“Fascinating,” Emily said, thinking this was exactly the kind of dirt Michelle Ellis would be interested in. “Not only did Garrett Stonehaven have another name, he was a young offender. What was he in for?”
“He was busted for running a pyramid scheme. Ironically, while he was there, he tried to run another one.”
Emily thought about Stonehaven’s presentation, the neighbors helping neighbors angle. “Do you think StoreHaven was a pyramid scheme?”
“I think it’s possible.”
“And if it was a pyramid scheme, then he might be dead because he tried to swindle the wrong person or persons,” Arabella said.
“That’s certainly one theory,” Levon said, “but I’ve been thinking about nothing else for the past few hours. I think the reason for his death might go farther back than StoreHaven. Possibly as far back as Camp Miakoda.”
“Do tell,” Emily said, leaning back to hear the rest of the story.
“Outside of group and individual counseling, Camp Miakoda wasn’t what you’d expect of a boot camp for young offenders,” Levon said. “It was more like a supervised summer camp. We were encouraged to partake in a variety of outdoor activities. That was their word, by the way, partake. Baseball and basketball, swimming and hiking. Kayaking and canoeing.”
“I suppose they were trying to develop your teambuilding skills and keep you fit,” Emily said, “but weren’t they worried you’d try to run off?”
“Be a bit tough. The property was surrounded by high wire fencing, and the road leading into the camp was a good mile of winding road, leading up to yet another fence, this one guarded. Adjacent to the camp was a fast-flowing river, across the way, acres of densely wooded forest. If the river didn’t stop you, the forest had your number. It wouldn’t take much more than a few minutes to get lost in there.”
“But you were on the water, with access to a canoe. Surely you could have tried to make a run for it.”
Levon shook his head. “Arabella asked me the same thing. It would’ve been difficult, if not all but impossible. At that point the Dutch River has two fairly large waterfalls, one about three miles to the east and one about five miles to the west. Nothing like Niagara Falls, but the one to the east had a partially open dam, used to be an old hydro generating station, helped power the mill upriver way back when. No one in a boat, or swimming, was going to survive the fall without breaking at least a few bones, and all kinds of stories were floating around about the fools who died trying. But even without all that, where were we going to escape to? Most of us didn’t have anywhere else to go.”
“So you became one big happy family?”
“I wouldn’t exactly say one big happy family. Each of us was carrying more than our fair share of baggage. Not everyone got along every single day.” He glanced over at Arabella.
“We all have our fair share of baggage,” Arabella said.
Levon flashed a smile. “Some of us more than others, eh, Bella? Anyway, it wasn’t long before friendships started forming. My first real friend there was Graham Gilroy. We met on the bus, sat next to one another.”
“Graham Gilroy of the Gilroy Mansion?” Emily was surprised. Johnny hadn’t mentioned anything about Levon and Graham being friends.
“The one and only, although back then he was just another kid with a sad story. He’d been caught stealing exams and selling them to other students, not to mention cheating on a few of his own exams. Claimed the constant pressure to achieve good grades drove him to it, but he’d also pocketed some serious coin selling those papers. His parents had enough money and power to pull some strings and save him from getting expelled or worse. The trade-off was a summer at Camp Miakoda.”
“A poor little rich kid,” Arabella said, with an affectionate glance at her ex. “And Levon, a poor little poor kid.”
Levon smiled. “Something like that. I was also a bit in awe of Graham. Everyone at Camp Miakoda was, to one degree or another. Partly it was because he had the sort of self-assurance that comes with growing up wealthy, but it was more than that. Graham was always pushing the boundaries.”
“What sort of boundaries?” Emily asked.
“Silly things. Like if we were supposed to swim across the river and back, Graham would dive in off the rock cliff, instead of off the dock. When he died in the snowmobiling accident it dawned on me. He’d always had a self-destructive streak. But back then, Graham seemed exciting. And to be perfectly honest, I figured getting chummy with a rich kid couldn’t hurt my future chances.”
