Whipping Boy (18 page)

When the baron failed to keep his promise, Laurence made good on hers. She put the contract dispute in the hands of the Washington lawyer present during the loan discussions in Zurich. He petitioned Robert Gurland for the funds placed in his care. Correspondence between the two attorneys remained amicable (and mutually remunerative) for a few months before negotiations broke down.

“At that point, I considered suing,” Laurence tells me. “But the
litigators I consulted all said forget it. I’d be throwing good money after bad.” Already out $54,000 to Cesar, hundreds of thousands of dollars in legal costs, and nearly $100,000 in travel expenses (in addition to the $500,000 staked by Victor Benetar), Laurence heeded their advice. But while restitution was off the table, retribution was not.

“I made an appointment with the New York District Attorney’s Office.”

For some two hours she detailed an improbable tale of an international bank fraud operated by a trio of self-styled nobles and a shill named after a Roman emperor.

“The DA’s office thought I was nuts. They looked at me like I had three heads. The whole story sounded so crazy. Then I showed them my files.”

Laurence substantiated her complaint with faxes, emails, personal correspondence, financial statements, wire transfer records, canceled checks, loan contracts, legal memos, airline tickets, hotel bills, gold-embossed visiting cards, rejected bank letters, drafts of handwritten mea culpas, and website bios of the Barclay and Badische executives.

“They kept asking me, ‘How could a savvy businesswoman like yourself get duped by guys playing dress-up?’”

I tell Laurence it’s a fair question.

“I know,” she acknowledges. “I’ve asked myself the same thing a thousand times since that first phone call with Cesar.”

“And what’s your answer?”

“The best I can come up with is that I was ripped off by a bunch of low-class bullies who figured out how to prey on ambition and dreams.”

After reviewing her evidence, the DA’s office declined to take the case. “They said, sorry, you may have been a victim of international fraud, but that’s outside our jurisdiction. We don’t have the authority or the resources to pursue the matter. Try the US Attorney. So I gathered up all my stuff and schlepped it a few blocks south.”

Specifically, Laurence presented her dossier to a criminal investigator at the Southern District of New York headquarters of the US Attorney’s Office.

“That’s where my luck began to turn.”

“What made you do it?” I ask. “Cesar fleeced I don’t know how many victims, but you’re the one who stepped up.”

“You want to know the thing that really pushed me over the edge?”

“I do.”

“It wasn’t the money.”

“No?”

“No. It was missing my grandmother’s funeral. I’ll never forgive those creeps for that. I’ll never forgive myself. I wasn’t there for my mother when she needed me most. And why? Because I was in Zurich getting ripped off by a bunch of pretend businessmen. So, sure, I can play nice, and I can jump through hoops. But in the end, here’s a piece of free advice. Don’t
ever
fuck with me.”

But what is truth?

Is truth a changing law?

We both have truths.

Are mine the same as yours?

Jesus Christ Superstar
, “Trial Before Pilate”

When one lies, one should lie big, and stick to it . . . even at the risk of looking ridiculous.

Joseph Goebbels
, “Churchill’s Lie Factory”

Before talking with Barbara Laurence, I had viewed the swindle in comic terms, taking my cue from the jokey headlines cooked up by the New York tabloids. But that lighthearted reading was insensitive. It overlooked the malevolence that infused the crime. I could tell that for all her good-natured self-mockery, Laurence still suffered the consequences of the abuse dispensed by the Badische boys.

We weren’t the only two Cesar put through the wringer. As an exclusive liaison to the Badische Trust Consortium, he tried to broker at least a dozen dead-end deals. Besides Laurence’s ill-fated loan, there was the $200 million agreement for a hundred-bed charity hospital in Belize. The $400 million for an oceanfront development in North Carolina. The “irrevocable $100 million funding commitment” intended to transform a derelict Long Island scrapyard into a tire-recycling facility.

Cesar helped the prince sign agreements with an Arizona real estate developer, a German plastics manufacturer, and a Japanese inventor of an underwater bonding agent similar to Krazy Glue.

