by Guy Lawson
“That was the known market. People think the Federal Reserve is run by the federal government. But it isn’t. The Federal Reserve is a private company, owned by the banks. It’s a club. That’s why everything it does is so secret. Everything is behind closed doors. The public doesn’t know who really runs the Fed—or who owns the Fed. Bob said that if you understand the powers behind the Federal Reserve, you can see who is really running the world. Money makes the world go round, after all. The reality, Bob said, is that the United States government is bankrupt. When Nixon took America o"
the gold standard in 1972 the shit hit the fan. There wasn’t enough gold in the Federal Reserve to pay for all the dollars that had been issued by the government. So America just changed the system. That was what created the so-called !at currency. The American dollar isn’t worth the paper it’s printed on.
“I knew Bob was right. I’m never wrong about this kind of thing. This was the stu" I knew—the stu" I had been taught by the traders in Freddy’s o$ce in the eighties, the real Masters of the Universe. I’d grown up watching how things were manipulated. This was where the secret bond market came in, Bob said. To keep the system solvent the Fed secretly issued notes at a huge discount—under !fty cents on the dollar. The notes were then traded in the shadow market. The major banks had special departments that did this kind of trading. The margins were huge. The sums were huge. Billions upon billions. But the public wasn’t told about the market because if it became known how flimsy the global economic system really is, there would be a huge panic.
“Bob said there was a catch. If you traded into this market, you weren’t allowed to keep all the pro!ts. If I managed to get into the market—which was a big if—Bob said I would be able to keep a cut. Maybe 20 percent. Maybe 10 percent. It depended on the structure of the deal. The rest would go to charities approved by the ruling families.
The money would be spent curing AIDS in Africa or building water treatment plants in Pakistan. That was how the system worked—how the world !nancial system really functioned.
“I didn’t understand everything Bob said at !rst. But the core of what he was saying made sense to me. I knew the Fed was !xing the stock market. All the ‘quantitative easing’ the Fed did was just to drive up the S&P to keep the little people happy and not asking di$cult questions. I told Bob I wanted to learn more. If what Bob was saying was true, the implications for me were amazing. If I was going to get into the shadow market, I knew that I was going to have to stay in London to make the trades. Bob said he was going to introduce me to his colleagues the next day. They were brokers in the market who could explain the charitable part of the business themselves.
“Bob said he was going to stick close to me. From that day forward, we were together constantly. He kept me away from other people as much as he could. He was my handler. That was his word for it. From then on he was going to handle me.”
AS A MASTER OF DELUSION, Sam had found a kindred spirit. Nichols told lies with such authority and frequency it was hard to tell if he knew he was lying at all. Nichols had told Sam to lie to Jack O’Halloran the next morning about their meeting and the secret bond market, for instance; Nichols didn’t want O’Halloran interfering with their new project. As part of the project of developing Mosaic into a movie, O’Halloran had arranged a meeting with !lm producers in London. Israel went along with O’Halloran in the morning, as promised, but he was itching to leave. Sam liked Jack and he enjoyed Mosaic and thought it would make a !ne movie. But all Sam could think about was the high-yield investments—the existence of which he had to keep hidden from his friend.
“From the very beginning Bob swore me to secrecy,” Sam said. “Bob didn’t want Jack knowing about the secret bond market. He didn’t want Jack to know that we had met privately. Bob wanted to keep me away from Jack. He told Jack he was looking into the !ngerprint technology. He would get back to him. But he told me he wasn’t going to do anything about it. Bob wanted to convince Jack that I wasn’t doing any business with him. Nothing could have been further from the truth. But Bob was a facile liar. He lied by misdirection. He lied by omission. He was an accomplished bullshit artist.”
Before Sam’s second meeting with Nichols, Israel and O’Halloran had lunch at Claridge’s. Across the lobby, the movie star Tom Hanks and his wife, the actress and producer Rita Wilson, were checking in. Though he wasn’t a great celebrity bu", Israel instantly recognized Hanks. So did O’Halloran. To Sam’s amazement, O’Halloran walked across the lobby and shook hands with Hanks. Sam followed and was introduced to Hanks and Wilson. “Jack had been in Dragnet with Hanks,” Israel said.
