The First Billion

by Christopher Reich

  Sellers inched into the market, eager to accept the quickly appreciating bids. Luca held on as the stock advanced an eighth, a quarter, a half. An eye flicked to the volume chart and a sixth sense told him the stock was running out of steam. Spotting a bid for eighty round lots, or eight thousand shares, that would lock in his half-point profit, he dashed off an order to sell. Bingo! Four grand in the plus column. In and out in twenty minutes.

  “Trade, don’t invest.” The diligent day trader’s motto.

  Luca turned his attention to his position in Merck as a gaggle of male voices burst out shouting down the aisle. One raucous laugh stood apart from the others. It was Mazursky—or “the Wizard of Warsaw,” as he called himself—and he was crowing about taking down three points on a position inside an hour.

  “Thirty grand, baby. Thirty fuggin’ large! Oh, yeah! The beers are on me tonight, fellas. And whoever wants to buy me the first shot of Jagermeister will be the recipient of my daily tip. Ooh-yeah!”

  Luca shuddered at the Pole’s shameless bragging. He didn’t need to look to know that Mazursky was doing his victory dance, the revolting little number where he clasped his hands behind his head and rotated his hips and potbelly in ever-widening circles.

  Luca felt himself being dragged from the zone, his cerebral connection to the ether evaporating. Annoyed, he leaned even closer to his precious screens, clenching his jaw and grinding his molars in a desperate attempt to lock out the distraction. But it was too late. His connection was severed. He was free-falling back to earth and his place among mortals. Ducking a head outside the cubicle, he saw the regulars crowded around Mazursky’s hangout—Krumins, Nevins, Gregorio—all giggling like teenagers.

  “Hey, Ray, that goes for you, too,” said Mazursky, spotting him and waving him over. “First beer’s on me.”

  Surprised, Luca smiled. It wasn’t like Mazursky to count him in. Ray Luca wasn’t one of the guys. He didn’t share tips on what stocks were about to pop. He didn’t discuss his trades or offer advice on how others could make as much money as he did. Part of the reason was that he was naturally a timid person who never did well in groups. People often mistook his shyness for aloofness. Another part was that, well, they were right: He did operate on a different level than these ham-and-eggers did. He was a theorist, an inventor, an evangelist. He was the father of the Synertel fiber-optic switch, a cutting-edge technology that almost—almost—revolutionized the web. If he shared a work space with them it was only a temporary measure, a fluke in the cosmic plane.

  Standing, he tucked an errant shirttail into his trousers and ventured a wave. As long as he was out of the zone, why not try to socialize a bit? Truth was it got lonely being a theorist and an inventor. “Hey, Maz,” he said. “Beer sounds good. Where you guys heading?”

  “What? A word from his highness?” cackled Mazursky. “We serfs are touched.”

  “Come on, Maz,” said Luca. “You guys going to El Torito or what?” Luca felt all eyes on him. Don’t look away, he told himself as he jammed both hands into his pockets. Keep your chin up. But already he was fighting for the gray, neutral comfort of the carpet, his chin bobbing up and down, the blinking going haywire. “Umm, what time?”

  “I’ll be happy to tell you,” said Mazursky, “just as soon as you put your stuck-up wop nose up my hairy ass and tell me what I had for dinner last night.”

  The teenagers burst out laughing and the victory dance began. Round went the hips. Jiggle went the belly. Ooh-yeah.

  Luca dropped like a stone into his chair, his cheeks afire with humiliation. Instinctually, his eyes began trawling the bank of computer screens, checking stock prices, volume charts, news alerts—anything to lessen the pain of rejection, his shame at wanting to fit in, his anger at himself for not knowing better.

  Mazursky, you jerk, he cursed silently. Just you wait. Another month and everything will be different. You’ll be begging to buy me a drink, to spend even a minute in the presence of the owner and editor of The Private Eye-PO, the nation’s hottest investment newsletter.

  And with that he went back to work.

