Saving Jason (28 page)

Virgil folded his hands on the table and stared at them.

Matt Damon spoke. “When a sinister person means to be your enemy, they always start by trying to become your friend.”

Brady spoke to the laptop. “You’ve got a paper trail? I mean, you can demonstrate that all of the trades lead back to this Rose Holding. That’s what you’re saying, am I right?”

I cleared my throat. “Before Manny answers that question, Marcus, I need to caution you. We’ve come to a point where you have to make a decision.”

Brady looked up at me in surprise.

“Some of the information Manny has gathered has been the product of unorthodox means.”

Brady squinted at me, trying to give me the federal agent hard-ass look. I knew him too well.

“And the solution to Virgil’s problem—and mine—will require other unorthodox activities. I would not want you to compromise yourself in any way. We can break here and you can take my story and leave. You are free to make of it what you will. Tell it to Blackmore, research it on your own, or forget you ever heard it. As you wish. But if you stay and hear me out, be forewarned.”

“You’re not threatening an FBI agent, are you, Jason?”

“No, Marcus. Just the opposite.”

He turned to Larry. “What about you?”

“Attorney-client privilege will only cover me so far,” he said. “But I believe I can best serve my client—and my friend—by staying here and giving my best counsel.”

Brady thought about it. “I want to help.”

“And you
can
help. But I need you to trust me.”

“If it backfires, I’ll lose everything.”

I turned to Virgil. He looked up and nodded. “I’m sorry, Jason. So much of this could have been avoided. It is my fault. I will do whatever it takes to make things right.” He turned to Brady. “We can protect you. If Jason’s plan blows up on us, I am comfortable testifying that you left the room at this point and did not return.”

“No,” he said. “I don’t want anyone to lie for me. I’ll stay. I’m all in. Bet the ranch. Or however you want to say it. Tell me what’s next.”

I took a deep breath. “Thank you.”

“Yeah, yeah. Thank me when it’s over. What’s next?”

Everyone leaned in.

“Manny? Why don’t you go first.”

R
ose Holdings doesn’t own the shares in its own name, of course. But Rose owns a host of blinds, almost all of which are numbered accounts. I will provide you with the names, addresses, and banking information for each of these subsidiaries. Your people will have to be told where to look. Believe me, they’re not going to stumble across it.”

“They’re pretty good,” Brady said.

“Then let them try,” Manny continued. “You’ll be available to give out hints, though, if they need it.”

“I can’t use anything you got illegally. Any good defense lawyer will get it all thrown out.”

“I would,” Larry said.

“It will be entirely up to you as to how much information you share or whether you choose to reveal the source,” I added.

“It won’t be the first time an FBI agent has had to shave the facts when on the stand,” Larry said.

Brady bristled. “We’re not all as crooked as you like to think, counselor.”

“No,” Larry answered. “Only about a third or so.”

Virgil half rose from his seat. “Boys! Boys! No fighting. We’re here to work together.”

“You’re right,” Larry said. “Forgive me, Agent Brady. You are being asked to take a wider view of the ethics of what is being discussed, and I respect your willingness to listen.”

“Thank you,” I said. I looked at Brady. “You okay?”

“I’m good.”

“The weak link,” I said, “is Scott the younger. Joey is out of his depth
and afraid to admit it. But he is loyal. We won’t get him to talk
unless
he thinks it’s all over—that there is no longer any good reason to keep his mouth shut.”

“Agreed,” Brady said.

“But if we can get him to talk, we can roll up Nealis, the old guys in Florida, and maybe even the young muscleheads that keep coming after me.”

“We need some kind of leverage,” Virgil said.

“Leverage is the key,” I said. “Look at it in reverse. If Brady’s people arrest Nealis, the old man, and his cronies, then Joey will panic. Then Blackmore can bring him in, offer him a deal, and squeeze every drop out of him.”

“This is the chicken and the egg story. We can’t arrest them without hearing what Joey has to say,” Brady said.

