No Way to Die (10 page)

Chandler’s Crabhouse sits at the south end of Lake Union. I don’t know who Mr. Chandler was, but they named the whole south end of the lake after him—it’s called Chandler’s Cove. There are numerous marinas and restaurants in and around the cove. The Kenmore air seaplane terminal is directly across the water from the restaurant. The seaplanes dodge the boats as they land and depart all day long. Sitting at the outdoor tables on a warm summer day is a Seattle tradition. Today, though, weather dictated that we sit inside. Our waiter took our order and, after a short bout of college-days reminiscing, we got down to business.

“Thanks for agreeing to see us,” I said.

“No problem at all,” he said enthusiastically. “I was so delighted to hear from Toni this morning.”
I’ll just bet you were. You probably had your secretary clear the whole afternoon.

“John,” I continued, “as I think you know, our firm has been retained by Katherine Rasmussen to investigate the alleged suicide of Thomas Rasmussen. Mrs. Rasmussen is suspicious as to whether the death was, in fact, a suicide.”

This sobered him up, as if someone had suddenly flipped a switch. One moment, he’s happy, jovial, flirty John Ogden. The next, he’s John Ogden, attorney at law. Watch out. “I did hear. I was contacted by Mrs. Rasmussen’s counsel thirty minutes ago. Your father, I presume?” he said.

I nodded.

“I’m surprised,” he continued. “Surprised that Mrs. Rasmussen has brought in separate investigators. I thought the police said the evidence was overwhelmingly in support of their finding of suicide.”

“That’s what they said,” I said, reaching for my water glass. “And the police
are
convinced it was a suicide. In fact, all of the physical evidence seems to lead in that direction. But none of the other factors seem to point toward suicide, and it’s this conflict that troubles Mrs. Rasmussen. And, frankly, it troubles us as well. That’s the conundrum we’re trying to reconcile.”

“Determine whether or not it was a suicide,” he said.

“Correct.”

He thought about this for a few moments. “You know, I really liked Thomas. If someone killed him—worse, if someone killed him and then tried to make it look like he killed himself—well, the very thought of that pisses me off. What can I do to help?”

Excellent.
“Thanks, John,” I said. “We have a few questions on what we call our Program Question List—it’s basically a list of questions we prepared in advance as a group for this case. We follow it so that we don’t forget to ask anything important.”

“John,” Toni said, “your part of these questions deals mostly with the business and the business structure. You’re probably uniquely qualified to answer,” Toni said.

“Yes,” he said, “I can see that I would be.”

“Do you mind if I take notes?” she asked.

Ogden smiled. “By all means. It’ll be almost like lecture hall all over again.”Suddenly, he stopped smiling. “But most of the information I have is confidential to the business. I’d not be able to release any info to you without authorization from the company.”

“Then let me start by providing you with a copy of our engagement letter and an authorization signed by Mrs. Rasmussen that allows you to release any and all information to us.” I handed him a copy of the papers that Dad had Katherine sign for Inez Johnson.

He shuffled through them. “Technically,” he said, still looking at them, “I
am
able to take direction from either Thomas Rasmussen
or
from Katherine Rasmussen. Both are listed as comanagers of the LLC in the organization papers. I barely know Katherine Rasmussen, but nonetheless, I can see by the notary that her signature is authentic. The release looks sound. So this authorization, along with the telephone call from your father, works for me.”

“Good,” I said. “That being the case, we’d like to start by asking you a few questions about the company.”

“Right,” Toni added. “Start by telling us about the company’s organizational structure.”

“Okay,” he said. “Applied Cryptographic Solutions—or ACS as we generally call it—is a Washington state LLC. I filed the formation papers myself in 2008.”

“You’ve always been the company attorney?”

“I have. As I said, Thomas engaged my firm more than four years ago to draft organization documents for him for this new venture. We drew up all the legal documents and handled all the filings with the state. In fact, we’re still the registered agent for the company with the Washington Secretary of State.”

“And you said there are comanagers of the LLC?” I asked.

“Yes, two. The original documents list both Thomas Rasmussen and Katherine Rasmussen as the comanagers. We generally do that so that in case one of the owners dies, the other can step right in and take over.” He considered this for a moment. “Clearly, we’ll have to update that now.”

“Who are the company owners?” Toni said.

“The Rasmussen's own 90 percent as their community property. Holly Kenworth owns the remaining 10 percent.”

I wrote this information down.

“She doesn’t just own an option?” I asked.

“No, she got an actual ownership interest. That was back in 2008 as well.”

“Okay,” I said. “Have there been any resolutions or anything like that appointing anyone else to a position of authority of any kind? In other words, have the managers delegated their authority to someone?”

“Yes,” he said, “there was a resolution—I think it was a year ago now. The organization documents were amended to grant Thomas the title of president and Holly Kenworth the title of vice president. In the absence of the president, the vice president is delegated certain managerial powers by the manager.”

“Okay,” I said. “How about a succession plan? Legally, who takes over now that Thomas is no longer in the picture?”

“No succession plan needed for the LLC manager because of the comanagers. But there is one for the actual business managers. Basically, Holly Kenworth takes over in an interim capacity. There’s to be a personnel review committee established consisting of three owner’s reps—in this case, all three positions to be held by Katherine Rasmussen—and two advisory positions. This committee is charged with conducting any and all necessary searches and interviews in order to locate a replacement for Thomas.”

“Who are the advisors?” I asked.

“There are two. One is to be a representative from the company’s CPA office, and the other a representative from the company’s legal counsel—in other words, me.”

“A total of five voting interests then?”

“Correct.”

“And you’re saying that Katherine Rasmussen would end up with three of those interests and, thus, the authority to select a new manager.”

