Authors: Emily St. John Mandel
At the sentencing hearing six months later, Alkaitis’s lawyer appealed to the judge on compassionate grounds. “If we are to be honest with ourselves,” the lawyer said, “who among us has never made a mistake?” But this was an error, Olivia saw that immediately. The judge was giving the lawyer an incredulous look, because sure, yes, everyone makes mistakes, but those mistakes are typically more on the order of forgetting to pay a phone bill, or leaving the oven on for a couple hours after dinner, or entering the wrong number into a spreadsheet. Perpetuating a multibillion-dollar fraud over a period of decades is something entirely different.
Could the lawyer see the error too? Impossible to tell. Veer Sethi was a sleek, expensively dressed person with silvery hair and a sense of performance. The man sitting next to Olivia—a fellow investor, a retired dentist who all but quivered with rage when he talked about the fraud—had told her that Alkaitis’s lawyer was one of the most expensive criminal defense attorneys in the city, but Sethi didn’t strike Olivia as a particularly formidable person. He’d made a mistake but he pressed on with the story, like a boy following a dwindling trail into the woods at nightfall: Once upon a time there was a family, Jonathan and Suzanne and then a daughter, Claire. (Speaking of which, where was Claire? Olivia had attended three hearings without seeing her.) They lived in a small house in an unfashionable suburb, then a slightly larger house, Jonathan working long hours and Suzanne working a little too, brief and inexpensive summer vacations in places that could be reached by car, Christmases with her family in Virginia or with his family in Westchester County, the inevitable struggles of starting a business, the business’s ever-increasing success, Claire goes to Columbia and then takes a job in her father’s brokerage company—the legitimate company, Sethi wished to stress to the courtroom, the company that had absolutely nothing to do with the crime—and then Suzanne is diagnosed with an aggressive cancer.
“I don’t suggest that anything in this excuses my client’s actions,” the lawyer said. “But I’ve been married to my wife for thirty-five years, and as a husband, I can only imagine what those days must have been like for that family.” Vincent had shown up, which Olivia thought must have required a certain courage. She was a few rows up and on the other side of the courtroom, sitting very still in a gray suit.
“And while no measure of grief can excuse his actions, it was during that period,” the lawyer continued, “that the fraud began.” He seemed to be trying to convey the impression that the Ponzi was something that
the way weather happens, as opposed to a premeditated crime coldly perpetuated and covered up with the assistance of a dedicated staff. (If only the staff were here! Olivia would have liked to personally kill them. She would start with Harvey Alexander. He would beg. She would be merciless.) The judge was writing something. Sethi was going on about hospitals and surgeries and rounds of chemotherapy, Alkaitis’s vanishing from the office for weeks at a time, distracted and not paying as much attention as he should have been. He’d been heavily invested in several dot-com companies and had been caught flat-footed when they imploded. There’d been signs that the tech bubble was ending, but he’d been distracted by his wife’s illness and death, and he hadn’t read the signals correctly.
“And this was the moment,” the lawyer said, “when my client made his fatal mistake.” How many times could he drop the word
into a single address? Was his strategy as transparent to the judge as it was to Olivia? She couldn’t tell. The judge was impassive. “My client took a loss, and he thought,
You know what, I can cover this.
He made a terrible, terrible error in judgment, a terrible mistake. He decided to cover his losses with income from new investors. He was embarrassed. He thought he could make up for the shortfall over a month or two, and no one would know. Why would he do such a thing? Why would he make a mistake like that?” Here, a pause for dramatic effect. Veer Sethi had been handed an impossible task. He was performing to the best of his abilities.
