Bull Street (A White Collar Crime Thriller)

by David Lender

  Richard got out of bed and crossed the hotel room to retrieve his laptop from the desk. After five minutes of sorting he said, “Holy shit,” aloud.

  “You are so damn compulsive,” Kathy said.

  “Sorry, I didn’t mean to wake you.”

  “What is it?”

  “The mole. See these code names?” He turned the screen toward her.

  “Chloe, Renée, Elaine and Cynthia. LeClaire’s wife and kids.”

  “The mole’s LeClaire.”

  “How do you know?”

  “The code names. LeClaire told me that for the last year or so the new convention at Walker was to give code names based on family members of the client. The mole code named those four deals for his wife and kids. And MCS is Mary Claire Stepshus, Milner’s wife’s maiden name. Project Mary Claire is Tentron. All the mole’s trading in MCS is Tentron. The mole is LeClaire.” Richard was thinking of work, the late nights; LeClaire obviously sneaking off to send his mole emails. Richard’s mind had gotten around it, but he was still stunned, trying to absorb it.

  Richard watched the financial news channels at the Waldorf, unable to take his eyes off the unfolding train wreck in the markets, when the story that crossed shortly before noon about stood him on his head. Oh, no. The Enforcement Division of the SEC and the U.S. Attorney’s Office announced they were pursuing a major insider trading case with the cooperation of a central member of an insider trading ring they were calling “Source X.” Source X was cooperating as a result of a plea bargain and limited immunity agreement with the SEC and the U.S. Attorney’s Office. At least one prominent U.S. corporate business figure was implicated and perhaps others were involved. Further announcements would come soon. He saw himself back at 75 Centre Street, then with cuffs on.

  “I’ve been looking for you at the Carlyle,” Toto said when Richard called her after seeing the announcement. “Get your butt over here. Bring Kathy. Jack and Mickey are on the way.”

  “Right away,” Richard said, not liking the sound of any of this. This had to be the mole. And Milner.

  Richard hung up the phone and turned to Kathy. “That was Toto. She wants us at her office.”

  “I love you,” she said and kissed him.

  No spunky remark. She was worried. Richard was trying to get his mind out of slow-motion. He grabbed his Otis baseball cap, seeing himself do it and asking himself why at the same time, then his briefcase. A glance over his shoulder at Kathy’s face told him how he must have looked: tears were welled in her eyes. He walked to her and hugged her. “Let’s go,” he said.

  When they entered Toto’s office she motioned for them to close the door, and put her phone call on the speakerphone.

  “Source X is an employee of Walker & Company. We’ve granted him limited immunity in exchange for a plea bargain in which we’ve made very few commitments to him…”

  Toto was scrawling names on a piece of paper. Franklin Stone, Head of SEC Litigation, Roman Croonquist, Head of SEC Enforcement, Charles Holden, Assistant U.S. Attorney. Richard’s muscles twitched at seeing Croonquist’s and Holden’s names. He kept shooting glances from Jack to Steinberg to Toto, not seeing much reaction from any of them.

  “Gentlemen, let me interrupt you for a moment. I have put you on the speakerphone with Messrs. Jack Grass and Mickey Steinberg, my clients at Walker & Company. I’m prepared to continue this conversation with them on the line.”

  “Up to you,” Croonquist said. “Our limited immunity for Source X doesn’t extend to other individuals at Walker & Company. To be perfectly clear, any other members of this ring are subject to prosecution independent of whatever arrangements we have made with Source X. Understand?”

  “Understood, but not agreed to,” Toto said.

  “We aren’t asking for your agreement.”

  That got Richard’s attention. He glanced at Jack and Steinberg again. Still calm. Richard wasn’t.

  “What about Walker & Company itself? You were starting to say something as my clients entered.”

  “Well,” Croonquist said. “In our agreement with Source X we have come to some unusual arrangements for Walker & Company.”

  “Go on,” Toto said.

  “One of the stipulations Source X required in order to cooperate was immunity from prosecution for Walker & Company itself.” Toto looked at Jack and Steinberg, who both smiled and shrugged. She pushed the mute button on the speakerphone. Jack and Steinberg looked at each other.

