech tonight in Austin.
“What?” Traynor said abruptly to Lauren Parker.
“Which do you want to do at eleven tomorrow? Interview with the Texas Tribune or meet with two donors, Helen Gilley and Sam Ford? They are double-booked.”
“Make them both happen,” Traynor said.
“How?”
Traynor sighed. “The interview first, but we’ll give the reporter just fifteen minutes even though we tell him thirty. Ask the donors if they mind coming into the room with a reporter there. If they’re okay with it, have them come in. We’ll tell the reporter it was a mix-up, an overlap in the schedule we couldn’t avoid. The reporter will think she’s getting some behind-the-scenes color, something special. And then she won’t mind when we shoo her out.”
Lauren tapped this into her iPad.
“Okay?” Traynor said.
“Great,” the scheduler said. She hesitated. She was unsure whether she should leave now. She wanted so much to help.
“Have a good night, Lauren.”
She took an awkward step toward the door, a hint of uncertainty mixed with disappointment in her eyes. Then she turned, gave a final glance back, offered a kindly “good night,” and left the suite.
TRAYNOR LOOKED AT THE MEN on the sofa and rolled his eyes.
“Well?” Traynor said impatiently.
The men looked back, uncertain what he meant. They were Sterling Moss, the chief strategist of the David Traynor for President campaign, and Quentin Phelps, the campaign manager, who coordinated the operations, paid the bills, did the hiring, made sure things happened on time.
“What about goddamn Wendy Upton?” Traynor said, raising his voice, as if saying it louder would clarify the question for his strategic consultant. “Is she going to say yes or what? Can you get me a fucking answer finally?”
Traynor liked Sterling Moss, but it annoyed him that political consultants were so expensive. They seemed to think they were Jedi masters, not hired hands, and they cost as much as hiring Kim Kardashian to come to your kid’s bar mitzvah.
Moss offered Traynor a half smile back. The Colorado billionaire entrepreneur senator wasn’t as wild as he tried to appear, Moss knew, but Traynor did try to provoke people to get things done.
As a young man, Sterling Moss had worked for Jesse Jackson’s chaotic insurgent campaign for president in 1988. “I’m a tree shaker, not a jelly maker,” Jesse used to announce to delighted crowds—meaning he saw himself as someone who shook the tree to loosen the fruit, but he was not the man who climbed the tree, picked the fruit, and turned it into jelly. It was Jackson’s way of explaining, or perhaps excusing, the bedlam surrounding the whole crazy, impromptu caravan. It was also proof, however, that Jackson’s was a “message campaign” and that Jesse, the man atop it, was incapable of managing the government.
David Traynor was more than a tree shaker. He was a self-made billionaire, founder of five different successful companies, still a majority shareholder in three, an NBA team owner, a U.S. senator—and now, after three years in politics, a serious contender for the Democratic Party nomination for president. A tree shaker? He was buying the freaking orchards, plantin
g the trees, picking the fruit, taking it to market in his own trucks, and he owned the stores where it was sold.
“It’s a big decision, David—to cross party lines,” Moss said. “You sort of sign your own death warrant. She may never go higher in politics. If you win, she has to leave the Senate. And if she says yes, David, and you lose, she may be done. She might never get elected to anything again. She might lose her own Senate seat in the next election. In effect she’d be taking one for the country. Maybe it doesn’t work out and she’s history.”
Traynor raised his eyebrows in a way that suggested Moss had just stated the obvious. “Yeah, that’s the fucking point!” He was almost yelling. And he seemed to be enjoying himself. “You get to be at the center where history is made. And I’m looking for her to be a genuine partner here. If I win, she’d have a real portfolio. Did that get communicated?”
Moss was nodding and for good measure added a “Yes.”
“Good,” Trayner said even louder. “And who knows, I might decide the job stinks and just move back to Colorado and let her have it. Or maybe I’ll keel over from boredom.”
“That’s not funny, David.”
“Who’s joking? Politics is fun until it’s not. Those are the cold calculations she has to make. Or she should be making. I sure as hell would be making them.”
Moss said nothing.
The third man in the room, Phelps, the campaign manager, watched the two men joust and remained silent. His job was to make the trains run on time. He would not get into this unless asked.
“And you don’t know what’s holding her up, do you?” Traynor asked.
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