Due Diligence (9 page)

I moved close enough to spot the tiny run in her stocking. It was just below the knee, along the calf of one of her massive legs.

“I'm so damn clumsy,” she said, her lips quivering. “This is the third pair of pantyhose today. The third! They cost me four dollars each.”

“It's not so bad, Jacki,” I said gently. The poor thing looked like she was on the verge of estrogen shock.

“Maybe not yet,” she moaned, waving her arms, “but just wait. In an hour it'll be all the way down to my toes.”

I kneeled by her leg and studied the run. I looked up with a smile. “We can stop it.”

She gave me a puzzled look.

“Do you have some clear nail polish?” I asked.

Jacki thought for a moment and shrugged helplessly. “It's at home.”

“Check the bathroom down the hall,” I said as I stood up. “I think I left some in the medicine cabinet.”

She blew her nose. “What do I do with it?”

“I'll show you.” Then I remembered Bob Ginsburg. “Good grief.” I hurried back to my desk. “I'm sorry, Bob.”

“What's happening out there?” he asked.

“My secretary had a problem. It's okay.”

“What kind of problem?”

“Well, uh, with her pantyhose.”

“Pantyhose?”

I giggled. “Just a run.”

“Just a run? Hey, tell her I'll buy her a new pair. She sounds sexy.”

“What?” I said in surprise.

“I love her voice. Deep and husky.”

“She's not your type, Bob.”

“How do you know?”

“Trust me.”

“Describe her.”

I chuckled. “Well, she's tall.”

“Blond?”

“Actually, yes.”

“Sounds better every minute. Built?”

I chuckled. “You mean chest size?”

“Well, sure.”

“Big.”

“How big is 'big'?”

“At least forty-two inches.”

“Praise the Lord.”

I could barely keep from laughing. “Tell you what, Bob, I'll fix you two up next time you're out here.”

“You're a true pal, Rachel.”

“Don't thank me, yet. Meanwhile, back to business. You were telling me about some work you did with a pharmaceutical company.”

“Oh, yeah. The due diligence stuff with McNeil Pharmaceutical. Do you know anything about the economics of the drug industry?”

“Not really,” I admitted, taking notes.

“You can't sell a new drug in the United States without first going through an incredibly rigorous system of approvals supervised by the Food and Drug Administration.”

“I knew that much.”

“Well, that's where the economics come in. On average, it takes eight to ten years and fifty to eighty million dollars to bring a new drug from the original concept through the FDA process to the market.”

“Wow.”

“Exactly. Moreover, the odds against a new drug surviving all the way are steep. The guys at McNeil had statistics showing that only one out of every four
thousand
drugs that undergo preclinical testing ever makes it to the market. Even if you get past the preclinical phase to the human testing stage, which is pretty far down the process, your odds of making it to the market are still only one of five. You know what that means?”

“I'm not sure,” I mumbled as I finished scribbling:
1 out of
5—
human testing to market
.

“It means that you've got to do some serious due diligence before you have a sense of what a pharmaceutical company is really worth. For example, you need to find out the status of the IND applications.”

“The what?”

“IND. It stands for Investigational New Drug.”

“Let me write that down.”

As I was scribbling, Jacki came in. “I found it,” she whispered, holding up a bottle of clear nail polish.

“Bob, can I have one more pantyhose timeout?”

“No problem. Tell your secretary I'm falling in love long distance.”

I rested the receiver against my neck. “Here's how you do it,” I said to her, reaching for the bottle of nail polish. I unscrewed the top. “Come closer.” She did. I slid out the brush and leaned toward her leg. “Just like this. Put a little dab at the end of the run. Let it dry. It'll keep the run from getting any longer.” I leaned back with a smile, screwed on the top and held it out to her. “There. All done.”

Jacki gave me a look of gratitude as she took the bottle of nail polish. “Thanks so much, Rachel.” She glanced down at the stocking. “That's wonderful.”

I lifted the receiver to my ear. “I'm back,” I said to Bob.

“Wow, that's better than phone sex.”

“Back to business, stud.” I glanced at my notes. “IND. You said it stands for Investigational New Drug. What's that?”

“Okay. When a drug company has finished all of its preliminary testing on animals and wants to move to the next stage of the approval process, which is testing the drug on humans, it files an IND application with the FDA. Among other things, the IND describes the drug and the human testing the company proposes to do. Accordingly, part of the due diligence is to review the pending IND applications. That will give you a sense of what the company might be able to bring to market four to six years down the road.”