  “We have no idea what’s going on,” Jack said.

  Toto didn’t look convinced. Richard wasn’t. He continued to look back and forth between Jack and Steinberg. Nothing. He might as well have been looking at concrete. Toto released the mute button. “Go on,” she said.

  “Harold Milner is at the center of this investigation and has been implicated by Source X for violations of the securities laws, including conspiracy to engage in unauthorized trading on material nonpublic information. Any other Walker employees, including Messrs. Grass and Steinberg, will be treated on a case-by-case basis based upon their involvement and on their cooperation. Any information which corroborates Source X’s information and which supports our case—which is already strong—against Mr. Milner will be treated as helpful to the government and likely to lead to favorable treatment.”

  Toto said, “In short, you don’t think your case is airtight, so you’re offering anybody at Walker a deal if they’ll help bring down Milner.”

  “Interpret it any way you want. We’re here to discuss the possible interest of any of your clients in cooperating. I don’t think we have anything more to offer in this conversation at this point. Charlie Holden at the U.S. Attorney’s Office is on board with this approach. You can contact either one of us.”

  “Thank you, gentlemen. We have no more questions for the moment,” Toto said, looking up at Jack and Steinberg, who nodded, “we’ll be back in touch if we have anything for you.”

  “If that’s your response, we think it’s only fair to tell you that we’re currently processing warrants for the arrest of certain individuals in this case.” Richard recognized the voice as Charles Holden’s. It made him twitch. “You may not wanna wait too long to make up your minds about your course of action.” Why did these guys talk like that? “Certain individuals.” “Course of action.” No wonder the papers Holden slapped in front of him at Centre Street were so thick.

  “Thank you, we’ll be in touch,” Toto said, and hung up.

  “Will someone please tell me what on earth is going on?” she said, looking back and forth at Jack and Steinberg.

  Steinberg said nothing, but looked at her, blinking slowly. Richard exhaled, now feeling more grounded. This wasn’t the kind of thing he wanted to get used to, but he sensed he was adjusting. He looked over at Kathy, who seemed paralyzed.

  “We’re telling you everything we know as soon as we learn it,” Jack said. “And we—at least I—can’t figure it out. Why would their Source X insist on full immunity for the firm? Not that I’m complaining or anything.”

  “Unless he’s someone who has an interest in the firm being unencumbered by any liability as a result of this scandal,” Steinberg said.

  No one spoke for a few moments. Richard wondered if Jack and Steinberg were playing dumb about Source X.

  “Richard, Kathy, does any of this make sense to either of you?” Toto asked.

  Richard was juggling pieces in his mind, trying to line them up. The mole had to be LeClaire, so wasn’t the mole Source X? Or could Source X be somebody else involved who got caught or turned himself in? Was it possible Jack and Steinberg weren’t involved after all? The scheme started when the foreign partners invested in Walker four years ago; maybe LeClaire was their boy on the inside and Jack and Steinberg were clean.

  “Richard?” Jack said.

  Richard decided he’d get at least part of it out in the open and see how Jack and Steinberg reacted. He’d taken a calculated gamble with Milner the other day. This would be another
one. Richard said, “We did some analysis of the trades you all have copies of. Four of the institutions doing trading are each owned in part by Schoenfeld & Co. And those four institutions had their trades funneled to them from a staging point in London called Golding & Co., rather than from GCG Paris. We also believe that GCG Paris’ messenger in the network doesn’t know the other Schoenfeld-owned banks exist.”

  “What are you getting at?” Toto said.

  “I don’t know what we’re getting at; these are just the facts for now.” Kathy was looking at Richard like he was nuts.

  “Go on,” Toto said.

  “We were able to figure out that the foreign partners— Schoenfeld and GCG—made additional investments in Walker stock shortly after completion of three of Milner’s deals that the SEC says were part of this investigation. Tungsten Steel Service Centers, Ernest-United and Val-Tech Industries. And the amounts they invested correspond with the amount of profit we estimated on the network’s insider trading.”

