by Bryan Devore
All three men watched the price and financial news the rest of the day. The panic seemed to have left the market. Seaton had lunch brought in as the three played games of Spanish billiards while keeping one eye on the screen. At the end of the day, the price had risen from its low of ten dollars to thirteen by the closing bell. Don Seaton had lost nearly eighty percent of his net worth—over seven billion dollars—in one day’s trading, but he had saved X-Tronic from collapse.
68
AS LUNCH HOUR interrupted the rhythm of work at Cooley and White, troops of accountants poured from the building for a midday pillaging of the nearby luncheonettes. The office grew quiet within minutes, and Michael soon found himself alone, sidling past the morning’s aftermath, careful not to brush against a tower of documents that rose precariously from his desk like a house of cards. Would he miss this? he wondered. Would he miss the thrill of living a secret life? The question haunted him, for although he had long yearned for freedom from his tormenting situation, he now realized that he might occasionally find himself missing the life of a senior auditor at one of the world’s top international accounting firms.
It had been two days since trading began for X-Tronic shares. In that time, he had been given notice that his last day at Cooley and White would be today. Even though he had earned his position at the firm through a fraudulent identity, he wasn’t being fired; indeed, the firm was in enough legal trouble from the X-Tronic case that it was in no position to battle the federal government over an ambiguous precedent for undercover agents. In the end, Cooley and White had given him two days to wrap up his affairs and any pending documentation for client engagements before his mutually agreed-upon departure from the firm. Ironically, his entire employment here had been a fraud, and he was not surprised they were forcing him out so soon after his true identity was revealed. And now the time had come for him to go.
He took a deep breath as he stepped onto the elevator for the last time. Going down, please—thirty-seven floors to the next chapter of my life. The car was packed. Hypnotized passengers stared at the video monitor’s advertisement blurbs, while Bloomberg took center stage with a breakdown of the market watch as the U.S. economy lurched forward in another fine day of trading. No bad news, most stocks happy, every investor counting down the hours to the day’s end. Michael was the only one not entranced by the media. He studied the tops of his shoes as a lost traveler might ponder a map. At last the chrome-plated doors slid open to a gleaming sea of black marble.
Out the doors and in the sunshine, he found himself moving through the outside square as fast as possible. No more strolling; he had momentum now. Contented urbanites grazed in the courtyard between the MCI and Bank of America buildings—the common ground between corporate giants. What a lovely day. How could the city stay so warm in the winter? Thin air, some said, as if that alone explained everything unique in the Mile High City.
He had survived the winter of his life.
* * *
On Monday morning, after a long phone conversation with Glazier over the weekend, Michael walked into the Denver District Office of the Kansas City Federal Reserve Bank. True to its image, the office had a cold, gray interior, watched over by three security guards in white uniforms. A stone staircase ran from the corridor up to a second-floor mezzanine, which held a collection of artifacts worthy of any museum of economics, telling the history of the Federal Reserve and the impact its policies ultimately had on the U.S. economy.
“Your office is just down the hall,” said the midlevel economist who met him on the mezzanine and walked him through security.
Michael was feeling depressed. The phone call from Glazier had mapped out what his responsibilities—or lack thereof—for the Treasury Department would be for the next six months. Since he had chosen to expose himself as an undercover agent at the shareholders’ meeting, the department was limiting his responsibilities until all the indictments and legal proceedings involving X-Tronic had begun. So he had left the high-adrenaline world of corporate finance for a dull government bureaucracy.
They arrived at an open door to an office strewn with boxes.
“What’s this?” Michael asked.
“It’s your office.”
“What are those boxes?”
“Ah! You’ve been assigned to help with the Treasury’s Payment Application Modernization. Since we transferred our savings bond operations to Minneapolis and Pittsburgh last year, the Fed governors have assigned our branch with new initiatives. The Treasury is understaffed in this department, so you’ve been assigned to help out.”
“This isn’t what I do,” Michael protested. “I’m not a banker. I’m an investigative agent in the Financial Crimes Division.”
“That’s who you were, Mr. Chapman. You’ve been reassigned to this project until further notice. I’m not privy to any more information than that.” The economist looked around the room and nodded for show. “IT should stop by soon to set up your log-ins on our network. Also, Mr. Glazier said he would be stopping by this morning before his flight back to Washington. Until then, just make yourself at home.”
Half an hour later, an IT guy with an astonishingly large belly and a crisp beard gave Michael’s computer all the network access necessary to carry on the fight against inefficient payment applications. With all the department’s documentation available for exploration on the shared drive, the ex-agent and newbie banker, demoted by his superiors for pursuing their cause and achieving results beyond their control, found solitude in the World Wide Web and the countless articles examining the aftereffects of X-Tronic’s fraud:
Bank of Cincinnati cancels line of credit with X-Tronic in post-fraud fallout.