“Both by virtue of the succession plan and also by virtue of the fact that she owns a 90 percent interest in the company. Ultimately, if she doesn’t like the succession plan, or anything else about any other company document for that matter, she can simply have them amended to suit her desires.”

“Has she been active in her role as comanager?” Toni asked.

“Never,” Ogden said, shaking his head. He reached for a slice of bread from the basket the waiter placed on the table. “As I said, I’ve only met her a few times. Thomas did all the work.”

“How about any sort of buyout provisions?” I asked. “Partnership documents or LLC documents contain some pretty creative buyout language sometimes, right?”

“Funny you should ask,” he said. “I was just asked to review that language this morning.”

“Really?” I asked.

“Yes,” he said. “Holly Kenworth asked me about the buyout this morning. I told her I’d review it and get back to her.”

“Wonder why she’d ask about that? Especially now?” I asked.

“I think she’s worried about keeping her job if Katherine takes over management,” Ogden said. “She mentioned that she wanted to make certain that her talents were being used in something she had an equity interest in.”

“Were you able to look at the language?” I asked.

“Yes. I know it well. Essentially, it’s what we call a Gunslinger’s Put. At any time, any owner can make an offer for any other owner’s interest. The offeree—that’s the one to whom the offer is made—then has the option to either accept the offer, or to ‘put’ the offer back to the original offeror at the same price and terms, on a pro rata basis.”

“How’s that work?” I asked.

“Imagine we have a company in which we each own fifty shares. To me, my shares are worth ten dollars each—or five hundred bucks for all fifty. If at some point I get so tired of working with you that I feel like I have to end the relationship, then the Gunslinger’s Put says I can make an offer to buy your shares for any number—say five hundred dollars. You can then either accept my offer, in which case I’ll pay you and own all the shares, or you can flip it around on me and buy my shares for the same five hundred dollar price. In that case, I’ll be out, and you’ll own all the shares. Either way, the relationship ends and the company continues. I either buy your shares or you buy mine at the same share price—your option since I made the first offer.”

“And both parties are kept honest in the valuation,” I said.

“More or less. If I make you a lowball offer for your shares, you’ll almost certainly turn it around on me and cause me to have to sell to you at the same lowball price. In fact, if I really want to end the relationship and keep the company, I might be wise to build in a premium to induce you to sell.”

“I see,” I said. “Pretty slick.”

“I think so,” he said. “It tends to favor those with cash or access to cash, which is why Thomas wanted to put it in. He figured that if he was going to grant minority ownership slices to individuals, then he wanted the ability to be able to cash them back out if necessary.”

“And the only people who can play this game are Katherine, with 90 percent ownership, and Holly, with 10 percent?” Toni asked.

“That’s right. They’re the only owners. And since the actual percentages of ownership aren’t equal, a pro rata filter would be applied that adjusted the number for size of interest being bought or sold, kind of like a 'per-share' price.”

“And if a person received an offer for their interest—adjusted for size of the interest—and they didn’t want to sell?” Toni asked.

“Then their only recourse would be to ‘put’ the offer back to the original offeror and buy out the offeror on the same pricing and terms.”

“Wow,” she said. “They’d have to have the money—or at least have access to it—otherwise, they get bought out. I’m going to have to think about that. That introduces a number of possible scenarios, doesn’t it?”

“Perhaps,” Ogden said. “Mostly, it’s designed to keep an owner from feeling trapped inside a company. It provides a reasonably elegant way to end a relationship without blowing up the company.”

Our lunch was served, and we took a break while we ate. Mostly, Toni and Ogden talked to each other, only bringing me in when it became uncomfortable. Then, once the equilibrium was reset, they’d go back to each other. It wasn’t the most comfortable lunch I’ve ever sat through. I looked out the window a lot. I could see our office across the water. I wished I were there.

* * * *

After we finished, I said, “Do you have time to answer a few more questions? We can order coffee.”

“Great,” he said. “I’ve got all day.”
I was right—you did clear out your whole day. I’ll bet you’re going to make a play for Toni before we’re done.

“I’d like to understand a little more about the value of the company.”

“I’ll do what I can,” he said. “I’m no valuation expert, by any means.”

“That’s okay,” I said. “Do you know about the products the company is working on?”

“Yes,” he said. “I had reason to learn about these recently when we went through a process with the Department of Commerce. I presume you were told about the offer that ACS received for the Starfire Protocol?”

I nodded. “Yes. Katherine told us.”

“There’s a company called Madoc Secured Technologies—MST for short. They made an offer of ten million dollars for Starfire. Thomas was suspicious of this offer for a couple of reasons, but he decided to go through the Department of Commerce’s Bureau of Industry and Security—the BIS—prior to starting negotiations, or even further discussions, for that matter. The BIS is responsible for regulating the sale or transfer of all sensitive technologies to foreign interests. They’d have had to approve the sale in any case.”

“And I take it that MST is a foreign company?” Toni asked.

“Technically, MST is a domestic company—a Washington LLC, in fact. But if you start peeling back layers, you eventually find that it’s really owned by a guy named Nicholas Madoc. Madoc is supposedly originally from the UK—either English or Scottish, I don’t know which. But the word is that he lives in Italy now. When we received what was an unsolicited letter of intent from MST, we knew we needed to verify MST through the BIS. I’d already started the process of obtaining what’s referred to as a commodity classification from the BIS for Starfire—it’s the first step in any potential export. We knew that the BIS would have something to say if we found a buyer who was foreign, so we decided to start the registration process early. You have to register the product and then, depending on the commodity classification the product is assigned, its subsequent sale is restricted to approved, legitimate foreign buyers. I say ‘legitimate’ because there are a number of foreign buyers on the ‘denied persons list’ to whom you can’t sell, and also an even larger number on the ‘unverified’ list. You can’t sell certain items to those people, either.”