The Aspen Account (26 page)

“There
has
to be a way.” Michael leaned back, not breaking eye contact. So what if Glazier had more experience in these matters—he wasn’t going to give in.

 “You need to listen to me on this: you
can’t
save this company. Sometimes you just have to do some wrong things in order to serve the greater good. That’s just the way the world works.”

Michael glared at Glazier, studying the man’s qualities as much as his words. “But what about values?”

But those were just words, Michael realized. He knew the real reason he had to pull X-Tronic from the flames. But he couldn’t tell Glazier. He couldn’t let his case officer discover just how emotionally invested he had become. The unfolding events were following in such close parallel with his own family’s tragic history—with things that, though they occurred long before Michael’s birth, had somehow cursed him all the same.

“
Values?
” Glazier said. “This isn’t Sunday school. You need the values to make the tough choices in life, the choices where you have to break eggs. Some good people will suffer in the short term, and that will be the hard part of finding the courage to make this decision. But in the long run, you will have made the best decision for the most people.”

Glazier paused and looked around. A crowd of young professionals was laughing and chattering and flirting at the bar. Michael wondered if the man was remembering younger days, when he might have made the same idealistic argument to save X-Tronic that Michael was now making.

Glazier turned back around and ran a pawlike hand through his hair. “It’s only rational to doubt what you’re doing,” he continued. “But that rationality makes you realize that the only responsible thing is to bankrupt a company that employs fifty thousand people, if it helps preserve an entire nation’s economic structure and strengthen the financial institutions that support it.”

Michael looked down at the bubbles rising in his beer. In a tired voice, he said, “Who are we to make God’s decisions?” 

“We’re the United States government, that’s who.”

“And I suppose the government’s going to be God enough to absolve me of the guilt I’ll be carrying to the grave, too?” He downed the rest of his beer.

“I guess we’ll both find out.”

And there they sat, in somber contemplation of the events they were about to set in motion. Michael wouldn’t admit it, but he was glad to have Glazier in Denver.

A dance room upstairs pulsed with loud electronic music. After talking over it for a few moments, Michael suggested, half in jest, that they go and “check it out,” and to his amused surprise, Glazier agreed. As Michael walked through an ornate archway at the top of the stairs, red lights lit up the rising “smoke” on the dance floor, and silhouetted dancers raised their clawing fingers through the cloud, like zombies emerging from some hell world of his own design.

42

MICHAEL GOT TO X-Tronic at seven thirty on the designated morning. He had developed the bait yesterday. Glazier had obtained the federal warrants to tap the phone in Diamond’s office at X-Tronic and Falcon’s offices at Cooley and White, as well as to set up receptor codes on nearby cell towers to intercept their cell phone conversations.

Falcon was going to be with other clients for the rest of the week, so Michael was alone in the audit room. He logged on to his e-mail account and pulled up the draft message in his unsent folder in Outlook.

He reread the unsent e-mail one last time. His final draft spelled out to Diamond and Falcon that he had found some issues with the financial statements, which he thought should be communicated to the SEC and the NYSE. After rereading the e-mail, he hit
Send
and watched the electronic hourglass process slowly, giving him too much time to reflect on what he had just put in motion.

He flipped open his cell phone and speed-dialed the number.

“This is Glazier.”

“I just sent the e-mail.”

“Okay. My team will be listening for anything. Be sure to let me know when they open the message.”

Michael heard a knock on the door. “I have to go,” he said, and flipped his cell phone closed and snapped it back onto his belt clip.

Lance Seaton walked into the room. “Good morning,” he said. “Looks like everyone’s abandoned you.” He looked around the room. “Do anything fun this week, or have you been working too much?”

Michael read something in the twin’s voice . . . a warning, perhaps? 

“A little of both. I have an old friend from out of town who’s working in Denver this week.”

“Did you show them the mountains?” Lance said, moving to the table and resting his hands on the back of a tall leather chair. The white sleeves inched out from his suit jacket, revealing turquoise cufflinks.