“What I believe, Your Honor, is that it comes down to a question of fear. Every life contains a measure of terrifying moments. My client had lost his wife. He was desolate. All he had left was his work, his job. And the fraud started, this terrible mistake of his, because he could not bear to lose his work, which at that moment was the last thing he had.” Which wasn’t particularly flattering to Claire, Olivia thought. Perhaps she should have followed her sister Monica to law school. She felt she could do a better job than this guy was doing. The courtroom was too warm. Olivia let herself drift for just a moment, back to a particular afternoon in the studio in Soho, sitting on the sofa with Renata during one of those violent August rainstorms, taking a break from painting, listening to the rain, drinking wine, Renata saying, “I couldn’t join the working world even if I wanted to,” but in a way that sounded like she was trying to convince herself, which Olivia suspected was why the moment had stayed with her. Renata had made it to 1972 before she succumbed to her habit. 1973? No, definitely ’72, because Olivia remembered watching reports of Watergate and wondering what Renata would have thought about it, if Renata were still alive, Renata who’d left her politician father and secretly alcoholic mother in the Maryland suburbs to come here, Renata who claimed not to care at all about that world but who carefully followed politics all her life.
Back in the courtroom, Veer Sethi was still talking. “When you look at my client,” he said, “you are not looking at an evil man. You are looking at a deeply flawed man, a man who, at the moment when it mattered, at the moment when he realized that he had losses he couldn’t cover, did not find his courage. You are looking at a decent man who made a mistake.”
It was impossible not to notice, as Sethi thanked the judge for his consideration and resumed his seat at the table, that the lawyers for the state were smirking and shaking their heads. Alkaitis was making careful notes in a legal pad. Sethi and his two junior sidekick lawyers were conferring and shuffling papers in order to avoid looking at anyone, especially not at the state. The state was rising from the prosecution table, the state was buttoning its suit jacket, the state was beginning, with barely disguised contempt, to rip holes in the timeline that the defense had laid out. It was curious, the state noted, that the Ponzi scheme was supposed to have begun around the time of the dot-com crash, when one of Alkaitis’s employees—a Harvey Alexander—had confessed to participating in a scheme that had begun in the late seventies. Olivia’s mind wandered. She hadn’t been sleeping well. She’d given up her apartment and moved in with Monica, and the bed in Monica’s guest room was uncomfortable. Was there any point, actually, in staying to listen to more of this?
But Olivia stayed till the end. The sentence, when it came, was like something from a fairy tale: there once was a man locked away in a castle for one hundred and seventy years.
The intake of breath in the courtroom was audible.
A hundred and seventy years,
someone repeated nearby. A soft whistle. Some muted cheers. Olivia sat very still and felt absolutely nothing.
She’d set out before dawn with a sense of embarking on a mission, but after the verdict came down, she almost wished she’d stayed home. She couldn’t have hoped for a longer sentence, and yet there was a curious sense of anticlimax. She was slow leaving the courthouse and went unnoticed when she finally straggled out. She didn’t mind her cloak of invisibility, in this instance. She wasn’t feeling very well. There’d been a time when a New York City heat wave wouldn’t have bothered her, but that time had passed. The media were clustered around other investors. “Look, it’s just, it changes nothing,” she heard the dentist say. He was right, she supposed. Jonathan was going to prison forever, but Olivia still lived in her sister’s guest bedroom. She made her way uptown through the furnace of the subway system and observed the way the life of the city continued around her, indifferent and uninterrupted. When she’d boarded the downtown train that morning she’d had the thought that she was witnessing history, but would history remember Jonathan Alkaitis? Just another empty suit in a time of collapse and dissipation, architect of an embarrassingly unsophisticated scheme that had run for a while and then imploded. The heat was too much. The subway was crowded. When she finally emerged into the Upper East Side, a few blocks from her sister’s apartment, she had to walk very slowly so as not to faint. A man walking in the opposite direction almost walked into her; he frowned as he stepped out of the way at the last minute, as if she were entirely at fault.
“This is academic,” the judge had said, “but I’m required for technical reasons to impose a period of supervised release following your sentence.” Idea for a ghost story: there once was a man who remained under supervised release for three years following the end of his 170-year prison term. Idea for a ghost story: there once was a woman who drifted unseen through the city of New York until she faded into the crowds and the heat.