Merrill Lynch downgrades X-Tronic common stock to “underperform.” Credit rating drops to BBB.
Civil actions filed against X-Tronic by Boston Investor Group. More lawsuits likely to follow.
Links to accounting fraud in Cooley and White may extend as high as engagement partner John Falcon in the firm’s Denver office. A call to Mr. Falcon’s office was not returned.
Treasury Department close to fraud allegation charges against Don Seaton, someone close to the issue said. Wall Street teeters on rumors, but stock price holds strong against speculations.
Michael breezed through the articles. X-Tronic was a sinking ship, taking on water at an overwhelming rate, financial institutions were all but abandoning the software giant, and now Don Seaton was coming under fire.
“Knock, knock,” Glazier said from the doorway.
Michael looked up from his computer. “Glazier, what the hell am I doing on a banking project for Treasury?” he fumed. “You have fifty agents working around the clock on X-Tronic’s accounting files, yet you dump me in this dead-end office.”
Glazier gave him a consoling grin. “Things are complicated, Michael. Your phase of this operation is over. Some of the top boys in Washington have stepped in to delegate on this one. It’s bigger than Enron and WorldCom because we still haven’t determined how high up the fraud goes. It’s clear to us now that the twins weren’t running the show.”
“Then Falcon was.”
“No, we don’t think he could mastermind things from Cooley and White. His resources were too limited. At this point we’re working under the theory that Don Seaton masterminded the conspiracy to regain control of X-Tronic. This is consistent with all the evidence we have. It’s been interesting to see the fallout effects of the fraud announcement. And we’re beginning to see a connection between the fraud and the fact that Seaton has now been able to repurchase enough shares of X-Tronic to have a majority ownership again. We are not, however, pressing any charges against him at this time. More conclusive evidence is expected after we finish negotiations with the attorneys for Jerry Diamond.”
“You’re going to cut a deal with that hyena!”
“We’re going to do whatever is necessary to take down the top person responsible for the fraud.”
Shocked at what he was
hearing, Michael shot to his feet. His chair rolled backward, hitting the wall. “But you know you can’t trust that scoundrel—he’d sell his own children to plea-bargain a deal. And you can’t seriously think Don has anything to do with this.”
“Oh, ‘Don,’ is it? Jesus, Michael, you’re on a first-name basis with this guy? Don’t you see how clouded your judgment has become? The SEC noticed some suspicious trading activities in X-Tronic’s shares a few days before the fraud was announced at the shareholders’ meeting. We think Seaton was involved.”
“What suspicious trading? What are you talking about? It doesn’t make sense that Don was involved,” Michael protested.
“There’s an angle here that you’re not seeing. Think! How could Seaton profit from this?” Glazier asked.
“He couldn’t. The stock value could only go down after the announcement. He lost nearly seven billion dollars saving the company from bankruptcy after the announcement.”
“Not necessarily. Someone very wealthy shorted three hundred million dollars’ worth of X-Tronic shock two days before the fraud announcement. In shorting the shares, they had committed buyers to the market price at the time of the short, before the announcement. When the price dropped, they called the shorts, selling the shares and profiting from the difference. Whoever pushed the shorted stock derivatives on the open market made almost three billion dollars. Whoever it was is obviously wealthy and well connected. The transaction was hidden through dozens of offshore venture funds that are privately owned. I have people from the Treasury and the SEC investigating the transaction for insider trading. We haven’t turned up much yet, but we will.”
“I can’t believe it,” Michael said. Leaning low over the desk with arms spread, he craned his neck up at Glazier. “I can’t believe Don would be capable of that.”
“He fooled all of us, Michael. He’s even made it look like his top executives committed the fraud behind his back. They’ve been at odds with Seaton for years, trying to get him to sell the business to a larger competitor. He must have known he was losing control of his company. Even the board of directors was against him. This way he could get rid of these executives without the board’s approval and regain a majority control of the company without losing much money.” He pointed a beefy finger at Michael. “You told me how calmly he reacted to his son’s death. What kind of father reacts that way? He didn’t care. As far as he was concerned, you did him a favor. Maybe it was even part of his plan. His sons are probably the only ones that could successfully implicate him in the fraud in front of a judge. That’s why we must find Lance,” he said, making a fist in front of his face. “He may be the only one that can really give us enough evidence to prosecute his father.”
“You think Don will try to kill his only remaining son?” Michael asked.
“That’s exactly what he’ll try to do. For all we know, Lance may already be dead.”
“Look,” Glazier continued, “I’m sorry we have to separate you from the remaining investigation. We just need to be careful where we place you because of your public exposure from the case. Plan on being here in Denver for six months. Let things calm down. Then we’ll move you into a departmental role in D.C.”
