Free to Trade (26 page)

The office was large, with a big desk, two armchairs, a sofa, and a coffee table. The room was littered with 'tombstones', advertisements of previous deals encased in clear plastic blocks. Waigel had done a lot of deals, and he wanted everyone to know about them. There were two framed photographs on the wall, one of Waigel shaking hands with Lee Iacocca and another with Mayor Ed Koch. The Koch one would have done any New York Chinese restaurant proud.

Along one wall was a row of wooden filing cabinets. Two full cabinets were marked 'completed deals'. I tried them. They were locked.

Tommy went outside, and under the pretext of asking for some coffee, came back with a key from Jean. He opened the cabinets.

Inside were rows of files in alphabetical order. I quickly flipped through until I came to T. No Tremont Capital. Damn. I began to look back through some of the other files. I noticed that many of them had titles which were obviously code words.

'What do we do now?' Tommy said.

'There's nothing for it but to go through each file individually,' I said.

'But there are at least a hundred. It will take an hour! We only have twenty minutes.'

'We've got no choice. I'll start at A and you start at Z and work back.'

'Just a moment. Let me see if I recognise any of the code words,' Tommy said.

I was riffling through my second file which turned out to be about the takeover of a beauty-products company code-named 'Adonis', when Tommy whispered, 'Here, I've got it!' He held up a file labelled 'Music Hall'.

'How did you work that one out?' I asked.

'Tremont Capital reminded me of Tremont Avenue in the Bronx. There was a music hall there that used to be very popular.'

'Well done!' I said, and grabbed the file. I hadn't connected the word 'Tremont' with the Bronx. Interesting.

I laid out all the documents in the file on the desk and worked my way through them. There were drafts, and then the final version of the prospectus I had looked through back in London. There was correspondence with the lawyers Van Kreef, Heerlen discussing a number of detailed legal points. One letter dealt with how to ensure that the ownership of Tremont Capital was kept strictly anonymous. Needless to say the owners were not mentioned there.

Then I found a letter with the Harzweiger Bank letterhead. It was from Hans Dietweiler. It confirmed account numbers for the payment of funds raised by Tremont Capital from its bond offering.

Damn. If the money De Jong had paid for the private placement had gone into Switzerland, it would be next to impossible to trace it.

I moved on. Then I found it. It was just a scrap of yellow legal-pad paper. Scrawled on the top was the word 'STRUCTURE'. Below were a series of boxes. It laid out the complete structure of the fraud.

I took a piece of paper from Waigel's desk and copied out the diagram. I was interrupted by a tap on the door. It was Jean. 'You guys had better hurry up. Dick will be back any minute now.'

I hurriedly finished the diagram, carefully reassembled the 'Music Hall' file and placed it back in the filing cabinet. Tommy and I checked the office to make sure everything was as we had found it. My eyes fell on Waigel's desk diary. I quickly checked the week Debbie had been killed. It was filled with appointments, all of which seemed to be in New York. There was no mention of cancelled meetings or flights to London.

'Come on,' said Tommy, and I followed him out of the door. Looking irritated, Tommy stopped at Jean's desk and said, 'Tell Dick we waited for him. Mr Smith has another appointment, and we are already late. Have him call me, please.'

'I can't think what can have happened to him,' said Jean. 'I am very sorry you and Mr Smith had to wait so long. I am sure he will be back in a minute.'

'We can't afford to wait any longer. Goodbye.' With that, Tommy and I marched out of Waigel's department into the corridor. Our act had drawn one or two bored glances from the people working in the outer office. It was enough to be plausible, not enough to be memorable.

We waited for what seemed an age for a lift to come. Finally one arrived. It was crowded with Japanese businessmen, clients of Bloomfield Weiss. They went through a complicated dance to decide which one of them should get out of the lift first. Behind them all, ushering them out, was the short, bald figure of Dick Waigel. I saw him before he saw me.

'Quick, Tommy. Fire exit!' I said.

Without dithering, Tommy darted to the stairway. I couldn't follow him since I was caught up in the melee of Japanese. Waigel saw me.

'Paul, what brings you here?' he asked, his eyes suspicious.

'Oh, I was in the building and I thought I would drop by to follow up on one or two of the comments you made at lunch yesterday,' I said. 'I found them very interesting.'

