The First Billion (7 page)

Awake, perched on the edge of his bed in the dead of night, he’d suddenly realized that he had no possibilities without her, that he would never find someone to replace her, that there was no one in the world who could excite him and challenge him and thrill him as she had. No one who would own him so utterly.

Gavallan’s phone rang. Bolting forward, he dropped the pictures into the drawer, slid it shut, and picked up the receiver. It was Emerald Chew on his private line.

“Yes, Emerald.”

“Sorry to disturb you, but Tony’s on his way in. He’s very agitated.”

“Agitated?”
Gavallan dropped his feet to the floor and sat bolt upright. “Did he say what it’s ab—”

Just then the door burst open and Antony Llewellyn-Davies, the firm’s head of capital markets, rushed into the room.

“Tony, what is it? What’s wrong?”

But one look had already told him everything he needed to know.

7

He’s back,” shouted Antony Llewellyn-Davies. “And he’s calling our stock a ‘scam dog.’ Cocky bastard!”

Gavallan rounded his desk, confronting the anxious man in the center of the office. “Who’s back?”

“Who do you think? The Private Eye-PO. He’s worse than the bloody herp. But this time he’s gone too far. It’s slander. I swear it is, Jett. Mercury, a scam dog? Never.”

Gavallan knew all too well what a scam dog was. Slang used by day traders and Internet stock junkies, it connoted a stock that was at worst a fraud—hence, “scam”—and at best an underperforming or poorly run company—hence, “dog.” “Okay, Tony, let’s calm down. Just give it to me from the top.”

“If you’ll step aside, I believe the expression is ‘Better show than tell.’ ”

Llewellyn-Davies was a tall, thin man with wavy blond hair and a bobbing Adam’s apple. An émigré from “the City,” as London’s financial district was known, he looked every inch an advertisement for the English upper classes. Gray slacks, white shirt, and navy pullover: It was his uniform, and he wore it every day. Add the apple blossom cheeks and the look of childish outrage and he was the old Etonian who’d never grown up. Just thirty-one, he was the youngest member of Black Jet’s executive board, and its latest addition.

Gavallan allowed Llewellyn-Davies to pass, and a minute later the men were huddled over the monitor reading the Private Eye-PO’s latest salvo at the Mercury Broadband offering.

Hi, kids! Surprised to hear from me again so soon? Don’t be. News this sizzling pops right out of the pan and into your laps. Don’t thank me. Thank our sponsors at Black Jet Securities. Last week, we showed you a pretty pic of Mercury Broadband’s Moscow network operations facilities. Très déclassé, n’est-ce pas? This week, we go a step further. Your Private Eye-PO has come into possession of documents proving once and for all that Mercury is nothing but a hairy little scam dog with mucho fleas.

The Private Eye-PO went on to claim that Mercury Broadband had not purchased sufficient Cisco routers to service its two million business and residential customers in Central and Eastern Europe. (Routers formed what was known as the “IP backbone” and were basically sophisticated machines that channeled digital messages to the proper addresses.) As proof, he contrasted a footnoted item in the Mercury offering prospectus with a copy of an internal accounting document from Cisco Systems, the giant manufacturer of Internet operating equipment. Whereas the prospectus claimed that Mercury had purchased over three million dollars’ worth of equipment from Cisco in the last year alone (and even listed the products: the 12000 series Gigabit Switch Router, the 7500 series router, and the MC 3810 multiservice access convertor), Cisco’s internal “customer revenue summary” showed cumulative sales to Mercury during the period 1999–2002 totaling just $212,000.

The missive ended with an unusually brazen sign-off.

Shocked, loyal readers? Not as much as the hotshots at Black Jet, I’ll bet. Or are they in the know? Here’s a quick lesson, Mr. Gavallan: No routers, no customers. No customers, no moolah! Remember, it’s never too late to ix-nay the deal, Jett. You’ve done it before at the last minute—and for less of a reason. Will your pride permit you to do it again? Or is the going price for honesty two billion smackers these days? Hey, all you lowlifes in San Francisco, can you say “due diligence”? Better yet, can you say “class action”? See you in court, Jett!

“Class action, my ass,” spat Gavallan, chewing the inside of his lip, fighting to control the fount of anger welling inside him. “I toured their network operations centers in Kiev, Prague, and St. Petersburg. Their facilities are top of the line. They’ve got a dozen engineers on payroll in Geneva laying out plans for the new expansion grid. He’s got it all wr—” Aware that his words were sounding more like an excuse than an explanation, he cut himself off. “This is bad, Tony.”

Llewellyn-Davies crossed his arms, nodding. “Indeed. Do we just ignore this too? I mean we can’t, can we? This is the second time in two weeks he’s come after us. First Moscow, now this. Hasn’t that chum of yours found him yet? The Internet detective, what?”