  For the past three years, Ray Luca’s life had been divided into two halves. Nine to five, he was another “hard-timer” trying to put together a decent grubstake trading the market. It wasn’t easy. With alimony claiming six grand a month off his paycheck and child support another three on top of that, he had to make a killing just to keep his head above water. In a good month, he cleared thirty grand. Nine went to his ex-wife, seven to the IRS, and five to settle his penalty to the federal government’s Department of Corrections. Living expenses ate up another two grand. Small wonder he was never able to put together a decent capital base.

  But every evening he devoted himself to a systematic and thorough dissection of the market for initial public offerings. He educated himself about particular businesses going public. He researched their viability and analyzed their business plans. He compared each upcoming offering against past issues in similar market segments. If the market for IPOs had cooled down, it was to his benefit. Ray Luca was a dyed-in-the-wool contrarian, and he didn’t frequent pastures where the grass had been chewed to the roots. Working alone, he was unable to analyze more than two offerings a week. The current market conditions suited him fine. As long as three or four solid new issues hit the street each month, he was on track. His goal was to build a reputation as the nation’s foremost prognosticator of IPOs, and on this sunny summer day he could say with equal degrees of modesty and certainty that he had succeeded. Forty thousand hits a day on his website qualified what some might label “hubris” as a mere statement of fact.

  Luca sighed, thinking it was a long way from Sand Hill Road in Palo Alto to Cornerstone Trading in Delray Beach. Unlike other casualties of the boom that went bust—the dot-wronged and the dot-bombed—he had no one to blame but himself. He’d been positioned at the right time at the right place with the right technology. Synertel was bulging from two hundred million in VC funding. A white-hot investment bank was set to take the company public. Market capitalization was projected to be eleven billion, leaving Luca’s 5 percent stake worth a little more than five hundred million dollars . . . and that was before the issue hit the market.

  The bad news had come one week before the IPO was set to begin trading. Luca was in Milwaukee on the fourteenth day of a sixteen-day road trip. He’d just emerged from his thirty-third face-to-face investor meeting, talking up Synertel and its position as a vanguard in Internet transmission technologies. The fund manager evinced interest and promised to put in for 10 percent of the offering. There was talk of Synertel’s stock tripling the first day. In Luca’s mind, his five-hundred-million stake had already grown to over a billion dollars. His days as a lab rat were near their end, his years of sixteen-hour days, forgone vacations, and forgotten family about to pay off. Ray Luca was as good as a billionaire, and as such qualified to call himself a visionary, a creator, an evangelist of tomorrow.

  And then it was gone.

  Out of nowhere a team from Lucent bettered the speed of Luca’s fiber-optic dynametric switch by two gigaseconds. Two fuckin’ gigs! Less time than an atom took to circle a molecule, but an eternity in the world of high-speed Internet transmissions.

  Black Jet Securities shelved the offering, Jett Gavallan, its CEO, publicly calling for a reevaluation of Synertel’s technology. Investor interest evaporated faster than rain in the Mojave. Luca was fired. His wife, doomed to another go-round as a start-up spouse, said “Screw this” and took the girls to live with her mother in Boston. In the space of seventy-two hours, Ray Luca went from billionaire-to-be to bum-in-training. Unemployed, unwanted, and unloved, dismissed by everyone and everything that had meant something to him, he was as instantly obsolete as his very own fiber-optic switch.

  Taking in the agro-fluorescent lights, the soda-stained carpeting, and the chest-high cubicles, he wheezed dejectedly. It was time to get out of this jail.

  The thought of escape drew hi
s eyes to the battered Samsonite at his feet. Dropping a hand, he unlatched the silver briefcase and gingerly removed the fax he’d received this morning. Simply holding it made his fingers tingle, his stomach swoon. It was his pass to the big time. His golden E-ticket. His invitation to the major leagues. He reread it for the hundredth time, his eyes tripping over the mention of “Prosecutor General,” “Joint Russo-American Task Force on Organized Crime,” and “FBI.” He planned on spending the entire night calling sources in Europe—reporters for the Financial Times, the Wall Street Journal, and the Washington Post—asking if they’d heard anything about Kirov’s being arrested or a raid on his offices.

  He considered calling Cate Magnus, too. She’d sent him the fax; maybe she could shed some light on what was going on in Russia. He discarded the idea immediately. The rules were clear. Only she was allowed to initiate contact.

