Tuesday, December 9, 2008

Chapter 5- Mission Control, We Have A Problem

Startled by the “snap” of a notebook being shut by one of the firm’s junior brokers sitting directly in front of me, I looked up at the clock on the wall at the front of the room and saw that it was 8.00 am. Than I heard Bobby’s post meeting cheer: “Now get out there and making some fucking money!!.” On the floor of the New York Stock Exchange, they ring a bell to start the day; at RTM, Bobby busts your balls.

Last one in, and because I was sitting closest to the door, I was the first one out. I wanted to go to the bathroom and throw cold water on my face, but I knew there would be the usual post-meeting rush into the ‘executive lounge’, so instead, I headed to the elevator. I needed to smoke a cigarette, and the only place to do that was outside the building. As I stood waiting for the oak wood elevator door to open, I could sense that Bobby was zeroing in on me. Actually, I could smell him approaching; the scent of his Armani Aqua di Gio cologne precedes Bobby by at least ten feet, providing good advance notice, and reducing the chances of him stabbing you in the back, at least in a literal sense.

“Everything all right, kid?” Bobby asked. I guessed he had remembered to take his meds before the meeting, so his mood was otherwise relaxed.

Bobby had followed my career path, and because I had become an industry expert in electronic exchanges, and the various business models, he was willing to pay me a lot to be his private advisor. His thinking was that I could be instrumental in guiding him as the industry was undergoing major changes. He also knew that I was very entrepreneurial, and that I had been involved in a variety of businesses, so he encouraged me to keep him informed about anything that he should find interesting.

My first six months with the firm were focused on reviewing dozens of proposals for internet start-ups and businesses that were positioned to compete with his. I had told Bobby that none was likely to succeed, and that his traditional business model was otherwise intact, at least for another three or four years. Unlike Treasury bonds and “Repos”, nobody on the Street wanted to post bids and offers on junk bonds into a networked computer system that would display pricing throughout the trading community.

Elated with my prescience, he decided to make me a partner of the firm, and he put me in charge of soliciting new accounts for the institutional sales desk, along with overseeing the firm’s technology and managing the brokers and traders working on the regional dealer sales desk. Essentially, I became his ‘bitch”, and with that promotion, I had the distinct honor of being moved from a corner office in the Research Department, one that occupied an entire floor with French doors leading to the roof top deck, to a spot three chairs away from his on the trading floor, which also occupied an entire floor, two elevator stops below the building’s penthouse..

“Sure, Bob. Everything is good.”, I replied. “And I’m sorry for being late”. I didn’t offer any explanation. “I’m just going to get a bagel downstairs, do you want anything?”

I was wearing my anxiety on my sleeve, and he could tell by the jibber jabber answer; after all, there’s a fully-stocked gourmet kitchen directly adjacent to the trading floor, to keep the salesman and the traders on the floor and next to their phones from the break of dawn until the sun sets. Every day there are platters of bagels and muffins brought up at 6.30 am. Just before noon, a buffet table is put out with an assortment of hot and cold sandwiches, salads, and pasta. At 3 pm, it’s milk and cookie time; providing lots of sugar to keep everyone operating at peak performance until 5:30. The only thing missing from the late afternoon snack was an insulin chaser.

“No thanks, kid. See you in a bit”, he said. The elevator doors opened, and as I started to walk in, he called after me and said, “And stop smoking so much!”

When I hit the street level, I walked out on to Madison, made a right on 43rd, and found my usual smoking corner; inside the service entrance doorway to our building. Even though it was the first week of October, the weather had stayed warm, and it was already a comfortable sixty five degrees; a nice change from the chilled-to-perfection conference room. After I lit up, it took about 2 minutes to ingest the Marlboro Light, an act that, according to the Surgeon General, would wipe 11 minutes from my life span. I lit up another one and was thinking about the US Attorney General, Jake Bronstein, and how that combination was going to impact my life span.

I noticed the bank of pay phones on the corner, and considered calling Jake, but decided against it. Vegas is three hours behind, and calling him at 5 am was a bad idea for two reasons. He doesn’t talk about business from his home; you either call his office or his cell. More important, if the FBI was looking into something having to do with Jake, I couldn’t be sure they hadn’t already tapped his phones, or if they were monitoring his phone records. 5 am calls stick out on phone logs, and even if I called from a pay phone, it wouldn’t take much to trace it back to a public booth in New York City directly outside of my office. After a total of six minutes, I composed myself, and went back upstairs.

The trading floor was already starting to buzz by the time I slid my access card into the high tech reader that opened the double-paned and bullet proof glass doors. The traders were shouting out pre-opening prices and the sales execs were smiling and dialing their accounts to solicit orders. Bobby was still in his private office, going over the previous day’s P&L and broker commission reports, so his throne at the top of the trading desk was still empty. Even though he rarely spoke to accounts anymore, he made it a point to keep his conductor’s spot at the head of the 10,000 square foot trading complex, and directly behind that perch was his inner sanctum; a smaller, glass-enclosed office that he shared with the firm’s Chief Operating Officer, Mel Miller .

