“Uh, you’re very welcome.”
I couldn’t help but cringe. Bell had just laid out a case of financial Armageddon for Saxton Silvers, and pictured on television screens everywhere was our fearless leader speaking from the golf course at the Breakers Hotel, his nose shiny with sun-screen and a plaid golf cap atop his head. He must have looked ridiculous to anyone who wasn’t within three blocks of tony Worth Avenue.
“Mr. Wyle, let me begin by asking you this: Why are traders dumping their shares in Saxton Silvers?”
“No one’s dumping anything,” said Wyle.
“Sir, it is now nine forty-six A.M. Eastern time, and in just sixteen minutes of trading your stock has dropped from one hundred ninety per share to one hundred thirty.”
“Because of you!” Eric said to the screen.
Our CEO, fortunately, kept his cool. “The firm’s capital reserves are more than sufficient to cover the write downs that we will announce later today. The market will correct itself, and the price will come back just as soon as these silly rumors stop.”
“If that’s the case, sir, then why are Saxton Silvers’ most talented people dumping their stock in the firm?”
“That’s ridiculous. I don’t have any idea what you’re talking about.”
“Well, let me give you an example. Michael Cantella has twice been named Saxton Silvers’ investment advisor of the year, correct?”
“I believe that’s true.”
Eric and I looked at each other, equally confused.
“He also holds the title of vice president, as head of your Green Division?”
“He’s certainly one of our most outstanding young talents.”
“No argument there,” said Bell. “He’s appeared a half dozen times on FNN, including twice on my own show—which, by the way, normally appears Monday through Friday at five P.M., so viewers, please set your TiVo.”
“And your point is?” said Wyle.
“Simple,” said Bell—and he seemed to be struggling not to smile. “My sources tell me that just yesterday, Mr. Cantella liquidated his entire personal holdings in Saxton Silvers—nearly two million dollars’ worth of stock and options.”
On screen, our CEO looked stunned. Across the room, Eric looked even more stunned. I stared at the screen with my mouth hanging open.
Bell said, “Sir, what about that?”
“I—I can’t comment, except to say that it sounds like more silly rumors.”
“It’s no rumor,” said Bell, holding up a document. “I have here—”
My cell rang, and I recognized the incoming number: It was Sonya, the general counsel.
“Be in my office in two minutes,” Sonya said, without even a hello.
“Michael, what the hell is going on?” said Eric.
“I can explain,” I told him, then went back to the phone. “Sonya, I’m with Eric.”
“I’ll be right there,” she said, and hung up.
“I’m listening,” said Eric.
“This is not what it looks like,” I said, taking a deep breath to start my story.
But Eric was now staring past me in disbelief. On FNN, Bell was going to a commercial—but not before the network flashed a new BREAKING NEWS banner on the screen: SAXTON SILVERS “ADVISOR OF THE YEAR” DUMPS ALL S&S HOLDINGS.
My burned hand was stinging worse by the minute, and echoing in my ear once again was Stanley Brewer’s warning about the type of work I did, the enemies I’d surely made—enemies I didn’t even know I had.
“That’s the thing about revenge,” I said, watching the screen.
“Revenge?” said Eric. “Who said anything about revenge?”
“No one, forget it,” I said, but the lawyer’s words were still ringing.
You never know when—if ever—they are going to call it even.
13
ERIC DIDN’T OFTEN MAKE ME SWEAT, BUT HE WASN’T WEARING HIS mentor hat this morning. It was hard to believe that twelve hours earlier I had been celebrating my birthday with scores of guests—including Eric—who probably thought I was one of the luckiest guys on the planet. Not one of them would have traded places with me now.
“Stuart is going to call me as soon as he putts out on the next hole,” said Eric, only slightly facetious about our CEO’s priorities, “so I need some straight talk: Is there any truth to what Chuck Bell just said about selling your stock?”
Eric had only a rough idea of my identity theft problems, so I laid out the details as quickly as I could. Sonya arrived just as I was getting to the FNN report:
“In typical FNN style,” I said, “the report is technically accurate, but it’s grossly misleading. True, all of my stock in Saxton Silvers was liquidated, but it was liquidated along with all of my other holdings—not by me, but by an identity thief who has taken everything I own and moved the cash into a secret offshore account.”
I expected Sonya to jump in and second my explanation, but she was silent. Not merely silent. She seemed skeptical.
Eric said, “Is there something you’d like to add, Sonya?”
“I’m concerned,” she said.
My stomach churned. I didn’t know where this was headed, but I suddenly recalled that it was within Saxton Silvers’ protocol to fire someone so long as there were more than two people in the room. At least I still had clients to go with me.
Thank God I didn’t drink the Kool-Aid.
“Concerned about what?” I asked.
She came to the edge of her chair and leaned toward Eric, hands folded atop her knees. It was her I’m-talking-to-the-president-and-only-to-the-president posture.
“Here’s the thing,” said Sonya. “Michael’s in management—an officer of the company—with access to inside information. He sold his shares the day before the firm publicly announced another twenty-two billion dollars in subprime write-downs. That could trigger an SEC investigation for insider trading.”
