Murder in the Dorm (8 page)

“Sounds like you’ve made some headway. Oh, yes, Kim Berger called me in the afternoon wanting to know if you’d learned anything more about the case.”

“Did she now. I know she told us McDermott had an account with Raymond, Teller, but do you know if Berger knew him beyond handling his trades?”

“Well, my impression is that she oversees a lot of trades for a lot of people, but that doesn’t involve direct contact with clients aside from messages like alerts or warnings. If McDermott was a day-trader, he almost certainly did his own trades online. Someone has to oversee online trades, and since that’s what Kim mainly does, she most probably did deal with some or a lot of his trades. That’s a ways from actually talking to McDermott on the phone, and a much longer way from seeing him at the brokerage. I rather doubt she knew him personally, at least not in connection with his trades. She certainly hasn’t mentioned knowing him to me.”

“Okay, but on another matter, I recall what you said to me about Kelsey, that he never looked you in the eye. A student said the same thing, and another student thought him furtive. I attributed all that to his being shy or unsure of himself, especially since some people described him as being something of a nonentity in comparison to McDermott. Do you think it might have been arrogance? One of the students thought so.”

“That’s an interesting idea, Charlie, and I think it may be right. I know what you mean about the nonentity part. Certainly McDermott overshadowed Kelsey, but maybe that was just fine with Kelsey because he didn’t give a damn and wasn’t interested in most people.”

“The reason I’m asking is because one of the detectives told me that some rather important files they found apparently belonged to Kelsey and not to McDermott as they first thought.”

“Kelsey wasn’t as good with computers as McDermott, but that doesn’t mean he wasn’t calling the shots.”

“Quite right. McDermott’s computer ability was no doubt crucial to doing whatever they were doing, but Kelsey seems to have had expertise that rivaled McDermott’s in the context of a scam, given his knowing the market, and maybe the scam was his idea in the first place. I can more readily believe that Kelsey initially approached McDermott than the other way around from what I’ve been told about both of them. I’m thinking now that whatever they were doing, Kelsey had more to do with running it than McDermott. But tell me, were you surprised that Berger called asking about what is going on?”

“Not really. She seemed interested from the first. I just assumed she thought if you’d learned something you’d have told me, as you have now.”

“I do think it would be for the best if you don’t tell Berger about our talks.”

“If you think there’s any chance at all that she might have been involved, then I won’t tell her anything. I’m not planning on calling her and if she calls me I’ll simply tell her that you and I haven’t talked. I don’t know her all that well, and if there is even the slightest chance that she played any part in what Kelsey and McDermott were up to, I’m certainly not going to help her.”

Charlie and Sommers finished their lunch and returned to their offices. Once there, Charlie pondered how things changed if he thought of Kelsey as the dominant figure. That evening Charlie told Kate about his lunch with Sommers and his view that regardless of having seemed innocuous, Kelsey could have been the scam’s main figure.

“Did you call DeVries?”

“No. She called me, but that was before my lunch with Sommers.”

“You said there were only two sets of numbers for each line in the third column. If the middle column has figures larger than the added up ones in the third, the difference is probably the third party’s cut and the two figures in the third column Kelsey’s and McDermott’s or vice versa.”

“That’s what I figured out, too, and I think it makes the best sense of the columns and differences. I suppose the question is whether the variance in the two right-hand column figures indicates that McDermott or Kelsey was legitimately getting a bigger cut or was being cheated by the other. Since there seems to have been a bad argument and Kelsey was killed, it’s pretty clear that the answer is one of them was being cheated. Now, if the files were originally Kelsey’s, then it makes good sense that McDermott initiated the argument because he was getting ripped off. Looks like Kelsey was something of a dark horse.”

Chapter 12

The Second Tuesday

Charlie awoke had breakfast, showered, dressed, and was on his way out when Kate meandered into the kitchen looking for coffee. Once in his office, Charlie gathered his notes for his epistemology class and dialed DeVries’ number. Luckily, she was in.

“Charlie here. I’ve got a class coming up but wanted to tell you a couple of things.”

He then laid out his and Kate’s thinking about Kelsey being the main player in the scam, McDermott being the enabling hacker, triggering sell orders, and his likely getting wise to Kelsey’s cheating. Charlie added the idea about Berger possibly being the third party but stressed it was pure speculation when he went on to say that if Berger was the third party, then she had almost certainly shot McDermott and her size explained why McDermott’s body was found behind the dumpster and not in it.

“Those are good points, Charlie, and they jive with some of what Guy and I’ve been thinking. I need some time to talk to him and of course we have other cases. You go to your class and I’ll call you this afternoon or perhaps not till this evening.”

Charlie was just in time for class and was soon immersed in the topic they were covering that morning. Things weren’t over at noon because three students had questions, but Charlie was at the Club table by twelve-thirty. Conversation was mainly about the increasing tendency of students to lawyer up when questions arose about cheating. Things took a turn when Evan Jones showed up with Richard Baynes in tow.

Charlie and Baynes exchanged looks, smiled, and the two newcomers joined the conversation. Eventually people starting leaving and finally only Charlie, Jones, and Baynes were left at the table.

“Okay, I think I see what’s going on. I have a class, anyway. See you both later.”

With that Jones left and Charlie and Baynes ordered more coffee and brandies.

“Looks like we understood one another when I sat down.”

“Definitely. Let me fill you in.”

Charlie then told Baynes pretty much what he’d said to DeVries and asked for his thoughts.

“Well, I can’t help you with Berger, but Kelsey is a different matter. I do think that because of his manner he was easy to underestimate. That business I told you about the laptop charges? He handled it very well. I had my suspicions, but he gave me no reason to favor the techie’s side of the story. As for whether he could do the sort of hacking you think he might have done, I don’t doubt it. He had adequate skill, in my view. He might have needed a little assistance, but once he knew what he was doing, there’d be no problem. Just what do you think he was actually doing?”