“They knew each other well. It was great. Instead of me being a fan with nothing to say, standing in the lobby staring at a movie star, there I was shaking his hand, saying hello.
They came over to our table and had lunch with us. Jack was fun in that way. I liked being around him.”
Israel departed after lunch. Nichols had told Sam to meet him at the Grosvenor Park Hotel, another luxury hotel a few blocks away on Park Lane. On the seventh #oor of the Grosvenor was the Royal Club Lounge, a private business center for the hotel’s guests. It was a little-known fact that Gold and Platinum memberships could be purchased for a nominal sum by anyone, enabling nonguests to conduct business in the lounge at an extremely low cost. Hostesses were at the reception desk twenty-four hours a day, and members enjoyed free refreshments and newspapers and magazines. Flat-screen televisions showed cable news and !nancial networks. The space was quiet, clean, centrally located—the perfect meeting location for a traveling executive. It was also the perfect front for a grifter looking for a cheap place to give the impression of respectability.
Nichols introduced John Cassidy and Nigel Finch, men he claimed were veteran intelligence operatives. Cassidy and Finch were key to gaining entrée to the bond market, Nichols said. According to Nichols, Cassidy was a former CIA station chief in Hong Kong and had been a pilot for Air America during the Vietnam War. He was a descendant of Butch Cassidy, the notorious frontier outlaw of the Wild West. Nichols said that Cassidy belonged to a faction of intelligence operatives who had been close to Ronald Reagan and the !rst Bush administration. But in the early nineties Cassidy had fallen out of favor with the incoming faction attached to the Clinton administration.
The new faction had vanquished the previous faction, sparking a rivalry that was still going on—a violent !ght for supremacy inside the secret market. As a result, Cassidy had been forced into exile.
“Bob didn’t really trust Cassidy,” Israel said. “But he said Cassidy was the way to get into the market. Bob said Cassidy had put a lot of people into the high-yield bonds.
Before the meeting Bob had warned me that Cassidy was very volatile and dangerous.
Cassidy had been injured in a helicopter crash in Cambodia. I knew he’d been dis!gured. Bob told me to be careful, to not look at him too much. But he was truly freaky looking. He had tattooed eyebrows. He limped badly. He was short. His teeth were fucked up. He was one scary-looking dude. He was hard not to stare at.”
By contrast, Finch was a suave Englishman with a re!ned accent. According to Nichols, Finch was a veteran of MI6, the British secret intelligence operation. Finch also ran an antiques store and specialized in the restoration of metalwork and sculpture. A fellow of the Royal Society of Arts, Finch did work for royalty as well as major museums and dealers. Nichols joked about Finch’s breeding and how unlikely it was for such a man to be involved in the rough-and-tumble of doing business with “the boys.”
The four men took their seats in a private conference room. Half a dozen chairs were arranged around a small table with a window over Hyde Park. The meeting could have been taking place in any boardroom—such was the setting’s resemblance to a mise-en-scène of a multi-billion-dollar transaction. But the conference room was complimentary, the coffee and pastries provided by the hotel, the air of high finance an optical illusion.
“We have a number o
f items on the agenda today,” Nichols said, taking up the role as chair. “We are going to deal with the issue of the bonds. Plus, Sam wants to acquire the computer program PROMIS.”
But the subject of the CIA’s covert “trapdoor” digital surveillance system wasn’t raised again. Sam had lost interest in it anyway. The shadow market was what he wanted to hear about. Nichols explained that the three men had squired wealthy people into the trades for years. But all they had received was broker commissions. They hadn’t been able to trade on their own account. They hadn’t been able to reap the billion-dollar bene!ts. Now, at long last, it was going to be di"erent. With Sam’s $150 million, they would have the chance to get into the game as principals. They would form their own faction. The group would consist of Sam, Nichols, Cassidy, and Finch. Making the trades would not be easy—far from it. The mission, should Sam choose to accept it, was nearly impossible. Just attempting to enter the shadow market meant that Sam risked being killed at any moment by a rival faction. Sam nodded solemnly.