“But I didn’t sell anything. An identity thief liquidated my account and moved the money offshore.”
“But if I’m the SEC, your explanation raises an obvious question: Who controls the secret Cayman Islands account? In other words, are you operating behind a cleverly crafted financial and corporate shell game to avoid going to jail for illegal insider trading?”
“I hear what you’re saying,” said Eric, shaking his head. “But that’s a very cynical view.”
Sonya said, “I’m not making any accusations, but from a regulator’s standpoint, the timing of the sale and resultant profit seem a little too convenient.”
I checked the TV on the wall. The audio was muted, but Bell was still on the air and the breaking-news banner proclaimed that Saxton Silvers’ stock was down another thirty dollars per share—about ninety dollars for the day.
“Do the math,” said Sonya. “How many shares did you hold, Michael?”
“About ten thousand and change.”
“So the difference between selling yesterday and selling today…about a million dollars, right?”
Her theory couldn’t have been further from the truth, but the implication still gave me chills.
“Look, I didn’t do anything wrong,” I said. “I have no idea who accessed my account, and I have no clue where that money is headed. Why would I use the firm’s outside counsel to enlist the help of the FBI if I was the one behind the scheme?”
“As I recall,” said Sonya, “hiring Cool Cash and going to the FBI was my idea.”
Her remark made me bristle. “What are you trying to say?”
“The fact that the firm called the FBI won’t stop the regulators from being highly suspicious about the timing of your ‘identity theft.’”
I showed her my hand. “What about the package I got this morning? You and Brewer told me not to talk to the FBI, and I talked to them anyway when they came to check out the elevator. Is that what a crook does when he’s hiding something?”
She didn’t answer.
“The fact is,” I said, “I didn’t
know about the additional subprime write-down that was going to be announced today. Eric just told me about it ten minutes ago.” I glanced at my mentor. He looked ashen. “Isn’t that right, Eric?”
He breathed in and out, staring at the television.
“Eric?”
“I just did the math for myself,” he said. “I lost two-hundred-forty million in the last forty-five minutes.”
I ran a hand through my hair. “This is insane.”
“It also changes things,” said Sonya. “It no longer seems appropriate for the firm to have its outside counsel dealing with the FBI on your behalf.”
“Why not?”
“Conflict of interest. Saxton Silvers shouldn’t use its lawyers to represent someone who might be accused of illegally trading its stock.”
“My life savings are disappearing deeper and deeper into the international banking system with every passing minute and you want me to change lawyers now?”
“The FBI has already been alerted. Agents are on the case. There’s really nothing more for you to do on that front. It’s only a question of follow-up.”
“Now you’re pissing me off, Sonya.”
“Calm down, Michael,” said Eric.
“No,” I said. “I’ve done nothing wrong, and without the proper follow-up, I could lose everything!”
“We all could,” said Sonya, “if we don’t get our hands around the bigger crisis.”
Eric’s gaze drifted back toward the television screen. “Three hundred million,” he said, muttering in disbelief. “Now I’m down three hundred million dollars.”
There was a knock on the door frame that rattled the glass. Before Eric could ask who it was, the door flew open. Kent Frost burst into the room. Eric’s assistant had him by the arm, having failed to keep him from entering unannounced.
“Eric, I need you right now,” Kent said.
Kent Frost was a few years older than me, but we’d started at the firm around the same time and had competed for Eric’s praise for almost ten years. Each year in December, without fail, Kent made it known throughout the firm that his annual bonus dwarfed mine. Frost ran the Structured Products Division, and his specialty was collaterized debt obligations made with subprime mortgages. He was the shameless recipient of the award given at the banquet I had gladly missed for my surprise birthday party.
“What is it?” asked Eric.
“A new wrinkle,” said Frost.
“Don’t tell me,” I said, trying not to scoff. “You left off a zero in the twenty-two billion?”
Kent glared. Up until six months ago, he had at least tried to hide his contempt for me and anyone else who disagreed with him. That all changed in October, when I aired my view that with one out of every five mortgages in America being “subprime,” the whole market was a ticking time bomb—another one of those “Fonzie schemes,” as Papa called them. Admittedly, criticizing the business activities of a sister division was overstepping my authority, but if the subprime guys refused to rein themselves in, someone had to blow the whistle.
“Eric,” said Frost, “this is private.” He meant it was not for my ears. Eric nodded.
“Holy shit,” said Sonya. She was looking at her BlackBerry.
“What now?” asked Eric.
“Our stock was at ten times normal volume in the first hour of trading. At this pace, we could be looking at seventy million shares by the end of the day.”
Eric massaged the bridge of his nose, as if staving off a migraine. “One thing at a time. Kent, take a seat. Michael, we’ll talk later.”
Frost entered. I started toward the door, then stopped. The firm’s subprime crisis had to be the president’s priority, but I needed someone to focus on a problem we could actually fix—mine.
“One more thing,” I said.
The three of them waited, but I paused. That blowhard Chuck Bell had told the world that the Saxton Silvers’ investment advisor of the year violated every securities regulation imaginable to cash out before our stock went into free fall. The market was now tanking, and, when the dust cleared, it was entirely possible that none of us would have anything left but our reputations. I had the right to clear mine—to tell the truth that my identity was stolen. End of story.
