The index of self destru.., p.28
The Index of Self-Destructive Acts, page 28
She was on her way inside to refill her coffee when the bell rang. At first she thought that Marinela had forgotten her key, but Marinela was on her annual trip home. Kit couldn’t remember the last time someone had rung the bell unannounced at any hour, let alone this early. They got deliveries, they got meter readings, but friends didn’t drop by unexpectedly. This wasn’t a neighborhood where Jehovah’s Witnesses or political canvassers went door to door.
The two men standing outside could have been either of these things, in their boxy dark suits, white shirts, and striped ties of slightly different pattern and color, which might once have hung beside each other on the same discount rack. Above their outfits they wore the studiously solemn expressions of professional pallbearers. One was tall and heavyset, with neatly combed but thinning blond hair and the handsome, tired face of a movie star gone to seed. He held a trunk-sized briefcase in one hand. The other man had a black crew cut and youthful Asian features. He was short and thin. He seemed not just smaller than the first but more compact, as though he’d chosen this shape for himself with efficiency in mind. Instinctively Kit turned first to him.
“Can I help you?”
“Are you Katherine Doyle?”
His tone made clear that he already knew the answer.
“What can I do for you?”
“My name is Dan Canilang. This is my partner, Greg Donaldson. We’re agents with the FBI’s financial crimes unit, and we were hoping for a few minutes of your time this morning.”
“What is this about?”
“I think it would be better for all of us if we spoke inside.”
Kit hesitated briefly before letting the men in and leading them down the hall to the library.
“Can I get either of you a cup of coffee or a glass of water?”
“We’re all right, ma’am,” Canilang said. His partner had still not spoken a word.
“If you don’t mind, I’ll refill my own. I was just on my way when I heard you ring.”
In the kitchen, Kit tried to settle herself. She’d been prepared for the possibility that she would hear from someone, but she’d thought it was unlikely. There was no real evidence against her. She’d been so pleased with her solution. Of course she could never take Edward’s money, but she hadn’t needed to take it. She was already the one who managed his investments. All she had to do was move him into Celsia. She’d have to explain things to him somehow when it came time to take the money she needed out, but he would hardly listen, if her previous conversations on the topic were any indication. He would happily sign anything she put in front of him, and she would be leaving him as much as he’d started with.
Most securities enforcement happened through self-reporting. When an individual made a large profit on a market-moving announcement, the compliance officers at the bank that executed the trade were supposed to notify the Financial Industry Regulatory Agency. A report to FINRA generated a referral to the SEC. In most cases, this is where the whole thing stopped, assuming the trade was even noticed and reported in the first place. The referral got filed away in some database and forgotten. If the person in question had been the subject of a previous referral or had some obvious connection to a company insider—the kind of thing that could be discovered without a subpoena or really any legwork at all—the SEC might open an investigation, which generally meant calling the target and asking for some explanation. Kit had never received one of these calls, but she knew plenty of people who had. If you traded in any real volume, the good timing on a single bet could reasonably be put down to luck, which was usually enough to satisfy the SEC.
These days Kit hardly traded at all, and since taking over Edward’s account she’d kept most of it in mutual funds and ETFs, so she’d prepared a bit of a precautionary script, though she’d doubted that the amount she was dealing with would even generate a report, let alone merit a call. If it came to that, she’d been confident that her story would be enough to put the matter to rest. But she hadn’t prepared for FBI agents at her door. The FBI didn’t do civil enforcement, they did criminal investigations, and they expected to make cases.
Back in the library, Donaldson was seated on the couch where she’d left them, going through his briefcase. Canilang stood near one of the bookshelves with something in his hand. Looking over his shoulder, Kit saw a framed photo of Edward and Justin, taken when they were seniors at St. Albert’s. Canilang replaced it on the shelf without remark and walked back to the couch while Kit sat in an armchair facing them. Donaldson pulled out an accordion file, from which he took a yellow legal pad and a small stack of loose papers. He placed the pad on his lap and passed the papers to Canilang.
“What can I help you with?” Kit asked.
“On June 23,” Canilang began, reading directly from the sheet, “you executed a purchase on behalf of your son, Edward Doyle, of 44,680 shares of Celsia—stock ticker CLA—for the amount of $47 a share, a total purchase of $2,100,000. Is this correct?”
Kit waited a moment, as though going over the numbers in her head.
“That sounds right. It was definitely in that ballpark.”
“One week later, Celsia’s board announced a share repurchase at 150 percent of Friday’s closing price, which netted your son a little more than a million dollars.”
“This is all a matter of public record,” Kit said. “I don’t see why you needed to come to my house at this hour for confirmation of it.”
“You understand why the timing would prompt some questions.”
Here she fell back on what she’d prepared for the SEC.
“The company was undervalued. The fundamentals are very good, even in a tough economy like this, but the markets are skittish. I probably saw the same things the board saw when they decided to do the buyback.”
“Just to be clear,” Canilang said. “You had no knowledge of a potential repurchase at the time you made the trade?”
“I’ve been doing this for a long time. My experience is that luck tends to even out. I’ve certainly had some bad luck in the past few years, so maybe I was due.”
