Alana stood there stone-faced.
“Thanks, Victor. That’s very thoughtful. But I’m not comfortable working for anyone else. I think I’ll be my own client for as long as I can afford myself.” Scarne then decided to burn his bridges, and the roads leading up to them. “Besides, I know why Carlo Brutti shot up Alana’s party and tracked her to Antigua. Poor Goetz. The only accidental death in this whole farce. And I know that you killed both Josh Shields and his father. What I don’t know is why. But I will soon.” He turned to the bartender, who was standing there, mouth agape, pouring wine into a glass overflowing onto the counter. “That’s going to stain. Give the wine a rest and pour me another Jack Daniels, please. Try to keep it in the glass. Victor, do you want anything?”
If Boyko was surprised by anything Scarne said, he didn’t show it. He merely smiled and stared at Ballantrae.
“Jake, I honestly don’t know what you are talking about,” Ballantrae said, glancing nervously in Boyko’s direction. “I guess what happened over the last few days must have affected you more than you realize. You need help. But I have to warn you, despite my gratitude, I will defend my reputation vigorously, even to the point of a slander suit. Now, I think you had better leave.”
“Victor, you lie even worse than you golf.”
It was a weak parting shot, but Ballantrae reddened. Scarne brushed past Garza and Keitel and walked out the door. Very dramatic, he thought. Probably just got myself killed. As he left the room he glanced back. Ballantrae was talking rapidly to Boyko. No one followed him out to his car. If they wanted him, they would try the Delano first. When he hit Collins Avenue, he turned toward South Beach, just to be on the safe side. No one was on his tail, and he doubled back and drove to La Gorce. Once again, he entered unnoticed.
Back in the apartment, Scarne poured himself a drink and found the pack of cigarettes. He walked out to the deck, opened up a beach chair and sat down next to a small table before realizing he didn’t have an ashtray. Then he spotted a large seashell on another table in the corner. It was a rather nondescript and discolored conch. It would do. He carried it to his chair. Before flicking an ash into it, he put the shell to his ear. He thought of Emma and Josh Shields as he listened for the hollow sound of the “ocean” – his own blood. Strange. There was only the faintest hum. Something fell into his ear, and he almost dropped the shell, thinking it was some sort of small animal or insect. He looked into the conch and something long and black spilled out, giving him another bad moment. But it just hung there and he immediately knew what it was.
“Son of a bitch.”
With a rising sense of excitement, he gripped the end and pulled. Several more inches of black cord came out, but then whatever was at the end got stuck in the shell. It wouldn’t budge.
Scarne walked to the kitchen. He wrapped the shell in a towel and put it in the sink. He found a meat hammer in a drawer and gave the bundle a sharp rap. He heard the shell crack. When he opened the towel, the object inside came loose easily. Scarne lifted it by the black mini-lanyard and smiled. It was two-inch long computer flash drive.
Scarne looked around the still-trashed apartment.
“Way to go, Josh.”
CHAPTER 48 – PUBLISH OR PERISH
Although he was almost certain no one knew where he was, Scarne didn’t feel the least bit silly tilting a chair against the front door knob of the La Gorce apartment. He didn’t bother about the sliders to the deck; he would take his chances if Spiderman was on the Ballantrae payroll. But he slept fitfully, and with the Bersa close at hand. The next morning he brewed coffee and took a cold shower. He’d have to stop drinking on the job. He couldn’t afford any mistakes. He spent an hour doing what he could to clean up the apartment. Then he packed and called the South Florida Times.
***
“I heard about Sheldon Shields,” Pourier said without preamble. “I presume there is a connection or you wouldn’t be back here.”
“This may tell us.” The editor’s eyes lit up when Scarne held up the flash drive. “Josh hid it in his apartment.”
“Where?”
Scarne told him.
“Josh and his shells,” Pourier said. “He was always bringing in a bag for me to give to my kids.”