  “When were you thinking about telling us this?” Toto said. Her nostrils were actually flaring. She was looking at Richard now like she might smack him. Jack’s and Steinberg’s faces didn’t show any emotion.

  “We couldn’t quite believe it ourselves,” Kathy said.

  “They were just keeping their equity percentage at the same level after management took bonuses in shares instead of cash,” Steinberg said. “We were allowed to do that under the agreements with Schoenfeld and GCG when we put the amalgamation together.” Richard looked at Kathy, who rolled her eyes. She wasn’t buying it. Toto looked Steinberg in the eye for a moment, and then sat down in her chair behind her desk.

  “Have a seat, everyone, please,” she said. She leaned forward, put her forearms on her desk while they all sat down, looking like she was ready to leap across at one of them. Richard wasn’t sure she trusted any of them at that moment. He didn’t blame her. Then Toto sat back in her chair, sighed.

  “Is there any reason to believe any of you is likely to get hauled away in handcuffs by the U.S. Attorney’s Office in the next twelve hours? I’d like to know so I can plan my evening,” Toto said. Richard saw Kathy wince and arch her back. He wanted to go over to calm her down, then realized he wasn’t exactly cool himself.

  Jack muttered, “The perfect ending to a perfect day.”

  “Alright, let’s regroup,” Toto said. “We should try to stay one step ahead of this thing. There’s no sense in seeing it unfold before us in the newspapers.”

  “No shit,” Jack said.

  “You all better get out of here,” Toto said. “Charlie Holden is likely to shoot first and ask questions later. I’m nervous that he’s processing warrants. I’ll call him.”

  “What are you up to?” Steinberg said.

  “In the first place, I’d like to see what else I can get out of him. In the second place, if somebody’s going to give Walker & Company immunity, I’d like to know what he has in mind, and negotiate the whole thing out. I am, after all, Walker’s attorney, aren’t I?”

  “Absolutely,” Jack said.

  Richard thought about the forms he’d signed at Walker upon entering M&A, and his initial conversation with Toto. She was still Walker’s attorney, still Richard’s attorney, as long as no conflict existed.

  After leaving Toto’s office, in the limo back downtown, Jack decided. These kids could screw up the whole deal. They were supposed to be given up to the Feds with the Source X deal. LeClaire, a bunch of junior stooges, and, of course, Milner, neatly packaged. So the whole thing would be firewalled; it would hurt, but wouldn’t kill Walker. But now these kids: they knew more than the Feds. And once the Feds squeezed them, they’d tell everything they’d figured out. They’d unravel the whole Source X deal and bring it all down around them.

  “These kids know too much,” he said to Mickey.

  Mickey nodded. “More than the Feds,” he said.

  “At this point they’re our only loose end.”

  “Milner’s still out there someplace, as far as we know.”

  “Yeah, but I don’t care if Milner gets caught or gets out. He can’t prove anything past what the Feds already have. But the kids can. They have to go.”

  Mickey just looked out the window, nodding, blinking.

  Jack would drive to Canarsie this evening, talk to Preston. Jack hated this shit; he liked Blum, but sometimes you had to do lousy stuff to cover your ass. It wasn’t any different than back in Canarsie when they set up Splits Duncan for the fire Jack and Bucky Pierson set in the Timex warehouse on Avenue L.

  Richard and Kathy sat in the corner of the Bull and Bear bar at the Waldorf, Richard looking over Kathy’s shoulder at a guy who glanced over at him before sitting down. Anything? He didn’t think so. Richard had seen the corner booth and walked straight for it. He slid into the high-backed seat and crawled in all the way to the wall. He wasn’t taking any chances. Well, they were; Kathy and he could just as easily be having a drink from the minibar in the room, but when Richard said he felt like getting away for a half hour, Kathy agreed. They hunched together over the table, sheltered in the corner among dark mahogany paneling in dim lighting. He smelled beer nuts, spilled wine and the sweaty tourists who kept comparing New York to St. Louis at the booth next to them.

  Kathy said, “I never imagined things could get turned so crosswise.”

