Maddy sat silently staring out the windshield thinking over what her lawyer had said. After almost a full minute, realizing he was right, she finally, softly said, “Okay.”
Marc and Tony, walking together, followed Vivian and Maddy through the large, open foyer of the mansion. Vivian had her right arm around Maddy’s shoulders as the four of them passed through the building to the large French doors leading to the patio. One of the patio tables, with an open umbrella in its center, was set with excellent chinaware for four people.
“Mary has whipped up an excellent chicken salad for lunch. You two guys especially, look like you should start eating a little healthier,” Vivian said with a sly wink at Maddy.
“Getting a little soft around the middle, fellas,” Maddy added with a smile.
While Maddy took her seat, Marc tilted his head and looked at Maddy’s backside. “I’m not so sure you should be talking there, wiseguy,” Marc said.
“Ahhh! What do you mean?” Maddy practically squealed as she tried to swivel her head to look at her butt. She then gave Marc a dirty look and slapped him hard on the shoulder. “That’s not funny,” she said.
“See how they are?” Marc asked Tony.
“Yep, they can dish it out but they can’t take it,” Tony replied.
“You two are living dangerously,” Vivian told them.
Marc looked at Vivian and said, “I just like saying things like that to her because they’re not true. But it won’t matter. She won’t eat anything but carrots for a month.”
This good-natured banter and teasing continued for a few more minutes while Mary served their lunch. Mary also got in on it, taking a couple of well-timed, verbal pokes at Carvelli.
They all began eating and a couple minutes in, Vivian started.
“The guys at CAR Securities,” she began, “are pretty much what you see. The three from Wall Street,” she continued removing a small notebook from the pocket of her slacks, “Corbin Reed, Jordan Kemp and Walter Pascal, all met while working at Bear Stearns before the crash.
“Pascal and Kemp seem to be pretty straight. Corbin Reed has a history of having several different employers. Rumor has it that he was ethically challenged. He didn’t have a problem putting customers into high-risk investments for higher fees for himself.”
“Gee. Wall Street guys putting themselves ahead of their customers. What a shock,” Marc sarcastically commented.
“Kemp is a math and analytical genius. Pascal is an excellent bond trader. Combine that with what we now know about Ethan Rask and we have what may be a Ponzi scheme taking place,” Vivian said. “My nephew is going to get his money out as soon as possible.”
“There’s another guy, what’s-his-name…” Tony said.
“Victor Espinosa,” Vivian said. “Not much on him. By all appearances, he seems legitimate.”
“He got hooked up with those guys for a reason. We’ll keep digging,” Tony said.
Marc, eating too fast, finished his lunch, set it aside and said, “With what we know about this Rask character, the question I have is, can we point a finger at them and claim they had a motive to kill Rob Judd?”
“He went to his boss, this Walter Pascal and warned them about some securities. Something about mortgages, I can’t remember exactly what,” Maddy said.
“Mortgage-backed securities?” Vivian asked her.
“Yes! That’s what he called them, mortgage-backed securities. Rob told me they were not what they should be. They weren’t backed by mortgages with a good enough rating.”
“Oh my God, you’re kidding,” Vivian said. “What exactly did he tell you?”
“Let me think,” Maddy said. She paused for a moment to gather her thoughts then continued. “He said, legally, they were supposed to be triple A and double A mortgages but they weren’t. They were much worse. I think it was double or maybe triple B and lower. I can’t remember for sure. I know it was some type of B rating,” Maddy answered her.
“Good God,” Vivian said tossing her linen napkin on the table in disgust.
She looked across the table at Marc who looked back at her, shrugged his shoulders and said, “They haven’t learned.”
“Too big to fail,” Vivian sighed.
“What?” Tony said looking first at Marc then at Vivian. “I’m just a dumb cop. What’s going on?”
“Do you remember the financial industry meltdown of ’07 and ’08?” Vivian asked Tony.
“Sure,” Tony said.
