by Bryan Devore
Don Seaton seemed to be waiting until the tide of conversation in the ballroom rose higher, before he calmly leaned forward and spoke into the microphone, just seven minutes after the meeting was scheduled to begin. “Ladies and gentlemen, fellow shareholders, please take your seats so that we may begin today’s meeting.”
Seaton took a few seconds to shuffle one last time through the notes Michael had prepared for him. Then he took a deep breath, his smile faded, and all signs of confidence left his face. “Fellow shareholders,” he said, “I have a lot to discuss with you today. Our meeting this morning will be instrumental in forging a new corporation, a new X-Tronic. It is my hope that this new corporation will be faithful to the core values and beliefs on which I founded this company more than thirty years ago—values and beliefs that have not been much in evidence at X-Tronic in recent years. Values and beliefs that have, unfortunately, been lost under the company’s current management.”
A quiet murmur ran through the room as the shareholders tried to decipher Seaton’s words. His concerns were something no one in the room seemed to expect.
“Ladies and gentlemen,” he continued, “I regret to inform you that there will be no vote on a merger between X-Tronic and Cygnus.” The murmur exploded into an outraged roar. In the blink of an eye, everything had changed.
Michael watched as Seaton raised a hand in a vain effort to calm the uproar. “I know that most of you have reviewed the ten-K filing. You’ve seen strong performance by X-Tronic during the past year. I also know that many of you have just discovered that all trading of the company’s shares have been temporarily suspended by the SEC and the New York Stock Exchange only a few minutes ago. In a moment, I will explain why this has happened. I know that many of you have traveled far to be here today. Let me assure you that today is going to be no ordinary shareholders’ meeting.” His eyes scanned the room until they found the table of securities analysts at one side of the room. “Today we will make history.”
Michael watched as Don turned to make eye contact with him. Once the billionaire had given him the slow nod, Michael raised his left hand to his mouth and spoke quietly into the small send-receiver embedded in a black wristband. “This is Chapman. We’re ready. Send ’em in.”
Within seconds, the rear doors burst open as a small team of federal agents, accompanied by two uniformed police officers, quickly made their way down the center aisle. A loud grumbling spread through the room, then turned to shocked silence, as the shareholders watched events unfold. The agents reached Jerry Diamond. He sat bolt upright, his big shaved head staring forward, looking like a jacklit deer, then began laughing hysterically at the agents as they read him his rights. It wasn’t until he lunged toward Seaton in a burst of rage that the officers subdued him and hauled him from the room. Falcon ignored this activity completely, staring forward as if in a trance.
The room had fallen utterly silent as the agents escorted Diamond out. Falcon remained, still untouchable. As Michael watched him, looking for any trace of a reaction, he found himself almost admiring the man’s iron self-control.
Once the agents left the room, the spell broke, and the shareholders erupted into chaotic chatter. Seaton tapped on the microphone until the noise again subsided.
“Fellow shareholders, you have just witnessed the arrest of one of the men currently being charged with securities fraud in a wide-ranging conspiracy to manipulate X-Tronic’s financial results.” The room exploded with shouts of dismay. Seaton continued to speak, raising his voice, determined to say his piece. “The conspirators enriched themselves through a scheme involving bonuses, the granting of stock options, and career positioning at the potential merger with Cygnus. They engaged in activities that knowingly and fraudulently misrepresented X-Tronic’s financial condition and performance.”
The securities analysts were on their cell phones, frantically relaying the information to their investment firms in New York. The news would reach Wall Street immediately, eventually gliding across bottom tickers on the news channels, followed by immediate article postings on the ever-fluid online issues of the Western world’s financial news sources, and eventually in a wave of abrupt announcements on news channels across the country.
Someone yelled out an unrecognizable question that was lost in the commotion. Seaton seemed to struggle as he tried to regain control of the meeting. A dozen shareholders had already left the room, fumbling with the small buttons on their cell phones. A small scuffle broke out in the far corner of the room.
