by David Lender
Katie laughed again. “That’s my daddy.”
Rudiger said, “So maybe a way to start this off is to look at how we each would approach this in our former lives. How’d you go after Ducasse if you were still with the U.S. Attorney’s Office?”
“First, I’d draft a complaint that would peel the varnish off the wainscoting in his office.”
“What would you allege in the complaint?”
“That he defrauded at least three U.S. investors—my man at ASB in Geneva introduced me to them when I was considering investing in Ducasse Fund V—in a Ponzi scheme that bilked them out of their money to pay off previous fund investors, and fabricated rates of return to solicit and defraud new investors like me.”
Rudiger said, “I did most of the research, but I could go back and do it in detail to give you the guts for that complaint, citing each of the deals from their first four funds that were bogus. Companies that I never heard of and found no evidence of, I’m sure never existed. And then those companies being bought out by other companies that also never existed. All to fabricate phony investment profits.”
Katie said, “How would you go after Ducasse if you were in your former life?”
“Do the same research I already did, then find his weakest link.”
“Weakest link?”
“Yeah, his accountant, his CFO, a junior associate, then show them the data and bluff them into confessing by saying they’d get immunity. Then use that confession against Ducasse.”
Katie thought for a moment. “How about this? I put all that in the detailed complaint as if I’m still Katie Dolan working undercover for the U.S. Attorney’s Office in a sting operation. We show it to Ducasse and say if he pays me, Katie Dolan, the $30 million that I invested under the alias of Angela Conklin on behalf of the U.S. government, I’ll disappear with the money and bury the complaint so the U.S. Attorney’s Office will never be able to file it to bring him down.”
Rudiger shook his head. “All he needs to do is Google the U.S. Attorney’s Office and find out you’re no longer with them.”
“I’m undercover. And so are you, Walter Conklin. We busted you, and you’re cooperating as part of a task force to bring in white collar crooks.”
Rudiger said, “I’m not sure it’s enough, you and three other investors acting as witnesses.” He thought for a moment, then said, “We need someone on the inside who really knows Ducasse’s operation to give us his testimony, make Ducasse sweat. Didn’t you say it was your banker at ASB who introduced you to him?”
“Bemelman.”
“And the three other U.S. investors were also introduced to Ducasse by this Bemelman?”
Katie said, “Yes.”
“Ducasse’s fund documents say he pays origination fees of .5% for bringing in new investor money. So Bemelman is getting paid, and he’s Ducasse’s shill. We talked about this before we went to Geneva: Bemelman has a profile. Middle-aged, wealthy divorcées or widows, clueless about finance. He scans his clients for women meeting the profile, then feeds the easy marks to Ducasse.”
Katie said, “I met three of them. That’s exactly right.”
Rudiger said, “Lonely women looking for a man, bowled over by Ducasse’s impressive town house, vintage cars, exotic tastes, and susceptible to his advances.”
“I’m sure one of them slept with him, because every time she mentioned Ducasse her face lit up. She was like the pimply faced high school girl who was finally getting laid.”
Rudiger said, “So we go after Ducasse via Bemelman. We fly to Geneva and sweat him. We tell Bemelman I’m working undercover with you at the U.S. Attorney’s Office. We say we’ve figured out the scam, show him our draft complaint and get Bemelman to flip on Ducasse, spill everything he knows in exchange for immunity from prosecution.”
Katie was nodding. She said, “Then we add Bemelman’s testimony to the complaint, and then—”
“Show it to Ducasse and put the wood to him,” Rudiger said. “Okay. Let’s see if we can make it work. You start drafting your complaint. I’ll pull together my research on Ducasse’s scam for you to use in it.”
Katie looked skyward and said, “We’re on it, Daddy.”
Rudiger and Katie worked together on opposite sides of the table out on the balcony. Katie drafted a complaint against Banque d’affaires Ducasse, and Ducasse and his father individually, as if she were still with the U.S. Attorney’s Office. Rudiger refined his research into Ducasse’s phony deals.
