The Insider (26 page)

“Why did Richard Nixon make tapes?” Barbara was suddenly infuriated. “Every man has a fatal flaw. You should know that, or maybe you’re still too young to understand. Maybe you need a few more years of seasoning.”

“Why are you giving this to me?” Jay held up the envelope, ignoring her reproach. Barbara was looking up at the ceiling, and he could see the tears welling in her eyes, about to let loose in a torrent.

“You seem like an honest man,” she said. “I know something about business, but not enough. You’ll figure out how to best use this information.” Barbara shook her head, and the tears streaked down her face. “I can’t be the one to turn him in to the authorities,” she admitted sadly. “I can’t go that far. For whatever demented reason, I still love him, and I simply can’t be the one to actually turn him in.” Her expression suddenly turned to one of determination. “But I have to save myself and my child. Oliver is out of control. He’s close to the edge, Jay, and he’s dangerous. I don’t want to do this to him, but I don’t know any other way.” With that she bolted to the elevator.

Jay turned and raced after her, begging her to come into the apartment and talk further, but she wouldn’t. When the car doors finally opened, she stepped inside and stood with her back against the wall, refusing to look at Jay as the doors slid shut.

Jay stared at the closed elevator doors, then trudged back down the hallway to his apartment and went directly to his bedroom. He groaned as he glanced at his answering machine. Fourteen calls were registered on the display. He moved to the nightstand, punched the play button on the machine, and sprawled onto his bed.

The list of callers was predictable. There were several messages from Sally wanting to know where he was. During the fourth and final message she asked him to get together with her for dinner Saturday night if he was in the city. Oliver had called five times, also wanting to know where Jay was, at one point admitting that he knew Jay and Bullock had scuffled on the trading room floor Wednesday morning before Jay had left. In the message Oliver went to great lengths to point out that trading floors were high-stress environments where tempers sometimes flared out of control, and that Jay needn’t have any concern about his job at McCarthy & Lloyd. Oliver made certain Jay understood that he knew Bullock had started the fight, then begged Jay to call him. There were three blank messages from a caller or callers who had hung up without leaving messages, and one from Jay’s mother wondering if he would be coming home anytime soon.

As the messages continued to play, he rolled onto his side and pulled out the three pieces of paper from the envelope Barbara had just given him. On the first page were the names of four individuals he didn’t recognize and the brokerage firms for which he assumed they worked. He recognized the names of the firms. They were several of the largest brokerage houses on Wall Street.

On the next two pages was a list of companies, with the name of one of the four individuals from the first page behind the company name. As Jay’s eyes scanned the first page of company names, he recognized them as stocks Oliver and Bullock had purchased—at one point Abby had shown Jay a list of all the stocks Oliver and Bullock had purchased since Oliver had started the arbitrage desk. As Jay’s eyes hit the bottom of the second page he caught his breath. The two names there were Simons and Bell Chemical, behind both of which was the name Tony Vogel.

Barbara Mason couldn’t have manufactured this list on her own, Jay realized. She was telling the truth about stumbling onto the disk and making copies. But there was still something that bothered Jay. Why would Oliver create a computer disk file concerning something illegal, a disk that might fall into the wrong hands—as indeed it had?

Jay replaced the three pieces of paper in the envelope, then stopped and looked at the answering machine as the last message began to play. The man’s voice was unfamiliar to Jay, but the barely controlled anger of his tone, his unfriendly words, and the sounds of traffic in the background caught Jay’s attention. When the man identified himself as the treasurer of Bell Chemical, the room blurred before Jay’s eyes. When the message finished, Jay scrambled to the answering machine, rewound the tape, and played the message again.

There was static for a moment, then the man’s voice came on, trembling with anger. “Look, Mr. West, I don’t know who the hell you think you are, but you better call me back. I’ve called you three times and you haven’t been home, so I’m going to leave a message this time. This is Frank Watkins, the treasurer of Bell Chemical, and I want you to call me as soon as possible
at home
.” Watkins recited the phone number quickly. “Never call me at Bell again!” he shouted as a truck rushed past the phone he was using. “And I’ll tell you something, Mr. West: I don’t respond well to threats. Just because you think you have something on me concerning my past doesn’t mean I’m going to give you any information.” There was a long pause, and Watkins’s voice became more conciliatory. “Please call me.”

Jay stared at the machine as it clicked off. He’d never met a man named Frank Watkins in his life, much less called the man and threatened him. But Watkins clearly thought he had heard from Jay. Slowly Jay rose from the bed and moved to the corner of the room and his computer. Carefully he went through the two boxes of disks standing beside the CPU—as he had done several times since the night Sally had slept there. He was hoping that somehow he’d simply missed the disk detailing his personal financial transactions for last year, that it would be there this time. But it wasn’t.