He shook his head. “No time. Just staying in the city.”

“And they’re still here?”

Michael hesitated for a moment that was almost too long. He had just seen a message pop up on his computer. It was an automatic return receipt message. He had set up his options so that whenever someone first opened an e-mail from him, he would get a reply notifying him. He read the subject name on the message:
Return Receipt—Jerry L. Diamond
. His heart quickened; it had begun.

“Michael?”

“Oh, sorry. Yeah, he’s still in town, but he’s flying back Thursday night.”

“Mmm, that’s too bad you won’t get a chance to go to the mountains.”

“Yeah. I’m sure we’ll do it next time. He’s even considering a move here in a year or so.”

“Hey, that’s great,” Lance said with a grin. “Listen, Michael, I know you’ve had a very hard few weeks, with your father’s death and all. Well, Lucas and I are taking off work this Friday to go skiing at Vail before the weekend crowds rush in, and we wanted to see if you’d like to join us.”

Another message popped onto his screen:
Return Receipt—John S. Falcon
.

He had to concentrate to hide the building tension, relieved at least that Lance couldn’t see the laptop’s screen from where he stood. “I haven’t been skiing in a month,” Michael replied in what he hoped was a wistful tone.

“Then it’s settled,” Lance said, stepping back toward the door. “Besides, we’re the client, and you have to make us happy. Just e-mail me your address. Lucas and I’ll pick you up around eight. Traffic to the mountains shouldn’t be bad on a Friday morning. We’ll talk again Thursday.” 

The moment the door closed behind Lance, Michael redialed Glazier on his cell.

“Yeah?”

“They’ve both opened their e-mails—Diamond four minutes ago, Falcon two.”

“I know. Diamond called Falcon, but they didn’t say anything we can use. He only told him they need to grab a coffee. They’re meeting at a place called Sancho’s Café in fifteen minutes.”

“Glazier, you’ve gotta be there—it’s on the corner of Fifteenth and California.”

“I’m already heading there with a small team.”

“Listen, I know these guys. They’ll pay attention to anyone that looks like they’re worth money, so you can slob it down—jeans and tennies—and they won’t give a damn about you.”

“It’s already covered,” Glazier said. “You just let me know if
you
hear anything on your end.” And he hung up.

Michael stared at the e-mail screen on his computer. There was no going back now.

Michael worked the rest of the day on minor aspects of the audit, leaving only long enough to grab a sandwich from the cafeteria and bring it back to the conference room. By throwing himself into resolving the review points from Falcon, he managed to occupy himself enough to escape the remaining puzzles surrounding the X-Tronic scandal. He was almost certain he had put together all the pieces to the conspiracy, but his mind still wavered on the final resolution, as if there was still some remaining question he couldn’t quite pinpoint. 

At four thirty that afternoon, as if it were not important enough to bother sending earlier, he got an e-mail from Falcon:
Please meet me in my office at 8:00 tomorrow morning
.

43

WHEN MICHAEL KNOCKED on the open door, Falcon waved him in and motioned for him to sit in the black netted chair on the opposite side of the broad maple desk, where he waited for Falcon to end his phone call.

“That was quite an e-mail you sent yesterday,” Falcon said, hanging up the phone.

“Yes,” he replied. His mouth felt dry. He was too nervous to risk babbling. Glazier had told him to keep his answers short at first, to give Falcon the chance to set the tone of the meeting. Even though they were alone in the room, the recording device Michael wore under his clothes made him feel as if an audience of thousands were listening. 

“And you really have concerns that you think should be communicated to the SEC?”

“I do,” Michael replied, trying to steady his breathing.

“Then I think it best that we work everything out this morning.” He paused to open a desk drawer, and to Michael’s surprise, he pulled out a palm-size microcassette recorder and set it on the desk. “I hope you don’t mind my recording this conversation. I feel that conversations of this importance should be thoroughly documented in case there are any questions later on.”