There was more. According to Bob, the due diligence should also include a review of the NDAs, or New Drug Applications, which is the final step in the FDA approval process, filed after the proposed drug has passed the human testing stage and is ready to bring to market. In addition, the due diligence should include a review of the R&D files to determine whether there are any projects or proposals that might be worth pursuing. As Bob explained, Chemitex might not have had the capital to pursue some of the concepts still stuck in R&D, while SLP has money to burn. For an information fanatic like Levesque, two months spent reviewing IND, NDA, and R&D files would be money well spent.

I thanked Bob for his help, told him I would buy him dinner next time I was in New York, and promised to introduce him to Jacki when he came to St. Louis. I was organizing my notes when Benny returned my call. I filled him in on what I had learned that afternoon. He offered to drop by the library to try to locate the newspaper article on the Miami shooting death of the Smilow of Smilow & Sullivan.

“If I find it,” he told me, “I'll drop it off at your house on my way home.”

“Better yet, stop in for dinner. I'll get us some Chinese takeout.”

“You got a deal, gorgeous.”

“Bring your portable computer.”

“Oh?”

“Bruce's secretary made me a copy of everything off the hard drive of his computer. I'm sending a messenger down to pick up the disks. Maybe the answer is on one of those disks.”

Chapter Eight

Benny leaned back and rolled his eyes in ecstasy. “Oh, God, that's good.”

I winked. “What did 1 tell you?”

“What's it called?” he asked.

“Kung Pao Squid. Try the Fresh Clam with Ma-La Sauce.” I slid the white take-out carton toward him. “It's even better than the squid.” Using my chopsticks, I leaned over and lifted out a squid. I popped it in my mouth and chewed slowly, savoring the tastes.

“Where is this place?” he asked.

“In Olivette. Across from the bowling alley.”

I watched as Benny spooned some of the Fresh Clam with Ma-La Sauce onto his plate. We were having dinner at my house. Benny shoveled in a mouthful, chewed for a bit, and gave me a look of appreciation.

“Good, eh?” I said.

He swallowed and nodded. “Excellent find, dude.”

“I take that as a compliment,” I said with a tolerant smile, “even though it comes from a man whose idea of a great Oriental experience involves a set of pulleys and a heavily sedated JAL stewardess.”

“A man can dream, can't he, Miss Gold?”

Ozzie sat in the corner of the kitchen, intently watching us eat. He was a big fan of Chinese food. Although he preferred Cantonese over Szechuan style, I was sure he wouldn't let provinces get in the way of leftovers.

I took a sip of beer and glanced down again at the copy of the newspaper article Benny had brought with him. It had appeared on the front page of the
St. Louis Post-Dispatch
almost two years ago, under the headline:

ST. LOUIS ENGINEER KILLED
IN MIAMI CROSS-FIRE WHILE
WALKING BACK TO HOTEL AFTER DINNER

The article described the shooting death of Milton Smilow, one of the name partners of Smilow & Sullivan.

“I don't like it,” I said.

“What's not to like?” Benny asked as he twisted off the cap of another Dixie beer.

“It says here that Hiram Sullivan was with him in Miami up until the shooting.”

“So what?” Benny leaned over, scanned the article upside down. He pointed to a paragraph in the middle of the story. “Sullivan said that when they left the restaurant Smilow decided to walk back to the hotel instead of riding in the cab with him.”

“I still don't like it.”

“For chrissakes, Rachel, you think Sullivan shot his own partner from the cab? Come on! Read the papers, watch the news. It's open season on visitors to Miami. It's like a fucking video game come to life down there. And anyway, what's his motive?”

I shrugged. “I don't know. I just don't like him, I guess. He was a total jerk when I went to see him.”

“Just because he's an asshole doesn't mean he's a killer.”

“At this point, Benny, everyone's a suspect. Listen to this: you saw that Bruce's time sheets showed that he did eight hours of work on some personal matter for Sullivan, but there's no evidence of what he did.”

“Big deal. Think back to when we were associates at Abbott and Windsor. Remember some of the personal family bullshit the partners made us do? Traffic tickets, insurance claims. Shit, do you remember that uncontested divorce I handled for Bryce Carville's second cousin? The babe who married the sailor?”

I laughed at the memory. “How old was she?”