My proximity to him on the trading desk made it virtually impossible to have any personal or private conversations whenever he was “on deck”, and Bobby was a nosey guy, on top of everything else. He didn’t like it when anyone wasted HIS time on personal calls, and he didn’t have to be Carnac the Magnificent to figure out when people were bullshitting on the phone with wives or girlfriends, as opposed to customers. If it was ever in doubt, he could always “go to the tape”; all of the phone lines were mapped to a central tape recording system, a device intended to document trades made over the phone, just in case there was a dispute between a salesman and customer, but equally useful to document other conversations, should the need arise.

In my haste, I had neglected to call Lorna back before I had gone into the morning meeting, so I called her from a private line on my desk, one that wasn’t connected into the Centrex tape recording system. She picked up on the first ring.

“Hey, it’s me.” As if I needed to introduce myself. “Is everything OK?”

“No, everything is not OK, Josh! I’m totally freaked out here”, she said.

“Are they still there?” I asked.

She told me they had stayed parked on the street in front of the house for about fifteen minutes, and than drove off. “What did they say to you?”

I told Lorna that they thought I could help them on some silly case they were looking into, and it was nothing for her to worry about. I also told her that I took issue with them for being totally out of line by not calling in advance, and for otherwise being rude to her.

She didn’t buy into the idea of not worrying about it, but I didn’t want to get into a protracted discussion, so all I could say was, “Everything is fine, Lorna. I’m going to speak to them later on and find out what this is all about.” I closed with “I’ll see you later.”

I still didn’t know what the Feds had in their hands, or what they had up their sleeves. More than a year earlier, when Jake was soliciting investors to put up capital for his film finance business, I had suggested that he set up a credit line at a bank; a common practice for hedge funds, and the vig would be cheaper than what he might have to pay private investors. He had maxed out his credit lines on the West Coast for his other businesses, so I introduced him to several New York banks, including The Bank, the one that I used to work for. I had also introduced him to a small private bank, owned by a law firm that had done work for me in another assignment. They provided revolving business credit lines and charged very high rates, classic ‘shylocks’, which was no problem for Jake; his film finance business was lending short-term money to independent film projects at even higher rates.

Jake and the private bank’s President, a guy named Moshe, had forged a good relationship, and everything was going fine for months; Jake was drawing down from his revolver and paying the loans back on a regular basis, with hefty interest. The bank was so happy with the relationship that they offered to increase his borrowing limit by another $15 million, but they wanted to perform additional due diligence, including having a personal meeting with the West Coast bankers that were supposedly guaranteeing Jake’s loans.

Jake was reticent to have anyone pierce his veil of proprietary contacts. He’d frequently complain about having been screwed in the past by others that tried to ‘go around’ him, in order to forge direct relationships in deals that he was brokering. But he agreed to take the meeting with Moshe and bring along his LA banker, the guy that was guaranteeing the credit line. A few hours after their lunch meeting at the Ritz Carlton in Beverly Hills, Moshe called me to say “thanks again for the introduction”; he said the meeting had gone really well, and they were moving ahead to increase Jake’s line. A day after that meeting took place, I got another call from Moshe the Shylock, one that started without his usual schmoozy, banker type greeting, he jumped right in and asked “How well do you really know Jake?”

I was taken aback by the question, and when I asked “Is there some kind of a problem?”, the first part of the answer the shylock gave was, “We were so impressed by the presentation at the lunch meeting, we decided to stay in town an extra day and visit with Jake’s West Coast bankers, privately.” I could only conclude that they were looking to establish their own relationship with their new counterparts on the West Coast, and cut Jake out of the equation. Then I got the bottom line to the answer.

Using the business card offered up by Jake’s LA banker at lunch, the New York guys went to the LA guy’s office the next day; and while the person who greeted them had the same name on his door as name on the business card provided at the previous day’s lunch meeting, but he wasn’t the person they had lunch with.

Making matters worse, the shylocks told me that they had gotten so spooked by the experience, they had already called the FBI to tell them what had happened. All of this was being told to me while I was on a Metro North train headed back to Connecticut, so I really couldn’t understand everything the shylock was telling me, but I got the gist of it. My cell phone hit a dead spot as the train was passing the Stamford station, and when I got to Westport, I called Jake to tell him about the strange call I just had, and to find out from him what had happened. All he would say was that "I knew the shylocks from NY were going to try and go around me and I took precautionary measures”. Cutting through the hyperbole, it became clear what he happened; Jack had brought some stooge to the lunch at the Ritz Carlton, using a real banker’s business card, instead of bringing his banker, just in case they tried to go around him.

I knew that Jake was creative, but that stunt was beyond creative, and since I had made the initial introduction, thanks to Jake, I looked like an idiot; for the second time in six months, the first time was an equally troubling incident, one that I thought I had successfully deleted from my memory. I had called Moshe the Shylock back and said that I’d track Jake down to get an explanation, and I promised to call him back first thing in the morning.