“What is it, Michael?”
Eric was definitely feeling the stress. Now was not the time to ask for permission. Later, I’d ask for forgiveness.
“Nothing,” I said. “We’ll stay in touch on this.”
14
I CAME TO MY SENSES IN THE ELEVATOR. OF COURSE I WANTED TO take my case to the airwaves and give everybody hell, not just Chuck Bell. But I also still wanted to have a job at the end of the day.
Keep your cool, Cantella.
It was the Kent Frost effect. The guy just had a way of setting me off.
Fortunately, our paths didn’t often cross. The subprime alchemists worked in their own building, three modified apartments on Manhattan’s Upper East Side. The official name was the Structured Products Division, but everyone called it the CDO factory—collateralized debt obligations. I’d gone there only once, last October, just to check things out. Luckily, Frost had been out when I arrived. I got thirty minutes alone with his financial engineer—a Twinkie-eating, twentysomething geek named Wayne who spent every waking hour staring at trading screens. It positively thrilled Wayne to find someone willing to listen to him talk about what he did all day long. We went straight to the latest data, and Wayne gave me a primer on the sixteen million subprime mortgages in Frost’s CDO factory.
Frost had his suppliers all over the country: banks and mortgage companies that loaned money to people like that Bahamian taxi driver Ivy and I had met in Miami—borrowers with credit scores under 500 and no money for a down payment, no income to make their mortgage payment, and no business having a credit card, let alone a half-million dollars or more in subprime mortgages. The lenders didn’t worry about it because they immediately sold those toxic mortgages to Frost and others who pooled all of them together into mortgage-backed securities. Frost didn’t worry about it because the theory was that not all the mortgages would fail, and Frost spread the risk even wider, taking little slices from lots of different mortgage-backed securities to create CDOs, which he sold to really smart investors like insurance companies and pension-fund managers. The smart investors didn’t worry about it because they controlled the global pool of money—about seventy trillion dollars—and they were earning 10 percent returns instead of the measly 1 percent that the Fed was offering on T-bills and other safe investments. If the really smart investors wouldn’t buy them, Frost still didn’t worry, because little towns in places like Norway or Iceland would. They were always looking for “safe” investments, and Frost had no trouble getting the Triple-A stamp of approval from the rating agencies, who based their ratings on mathematical formulas that assumed home values would continue to rise 8 percent annually in perpetuity. That was like an insurance company writing life insurance policies based on actuarial tables that assumed the insured would never get sick, never get old, never die. All I could figure was that those rating geniuses had been under the influence of triple shots of tequila.
“I’m getting a little nervous,” Wayne had told me, “because we’re starting to see something we’ve never seen before. Borrowers defaulting on their very first payment. It’s weird.”
It wasn’t weird. It was the burst of the housing bubble. Taxi drivers in Miami who counted on flippin’ one flippin’ condo to pay the flippin’ mortgage on their next flippin’ condo suddenly couldn’t flip a flippin’ thing. I started to explain this to Wayne, but that was the moment Frost returned to the CDO factory, physically pushed me aside, and chewed out Wayne for showing me the data.
“Get the fuck out of here!” Frost had told me.
The “conversation” had gotten much uglier than that, ending with me charging out of the factory and swearing on my mother’s grave that I was “not going to stand by and watch one greedy son of a bitch
fly the plane into the side of a mountain.”
It may not have been the perfect metaphor, but with Saxton Silvers stock in the tank this morning on the heels of yet another subprime write-down, it just about summed things up.
“Forty…two,” said the mechanical voice in the elevator.
That was my floor, but I decided to stay in the car and pushed nineteen. Sonya had pulled Cool Cash off the trail of my stolen money, but she’d put no restriction on my using the firm’s internal security force. This was a sensible application of the “Better to ask for forgiveness” rule.
“Going…down,” the elevator voice said.
As the doors were closing, I spotted a familiar old man in the reception area. I couldn’t believe my eyes, but I hit the Open button too late, and the elevator started downward. A flurry of button punching brought the car to a stop. I got off on forty and ran up two flights of stairs, but the reception area was now empty. I hurried down the hall to my office and found him standing at the window, taking in the view of Midtown.
“Papa?”
He turned. “Surprise!”
I went and gave him a hug. “What are you doing here?”
“We’ve come to celebrate your happy birthday, of course.”
Papa never celebrated just birthdays; it was always “happy birthdays,” as if the two words were a single, inseparable noun.
“Got here for free, too,” he said. “Remember those frequent-flier passes you gave us?”
“You were supposed to use those for a trip to Europe.”
“Been there once before. Ended up having a pretty miserable time at a beach called Omaha.”
I heard the toilet flush in my private bathroom, and Nana stepped out. It was her first stop wherever she went: big heart, small bladder.
I gave her a kiss, and the three of us shared a group hug. It had been three months since I’d last visited them in Florida, the longest stretch in years. They never seemed to change, which was what I loved about them. The bruise on Papa’s forehead, however, was definitely new.
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