He put the box down and glanced back at the answering machine. He was in deep trouble.

O’Shea grabbed the phone before the first ring had ended. “Hello!”

“Got him.”

“Where?”

“His apartment. He went in a back way, through a service entrance. But we got him.”

“Good.” O’Shea let out an audible sigh of relief. “Whatever you do, don’t lose him.”

“Never happen.”

Sure,
O’Shea thought.
It wasn’t supposed to happen in Boston, either.
“Keep me apprised of where he goes for the rest of the weekend. I don’t want any hitches on Monday.”

“I understand.”

“I’ll talk to you later.”

“One more thing.”

“Yeah?”

“Barbara Mason went into West’s building a little while before he got there. Then she came out about ten minutes after he went in.”

O’Shea felt his pulse quicken. Monday morning couldn’t come fast enough.

Victor Savoy watched as the men hurriedly unloaded the long wooden boxes from the backs of the trucks and stowed them in the warehouse located on a lonely side street of Antwerp. An hour earlier, in the dead of night, they had surreptitiously unloaded the freighter at the Belgian port.

When the last box had been stored, Savoy paid the men their cash. Seconds later they were gone. Different men would arrive in a few nights to load the arms onto smaller boats, which would take the cargo on its last leg—a short voyage across the North Sea, around the northern point of Scotland, and down to Ireland. He smiled as he padlocked the door, listening to the trucks roar off. The smuggling route had worked perfectly, and the infrastructure was in place. As soon as he had finished the job in the United States, he could begin wholesale shipping of the small arms—and make himself a large fortune.

Savoy glanced at his watch and hurried away. He had a little over an hour to make the flight to New York.

CHAPTER 24

“What’s the problem, Jay?” Vivian Min pushed the chair she was sitting in away from her desk with the toe of her running shoe. She was dressed in shorts and a T-shirt. She was planning to jog from her Rockefeller Center office back to her Upper East Side apartment after finishing some paperwork that was easier to accomplish on weekends, when the phones weren’t ringing off the hook. “Why the need to see me so urgently on a Saturday?” Vivian was a partner at Baker & Watts, a small but prestigious midtown Manhattan legal firm specializing in transaction law and securities work.

Jay hesitated. Vivian was young, attractive, hardworking, and a firecracker—never without a punch line. He had become friends with her during his time at National City, when she had provided legal counsel on many of his transactions. “I have a friend,” he began lamely.

Vivian rolled her mahogany eyes, flipped her long jet-black hair over one shoulder, and smiled knowingly. “Okay, tell me about this friend,” she said.

“He’s in kind of a tough spot,” Jay continued, still trying to figure out the best way to put this.

“Oh, really?” She twirled a pencil around her thumb like a baton, a sure signal that she was quickly losing interest. For all of her virtues, she had little patience.

“This friend of mine thinks he’s being set up to take a fall for an insider-trading charge at his investment bank,” Jay explained.

The pencil stopped twirling. “Why does he think that?” Vivian’s voice had lost its disingenuous tone.

Jay glanced down. “His boss pushed him into buying a couple of stocks that ended up being takeover targets only days after this guy purchased them.”

“I’m not an expert with respect to insider trading,” Vivian reminded him. “You know that.”

“But you do a great deal of securities work,” he pointed out. “You may not be an expert, but you know a lot about it.”

“More than I’d like to right now,” she mumbled, pulling a pack of Marlboro Lights out of her desk drawer and lighting one. “Just because your friend—”

“All right,” Jay interrupted, shaking his head. “There’s no need to continue the charade. The friend is me.”

“Sorry to hear that.” Vivian took a puff. “Did your boss write down his order to buy the shares of the two stocks?”

“Yup,” Jay said, aggravated with himself for making such a stupid mistake. He liked to think of himself as at least halfway intelligent, but this little maneuver had shaken his self-confidence. “He wrote me a nice long note in his own handwriting.”

“What’s his title at McCarthy and Lloyd?” she asked.

“Senior managing director.”

“And what’s yours?”

“Vice president.”

“So he’s clearly your superior.”

“Yes.”

“Did you keep the note?”

“Yes.”

Vivian’s expression brightened. “Then what’s the problem? You were simply acting on his orders and you have the note to prove it.” She smiled. “Let’s go have a beer and celebrate.”

Jay shook his head. “Nowhere in the note does my boss actually specify the names of the stocks he wanted me to purchase. He refers to them in passing as ‘stocks we talked about last night.’”

“Oh.” Vivian rubbed her nose. It was what she always did when she was deep in thought. “Did anyone ever overhear you two discussing these stocks?”