“Larry, what would happen if Nealis votes shares he doesn’t own?” I asked.

“That’s illegal. Major fraud.”

“But he does own them,” Larry said. “Or at least Rose Holding owns them and he will have the proxy.”

“So we need to get Rose to sell. That’s all.”

“And how do you propose to convince them to sell before the meeting?” Virgil asked.

“You said it. Leverage. The old man and his partners don’t have enough money to pay cash for all those shares. They bought them on margin. Borrowed money.”

“That sounds right,” Virgil said.

“We trigger a margin call. If the price drops enough, the banks will call in their loans. When Nealis’s friends don’t come up with more money, the banks will sell out their positions in Becker Financial. If Nealis tries to vote those shares, Brady arrests him.”

Larry laughed. “That’s quite a plan. And only a trader like yourself could come up with it. I love it.”

Virgil looked confused. “You would need a substantial drop in price to pull this off. I mean, not just a point or two. How do you propose to do that?”

This was the part where I was afraid I might lose some support. Manny had assured me that it was doable, but the plan was like playing catch with a hand grenade. Or an atom bomb.

“We’re going to crash the stock market,” I said.

I
think I’ll have a beer,” Brady said. “Anyone else?”

Larry got up and joined him at the buffet. “I think I’ll try the wine.”

I was exhausted and exhilarated. They had all approved the plan, but they had made me explain every step. I had tried, but it wasn’t possible. The markets don’t run on logic. It’s fear and greed. And all I had to do was create enough fear to get the markets to drop by a hundred points on the S&P about a half hour before the close. A flash crash. Stocks would pop right back, but not all stocks would rally equally. It had been done before by a guy with a laptop. He’d done it for profit and gotten caught. I was going to do it to catch some bad guys. And I wouldn’t get caught.

When a move that large and that sudden occurred, all the financial stocks would stay under pressure. Though the general market would rebound, there would be lingering fears that the bank stocks would be in trouble simply because of the volatility. I would need to keep the lid on only one of those stocks.

“It’s important that we all keep our heads through this,” Virgil said. “We cannot profit from this. No one makes a trade based on the plan. No tip-offs to your favorite aunt or sleazy brother-in-law. Nothing. The regulators will be looking at every trade connected with a market move like this. We can’t have anything that could trace back to any one of us.”

Virgil had been enervated when I arrived, but this cockeyed, highly illegal, and quite dangerous plan had rejuvenated him. He may have been issuing a stern warning, but he sounded more like a pirate captain than a responsible adult. I wanted to answer him with an “Arrgggh.”

Larry and Brady clinked wineglass to beer bottle. “If this ever comes to light, you and I will be famous, Agent Brady. Every graduating law school class will know our names for decades to come.”

“And every police academy graduate, too,” Brady answered.

They drank.

A late-summer sunset was sending shafts of orange and pink light across the living room. It was late. Roger and the Kid would be back from visiting my father. I signed off with Manny and packed up the laptop. “I’ve got to get back home. The next time we meet will be next Friday before the annual meeting. If anyone comes up with a reason for us to rethink this scheme, give a call. Otherwise . . . Later.”

Virgil walked me to the door. “I made a mistake. I see it now, the whole picture. Thank you and please accept my apology.”

“Nealis looked too good to be true.”

“And I was greedy and impatient.”

I smiled at my boss and my friend. “I’ll never tell.”

“Good luck, Jason.”

“Better to be lucky than smart,” I said. I felt neither and I would need to be both.

M
anny and I had a lot of work to do. The setup had to be seamless. We had to insinuate ourselves into the market without setting off a run too soon. We had agreed to meet in the chat room, just as soon as I got the Kid down for the night.

A full day with Roger, my father, and Pop’s new wife, Estrella, had done the poor guy in. His stomach was bloated with vanilla ice cream. He nibbled at dinner with no enthusiasm. I imagined him sinking slowly into his pile of ketchup and fries.