There’s a morning in FCI Florence Medium 1 when Alkaitis steps out into the yard and sees a flash of color in the crowd. It’s red, but that’s impossible. Red isn’t allowed here. Not just red, but a red power suit, of the kind he hasn’t seen on a woman since the early nineties, mid-nineties at the latest, fire-engine red with extremely padded shoulders. The woman wearing it seems to move too quickly; in a few steps she has somehow crossed the yard and is standing near him, staring.
“Madame Bertolli,” he says quietly, trying to steady his voice.
“You say something?” a nearby guy asks.
“No, nothing.” Yvette Bertolli obviously isn’t here, because that would be impossible and no one else seems to have noticed her. Nonetheless, here she is. She begins a slow circle of the yard, sometimes flickering slightly. She looks much younger than she was the last time he saw her. This may actually be the same suit she was wearing when he met her for the first time, which would’ve been, what, 1986, ’87? A lunch in Paris. She’d just started her own investment advisory business and she had a few high-net-worth French and Italian clients for him. On the morning of Alkaitis’s arrest, her clients had a combined total of $320 million of their money in the Ponzi. Yvette Bertolli died of a heart attack that afternoon.
Now she circles the yard, glancing every so often at Alkaitis. He closes his eyes, pinches himself, every trick he can think of, but she’s still there when he goes inside an hour later, conferring with Faisal under a tree.
“I’d like to ask about your employees,” the journalist Julie Freeman says on one of her visits.
“They were good people,” he says. “Loyal.”
“It’s interesting that you think of them as good people, when they were involved in the crime.”
“No, I did all of that on my own.” He has decided to stick with this story until the end of his life, even though three of his five asset management staffers have been convicted. He detects a flicker of irritation as she makes a note.
“I assume you heard that Lenny Xavier lost his appeal,” she says. “Guilty on nine counts, all involving the Ponzi.”
“I’d prefer not to talk about him,” Alkaitis says.
“Let’s switch tracks, then. I’d like to ask you about something one of your staffers said on the stand,” she says. “When Oskar Novak was cross-examined, he was asked about the search history on his computer, and he said, and I quote, ‘It’s possible to both know and not know something.’ ”
“Why, what was his search history?” Alkaitis hasn’t actually spent much time thinking about Oskar or any of the others. He carried them for years. They could’ve quit at any time.
“He spent a combined total of nine and a half hours researching residency requirements for countries that don’t have extradition treaties with the United States,” Freeman says.
“Ouch. Poor kid.” In his mind, Oskar is still the nineteen-year-old college dropout in a too-big suit at his job interview. “That can’t have gone well for him.”
“It didn’t.” She waits a beat or two, but he doesn’t ask. The truth is, he doesn’t really care what happened to Oskar, which prison he ended up at or the length of his sentence. “Anyway,” she says, “I was curious about whether that idea has any relevance for you, that notion that a person can know and not know something at the same time.”
“It’s an interesting idea, Julie. I’ll think about it.”
There’s something in it, he decides later, standing in line for dinner. It’s possible to know you’re a criminal, a liar, a man of weak moral character, and yet
know it, in the sense of feeling that your punishment is somehow undeserved, that despite the cold facts you’re deserving of warmth and some kind of special treatment. You can know that you’re guilty of an enormous crime, that you stole an immense amount of money from multiple people and that this caused destitution for some of them and suicide for others, you can know all of this and yet still somehow feel you’ve been wronged when your judgment arrives.
Between Freeman’s visits, Alkaitis finds himself dwelling on Oskar’s search history. It’s kind of poignant, actually, thinking of the kid running Internet searches on countries without extradition treaties, research for a project he lacks the guts to carry out. Not like Enrico, who remains at large.
He’s in line for the commissary when he sees Olivia. She’s wandering around, touching various items on the shelves, not looking at him. She’s wearing a blue dress that he remembers from that last summer before he went to prison; she wore this dress on the yacht. He backs away and leaves without buying anything, deeply shaken. He goes back to his cell and lies down with an arm over his eyes. Hazelton is somewhere else, thank god. He’s desperate to be alone, but the problem is that now he can no longer be sure of whether he’s alone in any given room. Certain borders are dissolving.