He quickly put the flash drive into the UBS slot of his computer. A list of 12 folders popped upon the screen: DRAFTS, FRAUD (Insurance), FRAUD (Securities), GOVERNMENT REGULATORS, LEGITIMATE BUSINESSES, MISCELLANEOUS, MONEY LAUNDERING, OFFSHORE BANKING, POLITICAL INFLUENCE, PONZIS, RESEARCH and SOURCES. He copied them to the computer’s hard drive. Scarne didn’t object. The more people with access, the better.
“Why do I think the LEGITIMATE BUSINESSES folder will be thin,” Pourier commented, moving the cursor to DRAFT. He opened it, revealing three Word documents: Ballantrae (First Draft), Ballantrae (Final Draft) and To Do. He put the cursor over the Final Draft Word doc. “Only 28 kilobytes. Virtually empty.”
“Ballantrae got to write Josh’s Final Draft,” Scarne said.
The cursor moved to First Draft. It contained almost 800 KB.
***
Business Empire Founded on Fraud Expands in Criminality
By Josh Hidless
“This sounds promising,” Pourier said dryly. “Although I’ll never understand why reporters insist on writing their own headlines. We change them anyway.”
They started reading:
“The Ballantrae Financial Group, a conglomerate of financial services, banking, insurance and trust companies, is nothing more than a front – a clearing house, in fact – for a variety of criminal organizations, sources within the company have revealed. The sources, who have asked for anonymity, said that Ballantrae, which has offices in New York, Miami, Dallas, Seattle, Chicago, South America, the Caribbean and in many European countries, has, in effect, created a huge Ponzi scheme to hide its real operations and to launder what may potentially be billions of dollars in criminally sourced money from both foreign and domestic partners. The alleged mastermind of this financial plot is Victor Ballantrae, an Australian businessman who is the sole owner of the Ballantrae Group.
Although Ballantrae has been lionized in the financial press and is considered a rising star on Wall Street, he has also apparently caught the eye of several American and international police and regulatory agencies, these sources say. But his company’s structure – it consists of more than 50 “affiliated” companies, all with their own boards of directors and lawyers – has so far thwarted any serious prosecutions, they contend.
According to public records, Ballantrae has lost only a few minor skirmishes with the Securities and Exchange Commission and the National Association of Securities Dealers, which have imposed relatively minor fines in a handful of small cases involving allegedly fraudulent securities transactions and aggressive recruitment of employees from rival brokers. In fact, a survey of more than 100 complaints brought against Ballantrae’s securities brokers by clients during the past two years reveals that the company won approximately 75% of the cases. (Brokerage disputes rarely end up in court. Most are adjudicated by arbitrators who have worked in the brokerage industry. Clients who lose their cases must pay for the arbitration.)
“He’s editorializing here,” Pourier said. “But I guess that’s all you have to know about Wall Street.”
They continued reading.
Ballantrae’s non-brokerage companies have also been the target of many civil suits, all of which have been settled or withdrawn.
“This is small change for Ballantrae,” one source said of the settlements, which are confidential. “It’s breakage, the cost of doing business.”
This source, a former Ballantrae employee, said Ballantrae’s aggressive expansion into financial services is part of its plan to launder money that is deposited in Ballantrae International Bank, based in Antigua. According to this source (and confirmed by others), the money that flows into that offshore bank is “invested” in the expansion of Ballantrae’s financial services
business in America. Approximately half of the money in the offshore bank comes from “legitimate” or “quasi-legitimate” sources, mainly very rich South Americans trying to avoid confiscatory estate taxation in their home countries or political appropriation of their wealth. These deposits are then commingled with other deposits from less savory “investors,” reportedly including both the Russian and Italian “Mafias” on the West Coast of the United States.
“Holy shit,” Pourier said.