'Oh good,' said Waigel, staring at me thoughtfully, trying to decide whether I was telling the truth.

The group of Japanese were looking at Waigel expectantly. I coughed nervously and said, 'Well, this doesn't look like a good time for you. If you are going to be at the conference in Phoenix, perhaps we can chat then.'

I knew I wasn't convincing. Waigel's stare hardened. I stared back. Something was wrong. He didn't know what, but it unsettled him. He hesitated for a moment, but his guests were waiting. 'See you then,' he muttered.

I got into the lift, and breathed out loudly as the doors closed behind me. My heart was beating rapidly, and I could hear the blood rushing round my ears. I hoped Jean would be able to bluff her way round the awkward questions Waigel would be bound to ask her. But at least I had the diagram.

I met Tommy in the lobby. He was clearly enjoying his afternoon. 'Wow, that was close!' he said, eyes shining. 'I just caught the gleam of his bald head, so I beat it. Did you speak to him? Did he suspect anything?'

'I don't know,' I said. I shuddered. 'What a nasty little man!'

Tommy laughed. 'One of Bloomfield Weiss's finest.'

'I hope Jean is all right,' I said.

'Don't worry. The worst Waigel can do is fire her, and she wants to quit anyway. So what did we find? Was the mission successful?'

'It was indeed,' I said, patting my pocket. 'I think this diagram will explain a lot.'

'Well, let's get it out and look at it, then.'

'Look, I'm sorry. I don't think I can show it to you.'

'Why the hell not?' Tommy was upset. 'I just risked getting fired for the second time in one week. I have a right to know. Come on, let's get a cup of coffee and you can tell me all about it.'

'I would, but....'

'Yes?'

'I know this may sound corny, but I don't want to put you in danger.'

Tommy took me by the arm and looked me in the eye. 'You're right, it does sound corny. Look, if you really are in danger, maybe I can help you out. It's no good. You've got me hooked on this thing. I can live with the risk. Let's get that cup of coffee.'

'OK, I give in.'

We found a Greek coffee shop, ordered two cups, and I began.

'About a year ago, Bloomfield Weiss sold us twenty million dollars of a private placement for a company called Tremont Capital NV. Tremont was supposed to be guaranteed by Honshu Bank. It turns out that this guarantee never existed. Neither Honshu Bank, nor Bloomfield Weiss have any record of it. The only security we have for our investment is an offshore shell company.'

'That's bad,' said Tommy.

'What's worse is that two of the three people who have discovered this are now dead.'

'Wow,' Tommy whistled. 'Was one of them Greg Shoffman?'

'Yes,' I replied. 'The other was a woman called Debbie Chater who worked for us in London.'

'Do you know who did it?' Tommy asked.

'No. Debbie fell into the River Thames. I think she was helped. Who by, I just don't know. But I'm going to find out.'

'So who is behind Tremont Capital?' Tommy asked.

'I can guess,' I said.

'Who sold the deal to you?' Tommy asked.

'Cash Callaghan.'

'And Dick Waigel structured it?'

'Dead right,' I said.

'Jeezus,' Tommy said as he leaned back in his chair. 'Well, I am not surprised by that snake Waigel. But Cash? I can imagine Cash bending the rules, but I wouldn't have thought he would go that far. What scum!'

Tommy gulped his coffee, trying to take it all in. 'So Shoffman and your Debbie Chater are dead? Who's the third person?' Tommy paused, and whistled again. 'That's you. Man, you had better watch yourself.'

'I know,' I said. 'And you can see why I was reluctant to make you the fourth.'

Tommy laughed, 'Don't worry about that. They don't know I know. I'll be all right. So what happened to the money?' he asked.

'I don't know,' I said. 'That's why I wanted to take a look at Waigel's files. Let's have a look at that diagram.'

I pulled it out of my pocket and spread it out on the table of the coffee shop.

It consisted of a series of boxes, one underneath the other. Connecting them were arrows, all pointing downwards. They showed the direction of the flow of funds in the transaction.

The first box was labelled '2 investors'. That was presumably De Jong & Co., and Harzweiger Bank.

An arrow with $40 million written by it, pointed down to the next box, labelled 'SPV. That must stand for 'Special Purpose Vehicle', which was Tremont Capital. This represented the $40 million raised by Tremont from the private placement.

