“You’re the compliance officer,” Jordan Kemp the CIO said with a smile. “You’re supposed to know this shit.”
“Tell me anyway,” Rask said to Pascal.
“A mortgage-backed security is just what it sounds like. It’s basically a bond backed by mortgages. It can have a very large number of mortgages backing them or just a few. Depends on what you want. You’re buying stacks of mortgages and in return you get the interest payments as they come in.”
“We basically use them for cash flow and they look good on the books,” Corbin Reed said. “Very conservative, almost risk-free. Or, at least, they are supposed to be. The gambling that went on during the 90’s and up to ’08 with these was the primary cause of the meltdown. Too many risky mortgages being given out and not enough honesty by the bond rating companies.”
“A tranche is what the financial world calls a group of mortgages with the same rating. Either triple A, which are supposed to be almost risk-free or double A which are also good but not quite as good as triple A. Mortgage-backed securities are not supposed to have any single A, triple B, double B or lower-rated mortgages in them. Okay?”
“I get it but I’m guessing they do have lower-rated mortgages in them even though they’re not supposed to. Am I right?” Rask said.
Everyone in the room went silent for a moment then Walter Pascal said, “Yep, you’re right.”
“How does this happen?” Rask asked.
“The big financial outfits, the too-big-to-fail guys who package the securities for sale, well, let’s just say they have a cozy and mutually beneficial arrangement with the companies that do the ratings,” Jordan Kemp said.
“Back to my original question,” said Reed. “What do we do with this guy? Our snoopy bond trader.”
Reed looked around the table at each man then stopped when he got to Ethan Rask.
“Nothing right now,” Rask said. “It’s too soon since McGarry fell down the cliff. Let me think about it.”
“How much will this affect our cash flow?” Reed asked Walter Pascal.
“A little, not bad. With the new investors you’ve brought in, it won’t make a blip in our plans.”
“Okay but keep an eye on him,” Reed told Rask then looked at Walter.
Both nodded their heads in agreement.
As the meeting was breaking up, Ethan Rask motioned to their boss to follow him into his office. When the two men were seated in the windowless, soundproofed room, Rask lit a cigarette and Corbin Reed decided to take one also.
“I know a guy who can take care of this for us. He’s among the very best. He never fails and will do it in a way that no one will ever trace it back to us,” said Rask.
“How do you know him?” Reed asked.
“From my days working for the missing, presumed dearly departed, Leo Balkus,” Rask answered.
While he enjoyed the rare cigarette he was sucking on, Corbin sat silently thinking about it for a minute.
“Go ahead,” he finally said. “We’re too close. Only six or eight more months and I don’t think Judd is going to let it alone.”
“I agree,” Rask said. “The way this guy works is, he sets the price, you wire half upfront. Once he receives that payment, you won’t hear from him again. If you change your mind, too bad, you won’t be able to get a hold of him to call it off.
“He also makes it clear that if the target dies from a heart attack, gets hit by lightning or trampled by an elephant or any other unfortunate circumstance, you still pay the second half of the contract. Just so you know that. You want to think about it?”
“No, let’s do it. But we have the Fourth of July party coming up. Make sure he waits until after that. I don’t want this hanging over everybody at the party.”
“If you stiff this guy, you’re next and there are a couple stories floating around about what he did when guys tried that. I heard Leo tried and a good friend of his got sent to him stuffed in a box. Almost every bone in his body was broken before he died.”
“Jesus Christ. Is that true?”
“Yeah, I heard it from a guy who saw it.”
“Okay, don’t worry, we won’t stiff him. How do you get a hold of him?”
“I know a guy in Chicago I can work through. I’ll have an answer maybe even by this afternoon. How soon do you want it done?”
“Like I said, just not before the weekend of the Fourth.”
“Okay, I’ll get the ball rolling.”
“What’s the guy’s name?” Reed asked.
“Charlie Dudek and I don’t know if that’s his real name. He works out of somewhere in the Midwest, or so I hear,” Rask answered.