The mechanics of the bonds were discussed. Nichols explained that investing in the high-yield market was risk free. Bayou’s millions would be placed in a “nondepletion account.” It would be a joint account in Sam’s name, along with that of a designated approved charity. But no one would be able to access the money other than Israel. The only purpose for the cash was to provide capital to leverage the trades. It could be used only as collateral for the securities traded in the shadow market. If the trade didn’t happen for any reason, Sam wouldn’t lose a penny.
Nichols explained that Cassidy and Finch operated an organization called the Humanitarian Coalition. The charity was a necessary part of the structure. The Humanitarian Coalition was an approved charity, registered with the appropriate British authorities, tax exempt, and ready to distribute the hundreds of millions it would reap as a result of the trading program. The money would be used to cure AIDS, the men told Sam. Cassidy and Finch showed Israel a zinc-based mineral supplement they had developed. The liquid had been proven to drastically reduce levels of HIV, they said. The charitable donations from the bond market would be used to distribute the elixir in sub-Saharan Africa.
In a matter of minutes, Sam had gone from contemplating becoming a billionaire to getting killed for doing so and then on to the prospect of curing AIDS. The conversation was preposterous. What quali!ed Cassidy and Finch to cure AIDS? Wouldn’t it have made the news? Wouldn’t the Nobel Prize committee have noticed the break-through?
Nichols and his colleagues were straight-faced, matter-of-fact. It was as if the leaps in logic they invited Sam to take made perfect sense. The HIV medicine wasn’t available because pharmaceutical companies were making a lot of money selling antiretroviral drugs and were protected by powerful and violent factions inside the American government. The suppression of the cure was evidence of the ruthlessness of the forces they confronted.
Israel inspected the medicine with interest. The three men watched him expectantly.
Israel could admit to the insanity of the proposition and depart, returning to Bayou and the Problem. Or he could suspend his disbelief and consider the possibility that Nichols was telling the truth—in fact, the Truth. Given the dysfunction and despair of the hedge fund, there really was no choice. Sam’s family had always been heavily involved in charitable work; his mother’s life had been devoted to philanthropy. The idea of making money and rescuing Bayou excited Israel. So did the prospect of helping so many people at the same time. The trio told Sam that the zinc compound also enhanced sexual appetite and performance. Sam took three drops of the magic medicine and grinned.
“Millions of lives could be saved,” Nichols said.
Israel felt Cassidy staring at him. The look was long and hard and searching. Israel began to feel uncomfortable. Sam turned to him, but Cassidy didn’t avert his eyes.
“Can I help you with something?” Israel asked.
Cassidy kept his gaze steady. Nichols was visibly agitated.
“Do you have a problem with me?” Israel asked.
“I know you,” Cassidy said.
“I don’t think so,” Israel replied.
“I’m sure I know you from somewhere,” Cassidy insisted, still staring.
“Maybe you’re seeing me through the eyes of Butch Cassidy,” Israel joked.
Cassidy didn’t laugh. Nor did Nichols. Cassidy left abruptly. Once he was gone, Nichols told Sam to mind his manners. But Sam said he wasn’t going to take crap from a psycho. After a few minutes Cassidy returned.
“I knew it,” Cassidy said, rejoining them at the table. “You’re Mossad.”
Israel laughed at the notion that he worked for the Israeli intelligence agency.
“You’re out of your cabeza,” Israel said, using the Spanish word for “head.”
“He’s Mossad,” Cassidy repeated.
“It isn’t true,” Nichols said calmly. “I have vetted him thoroughly.”
Cassidy sneered. “Have you had any recent heart trouble?” he asked Israel. “Have you had a heart attack, or a bypass, or had a pacemaker put in?”
Israel was #abbergasted. He had told no one about his heart troubles. No one. There was no way some stranger in London could know about Israel’s condition. Not unless he had access to con!dential information—the kind of secrets a spook would be able to obtain.
