“Has she been active in her role as comanager?” Toni asked.
“Never,” Ogden said, shaking his head. He reached for a slice of bread from the basket the waiter placed on the table. “As I said, I’ve only met her a few times. Thomas did all the work.”
“How about any sort of buyout provisions?” I asked. “Partnership documents or LLC documents contain some pretty creative buyout language sometimes, right?”
“Funny you should ask,” he said. “I was just asked to review that language this morning.”
“Really?” I asked.
“Yes,” he said. “Holly Kenworth asked me about the buyout this morning. I told her I’d review it and get back to her.”
“Wonder why she’d ask about that? Especially now?” I asked.
“I think she’s worried about keeping her job if Katherine takes over management,” Ogden said. “She mentioned that she wanted to make certain that her talents were being used in something she had an equity interest in.”
“Were you able to look at the language?” I asked.
“Yes. I know it well. Essentially, it’s what we call a Gunslinger’s Put. At any time, any owner can make an offer for any other owner’s interest. The offeree—that’s the one to whom the offer is made—then has the option to either accept the offer, or to ‘put’ the offer back to the original offeror at the same price and terms, on a prorata basis.”
“How’s that work?” I asked.
“Imagine we have a company in which we each own fifty shares. To me, my shares are worth ten dollars each—or five hundred bucks for all fifty. If at some point I get so tired of working with you that I feel like I have to end the relationship, then the Gunslinger’s Put says I can make an offer to buy your shares for any number—say five hundred dollars. You can then either accept my offer, in which case I’ll pay you and own all the shares, or you can flip it around on me and buy my shares for the same five hundred dollar price. In that case, I’ll be out, and you’ll own all the shares. Either way, the relationship ends and the company continues. I either buy your shares or you buy mine at the same share price—your option since I made the first offer.”
“And both parties are kept honest in the valuation,” I said.
“More or less. If I make you a lowball offer for your shares, you’ll almost certainly turn it around on me and cause me to have to sell to you at the same lowball price. In fact, if I really want to end the relationship and keep the company, I might be wise to build in a premium to induce you to sell.”
“I see,” I said. “Pretty slick.”
“I think so,” he said. “It tends to favor those with cash or access to cash, which is why Thomas wanted to put it in. He figured that if he was going to grant minority ownership slices to individuals, then he wanted the ability to be able to cash them back out if necessary.”
“And the only people who can play this game are Katherine, with 90 percent ownership, and Holly, with 10 percent?” Toni asked.
“That’s right. They’re the only owners. And since the actual percentages of ownership aren’t equal, a prorata filter would be applied that adjusted the number for size of interest being bought or sold, kind of like a 'per-share' price.”
“And if a person received an offer for their interest—adjusted for size of the interest—and they didn’t want to sell?” Toni asked.
“Then their only recourse would be to ‘put’ the offer back to the original offeror and buy out the offeror on the same pricing and terms.”
“Wow,” she said. “They’d have to have the money—or at least have access to it—otherwise, they get bought out. I’m going to have to think about that. That introduces a number of possible scenarios, doesn’t it?”
“Perhaps,” Ogden said. “Mostly, it’s designed to keep an owner from feeling trapped inside a company. It provides a reasonably elegant way to end a relationship without blowing up the company.”
Our lunch was served, and we took a break while we ate. Mostly, Toni and Ogden talked to each other, only bringing me in when it became uncomfortable. Then, once the equilibrium was reset, they’d go back to each other. It wasn’t the most comfortable lunch I’ve ever sat through. I looked out the window a lot. I could see our office across the water. I wished I were there.
* * * *
After we finished, I said, “Do you have time to answer a few more questions? We can order coffee.”
“Great,” he said. “I’ve got all day.” I was right—you did clear out your whole day. I’ll bet you’re going to make a play for Toni before we’re done.
“I’d like to understand a little more about the value of the company.”
“I’ll do what I can,” he said. “I’m no valuation expert, by any means.”
“That’s okay,” I said. “Do you know about the products the company is working on?”
“Yes,” he said. “I had reason to learn about these recently when we went through a process with the Department of Commerce. I presume you were told about the offer that ACS received for the Starfire Protocol?”
I nodded. “Yes. Katherine told us.”
“There’s a company called Madoc Secured Technologies—MST for short. They made an offer of ten million dollars for Starfire. Thomas was suspicious of this offer for a couple of reasons, but he decided to go through the Department of Commerce’s Bureau of Industry and Security—the BIS—prior to starting negotiations, or even further discussions, for that matter. The BIS is responsible for regulating the sale or transfer of all sensitive technologies to foreign interests. They’d have had to approve the sale in any case.”
“And I take it that MST is a foreign company?” Toni asked.
