“When you put it that way, I guess we should each concentrate on our area of expertise.” He drew out the last syllable in a long teeease as he gathered up his papers.
“Great. I need you to put these invoices in date order.” Kat handed him the Research Analytics file, knowing Harry liked feeling indispensable a lot more than he liked math.
“Okay, boss.” His scowl vanished. “You need anything else, just holler.”
Kat held out her hand. “Better give me those.”
Harry reluctantly handed over his checkbook and bank statements. “Promise you won’t undo my work so far? I need to keep track of where I left off.”
Kat smiled at him, but secretly worried about what other financial surprises his checkbook might hold. “Promise.”
She stole a glance at Jace, but he avoided eye contact. Instead he plodded over to the reception area couch, his broad shoulders slumped in defeat. He sat down and loosened his tie. Something was wrong. The nicely pressed suit he had left the house in this morning was now wrinkled and creased. His hundred-amp smile was absent, too.
“Is this your disheveled journalist look? If it is, you’re pulling it off perfectly.”
No answer.
“Jace, I really need to talk to you.” She motioned him to follow her. Jace’s steps fell in behind hers as they headed for her office.
“An assignment for me too?”
“It’s Harry.” She lowered her voice. “Harry’s got some big financial problems—even bigger than I found out about yesterday. He’s got high credit card balances. He’s practically bankrupt. Look at this.” She handed him a copy of Harry’s bank statements, showing the massive mortgage for the full value of Harry’s house. “He’s mortgaged to the hilt and has nothing in the bank. Every time I turn around there’s a new loan or credit card charge. Yet he’s with us night and day. Where is he finding the time to do these things?”
Jace shrugged. “Maybe online?”
Kat shook her head. “He’s close to losing his house.”
“Like I said before—Harry can move in with us. He can sell the house.”
Jace wouldn’t feel the same way once he realized what was in store. “He refuses. Says I’m betraying him. He doesn’t understand anymore, and he has no recollection of taking out a mortgage. Meanwhile his finances have spiraled out of control. What do I do, Jace?”
“I don’t know.” Jace collapsed into the chair opposite her and let out a sigh.
Something was wrong. Jace always had an answer for everything. And he looked miserable. She felt sad just looking at him. “What’s wrong with you? You look like someone died.”
Kat cleared a spot on the desk and deposited Harry’s paperwork. It could wait a few more minutes.
Jace bent forward, elbows on his knees. He held his forehead in his hands, still silent.
“Jace? What’s wrong?”
“The Sentinel just sacked me.”
“No! Why you?”
Jace leaned back and brushed his fingers through his hair. “I think I know why. That real estate story? It must be connected to someone important.”
“Who?” She felt selfish for putting her problems ahead of his.
“That’s what I can’t figure out. They not only pulled my front page story—they told me my services are no longer required.”
“That’s crazy. Your editor loved that story.” Jace had investigated the company for over a month. Kat had helped with the analysis that ultimately exposed the crooked real estate appraisals.
“I don’t think it was his decision. Someone higher up must have killed it. No one’s telling me anything. They escorted me from the building, Kat. After ten years. Too contentious, I guess.”
“Isn’t that what news stories are supposed to do? Stir the pot, invite discussion? Expose wrongdoings?”
“Apparently not at the Sentinel. But why tell me to go with it if they planned to kill the story in the end?” He dropped the paper on her desk. “See this? They’d rather have advertorials about real estate developments than even a whiff of controversy.” The full-page spread showed a twenty-something couple draped on a couch with a set table and gourmet kitchen in the background.
“They can’t even tell me the truth about it. They said they were replacing the reporters with syndication. But I was the only one turfed.”
The Sentinel’s reporting staff had already been downsized when a global media group bought it last year.
“They can’t fire you. You’re not an employee, you freelance.” Kat jumped up from her chair and came around the desk. She leaned over and kissed the top of Jace’s head. She hated to see him so dejected. Journalism was his life.
