Sunday, December 14, 2008

Chapter 17- The Plot Thickens

Wednesday October 9.

I had spent the night tossing and turning, and when I got to work the next day, I made another stab at burying myself in RTM work. I had culled enough research that should give Sercowitz a good foundation to work with, and I’d simply have to wait to see what he thought it all meant and how to handle it.

There wasn’t much point in reaching out to Jake today, I’d let him mull on the articles that I had sent the night before, but I kept an eye on the IM buddy list to keep tabs on whether he was in his office.

At 4 pm, Sercowitz phoned me.

“Mr. Berman, Morris Sercowitz here. I wanted you to know that I just spoke with the Assistant US Attorney, Mr. Shulman.” His tone and tenor remained consistently flat.

“And.?” I said.

“He seems to be a pleasant enough fellow. But, we don’t need to discuss this on the phone. Why don’t you come to my office tomorrow afternoon, lets say 5 pm.”

I didn’t like his bedside manner, or the cryptic response, and the hairs on my neck bristled as the paranoia meter ticked up another ten degrees.

“How about I call you this evening? I found a bunch of interesting things on the web that might help.”

“I’m glad you’re doing your homework. Print out whatever you have, and bring it with you tomorrow; our conversation can wait until then.”

Since Sercowitz had more than a few mobsters as clients, I could only surmise that its better to be safe than sorry when communicating with clients, especially in these days, when the FBI was apparently doing a great job of exploiting the new wire tap guidelines within the recently introduced Patriot Act. News reports in the past few months had pointed to least six different corporate white collar cases and five mob-related cases where the Feds had tapped phones using Patriot Act–related requests. The 9/11 attacks had otherwise given the US Attorney carte blanche in pursuing anyone and everyone for anything.

As I was getting ready to leave, my private line rang.

“This is Josh Berman.” I answered.

“Glad to hear your voice. “I guess you haven’t been put behind bars yet.” It was Seth.

“That’s very funny” I replied.

“Just checking in, and if you’re headed back to Connecticut, I thought I’d offer you a ride home. I could use some entertainment by hearing the full story.”

“So far I’m not entertained, but I guess you will be. Maybe even intrigued” I said. :Based on what I’m finding, there might even be a retainer assignment for Knoll.”

“If only I thought you could afford it.” He said, lampooning me. “Our retainer would scrub Charlie’s college tuition. Why don’t you meet me at my office, and we’ll drive home together.”

Seth’s office was on 56th and Third Avenue, and by the time I walked up the fourteen blocks from my office, he was standing outside the building waiting for me.

He greeted with me a warm and sensitive, “Gee, I hope you can move faster on the court this weekend than you can walking a few blocks.” At least I was still on his invitation list.

We crossed over to the garage on 55th and his brand new, red Miata convertible had already been pulled out to the curb.

“I hope you don’t use this car for stakeouts” I said.

“Actually, this fits in pretty well when considering how many Wall Street engagements we have at the moment. Checking out hedge fund managers is a brisk business these days.”

Knoll’s list of services looked like a Chinese menu, more than two dozen practice areas that included everything from evaluating facility security systems to counseling on foreign travel to background checks, and the hedge fund industry was growing exponentially, providing a burst in business for Knoll.

The number of non-regulated money managers marketing esoteric strategies, an arena once dominated by the George Soros’s and the Paul Tudor Jones’s of the industry, had grown from less than a few hundred to more than a thousand in the past three years alone. Most were domiciled off-shore so as to avoid regulatory, and in many cases tax oversight, and all were promoting outsized returns. The sizes of the funds ranged from $5 million to over a $1Billion, and the common denominator was secrecy. With so-called sophisticated investors seeking higher ground after the Internet IPO bubble had burst in early 2001, the hedge fund industry was attracting tens of millions of dollars every day and that money was going into discretionary accounts managed by newbie traders specializing in derivatives and exotic fixed income instruments.

The combination of greedy investors, both institutional and ‘high net worth”, and their acquiescence to being provided limited information about the respective funds’ workings provided a perfect opportunity for Ponzi schemes; exactly like the world of Indie film financing. More than a few hedge funds had already blown up, leaving investors with nothing more than phony account statements, a disconnected phone number, and only speculating where their money had actually gone.