It was like when the two of them had done their separate parts back at her house in pulling together the LHIW Propylene charade. But now it was bittersweet because Daddy wasn’t there.
Early on, Rudiger said to Katie, “You don’t need notes or source documents?”
“Only the stuff you’ll be feeding me, but the complaint itself? I could do this in my sleep.”
At the end of the first day, Katie handed Rudiger a 45-page shell of her complaint, listing 11 counts—securities fraud, investment advisor fraud, mail fraud, wire fraud, money laundering, providing materially false and misleading information, and so on. Under the first count, a heading in the middle of the page read: “The Ponzi Scheme to Defraud.” It summarized Ducasse’s entire modus operandi. A series of captions with half-page blank spaces beneath them read: Specification One, Specification Two and so on.
“The blanks below the specifications are where we’ll drop in your information about specific fraudulent deals,” Katie said.
After he finished reading the document, Rudiger said, “Why aren’t you naming the women witnesses you call Sources X, Y and Z?”
“For now, we don’t want Ducasse to know who they are and come after them.”
“But you use Bemelman’s name in here.”
“That’s under the assumption we can get him to flip, and—”
“Yeah, I get it. Trust me, we work him hard enough, Bemelman will flip. Then Ducasse will see that and know he’s cooked.”
Rudiger started feeding Katie the bogus deals and she dropped them into the complaint, fleshing it out.
They had a regular routine. Up shortly after dawn, a run on the beach, shower and breakfast, take Styles out for a walk and ball throwing with the Chuckit! launcher, then back to the hotel by 10:00 a.m. and work through until early afternoon, lunch, more work, then cocktails at 5:00 p.m. In the evenings they’d take walks with Styles, watch TV together, Styles curled up with them on the sofa. Once Styles was tired enough to want to go to sleep, they’d retire to the bedroom and make love. Katie hoped it could always be like this.
By the end of the third day she was satisfied with the draft of the complaint.
“We’re in good shape. Once we talk to the three American investors and Bemelman, we’ll have some changes to the document before we can use it. But for now, we’re there.”
“I’ll book a flight and hotel in Geneva.”
“I’ll line up the three ladies.”
Rudiger sat back in his chair. “We may have to hold off for a day or so. I called my documents guy in New York yesterday and have him working on something for us.”
“Why can’t we use the documents we left the UK with?”
“We can. This is different. He has all kinds of sources, hacks into various computer systems, has databases the cops, the FBI and Interpol use. I asked him to find out as much as he can about Bemelman. I also hired a Geneva PI firm to do some research as well. If we can dig up some dirt on him, great. But at least to know where he lives, whether he’s married, has kids, whatever, will help us out.”
Katie smiled. She was glad Rudiger and she were on the same side.
Two days later they left Styles with Flora at the hotel and flew a chartered jet direct to Geneva. They checked into the Hotel d’Angleterre and went downstairs to the lobby, where they would meet the first of the three “American Ladies,” as Katie had come to call them.
They sat in the lobby until an elegant woman with flowing brown hair, beautifully made up and wearing a stylish wrap dress, entered. Katie stood up and smiled.
“Stephanie,” Katie said, “so glad you could come.”
“My pleasure, Angela.”
Katie introduced the woman as Stephanie Silverman and Rudiger as John Rudiger, a friend of hers. They sat down. Katie started off in a lowered voice. “Stephanie, some of what I have to say may surprise you, even shock you, so I didn’t want to let on over the phone.”
The woman’s brow wrinkled.
“I asked you here to talk about the Ducasse funds.”
“Is something wrong?”
“We think so.”
Rudiger leaned forward and said, “We’re more certain than that. I’m in the investments business myself, and I do a great deal of private consulting work, including with the U.S. Attorney’s Office in New York. That’s the assignment I’m currently working on.”
Stephanie’s eyes widened.