“Nineteen. Showed up at court with a wad of chewing gum in her mouth, a skirt slit up to her
pupick
, four-inch fuck-me pumps, a skintight turtleneck, and no bra.”

“You loved it.”

“Me? You should have seen Judge Diener. When she sashayed up to the witness stand, I thought that horny bastard's eyeballs were going to pop out of his head on springs.”

“It worked, didn't it? He gave her the divorce.”

“The divorce? Hell, by the time she was done he would have given her his pension. The guy had a major husky under his robe.”

I smiled at the memory. “What a great case.”

“But,” said Benny, jabbing his finger at me for emphasis, “none of that showed up on my time sheets. All I wrote down was 'Bryce Carville—personal matter.' Assuming consulting firms are the same as law firms, there's your reason for no description of what he did on Hiram Sullivan's personal matter.”

“But there's one difference,” I said. “When you handled that divorce, you had a file. There were divorce papers in there, correspondence, research memos.” I gestured toward Benny's laptop computer, which was near me on the table. “Bruce's computer files are on those four disks. I've looked through them all. There's nothing on any personal matter for Sullivan in there.”

Benny shrugged. “So maybe what he did for Sullivan didn't require a computer. Or maybe he didn't save the files. According to his time sheets, he worked on the project off and on over a three-day period about three weeks before he died, right? Presumably, he started and finished the project during those three days. So even if he did use the computer, maybe he just deleted the files when he was done.”

“Or maybe someone else did.” I pulled his computer to me and turned it on. “I spent two hours going through these files at work this afternoon,” I said. “Bruce Rosenthal was an organization and classification fiend.” I gestured toward the screen. “He's got directories and subdirectories and sub-subdirectories and sub-sub-subdirectories. Every file and every document is neatly arranged. This disk,” I said, holding up the one Karen had marked DISK 2, “has the directory and all the subdirectories for the SLP deal. Presumably, it should have everything he did on the deal.” I inserted the disk, typed DIR, pushed the ENTER key and looked over at Benny. “But I don't think it does.”

“Really?” He came over to my side of the table. “What makes you say that?”

“A couple things. First of all, let me show you how this is organized.” I pointed to the screen, which showed one directory:

CHEMITEX

To the right of CHEMITEX was the date (2/16) and the time (8:45 am) that the directory was created.

“Now look at the subdirectories within the SLP directory.”

I typed the instruction again and pushed ENTER. That gave us access to all the Chemitex files. Now the screen showed the following:

FINANCIAL

IND-PENDING

NDA-PENDING

R&D-LAB

“Okay,” he said uncertainly.

I said, “The first one—FINANCIAL—has his due diligence on the Chemitex financial records. Look.” I typed the List Files instruction for the FINANCIAL subdirectory and pushed ENTER. The screen filled with three rows of sub-subdirectories, all clearly having to do with the books and records of Chemitex Bioproducts—depreciation, state taxes, federal taxes, cash flow, receivables, payables, assets, etc.

I returned to the prior screen:

FINANCIAL

IND-PENDING

NDA-PENDING

R&D-LAB

“What's this one?” Benny asked, pointing to the IND-PENDING directory.

“That's for all the pending IND applications.”

“Great,” he said sarcastically. “What the hell are IND applications?”

“IND stands for Investigational New Drug. When a pharmaceutical company has finished all of its preliminary testing on animals and wants to move to the next stage of the approval process, which is testing the drug on humans, it files an IND application with the FDA. So this,” I said, pointing to the IND-PENDING director, “is for all of Chemitex Bioproducts' pending IND applications.” I looked over my shoulder at Benny and winked. “I've been doing my homework.”

“What a total babe you are.”

I entered the IND-PENDING directory. “See?” I said. “There are five IND applications in that directory. Those are the ones he reviewed.” I returned to the prior screen.

“What are those directories?” he asked.

I explained what an NDA was and showed him that the NDA directory included the two pending new drug applications that Bruce had reviewed. I returned to the main screen. “This,” I said, pointing to the R&D directory, “is presumably for all of the research and development files.” I typed instructions to reveal the contents. “But look.” I pushed ENTER.

We were staring at a blank screen.

“Empty?” Benny asked.

“Completely.”

Benny scratched his chin. “Maybe he never got around to this part of the due diligence.”

“Wrong. I have his time sheets. Bruce actually spent most of his time on the R and D stuff.”

“Maybe he didn't use the computer for that part.”