What was Falcon
doing
? The entire reason he had sent the e-mail was to get the man to reveal something incriminating—obviously, he had completely underestimated him. Falcon wasn’t going to reveal anything. In fact, he was going to use their conversation as insurance if he should face federal prosecution. The partner would try to distance himself from X-Tronic, and Michael had walked right into the trap.

Falcon pressed the Record button. “Now, Michael Chapman, please continue. Tell me exactly what concerns you have regarding your audit test work of X-Tronic Corporation relating to its year-end financial statements.”

Michael was silent for a moment. Falcon had been playing him since he put Michael on the Performance Improvement Plan five weeks ago. He wished he could just get up and leave without saying another word, but that would give Falcon a perfect excuse to yank him off the job.

“Well,” he finally said, “I think X-Tronic is incorrectly recognizing its revenue and isn’t nearly as conservative as it should be.”

“You’re concerned about insufficient
conservatism
?” Falcon asked, as he raised an eyebrow.

Michael knew he needed to be careful with his wording. It would be possible to defuse the situation if the partner could make it look as if Michael were merely being too cautious with his concerns for X-Tronic. But if he mentioned the fraud, Falcon might insist on a full investigation for the record—an investigation that Michael would no longer control. 

“Yes,” Michael said. “I was looking over some of the revenue contracts we tested, and I came across situations where X-Tronic incorrectly recorded too much revenue.”

Now Falcon was silent for a moment. “What’s the dollar amount you think they overstated?”

“Two hundred forty thousand dollars.” 

The number was merely something he had pulled out of the air. The import thing was to make sure the amount seemed too small to warrant correction of the financial statements. He was peeling his lie back from the truth, trying to reveal just enough of a false concern that Falcon might dismiss the warning without taking any action against him—just as when a hustler barely “misses” a billiards shot, leaving his opponent none the wiser.

“And did you extrapolate that sample to the entire company?” Falcon asked.

“Yes. The estimated misstatement for the entire company is two point one million,” he lied, knowing that the real number was closer to four hundred million. He couldn’t give Falcon the chance to act surprised and have the statements reexamined. Then the crafty partner could reopen the audit, announce a restatement effort, send out another team, burn X-Tronic’s reputation on Wall Street, and conclude that Michael had been completely incompetent on the engagement, thus destroying any chance of connecting Cooley and White to X-Tronic’s fraud. Michael had to lie.

“As I recall, listing scope for X-Tronic is two million, correct?” Falcon asked.

“That’s right,” Michael answered. He knew what Falcon was getting at. Every audit engagement had a materiality listing scope—a threshold amount, calculated based on a percentage of the company’s assets or revenues, above which known mistakes on the financial statements must be corrected. Any accounting error less than the listing scope need not be corrected, because it was deemed too small for any investor to be concerned about.

“Mmm,” Falcon mumbled. “Is it possible that our materiality is a little too low? I recall that we were conservative when we first calculated it.”

“Are you suggesting we change materiality after the fact?” This time it was Michael’s turn to say something for the record, and he fought hard not to grin.

“Of course not,” Falcon said peevishly. “Materiality can’t be changed after so much work has been done. But since it is the partner’s ultimate responsibility to feel comfortable with the audit test work and financial statements before signing off, I would like you to document what you found with this revenue testing and what you think the changes should have been: the two point one million. I’m comfortable signing off on not making those changes, because of the relatively low dollar amount. Now, was that your only concern?”

“Yes.”

“Then I’ll consider the matter closed.”

“I’ll document our discussion in the workpapers,” Michael replied.

“And, Michael,” Falcon began, as if there was still an important matter that they had not yet discussed, “regarding your e-mail, I appreciate your concern, but I think you may have overreacted when you suggested we contact the SEC about this issue. In the future, if I were you, I would be cautious of blowing things out of proportion before I had a chance to discuss things with the appropriate people.”

“I understand.”