Cassidy watched Israel’s speechless reaction. “I thought so,” he said. Cassidy turned to Nichols and Finch. “He’s Mossad,” he said.
Israel looked around the room, disbelief turning to anger. “I’m telling you, I’m not Mossad,” he said. “I am who I say I am. I’m a trader. I run a hedge fund called Bayou.
You can look it up.”
“I did look you up,” Cassidy said. “I did a background check. You’re on something called the Intellectual Threat to State list. The CIA poisoned you and made it look like it was heart failure. There are people who want to kill you. You’re either very lucky or you’re in great shape.”
Israel started to panic. The Intellectual Threat to State list? Mossad? Could he have already captured the attention of the dark forces of the Octopus? Was Sam caught up in the same vortex that had killed Danny Casolaro? The doctors hadn’t been able to explain the cause of his rare heart condition. Was this the reason he had nearly died?
Cassidy reassured Israel. There was no need to be afraid. Not anymore. Cassidy could arrange to have Sam’s name taken o" the Intellectual Threat to State list. Sam was now under the protection of Robert Booth Nichols, a highly skilled assassin. The important thing was to keep Sam alive so they could proceed with the high-yield program. Israel was now convinced he was in the presence of truly powerful men. To what end, good or evil, he wasn’t sure. But Sam wasn’t going to let fear stop him.
BACK IN HIS SUITE at Claridge’s, Israel called Marino at the Bayou o$ces in Connecticut and excitedly said he had found the answer to their Problem. Sam wanted Marino to come to London immediately. Sam said he couldn’t talk over the telephone.
The news he had was too explosive. The line might be tapped. Marino was skeptical, but he #ew to London on the red-eye. Over lunch, Sam gave Marino a thumbnail sketch of Nichols’s background—the years as a CIA hit man, his connections to the NSA, the shadow market.
“It sounded fantastic to me,” Marino said. “If what Sam was saying was real, I was going to be a billionaire. I was excited—if it was true.”
At the Royal Club in the Grosvenor Hotel that afternoon, Nichols showed Marino a chart illustrating the returns on an investment of $150 million. Even if Bayou kept only a fraction of the windfall, the pro!ts were amazing. Marino stared at the numbers with incomprehension. Nichols said that Bayou would receive $6.25 billion in the !rst year alone. The math made no sense to Marino. He couldn’t follow the logic of Nichols’s presentation. But Sam was convinced, so Marino kept listening and hoping. Sam was the trader, so perhaps there was something Marino was missing.
“The market is unknown, and
only a few people are able to get in,” Nichols said.
Nichols said it was classi!ed top secret. Both Israel and Marino had to sign nondisclosure documents that speci!ed thirty years in prison as the punishment for revealing the existence of the market. The agreement required absolute con!dentiality.
It failed to specify who would imprison the men—or where they would be detained—in the event that they talked. Perhaps the Octopus had a secret facility somewhere, along the lines of Guantánamo Bay.
“There are a lot of people pretending to have access to the program,” Nichols said. “I can help you through the process. I am one of the facilitators that can bring the right people to the table. I can make sure you aren’t cheated. There are a lot of cons out there that try to copy these trades. They are frauds. They aren’t real. I can get you into the real market.”
“I believe in you, Bob,” Israel said.
“This market is extremely dangerous,” Nichols said. “You can get killed trying to get in.”“I don’t care,” Sam said.
“I can protect you,” Nichols said.
“I know you’re a stone-cold killer,” Israel said to Nichols. “But if you steal $150
million from me, I swear I will kill you.”
“That is absolutely fair,” Nichols said.
Israel and Marino left the meeting and rode the elevator down in silence. Marino’s mind was spinning.
“What do you think?” Sam asked.
“Why would rich people do this?” Marino asked, sensibly. “Why would they let you make so much money?”
“Because they know the world is bankrupt,” Sam said. “If they don’t keep the !nancial wheel going it will come o" the tracks. There will be revolutions all over the world. The masses will take over. By doing this they’re able to control what is happening and to keep their status as the superwealthy.”