  “Hi, I’m Cate Magnus,” she’d said when he’d picked up the phone at his home on a sultry spring evening hardly four weeks before. “Jerry Brucker at the paper told me it would be worthwhile for us to have a little talk.”

  “Oh?” He recognized her name, and Brucker was an old pal from M.I.T.

  “I’ve got an interesting piece of news that could do you some good. Mercury Broadband,” she whispered. “Take a closer look. I think you’ll find something the Private Eye-PO might like to share with his readers.”

  The next day he’d received an envelope containing the photographs of Mercury’s Moscow downlink facility. If her claims sounded sketchy, the Cyrillic letters and twin-headed eagle of the Russian crest stamped on the backs of the photographs did not. A friend had translated the words as “property of the Prosecutor General’s office,” and Luca had shivered. Next came proof of Mercury’s phony purchases from Cisco, then just this morning news of Kirov’s impending arrest. If everything Cate Magnus said was true, Mercury wasn’t just a scam dog—it was a monumental fraud. An international incident waiting to happen.

  Envisioning the Black Jet name on the prospectus, he knew it was meant to be.

  “Come on, Jett, just give us some time,” he’d pleaded with Gavallan at their last meeting. “Don’t cancel the offering. Six months and another round of financing and we’ll be in the clear. We’ll dust those losers from Lucent.”

  “Sorry, Ray. I don’t think the VC guys would go for it. Six months is a lifetime, you know that. It’s tragic. We’re all disappointed for you. But unfortunately, this kind of stuff happens.”

  “Four months,” Ray had pleaded, grabbing at Gavallan’s sleeve, pawing at him. “I’ll double the speed. . . . Come on, Jett. You gotta believe. Synertel can do it.”

  “So will Lucent, Ray. It’s not the speed. You need a new technology.”

  A new technology. The words had defeated Luca. Four years later, they still did.

  Luca put the fax away. He could only hope that when the raid mentioned in the memo took place, he would learn about it. Picking winning stocks, while worthy of admiration, was one thing. Revealing fraud and corruption on an international scale was quite another, and it turned Luca’s role from profiteer to patriot. He was defending his country against a new Red Peril. Any aspersions about his past would be bleached clean by the mantle of “Nation’s Defender.”

  On a personal note, it would be Ray Luca’s pleasure to cancel Mr. Jett Gavallan’s largest IPO. There was a symmetry to the affair that pleased Luca’s mathematical mind.

  One thing was certain: It would be a helluva way to launch the Private Eye-PO’s investment newsletter.

  Refocusing his eyes on the collage of screens, Luca felt a new energy plucking him up. He might not ever become a billionaire, but from where he stood in his beat-up Docksiders and floral-print shirt, “millionaire” sounded damned impressive. He’d done the math a thousand times. By multiplying the number of daily hits on his website by the standard browser-to-buyer conversion rate of 2 percent, he’d arrived at the figure of three thousand wise men and women willing to fork over five hundred dollars a year to receive the Private Eye-PO’s twice-monthly newsletter. A cool one and a half million in revenues for a start.

  Luca felt giddy at the prospect. If nothing else, at least he’d have the money to win visitation rights with his daughters.

  It was then that he remembered his sell order for Merck. In the ten minutes he’d been daydreaming, the market had moved against him. Merck was trading at 381⁄2 and falling fast. He sent in his order and was filled at 381⁄8. Instead of making five hundred bucks, he’d lost almost two thousand.

  Luca dropped his head into his hands. It was time his luck changed.

  26

  Gavallan arrived at the Ritz-Carlton in Palm Beach a few minutes before midnight. Once in his room, he set down his bags, opened the windows, and stepped onto the balcony. The smell of gardenias and the sound of the sea washing onto the beach greeted him. He always forgot how far south Florida sat, how tropical it could feel. It was hard to believe he was still in the States and not in some island paradise. A second later the first mosquito buzzed his ear and landed on his cheek. So much for paradise. He slapped at it, then went to the bedside phone and checked for messages left at his home. The first was from Tony Llewellyn-Davies.