“Semantics. It’s the same end result—no more income. And as a freelancer, I get no severance. The newspaper’s been my only income for more than a decade. What am I going to do, Kat? They’re the only game left in town.”
It was true. Nobody read newspapers anymore. Everything was online, dumbed down to monosyllabic words, and free.
Kat sat on the edge of Jace’s chair and gave him a hug.
“There’s lots of online magazines.” Kat tried to sound upbeat, though she didn’t believe it herself. “You could do something there.”
“Doubt it. Everything’s syndicated now, and they pay pennies a word. It’s not enough to live on. I need to pay the bills.”
“You’ll find something. You’re a good journalist.” Jace had won industry awards three years running.
“I’m not so sure. With all the mergers, everything’s owned by fewer and fewer people these days. No one’s hiring.”
“I can cover our expenses, Jace. I just got a nice retainer from my new case. You’ll get work soon—I’m sure of it.”
He shook his head. “I should have picked a different career. Who’d have thought journalists would go the way of blacksmiths and typewriter repair people? Obsolete.”
“You’re not obsolete. People still need to hear the objective truth.”
“It gets worse.” Jace flipped the paper open to the financial section. “Read this.”
Kat scanned the headline. Bargains Abound in Local Real Estate. “It’s the polar opposite of your story about appraisal fraud and an overheated market.” She shook her head. “It doesn’t matter, Jace. It’s their loss.”
“Of course it matters. They fired me because of some sort of cover-up. I want to know what it is.”
“It’s better for your peace of mind to drop it.” Jace never knew when to quit. He was as tenacious as a dog with a bone. Sometimes that was good, like when dealing with contractors on their never-ending house renovations. But facing off against powerful people rarely worked out in the end.
“That’s exactly what they want me to do. There’s obviously more to the story than what I’ve uncovered. I’m going to find out what that is. They can’t muzzle me. The truth is always worth fighting for.”
“Sometimes, but it’s always at a cost, Jace.” Kat wanted to believe. But ruthless people gained at any cost, and often at the expense of idealists like Jace. They thought nothing of stepping on the bodies, hearts, and minds of others to get ahead. Confront them and they’d bury you, in a hole sometimes too deep to dig out of.
Like Uncle Harry and his money. Or those smaller investors who followed Zachary’s currency gambles. Jace would be better to cut his losses and move on instead of making it worse. You had to pick your battles. The black-and-white ones. The ones too precious to lose.
Chapter 12
Kat marched into the bank, ready for combat. She ignored the tellers’ stares and made a beeline for Anita Boehmer’s office. Jace was right. Some things were worth fighting for. And since Harry couldn’t do that himself, she would. How could the bank put their own self-interest ahead of blatant financial abuse? Was making a buck really that important to them? It was criminal. She inhaled, focused her thoughts, and willed herself to keep calm. Do Battle With Banks hadn’t been on her to-do list today.
Jace h
ad taken Harry grocery shopping, which gave Kat a chance to work on Harry’s checkbook. She wanted to have it reconciled for him when he returned. His finances were much worse than she realized.
After a closer look at his statements for the last six months, she noticed something more. Both mortgage payments had been reversed due to insufficient funds. Harry had always been a saver, yet suddenly he was stretched to his overdraft limit.
Kat stared down a startled Anita Boehmer in the bank manager’s office. “Why didn’t you mention Harry’s mortgage when we were here yesterday?”
“We were talking about his renovation loan. There was no particular reason to mention the mortgage.” Anita rose and stood by her desk.
“No particular reason?” Kat dropped Harry’s bank statement on the bank manager’s desk. “We came in here to discuss an unusual transaction. What would be a good reason to mention other suspicious transactions in an eighty-year-old pensioner’s account?”