The more I studied the dossiers, the more I came to realize that the spanking Barbara Laurence received was neither the cruelest nor the most enduring dispensed by the Trust. The file on another would-be borrower, a telemarketing executive named John Kearns, was far more sinister.

Kearns, a sixty-seven-year-old entrepreneur seeking $30 million for a web-based technology that promised to improve the performance of hotel switchboards, contacted the Trust around the same time Laurence did. (In fact, the two were ensnared at the Dolder
Grand the same weekend, and with the same ceremonial flourish: wooden laptop; green-ink, supersized fountain pen; champagne; etc.)

To set up the prerequisite offshore accounts, Kearns borrowed $30,000 from the friend of a friend, a pilot with Northwest Airlines. For the $120,000 performance guaranty paid to the trust he hit up his eighty-six-year-old mother-in-law; she took out a loan against her home in San Jose. And to cover travel expenses, Kearns borrowed $25,000 from his daughter’s mother-in-law and another $40,000 from a bank in Costa Rica.

The international snipe hunt Kearns undertook was so extensive that federal prosecutors, at trial, charted his itinerary on a giant Styrofoam-backed map of the world, marking each fruitless stopover with a bright yellow star. New York received the first. Zurich the next. After that came Costa Rica and then Guam. From Guam, Kearns traveled to Hong Kong, then back to New York, where he attended a meeting with the Badische finance committee in the boardroom of Clifford Chance (“the largest law firm in the world”), followed by “a private luncheon in the Delegates Dining Room at the United Nations.” He then rushed home to Lake Tahoe, California, to care for his wife, who was battling stage III multiple myeloma, an incurable cancer of the bone marrow.

But no sooner had he put down his bags than he was forced to pick them back up. Contractual deadlines imposed by the colonel compelled him to quit his wife’s bedside and fly to Toronto, Halifax, New York, London, and Hong Kong. The Trust rejected every one of the banks Kearns hoped to use.

Government prosecutors never put a star on Bad Heilbrunn, Germany, but they could have. Kearns was in the tiny German village, overseeing his wife’s cancer treatments at a renowned clinic, when Colonel Sherry showed up to declare that his loan was “in limbo” and that his performance guaranty had been forfeited. To temper the grim news, Sherry offered to cover Barbara Kearns’s medical expenses and to underwrite a second loan, this one for a patented “hair
augmentation product” that Kearns was keen to bring to market. The colonel assured the “nonperforming” borrower that Badische would invest $10 million in the new venture, which exploited recent breakthroughs in fetal stem cell research.

Back in Lake Tahoe, Kearns tried to follow up on the commitments Sherry had made at the Bavarian cancer clinic. His efforts were stymied by the colonel’s abrupt and unexplained disappearance.

Desperation made Kearns tenacious. “Our lives are on the line,” he wrote in one of the many emails the colonel failed to answer. “The delays and unknowns have cost us to the point we have had to discontinue all of [my wife’s cancer] treatments. It adds to our stress that we hear nothing from anyone and can only conclude the worst.”

He was right to do so.

Badische wiped Kearns out financially. At trial, he estimated he lost “close to six hundred and fifty thousand dollars.” But his testimony indicates that the Trust stole a great deal more than money. Like Laurence, Kearns was regularly chastised during the loan proceedings, both for what he said (“There was [to be] no ‘John’ or ‘Brian.’ It was all ‘Mr.’ and ‘Mrs.’ and ‘Doctor.’”) and what he wore (“They told me suit and tie. California Casual was
not
acceptable.”). Like Laurence, he was punished for his contractual derelictions, forced to submit handwritten pensums apologizing for failing to present his bank letters in what Sherry called a “timeous” manner. And like Laurence, he might have overcome his bitterness more quickly if the
bankers hadn’t deprived him of something more valuable than dignity or dollars.