“What caused it was this very thing. Between greedy mortgage companies, greedier Wall Street crooks and stupid, do-gooder politicians, they almost crashed our economy.
“First, the politicians, in their never-ending quest to con people into voting for them, decided it was a good idea to get home loans for people who couldn’t pay for them. A few very powerful members of Congress pressured Fanny Mae and Freddie Mac, government mortgage insurers, to get mortgages for people of low income and poor credit. Those were B level rated securities at best. And the companies who rate these things were in on this scam up to their eyeballs.
“Then Wall Street packaged these things up in mortgaged backed securities and sold them. You buy the security, you get the interest payments when they come in. They are pretty much the same thing as bonds but supposedly backed by no risk or low-risk mortgages.
“Do you remember AIG, the giant insurance company?” Vivian asked Tony.
“Yeah, I do. The government bailed them out for like eighty billion. What did they have to do with it?”
“AIG wrote insurance policies for these mortgage-backed securities,” Vivian continued. “This was a complete scam designed to generate billions of dollars of fees for Wall Street firms. It was based on the assumption that the real estate market would continue to grow at eight to ten percent every year. There were people who were warning these guys that the housing market was a bubble about to burst but no one listened. No one wanted to believe it and these guys had been crying wolf over this real estate bubble for at least ten years. Which is why no one believed them. If you yell fire over and over and there’s never a fire, it won’t be long before people stop listening. But if you say it long enough, sooner or later there will be a fire and then you can brag that you predicted it.
“Finally, in ’07 and ’08, the bubble did burst, the real estate market started to decline and these entire mortgage-backed securities that were backed by too many bad loans, collapsed. Wall Street losses skyrocketed and AIG didn’t have the money to pay all of the insurance claims in the meltdown.”
“And they’re at it again,” Maddy interjected.
“Maybe,” Vivian agreed. “Even probably.”
“How much did Rob say CAR Securities had invested in these low rated mortgage backed securities?” Marc asked Maddy.
“I’m pretty sure he said it was three hundred and forty or fifty million and the default rate was getting too high,” Maddy answered him.
“That doesn’t sound like much in an economy as big as ours,” Tony said.
“No, you’re right,” Vivian agreed. “If that’s all there is. But CAR Securities did not package these securities themselves. They bought them on the market. Probably from the big boys who still have their gambling habit.
“Do you remember did Rob tell you what the default rate was?” Vivian asked Maddy.
“I think he said it had gone over six percent,” Maddy replied.
“If it gets to even nine or ten percent, it could happen again,” Vivian said looking at Marc.
“Their cash flow from these things is higher than they’re reporting, I’d be willing to bet,” Marc said.
“High enough to show investors a rate of return better than what should be in this market. And if they are using money from new investors to pay interest payments to other investors, we have a classic Ponzi scheme,” Vivian told him.
“How do you know all of this?” Tony asked Marc.
“I have a Business Degree from the U for my undergrad deg
ree. Plus I have read news reports about what happened in ’07 and ’08,” Marc told him. “Is three hundred plus million enough to murder someone to shut him up?” Marc asked, the answer very obvious.
“How do we prove it?” Tony asked. “We can’t put Maddy on the stand to tell a jury this without proof.”
“No, we can’t,” Marc agreed. “We need to get our hands on some documentation to prove it.”
TWENTY-EIGHT
July 27th, a Wednesday, started off warm and humid and the weather geeks reported it was going to get worse. Marc had left his apartment early, before seven o’clock. It was already eighty degrees and muggy. Now, seated at his desk, he checked the clock on the wall which read 9:10.
He swiveled his chair around, opened the window behind his desk and involuntarily flinched at the blast of hot air that hit him. The high was predicted to be 98.
“Must be climate change,” Marc muttered to himself as he closed the window.
His intercom buzzed at the same time there was a knock on his door. Marc answered the intercom and was told Maddy had arrived at the same time she walked through his office door.
“I see that. Thanks,” he told Sandy.
