Bad Business (18 page)

M
arty Siegel came to my office carrying a pigskin attaché case and looking like he was on his way to an inauguration.

“Are you sure you're an accountant?” I said.

“I am the best accountant in the world,” Marty said.

“I know that,” I said. “But you're supposed to be geeky and wear glasses and a pocket protector.”

“Would contacts cover me?” Marty said.

“Accountants don't wear contact lenses.”

“And if they're any good they're not hanging around with you, either,” Marty said. “Be glad I'm atypical.”

Marty put his pigskin attaché case carefully on the seat of one of my client chairs and sat just as carefully in the other one. He was tall and lean with long black hair that waved back over his ears. He wore a black silk suit, a white shirt with a Windsor collar, and a white silk
tie. His face was clean-shaven and perfectly tanned. He even had a little cleft in his chin.

“I've arranged for you to do a full audit at Kinergy,” I said.

“Access to the site?”

“Yep.”

“Nothing off limits?”

“Nope.”

“No time limitation?”

“Nope.”

“You have something on the CEO?”

“Yep.”

“Good,” Marty said. “What I've seen so far, they could use a good audit.”

“You already know things?” I said.

“Of course,” Marty said. “Would I be the world's greatest CPA and not know anything yet?”

“Whaddya know?”

Marty looked at my coffeemaker. The pot was nearly full.

“You got coffee made?”

“Yes.”

“Gimme some,” Marty said.

I handed him a cup and he got up and poured himself coffee and sat down and crossed his legs, making sure to adjust his pants at the knee so the crease wouldn't bag.

“Any publicly held company,” Marty said, “is required by law to make quarterly and annual financial filings. The quarterlies are called 10Qs and the annuals are 10Ks.”

“Isn't that something?” I said.

“You wanna learn something or not?” Marty said.

He drank some coffee.

“Hey, this stuff isn't bad,” he said.

I nodded modestly.

“The filings are public. You can go to the SEC web-site and look them up. What you'd be especially interested in, if you were a really amazing CPA instead of some kind of semi-legal thug, would be three documents. The balance sheet, the income statement, and the statement of cash flow.”

“I resent being called a semi-legal thug,” I said.

“Okay,” Marty said. “Illegal thug.”

“Thank you.”

“Any good accountant can learn a lot from those documents,” Marty said. “And the great ones, like me, know to pay close attention to the footnotes.”

“So whaddya know?”

“You know what mark to market accounting is?”

“No.”

Marty looked pleased.

“Do you know what cost or, as it is sometimes known, accrual accounting is?” he said.

“Also no.”

Marty leaned back and drank some coffee and got himself more comfortable in my chair.

“And,” I said, “if you begin to tell me in any detail I will jam you into your attaché case.”

“You wouldn't understand detail anyway,” Marty said. “Say you kept a ledger, which in your case is unlikely, but say you did, and say you're making knuckle knives. You sell one to Hawk for a buck, and you debit your asset column one dollar, and credit your liabilities
column one dollar. The two columns are always supposed to be equal.”

“I don't have a ledger,” I said.

“I know,” Marty said. “And if you did, the columns would never be equal. But this is hypothetical.”

“And Hawk's already got a knuckle knife.”

“Shut up and listen,” Marty said. “So you keep your ledger and somebody says how much money you got and you say a buck, and they say show me, and you take the buck out of your pocket and wave it under their nose.”

I nodded. We'd get there eventually. Pushing him wouldn't do any good. Marty was one of those guys who knew so much about a thing that he had to tell you far more about it than you ever wanted to know.

“But,” he said and paused.

“But?” I said.

I knew he was pausing for dramatic effect, I might as well help him enjoy it.

“Suppose you and Hawk have a deal. He'll buy a knife every year for five years. So you debit a buck from the asset side, and you credit five bucks on the liabilities. Because that's what the deal's worth over time.”

I nodded.

“Get it?” Marty said. “See the problem?”

“What if Hawk dies or backs out of the deal?”

“Yes,” Marty said.

He was thrilled.

“Or somebody comes by the first year and says show me the cash?” he said.

“I take out my one dollar,” I said.

“And suppose the guy that's asking has just fixed
your sink and seeing that you had five dollars in revenue, does it for credit, and now he wants his five smackers.”

“I don't think I've heard anyone say
smackers
since I dumped all my Perry Como albums.”

“Never mind that,” Marty said.” What I described in grossly oversimplified terms is another kind of accounting called mark to market.”

“Thank God for the gross oversimplification,” I said.

“And here's a little embroidery,” Marty said. “Say you think the cost of knuckle knives will go up over time, so you, or probably I, at your behest, because you pay me a monstrous retainer every year, and I am in your pocket, make a projection of how much the price will rise, and decide that they'll be worth two bucks, five years hence.”

“Hence,” I said.

“Yeah, hence. I went to the fucking Wharton School, remember. So now you've got a deal worth ten simoleons, and you credit that. But how much actual cash you got?”

“A simoleon,” I said.

“See?”

“Is that what's going on at Kinergy?”

“I believe so.”

“And the advantage of that is that it inflates your revenue?”

“Yes.”

“Which makes your stock worth more?”

“Yeah, and if you need to show an even bigger profit you can just move the curve.”