“Technically, MST is a domestic company—a Washington LLC, in fact. But if you start peeling back layers, you eventually find that it’s really owned by a guy named Nicholas Madoc. Madoc is supposedly originally from the UK—either English or Scottish, I don’t know which. But the word is that he lives in Italy now. When we received what was an unsolicited letter of intent from MST, we knew we needed to verify MST through the BIS. I’d already started the process of obtaining what’s referred to as a commodity classification from the BIS for Starfire—it’s the first step in any potential export. We knew that the BIS would have something to say if we found a buyer who was foreign, so we decided to start the registration process early. You have to register the product and then, depending on the commodity classification the product is assigned, its subsequent sale is restricted to approved, legitimate foreign buyers. I say ‘legitimate’ because there are a number of foreign buyers on the ‘denied persons list’ to whom you can’t sell, and also an even larger number on the ‘unverified’ list. You can’t sell certain items to those people, either.”
He paused and sipped his coffee before continuing. “When the BIS found out that Starfire was a cryptology application, they got very prickly about allowing the company to export it to foreign countries. I think they gave us one of the most restrictive commodity classifications possible—right up there with centrifuges and other nuclear reactor components. We got this just before Christmas last year. Like I said, after we got their letter of intent, we submitted MST as a potential buyer for preliminary approval. The investigations staff at BIS must be very efficient because almost immediately they fired back that Nicholas Madoc was on their unverified list and that it could potentially take as long as a year to get him approved. They also included a friendly little warning reminding us that if we went ahead and sold Starfire to MST without official approval, we could be liable for some very hefty fines and some significant prison time. That made it an easy call. Thomas and I talked it over, and he decided that he didn’t want to sell to MST for two reasons—first, he didn’t want to wait months in the hope that Madoc could get approved; and second, he really didn’t want to sell to a foreign interest anyway. He wanted to sell the technology to a domestic interest—a major defense contractor or perhaps a major high-tech firm.
�
��He had me type up a rejection letter to MST along with a copy of the order from BIS stating that we were prohibited from selling to them. I sent it off to MST in mid-January, and we never heard another word from them. One month later, Thomas was dead.” A very serious expression formed on his face. “Do you think this could be related?” he asked.
I shrugged. “We don’t know. It’s still too early to tell,” I said.“We just started on the case yesterday.”I didn’t know where Ogden’s loyalties were or whom he was talking to, but I wasn’t inclined to open up and let him know everything we were thinking.“As of now, all the physical evidence points pretty conclusively toward the scenario in which Thomas took his own life.”
He thought about this for a few seconds. “Boy,” he said, “I think that’s bizarre. I worked pretty closely with the guy for over four years, and I never once got the idea that there was any sort of mental instability at all. He seemed like a guy who knew where he was, knew where he wanted to go, and knew how to get there. Sure seems like he was on the way to reaching his goals.”
“Along those lines,” I said, “you’re saying he never gave you any indication that he was depressed or disillusioned, no signs that he might be on the verge of breaking down?”
“Not even a hint of that,” Ogden said. “Thomas Rasmussen was one of the most solid guys I ever had the pleasure of working with. I looked at him with a certain degree of envy. On top of his profession, successful business, beautiful wife—” he glanced at Toni here. She was taking notes and didn’t look up, but I could tell she noticed because she smiled when he said it. “—wonderful kids. I tell you—if someone like Thomas Rasmussen can commit suicide, any of us can.”
Pretty powerful statement. And one more mark on the “homicide” side of the ledger.
* * * *
“So what do you think?” Toni asked as we drove away in my Jeep fifteen minutes later. Before we left our table, Ogden had phoned Holly Kenworth at Applied Cryptographic Solutions. She agreed to meet with us at two o’clock. The ACS office was in Redmond—we’d have to hustle to make it on time. We’d said our good-byes on the sidewalk in front of the restaurant.
“I think he’s a nice guy.”
“Not about him,” she said. “About what he had to say about the case.”
“Oh. Well, it sounds like ACS couldn’t have sold to Madoc even if Thomas would have wanted to—which he apparently didn’t.”
“Come on, Danny,” she said. “It means more than that. It means we might have a name for the so-called ‘big bad guys’ we’ve been talking about.” She was pretty clearly getting caught up in the case. I, on the other hand, was hung up on the full-body hug and warm smile she’d given to Ogden as we left. A good firm handshake was all he got out of me.
“True, I suppose,” I said. “Although it’s pretty hard to imagine someone bold enough to just up and kill a businessman if he doesn’t get his way.”
“Are you kidding?” she asked. “People kill people around here for a pair of basketball shoes. Do you seriously think that a technology like Starfire wouldn’t motivate a criminal enterprise or even an unfriendly foreign power to kill to get it?”
I thought for a second as I drove. “I understand all that,” I said. “You’re right, I guess. Your thesis would be that the rogue outfit MST makes a legitimate offer to buy Starfire from ACS. ACS checks with BIS, and BIS says no. Rebuffed, MST gets pissed and decides to get even. So they murder the head of ACS. My question is why? Why would they do that? What would they hope to accomplish?”
“They want Starfire,” Toni said.
“Okay,” I said. “We know that. We know what they hope to accomplish. The question becomes, how would they hope to pull it off? And how would killing Thomas get them there?”
She thought about that for a few seconds, and then turned to me. “That’s why they pay us the big bucks,” she said cheerily.
I looked at her. She was happy about seeing John Ogden. Great. I suppose that a better man than me would have been happy for her. I’d have to try harder.
