The Tainted Trust

by Stephen Douglass

For some time Mike had asked himself the same questions, but pride had prevented him from talking about it, and memories of the harsh treatment the Feds had given both of them had prevented him from doing anything about it. “I’m torn, Babe,” he admitted. “Half of me wants to keep it forever, and the other half wants to get rid of it. All my life I’ve been an honest man. I can’t even tell a lie without breaking out into hives, but this one’s different. As long as I live I’ll remember how those sons of bitches treated us like numbers. I’ll never spend a dime of that money, but I’d rather die than give it back to them.”

  The stock market continued its gradual recovery in 1988. Capital gains were slow and difficult to achieve, however. Even worse, the price of crude oil had continued to sag, never once coming close to twenty dollars a barrel. Each time it showed any sign of strength, Visconti called Dennis, anxious to get his blessings to proceed with his planned short sale. Each time Dennis advised him to wait, his advice driving Visconti to unchartered levels of desperation.

  The spot price of West Texas Intermediate had dropped to fifteen dollars a barrel by the end of May, and Visconti’s hopes had plunged with it. Convinced he had missed his seat on the boat intended to deliver him from his nightmare, it was apparent that he would have to falsify a third consecutive quarterly report to Mike King. Deeply discouraged, he telephoned Assif Raza in Kuwait City. After an agonizing delay of more than twenty minutes, Raza finally answered, “Sorry to keep you waiting, Louis. To what do I owe the pleasure of your call?”

  “I need some information, Assif. It’s extremely important… When we first met over a year ago, you told me that you and your fellow investors expected the price of crude oil to drop a long way. Do you still think it will?”

  “Nothing has happened to change our opinion. There is no factor, with the exception of the Saudis, which we think is capable of providing sustained support to the price of crude oil.”

  “If that’s true, what’s keeping it up?”

  Raza chuckled. “Forgive me, Louis. I have difficulty understanding your question. We haven’t seen the price as low as fifteen dollars for a long time.”

  “That’s true,” Visconti conceded. “But you said it would drop to five, didn’t you?”

  “Yes, and we still believe it will, because we don’t think the Saudis can continue to carry the full weight of world crude prices on their shoulders for ever.”

  “How soon? Can you give me an informed opinion?”

  “I can only assure you that we believe in the inevitability of a crash. The longer the price of crude oil defies gravity, the further and faster it will drop.”

  Raza’s words were sweet music to Visconti’s ears, nourishment for his obsession.

  CHAPTER 25

  Toronto. Friday, June 24, 1988.

  Phillip received his high school diploma in late June, a bittersweet experience for Mike and Karen. His marks were abysmal, barely high enough to pass. His teachers spoke of their enormous frustration with the boy. Tests had confirmed his extremely high intelligence level, yet consistently low marks had revealed a low level of motivation. His teachers agreed that his poor academic performance would make it nearly impossible for him to be accepted at any reputable university, and strongly recommended a repeat of his final year.

  Armed with that information and Phillip’s final marks, Mike and Karen confronted him. Karen was stricken with the embarrassment most mothers feel when one of their children does poorly in school. Mike felt a strong sense of failure and frustration. In spite of all his efforts and attention, he had been unable to motivate Phillip to realize his potential.

  Instead of eating alone in front of the television set in the den, as Phillip normally did, he joined his parents for dinner in the dining room, planning to remind them of the car they had promised to commemorate his high-school graduation. He dressed for the occasion; baggy blue jeans, a heavy multicolored T-shirt, and scruffy sneakers.

  While Karen stared at her son, she was brutally reminded of her former husband. His baby fat had given way to muscle, forming a firm body structure very similar to that of his father. She was horrified by his unshaven face and the tiny gold earring in his left earlobe. She winced as he jerked a chair from beneath the table, then allowed himself to flop onto it. “Phillip, how many times have I told you to sit gently?” she scolded.

  “Sorry,” Phillip said, smirking as if he took pleasure in annoying her. “I forgot.”

  “It’s apparent that isn’t all you forgot,” Mike barked.

  Phillip flashed a defiant stare. “What do you mean by that?”

  “Your marks clearly indicate that you forgot to work hard in school. Your mother and I were so concerned that we arranged interviews with each of your teachers. They all confirmed that you achieved far below your ability. When we asked them for specifics, they said you frequently failed to turn in assignments and to complete your homework. In addition, they suggested that you repeat your final year, to have another chance to elevate your marks to a level consistent with your ability, and that required for acceptance at university… What do you think of that?”

  Phillip hung his head. Clearly, it was the wrong time to ask for a car. “The only thing I can say is that I hate school,” he said, attempting to feign as much regret as possible.

  “If you hate it so much, why waste any more time at it?” Mike asked, assuming he had successfully challenged Phillip’s bluff. “You should get out and do something you don’t hate.”

  Mike had said exactly what Phillip wanted to hear. The statement had actually sanctioned his most fervent desire. “You really think I should?” he asked, struggling to conceal his joy.

  “It’s your call. You have to decide what’s more important. You’re almost eighteen. You should be making your own career decisions. Do you have any plans?”

  “Nope.”