  “This is pretty high on the weird scale.” He checked out the guy again who’d glanced at him.

  “I guess the good news is that the mole turned himself in and we’re eventually going to get off the hook.” Richard didn’t respond. He was turning the last few days over in his mind. Kathy went on, “Whoever’s at the top of this thing, it looks like they’ve packaged it for the Feds in such a way that it’s going to get resolved without us getting screwed. Once Toto gets the immunity negotiated and all the arrests get announced, we can go back to—whatever.”

  Richard looked over at Kathy, couldn’t believe what he’d just heard. “You’re dreaming,” he said.

  “What do you mean?”

  “This isn’t over yet. I feel like we’re in a labyrinth. Stuck wandering around. And when we get to the exit, somebody’s gonna be standing there with a baseball bat.”

  “You mean other than the Feds?”

  “Think about it. Ever consider they might not want us to get out?”

  “Who? Jack and Mickey? You said yourself you think it’s possible they’re clean.”

  “I was kidding myself. Think about it. We said it before: it looks like it goes all the way up to the foreign partners. You said yourself, crooks at Walker, GCG, Schoenfeld. What if they’re all in on it—Sir Reginald, Delecroix, Jack, Steinberg? And we already know LeClaire’s the mole.”

  “What good does it do them to screw us?”

  “Negotiating chips. We’re expendable anyhow. You know how Wall Street works better than I do.”

  “But the Feds already have the mole—LeClaire.”

  “And he’s protecting the firm. Why?”

  Kathy thought for a moment. “Walker’s paying him off.”

  It was exactly where Richard came out. It fit with Source X holding out for immunity for Walker. “Yeah. He cops a plea, goes to jail, and he collects his $200 when he gets out.”

  “It’s too farfetched. God, he’s got Elaine and the kids to think about. Way too extreme medicine for LeClaire just for some money.”

  “Probably a lot of money. And if he’s guilty then he’s hosed already anyhow. Might as well get something out of it.”

  “And we’re an extra bone to throw the Feds.” Kathy was finally getting it.

  “Yeah. His word against ours. Plus the wiretaps, plus the emails. Add my desktop computer with all the mole’s emails on it. And if they could get a hold of it, my laptop.”

  “A couple of bodies.”

  “A few in New York added to those in Paris and London they’ll throw in. Makes a nice neat package.”

  Kathy thought for a moment. �
�But in these things you always follow the money. They can trace the money to all of those institutions, the trading accounts.”

  “How much you wanna bet they’ll never find it? It’s buried in numbered accounts in Switzerland, the Caymans. They’ll never find out who owns them. Or if they could, it would take years. So the Feds get some quick convictions, look like heroes and everybody else goes back to business as usual.” Kathy’s eyes were unfocused, glazing over. Richard went on, “Or worse, they could see us as a threat and try to get rid of us completely.”

  “How?”

  “Permanently. Kill us. Look what happened to Milner’s CFO and Walker’s General Counsel.”

  Kathy’s face went blank. She stared at the wall above Richard’s head for a few moments. When she finally spoke her voice was jagged. “You’re just speculating.”

  Richard nodded. “Speculating, yeah. The situation is highly ambiguous, I agree, but we need to act or we’re gonna get swept away.” Richard saw Kathy smirk. Then it grew into a smile. What had she figured out? “What?” Richard said.

  “I’m just remembering what Jack said in the Fortune article on Milner.”

  It dawned on Richard, too. He smiled. “Something like: ‘This business takes a high tolerance for ambiguity. Markets are uncertain. People are untrustworthy. Your ally today could be your adversary tomorrow. You need to make judgments based on imperfect information, and act.’”

  “So we can’t go to the Feds. And if you’re right, not Jack or Mickey,” Kathy said.

  “That leaves Milner. He’s the only angle I see.”

  “That’s nuts if he’s really at the center of this thing.”

  “Even better. Go directly to the source. And he’s the one who stands to lose the most. I say we go to him.” Richard was speaking, but no longer to Kathy. He was thinking aloud, then to himself, deciding how to go about it.