“I doubt that. His secretary said he took his computer with him everywhere.” I took the photocopies of Bruce's time sheets off the chair next to me and handed them to Bruce. “Look how the dates on his time sheets match up with the dates on these files. According to the computer, what's the date he created the directory for the financial records of Chemitex?”

Benny squinted at the screen. “February sixteenth.”

“Now look at his time sheets. What's the entry for February sixteenth?”

Benny read from the time sheet for that date: “Chemitex Acquisition—Commence examination of financial books and records—eleven hours.”

I had him page slowly through the time sheets so that he could see the correlation between certain key dates in the computer records and dates in the time sheets. For example, the time sheets showed that on February 22 Bruce stopped reviewing financial records and started reviewing pending INDs. That was the same date he created the IND directory in the computer. So, too, the date he stopped reviewing INDs and started reviewing NDAs was the date he created the NDA directory.

“Okay,” Benny said, “but what's the point?”

“Here's the point. According to his time sheets, what did he do on March fourth?”

Benny read the entry. “It says he started examining the Research and Development files.”

I pointed at the screen. “And that's the date he created the R and D directory, right?”

Benny looked at the screen and then back at the time sheets. He started flipping through the time sheets, nodding his head. “That's all he did for the remaining weeks—examine R and D files.”

“Exactly. That's the point. Bruce spent more time on the R and D files than on any other phase of his due diligence, but look—” I pressed the key to display the contents of the R&D directory. The screen showed no contents. “See,” I said, pointing. “There isn't one file in that directory.”

Benny squinted at the screen again, and then down at the time sheets.

“Jesus,” he finally grumbled as he placed the time sheets back on the table. “Someone erased the files?”

I nodded. “Definitely.”

Benny gave me a puzzled look. “Who?”

“There are only two possibilities: either the person who killed him that night or someone at Smilow and Sullivan.”

Benny walked over to the refrigerator and took out two more bottles of Dixie beer. He handed me one and sat down at the table across from me. He unscrewed the cap, took a big gulp of beer, and frowned at me. “Why?” he said.

I shook my head. “Don't know enough, yet.”

“Where else can you look?” he asked.

“The documents Bruce copied from the Chemitex R and D files are the best bet.”

“Where are they?”

“All the documents Bruce had copied were sent to Chicago. For all I know, they're over in France by now.”

“What else?”

“I don't know. His computer files were deleted. His apartment was searched.” I sighed in frustration. “Even if Chemitex would let me look at their original files, which I'm sure they won't, I wouldn't even know where to begin. If Bruce spent six weeks looking through those files, there must be tons of records down there.”

“You're right,” Benny said grimly. “You don't know enough to make sense out of the files. Even if you got lucky enough to stumble across a key document, you'd probably not realize it. And you're right about them not letting you look through those records. They must be filled with trade secrets.”

“It's maddening,” I said. “Bruce was clearly upset about something, yet everything that could tell us what that was is gone, except for the list he gave to David.”

“You showed that list to his secretary?” Benny asked.

I nodded.

“She didn't recognize it?”

I shook my head. “No. I was hoping that maybe she typed it.” I stopped. “Typed it,” I repeated. I smiled at Benny. “Yeah.”

“What?”

“Her computer, Benny.”

“Huh?”

“There might be R and D records in
her
computer. She said that sometimes she typed tapes that he dictated. The stuff she typed for him might still be in her computer.”

I found Karen Harmon's number in the telephone book. Fortunately, she was home. I explained what I was looking for and the missing computer files.

“I definitely typed tapes for him on the SLP deal,” she said.

“He spent the last six weeks going through the R and D files,” I said. “Those are also the only due diligence materials that were erased from his computer. Did you type any tapes during those last six weeks?”

She paused for a moment. “I'm pretty sure I did.”

“Would those documents still be in your computer?”

“Oh, rats,” she said, “I don't think so, Rachel. I'd type it, he'd edit it, and then I'd retype it in final form and copy it onto a computer disk for him. The whole process would take a few days, especially when he was out of the office. After that, though, I didn't see much reason to keep the document in my computer. Every couple weeks, I'd go through my computer files and delete whatever I didn't need. I'm pretty sure I deleted all those documents.”

“Darn,” I said, disappointed.

“But wait,” she said. “I bet I could still find them, or at least some of them.”

“Where?”

“At the end of each day we have to make a backup copy of our computer files. We do what they call an on-site backup during the week, but every Friday we have to do a full off-site backup.”