“Predict that knives will sell for two-fifty,” I said. “And then I can show a credit of twelve-fifty.”

“Exactly.”

“And it's legal.”

“Sure, mark to market is perfectly legal, often useful, sometimes necessary, in companies where a reasonable curve can be projected. But it's less, ah, less appropriate for a company like Kinergy, whose product may fluctuate wildly because of war, or climactic events, or political decisions, or economic circumstance, or the death of some Arabian sheik.”

“And you might find yourself with a cash-flow problem.”

“Yeah. You have to pay your employees, for example, in cash. If you have debt to service, and if you're cash poor, you have to service that in cash. And you have to do it now, not five years from now.”

“So,” I said. “Worst case?”

“You can't pay your bills. You go bankrupt.”

“Is that what's going on at Kinergy?”

“Might be,” he said. “It seems to me that they should be showing more loss and less profit than the 10Qs are reporting.”

“You think someone's cooking the books?”

“Something's going on,” Marty said.

“When you do the audit,” I said, “can you find out what it is?”

Marty looked at me as if I had just said something in Greek.

“Am I the world's best CPA?” he said. “Of course I am. If there's chicanery, will I find it? Of course I will.”

“That's a relief,” I said.

W
hen I woke up in the morning on the couch in my living room, I could hear my shower running. At least Adele was clean. I put on my pants and had coffee made and orange juice squeezed when she strolled out of my bedroom with her hair in place and her makeup on.

“God,” she said. “Coffee and orange juice waiting. What a husband you'd make.”

“This morning my accountant, with the blessing of Bob Cooper, begins his audit at Kinergy.”

“Really? I can't imagine.”

“I think we should go over there and be handy if he wants to talk with you.”

“Your accountant?”

“Yes. Marty Siegel.”

“To Kinergy?”

“I'll be with you,” I said.

“You think it's important?”

“Yes.”

“Will Vinnie come with us?”

“Sure,” I said.

“I guess that will be okay,” she said.

I took my turn at the shower. There were several pairs of highly impractical-looking ladies' underwear drying on my towel rack. I tried not to blush. As I was getting dressed, Vinnie showed up for work.

“You know a skinny little guy with long hair and big glasses?” Vinnie said.

“I do.”

“He's got your place staked out.”

I walked to the front window.

“Corner of Arlington,” Vinnie said. “Across Marlborough.”

I saw him. He was wearing a blue seersucker suit, and his hands were jammed into the side pockets.

“Might be staking out Emerson College,” Vinnie said.

“Nope,” I said. “It's me.”

“Want me to buzz him?” Vinnie said.

“No, we'll leave him alone, see what he does.”

I took my coffee to the window and watched Long Hair while I called Hawk on his cell phone.

“Where are you?” I said.

“Not your business,” he said.

“What are you doing.”

“Very not your business,” he said.

“Oh that,” I said. “Long Hair's showed up in front of my house, corner of Marlborough and Arlington. Blue seersucker suit. Big glasses with black frames.”

“Okay,” Hawk said. “Lemme finish up here.”

“Make it quick.”

Hawk laughed.

“Person I with don't want that.”

“Whoops,” I said. “Well, do your best and call me when it's over.”

“Be over already, you hadn't called me up in the middle,” Hawk said. “I'll call you when I'm on him.”

It was a large orange juice and two coffees before Hawk called.

“Got him,” he said.

“Okay, long leash,” I said. “Let's just see where he lives, who he is, that sort of thing.”

“Sho,” Hawk said.

With Long Hair behind us, we walked to my car. I could see that it was annoying Vinnie.

“How 'bout I just put one in his foot, or maybe a knee?” Vinnie said.

“No,” I said. “Gratifying though it would be.”

“Are you talking about shooting that man?” Adele said.

“Yeah.”

“Why is he following us?” she said.

“That's what I think we'll find out,” I said. “Hawk's behind him.”

Adele started to turn her head.

“Don't look,” Vinnie said, and she froze.

“Wouldn't see him anyway,” I said. “I expect we won't see him until he's through tailing Long Hair.”

“So how do you know he's there?”

“He said he was there.”

“But . . .”

“Hawk never says something ain't so,” Vinnie said.

“Never?”

“Nope.”

I beeped the power locks on my car doors. Vinnie opened the passenger door in front and Adele got in. Vinnie got in the back and I drove.

“So you want this man to follow us,” Adele said.

“Yes.”

“What if he doesn't have a car.”

“Then he's really an amateur,” I said. “But it doesn't matter if he follows us or just goes home. Hawk will find out who he is.”

Vinnie was turned in the backseat, looking out my back window.

“He's got a car,” Vinnie said.

In my side mirror I could see a yellow Mazda Miata pull away from where it was parked by a hydrant.

“Nice car for a tail job,” I said.

“Blends right in,” Vinnie said.

“And you think Hawk is somewhere behind him?”

“Yep.”

“And after this man eventually stops following us and goes home, Hawk will follow him there and find out who he is?”

“Yep.”

“What if Hawk loses sight of him or something?”

In the backseat, Vinnie laughed.

Adele turned and looked back at him.

“Well, it's certainly possible, isn't it?”

“No,” Vinnie said, “it ain't.”