Anita sighed and sat down. She motioned for Kat to do the same. “Like I told you yesterday, he seemed perfectly normal when he took out the loan. As for the mortgage, that would have been done by the loans officer.” Anita’s held her arms up, palms facing Kat. “I don’t see what’s so susp—”
“He’s eighty years old, Anita! Living on a fixed income, with money in the bank. Suddenly all his money’s gone, and he’s in debt. Would you let your elderly parents mortgage their house?”
“I can’t tell him not to do it—it’s none of my business.”
“He’s got Alzheimer’s. If you don’t help him, who will?”
Anita just stared blankly, like she heard it all the time.
“Silence is just as bad. But I suppose you earned a few more points towards your monthly quota.” Kat really had no idea whether bank employees got incentives or not.
Anita’s face reddened. “I am sorry his finances are in such a state. Really I am. It’s simply not our business to manage people’s money.”
“No? When does it become your business? After you’ve sold them every bank product under the sun?” Kat pointed at Harry’s bank statement. “After you ruin them?”
“I’m sorry, but I don’t see how the bank is responsible for any of this.”
“Anita—you helped him fill out the loan application.” Kat pointed to the form. “This isn’t my uncle’s writing.”
“I do remember him having trouble filling it out.” Anita bit her lip.
“Exactly my point. He can’t remember things from one hour to the next. He can’t balance his checkbook and can’t do the paperwork. Yet you’re comfortable giving him a loan?” Harry’s checkbook had been riddled with errors. His calculations indicated a balance thousands of dollars higher than his bank statement.
“I couldn’t refuse him. He qualified, and the numbers work. But that’s not my writing on the loan application. Someone else helped him.”
“Who?” She’d give them a talking to.
“No one from the bank. He took the form home.”
“That just doesn’t make sense.” Kat said it more to herself than Anita. Even if Harry remembered to complete the application, he would have forgotten to return it. Aside from the fact that he no longer drove and was with her almost twenty-four-seven. “Who was with him?”
“Nobody. He came by himself. Both times.” Anita handed Harry’s statement back to Kat. “I know this must be hard for you, but the bank hasn’t done anything wrong.”
Kat stood. “Maybe not legally. But morally, I wouldn’t give a senior with dementia a mortgage and a loan to make a buck. If you and the bank don’t have a conscience, who does?”
Anita just stared at her, speechless.
“Who watches out for vulnerable people like Harry?” She needed to not only get Harry out of this financial disaster but also to find out who got him into it in the first place.
Five minutes later Kat sat in her Subaru in the bank parking lot, furious. Like most people, Anita put her own needs first—her quota ahead of a vulnerable person’s welfare. Technically Anita was right; she was just doing her job. Legally, she couldn’t exercise moral judgment over her customers. But that was part of the problem. Laws and rules never applied until someone got burned. People like Harry, the most vulnerable in society, got used and abused repeatedly before anyone made the laws in the first place.
Her keys dangled from the ignition as she tried to pull herself together. While she didn’t agree with the bank, she probably shouldn’t have launched into a tirade with Anita. Better to focus on who did this and get the money back. But with Harry’s faulty memory and no clues, where to start?
As a forensic accountant, Kat always considered the fraud triangle of motive, rationalization, and opportunity. It almost always pointed to the fraudster. Except in Harry’s case there was no opportunity. Harry was with her or Jace constantly, except when he went home to sleep. She was pretty sure he hadn’t seen anyone in his social circle for months, since most of them had called her to express concern about his absence and his forgetfulness.
At least in her Edgewater case, she had a likely suspect. But one thought tugged at her since reviewing the audited statements this morning. Even if Zachary hadn’t noticed the missing money, how had it escaped the auditors’ scrutiny? With so much money unaccounted for, the annual audit should have raised alarm bells. Auditors didn’t sign off on company financial statements without verifying account balances. Either they hadn’t checked the bank balance, or they purposely allowed the deception.
She grabbed the Edgewater annual report from the passenger seat and flipped it open. The auditor’s report was signed Beecham & Company. Strange that a company the size of Edgewater would be audited by a small local firm instead of one of the big international accounting firms.