Noticing Seaton looking over at him, Michael realized that the old man needed help, so he pushed through the curtain and marched directly onto the stage. He grabbed the microphone and faced the room. “Everyone, listen—please!” he said in a tone that commanded attention. “My name is Michael Chapman, and I am a federal agent with the U.S. Department of the Treasury. I am the principal investigator into the alleged conspirators’ fraud. Unless you want to lose every nickel you have invested in X-Tronic shares, I suggest you listen to the plan that Mr. Seaton and I have outlined to keep the corporation from filing bankruptcy.” The room fell silent—he had their attention. As he waited to continue, his gaze fell downward and he made direct eye contact with John Falcon for the first time in over a week. The man glared stonily back at him.
As the room quieted, he stood aside and let Seaton take over. Recalling his impassioned conversations with Glazier, he could understand how his case officer might lose hope, might forget those moments of illumination, back in college, when economic and financial theories resonated with supreme clarity in his mind. But Michael could still remember. And as he watched the crowd wait in horrified anticipation of Seaton’s final words, he found himself remembering the things his father had taught him from an early age about business and finance. He thought about how proud his father would be of him if he could see this. Watching Seaton try to calm the people, he thought now of his grandfather and the burden of pain he had carried for the last forty years of his life. He wondered what his grandfather would think if he could see him standing on this stage before panicked shareholders, trying to help a company through a crisis. And he felt, in a strange mix of emotions, that he was finally living up to the covenant that his family had failed to keep to their community in Elk County two generations ago.
Seaton had concluded the presentation. The shareholders were leaving the room, each struggling with the weight of the decisions to be made. There was nothing more to be said; it was now just a matter of waiting for the opening bell on the floor of the New York Stock Exchange tomorrow morning, and the few short hours when the fate of X-Tronic would be decided.
67
JOHN FALCON STEPPED out of his silver Jaguar XKR coupe on the isolated airstrip and stared at the single-engine Cessna 206H Stationair bathed in the headlights. Inside the small hangar, a gangly man jumped up off a threadbare couch patched with duct tape. “Z’at her?” the man asked, practically drooling at the Jaguar. “Lord Almighty, you sure weren’t lying, Mr. Falcon—damn if she ain’t a beauty!”
“I want to leave it in the hangar until you return,” Falcon said. “I don’t want it discovered while we’re gone—I don’t want any surprises. The title’s in the glove box, signed over, so she’s yours once you get back.”
“I can appreciate that, Mr. Falcon. Anything you say.”
“Move the plane out. I’d like to leave as soon as possible.”
With an eager nod, the man pulled the plane out of the hangar and started his preflight check.
Getting back in the Jaguar, Falcon heard “Clear!” and then the sound of the engine starting. After stashing the car inside the hangar, Falcon slung his travel bag over his shoulder and walked back to the plane.
“Now, you know I can’t fly all the way into Canada,” the pilot said.
Falcon reached over and dropped the Jag keys in his lap. “Just get me as close as you can. I have people who can get me across the border and eventually out of North America. People will come l
ooking for you once you register the car in your name. You’ve done nothing illegal, so tell them anything you want. As far as you know, I’m nothing more than an eccentric, paranoid businessman who gave you an offer you would have been a fool to refuse.”
The pilot throttled up the engine, and the plane vibrated as a roar came from the propeller. As they began rolling down the runway, Falcon tried not to think of the life he was being forced to abandon. For the moment, he needed to focus only on escaping and surviving, on helping his family start anew. But as the plane lifted off the runway and climbed into the night sky, his mind colored with fantasies of revenge against the young man who had ruined his life.
* * *
“Is Stuttgart already here?” Michael asked Marcus as he walked into Seaton’s Denver estate. He had seen the red Porsche near the entrance.
“Beat you by fifteen minutes.”
“The eager little prick,” Michael said, grinning. “He never liked my plan from the beginning. You know why he made sure to arrive before me?”
“Let’s see,” Marcus deadpanned. “To get a better seat?”
Michael laughed. “To try one last time to talk Mr. Seaton out of buying back X-Tronic’s shares. He’s here for the money, Marcus. He’s here to try to save his biggest client from putting all his wealth on the line.”
Michael moved through the enormous house, went down a wide staircase, and rapped lightly on the double doors of the game room.
Seaton smiled. “Michael! Good, you’re here with plenty of time. Trading begins in twenty minutes.”