“Are you too tired for a bath?” I asked.

He ignored me.

Often, I could tell what he meant by the
way
he ignored me. He had his tells and his tics. But that night he was too exhausted to even emit subliminal signals.

“All right. We’ll do the bath in the morning. But I do want you to wash face and hands and brush teeth.”

He sighed. A big, long operatic sigh. A Wagnerian sigh.

“I’ll help you,” I said.

“I do it,” he said.

“Fine,” I said, and then, when he didn’t move, “Are you ready?”

“Why is Willie bad?” he said in a dreamy voice.

“Wow. That’s a big question, sport. What makes someone do bad things? Is that what you’re asking?”

He let his head flop to the right. That may have meant “Yes.”

“I’m not that smart, son. Sometimes people make mistakes and then find themselves stuck and doing things they never imagined they’d be doing.” That wasn’t Willie. That was me. “I don’t know. Maybe he didn’t have good parents. Not everyone is lucky that way.” The Kid had
suffered from not having good parents. His one remaining parent was muddling through as best he could, but was still woefully inadequate.

He sighed again. A small sigh.

“Let’s get you cleaned up.”

He let me take his hand and lead him to the bathroom, where he surprised me by stripping off his clothes. I turned on the faucets in the tub.

The sunburn was on his cheeks and chin, his neck and the top of his chest where his shirt did not cover, and along both forearms. Otherwise he was a light honey hue. Though I’d done my best to shelter him from the Tucson sun all summer, it had left its mark, seeping through clothes and sunscreen.

“Does your sunburn hurt?” I asked.

He growled. It was annoying to talk about it.

He climbed in the water and sat down, waiting for me to wash him. Though he did not like to be touched, bathing was different. Like a Roman emperor, he was content to be treated like a lesser god. I soaped up my hands and gently rubbed him all over—he hated the feel of a washcloth.

He winced as my hand brushed over his arm.

“We’ll put some cream on that when we’re done,” I said.

He looked at me askance.

“Okay. Not cream. Medicine. Gook. Good gook. It’ll feel cool. You’ll like it.”

He let his head flop forward, resigned to a life stuck with such an idiot for a father. I lathered him up and rinsed him off quickly. While I worked, he entertained himself by making frog sounds.

“Okay, hop out, Mr. Froggy.” I patted him dry with a smooth towel.

“Willie is afraid,” he said when I was done.

I wrapped the towel around him. “You are very wise, little one. I think you’re right. Willie was afraid, so he did some mean things. Were you afraid? I was afraid for you.”

“Rrrrribit,”
he said.

“Okay, brush your teeth and I’ll get pj’s.”

I walked into his dark bedroom and before I could turn on the light I heard the weird, lonely howl of a coyote echoing through the apartment. Again.
“Yip. Yip. Aaarrrooooooo.”
The Kid was a perfect mimic. My stomach muscles clenched. A chill ran up my back. Then I heard the sound of a small child brushing his teeth and I relaxed again.

Had he been afraid? I would never know. But I was, and always would be.

T
he sell orders had been building up all week. Manny concentrated on individual stocks in the financial sector, as well as the banks, brokers, insurance companies, and ETFs and other funds that specialized in those stocks. He was careful to keep the offers to sell just a bit above the market so that he never actually executed a trade. I picked the stocks and the prices. He entered the information into his computer, and the program he’d written placed the orders anonymously through many different brokers, making it look like the sell interest was broad-based. The market drifted sidewise all week, which worked in our favor.

We worked in my father’s new apartment on 115th Street in College Point with a view of the airport and the city jail on Rikers Island. It was a constant reminder to not make any mistakes. Manny piggybacked on the Wi-Fi at St. Agnes High School—closed for the summer—so that if any watchdog entity tried to search back through the Internet to find where the selling pressure was coming from, they would run into a dead end.