“So you became fast friends with Graham,” Emily said. She could see how that could happen.
“Yeah, but you know how these things are. First friendships form and then cliques develop. Before long there were five of us, with Garry the self-appointed leader of the pact.” Levon shook his head. “I knew the minute I set eyes on Garry Stone that he was trouble. I should have trusted my instincts. I first met Garry Stone on the school bus taking us to Camp Miakoda. We were picked up at various drop points, depending on where we lived. By the time I got in, the bus was pretty much full, row upon row of taciturn teens, most of them looking as scared as I felt. The lone exceptions were a dark-eyed kid with a semi-insolent stare and a guy sprawled out next to him. I can still remember the way he sat there, his impossibly long legs splayed out into the middle of the aisle. He muttered something like ‘another loser,’ and a couple of the kids snickered, though most of them kept their heads down and their mouths shut. The dark-eyed kid, he just kept on staring.”
Levon’s eyes narrowed at the memory, and his voice took on a hypnotic tone. Emily closed her eyes and found herself being transported to another time and place…
Levon decided to take the seat across from them. “Takes one to know one,” he said quietly, kicking one of those long legs, hard, as he pretended to trip over them. There would be a nice bruise there tomorrow. The driver turned around and shot him warning look. The dark-eyed kid grinned. The sprawler studied Levon through narrowed eyes. After a moment he nodded and pulled his legs away. Levon wasn’t sure if the guy was giving in, or thinking of a way to give it back. He’d be ready for either.
The drive to Camp Miakoda took forever. As a city kid, even one from the suburbs, Levon had never seen so many trees, let alone endless stretches of road dotted with nothing but the occasional one-horse town. The final stop before camp was in a godforsaken place called Lount’s Landing. He was wondering what would possess anyone to live so far from civilization when a curly-haired teen with a kiss-my-ass swagger stepped onto the bus.
“Money,” the long-legged kid said, under his breath.
Levon looked at the new arrival. Long-legs was right. Everything about this guy spelled money, from the brand new Levi’s to the Tommy Hilfiger polo shirt. Who wore Tommy Hilfiger to boot camp? He moved over to the window seat and gestured for the new kid to sit next to him. Hilfiger boy muttered a quiet thanks and sat down. “Graham,” he said. “Graham Gilroy.”
“Levon. Larroquette.”
“Garry Stone,” long legs said, leaning over. “This here’s Jacob Porter.”
“Jake.”
“Cut the chatter,” the bus driver said, not bothering to turn around. Levon settled back into his seat and stared out the window. For the first time, he began to doubt Constable Death’s plan. They couldn’t talk on the bus? And this was supposed to be better than juvie hall or some do-gooder foster home?
After what seemed like an eternity, they turned into a narrow road all but obscured by a thicket of pines. A barbed wire fence came into view. Two security guards were there to unlock the padlocked gate and let them through. One pimply-faced kid at the back of the bus murmured, “Oh, shit,” which prompted a few nervous titters, hastily stifled.
The narrow road continued, twisting and turning, with intermittent clearings off to one side, presumably to provide an allowance for an oncoming vehicle to pass. The clearings were already starting to grow over with a tangle of weeds and wildflowers. If you tri
ed to escape, Levon thought, the mosquitoes and black flies would eat you alive. The silence in the bus was deafening, the odor of sweat and stolen dreams palpable.
At long last they arrived at a gatehouse. The bus driver handed some sort of pass to the guard. A wooden arm inside the gate lifted and they drove through.
The first thing Levon noticed was a long red bunkhouse with small leaded glass windows. They were attractive until he realized the leaded glass acted like bars. The next thing he noticed was a narrow river, with a densely packed forest on the other side. So this was going to be home for the foreseeable future. An ominous chill fingered his spine.
“Welcome to Camp Miakoda,” the bus driver said, his voice dripping with sarcasm. “Back rows go first. Come on boys, step lively.”