Katie said, “And that’s my role here, too. My real name is Katie Dolan, and I’m a lawyer with the U.S. Attorney’s Office in New York, working undercover.” She pulled out her old ID from the U.S. Attorney’s Office and showed it to Stephanie. “To get it all out on the table, we believe that Banque d’affaires Ducasse has conducted an elaborate Ponzi scheme with their various investment funds over at least the last ten years.”
Stephanie’s lips parted and her eyes looked glassy. “Is my money safe?”
“We don’t know the extent of the situation yet,” Rudiger said, “but we’re certain as an investor in Funds III and IV that you’ve started to receive payouts.”
“Yes, in fact I’ve gotten half of my money back already.”
Katie said, “That’s because we believe—”
“We’re certain,” Rudiger interjected.
“—that Ducasse’s modus operandi is to take money from investors in subsequent funds, manufacture artificial returns to the investors in the earlier funds, and then skim as much as he wants out of the combined pot.”
“It keeps working as long as he keeps adding new funds of bigger and bigger size,” Rudiger said. “So your money is giving investors in Funds I and II very nice returns. And you’ll do very well if Ducasse can raise Fund V. But someday when the music stops, everything will come crashing down with a thud.”
“The rationale for the U.S. Attorney’s Office getting involved,” Katie said, “is based on the fact that U.S. citizens, such as yourself, have been defrauded in this Ponzi scheme, a violation of fraud provisions of the U.S. securities laws. In addition he’s violated U.S. mail fraud, wire fraud, and money laundering laws.”
Stephanie leaned back in her chair and rubbed her forehead, as if trying to digest all the information Katie had just dumped on her. After a moment she said, “So how does this involve me, aside from the fact that I may have been one of Ducasse’s patsies?”
“What we’re asking is for you to give us the details of your investment—amount, timing, when you received money back from those funds—for us to use in supporting the charges against him.” Katie met her gaze, saw resignation, then sadness in her eyes.
“I feel so stupid. If Stanley were still here on this earth, he’d skin me alive.” Stephanie looked away. When she turned back her eyes were moist.
In that moment Katie felt connected to her, got a terrible sense of loneliness. She felt her hatred of Ducasse flare.
Stephanie said, “Okay. I’ll do whatever you ask.”
Two hours later, the meeting with Valerie Seymour went about the same. After Valerie left, Katie said to Rudiger, “I think I’m going to cancel the next meeting with Melinda Chase.”
“Why?”
“She’s the one who I think might be sleeping with Ducasse.”
“You afraid she might tip him off?”
Katie nodded. “I don’t think so if she knew the truth, but it’s a risk not worth taking. We’ll get enough from Stephanie and Valerie to give Ducasse a statistical sample of his widow investors’ righteous fury that should scare him to death.”
Rudiger said, “Okay, tomorrow we do Bemelman. If that goes as planned, we’ll really scare the hell out of Ducasse.”
The next morning over breakfast, Katie said, “Did your documents man or that private investigator ever turn anything up on Bemelman?”
Rudiger realized he’d forgotten to tell her. “Most of what I got was from the PI, Krause. Bemelman lives a pretty ordered life. He has breakfast every day at a café around the corner from his house, where he reads the newspaper. Then he goes to the office. He eats lunch at one of three places near his office every day, unless he’s entertaining for business. After work he generally goes straight home. Except on Friday nights.” He paused. “Then he goes to the Pâquis District to the apartment of his mistress, Gabriele Stoltzberg. Sometimes he stops and buys groceries first.”
“What’s the Pâquis District?”
“It’s Geneva’s red-light district, where prostitution is legal. Gabriele Stoltzberg is a registered sex worker, with a long record of drug arrests.”
“Not the kind of thing that a buttoned-up Swiss banker wants getting around. That should help get him to cooperate.”
After breakfast Katie called Bemelman. “Mr. Bemelman, it’s Angela Conklin.” Pause. “Yes, I happen to be in town and I was wondering if I could come to your office to introduce a friend as a potential client. He needs a local banker.” Pause. “My pleasure. We’ll see you at 11:00 a.m.”