  “Then I suggest you take at least a year out of school and get a real job. Maybe you’ll hate work so much, you’ll want go back to school.”

  Phillip seized the opportunity. “But how can I get a job if I don’t have a car to get me there?”

  “Take a bus,” Mike retorted, amused by Phillip’s infantile attempt at manipulation. “If you work hard enough and long enough, maybe you’ll make enough money to buy your own car.”

  It was impossible for Phillip to hide his disappointment. Time to protest. “But you promised I could have a car when I graduated from high school.”

  Mike relented. “Tell you what I’ll do. If you promise to work, and work hard, I’ll give you a job with the company. If you’re interested, I’ll teach you everything I know about the business… Who knows? Maybe some day you’ll want to run it.”

  “Can I drive a company car?”

  “We can arrange that.”

  Phillip tried to appear excited and grateful, but was neither.

  New York. Friday, July 29, 1988.

  After a brief flirtation with the seventeen dollars a barrel level in July of 1988, the spot price of crude oil resumed its descent. As it knifed through the fifteen dollar resistance level, there was joy among the world’s consumers of oil, even speculation that O.P.E.C. had finally failed as a cartel and lost its pricing power, perhaps forever. The price continued to decline through the summer of 1988. In October it hit thirteen dollars.

  Enraged and convinced he had lost the opportunity of a lifetime, Visconti called Miles Dennis. “You son of a bitch!” he shouted. “Crude’s at thirteen dollars! Do you have any idea how much money you’ve cost me? I don’t know who the idiots are that give you advice. Obviously they don’t know a goddamned thing about what’s happening in the real world.”

  Dennis’s response was cool and professional. “Relax, Louis. I’m still confident those idiots are right. I still think you should wait for twenty dollar crude before you jump in. Patience is crucial in this game.”

  His comments failed to placate Visconti. “That’s unmitigated bull-shit! You gave me that same crap a year ago. If I
had done the short then, I’d be sitting on a paper profit of over a hundred million.”

  “That’s probably correct,” Dennis conceded. “If you had done the short, would you take your hundred million and run, or wait for still lower prices?”

  “I’d hang in there,” Visconti replied without hesitation. “A hundred million is peanuts compared to what I could make when crude really crashes.”

  “If you’re patient, you might still do it.”

  “Do what? Die with the bat on my shoulder?” Visconti countered.

  Dennis chuckled, then changed the subject. “Do you know where I could find a good secretary? I’m looking for one that’s young, beautiful, intelligent and eager to learn?”

  “If I did, I sure as hell wouldn’t tell you.”

  CHAPTER 26

  New York. Monday, October 24, 1988.

  North winds howled and the temperature was plummeting when twenty-one year old Kerri Pyper left her two bedroom Manhasset apartment and climbed into a yellow cab. Rain droplets splattered against her window, blurring everything in her field of vision as her taxi inched its way through heavy Manhattan traffic. The inclement weather compounded the emptiness and loneliness she had confessed to Brian.

  Kerri was alone in a city of millions of people, none of whom knew her or cared she existed. With the exception of her marriage to Brian, her job search was the only brightness in her life. In spite of being frustrated and offered nothing but rejection, she thrived on it. The challenge of finding a job kept her busy and helped her to forget her loneliness. Instead of tolerating each day by making tedious boring domestic jobs last, she now found herself hurrying. She had a focus and liked it.

  In an attempt to broaden her resume and to fill some of her empty evenings, she had enrolled in a course on commodities at Long Island Community College, near Smith Town. The forty hour course was to be given in two hour segments, every Tuesday and Thursday evening. Kerri’s business courses at university had given her an elementary exposure to the world of commodities. She discovered an intense fascination for the subject. In her final year of university she won a prize for her brilliant essay on the subject of the supply and demand equation for soybeans.

  She arrived for her first session at one minute after eight and ran as fast as she could to Lecture Room Four. She took a seat in the back row near the door, then looked around the room, an amphitheater with seating capacity for one hundred. Almost all seats were occupied, by men. Including herself, she counted only three women.

  The lecturer entered the room through a door to the right of the blackboards. He was tall, thin and sharp featured, with thinning gray hair. He wore a dark blue suit, matching tie, a buttoned-down pale blue shirt, and tasseled black loafers. He marched to the middle of the podium and stood behind a maple wood lectern. He reached into the inside pocket of his jacket and removed his notes, then looked up and scanned the audience. “Good evening, ladies and gentlemen,” he said with a warm smile. “I had to scan the audience to confirm that I could include ladies in my salutation. I’m pleased that I can. Welcome to the Long Island Community College, and to the fabulous world of commodities.”

  The speaker paused to take drink of water, then smiled again. “I’m happy to see a few of my clients here tonight. For them, I need no introduction. For those of you who don’t know me, my name is Miles Dennis. I’m a broker with Iacardi & Sons, in New York. For those of you who are unfamiliar with the company, it’s small, very well respected, has offices in the World Trade Center, has been operating successfully for over fifty years, and specializes in brokering commodities.” Dennis grinned, then blushed. “One of the perks of this job is to have the privilege of plugging my company, whenever I want.”