He looked over Maddy as she stood in his doorway. Marc had told her to dress nice but simply, which she had done. A simple white blouse, navy blue slacks and plain, low-heel, black pumps. Maddy could wear sackcloth and she would still look great.
“Maybe we should put a burqa on you,” Marc said with a smile.
“Shut up, I’m nervous enough as it is,” she said.
“You know what’s going on here today. It’s…”
“Never, as the guest of honor.”
“…an arraignment on the indictment. We’ve been all through this.”
“What if the judge won’t allow bail? You said Gondeck is going to ask to remand into custody. What if the judge agrees?”
“Graham? Margaret says he’s okay. I was in court with him once,” Marc was saying as he grabbed his leather, satchel briefcase and suit coat. He continued as they headed across the office toward the exit door to a chorus of ‘good lucks’ from the office personnel.
“He had this idiot gangbanger in front of him with a street thug attitude. He even called Graham ‘bro’ but only once.”
“Is Graham African-American?” Maddy asked.
“Yeah, but he sure as hell didn’t appreciate that level of disrespect.”
Marc held the door for Maddy and he continued as they started down the stairs.
“Graham proceeded to read into the record this guy’s adult criminal record, all of it. It took the judge almost ten minutes. Graham then ripped this guy a new ass and put him in prison for six years on multiple drug charges.”
Maddy stopped three steps from the bottom, looked at Marc and said, “And how is this story supposed to make me feel better?”
Marc looked back at her, his mouth hanging partially open, and said, “Ah, well, um, he’s a fair judge. He’ll set bail. The story is meant to show you he doesn’t play favorites.”
Maddy rolled her eyes up then said, “I’m hoping he does, dummy.”
“Well, maybe you should have worn a mini-skirt.”
“Oh yeah, that helps,” she said.
“Or you could unbutton three or four…”
“I’m going to hit you,” she snarled.
Marc laughed, walked down to the back door, opened it and said, “Come on, you’ll be fine. Let’s go,” he said smiling while she scratched her cheek with the middle finger of her right hand as she walked past him.
The hearing was scheduled for 10:00 A.M. and the two of them stepped off the elevator at 9:40. Waiting by himself, away from the mob by the courtroom, was Tony Carvelli. He gave Maddy a warm hug, put his arm around her shoulders and started to lead her to the security doors. Tony had slipped a court deputy he knew twenty dollars to stand by and let them in through the back. Tony rapped a couple of times on the frosted glass door. His deputy friend immediately opened it and ushered them in.
“There’s a good size gaggle of media out front in the hall. They haven’t opened the doors yet to let them in,” Tony told them as they walked toward the courtroom.
Marc looked ahead and saw both Steve Gondeck and Steve’s main assistant, Jennifer Moore leaning against the wall. They were standing next to the door to Judge Graham’s chambers. Marc continued down the back hallway while the deputy took Tony and Maddy into the empty courtroom.
“Sneaking in the back,” Gondeck said as he shook hands with Marc.
“I guess there’s a mob out front,” Marc said. He turned to Jennifer, extended his hand and said, “I hear congratulations are in order. Why wasn’t I invited?”
“It was a small ceremony, Marc. Very few people. It’s a second time for both of us so we kept it small. But thanks,” she smiled.
“Well, I hope it works out and you’re happy. If not, Connie Mickelson will handle your divorce and suck out all of his internal organs. Is he a lawyer?”
“No, he’s a dentist with a good practice,” Jennifer said.
“Well, then you have a chance.” Marc then turned to Gondeck and asked, “What’s going on?”
“Graham wants to see us,” Gondeck shrugged. Graham’s clerk stepped out and asked, “Everybody here? Good, go on in,” she said without waiting for a reply.
Gondeck and Jennifer Moore took their seats as the judge stood extending a hand to Marc.
“I don’t believe we’ve met. Derek Graham,” he said shaking Marc’s hand.