Ten minutes after he left the meeting in Suite 2007, Victor Espinosa was walking down LaSalle toward downtown Minneapolis. When he was two blocks from the office and certain no one had followed him, he pulled out a flip phone and speed dialed the only number in the phone’s directory. It rang once and a familiar voice answered. Without even saying hello, the man said in Spanish, “I’ll call you back in two minutes.”
In precisely two minutes Espinosa’s phone rang and he answered it before the first ring finished.
“What’s wrong, my friend?” Pablo Quinones, the consejero to El Callado asked still speaking Spanish
“We have a problem,” Espinosa calmly told him. He then spent two minutes explaining the meeting he had recently been in and what it was all about.
“I see,” Quinones said. “Do you believe it is serious enough that we should take care of it?”
“Yes,” Espinosa said while still walking around downtown. “We’re too close. Only seven or eight more months. We can’t let anything interrupt our plans. But the firm has the Fourth of July party coming up. Don’t do anything before that. We don’t want this hanging over everybody at the party.”
Quinones paused for a moment and then said, “I agree. I’ll take care of it. You continue to act as if nothing is happening. Keep me updated.”
“Of course, my friend,” Espinosa said.
At 4:15 that afternoon, Rask went into Corbin Reed’s office and said, “We’re all set.”
Reed asked, “How much?”
“One fifty,” Rask replied.
“He’s not cheap, is he?”
“Nope, but he’s worth it. You’ll see.”
“Did you pay the first half?” Reed asked.
“Yeah. It’s all set. He acknowledged receipt and we won’t hear from him again.”
“Okay,” Reed sighed.
“What?” Rask asked him.
“Nothing. I didn’t want this and I just hope this is it.”
“Yeah, me too.”
EIGHT
Corbin Reed was at his desk reviewing the website of the Minneapolis Club in downtown Minneapolis. He had a lunch meeting with David Corwin, a sucker he was reeling in, and he wanted to learn as much as he could about the place they were meeting. Founded in 1883, it was a private club for the movers and shakers in the business, civic and social leaders of the Upper Midwest; the place where old and new money came together. The club featured a pool, large exercise facility, private dining and facilities to accommodate their members’ every need.
“Delivering on that promise has placed the Minneapolis Club amongst the Five Star Platinum Clubs of the world,” Corbin quietly read out loud, a snippet from the Club’s home page.
“Wow,” he continued, “they even let in people of color and women. How progressive of them.”
“Who does?” Jordan Kemp asked.
Jordan had entered Corbin’s office without knocking, as he always did, just in time to hear Corbin’s last remark.
“The Minneapolis Club,” Corbin said. “Says so right here on their website.”
“Through the front door or the back? Are you thinking about joining?” Jordan asked as he sat down in front of his friend’s desk.
“By invitation only. I have a lunch meeting there with David Corwin and Alan Phelps, remember? Alan has been singing our prai
ses and it’s time to reel in Corwin. I’d love to get a meeting with the old gal that runs the bulk of the Corwin money, Vivian Donohue. That would be a score…”
“What did we decide about getting too greedy? Stay under the radar. Don’t attract too much attention,” Jordan reminded him.
“Yeah, yeah, you’re right. But you know it isn’t only about the money. We’ll live extremely well. Sometimes it’s the hunt. It’s like Marlin fishing. Bringing in a thirteen or fourteen-hundred-pound Blue Marlin. You don’t do it to eat the thing. You do it for the sport, for the excitement.”
“Okay, go fishing or go grizzly bear hunting with nothing but a knife, macho man, if you need the adrenaline rush. But keep your head when it comes to customers and stay the hell away from Vivian Donahue.”
Corbin laughed and said, “Yeah, you’re right.”
“What time’s your meeting?”
“Noon,” Corbin replied.
“Where’s Rask?”
“Playing compliance officer and finishing up our SEC report with Woody Symanski.”