Jay thought for a moment. “Nope. We were always alone when we talked about them.” Oliver had been very careful that way. Jay cursed under his breath. He should have seen it coming. It had been like a freight train bearing down on a crossing, but he’d paid no attention to the flashing red lights.

Vivian leaned back in her chair and inhaled. “Didn’t you get a little suspicious when he didn’t name the stocks in the note?”

“A little.”

“Then why in the world did you buy them?”

“I didn’t want to irritate him. I’d already stalled on the purchases for a few days.”

“So you put yourself in this position because you didn’t want to irritate him?” she asked incredulously.

“It isn’t as simple as it sounds.”

“What do you mean?”

Jay let out an exasperated breath. “I signed a contract when I went to work at McCarthy and Lloyd stipulating that I had a guaranteed bonus next January.”

“Is the amount significant?”

Jay hesitated.

“Don’t waste my time,” Vivian warned good-naturedly. “After all, I’m giving you free advice here. Now how much is your guarantee?”

“A million dollars,” Jay answered.

Vivian whistled. “I should be an investment banker, not a lawyer. Suddenly I’m very attracted to you,” she teased.

“Come on,” Jay growled.

“Okay, okay.” She glanced at the ceiling, considering Jay’s situation. “The million is guaranteed, right?”

“Yes.”

“Unconditionally guaranteed?”

“Yes—at least I think so,” he replied tentatively. He had never gotten around to reviewing the McCarthy & Lloyd contract as thoroughly as he should have. “Why do you ask?”

“If the bonus is unconditionally guaranteed, it would help your situation because it would demonstrate that you had no incentive to do anything shady. Not that I think you did.” She glanced out her fourth-story window overlooking the Rockefeller Center ice rink, home to a restaurant in the summer. “Why don’t you bring the contract to me on Monday and I’ll review it? That’ll cost you a nice dinner, but considering my normal hourly rates, you’ll be getting a very good deal.”

Jay reached down for the manila envelope leaning against the leg of the chair he was sitting in. “Here.” He stood up and placed the envelope on her desk.

“Oh, no,” she groaned. “I want to get out of here.”

“Please, Viv.”

“All right.” She picked up the envelope. “But you will buy me dinner.”

“I will,” he agreed. “It might have to be in a prison cafeteria, though,” he muttered.

For ten minutes Vivian carefully reviewed the document, then slid it back into the envelope, shaking her head. “That isn’t good.”

“What do you mean?” he asked.

“Two things,” she said. “First, it says in the contract that you could earn
more
than a million dollars if you perform well, so you certainly have incentive to perform, that is, to pick stocks that are winners.” Vivian finished her cigarette and snuffed it out in a glass ashtray on her desk. “Second, and more important, there is a provision in the contract stating that McCarthy and Lloyd may give you a performance review after the one-month anniversary of your starting date, and again after three months. If you receive unsatisfactory ratings on those reviews, your manager can terminate you. The provision is buried as an addendum to the boilerplate, and the language is actually typed on the back of one of the contract pages, which I find very strange. But it is there.” She pointed at the envelope. “Without the addendum the bonus is clearly guaranteed, which is good,” Vivian said. “But with the clause, buried though it is, your bonus is not guaranteed, which is bad. Therefore, in the eyes of a court, you would have incentive to perform. Again, incentive to pick winners.” She pursed her lips. “And a court might view a million dollars as a pretty big incentive. Enough to…” Her voice trailed off.

“What are you saying?” Jay asked quickly, sensing that she wasn’t telling him everything.

“I’m saying that you might have a little problem.”

“I appreciate your bedside manner, Viv. You sound like a doctor telling a patient he might have cancer when the doctor’s already seen the test results and knows the patient has only a few months to live. But I don’t need my bad information sugarcoated.”

“How long have you been at McCarthy and Lloyd?” she asked.

“Almost six weeks.”

“Did you receive that one-month review?”

“Yes.”

“And?”

“Initially I received a very poor rating, but then it was changed to a favorable one. For good reason,” he added. “I’ve worked hard since I’ve been there.”

“Did you ever receive a copy of the new review with the changed rating?”

Jay thought for a moment. Bullock had never actually gotten around to giving him a copy of the new review. “No,” he admitted quietly.

Vivian let out a frustrated sigh. “As I said, you might have a problem.” She tapped the desk with her long fingernails. “Has anything else occurred that makes you feel uncomfortable with respect to what we’re discussing?” Her tone became more formal.

“Yes.”

“What?”

He looked up. “Are we protected by attorney-client privilege at this point?”

Vivian nodded.

“Okay. Apparently someone claiming to be me called the treasurer of one of the companies I had purchased the shares of and threatened to expose something in his past unless he revealed insider information about the company.”

“How do you know that’s true if it was someone else who called him?” Vivian asked.

