The Darlings (16 page)

Her nerves steeled, she went back to her office to fire David Levin.

THURSDAY, 9:30 A.M.

“W
hat are you thinking about?” Merrill asked as she closed the trunk of the car. It made a satisfying
thunk
, the sound of a weekend away in the country. She looked up at Paul inquisitively, her hands stuffed into the pockets of her parka. The garage was freezing, almost the same temperature as outside.

He had let her load the bags without really helping. That was unlike him. “I'm sorry,” he said, flustered. He gestured at the bags in the back of the car. “I got distracted. The coffee hasn't sunk in yet.”

She smiled, a half-watt smile. She was tired, too. “That's okay. Want me to drive?”

“No,” he said, and opened the passenger side door for her. “Let's go. I'm fine.”

As he slid into the driver's seat, he noticed that his left hand was shaking. He adjusted the rearview mirror, checking it twice as he always did before he pulled out of the garage and onto the street. “So we need to talk about something,” he said, flicking on the blinker. He turned onto Third Avenue. The street was wide and empty. “Something's happening with your dad's business.”

Merrill had already settled in on the passenger side, her feet folded beneath her, Indian-style, on the seat. She had been fidgeting with the radio dial, but she stopped. King sensed the shift in tone and perked up, his ears alert.

“Come here, sweetheart,” she said, and scooped the dog out from the backseat and onto her lap.

Paul took a deep breath. “I found out yesterday that Morty was under investigation by the SEC. He was about to be indicted when he died. It looks like all of us—all of the officers, anyway—are under investigation.”

Merrill's eyes widened slightly. She reached out and put her hand on top of his, her fingers finding their way, familiarly, into the grooves between his.

“Okay. Tell me everything.”

As he talked, the city unfolded like a paper doll against the white winter sky. They drove north past Ninety-sixth Street, the doorman buildings turning into bodegas and gas stations, then housing projects. They came to a full stop at the light. Three teenage boys passed in front of the car and Paul fell quiet. There had been stories recently about all the carjackings and muggings at the edges of the city. Crime was on the rise. One of the boys held a basketball tucked beneath his arm. He was the biggest of the three. He made eye contact with Paul through the windshield, and he dragged his hand along the front of their car. It lasted a second, but Merrill silently pulled her hand away from Paul's knee to check the lock on the car door.

When the light turned green, Paul gunned the engine and caught the lights all the way to the FDR Drive. Once they were moving, Paul picked up where he had left off, speaking quickly, telling Merrill about the meeting with Alexa, and then the call with David Levin. Though he felt the absence of her hand he knew he had to keep going if he was going to get through everything without completely losing it. They both forgot about the boy. Eventually, the sound beneath the tires changed to a higher pitch as the car transitioned from the cement highway to the bridge, suspended above the river.

They passed the sign for Long Island. Usually, it promised a weekend at the beach or apple picking or playing golf on a crisp Sunday morning. Paul spoke for what felt like a very long time, and Merrill listened. He spoke quietly and efficiently, trying not to editorialize. She was a lawyer, after all. She would want only the facts. Still, when it came to his conversations with David Levin, Paul faltered. He wanted to explain his actions away.

“I wasn't trying to lie to him,” he said, chewing hard on his lower lip. “I just wanted him to stop asking questions. Not because I thought there was something to hide. We were all just so busy . . .” His voice trailed off.

Merrill covered her mouth with her hand and began to cry. King put his paws up on her shoulders and tried to lick the tears from her cheeks.

“Stop it, King,” she said. Her voice cracked. She pushed the dog to the backseat of the car with a firm hand. “Stop it.”

She released the seat belt and drew her feet up beneath her. Her shoes were on the floor in front of her and they clunked together as the car hit a pothole.

“Ask me anything,” he said. “Please.”

“You saw Alexa yesterday and didn't tell me about it.” She coughed fiercely.

“I know. I know that's complicated. But she's trying to help.” Paul reached for her hand but couldn't find it.

“Help who?” Merrill said. Her voice was loud and Paul flinched. King barked; he hated it when they fought. “Help you? She comes to you with this insider trading bullshit, or whatever it is, which she doesn't even know for sure, by the way, because she's not the one running the fucking investigation, and tells you what? That my dad's a bad guy and you should go be an informant for the SEC? That
they're
going to save you? And you think she's helping you?”

King paced frenetically in the backseat. Paul could hear the sound of his paws against the leather as he tried to make the jump by himself. Merrill ignored the dog and he began to bark. For a minute, Paul thought that he ought to pull over and stop. Talking in the car now seemed like a very bad idea. He couldn't even look her straight in the eye, talking this way. They had another hour before they reached East Hampton. But the traffic was running by on the right and there wasn't much of a shoulder. The only option was to keep driving, straight ahead, as fast as he could.

“I know it's a lot to take in,” he said, trying to stay calm. “It's a lot for me, too.”

“Yeah, it's a lot.” Merrill paused and stared out the window. She grew quiet, but tears still flowed down her cheeks. She wiped them away and made a snuffling sound. Fumbling in her purse she said, “Damn it, I don't have any tissues left. Okay, forget what Alexa told you. Do you have any reason to think Morty was doing something wrong?”

Paul hesitated. “It doesn't make any sense. The performance is statistically perfect. And there are other things, undeniable stuff that doesn't add up. They won't let us look at their accounts online, for example. They send trade confirmations by mail, these hard-copy printouts that could be anything.”

“What do you mean, hard-copy printouts?”

“Just lists of what they traded. But it comes straight from them. And they don't have an outside broker, so there is no way to verify their trades with an outside party's books. Basically, we just rely entirely on the information they provide, which isn't much.”

“I've never heard of that.”