  While the audience laughed politely, Kerri continued to stare at Dennis. She liked him and was delighted to have enrolled in his course.

  Dennis continued, “My job is to deliver the course to you and to try to make the subject interesting and fascinating to you. I urge you to ask questions, as many as you like, but please save them until the end of the class. Believe it or not, your questions might not be of any interest to others. They might also waste time… Any questions?” he asked, smiling again.

  Silence.

  “If any of you could determine the future, you would certainly have the means to become wealthy beyond your wildest dreams. It’s evident, however, that none of you is so blessed. If you were, you wouldn’t be here. Please dream with me for a moment. Suppose all of you were blessed with the ability to predict the future, and that you wanted to apply this ability to commodities. Your only limitation is that you could forecast only changes in prices, not the times of their occurrences… Can anyone tell me what problem that limitation presents?” Dennis searched the audience for a raised hand.

  After a very long fifteen seconds, one hand was raised. It was Kerri’s.

  Dennis pointed to her. “At last we have an answer. Please go ahead.”

  “With that limitation, we would have to live with an element of risk,” Kerri offered.

  “Bravo!” Dennis declared. “Good answer. I couldn’t have said it better… Now, suppose we mortals decided to try to improve our chances of determining the future by graphing a series of events over time. If we graphed the series long enough, it would run off the end of the page. Eventually we would notice that a portion of the line we are producing looks like another portion of the same line. Can anyone tell me the significance of that?”

  Kerri raised her hand once again.

  “I’m pleased we have one alert person in this class,” Dennis acknowledged. “Go ahead, please.”

  “The similarity would suggest history is repeating itself.”

  “Exactly. Take a bow for that answer.” Dennis picked up a piece of chalk and proceeded to draw a crooked continuous line across the full length of the five sections of blackboard. He turned to face the class when he ran out of blackboard. “Now, assume the line I’ve just drawn is our graph of a particular series of events. If we were to spend enough time graphing it, eventually we would be reasonably certain which direction the line would go next… Can anyone tell me why?”

  Kerri glanced around the amphitheater to see that once again, no hand was raised. Her modesty refused to allow her to raise hers for the third time.

  “Time’s up,” Dennis declared. “I’m going to ask you all to return to the Thursday session fully prepared to answer that question. The answer is absolutely crucial to your success in this business. You must learn how to follow a line and react to it. If you do, the future will belong to you. The line is the only thing that really counts in this game. Discarding the vast majority of lines and selecting the ones that have the potential to make you money are the most important things you will ever learn about the commodities game. A line on a chart is the historical price record. There can be no argument, no mystery. It’s a fundamental fact.”

  Dennis continued without interruption until ten, then concluded the first session. “Thank you for your kind attention. I look forward to seeing all of you again on Thursday evening.”

  Kerri was thrilled. At last she was doing something useful. She was involved, growing again. Commodities fascinated her, and so did Miles Dennis. She had identified him as a learned confident man, a professional. She looked forward to the Thursday session and resolved to arrive early enough to get a front row seat.

  CHAPTER 27

  After racing through another two days of her frustrating job search, Kerri returned to the Long Island Community College, this time early enough to have a choice of all the front row seats.

  Dennis, reviewing his notes on a chair behind the lectern, looked up and recognized Kerri immediately. It was difficult for him not to recognize her. Dressed in a tight pink skirt and breast enhancing red cashmere sweater, she was drop dead gorgeous. Her long blonde hair, large blue eyes and infectious white smile reached out and captivated him. “I’m glad to see my star pupil has returned,” he said with a big smile. “It�
�s like a breath of fresh air to see a woman showing such interest in my class.”

  Kerri smiled, nodded politely, then took a seat in the front row.

  “I’m curious to know why you have an interest in commodities. Would you mind telling me?” Dennis asked, continuing to stare at Kerri, almost intoxicated by her beauty.

  Embarrassed by his stare and nervous about answering the personal question, Kerri blushed. “I was involved in a business case study in my last year of university. The more involved I got, the more the subject interested me.”

  “What university was that?”

  “The University of British Columbia.”

  “You’re Canadian?”

  Kerri smiled and nodded.

  “What brought you to New York?”

  “I married a football player. He brought me here.”

  “Really. Who does he play for?”

  “The Jets. He’s their quarterback.”

  “Brian Pyper?”

  Once again Kerri nodded, displaying a proud smile.

  “You sure know how to pick ’em. I think he’s an extremely talented quarterback, even better than Nameth. Maybe they’ll win another Super Bowl with him.”

  “That’s his fondest dream.”

  “Oh no,” Dennis said, suddenly realizing his oversight. “I rudely asked your husband’s name without first asking yours. Can you ever forgive me?”

  “Certainly. I’m Kerri.”

  Dennis stood and approached her. “Delighted to meet you, Kerri Pyper,” he said, reaching for her hand, and practically drooling over her good looks. “I have some great books on commodities. Would you be interested in reading them?”

  “I certainly would. Thank you for offering.”

  “Fine. I’ll bring them here next Tuesday… Or maybe you could pick them up at my office. Do you ever get to Manhattan?”

  “My job search has taken me there many times, regrettably all in vain.”