“Can I ask you to look someone up for me?” he asks Julie Freeman on her next visit. Two days have passed since he saw Olivia in the commissary. “One of the investors was an old friend of mine, a painter who’d also known my brother. Her name was Olivia Collins. I wondered if you could just do a search and see what became of her.”
When he sees Freeman again, two weeks later, he knows what she’s going to say before she says it. “I have some bad news,” she tells him when she sits down. “That woman you asked me to look up, Olivia Collins. She died last month.”
“Oh,” he says. But he already knew this, he realizes. He’s seen Olivia twice now, once in the commissary and once in the yard, where she was engaged in conversation with Yvette Bertolli.
“I’m sorry,” Freeman says, and launches into her questions.
“Can I ask you something?” he asks a little later, interrupting a line of tedious questioning about account statements.
“Why do you want to write about all this?”
“I’ve always had an interest in mass delusion,” she says. “My senior thesis was about a cult in Texas.”
“I’m not sure I follow.”
“Well, look at it this way. I believe we’re in agreement that it should have been obvious to any sophisticated investor that you were running a fraudulent scheme.”
“I’ve always maintained that,” Alkaitis says.
“So in order for your scheme to succeed for as long as it did, a great many people had to believe in a story that didn’t actually make sense. But everyone was making money, so no one cared, except Ella Kaspersky.”
“People believe in all kinds of things,” he said. “Just because it’s a delusion doesn’t mean it can’t make real money for people. You want to talk about mass delusions, I know a lot of guys who got rich off of subprime mortgages.”
“Is it fair to call you the embodiment of the era, do you think?”
“That seems a little harsh, Julie. I didn’t cause a global economic meltdown. I was as much a victim of the economic collapse as anyone. By the time Lehman Brothers folded, I knew I couldn’t keep it going much longer.”
“I’d like to ask you about Ella Kaspersky,” Freeman says.
“Not my favorite person in the world.”
“Do you remember your first meeting with her?”
He met Kaspersky in 1999, at the Hotel Caiette. The trip was ill-starred from the beginning. Suzanne was sick by then and had stayed home in New York, and by the time he arrived at the hotel he was already regretting going out there and thinking about cutting the trip short. But he needed investors, so he’d been spending a week of every month away from New York City, trawling club drawing rooms and hotel bars. He liked the Hotel Caiette in particular, because the fact that he owned the property lent instant credibility:
Look, here we are having a conversation under a roof that I own.
Not that he played any role whatsoever in the management of the place, but that wasn’t important.
On that visit to the Hotel Caiette he came downstairs on his second evening and there was Ella Kaspersky, an elegant woman in early middle age, drinking whiskey in an armchair and gazing out at the twilight luminescence of the inlet, the reflection of the lobby rising to the surface of the glass. Alkaitis positioned himself nearby, nodded when she glanced at him. What did they talk about? Italy, if he remembers correctly. She was an art collector. She didn’t work. She traveled, she studied languages, she went to auctions and art fairs. She’d just spent three months studying Italian in Rome, and so they went off together on an extended tangent about the pleasures of Italy before the conversation turned to what he did for a living. She was interested. It emerged quite naturally that she had money to invest; her father, who’d died only a few months earlier, had bequeathed most of his fortune to their family’s charitable foundation, and Ella was involved in the foundation’s investment decisions.
“Tell me about your investment strategy,” she said.
