“I would have bet that would tie back to Tommy, not Mark,” Kyle responded, “But it doesn’t mean that Tommy’s not guilty of at least the market related charges.”
“I know, but it casts doubt and eats up time,” Doug said. “What the hell was Mark doing calling George? And there were a couple of calls in Whitefish that weren't commercial businesses. We’re going to have to track those down, too. Maybe George was in on this with Mark, or even John. Maybe one of them killed George. All these goddamn calls and numbers will probably track back to John, Tommy, Mark and who knows who else. Pretty soon we’ll have too many suspects, and everyone will keep looking guiltier.”
“Well, let’s keep tracking down what we need that pertains to Tommy on my market related charges case while he’s still in custody and let the other stuff slide a little longer,” Kyle offered. “John and Mark aren’t going anywhere, and if you help me with my market case, I’ll spend nights and weekends trying to find the right ties for you on the murder.”
Buying the logic, Doug continued, “Good point. Anything that we can find to sweat Tommy should still be our highest priority. Plus, with what’s going on in the market, he’s got to be worried that he can’t help Pat. Maybe he’ll give us something, something big, so he can get out before whatever he’s planning implodes.”
“Well, we’ve only had him in custody since this morning so the earliest he’ll be released is sometime late tomorrow, assuming someone posts bail for him,” Kyle said.
“We threatened Tommy with this already, but what if we actually try to get a petition for a change of jurisdiction on the murder charges based on the interstate calls and George's murder being on federal land? That could probably delay his release until maybe Thursday.”
“That would be enough time to drive him crazy,” Kyle offered. “He’s not real patient, and something is definitely going on. I can feel it,” Kyle said. “What do you mean?”
“John DeFallo is in town again, or still, for all I know. There are McKinstry guys and other firms crawling all over. There are big, really big, positions out there . . .”
“Say it straight,” Doug requested.
“There are a record number of short positions betting on the carbon market tanking, but those shorts are getting covered, and there is also some support for the price stabilizing. There’s a big trade association lunch meeting tomorrow. There will be lots of talk,” Kyle said.
“You going?” Doug asked.
“Yeah, you want to come?” Kyle asked.
“No, thanks. Too many pretentious suits for me. Besides, I better keep on-task tracking down leads,” Doug said.
“Not if you have too many of those,” Kyle said as he pointed to Doug’s second beer.
“Buy me one more, and I promise to go straight home and be back at the office by five in the morning.”
“Deal,” Kyle said. “And I will check with our attorneys about changing jurisdiction on the murder charge.”
43
Tuesday morning brought clear blue skies and a dry wind from the northwest. The welcome air bullied unpleasant moisture out of town. It was a normal workday for most of Chicago, but the drama continued for those very few that paid attention to, or cared about, one relatively obscure commodities market. It was very clear to Pat and John that they were on the opposite ends of an escalating bet about the market’s direction, and Pat’s firm continued to counter the short positions that John was taking.
Either of the two could easily get in big trouble if the market turned dramatically one way or the other, squeezed out of the market under the pressure of their own actions. Prices were inching down. People saw the building short positions and were waiting for something to happen. The market was like a stretched rubber band, ready to break.
That afternoon, men in dark suits and a few women in comparatively brightly-colored professional attire started to gather on the top floor of a downtown skyscraper. It was an impressive room with the outdoor brightness pouring in through the three-windowed sides of the large meeting room. The setting was very high end, a private club where, on most days, men gathered doing nothing more than being rich together.
Pat stood far away from the entrance staring out of the window, looking south over Grant Park. He could see Soldier Field and possibly all the way to Indiana, the sky was so clear. He took deep breaths and exhaled slowly, trying to calm himself. He had made many friends and acquaintances over the last several months. He had become well-known in this quirky business, both for his success and his anti-establishment look and attitude.
He knew it would only be a matter of time before someone recognized his stocky frame and ill-fitting suit from behind. He wasn’t going to turn from the window and the view and the solitude until forced. He hoped it would be Jenny. Pat was concerned that he was starting to think and act more like Tommy every single day, but he had started to understand it was the pressure that Tommy always put himself under that masked many of his good qualities. Only a few close friends could push through the façade and get to the good stuff. That same pressure was now impacting Pat. He needed this to end. He wanted his old life back and didn’t care if it came with a single dollar.
The room was buzzing with rumors as the 200 people in attendance bustled about. This month’s association meeting drew a much larger crowd than normal since many members were looking for information and an understanding of what was going on in the market. Pat could feel the energy and finally decided to turn from the window. He noticed a group of people huddled in the opposite corner of the room. That had to be Mark. He always drew a crowd and he could see the top of a cowboy hat. Pat then saw Jenny appear at the entrance. She had a dress that looked perfectly tailored to her body, but had actually been bought off the rack by Pat and Jenny on Michigan Avenue the previous night, five minutes before the store closed. Pat made his way over to Jenny. They both looked happy to see one another. They hugged, which was normal, but Pat’s hand lingered on Jenny’s as they started to talk.