“Originally much of the criminal money came from drug cartels, arms merchants and certain Middle Eastern ‘charitable’ organizations that were fronts for various terrorist groups,” claimed one source. “But after 9/11 a lot of that money dried up.” This source, who left Ballantrae after he became suspicious of the returns the company was promising its bank investors, said that Ballantrae is being forced to move into financial services in the United States, where it has created a growing broker/dealer business, complete with advisors who sell securities, investment bankers who structure deals, analysts who sell research (some of it quite good, he acknowledged), real estate developers, a marketing arm to attract new investors in the U.S. and a huge legal department that has, to this point, kept regulators and law enforcement officials tied in knots.
“It’s a classic Ponzi,” this source said. “The money coming into the offshore bank is sent onshore in the States, where it creates an aura of legitimacy. Real clients invest real money in real securities, and may even do well on their legitimate investments. Ballantrae earns commissions and investment banking fees, but nowhere near enough to cover the expenses of its rapid expansion. But it doesn’t matter. That legitimacy in America translates into even more deposits coming into the bank.”
“Some of these quotes sound a bit too pat,” Pourier said. “I wonder if Josh embellished them or put words into the mouth of his sources.”
“Reporters embellish? I’m shocked.”
“Yeah, I know. But I’m just saying we’ll have to be careful. My lawyers will have a field day with this stuff.”
“Maybe we should just ask Josh,” Scarne said.
Pourier looked pained and then continued scrolling.
The scheme, he said, is furthered by the ability of the offshore bank in Antigua to pay very high rates on the company’s certificates of deposit; often two or three basis, or percentage, points higher than similar instruments offered by mainstream U.S. banks. They can offer such rates because part of the bank money invested in the United States has been placed in some highly leveraged hedge funds returning 20% or more. But according to the source (and confirmed by the company’s sales and marketing brochures) Ballantrae tells clients and prospective clients that it achieves its spectacular returns by using a “proprietary” computer-based trading platform that “has created a new paradigm of investment strategy.”
“It’s all bull,” the source continued. “The program only works if the hedge funds continue to perform as advertised and legitimate investors can be lured into putting money into the offshore bank.”
Since the interview with this source, there has been a huge shakeout in the mortgage industry and many prominent hedge funds have collapsed, causing problems for prominent Wall Street firms and shaking the very foundations of the world’s economy. Ballantrae is not immune to the financial cataclysm. Indeed, it may be uniquely vulnerable. According to one source, Ballantrae takes a ‘fee’ for laundering mob money that amounts to maybe 10 percent, equal to hundreds of millions of dollars a year. Mobsters can put up with getting back only nine dollars out of every ten as long as it’s untraceable and squeaky clean, especially when they’re virtually recouping the 10% on C.D.’s. But they are presuming their principal is safe. If Ballantrae’s offshore bank were to stop interest payments on its C.D.’s or, in the worse case, refuse to redeem them (offshore instruments are not guaranteed by the F.D.I.C., as are C.D.’s in U.S. banks), the reaction of some investors can only be imagined.
“They might not be too happy if they find out that Ballantrae is gambling with their money in hedge funds,” the source said.
“That might be the understatement of the century,” Poirior marveled. “If the mob decided to ask for its money back and it’s not there, well, it’s not going to seek arbitration.”
Ballantrae Financial had its origins in a more modest, but still criminal, Ponzi scheme that started in Venezuela and then metastasized to Miami. Money from that original scheme, which was based on the notorious “La Vuelta” scam that defrauded thousands of Venezuelans and Miami residents (mostly Venezuelan expatriates) was then used to fund an even grander fraud involving the sale of $200 million in zero-coupon Venezuelan bonds that the Venezuelan government has disavowed.
The rest of the story was devoted to a detailed explanation of “La Vuelta” and the bond scheme. There was also an incomplete section briefly profiling the various Ballantrae subsidiaries and some of the organization’s major players, including Alana Loeb.
A last line in parenthesis read: (MORE TO COME).
“Afraid not, kid,” Pourier said quietly.
“Open the ‘To Do’ doc.”