“I haven't either. No one else does it. Frankly, I don't think we'd let anyone else get away with it, but RCM has always had a sort of favored status at Delphic.”

“So you have no idea what they're trading, really, how they're doing it, or with whom.”

“It seems that way.”

She closed her eyes and shook her head. “The lawyer in me really hates hearing this kind of stuff.”

“Trust me, the lawyer in me isn't thrilled, either. I mean, Christ. It's our job to run diligence on these funds before we invest our clients' money in them. We should know everything about every fund we're invested in.”

Paul hated to talk about it, but Merrill seemed calmer now that they were getting down to brass tacks, and that encouraged him. She had always been coolheaded in a crisis, always focusing on what logically could be solved, never letting her emotions run away with her. In law school, Paul was sure she'd make a great lawyer. She would make partner one day, if that was what she wanted.

“You said the performance was statistically perfect? What does that mean?”

Paul pointed to the backseat without taking his eyes of the road. “Get those folders back there. Open the top one—it shows the performance. You'll see what I'm saying. It's a perfect curve.”

The car fell silent. The exits were growing farther and farther apart. They had passed the suburbs, Glen Cove and Jericho and Syosset and Huntington, strung together as if on a low-slung clothesline, the local traffic thinning out on the highway. They were close to Exit 70, where they usually got gas and sodas at the 7-Eleven. Paul kept driving, his knuckles white on the wheel.

Merrill studied the folders' contents intently, the crease of her brow fixed. Paul resisted the impulse to ask questions. All he could hear was the undulating
chunkachunkchunk
of the highway's pavement beneath the car, and the quiet hum of the radiator.

Finally, she glanced up and said, “It's not insider trading. Is it.”

Smart girl
, he thought. “I don't think so.”

“Right. Inside information would enhance their performance, but there would still be variability in the results. No one earns the same amount every single quarter.” She shook her head, thinking of Elsa Gerard. “I just don't understand how they did it.”

“I don't think they did. It's an illusion. Don't you see? It has to be. They weren't investing the money at all. And I think I have a way to prove it. The SEC hasn't quite connected the dots, but they don't have access to all the information that I do.”

“You think it's a Ponzi scheme?”

“I know it sounds insane. It's a multibillion-dollar fund. It's fraud on such a massive scale, it seems inconceivable. That's what I kept thinking, too, all day yesterday.”

“What about the trade confirmations? I mean, you said Alain has drawers of them. They just made them up? That's crazy.”

“Look in the second folder. There's one trade confirmation, at the very back. Just pull it out. Do you see it?”

“Yes, here. Okay. I've never seen one of these. So I don't know what I'm looking at. It's just a list of trades . . . oh! March twenty-first. My birthday.”

“Right, your birthday, last spring. It was Good Friday. Remember? We went to the inn in Connecticut for a long weekend to celebrate. And we took the day off because the markets were closed, so we figured it would be slow; I remember it exactly. I was still at Howary. We left on Friday morning, I'm sure of it.”

“Right, so—” she started. Then it clicked. “Oh, my God. You're right. The market was closed.”

“Right. So there was no way these trades could have happened that day.”

“Do you think it's a mistake? It got misdated, or something?”

“Do you think so?”

Merrill paused. “No,” she said. “No, I'm starting to think I don't.”

They were quiet for a minute. When she spoke again, her voice faltered. “They think Dad knew. Or that he was involved, somehow, in all of this.”

“I think they'll try to say that, yes. They'll say that about me, too.”

“Do you think he knew? Dad, I mean. Alain probably had to.”

“No, I don't.” Paul said. He was momentarily grateful that he could answer that question honestly.

He had thought about it, of course. Carter and Morty had been so close, and worked together for so many years, that part of him said,
How could he not know?
But Paul knew Carter. He had spent his life providing for his family. The scheme Morty had been running was so incalculably perilous that no rational investor would undertake it. The risk simply outweighed the return. Why would Carter spend a lifetime building on such foundationless ground? It didn't make any sense.

“Your dad's a salesman, Merrill. He hasn't been involved with the investment side of the business for a long time. It was Alain who should have seen it. To be frank, I think Alain had to have seen it. The only thing your dad's guilty of is placing his trust in the wrong people.”

“He doesn't have it in him. Did you tell them that? Dad's so ethical. He works now because he enjoys it, not because he has to. He'd never get involved in something like that.”

“I know. But it's possible they won't see it that way. Or maybe it doesn't matter. The fact is that if there was any kind of misconduct at RCM, Delphic should have seen it. That's our duty to our clients. If it's a Ponzi scheme, we're talking millions of dollars that we've lost, of other people's money.” As he said it, Paul's jaw clenched reflexively. “Hundreds of millions. Fuck.”

“And if you cooperate with them, what happens then?” Merrill's jaw was set at a hard angle. She was asking a question, he knew, not condoning an option.

“I'm not sure. I think it means I bring them internal files—memos, e-mails, voice mails. That sort of thing. To help them build the case against RCM, but also against Alain and other members of the Delphic team, for diligence failure.” Paul paused, momentarily weighing how she would respond to the concept of a wire. No good would come of telling her, he decided. He wasn't supposed to, anyway. Levin had warned him against it; Merrill might tell her father in an effort to protect him.

It was the part of the deal with which Paul was most uncomfortable. Turning over e-mails and documents was passive cooperation. But wearing a wire felt like an act of disloyalty. There was something insidious about it, like an inside job at a bank robbery. Paul wasn't sure he had it in him, even with someone like Alain, who, he was certain, had betrayed the rest of the firm. There was also the alarming possibility that someone other than Alain could be drawn into this unwittingly. An offhand comment on tape, taken out of context, could be deadly. “If they have nothing to hide, they have nothing to hide,” Levin said. But they both knew it was more complicated than that.