He went into it in some detail. He told her he was using the split-strike conversion strategy, which involved buying a collection of stocks along with option contracts to sell those stocks at a set price later, thus minimizing risk. He timed these purchases according to fluctuations in the market, he told her, sometimes pulling out of the market altogether to invest his clients’ money in government-backed securities, U.S. Treasury bills and such, reentering the market when the time seemed right. She gave the impression of listening intently, but she was at least three drinks in by then and he wouldn’t have guessed that she’d retained everything he’d said, until a letter arrived at his New York office a few weeks later. She’d done some research on his trading strategy and methods. She’d analyzed the performance of a fund that he managed. She’d spoken with two experts on the investment strategy he claimed to be using, neither of whom could explain to her how Alkaitis’s returns were so high and so smooth; she was aware of two mutual funds who employed the same strategy, but their returns were much more volatile than his. She was puzzled by his ability to trade stocks in such quantities without affecting the stock prices. His returns would seem to require an almost psychic knowledge of when the market was going to fall. “I don’t wish to imply,” she wrote, “that I’m entirely closed to the possibility of mystery in the universe, or that I’m unprepared to accept the existence of unusual talent, even outright genius, when it comes to predicting the movement of markets, and yet one can’t help but note that your trading strategy, as practiced at the scale at which you seem to practice it, would require more OEX put options than actually exist on the Chicago Board Options Exchange.” On a personal note, perhaps he could understand her horror when she made inquiries and discovered that her family’s private foundation—which, she wasn’t sure if she’d mentioned this in Caiette, had been founded for the purpose of funding research into colon cancer, which had killed her mother a decade ago—was already heavily invested in Alkaitis’s fund. “Naturally,” she wrote, “I took the matter to the foundation’s director, who shared my alarm and immediately sent you a withdrawal request. Thus disaster was averted, but it is personally appalling to me to consider how close my family’s foundation came to being wiped out. How terrible to think of my parents’ legacy having been so imperiled.” She’d taken the liberty of forwarding a copy of her letter to the SEC.
Alkaitis called Enrico into his office. It was interesting to observe Enrico as he read Kaspersky’s letter; his face didn’t change, but his hands shook a little. He sighed as he handed it back.
“She can’t prove any of this,” Enrico said. “It’s innuendo and speculation.”
“She sent this to the SEC. They could walk in at any minute.”
“We’ll jump off that bridge when we come to it, boss.” Something that occurs to Alkaitis only much later, a few years into his new life at FCI Florence Medium 1: Why didn’t Enrico leave then? In the winter of 1999, with Ella Kaspersky’s having figured it out?
In any event, in the version of history that he gives to Julie Freeman in the prison interview, he shows Kaspersky’s letter to no one.
“So what happened next?” Freeman asks.
“We got a letter from the SEC. They were opening an investigation.”
“Why didn’t they catch you?”
“I don’t know, to be honest. They were incompetent or they didn’t care, or both. I assumed they’d catch us. All it would’ve taken was a phone call. Literally one phone call, and they could’ve confirmed there were no trades taking place.”
“And by ‘us,’ you mean you and your staff.”
“ ‘I assumed they’d catch us,’ you said.”
“I misspoke. I meant me.”
“I see. Must have been something of a pleasant shock, when they closed the investigation without catching you.”
“Very much so.”
“Did you see her again?”
Yes, but it isn’t an evening he likes to think about. He and Suzanne were eating dinner at Le Veau d’Or, a restaurant they both loved. Well, he was eating dinner, at any rate. Suzanne was sipping chicken broth. They’d just been to see the oncologist and it was as though they’d entered a tunnel that ended in darkness. They were being transported at high speed toward night. Alkaitis was trying to keep up his end of the conversation but Suzanne was in a different tunnel, an even darker one, she was answering in monosyllables and he could already see how they would be divided from now on, how Suzanne would be carried more and more rapidly away from him. He’d thought the evening couldn’t possibly get any worse, but any given evening can always get worse. A few tables away he heard breaking glass, and when he turned to look, he saw Ella Kaspersky. She was dining alone. A busboy had dropped her wineglass and it had shattered on a bread plate.
“You know her?” Suzanne asked, seeing something in his expression.
“You’re not going to believe this, but that’s Ella Kaspersky.”
(A difference between life with Suzanne and life with Vincent, one of many: he told Suzanne everything.)
“I didn’t think she’d be elegant.” Kaspersky didn’t glance in their direction. She was engaged in dabbing white wine from her lapel. “All this time, I was picturing her as some kind of disheveled crank.”