Michael was pleased to hear no wavering in the old man’s voice. He looked over at Stuttgart. The financial advisor had the look of someone who had fought and lost the battle. Now he would have to stand by and watch his client risk everything. Michael knew that no matter what happened, both Stuttgart and Seaton were going to lose a lot of money this morning. Indeed, there was no way to gain financially. The only victory would be to keep X-Tronic’s stock from tumbling so low it became virtually worthless or was delisted on the NYSE. To survive the fraud scandal, the company would have to face serious challenges. But of all the things X-Tronic must do to survive the fallout of the fraud scandal, the first crucial battle would be Seaton’s attempt, this morning, to keep the stock from tanking.
“I can’t believe we’re going to watch the trading from this game room,” Joseph Stuttgart said.
“Can you think of a bigger game than this one?” Michael replied.
Cracking a brief smile, Seaton pressed a button beneath the arm of his chair. The windows that stretched across the eastern wall, with their spectacular view of the rising sun behind Denver’s skyline, slowly began to tint until they lost all translucence. A wall opened in the corner of the room, revealing a wet bar stocked with juices, an espresso machine, and alcohol. A projector in the ceiling fired up, displaying on the wall screen the early ramblings of a securities analyst in a pin-striped suit, mouthing muted words as green ticker symbols flowed below her in an endless stream of data. To the side of the projector screen, a second panel opened and lowered a custom-made Bloomberg display. A myriad of financial information and market data was displayed for X-Tronic’s stock.
“Five minutes till showtime,” Seaton announced. The clock on the display showed 09:25:08 EST. They could see “X-Tronic” listed in bold letters below the anchorwoman.
“This is going to be the talk of the day across all the networks,” Joseph squeaked. “What are you hoping the floor price will be?”
“Twenty-five dollars?” Seaton asked, glancing at Michael.
“Twenty-five a share,” Michael confirmed.
Seaton walked to the center of the room, where a spider phone rested on a flat podium. The speakers on the phone came to life as he dialed a number.
“Fiduciary Wave Investors—this is Grant DeLarma speaking.”
“Grant, it’s Don. Are we ready to do this?”
“Good morning, Mr. Seaton. Yes, we’re ready. Everyone has been conferenced into the call.”
“How many?”
“We’ve got seven traders in total.”
“Good. Start by buying a million shares at ninety-seven dollars. We’ll see how long that holds.”
Michael looked up at the display. It was one minute before the opening bell on the New York Stock Exchange. One minute before the fast-paced frenzy of the market began to ravage X-Tronic’s last stock price, quoted at the end of trading two days earlier at a hundred and two dollars per share.
The displayed changed to 09:30:00 EST. Muting the phone with a remote switch, Seaton turned to Michael and Joseph. “I want both of your advice as we go through this.”
The two men nodded.
Suddenly, the price on the display began to drop: one hundred, ninety-eight, ninety-two, eighty-six.
“My God!” Stuttgart exclaimed. “Our bids didn’t even slow it down!”
Seaton unmuted the phone. “Grant! Buy three million at eighty dollars!” Then he muted it again before turning back to Michael. “Still think we can control this?”
“We always knew it would drop fast at the beginning.”
Eighty-three, eighty-one, eighty, seventy-seven, sixty-eight.
Stuttgart, unable to keep still, paced the room. “Bastards! All the other investors are dropping the stock like it’s a disease. I told you they wouldn’t listen to your speech at the shareholders’ meeting. No one cares about the bloody company; they just want to protect their portfolios.”
“Grant! Seven million at sixty dollars!” Seaton said while fiddling with the remote.
The price dropped immediately to sixty per share and held for almost two minutes before continuing to drop.
“It’s still going down pretty fast,” Seaton said. Michael had no answer.
“Don, please—this is insane!” Joseph pleaded. “You can’t just throw away everything you’ve built up over the last thirty years!”
“Joseph! I’m trying to save what I’ve built over the past thirty years! Now, either help me analyze these prices or go!”
Fifty-four, forty-seven, forty-three . . .
“Mr. Seaton,” Michael broke in, “buy fourteen million at thirty-seven dollars.”