30
Emily wasn’t sure where Levon’s mind had wandered off, but she had been a journalist long enough to know when to push and when to wait. Arabella also knew enough when to stay silent, at least when it came to her ex-husband. She gave Emily a look as if to say, “He does this.” It wasn’t until Levon suggested they order coffee that Emily knew he was ready to start talking again.
“So how did Garry Stone become part of your clique?” Emily asked after Betsy had brought their coffee.
Levon didn’t answer right away. Instead he took a tentative sip of his coffee. “Betsy seriously needs to upgrade her coffee supply. This stuff could strip the stripes off a zebra.” He added two creamers and a packet of sugar, stirred, sipped, added another packet of sugar. When he was satisfied, he looked up at Emily and Arabella and began.
“Like I said, I first met Garry on the bus to Camp Miakoda. After Graham got on in Lount’s Landing, and Garry made a snide comment about how he looked like money, I decided there and then that whoever this long-legged guy was, he was a class-A jerk. When we got to camp I made a point of staying out of his way. But after a few days, he sauntered over and reintroduced himself to me and Graham. He was completely charming, apologized for his behavior on the bus.”
Emily nodded. She knew how charming Stonehaven could be.
Levon continued. “We’d seen him around. He was hard to miss, a good head taller than the rest of us, and loaded with the kind of looks women swoon over and men admire. But it was more than that. He had this way of carrying himself, like he had some sort of magical power.”
“Even then?”
“Even then. I mentioned earlier he’d been busted for running a pyramid scheme, a fairly lucrative one if he was to be believed, and we had no reason not to. All sorts of pyramid schemes were going on at the time, with names like the Dinner Club or the Empowering Women Club or the Airplane Club. You get the drift. But if you got invited into one of the ‘clubs,’ no matter how naïve you might have been, you knew it wasn’t exactly legit.”
“I’ve heard of pyramid schemes,” Emily said, “but I’m not entirely sure how they work. Is it the same as a Ponzi scheme? I remember reading about Bernie Madoff and the way he bilked all sorts of celebrities and high society investors out of their life savings. The papers called it an elaborate Ponzi scheme.”
“Bernie Madoff’s an excellent recent example of a Ponzi scheme,” Levon said. “Basically, it’s a fraudulent investment plan where the money isn’t actually invested. Instead, every new investment is used to pay off earlier investors. So when the investors stop coming in—”
“There’s no money to pay off the earlier investors,” Emily said.
“Exactly. But the thing to remember is Bernie Madoff didn’t invent a new system. He simply took things to another level. Greed on steroids, if you will. The Ponzi scheme gets its name from a real life con artist by the name of Charles Ponzi. In 1920, Ponzi ran a scam promising New Englanders a fifty percent rate of return in forty-five days for a convoluted investment involving international mail coupons.”
“Yet folks believed it,” Emily said, thinking back to her conversation with Arabella on fakes and reproductions in the antiques world. “I guess the old adage, ‘if it seems too good to be true, it probably is’ comes into play.”
Arabella smiled, and Emily knew they were both remembering the same conversation.
“There’s another old saying, ‘you can’t cheat an honest man.’ People fall victim to their own greed. Or desperation, if you want to put a shine on it,” Levon said.
“So how does a pyramid scheme differ from a Ponzi scheme?” Arabella asked.
“In a Ponzi scheme the money collected from new investors is paid to previous investors, thereby providing a veneer of legitimacy. If you’re one of the investors getting a great return on your investment, you aren’t complaining, and a new investor is hoping for the same rate of return. In a pyramid scheme, every investor is expected to recruit further investors. Once that stops happening, the pyramid collapses.”
“I still don’t understand exactly how it works,” Arabella said.
“Neither do I,” Emily admitted. And she would need to when she reported back to Michelle Ellis. She had to prove she’d done her homework. Michelle would have zero tolerance for anything less.