“My guess is that McDermott was getting into brokerage accounts and triggering automatic-sell orders. Given that Kelsey seems to be the one who had expertise with stocks, I assume Kelsey told McDermott what orders to trigger, McDermott triggered the sell order on a stock and the price dropped even if only for a couple of minutes till someone realized what happened. In the meantime Kelsey bought the shares at the artificially depressed price. Then when the price of the stock stabilized, Kelsey sold the shares.”

“I see. Now, maybe I can help here. I know a little about buying and selling stocks from my own experience. If Kelsey and McDermott had an accomplice in a brokerage, evidence of the trades and could probably be expunged.”

“I do think having someone on the inside would make all the difference.”

Baynes didn’t respond immediately and Charlie could see he was thinking. Charlie sipped his brandy and waited.

Baynes looked off into the middle distance, took a drink of coffee, picked up his brandy glass, and spoke.

“You know, Charlie, there’s a rather simpler way to structure the scam you’ve been describing. If Kelsey and McDermott did have the help of someone in a brokerage firm, that person could supply them with specific account numbers of accounts using automatic-sell orders. If Kelsey and McDermott had those numbers, they could work their scam like this: Say a given stock was trading at six dollars. They find an account with an automatic-sell order. One puts in a bid for the stock at the automatic-sell order price. The other triggers the automatic-sell order and they buy the stock. They then turn around and sell the stock at the price it’s actually trading at and pocket the difference.”

“But if the stock were trading at six dollars, wouldn’t there be other bids below six but higher than the automatic-sell order price? How could they count on getting the stock at their price?”

“I’m sure that’s where the difficult hacking comes in and why it took two of them to work the scheme. While one is handling the buy order, the one triggering the sell order would have to insure that their buy order was the one filled. I don’t know how it’d be done, but you know how you can specify that all the shares you put up for sale must go rather than only some, and how you can set a specific price or simply buy or sell ‘at market’? There must be other ways to qualify an order, and if the one triggering the automatic-sell orders was into the brokerage account he could probably block other buy orders or maybe they worked with odd numbers, like a hundred and ninety-nine or three hundred and one shares so the one hacking the orders would recognize the other’s buy order.”

Baynes left shortly after that and Charlie walked back to his office, musing that if Kelsey and McDermott were working side-by-side, the identification of a buy or sell order might be easier. He waited until five but DeVries didn’t call.

That evening Charlie explained to Kate what Baynes had said. She thought it sounded right and that it was quite possible for a couple of savvy hackers to do what Baynes had described. One thing Kate and Charlie agreed on was that there was third party and that the third party worked in a brokerage and was supplying Kelsey and McDermott with information and likely obliterating their orders.

Charlie opened a bottle of sauvignon blanc, another New Zealand exemption to his California preference. Both were waiting for DeVries to call and she finally did. Before she could say much Charlie told her he had something she should know and filled her in on Bayne’s idea.

“Okay, Charlie, that is definitely a good idea and it dovetails beautifully with what I have to tell you. Guy and I talked things over and we’re going to let you in on this much, just three things but all are important. First, subpoenas take a while but one brokerage was cooperative without one: they identified several of the numbers we provided from the first column of numbers as their accounts. We expect the results of the subpoenas will show the same thing. Second, McDermott’s account with Raymond, Teller was impressive for someone his age, but nowhere near the amount of money the scam must have involved, so they were using another account. We’ve not found a brokerage account for Kelsey, and the banks, which have been more helpful than the brokerages, have no record of an account for him other than a decidedly modest checking account and one credit card. If those figures in the third column represent what Kelsey and McDermott were making, we’ve yet to find where the money went. We’ve not found Kelsey’s computer. Lastly, we did find McDermott’s laptop and a pad he also had, but there was nothing of interest on either.”

“Did you have a look at Kim Berger?”

“That’s outside the boundaries of what Guy and I decided we could pass on to you. What I can say, though, is that this idea about the scam focusing on brokerage accounts is promising. I’m going to talk to our financial-crimes expert and see if the scam is feasible. The question is, of course, where the money went, and that brings me to something of a problem. I don’t think your university connections are going to be much help with that question, so it rather looks like you’ve worked your way out of helping us. What I’ve just told you about Kelsey and McDermott was sort of owed to you for your help and especially for this idea of how the scam may have worked, but I doubt your colleagues or students are going to provide anything else that will be of much use to us. We thank you, Charlie, for what you’ve provided, and please feel free to call me if something does come up, but it looks like Guy and I will be handling things from here on in.”

“Why do I feel as if I’ve just been fired?”

“Not at all. As before, you’ve been a great help, but I just don’t see what else you might come up with. The basics of the case now look to Guy and me as if they’re beyond the university context. Look, Charlie, when things get sorted out you and I can have a coffee and I’ll tell you what I can about the case.”

On that note DeVries ended the call.

Charlie did feel as if he’d been fired and told Kate what had transpired. She shared his dismay and they decided to go out to dinner and forget about the case.

Chapter 13

The Third Wednesday

Charlie had a slight hangover when he awoke. He’d had too much wine at dinner the previous night and more when they got home. On reflection Charlie was surprised at how much it had bothered him to be in effect dismissed by DeVries. He could handle her being more circumspect than she’d been before, but she’d pretty much told him to butt out in saying that he wasn’t likely to learn anything more from colleagues and students. What irritated him most was that while he’d certainly collected information and some ideas from his colleagues and the students he’d spoken to, he hadn’t just passed it on. He and Kate had thought through what he learned, added their own speculations, and the result was more than just information.