She checked the address. Just a few blocks from the bank. She decided to pay Beecham a visit. She put the Subaru in gear and pulled out of the parking lot.
Minutes later she had an answer, just not the one she expected. She pulled up to the curb of 422 Cedar Street and got out. Instead of a glass and metal high rise, she faced a vacant lot, locked behind a chain-link fence.
Chapter 13
In late afternoon, Kat exited the elevator and entered Edgewater’s plush, quiet offices. The receptionist buzzed Zachary and motioned Kat to an overstuffed chair in the waiting area. Zachary wasn’t expecting her, but the revelation on the auditors demanded immediate attention.
If Beecham didn’t exist, then Edgewater’s financial statements hadn’t been independently audited. Purposeful deception meant only one thing: bogus financial results. Someone was hiding something. She grabbed her cell phone and punched in Jace’s number. She left a message, asking him to do a background check on Beecham.
Ten minutes later, Zachary greeted her at reception and ushered her into his spacious office. He pushed a stack of papers to the side of his desk and motioned to sit down. Kat filled him in on Beecham’s fictitious address and her suspicions.
“That’s impossible. The regulators require us to have audited statements. Not to mention our clients. They wouldn’t invest in unaudited funds.” Zachary shook his head.
“Did you ever meet with the auditors? Check them out?”
“Never had to. Like I said, Nathan handled the back-office side.”
“But you said your trading model was complicated. The auditors would need to understand it in order to audit Edgewater. Who explained it to them? Nathan?”
Realization dawned. Suddenly Zachary focused laser-like on Kat.
“Nathan never came back to me about it. And he’s used Beecham for years, even before I came onboard.” He slumped forward and rested his forehead in his hands. “This can’t be happening.”
“Well, it is. Unless Beecham operates from a vacant lot.”
“Maybe they moved?” Zachary wiped a thin sheen of sweat from his forehead.
Kat raised her eyebrows. “Beecham probably doesn’t even exist. I’ve got someone checking on that righ
t now.”
“But the auditor’s signature is on the statements. You’re telling me that was faked?”
“Anyone can cut and paste a signature. Edgewater’s year-end was a few months ago. Weren’t there any auditors in the office?” Auditors normally worked in their clients’ offices for part of the year-end audit. For a company of Edgewater’s size, the fieldwork would last at least a few weeks.
“Not that I remember. We don’t get many visitors, not even auditors. Back-office stuff isn’t exactly my strong suit, but still—how could this happen right under my eyes?” He pounded his fist against the desk as he stood. “How could I be so stupid?”
“It might seem obvious in hindsight. But until you ran short on cash, you had no reason to question anything.” Just like Uncle Harry and his loans.
Even Zachary looked small as he paced back and forth against the backdrop of the large windows. “I’ve got to stop this thing. What’s next?” His shoulders hunched forward in defeat.
“Think of why the financial statements were faked. I’ll reconstruct the results from your financial system to see what the real numbers are.”
“The real numbers?” He stopped abruptly and stared.
“If the financial statements are faked, you can be sure the actual numbers are different. I’m guessing not in a good way. I need complete access to your books and records. We’ll work at night while your staff is gone.” As if she had other staff to help. Reconstructing the financials could be hugely time-consuming. Maybe Jace could pitch in.
Zachary’s forehead creased. “Holy crap. No wonder Edgewater has no money. I’ll call my lawyer, get a court order. Freeze the bank accounts and the funds.”
“Zachary, that would be my first reaction too, but—”
“Don’t tell me to wait and see. I’ve got to shut him down.” Zachary headed for his office door, cell phone in hand.
“Okay, call your lawyer. But he’ll want proof too. Something Nathan can’t explain away. Especially if you want any charges to stick.”
Game Theory--A Katerina Carter Fraud Legal Thriller Page 6