“Okay,” Levon said. “Let’s take the classic 8-Ball Model, and let’s say the game is called the Chef’s Club. The head chef would be at the top of the pyramid. That’s level one. The head chef recruits two people at level two, let’s call that level the sous chef. So far, no money is changing hands, but both people at the sous chef level have an obligation to recruit two additional people for level three, let’s call them kitchen assistants. And still no money is changing hands. Are you both with me so far?”
Arabella nodded.
“Not entirely,” Emily said. “So far the pyramid has three tiers. The head chef, a second sous chef level with two people, and a third level with four kitchen assistants. But if no one has paid anybody any money, where’s the scheme?”
“I’m getting to that. The four people recruited at the kitchen assistant level are each expected to recruit two new members for a fourth level, let’s call it the waitstaff, but now the rules are changing. Those eight people can only join if they are willing to pay an entry fee to the head chef, let’s say a thousand dollars. The head chef, or the founder of the pyramid, receives the entry fee from all eight people of level four, in this case, eight thousand dollars.”
“Not a bad return for zero upfront capital investment,” Emily said. “But what happens to the other levels? How do they make any money?”
“A great question, Emily. Once the head chef is paid, he leaves the pyramid, and the two sous chefs reach the top. At that point, the pyramid is split into two. Each sous chef becomes the head chef of their own pyramid, and the four kitchen assistants split off to become sous chefs, two in one pyramid, and two in the other. Then the eight members of the waitstaff split off, four in each pyramid, to become level three kitchen assistants.”
“So as kitchen assistants, it’s their job to each recruit two more people to fill out the now vacant eight spots at the level four waitstaff level,” Emily said. “And once again, the waitstaff recruits are required to pay an entry fee of one thousand dollars.”
“You’ve figured out the formula.”
“But what happens to the original head chef?”
“He or she will join the waitstaff level in one of the other games, hoping to get to the top again. And by doing so, they add an air of legitimacy to the Chef’s Club.”
Emily thought for a moment. “And the pyramids keep splitting?”
“They do.”
“So at some point, one or all of the pyramids have to collapse, don’t they? Assuming each pyramid could go on for a while, there wouldn’t be enough people in the world to keep it going in perpetuity.”
“Right again. Often the only people who end up getting any money are the ones who never invested a dime, though the first recruits of level four sometimes get lucky.”
“Wow,” Emily said.
“Double wow,” Arabella said.
“Double wow indeed. It’s the
allure of getting rich quick. Everyone figures they know two people, and it’s in the best interest of the folks moving up the levels to help the newbies get fresh recruits.” Levon shrugged. “Like I said, most people are victims of their own greed. And I’m sorry to say, Graham and I were no exception.”
“Are you saying that you, Graham, and Garry ran a pyramid scheme at Camp Miakoda?” Emily thought about it. “Wouldn’t that have been rather risky?”
“Graham was a risk-taker,” Levon said. “And when Garry came up with the idea to run a pyramid scheme at the camp, he convinced us we could make enough money to start a new life once we got out. He called it graduating from Camp Miakoda, and in a way, he was right. We learned a lot about life there. On one occasion, we were taken on a heavily supervised bus trip to visit a maximum-security prison. Believe me, after that visit no one wanted to be a repeat offender.”
“I know what you’re thinking, Emily,” Arabella chimed in. “Levon didn’t want to be a repeat offender, and yet he was willing to risk running a pyramid scheme at a boot camp for young offenders.”
“That was exactly what I was thinking,” Emily said. “Though I expect a young Garry Stone could be every bit as convincing as Garrett Stonehaven.”
“He’s become more polished over the years, but you’re right. He was very convincing. He managed to put together a team of six to form Club Miakoda. Garry was at the top of the pyramid. All the six of us had to do was recruit eight players who would pay $1,000 each and then split the money between us.”
“Were you successful?”
“We could have been wildly successful, at least in the short term. Like I told Arabella, we were surrounded by kids who wanted to get rich quick, and they knew folks who wanted to get rich quicker. We found our first eight investors within a couple of days.”
“You say you could have been successful,” Emily said. “Meaning you weren’t successful.”
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