Knoll had carved out a niche doing background checks on hedge fund managers, and Seth’s partners had tapped me more than once to help them discretely network around the Street to uncover any personal tidbits about aspiring fund managers, the majority of which usually have at least a few years experience working for a bulge bracket investment bank, or on a trading floor. Wall Street is a small place, and odds were that six degrees of separation became closer to two degrees, and Knoll knew that I had a solid network of relationships in that arena.

Seth got onto the FDR Drive at 61st Street, and the rush hour traffic was moving at a snails pace. The story that Seth had waited to hear was a relatively short one so far, and in the half hour that it took us to cross over the Triborough Bridge, I had shared with Seth most of what I knew.

“Well, Ollie, You’ve certainly made a fine mess of this one.” Seth said, in his Stan Oliver mocking manner. “Your buddy in Vegas certainly did you no favors when he asked you to do him a favor.”

Seth was only a few years older than me, but he felt obliged to take on a parental role.

“Look,” he continued. “All kidding aside, as a former prosecutor, I can only tell you that FBI agents don’t need to have a brain in order to make your life miserable, however irrelevant a role you might have played in the grand scam, so to speak.”

“I didn’t scam anyone, Seth. They all knew that.”

“Actually Josh, it sounds like you were scammed, and you weren’t even smart enough to get paid anything for your trouble. I thought I taught you better than that” he said mockingly.

I decided not to rebut.

“OK, you didn’t intentionally defraud anyone.” Seth said. “I’m not sure whether that matters. That’s something that a good lawyer can help you with.

“And trust me, while we do have several former Bureau people at Knoll, we’ve turned away more former FBI agents than I can count. Based on your description of the ones that are on your case, it sounds as though they’re pretty much the normal field agents; guys that like to flash badges and show holsters.”

“That said,” he continued, “Given the jurisdictional issues, which I’m really not an expert in, if the agents that came to you are from Long Island, and a government-owned facility on Long Island was stiffed on a bill, and your old friend Baldson was shouting “Call the FBI”, and then the FBI gets hold of a letter that has you making a false representation on a federally-chartered Bank’s letterhead, they don’t need much more in order for them to close their file, go back to their box of donuts, while you dine on bread and water.”

“For something as ridiculously low level as this?” I asked.

“The Feds are doing a lousy job of catching terrorists, so they’re busy bunting and trying to score a few runs by bagging some Wall Street types”

“So what you’re saying is that I should just let myself out of the car while its moving and let the truck behind us trample me?”

“I’d suggest that, but I’d probably get some kind of a moving violation, and I still need a tennis partner this weekend, you’ve got the best serve of anyone that I know.”

I sat glumly for the next few minutes, staring out the window as we headed toward the Merritt Parkway.

Seth reached into the Miata’s console and extracted a leather cigar holder, it was dark purple and it had his initials branded on the outside. Seth was a cigar aficionado, and he loved saying “It might fog up the room, but it clears the head.” He unzipped the flap, and even though the top to the convertible was down, the tobacco’s aroma engulfed us.

He extended the pouch to me and said with a smile, “A dying man always requests a last smoke. Take one, it’s a Cuban. Just came in, courtesy of our office in London.”

“No thanks. But as long as I’m terminal, I’ll just have a cigarette while you stick that big thing in your mouth.”

“You know.” he said, “Some people say that the size of a man’s smoke tells as much about him as the size of a dog’s feet.”

“And if you’re wife hadn’t told my wife that what you lack in size, you make up with enthusiasm, I might be impressed.” I responded.

He laughed and deftly clipped off one end of the cigar with a sterling silver Dunhill cutter, extracted a thick wooden match from the pouch and lit up. I lit up one of the remaining Marlboro Lights that I had.

While enjoying his stogie, Seth had apparently been pondering as we continued to drive, and after ten minutes, he turned to me and more thoughtfully than usual said, “While you’ve been sitting there sulking, I’ve been thinking.” He was turning serious.

“Aside from what was presumably a momentary lack of judgment, from the sound of it, you’ve tripped over a can of worms, and at least some of the worms are bigger than the ones in a Godzilla movie.”

“I know about HLO.” continued Seth. “We actually had to fire them as a client a few years ago. The guy that runs that shop, Morowitz, is a pretty shrewd operator. I don’t remember the exact details, but he was involved in some kind of litigation and wanted one of our LA field staff to do some things that even we don’t do.”