“Or maybe you felt entitled to get yours back.”
These were the first words Donaldson had spoken. He seemed as surprised by them as Kit and Canilang did. He had an oddly high-pitched voice for a man his size, and Kit thought this might be why he didn’t generally do the talking.
“That’s a nonresponsive answer,” Canilang continued as though nothing had happened. “Were you aware of the buyback when you made the purchase?”
“Where would I have heard something like that? I sold my business. I’m retired.”
“We’ll get to where you might have heard it in a minute. In the meantime we’d like a yes or no answer.”
Kit had spent a fair amount of time over the past few weeks considering what she would say if posed the question in such stark terms. She hadn’t imagined being asked by a pair of FBI agents, but she didn’t think this should change her calculations. They might have proof that Justin had known about the buyback, but they didn’t have any proof that he’d told her anything. There had been no phone conversations, no text or email chains. Anything short of an admission from Justin would be circumstantial, and she had absolute confidence that Justin would never admit to such a thing.
“No.”
A brief flicker passed over Canilang’s face, almost a smile, as though this was the answer he’d wanted.
“When was the last time you spoke with Justin Price?”
“Does all of this have something to do with Justin?” She paused before going on. If she answered right away, that might be a kind of tell. She had no reason to lie, but at the last moment she’d remembered Justin’s arrival on the boat. Clearly he’d meant to conceal his visit. What if he left it out when he asked? “We had a party for my son back in April, and Justin was here, along with a lot of old friends.”
“April?” Canilang asked.
She realized right away that she’d made a mistake, but it seemed too late to go back.
“As far as I can remember.”
Canilang looked briefly down at some notes.
“The problem is that a call was made from your Bridgehampton landline on Sunday, June 14, reporting Justin’s boat missing. Later that day, your daughter drove him home.”
“Of course,” Kit said, probably too quickly. “He came over for dinner. We had guests that weekend, and Justin and I never really spoke. It slipped my mind that he’d been there.”
“Have you ever spoken with Justin Price about Celsia?”
She wasn’t sure whether she ought to sound surprised by the question. At this point it was clear enough where the conversation was headed.
“We’ve talked about a lot of stocks over the years. I can’t say we never discussed it.”
“Did Justin Price tell you about Celsia’s buyback plans over the weekend of June 14, in advance of your purchase of the stock on your son’s behalf?”
“I’d like to speak to my lawyer before answering any more questions.”
“If you didn’t do anything wrong,” Donaldson broke in, “you don’t need to lawyer up. If you did do something, maybe you should have spoken to your lawyer before you lied to us about it.”
Perhaps they were just very good at their act, but Canilang seemed genuinely chagrined by these interruptions.
“Here’s the deal,” he continued with an almost friendly tone. “We know Justin Price knew about the buyback, because the person who told him was working for us. We know he came over that weekend to tell you about it. We’ve got you dead to rights on insider trading, and now we’ve got you on obstruction for lying to us about it. Not a great way to end a long and distinguished Wall Street career. But you’re lucky, because we’re not interested in you. I know that Price is an old family friend, so I want you to understand that we’re not really interested in him, either. We’re interested in Dan Eisen. We want Justin to give us Eisen, but first we need you to give us Justin.” He handed over his card and waited for some response. Kit took the card without looking at it, and he went on. “I’ll make this simple. Go ahead and talk to your attorney. Give him my card and tell him to call me by the end of the week. If I don’t hear from him, I’m going to come back here with cameras from every network and paper I can drum up, and I’m going to wait until they’re happy with the lighting before I frog-march you out of this house. If you so much as hint about this visit to Price in the meantime, there will be no deal, and I will talk with the U.S. Attorney about throwing on a second obstruction charge.”
She had expected, when the heavy hand came, for it to come from Donaldson, but it had a much greater effect coming from the smaller, more controlled man, which might well have been the point. Kit slipped the card into her pocket, and she stood to show them out.
As she closed the door behind them, she thought she might collapse right there in the front hall, but when she turned back into the house, she found Margo staring at her from halfway up the stairs.
“Who was that?” she asked.
It seemed somehow appropriate that she would pick this one morning to get up at a decent hour. Kit wondered how long she’d been watching.
“Some old friends from work.”
“A little early for a social call.”
“It wasn’t a social call. They want me to do some consulting, and they needed to talk some things over before going into the office for the day.”
Margo walked the rest of the way down the stairs. As she got closer, her expression changed.
“Are you all right? You’re shaking.”
Kit tried to steady herself.
“Just a little worn out,” she said. She looked up at Margo, who also seemed rather shaken. “How about you?”
“I haven’t been sleeping well,” Margo said. “But I’ll be fine.”
“Would you like to sit out back with me?”
“That’s all right. I think I’ll go for a walk.”
As Kit let Margo out, her overwhelming thought was that she wanted a drink. She didn’t care that it was eight o’clock in the morning. She was about to head for the bar in the library when she remembered that it was bare. She considered going out for something. Instead, she took her coffee back out to the garden and pieced together the paper, which had been scattered by the wind. She wanted everything to look normal when Frank got downstairs.