While this conversation was taking place, the compliance officer, or at least the man with the title, Ethan Rask, was in a meeting. Woody Symanski was an agent of the Securities and Exchange Commission. His office was in Chicago at the SEC Regional office which had jurisdiction over Minnesota, among several other states. Rask and Symanski were meeting in a room at the Airport Hilton in Bloomington to wrap up the SEC audit of CAR Securities. Symanski, a lawyer and an accountant, was sitting at a table in the room rechecking the final document for the third time. When he finished, he placed it with the others on the table. Rask was patiently waiting, lying on the room’s bed with his coat off and shoes on the floor. He had been watching a tabloid talk show while Symanski finished up.
“Everything look okay?” Rask asked.
“Yep, you’re good to go,” Symanski said.
“Great,” Rask said. He bounced off the bed, clicked off the TV and said, “How do people watch this shit?”
Rask slid his feet into his loafers, stood and in one fluid motion, swung his suit coat over his head and slipped it on. He stepped over to Symanski who rose to meet him. Rask handed him the envelope with one hundred crisp one hundred dollar bills in it and said, “Sure you don’t want a ride to the airport?”
“No, I’ll stick around for a while, have lunch and catch a flight around 3:15,” Symanski replied. “No reason to hurry back to the office.”
“Okay. Stay in touch if anything comes up.”
“You’ll be fine,” Symanski said. “You’re too small for anyone to get too excited about.”
Corbin Reed had parked his car in a ramp, a block from his destination. The weather was nice and a short walk never bothered him. The Minneapolis Club is located on Second Avenue between Seventh and Eighth Street. A beautiful, vine-covered brick building, the exterior to which looked like it should be located on an Ivy League campus, not a city street in the Midwest.
Reed walked through the brick-columned entryway passed the spike-topped, wrought iron fence. He went inside, introduced himself to the concierge who smiled politely and led him through the walnut paneled interior and expensive furnishings to a small, intimate meeting room. Waiting for him were the two men he was meeting, Alan Phelps and David Corwin.
Phelps was the CFO of a mid-size local internet retailer owned by an investment group in New York. One of his functions was to administer the company’s 401(k) plan. Phelps had known Corbin Reed for over two years, had invested the entire 401(k) plan with CAR Securities and never regretted it. In fact, it was a headache that Phelps was delighted Corbin Reed had taken off of his desk. Both the employee’s and the employer’s 401(k) contribution flowed directly to CAR Securities and the returns, month after month, were solid. It never occurred to Phelps that maybe the returns were a little too solid.
Phelps had met David Corwin by being teamed up with him for a charity golf tournament Phelps’ employer sent him to. Both were about the same age and found out they were at Yale the same time. A friendship ensued and eventually the subject of investing naturally occurred. Phelps could not have been more enthusiastic singing the praises of CAR Securities and his good friend, Corbin Reed. Approximately four months ago, after stalling for several months, Reed agreed to meet this member of the very wealthy Corwin family.
Reed had perfected his sales pitch almost to an art form. In fact, it wasn’t a sales pitch at all. What he did was appear very reluctant to accept a new investor. He would make the mark believe that giving money to CAR Securities wasn’t just a good investment idea, he would be buying into an exclusive club, very much like the one they were sitting in now.
The two men rose from the comfortable, leather-covered chairs as Reed was shown in. Pleasant greetings took place and before they could retake their seats at the table, a Latino waiter magically appeared.
“Would you like something to drink?” Phelps asked Reed.
“An iced tea will be fine,” Reed said to the young man.
For the first half-hour, the three men talked about everything but money. Reed would never be the first to bring up that subject in any form. They talked about the NBA and Stanley Cup finals, the upcoming U.S. Open and even got into sport fishing.
During this time their lunch order was taken and after it was served, sirloins and salads all around, David Corwin broke the ice.
“The last time we met, we talked about me moving money to your firm,” he said to Reed.
“I know, I know,” Reed said with a sigh, sounding reluctant and disappointed that the subject even came up. He cut a piece of his steak, placed it in his mouth and while chewing the tender meat, dabbed his lips with the linen napkin.