“So, you seem a little affectionate today. Are you hitting on me?” Jenny said, trying to lighten the mood.
“No, but you are smokin’, and I don’t mind if the people in this room think we’re together,” Pat said.
“Oh, I see! Looking to use me to enhance your rep,” Jenny smiled playfully at Pat, fitting into the role.
“Oh, that’s perfect, and go ahead and give that old ‘you’ve got it bad for me’ look if you wouldn’t mind.”
“Anything to help, but let’s get through this next hour,” Jenny said, still smiling and appearing to flirt with Pat.
“I hear you. Everything is normal so far,” Pat said.
“Not for long. You may want to turn around.”
Pat whirled to see John taking a seat at the table on the stage, facing twenty or so round tables. People were quickly taking their seats, ready for salad and half of some small bird. Pat escorted Jenny to a table in the back and sat where they could see the stage without having to turn. He noticed Kyle at the next table, who smiled and nodded in his direction.
As the Carbon Trader Association’s executive director stepped to the podium and tapped his finger on the microphone, the attendees ended conversations quickly and scurried to their seats as if they were playing musical chairs and someone would be “out.” Pat was surprised that such an independent, aggressive, and entrepreneurial group could move in such precise unison.
The group half-heartedly listened. “Thanks for coming, blah, blah nice day, blah blah. We’d like to thank our sponsors, blah, blah.” Then came more information on the organization and finally the words, “Let’s welcome John DeFallo as our guest speaker.” That got Jenny and Pat’s attention.
John was a commanding speaker. He understood timing and had a presence at the podium. Without saying a word, he entranced them all. His charisma was infectious. Even the light clinking of silverware on china as people nibbled and cut through their bird halves, asparagus, and boiled potatoes stopped when John was spe
aking. John knew that all eyes were on him, and he savored their attention. “Friends, the commodity trading business can’t survive unless we all have the utmost integrity and respect for our roles in the process. This is our business, and we can all make good money, but we have to be careful.”
Pat and Jenny looked at each other and Jenny couldn’t help but note how Pat’s face had gone so pale it almost matched his shirt. She worried he might pass out.
John continued. “Over the years, we have had our problems in commodities. It started long ago and includes the Hunt brothers in 1980 trying to corner the silver market and a firm I was unfortunately part of that caused significant problems in the carbon markets. It must end today with people manipulating carbon markets paying the ultimate price for their wrongdoing. I have it on good authority that the CFTC has a current situation under control, and I commend them for protecting the integrity of our business.”
John paused for effect and to allow for the whispers and subtle pointing and head-nodding to ensue. He continued on with more thoughts on integrity and current market conditions. He may have just as well been reading the phone book. No one would have noticed after the subtle, but effective, accusation that someone was tampering with the market and had gotten caught. He finished and sat down.
Next, the group’s CFO rose to give the financial report and run through some other business. With each passing PowerPoint slide, a few more guests, not so discreetly, headed for the exits and their cell phones.
Pat buried his head in his thick hands and fingers and rubbed his face, trying to scrub away what had just happened. Kyle waited until the meeting was over, then got on his cell phone to call his boss and then planned to call Doug. Mark sat in the corner of the room taking it all in. John stood on the podium stage answering questions from those that lingered looking for more information. He didn’t associate the name Tommy Gardner with the current alleged wrongdoing; he didn’t have to . . . people would find out soon enough.
Not even two hours later, word spread quickly that Tommy Gardner had been arrested on market tampering charges, and people started to sell.
44
The late Tuesday afternoon sunlight sparkled off of the lake, and a cool early September breeze danced through the streets of Chicago. The atmosphere in Pat’s office was much different, though. It was thick with tension as he nervously watched the computer screen, and Jenny anxiously watched him. She wanted to be there to help, but she didn’t quite know what to do, so she watched and listened. As Pat stared at his monitor, Jenny would occasionally hear a muffled, “Fuck, fuck, fuck,” chant. Each time she would ask what was wrong. Each time, Pat said, “It just keeps going down.”
After the third time, Jenny asked, “How far can it go down?”
“In one day?” Pat answered, “I think it’s twenty percent before trading is suspended, and that’s where it’s headed. It will be over for the day soon. Then we can figure out what to do next.”
“We?” Jenny asked.
“Yeah, you and me . . . oh, there we go. Trading is locked out for the day and won’t resume until noon tomorrow. Good, I guess, because now we have time.”
“So, what do you want to do?” Jenny asked.
“I want to sell. I think it’s going into a freefall. When Tommy’s name gets fully tied to this, it will be even worse. Today everyone in the know was just looking out for themselves and their biggest clients. Tomorrow is bound to be an even bigger free-for-all when word spreads to smaller investors.
“But Tommy wants you to keep buying and covering shorts, right? Do you have any money left?” Jenny asked.