Seaton nodded and gave the bid to Grant, who immediately relayed it to his team. The price dropped to thirty-seven . . . then thirty. All three men stared in suspense at the display as the number held at thirty dollars per share. For six minutes there was virtually no change in the price. Seaton broke a slight smile until he looked back and saw Michael slowly shake his head. He turned back to watch the display, realizing they were not out of danger. Then, eight minutes after the price had seemed to stabilize, it dropped to twenty-nine dollars per share . . . then twenty-eight.
“Christ! It’s going all the way to the bottom!” Stuttgart cried out.
“Michael?” Seaton asked.
Michael gave a little sigh. “Can you buy fifty million at twenty-six?”
“You fucking bastard!” Joseph yelled. “Where do you get these numbers from? Don, you can’t listen to this guy anymore—he’s going to destroy you!”
“That taps me out, Michael. Are you sure?” Seaton asked. Michael nodded. The old man took a deep breath, ran his hand down his face, and relayed the bid to a baffled Grant DeLarma.
Twenty-seven, twenty-six . . . Then it held. Five minutes went by as they watched and waited. Then another five minutes. Still it held at twenty-six.
“It’ll never hold,” Stuttgart said.
“It’ll hold,” Michael insisted.
Fifteen more minutes passed with no significant change. Then the price dropped to twenty-five.
Seaton slugged the couch in frustration. Stuttgart murmured a steady stream of profanity. Seaton looked at Michael with a lost expression. “I’ve done everything I can,” he confessed helplessly.
Michael lowered his gaze. He could not bear to make eye contact with either man. Once again he had overstepped his bounds. He had imposed himself on t
he personal lives of others, and they had suffered from trusting him. “If we had just gotten support from the other shareholders,” he spoke as an afterthought.
Joseph shook his head bitterly. “Why would they? They have nothing invested in the company other than capital. And their capital is liquid. What made you think that they would be willing to risk anything?”
Michael shook his head. “I’m sorry, Don. I truly thought the drop in market cap could be stopped.”
To Michael’s surprise, Seaton managed a faint smile. “I loved my company as much as anything. We did the right thing in trying. You have to believe that. I’m not sorry about the money I’ve lost. We did everything we could. That’s something to be proud of, Michael. At my age, self-respect is worth more than money.”
He looked at the old man in awe. Besides his father, he had never met a more honorable man in his life. In that moment, he realized that it hadn’t been greed that made Seaton a billionaire—it had been the man’s vision and passion. And now that same passion and absence of greed would cost the man most of his net worth.
“Hey!” Stuttgart yelled as he jabbed a finger at the screen.
Michael and Seaton turned to look at the Bloomberg data. The price had dropped to ten dollars. “How long has it been around that price?”
Seaton flipped through the panel to get a breakdown of the historic data for the past hour. “Nine minutes!” he answered. “You think it’s stabilizing?”
“I don’t know,” Michael replied. “But something else must have happened, because we sure haven’t placed any more orders.”
They unmuted the news channel screen and listened to the anchorwoman run through the events of the past hour. She highlighted how X-Tronic’s founder, Don Seaton, had been purchasing enormous quantities of shares of X-Tronic and now owned more than 65 percent of its common stock. She explained how a number of additional investors had become attracted to the stock after it had dropped to a fifteen-year low. There appeared to be a growing attraction to the stock through a number of different parallels: Mr. Seaton’s loyal dedication to the company was encouraging some investors to reevaluate the honesty of the company’s presentation outlining all available information related to the fraud, and as a result, X-Tronic was winning back a certain degree of trust. Investors were reevaluating the company’s prospects, and they were encouraged by Seaton’s aggressive purchasing of shares. Additional analysts were quoted as saying that if X-Tronic was able to get through the fraud proceedings without further damage and managed to turn around, in two to three years it could potentially climb to its previous value. There seemed to be a sense on the Street that X-Tronic’s stock price had taken the beating it deserved, but that now the company was slightly undervalued. One analyst praised Seaton’s foresight in purchasing vast amounts of the stock to prevent a detrimental panic that likely would have dropped the price to the floor, freezing trades permanently until the NYSE delisted the shares.