“No, not yet,” said Gavallan, wanting to add that he was hardly a chum. Two days earlier, he’d contacted a man rumored to be the best in the business at what he did—namely, track down thieves and criminals who trafficked hidden inside the web—and provided him with the Private Eye-PO’s web address along with instructions that he needed him found within seventy-two hours. “Found” meant a name, address, and telephone number. A price was given: a fifty-thousand-dollar retainer to be wired to an account in the Cayman Islands, and fifty thousand more should the deadline be met.

Llewellyn-Davies printed out the accounting document and handed it over. “Ask me, it looks shoddy enough to be real. Still, these days you can’t tell. Any two-bit con artist could run up a copy of Cisco letterhead.”

“But why would he?” asked Gavallan, happy to have someone else defending Mercury for once. “Tell me that and I’ll tell you if the documents are real or phony.”

“Ah! The million-dollar question,” declared Llewellyn-Davies. “First answer’s obvious: Chap wants to push down demand so he can scoop up some shares himself. Hold ’em or flip ’em, it’s all the same. He knows Mercury’s a golden goose and he wants to make some dough.”

“If it were anyone else, I might agree. But this guy’s reputation’s too good. He’s no pump-and-dump artist. And Mercury’s no penny stock. Last few tech IPOs out of the gate he’s called to within ten percent of their first day’s close. The guy’s a sharpshooter.”

“The question remains, why is he taking aim at us?” Llewellyn-Davies pursed his lips and put a finger to his chin, and Gavallan noticed that his skin had taken on a peculiar yellowish cast. He couldn’t help thinking the man looked even thinner than usual.

“I suggest we call Cisco right away,” Llewellyn-Davies went on. “Tell them we’re double-checking, engaging in a round of last-minute due diligence.” Rising to his feet, he picked up Gavallan’s phone and dialed 9 for the main operator. “Let’s see if there’s anything to this.”

An astonished voice bellowed across the room. “Put that fuckin’ phone down, Two Names.”

Bruce Jay Tustin stormed into Gavallan’s office, his cheeks flushed, eyes afire. “What a disaster! I can’t believe this son of a bitch. Christ, Jett, what did you do to get this guy so pissed off at us—spill a couple drops on his shoe in the men’s room? I mean, this sounds personal. Fuckin’ Hatfields and McCoys.”

Llewellyn-Davies lowered the phone. “We’ll thank you to keep a civil tone, Mr. Tustin.”

“Excuse me, your majesty,” said Tustin, curtsying before Llewellyn-Davies. “Call Cisco and word will be out before lunch that we’re having doubts about our client. I can hear it now. ‘The hotshot investment bankers who don’t know if the biggest IPO they’ve ever brought to market is a ‘scam dog with mucho fleas.’ Jesus, you queens and your dramatics.” He put on a terrible English accent and walked mincingly around the room. “
‘I suggest we call Cisco right away. Just say we’re double-checking, what?’
What is it, Tony? Those cocktails you take every day starting to include a little gin?”

“Piss off, Bruce. You’re a fucking cretin.”

“Excuse me for breathing. When did you get such a thin skin?”

“Cool it, you two,” said Gavallan. He was in no mood for Tustin’s theatrics or his bullying, but he had enough respect for the man to give his counsel a hard listen. Bruce Jay Tustin was the firm’s resident historian, its link to the past. He’d come up on Wall Street in the heyday of greenmail, leveraged buyouts, and insider trading, in an era when news of a twenty-billion-dollar merger shook the world and of a man’s taking home five hundred million dollars in salary enraged the masses. At one time or another, Bruce Jay Tustin had worked with all the great names—Henry Kravis, Boone Pickens, Carl Icahn—and some of the not so great ones—Ivan Boesky, Martin Siegel, Mike Milken. He was rude, maladroit, and pathologically disrespectful. He was also savvy as hell, and he wasn’t shy about shining his Diogenes lamp on Black Jet’s own offerings.

“Bruce has a point,” said Gavallan. “Best if we keep our lips sealed for the moment.”

Llewellyn-Davies replaced the phone in its cradle, but not before whispering a catty, “Fuck you, Bruce.”

Gavallan returned his attention to Tustin. “You think it’s personal too? What gives you that idea?”

“Hell, I don’t know, but what’s all that stuff about pride and ‘you lowlifes’ and canceling a deal at the last minute ‘for less of a reason’? Guy sounds like as much of an asshole as me.”

“I won’t argue with you there.” The truth was that Gavallan had also thought the Private Eye-PO’s latest remarks sounded personal. Something in his words rang a bell, and though Gavallan couldn’t quite put his finger on it, it disturbed him nonetheless to think that somewhere in the past he’d wronged someone badly enough that the person would seek him out and try to return the favor. “You remember anyone we cut off at the last minute?”