  “Jett, where the hell have you been all day? Thought you were sick in bed, laid up with a summer flu. Anyway, Jett, if you’re not in bed now, go there immediately. I’ve got a piece of bad news. Jack Stuyvesant called from Lehman about the bridge loan to Mercury. Seems his board gave it the thumbs-down. They won’t accept the ten-million-dollar tranche to Mercury. Meg told him that Graf had called and said that everything was hunky-dory. She tried to get him to take a smaller piece instead, five million, even three, but Stuyvesant said Lehman wouldn’t lend Kirov twenty bucks if it was guaranteed by the full faith and credit of the U.S. government. That’s not all, I’m afraid. Barron Bleriaut at Merrill is out, too. Same reasons. At least he was polite about it. Said if we got all the news sorted out about Mercury, he’d be back in. So that’s it. Looks like us poor sods are left holding the bag. Fifty million of our best Yankee greenbacks in Mr. Kirov’s pocket. ‘Course, it will be all to our favor once we get Mercury public, that much more change in our pockets. You might want to call Jack or Barron if you get a chance. A word from the lord of the manor might be in order. Cheers.”

  Gavallan slumped onto the bed, the phone dangling from his hand. Lehman was out. Merrill was out. Black Jet was left holding the entire fifty-million-dollar bridge loan to Kirov. But maybe it was just as well, he figured. Save an extra lawsuit or two down the road. Running a hand through his hair, Gavallan wasn’t sure he could believe the string of bad luck. His right eye twitched, then twitched again, and he realized he’d developed a tic. Maybe this was what it felt like to be shell-shocked.

  Fifty million of our best Yankee greenbacks in Mr. Kirov’s pocket.

  That’s it, Gavallan said to himself. That’s the death knell. He could almost hear the bells pealing.

  Unless somehow he could turn the company . . . No, Gavallan admonished himself, discarding the idea as quickly as it had come. It’s foolish to keep hoping.

  With great effort, he took off his clothes and climbed under the sheets. Sometime later, he fell asleep.

  From her seat in the executive jet bound from New York to Miami, Tatiana stared transfixed at the limitless plain of water spreading below her in every direction. She had never seen the ocean, and it made her feel small in a way she never had before. Not forgotten or useless or empty, which was how she felt when she had driven across the endless Russian countryside traveling from her convent school near Novosibirsk to Moscow. But small in a way that left her comfortable and secure, feeling part of something large and wondrous, and maybe even magical.

  The ocean, she decided, made her feel happy. It was an odd sensation.

  Next to her, Boris Nemov yawned, then looked at his watch. “Eight o’clock. Good. We will land in thirty minutes. Did you get any sleep?”

  Tatiana s
aid yes, lying. She was much too agitated to sleep. She could not get Konstantin Kirov’s words out of her head. She had never heard him so angry.

  “This man is trying to harm us. Not just me, Tatiana, but you, too, and Boris, and everyone in our family at Mercury. He is spreading lies about the company. It is because of him that the American came to Moscow. You know, my sweet bird, that I abhor violence as much as you do, but sometimes . . .” His voice had trailed off, and she could feel his hurt, his fear, his apprehension.

  “Boris will tell you what you must do,” he’d gone on. “It will be quick, but messy, and for that I am sorry. Get in. Do the job. Get out. The Americans will think it was one of their own. This type of thing happens every day there. ‘Running amok,’ they call it.”

  Tatiana glanced at Boris, who had his nose buried in an American newspaper. “What do you find so amusing in the paper?” she asked.

  “Amusing?” Boris cast her a sidelong glance. “Why, nothing. This is the Wall Street Journal. Business news. Nothing amusing at all.” He began to read the newspaper again, but stopped after a moment, lowering it to his lap. “I am not going to stay with Konstantin Romanovich forever, you know.”

  “Oh?” Tatiana was surprised at the admission. Herself, she never intended on leaving Kirov. One of his TV crews had found her in a Petersburg brothel, a twelve-year-old runaway doing ten tricks a day. Incensed, Kirov had seen the house shut down and taken her in as his private ward. He gave her lodging, clothing, food. He was kind. (Which meant he’d never tried to sleep with her.) He was important, and she greatly enjoyed being in the employ of someone who commanded so much respect. No, she reassured herself, she would never leave. “What will you do?”