Chapter 6
I CALLED KENNY as soon as we left the restaurant and asked him to meet us in the parking lot at the ACS office at five minutes till two.
“Don’t go inside without us,” I said. “Wait for us outside by your car.” If our interview with Holly Kenworth led us into an area of questions that became too technical for me (and that wouldn’t take much, believe me), I needed to have Kenny there so that I could hand the interview off to him. He’s the only one of us who’s even close to being in Holly’s league when it comes to tech proficiency. But in bringing Kenny, I was taking a chance.
There’s a bit of artistry involved in conducting an interview with a potential suspect. On the one hand, you need to ask questions about things you don’t know in order to gain knowledge. On the other hand, you have to be careful not to divulge to the interview subject how much you already do know. If your subject figures out where you’re coming from and if they have anything to hide—and if they’re halfway smart—then they’ll try to modify and shape their answers to fit in with what they think you already know. It’s always better to keep your cards close to your chest. If you can question people without giving up what you know, you’re more likely to get honest answers—or at least more likely to catch them in an inconsistency.
Toni, for example, is a master at interviewing—I learn from her every time I watch her question somebody. She has the ability to put people at ease and ask them seemingly unimportant questions in a conversational, low-key manner that gives nothing away. It’s as if she’s just having a conversation while waiting for the interview to start. Sometimes, people are surprised when she thanks them and wraps things up. They’ll say to her, “What about the interview? Don’t you want to interview me?”—not knowing that she’d been doing just that the whole time. Like I said, she’s smooth.
Kenny, on the other hand, was an unknown. In the office, he has a tendency to be something of a loose cannon—we’re never quite sure what he’s going to say. His comments have, on occasion, tended to show—how should I put it—a little immaturity?As a result, Toni and I usually cringe at the thought of turning Kenny loose on the public. We’ve been afraid to bring him to important meetings. Now, I needed him, and whether he could come through for us, I was about to find out, one way or the other. Would he be his same goofy self in “public”—in a real-life interview? Would he blurt out something we’d prefer our subject didn’t know? Or would he be in control enough to shift gears and step up his game? Truth be told, I didn’t know. Best I could do was give him a little briefing before we met with Holly.
We crossed the 520 floating bridge and headed east for Redmond. During rush hour, the sixteen-mile trip to Redmond could take upwards of two hours. At one thirty in the afternoon, though, traffic was light, and I figured it would only take twenty-five minutes or so to reach the ACS office. Soon, we passed Marymoor Park on our right. I exited at Redmond Way and turned left. Moments later, I pulled into the office park in which the ACS office was located. It was 1:55.
One minute later, Kenny drove up. I walked him through the game plan and asked him to be careful not to give anything up. He said he understood. Hopefully, he’d remember all the way through the meeting.
* * * *
We walked into the ACS office as a group. I told the receptionist who we were and that we had an appointment with Holly Kenworth. She directed us to three white resin patio chairs and asked us to wait while she disappeared through a doorway. A tall plastic plant sat by itself in a corner.
“They don’t waste much money on foo-foo things like chairs and furniture, do they,” I said quietly to Toni.
“You got that right,” she whispered. “It’s like ‘shabby chic’ without the chic.”
There were a half-dozen framed black-and-white portraits on the walls. “You recognize any of those guys?” I asked.
“That one over there is Isaac Newton,” Kenny said, pointing toward a man with
long, curly hair.
“And that one’s Einstein, obviously,” he said.
“Who’s that one?” Toni asked, pointing to the next photo.
He stared at it for a few moments. “I have no idea,” he said.
“That’s Claude Shannon,” said a voice from behind us.
We turned and saw a pretty young woman standing in the doorway.
“I’m Holly Kenworth,” she said. She walked over to us. She had striking red hair and light blue eyes. She was dressed in blue jeans and a Stanford University sweatshirt. She was younger than I expected—Katherine said she was in her early thirties, but she looked to be in her mid-twenties to me.
“Hello, Holly,” I said, standing and stepping forward to shake her hand. “I’m Danny Logan. I think John Ogden called about us.”
“He did,” she said.
I introduced Toni and Kenny.
“Kenny Hale,” Holly said slowly, mulling the name over. “I’ve heard that name. Where’ve I heard it before?”
“I’m not sure,” Kenny said. “I do some consulting work for some of the companies around here, mostly security related things—firewalls, access control, that sort of stuff.”
“That’s probably it,” she said, smiling. “A little bit related to what we do.”
She turned back to me. “Thomas respected the work of the pioneers in our field, so he had portraits put up here in the lobby and throughout the office. They’re our single attempt to decorate.” She pointed at a photo. “Claude Shannon here was the first to develop the forerunner of the modern mathematical cryptograph.” She pointed to some of the other pictures. “This is Whitfield Diffie, and this is Martin Hellman. They pioneered modern public key technology in the ’70s—the same basic methods we use today.”
She studied the photos for a few moments.
“You know, without doubt, Thomas would have joined these pioneers within the next few years,” she said. She paused and stared at the photographs, her face expressionless. A few moments later, she turned back to me and smiled. “Anyway, would you like to come back to our conference room? John told me you’re working for Mrs. Rasmussen. I imagine you must have many questions.”
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