Glazier left, and Michael turned back to the pile of cardboard boxes. He had a meeting with the project manager in twenty minutes, but he couldn’t concentrate on anything other than the new suspicions against Don Seaton. Was Glazier right? Had he really let his long-held admiration for his business idol set him up to be the unwilling participant in a scheme by Seaton to regain control of X-Tronic? Had the entire drama been nothing more than an internal power struggle for the software company? Had Michael played right into the hands of the true master conspirator behind the X-Tronic fraud? He wrestled with the questions plaguing his mind, knowing all the while that it didn’t matter anymore—he had been cut loose. Glazier and his team of investigators were prowling through the ruins of the financial catastrophe, searching for any clues to what had really taken place. And Michael now understood why Glazier had taken him off the investigation: he had made a huge mistake and could no longer be trusted now that Don Seaton was fingered as the master conspirator.
Michael had become so used to his undercover life that he found reality a shock to the system. Was he just supposed to resume a normal career in the Treasury Department after such a fast start as an undercover agent? He now found life as hopeless as it had seemed when he was trapped in his world of lies and subterfuge.
The biggest piece of the puzzle was still missing from the X-Tronic investigation. What was Don Seaton’s true involvement in the events leading up to the fraud? But then an idea occurred to him. As he sat in the room full of boxed documents for a boring Federal Reserve project, he realized just how the true mastermind of the conspiracy could have played everyone involved in the fraud in order to benefit secretly from its eventual fallout. Glazier was right: the X-Tronic fraud had always been meant to be exposed at the right moment. The answer to everything was now so clearly illuminated in his mind that he was surprised no one else had figured it out. But there was something even Glazier had missed—one last thing Michael needed to do before he could put the X-Tronic incident behind him. And there was only one man he could contact to help him bring the curtain down on one of the darkest chapters in the history of corporate America—the one man powerful enough to challenge Don Seaton.
69
SARAH MATTHEWS KNELT in front of her brother’s tombstone and brushed her hand across his name. Behind her she heard the growl of a car crawling up the hill in low gear. Turning her head, she saw Michael’s silver Audi come to a stop next to her Jeep. She returned her gaze to Kurt’s epitaph and listened as feet swished through the wet grass toward her.
Michael watched Sarah’s back as he approached: her stooped shoulders hidden beneath a cascade of red hair that stood out among the gray tombstones. He knelt down next to her.
“I saw your article in the Denver Post. It got picked up by both the AP and the Dow Jones Newswire. You told the story of X-Tronic better than anyone.”
She kept her gaze on her brother’s tombstone without replying.
“Kurt always said you’d become a great journalist—one of the best investigative journalists of our generation.”
“How much do you think he really knew?” she finally asked, still looking ahead.
“Enough to be curious . . . enough to be suspicious.”
“But not enough to know for sure?”
“No, not that much. But he was on the path. He would have figured it out.”
“What about the day he died? You were in the trees with the twins, just like he was. What would it have been like for him?”
Michael lowered his chin to this chest. It was a question he had often asked himself. “It would have been a surprise,” he finally said. “They would have caught him off guard . . . It would have been quick.”
Sarah closed her eyes. A cold wind pushed through the cemetery and blew her long hair across her face. She opened her eyes and looked at him for the first time. “I’m running a story in tomorrow’s Post that reveals suspicions of Don Seaton as the mastermind behind the X-Tronic fraud.”
“You should hold the story. You don’t want to run it yet.”
“Why not?”
“Because it’s more complicated than that. There will be a lot of other papers running a similar story tomorrow. The Treasury Department will be leaking it to the press, but I want you to stay away from it.”
“Why? Is Don Seaton guilty or not? What’s going on, Michael?”
“Give me some time. We’ll know everything there is to know about Seaton’s involvement soon. I’ve put something together that will answer all our questions. Give me a little time, and I’ll give you an exclusive that will be bigger than you can imagine.” He sniffled in the cold air. “All the other papers are just guessing—they have zip in the way of details. I’ll give you everything you need. I’ve spoken with people at the Treasury. W
e all want you to be the one who breaks the final story when we’re ready to release the information to the public. You’ll know how to keep things in perspective. You’re the only one who will truly understand how to write about everything that’s about to happen.”
Sarah opened her mouth as if to ask another question, or perhaps to say thank you. But she turned back to Kurt’s tombstone without a word. Michael knew she wasn’t the kind to hold back a probing question, so he pretended that it was a word of gratitude she had been tempted to offer him.
Knowing the difficult task before him, he looked out at the rolling field of weathered tombstones and found that she had just given him reason to be happy. She finally understood his sacrifice, and must know that he was about to make good on his promise to give Kurt justice.