Although the story is well sourced, nobody is willing to go on the record. One source said she had heard stories about employees who threatened to spill the beans about the company who then disappeared, or died unexpectedly. She also said that there is something fishy about mortality rates in Ballantrae’s insurance unit. I think she might have read “The Firm” once too often.
Tie up loose ends. Have called the company several times for comment. Provided the basics of the allegations. No response, except a threat to sue. Next step may involve a trip to Antigua.
Still awaiting copy of suit brought against Ballantrae brokers by clients burned in lottery scam. Clients withdrew suit (paid off?).
They started going through the other folders, which each had subfolders and were full of news clippings about the Ballantrae companies and personnel; the Caribbean, Switzerland and other money havens; fragmented interviews; explanations of financial terms; records of phone calls and emails; profiles of politicians and regulators; securities regulations, and examples of financial frauds from the Middle Ages to Madoff.
“This could take hours,” Pourier said, quitting half way through the list. He tilted his chair back and put his hands behind his neck. “I wonder when he had time to sleep, let alone go fishing. That was his passion, you know. That and the goddamn seashells. This has Pulitzer written all over it. It’s a story any reporter would die for.”
Scarne sat on the edge of the desk facing him.
“He apparently did, John. The threat this would reach print would force Ballantrae to stop him, and not with a lawsuit. He couldn’t afford to have his mob investors find out he was gambling their money. In effect, he was running a Ponzi on gangsters. I don’t know what Ballantrae told the mob but I guarantee it wasn’t that they were now in the sub-prime mortgage market and could lose 100% of their money. Criminals are very conservative with their ill-gotten gains. If they found out Ballantrae was gambling their hard-stolen money – after paying him 10% to wash it – they would go nuts.”
He suddenly looked thoughtful.
“What? What it is?”
“I’ve been trying to figure out why so many bodies are piling up. I wouldn’t be surprised if there has been a run on Ballantrae’s bank.”
“What are you talking about?”
He told Pourier about the shooting at Alana’s house and Brutti’s death in Antigua. He left out the video. Pourier picked up a pad from his desk and balanced it on his knee. As Scarne spoke he wrote continuously, pausing only to shake his head.
“Who knows you have all this information?”
“Nobody but you. But I may have overplayed my hand. Last night I shot off my mouth in front of some of his investors, or partners, or whatever the hell they are, including the head of the Ukrainian mob in Seattle. I was bluffing and guessing. Not that it matters. I’m sure they are looking for me.”
“Then it’s in both our interests to get this in print. Once it’s out there, they’ll have more to worry about than you or me.”
“You shouldn’t underestimate these bastards, John. Take whatever precautions you can. When is your next edition?”
“Friday.”
“I think this may be a case of publish or perish.”
“That refers to academics, and I don’t think that’s funny.”
“I guess not. But I don’t see how a story could hurt now. Sheldon Shields is dead. I’m probably next on the list. Whatever happens between now and Friday, one way or another I want Ballantrae finished. But do you have enough to go on? You still have to check things out, don’t you?”
“Of course. We’ll start a full court press. If we can get hold of Josh’s sources, and they confirm what he wrote, there’s enough. We’ll have to talk to the company, of course. And I want the civil suits, but that should be public record. That will give us enough to turn over some rocks.”
Pourior smiled and pointed his pen at Scarne.
“Hell. Even without the sources, we probably have enough to run a ‘where there’s smoke there’s fire story.’”
“Goddamn it!”
“Now what!”
“The sources. If we have their names, then so does Ballantrae.”
“Oh, Christ.”
Pourier slammed his chair forward and reached for his mouse.
“Maybe he used a code or something,” he said, hopefully as he opened the SOURCES folder.
It was a list of six names, with phone numbers. The two men looked at each other. Scarne spoke first.
“He wouldn’t have known what he was dealing with. In his world, companies that feel threatened call their lawyers, not hit men. Ballantrae didn’t realize who Josh was. He considered him just a gnat.”
“It’s been three months since they got his computer?”
Two Jakes Page 36