“Once, your Honor,” Marc replied. “About a year ago.”
“Sorry, I don’t remember it. Please, have a seat. “We have a high publicity case,” Graham stated when Marc was seated. “I’m already getting requests for cameras in the courtroom. What are your opinions?”
“No,” Gondeck quickly said.
“Marc?” the judge asked.
“I hadn’t given it any thought,” Marc said. “Normally, I’m not a big fan. Too much risk of lawyers, jurors, witnesses and pardon me, your Honor, even judges playing to the camera.”
“Have you seen his client?” Jennifer said. “She’s enough of a distraction without putting her on TV.”
“Oh? How so?” Graham asked Marc.
“She’s an attractive woman, your Honor,” Marc looked at Jennifer and said, “I promise I won’t let her wear a swimsuit.”
“Damn, I was hoping,” Gondeck muttered.
Graham looked at Gondeck, smiled, shook his head and said, “I take it you’ve met her. I’ll put off the question of cameras for now. But I’m not inclined to allow them.” He looked at Marc and continued. “I agree, they tend to create a little too much acting and drama.
“This morning,” Graham said continuing, “bail was previously set by Judge Jennrich at a prior appearance, before the indictment. You’re opposing bail entirely, Mr. Gondeck?”
“That is correct, your Honor.”
“And you want to continue what has already been paid?” he asked Marc.
“Yes, your Honor.”
“Okay. We’ll put the arguments on the record and I’ll rule. I’ll be out in a couple minutes.”
The first appearance or, in Minnesota, the Rule 5 hearing, is basically to tell the defendant the charges, read her the Miranda rights, enter a plea and set bail.
Marc waived reading the indictment. Maddy agreed, on the record, that she had received a copy through her lawyer, understood the charges and entered a plea of not guilty. There is also a Rule 8 hearing that is little more than a second appearance for mostly the same reason as the Rule 5. These are normally, by agreement, combined with the first appearance to save time. This was also read into the record.
Marc requested an omnibus hearing to force the prosecution to satisfy Judge Graham that there is probable cause to proceed to trial. It forces the prosecution to present most of its evidence through witnesses. This gives the defense an opportunity to get a good look at their case before the trial. This h
earing must, by rule, take place within twenty-eight days of the combined Rule 5 and Rule 8 hearing. Marc also informed the court his client would not waive her right to a speedy trial. A trial date would be set at the omnibus hearing.
“Bail application, Mr. Gondeck,” Graham stated toward the end.
Marc again swiveled his head around to look over the media. For some reason, they had all crowded into seats behind the prosecution table. That is, all except for one older gent who worked for the paper across the river, the St. Paul Pioneer Press. He had the front row behind Marc, Maddy and Tony all to himself.
Gondeck stood up and said, “The state requests that the current bail be revoked and the defendant remanded to custody. This is a horrible, heinous crime, your Honor. She is originally from Chicago, has minimal ties to the jurisdiction and is a threat to others and a flight risk.”
After Gondeck sat down, Graham turned to Marc and said, “Mr. Kadella?”
Marc stood and said, “Ms. Rivers moved here permanently several years ago. She has been an upstanding, law-abiding citizen whose every intention is to use the trial to clear her name. There is no indication she will flee and no evidence she is a risk to anyone. As to the crime itself, it is no worse now than it was when Judge Jennrich set the original bail. The only difference is the state convinced a grand jury to grossly overcharge it. Bail should be continued.”
Gondeck stood again and said, “Your Honor. She is responsible for the deaths of two men…”
“Objection!” Marc yelled as he jumped out of his chair. “Mr. Gondeck knows perfectly well one of those men was trying to rape and murder her in her own home. The other was about to murder her best friend. Both were ruled justifiable homicides.”
“Is that true, Mr. Gondeck?”
“Well, ah, yes, your Honor,” Gondeck meekly replied.
Marc Kadella Legal Mysteries Vol 1-6 (Marc Kadella Series) Page 240