“Real money? No, but I haven’t used that much of the line of credit. I can probably invest, or throw away, whatever, another twenty million when the market opens,” Pat reasoned.
“So, are you going to listen to him?” Jenny asked.
“I don’t know. I ran the math, and even selling into a falling market I can still probably pay off the line of credit we used so far and walk away with a few million dollars,” Pat said.
“If you don’t sell everything, what happens?” Jenny asked.
“If I keep borrowing money and it goes down let’s say another fifteen percent I’ll be well underwater. The banks will eventually require that I start selling, which will put even more downward pressure on the price. It will get uglier and uglier, and I won’t even be able to cover the loans. I’ll be done, squeezed out by John.”
“Shit! And you want my help with this?” Jenny said. “No way. Your call. Good luck!”
“Come on. Give me something,” Pat begged. “I’ll tell you what . . . I’ll give you half of whatever is left if you convince me to sell!”
“You’d really give me half if you sold!?” Jenny said, smiled and continued. “No, don’t answer that. I know you would actually do it.”
“Yes, I would. Now, please, give me something,” Pat said.
“Fine. Do you think Tommy is driven more by logic and experience or by vengeance at this point?” Jenny asked.
“That’s easy—vengeance,” Pat said.
“Then you should sell and get out. It’s your money, not his,” Jenny said.
“But I’d be letting him down.”
“But you’d be saving yourself,” Jenny argued.
“So, I shouldn’t go big? I should just go home?”
“Well, what is the upside if you go big and it works out?” Jenny asked.
“Who knows? Could easily be fifty to a one hundred million,” Pat said.
“Shut up! How could it be that much?”
“Well, with all the cash we had made, plus borrowing way more than that and throw in a bunch short sales and futures contracts . . . this is pretty damned leveraged. House of cards. It’s whether ours falls first or someone else’s does.”
“You mean John’s?” Jenny knew where this was going.
“There are way more people out there on each side of this bet than me and John, but probably not any as far out on a limb as we are. There will probably be a billion dollars trading hands here in the next couple of days, and I have until noon tomorrow to decide how we play this out.”
“Sounds like we should drink a little on this,” Jenny said.
“Good idea. Let’s find a bar that John would be too uptight to frequent. I couldn’t stand running into him again,” Pat suggested.
“It’s a big city. We won’t see him.”
“Unless he wants us to see him.” They walked out onto the street packed with people moving purposefully toward their lives outside of work.
45
While Pat and Jenny were drinking away their Tuesday evening, Kyle was with Doug giving him the update on the meeting and the market activity. They quickly turned their attention back to Tommy and their plan.
Doug got them on track. “What did your attorneys say about the jurisdiction issue?”
“They said that we didn’t have a prayer of turning it into Chicago jurisdiction, and the feds aren’t interested in taking it over. They asked what the real goal here was, and I told them we wanted his help until the end of the day on Wednesday,” Kyle answered.
“We picked him up on Monday. Does that still work for whatever due process laws you guys have on federal charges?” Doug asked.
“I guess I should have known this but I’m new to this law and order stuff. We have up to seventy-two hours, so holding him until the end of the workday on Wednesday isn’t a problem,” Kyle said.
“Did you see Tommy today? Were you there to tell him when he was likely to get out?”
“Yep.”
“And his reaction?” Doug asked.
“Strange enough, he just smiled, but I don’t think that meant anything. He’s just trying to mess with us. Technically we could hold him until Thursday morning, but we plan on releasing him after the market closes tomorrow.”
“Please make sure he knows he can talk to us if he wants to speed up
the wheels of justice,” Doug said.
With Tommy in custody and no other leads to follow on the market case, Kyle turned his Tuesday evening attention back to helping Doug look for connections between Tommy, Mark, John, George, and John’s co-owner in Big Mountain, RD Partners. Doug wasn’t able to track down ownership through the maze of shell companies but figured Kyle could.
Kyle had put some of the pieces together over the previous couple of days, but he now worked through the night. By morning there was more dirt than he knew what to do with. Kyle called Doug first thing in the morning, having not slept a single minute that night.
“Hey, can you meet me at my office?” Kyle said, exhausted, to Doug.
“You usually come to the precinct. What’s the deal?” Doug asked.
“I’ve got the computers and files here that we may want to access,” Kyle said. “I have some interesting information on known associates for your murder case.”
“I’ll be there in thirty.” Doug hung up, not waiting for a response.
Their offices were only blocks away from each other, but architecturally they couldn’t have been more different. Plus, Kyle’s office was all granite, glass, and chrome instead of Formica, plastic, and steel. Cubes were still cubes as Kyle guided Doug back to his.
“We have some interesting overlap in people coming in and out of these guys’ lives. For example, two brothers, small time criminals who grew up with John. One of them was with Mark in Whitefish. To top it off, it was shortly before George died,” Kyle said.
“What?! That’s huge. Wait. How the hell did you piece that together?”
The Squeeze Page 23