“More than rifling through garbage I take it.”

As intrigued as I was, Seth would have expected no less from me. A few years ago, The Wall Street Journal ran a story that one of Knoll’s people had actually been caught rifling through a garbage bin outside the townhouse belonging to a supermarket chain’s CFO. The accountant was allegedly cooking the books in order to bolster his own bonus.

“Josh, rifling through garbage is not only legal, but you’d be amazed how productive it can be.” Seth said, with a smile.

“Anyway, when the head of our LA office told Morowitz that what he wanted was out of bounds, Morowitz called Jules to complain. Jules told him to take his retainer back and stick it up his ass, and also told him that he’d be better off hiring a good criminal defense lawyer with the money.”

“Wow.” I said. Jules was Knoll’s name founding partner, and his picture had appeared on the front page of Forbes Magazine, wearing a fedora and trench coat.

“Wow is right. Aside from him wanting us wiretap a bunch of phones of people he does business with, he wanted us to use some scare tactics as a way to intimidate a potential witness in the lawsuit. That kind of stuff is for amateurs, not that there aren’t PI’s that do that crap, especially in Hollywood. Some guy named Pelican has made it a niche, that’s where Morowitz ended up taking his business too.”

“Sounds like I should be hiring him”, I said, trying to sound sarcastic.

“Not. You know that we have our own ways. All of this means that you’ve once again found yourself dealing with some nefarious types, but this one is very well insulated and he has very deep pockets.”

“So, you think there’s a big picture strategy here?” I asked hopefully.

“Maybe. The connection could be coincidental, even if I’m not a big believer in coincidences. But, if the Feds have incriminating evidence against you, then they’ve got you with your pinky in the cookie jar. But, the Government is always looking to cut deals with cooperators, so they’re probably going to pressure you to finger your friend Jake. If he can finger somebody else, all the better. If you’re lucky, they’ll give you your pinky back.”

‘Not happening.” I said. “For one thing, my life insurance policy isn’t paid up”, I said half-jokingly.

“For another thing, Jake’s already started funding the legal expenses, and I certainly don’t have an extra hundred grand lying around. And, if this winds up with my pleading guilty to something, I’ll be out of the industry, and the only job I’ll be able to get is working in Jake’s food warehouse in Vegas. I’ve got nothing to finger him with anyway, and even if I did, I don’t know that I would, we’ve been friends way too long.”

“Sorry for saying this, but he’s not the type of friend you need to have.”

“Maybe, but that’s not the point.” I debated. “They made the fucking movie without him. It was actually Glassman, along with the insurance company guy and the other guy from HLO that dictated the letter.”

“Like I said, it’s a mess, but that’s why lawyers get paid the big bucks. By the way, have you connected to Tom Russo?”

“I spoke to him, but he can’t see me until Friday. At the moment, I’ve got Maury The Mobster Lawyer” on my team, he s already made the first outreach to the prosecutor. I’m meeting with him tomorrow afternoon to find out more.”

“Well, you’re at least doing as good a job as possible in staying in front of this mess, and I’m always impressed with your research skills. I don’t know who Sercowitz is, but I’m guessing you’ve already checked him out, but I’ll ask around about him too. I won’t tell you which lawyer to go with, but I do know that Russo is one of the best, and his previous life in the US Attorney’s might be helpful. Keep an open mind. It’s an important decision.”

Seth then added, ‘Josh, it also sounds like we’re both merely speculating; you haven’t even spoken with the prosecutor in charge of this. If and when the time comes, we can have your lawyer get on the phone with Mike Friedling in our LA office, I’d think that Mike would be more than happy to lend a hand, especially if Morowitz is involved.”

“Right now, I’d like a helping hammer, the kind that moves after you pull a trigger. But I appreciate your advice.”

“That’s not a place you want to go to, Josh. With your luck, you’d shoot yourself in the foot.”

“Maybe,” I said. But the PI you introduced me to in Philly a few years ago was kind enough to take me to his pistol range. I actually outshot him.”

We turned the conversation to our kids latest activities, and before long, Seth was pulling his Miata into the Westport train station parking lot so that I could pick up my car. When I was getting out of the convertible, he tossed his spent cigar ten feet through the hoop of an adjacent garbage can, and said, “No more smoking for the rest of the week, we’ve got a big match on Saturday and I need you in one piece.” He winked and drove off.

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