It was nearly noon by the time she had a chance to call her lawyer, who recommended a meeting with his firm’s white-collar criminal-defense specialist. The words “criminal defense” seemed almost tactless to Kit, though this was exactly what she needed.
She spent that afternoon on the most exhaustive examination of the family’s accounts that she’d ever attempted. She’d run through all these numbers many times over the past six months, but somehow she was hoping that they would look different now.
Everyone assumed there must be some money somewhere else, and she’d gotten so good at pretending as much that she’d almost convinced herself it was true. But her father had always believed in funneling profits back into the firm, and Kit had learned the habit from him. In her biggest earning years, she’d reinvested as much as she possibly could. What had seemed like prudence now haunted her.
Her grandfather had founded the firm with a partner, Miles Mulqueen, in 1935, after the passage of Glass-Steagall had forced the commercial bank where they’d both worked most of their lives out of the investment banking business. He’d run the place for nearly two decades—along the way buying out Mulqueen—before passing it on to his son. Tommy Quinn had started working for his dad straight out of Holy Cross, and he’d literally been carried out of his office. After Kit’s mother died, his only child and his family business were all that really mattered to him.
A lot of men from his generation would have encouraged their daughters to marry the most promising young man in the office, but Tommy Quinn had instead encouraged her to come work for him. She’d started a few years after the bear market of ’69, at the height of the counterculture, when Wall Street wasn’t exactly a popular destination for ambitious college graduates. She’d taken over just in time for the ’87 crash. Later she’d made it through the repeal of Glass-Steagall, which had forced Q&M to compete against international financial behemoths. Just as she’d established a sustainable business model for that environment, the attacks had taken their building down. Countless times over the years, the whole project could have ended in failure, but she had seen it through, and the sale to UniBank had been her reward. Now it had come to nothing.
At the time of UniBank’s collapse, her remaining cash assets amounted to a little under a million dollars. She’d been spending that down ever since to keep the household running, which was more expensive than she’d ever noticed in the past. First there was Marinela’s salary—Kit didn’t cook or clean, and she wasn’t interested in starting now. There were monthly payments on their mortgage, on their home and life and health insurance. There were everyday expenses once so trivial as to be virtually nonexistent—cable and phone and internet, groceries and gas—which she now noted carefully in the budget and made some effort to keep under control. There were luxuries—Edward’s party, expensive Christmas presents for the whole family—that she ought to have eliminated entirely but couldn’t without admitting how bad things had become. A lifestyle was a difficult thing to change at this late stage, particularly when no amount of belt tightening would address the underlying problem. In the span of eight months, nine hundred thousand had become five. At this rate, they’d be completely broke in another year.
It surprised her, how quickly it went. They’d never been especially extravagant in their tastes. What they bought they tended to consume. They’d thrown their parties. They’d traveled often and done it comfortably. Frank bought books and booze and clothes. Their house they’d treated as a space for living; none of the objects in it had been acquired as investments, and none could be easily unloaded for capital now. There was no abstract expressionist indulgence on the wall that could be brought to Sotheby’s. What artworks they had were mostly gifts from the artists themselves, which couldn’t be sold without some embarrassment and wouldn’t bring in much if they were. Their furniture, silver, jewelry, and other household items were valued for insurance purposes at $175,000, though they would have gotten a good deal less at auction.
The house itself they’d bought in ’77, when many of their friends were retreating to Scarsdale and Greenwich, and its value had appreciated nearly a thousand percent over three decades, which had seemed a kind of reward for their faith in the city. But since they’d had no intention of selling, the house had also seemed a source of untapped value. After the Q&M offices were destroyed, the firm had needed an infusion of cash. The vultures were circling, the credit market tightening up, and they couldn’t afford to wait for whenever the 9/11 compensation fund would get around to reimbursing them. She’d already known that she would be selling down the road—family-run investment banks were obsolete, even if there had been any family members interested in taking it over—but she didn’t want to do it at a discount. Rather than pay usurious rates on a business loan, she’d taken out a four-million-dollar mortgage on the house and invested the proceeds in the firm. This had been enough to keep it afloat, and the move had been vindicated four years later, when UniBank gave her twice what they’d been offering in 2002.
After paying off the mortgage and the federal, state, and city capital gains taxes, they would be lucky to net five percent of the total sale price, which meant that selling at the high end of their estimated range would earn them less than five hundred thousand—and leave them homeless. Unless they planned to sleep in a shelter, it was actually cheaper to stay where they were.
At least they owned the house in Bridgehampton outright, and they could deduct the money they’d put into the expansion, which would make the tax bill more manageable. But the market on the East End had been hit a lot harder than Manhattan by the crash. They weren’t the only ones looking to keep their heads above water by jettisoning a summer home, and the Wall Street bonuses with which down payments on such houses were usually made hadn’t materialized that year. The agent Kit had asked for an appraisal had told her bluntly that she ought to wait another six months if she possibly could. The number he gave her when she’d pressed him seemed like a mistake, half of what the house next door had gotten two years before. They might clear enough to pay off Frank’s advance, leaving them where they were now: a year away from broke. To put it in the kind of terms Frank liked to use, selling the house was necessary but not sufficient.