“Last minute?” asked Tustin. “Two years ago we canceled the whole goddamn slate overnight. We had eight companies registered that we had to shelve. I think we ended up saving two of ’em. The others went back for more rounds of funding or got snapped up by bigger fish.”

“I’ll do some checking,” volunteered Tony Llewellyn-Davies. “See how many issues we pulled in the last five or six years.”

“What’s the word on the street, anyway?” Gavallan asked Tustin. “Anyone buying this guy’s shtick?”

“Fidelity’s already been on the horn with me, and so has Vanguard. I told both of them the guy was full of shit, but Fidelity cut their order. Said they didn’t like the Eastern European exposure. If you ask me they’re gonna flip and get out.”

Gavallan ran a worried finger across his chin. Fidelity was the nation’s largest manager of mutual funds. If it backed out, others would too. “Anyone else call?”

“Scudder and Strong,” offered Llewellyn-Davies, giving the names of two more influential funds. “Not to worry. They’re still buyers, both of them, and looking to build a big position in a couple of their funds. I’m sure we’ll hear from others in the course of the morning.”

As it so often did, the market was sending Gavallan contradictory signals. Someone believed the Private Eye-PO. Someone else thought he was a raving lunatic. It was a constant game of tug-of-war. Gavallan likened it to guessing which way the wind would turn, and felt the only thing to do was to sniff the air and go on your own instincts. He walked to the window and looked down on the city. The streets were glossy and gray and crowded with automobiles.

As if reading his thoughts, Tustin asked, “You’re not thinking of postponing the offering?”

“Might not be an unwise move,” mused Llewellyn-Davies. “Give us time to sort everything out. Set this Private Eye-PO chap straight.”

“It would be a very unwise move, and we all know it,” Gavallan replied sharply. “The question is whether we have a choice. Word hits that Fidelity’s cutting their order and others might follow suit. It could kill us.”

He watched Tustin and Llewellyn-Davies exchange concerned glances. For all their adversarial banter, the two were close friends. A year earlier, when Llewellyn-Davies had suffered a relapse, Tustin had visited him nightly, bringing books and videos and sometimes sneaking in a plate of the Englishman’s beloved five-alarm curry from his favorite Indian restaurant.

“I thought we were safe on that one,” said Tustin, his swagger conspicuously absent.

“It’s spread out,” said Gavallan. “Lehman and Merrill took ten apiece, but it’s still a handshake deal. Best case, we’re left holding thirty million.”

“That’s a high price to win some business, Jett old boy.”

“Maybe,” said Gavallan.

They were talking about the bridge loan he had floated Mercury to win the deal: a short-term, fifty-million-dollar facility to help the company tie up real estate, purchase much-needed hardware, and lease fiber-optic cable. In good times, bridge loans were a wonderful way to leverage the fees a bank could earn on a transaction. You were out the money maybe ninety days. You charged a juicy premium over prime. And you won the loyalty of your client by showing faith and shouldering some of his risk.

But these weren’t good times, and right now the bridge to Mercury was looking to be a damned fool thing. First off, it had eaten up the last of the firm’s capital. Second, it had left Black Jet reliant on current earnings to meet its cash flow requirements. Maybe Tustin was right. Maybe it was a high price. But it had been necessary. Crucial even. Black Jet needed the Mercury business and the bridge had won it, allowing the smaller upstart to steal the prestigious offering from under the noses of the big guns in New York.

So far, Gavallan had managed to farm out twenty of the fifty million to a few friendly banks—half of what he’d hoped. If the deal went south, Black Jet would be out thirty million dollars. It would be too late for layoffs. He’d be forced to sell his company to the first interested party at a fire-sale price.
If the deal went south . . .

Gavallan swore to himself it would not.

“We can’t just sit still,” he said, at once disheartened and energized by the latest development. Like all adrenaline junkies, he functioned best in time of crisis. “Our silence will be regarded as an affirmation of the Private Eye-PO’s warnings. The pictures were one thing, but Tony’s right—he’s gone too far this time. It’s as if he were building a case against us.”
Against me,
came an unprovoked thought. “Bruce, do me a favor and get Sam and Meg down here, on the double.”

Sam Tannenbaum was Black Jet’s in-house counsel, Meg Kratzer its head of investment banking.

“Aye, aye,” said Tustin, saluting, then turning on a heel and hustling out of the room.

“Stupid git,” laughed Llewellyn-Davies, a bit of color returning to his cheeks. “Doesn’t even know you’re Air Force.”

Gavallan laughed too. “You want a coffee? Something to eat while we wait?”

“No thanks. I’m fine as is.”

“Sure? I’m thinking of a breakfast burrito. Sausage and egg. Maybe a soda. Didn’t teach you to eat like that at Eton, did they?”