Pop and Estrella stayed in my apartment and kept an eye on the Kid. Manny and I ate microwaved Lean Cuisine and never went out. We spelled each other during the night, keeping an eye on the overseas markets. By the weekend we were beginning to develop cabin fever, so we both agreed that a twelve-hour break was in order.

I flagged a livery driver on College Point Boulevard and paid him cash for a ride to West 110th Street in Manhattan. Skeli and I ordered Chinese, watched Bogie and Bacall in
To Have and Have Not
on TCM and went to bed early. Sunday, I rode the subway all morning, switching lines and cars until I was sure I wasn’t being followed, and then
took the Number 7 all the way to Flushing, Main Street, where I caught a bus that let me off eight blocks from Pop’s place. Manny arrived an hour later, wearing a dark brown ankle-length djellaba. In the multicultural, polyethnic mixing bowl of Queens, he fit right in.

“The Pacific markets open in a few hours. I want to be ready,” I said.

“We’re ready,” he said.

He was casual, relaxed. I was paranoid, anxious, and a nudge this side of explosive. It felt good.

We tracked the Sydney market, then switched to Singapore and Tokyo. The markets felt heavy, but at the same time somewhat skittish. It was perfect weather for a breakout session. By the time that London began trading, the world markets were all slightly lower on light volume. I was too hyped to sleep, so I made a pot of coffee and let Manny sleep for six hours. When he awoke, he scrambled eggs for us as we waited for New York to open. We ate while watching Bloomberg News on my father’s giant flat-screen. Becker Financial got a mention for the meeting on Friday evening.

“I think that whatever the results of the shareholder vote, they want the markets to digest the news over the weekend,” the guest talking head said. The banner at the bottom of the screen said that he was the chief portfolio manager at Boyle & Co.

“Do you have a stake in the vote, Tim?” the TV reporter asked.

“We’re in the contrarian camp. We own BFG. I think Virgil Becker has done a good job and I hope he is reinstated once this vote is out of the way. He’s been tainted by the investigation, but I believe he can weather it. And remember, the Beckers still own a large block of shares. I think the market will be very surprised if the vote goes against them.”

“And markets hate surprises, don’t they, Tim?”

They both got a good chuckle over that. The conversation switched to the restaurant industry and why those stocks’ performance was tied to the price of oil. I hit the mute button.

“Shall we surprise them, Manny?” I asked.

He grinned. “Photon torpedoes ready, Captain.”

Computerized trading has affected all markets, and the jury is still out on whether this is a good thing or a bad thing. My take is that it doesn’t matter. You can’t undo technological change. Celebrate the positive effects—greater liquidity, speed of execution, improved price discovery, transparency of information—and accept the fact that the guy with the biggest, fastest computer is always going to have an edge over the rest of us mere mortals. And also suck it up when, as will occasionally happen, the computers read the same signals and all lean the same way at the same time.

We started sending out those signals.

“It doesn’t matter how far above the market you make your offer. Just do it large. The computer programs scan the order books of the floor traders, and size means more to them than price.”

The program placed orders to sell Becker Financial two or three points higher than the market price. If any one of them had been executed, we would have been in deep trouble; Manny was offering tens of thousands of shares at a clip. I had him place similar orders to sell the S&P index on the Chicago futures exchange. Well above the current market, but again huge in size.

By midday, my adrenaline was starting to fade. I lay down and tried to nap for an hour, but I couldn’t relax. Though exhausted, I was still flying on nervous energy. I made another pot of coffee.

The bulls tried pushing the market up late in the day on the weekly car sales report, and for a few minutes I felt a stab of panic as the market ticked up. They were getting dangerously close to our sell orders on the S&P index. If I told Manny to pull the orders, the market might read it as a bullish sign and really take off. Rather than watch the tape and fret, I went in the kitchen and made turkey sandwiches for the two of us. We hadn’t eaten since breakfast.

“I hope you take mayo on your sandwich, because that’s the way I made it,” I said.