At 11:00 a.m. Katie and Rudiger went to his office and were escorted into a conference room. Bemelman came in smiling: a short, slim man in rimless glasses wearing a dark-gray suit with all three buttons buttoned, a white shirt and muted tie. His hair was combed straight back.
Katie made the introductions and they sat.
Rudiger’s heart rate shot up; he got right to it, saying, “My name is John Rudiger and I’m an investment manager who also does consulting work, in this case for the U.S. Attorney’s Office in New York. We are on the verge of filing a complaint and a formal extradition request to the Swiss government for Philippe Ducasse and his father, André, for 11 counts of violations of the U.S. securities laws, including securities fraud, money laundering, wire fraud, mail fraud and improper disclosure. Ducasse PE Funds I through IV, and its proposed Fund V, are part of an elaborate Ponzi scheme to defraud investors that’s been continuing for ten years.”
Rudiger watched as Bemelman’s face lost any expression, began to look like a death mask.
Rudiger continued. “We have obtained the cooperation of two U.S. investors in Ducasse funds, and in addition, the woman you’ve known for the past year as Angela Conklin is really Caitlin Dolan, a lawyer at the U.S. Attorney’s Office in New York working undercover.”
Katie pulled out her old ID and showed it to Bemelman.
“The $30 million she invested in Ducasse Fund V, at your introduction, was the U.S. government’s money, invested as part of this sting operation.”
Bemelman took a breath and opened his mouth to speak but Rudiger raised his hand for him to stop, talked over him.
“At least two other investors and Ms. Dolan were introduced to the Ducasse funds by you as part of a profiling operation to obtain unsophisticated investors—widows or divorcées with substantial resources and little knowledge of finance—as part of the Ducasses’ Ponzi scheme.”
Rudiger nodded to Katie, who said, “If you agree to cooperate with us and provide details of the Ducasses’ operation, I am authorized to offer you immunity from any prosecution in the United States and Switzerland.”
Bemelman stood up and said, “I’m going to speak to my lawyer.”
Rudiger said, “That’s certainly your right, but we should tell you that this is an offer we’ll only make you once.”
Katie said, “We ha
ve other individuals with whom we’ll be having this conversation. Insiders with knowledge of the Ducasses’ operation. Whoever agrees to work with us first will be provided immunity. The others would be prosecuted along with the Ducasses.”
Rudiger said, “In plain English, if you don’t hit the bid, you’re toast.”
Bemelman said, “Kindly show yourselves out,” then turned and left the room.
Rudiger felt like he’d been sucker punched. He slumped in his chair, turned to Katie. “I didn’t expect that.”
“Neither did I. I thought he’d roll right over.”
They left the building and hailed a cab. Rudiger gave the driver an address.
“Where are we going?” Katie asked.
“To Bemelman’s mistress’ apartment.” They drove into the Pâquis District, a seedy neighborhood of sex shops, bars and clubs. They stopped in front of a restaurant and got out. They walked to a door next to the restaurant that had buzzers for four apartments. Rudiger pushed one. A woman’s voice came on the intercom.
Rudiger said, “Gabriele Stoltzberg, it’s the police. I need to speak to you.”
“What about?”
“About Hans Bemelman.”
A buzzer signaled them to enter.
Rudiger and Katie walked up the stairs to the second floor. When they got to the landing, the door was ajar, the chain still on. A pretty woman in her 30s peeked out.
“Is he alright?” she said.
Rudiger handed her his card. “Please have him call me as soon as possible. It’s important.”
Rudiger and Katie left. They were sitting in their hotel room when Rudiger’s cell phone rang.
“Alright, you have my attention. I am prepared to meet,” Bemelman said.
Rudiger got a blast of energy. Yes.
He gave Bemelman their hotel room number. Twenty minutes later Bemelman knocked on the door. Rudiger showed him to a chair across from the coffee table and sofa where Katie and he sat down. Bemelman sat erect in the chair and said in a stern voice, “I am unaccustomed to treatment like this. I am a respected banker in the city and have been so for 25 years. I have been a faithful husband and devoted father for even longer.”