The next box down was labelled 'Swiss bank a/c'. That would be the account referred to in Dietweiler's letter.

Next came a more puzzling box--'Uncle Sam's Money Machine'. I had no idea what that could be. Below this were a series of boxes marked 'high return investments'. By the arrows were the numbers '$150 to $200 mm'. I could see the power of 'Uncle Sam's Money Machine'. Forty million dollars went into it and $150 to $200 million came out of it. A money machine indeed.

Underneath the diagram were some notes explaining things a bit further.

'Yrs 8-10 sell investments. Sell or break money machine. Take the profits out of SPV in dividends. Estimated dividends $50 million. Bond repaid if possible.'

'What do you make of that?' Tommy asked.

I thought for a minute or so. 'Well, I don't know what "Uncle Sam's Money Machine" is, but I think I understand most of the rest.

'The forty million dollars raised by Tremont Capital from the private placement is placed in a Swiss bank account. From there it is used to purchase, or perhaps build, the mysterious money machine. There the money is somehow turned into two hundred million dollars. This money is put into high return investments. After eight years or so, these are sold. The proceeds, which by that time are presumably quite large, flow back to Tremont Capital. The forty million dollars is then repaid. Any profits from the investments, over and above the interest costs on the private placement, are paid out by Tremont Capital in dividends. Waigel estimates these to be fifty million dollars. So, Waigel and his accomplices borrow forty million dollars, use this money to generate a further fifty million dollars in profits for themselves and then give the original forty million dollars back, with nobody any the wiser.'

'Why do they do that?' asked Tommy. 'Why don't they just keep the forty million dollars?'

'That's the clever bit. By giving the money back, no one will know that a crime was committed. They can carry on living normal lives, and perhaps try the same trick again, forty million dollars richer. If they were to get greedy and not repay the forty million dollars they had borrowed, then an investigation would be started, and they would run the risk of getting caught.'

'They raised twenty million dollars from De Jong. Where did they get the other twenty million dollars from?' Tommy asked.

'From Harzweiger Bank in Zurich,' I said. 'I spoke to a Herr Dietweiler there, who pretended they had never bought the deal. He must have got some kickback for getting involved. That must be why they use accounts at Harzweiger Bank, where Herr Dietweiler can keep his eye on the funds.'

'OK. So how do they manage to make all this money out of borrowing forty million dollars. What is this "Uncle Sam's Money Machine"?'

I shook my head. 'I don't know. It seems to be the key to the whole thing. I don't know what the hell it is.'

'Perhaps it's a government agency?' suggested Tommy.

'Maybe,' I said. 'But I don't see how anyone ever got rich by giving money to a government agency.'

'Uncle Sam could refer to the army,' said Tommy. 'A lot of people make money out of that. Defence contractors and such like.'

'Could be,' I said. We discussed the possibilities for several minutes without coming to a satisfactory conclusion.

'So -- how can I help?' Tommy asked.

'Are you sure you want to?' I said. 'You know what happened to Debbie Chater and Greg Shoffman.'

'Hey, I don't have a job, and I need something to do. This beats selling bonds. And the more I stir up that sticks to Bloomfield Weiss, the better.'

'Well you could try to find out a bit more about Greg Shoffman,' I said. I told him about my attempts to discover more about his disappearance. 'I would like to know who killed him. Just as important, I would love to know what he found out before he died. He may have turned up some useful evidence against Cash and Waigel. I would do all this myself, but I won't be in New York for very long. If you come across anything, call me at the conference in Phoenix.'

Tommy said he would do his best, we paid for the coffee, and we left.

I liked Tommy. For a moment I was concerned that I had needlessly put him in danger by telling him what I knew. No, that was silly. I knew more than Tommy. And I wasn't in any visible danger.

I got back to my hotel room, hot and sweaty. The red light on the phone was on. I left it there and jumped straight into the shower, letting the cool water lower my blood temperature. Feeling much better, I went to the phone and rang the message desk. Hamilton was coming into New York the next day. He wanted to meet me for lunch at a fashionable Italian restaurant on the Upper East Side. It would be good to see him. Everything was jumbled in my mind. Talking it through with him, I knew it would all fall into place.