“Thanks,” Manny said, though he had only been half listening.
“They had a little rally a while ago, but it didn’t amount too much. The market is back down to the opening levels. What do you want to do?”

“What’s the time?” I asked.

“Is this mayo? There’s no mustard?”

“I’ll get you mustard. What’s the time?”

“Three thirty-one,” he said.

Less than a half hour to the close of business on the New York Stock Exchange. Futures would stay open longer, and the aftermarkets would kick in right away, but the next day’s margin calls for BFG would be based on the four o’clock price.

A graph in the upper right-hand corner of Manny’s screen showed an ever-growing spike. Order flow toxicity, the measure of the relative imbalance in sell orders versus buy orders, was close to record levels. Hedge funds, market makers, and day traders would all be focused on that graph. And they’d be nervous. Soon, they’d be scared. Fear and greed, in the end that’s what moves markets.

“It’s time,” I said. “Let ’er rip.”

Manny hit keys on the laptop and all of our above-market offerings ticked lower. We still had not made one sale. We didn’t need to. All we needed to do was to give the appearance of many different sellers all leaning in the same direction at the same time.

At 3:34, the computers kicked in.

I had timed it perfectly. The market was tired. Traders were bored, or off the desk, or complacent; very little had happened and the close was less than a half hour away. They never saw it coming.

A nanosecond later, the market got hit with thousands of sell orders. Prices on the terminal all switched to red, and minus signs appeared on the tape. The selling continued. S&P futures dropped by two percent. Then three, and four.

“Manny, put your ear up to the computer, and if you listen really carefully, you will hear the screams of traders in crisis.”

“Cruelty has a human heart, Jason.”

The market continued to plummet, overloaded with sell orders from computer-driven hedge funds. There were times when the market would move so quickly that a human trader had no time to panic and react. He or she could only sit frozen in awe. Sometimes, like this day, that was a good thing. Computers don’t panic at all and they can react to market changes in an instant. So while humans watched, the computers behaved like lemmings and leapt off the cliff.

I checked the market for Becker Financial Group. After hitting a recent high of 52.1 a week earlier, BFG had been trading listlessly all morning between 50.06 and 50.12 with good size offered at 52.5. When the order came in to show twenty thousand shares at 51.5, all of the bids pulled out. The next sell order was from a computer to sell one thousand shares “at the market.” Not a particularly large order, but there were no longer any resting customer bids and other sellers were jumping in. There were a few trades in the high forties, then nothing down to 42.4, 42.2, and 42.0 as a few human traders tried to stop the flow. The computers blew right through them. In another few seconds, BFG was down to 38, where stop-loss orders began flooding the market and trading was halted.

The other financial stocks were getting a beating also, but none as badly as Becker.

The only thing that stopped the market from trading lower was that there were no more buyers anywhere. The selling stopped and everyone got to take a deep breath. It was 3:43. Nine minutes had passed and the stock market had given up half a trillion dollars in value.

The pause continued. At 3:46, the S&P futures market ticked up. It was the first uptick trade since the selling began. That was all it took. Despite the instantaneous flash of information through the Internet, through cable and ether, and by methods more ancient, the human animal responds at its own speed. Once the information was digested that the market had suddenly, and without reason, become vastly cheaper, the buy orders came back in. The markets began trading back up again, and by the time the final bell rang on the New York Stock
Exchange at 4:00 p.m., most stocks were back where they started the day or slightly higher.

But not the financial sector. Those stocks lagged. And Becker lagged the most. When the closing price for BFG hit the tape, it read 39.8. Down twenty percent.

“Is that too much?” Manny said.

“It’ll get a pop tomorrow. Maybe we overdid it just a tad.”

“You never know what is enough, unless you know what is more than enough.”

“You’ve pulled all of our orders out, haven’t you?”

“Aye, aye.”

“Then I’m going to bed. See you in the morning. Nice work, Manny.”