“I still have the same reservations. I’d hate to disappoint someone of your stature…”
Corwin started to speak but was cut off by Phelps who said, “Oh, don’t be modest, David. Don’t be ashamed of the fact you have money. That’s what politicians do: try to make you feel guilty and people who don’t have much money envious. They do it to play class-warfare and sucker people into voting for them. It’s shameful and most of these politicians that do it have as much money as anyone. They are in the same one percent class they try to denigrate. The whole thing drips hypocrisy.”
“I’ll tell you what,” Reed said placing the napkin back in his lap, folding his hands on top of the napkin and looking into Corwin’s eyes. “Like I told you, we’re intentionally staying small to give the best customer service. If you really want to do this, we’ll take the twenty million and set up an account that I will personally oversee.”
Corwin looked at Alan Phelps who raised his eyebrows, nodded his head and smiled back at him. “You won’t regret it,” Phelps said.
“Thank you,” an obviously relieved David Corwin said to Reed.
Reed removed an envelope from his inside coat pocket and said, “I brought along the paperwork necessary to set up your account and an extra copy for you. After we finish lunch, we’ll go over everything. I’ll get it set up this afternoon and you can have the money wired in at your convenience.”
“How soon?” Corwin anxiously asked.
Reed slightly shrugged his shoulders and said, “Tomorrow, for sure. Maybe not today anymore, but we’ll be all set for you for a transfer tomorrow. I’ll see to it myself.”
When Reed arrived back at his office he found Jordan Kemp and Ethan Rask in Rask’s office in Suite 2007.
“How’d it go?” Rask asked when Reed walked.
“No problem,” he replied. He handed the paperwork to Kemp then said, “Twenty million tomorrow.”
“Just stay away from his aunt,” Kemp reminded him.
“Relax. What do you think, I’m gonna go out and hit on the old girl? What is she, seventy, seventy-five?” Reed said, keeping it to himself that he had accepted an invitation to the mansion on Lake Minnetonka for this coming Saturday.
NINE
Tony Carvelli expertly slid his sleek, black C
amaro into a parking spot in front of his destination. He was on the street in front of an eighty-year-old, two-story brick house in South Minneapolis. The house’s owner was a computer whiz Carvelli had caught hacking one of Tony’s business clients. Instead of turning him into the cops or FBI, Tony scared ten years off of his life and kept him in his pocket. It was fairly often that Tony needed a little off-the-books computer research and the guy he was seeing was great at it. Of course, Tony paid him well and in cash.
Carvelli wasn’t much of a morning person. Even though it was 9:30, for Tony, that was early. Despite the time, he was actually running a little late. He had called ahead barely five minutes ago to let the man know he was coming.
Paul Baker, christened Pavel Bykowski by his devout Roman Catholic mother, was a world-class hacker. Whatever there was to know about someone, Paul could dig it out of the Internet. Baker’s office was the entire second floor of his mortgage-free home. It was mortgage free because Paul had hacked the lender and wiped the debt clean. There had been two bedrooms upstairs and the wall separating them was gone, creating sufficient space for his setup. Unknown, but certainly suspected by Tony Carvelli, Baker had at least a dozen more cash clients, including two FBI agents. It was enough to keep Paul Baker supplied with the latest equipment and all the best weed he desired.
Tony reached the door and before he could knock, Baker shocked him by opening the door first.
“Wow,” Carvelli said. “That’s a first. Usually I have to break in to find you.”
“Ah, kiss my ass, Carvelli. You never had to break-in. Maybe pound on the door a few times,” the hacker said as he stepped aside to let Carvelli in.
“What do you have?” Carvelli asked.
Baker picked up a stapled, small stack of papers off of the living room coffee table and handed them to Carvelli. Tony walked into the living room and sat down on the couch. Over the next ten minutes, Tony silently paged through the document.
[Marc Kadella 06.0] Delayed Justice Page 6