{Courtesy of John Kearns}

John and Barbara Kearns shortly before they were introduced to the Badische Trust Consortium.

He told me tearfully: “Here’s what I can’t forgive. They stole the last months of my wife’s life.”

Reconstituting the plight of Barbara Laurence and John Kearns sidelined Cesar. That was to be expected. The job of the shill requires that he withdraw from the scene once his confederates take the stage. I didn’t mind. On the contrary. The fraud was so alien to my own experiences I wanted to learn as much as I could about it. But there were other reasons, beyond curiosity, for my tenacity—reasons of temperament that had nothing to do with the crime.

Obsessives tend to have obsessions. Cesar wasn’t my first fixation, and I’m sure he won’t be the last. Baseball cards, Matchbox cars, Pez dispensers—I’ve always been a collector. From the age of seven until I left for Aiglon, I had an unquenchable interest in coins. I made regular trips to the local bank to exchange my allowance for rolls of pennies that I’d scrutinize, triage, and reroll while watching TV. I still have a blue Whitman coin holder with a single vacant slot—I never managed to harvest a 1909-S VDB—and a forty-pound box of duplicate wheaties rerolled by year of minting.
*
My point? I tend to go overboard. I investigated Cesar and Badische the same way I collected Lincoln pennies—intent on filling every void.

During one of my conversations with Barbara Laurence I asked her: “What caused you to lower your guard?”

“If I had to choose one thing that made me stupid, I’d say the lawyers. It never occurred to me that a distinguished Park Avenue law firm could be tied to a scam.”

John Kearns echoed that sentiment when called to testify: “If the largest law firm in the world was working for Badische, how could it
not
be legit?”

I’d been asking myself the same question ever since I first started sifting through the discovery materials. It was nearly impossible to reconcile the memorandums generated by so many legitimate lawyers with the illegal shenanigans of the ersatz royals. The Trust’s genius in this regard was most obvious in its sustained manipulations of Rogers & Wells, a Park Avenue law firm absorbed, in January 2000, by Clifford Chance, the London-based multinational behemoth.

Casual ties between the Trust and Rogers & Wells stretched back nearly twenty years, but the relationship was only formalized in 1998, when Colonel Sherry presented the firm with a $10,000 retainer. Soon after his check cleared, Rogers & Wells tapped a recently hired bank and regulatory law specialist named David L. Glass to serve as their “lead attorney” and liaison to the Trust.

“I was new to the firm and eager to build a client base,” Glass later recalled. “I was told the Badische bankers were existing clients so I was only too happy to oblige them.”

And oblige them he did.

Glass first helped the Trust, in August 1999, by drafting a regulatory memo that Colonel Sherry (unbeknownst to its author) deployed to reject Barbara Laurence’s initial bank letter.

“After that, he latched on to me,” Glass would later remember. Early on, the lawyer produced, again at the colonel’s request, a series of “attestation letters” on Clifford Chance letterhead that served no obvious legal purpose. The first such document recorded the removal of Prince Robert as head of the Trust. As Sherry explained to Glass, the prince had begun behaving erratically in early 2000, soon after his wife, the
self-styled Princess Audrey Khimchiachvili, fell ill.
*
The chairman’s grief—which routinely expressed itself in drunkenness, self-directed monologues, slurred speech, and alarming lapses in personal hygiene necessitating the intervention of professional upholstery cleaners—made it impossible to keep him at the helm of the Trust, so Colonel Sherry asked that Glass memorialize, in writing, the promotion of the Baron Moncrieffe as interim chairman.

Glass considered the request unusual. None of his clients had ever asked for a so-called attestation. Then again, none of his clients controlled $60 billion in assets. Glass provided the letter. No sooner had he done so than Colonel Sherry asked him to affirm that Badische was “a client in good standing” of Rogers & Wells
before
it merged with Clifford Chance. The colonel supplied the following rationale: he feared potential clients might wrongly assume that Badische had “hired Clifford Chance just because it was a famous, worldwide global law firm.”