Moshe and his partner had taken the red eye back to New York, and when I reached them mid day, I told them I had reached Jake late at night, and between listening to their different stories, I was more confused than anyone. I passed along Jake's explanation, and however distorted I told them I thought it was, I suggested that his motives were plausible, if not completely inappropriate and irresponsible.

Initially hot under the collar, the shylocks cooled off, and they promised not to make a further issue out of the mess, with the caveat that Jake would simply pay off the outstanding balance on his credit facility within twenty-four hours. By the end of business the next day, Jake wired the shylocks $2.5 million to cover his outstanding loans, and everyone went back to their corners. I hadn’t heard a word about that episode since, although the law firm that had made the introduction and wrote up the legal docs for the credit line did return the fee that Jake had paid them.

But that episode didn’t sync up with what the Feeb had said on the phone. There hadn’t been anything on Bank stationery, at least that I was aware of. Jesus, what a mess.

As agreed, at 10 am, I called the cell phone number that the Feeb had provided. He picked up on the first ring, and I simply said, “This is Josh Berman, I’m returning your call”, and without any passion, I apologized for taking so long to get back to him. He was equally cool, and immediately started to go into a replay mode of the conversation that we had earlier, and once again, expressing the urgency of his wanting to meet with me. I suggested that he fax whatever letter he had to my office, so that I could understand what he was referring to.

The ping pong match picked up where it had left off from earlier in the morning. He volleyed back with “We’re in the car and just leaving Connecticut now, Mr. Berman, so I can’t fax to you. How about you meet us at our offices in Long Island, it’s about one mile off of Exit 52.”

This guy was like a bulldog, but there was no way I was going to some office park on the outskirts of Long Island without knowing what this was really about. I sent him a lob in return, and suggested that we meet in Manhattan, as it was only a slight detour in his path from I95 in Connecticut back to his home base. He acquiesced, and we agreed to meet one hour later at Michael Jordan’s restaurant in Grand Central Station, a neutral ground that was only a block from my office. In the small chance that they weren’t real Feds and this turned out to be some kind of a set up, I’d be in a public place and otherwise pretty safe.

I passed the time and distracted myself by attending to some email messages and returning some business calls; I thought about phoning my pal Seth at Knoll and giving him a heads up, but I wasn’t ready to share this story with anyone just yet. Besides, Seth had known about Jake through stories that I shared, and even though no hits had come back when Seth had checked him out a few years before via Knoll’s internal database, he would still raise his eyebrows whenever I mentioned Jake’s name. As far as Seth is concerned, 90% of ‘businessmen from Vegas’ are “dicey”, and if anyone would have reason to be biased, it would be the #3 exec at the world’s most prominent private investigations company.

At 11 am, I got up from my chair, gave a wave to Bobby and said “I’ll be right back.” Not that I have to get Bobby’s tacit approval every time I step off of the trading floor. Unlike account execs, I wasn’t expected to be glued to my desk; part of my job requires visits to the upstairs research department as well as the IT room throughout the day. But Bobby expects me to be there when he sneezes, and if he were to turn his back and not see me, he’d be upset.

I had fifteen minutes before my rendezvous at Michael Jordan’s, which is a 30-second stroll from the front door of my office. I wanted to canvass the block, just to be on the safe side. Over the past few hours, I’d been transfixed and hyper-paranoid; for all I knew, there were snipers on top of the rooftops surrounding Grand Central, and I wanted to discretely get the lay of the land. I also wanted another smoke.

I walked up to 44th street, and before I turned the corner, I decided that I needed to call Jake. He’d be up by now, and likely in his office. If his secretary wasn’t in, I’d try his cell phone. If he didn’t pick up, I’d leave a message. Putting a wire tap on a cell phone is pretty hard to do, and besides, I hadn’t conspired to commit any crime, and I had nothing incriminating to say, all I wanted was to know what the fuck was going on, and if he might have an inkling to what was going on.

His phone rang through five times until the voice message picked up. “Hey, it’s me”, I said. It’s not like he didn’t know my voice. Over the past several years, we’ve talked to each other at least twice a day, aside from the voice messages we’ve left for each other. Most of the time, we’d just shoot the breeze; I‘d give him an update on a small trading account that I was watching for him, or about some of the leads I had for him on deals he was trying to put together, and he’d tell me about his daily schedule, like what aspiring actress or Vegas cocktail waitress was going to be giving him a blow job at lunch.

As the recorder recorded, I said, “I know it’s early, but just wanted you to know that I’m about to walk into a meeting with two guys that showed up at my door this morning, claiming to be from the FBI. I have no idea what is going on, but they mentioned your name.” I closed with, “I don’t think the meeting will take long, but if you get this message, call me back on my cell.” I hadn’t said anything inappropriate, and certainly nothing that could be interpreted as conspiratorial. Time to go.

As I headed back down to 43rd street, I took off my Rolex and put it in my pocket. If I was going to be rolled, I’d want to protect the gift my parents had given me more than twenty years ago, and if some Feds thought I had pulled off a multi-million dollar scam, I didn’t want to add fuel to fire by wearing what they might suspect were some of the spoils on my wrist.

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