“Because the treasurer left a message on my answering machine at home telling me that he wasn’t going to be bullied into giving away any sensitive information, and that I better stop harassing him or he’d take the appropriate action, whatever that was. Although at the end of the message his conviction didn’t sound nearly as solid as it had at the beginning.”

“It seems strange that he’d leave a voice message for you,” Vivian observed. “He had no idea who might hear what he said on an answering-machine tape.”

“He sounded pretty panicked, as if there really was something in his past he didn’t want outed. And he said he’d already tried to get me three times.”

“How do you know this man?”

“I don’t,” Jay said loudly. “That’s the point. I’ve never spoken to him in my life. I wouldn’t know him from a hole in the wall.”

Vivian pulled out another cigarette and put it in her mouth without lighting up. “So you think someone called this man from your home number, claiming to be you?”

“Yes.”

“How could someone use your home phone without your knowing?”

“They must have broken into my apartment when I wasn’t there.” Jay didn’t want to tell Vivian that he had a damn good idea who had made the calls. Vivian would want to investigate Sally immediately, and he wasn’t ready for that. “It would be easy. Hell, I’m never there. I’m always at work.”

Vivian glanced at the envelope. “Then your concern is that now there’s a record of phone calls going back and forth between you and the treasurer of the company.”

“Exactly. Don’t authorities look for things like that to prove insider-trading allegations?”

“Absolutely,” Vivian confirmed.

“Great,” Jay groaned.

She lit the second cigarette. “Is there anything else that’s made you suspicious?”

“Yeah,” Jay answered quickly. “There’s a computer disk missing from my apartment.”

“What’s on it?”

“My personal financial files for last year. A record of every check I wrote and every cash withdrawal I made.”

“Only things you would know,” Vivian said to herself. “Someone could plant a file on that disk having to do with your plans to trade on certain stocks, linking you to what was going on.”

“That’s true,” Jay agreed. The exact same thought had occurred to him on the flight from Washington as he was dozing in his aisle seat.

“And your fingerprints are on that disk.”

“Yes.”

She took an extra-long drag from the cigarette. “Huh.”

“What does ‘huh’ mean?” Jay asked nervously.

“It means that when you started telling me all this, I thought maybe you were just being paranoid. Now I’m not so sure.”

“I can’t tell you how happy that makes me.”

Vivian glanced out her window again. “Why would someone want to set you up?”

“I doubt I could reasonably estimate how many times I’ve asked myself that same question in the past twenty-four hours.” He shook his head. “I don’t know. Unless…” His voice trailed off.

“Unless what?”

“It’s only a guess.”

“Go on,” she urged.

“I think that there’s been a pattern of insider trading at McCarthy and Lloyd’s equity arbitrage desk over the last five years. Maybe I’m being set up as a scapegoat to take the fall so others won’t have to.”

“What makes you think that the pattern of insider trading exists?”

“Someone gave me information to that effect.”

“Someone reliable?”

“Yes.”

For a few moments they were silent.

“How does an insider-trading investigation work?” Jay finally asked. “Who has authority over it?”

“The Securities and Exchange Commission and the United States attorney’s office for the southern district of New York,” Vivian answered. “There are other people involved. Each of the stock exchanges has a watchdog group that looks for unusual patterns of activity in the trading of company shares or options, but the SEC’s division of enforcement and the U.S. attorney’s office are the primary players. The SEC is responsible for civil cases in which the guilty parties pay hefty fines, and the U.S. attorney’s office pursues criminal cases where they want to put people away. Typically, it’s an either-or situation, civil or criminal.”

“What determines whether the case is civil or criminal?”

Vivian heard the concern in Jay’s voice. “The SEC and the U.S. attorney’s office work very closely on these things and share all information. Higher-profile cases usually become criminal prosecutions. Cases where people have engaged in a pattern of insider trading and bilked investors out of lots of money.” She hesitated. “But you never know.”

“Well, I’m innocent,” Jay said defiantly, “so it doesn’t matter.”

“I’m sure you are,” Vivian agreed delicately. She’d always known him to be honest to a fault. He was a full-disclosure person, as she liked to say about certain individuals. “But sometimes that doesn’t matter.”

“What do you mean?”

“Insider-trading cases are like traffic court. You’re guilty until proven innocent. If the authorities show up with handcuffs, you’re in a world of hurt. It means they’ve identified a pattern of trading and other things like phone calls and that disk you were talking about. It becomes very difficult to defend yourself against that kind of investigation, as well as extremely expensive. The really insidious part about the whole ordeal is that people tend to settle with the government in terms of jail time or money because they simply can’t afford the cost of a protracted defense, even if they are innocent. Because once the government comes after you in these cases, typically they come after you with everything they have, and they will keep you in court as long as they have to.”