The Aspen Account (40 page)

Bank of Cincinnati cancels line of credit with X-Tronic in post-fraud fallout.

Merrill Lynch downgrades X-Tronic common stock to “underperform.” Credit rating drops to BBB.

Civil actions filed against X-Tronic by Boston Investor Group. More lawsuits likely to follow.

Links to accounting fraud in Cooley and White may extend as high as engagement partner John Falcon in the firm’s Denver office. A call to Mr. Falcon’s office was not returned.

Treasury Department close to fraud allegation charges against Don Seaton, someone close to the issue said. Wall Street teeters on rumors, but stock price holds strong against speculations.

Michael breezed through the articles. X-Tronic was a sinking ship, taking on water at an overwhelming rate, financial institutions were all but abandoning the software giant, and now Don Seaton was coming under fire.

“Knock, knock,” Glazier said from the doorway.

Michael looked up from his computer. “Glazier, what the hell am I doing on a banking project for Treasury?” he fumed. “You have fifty agents working around the clock on X-Tronic’s accounting files, yet you dump me in this dead-end office.”

Glazier gave him a consoling grin. “Things are complicated, Michael. Your phase of this operation is over. Some of the top boys in Washington have stepped in to delegate on this one. It’s bigger than Enron and WorldCom because we still haven’t determined how high up the fraud goes. It’s clear to us now that the twins weren’t running the show.”

“Then Falcon was.”

“No, we don’t think he could mastermind things from Cooley and White. His resources were too limited. At this point we’re working under the theory that Don Seaton masterminded the conspiracy to regain control of X-Tronic. This is consistent with all the evidence we have. It’s been interesting to see the fallout effects of the fraud announcement. And we’re beginning to see a connection between the fraud and the fact that Seaton has now been able to repurchase enough shares of X-Tronic to have a majority ownership again. We are not, however, pressing any charges against him at this time. More conclusive evidence is expected after we finish negotiations with the attorneys for  Jerry Diamond.”

“You’re going to cut a deal with that hyena!”

“We’re going to do whatever is necessary to take down the top person responsible for the fraud.”

Shocked at what he was hearing, Michael shot to his feet. His chair rolled backward, hitting the wall. “But you know you can’t trust that scoundrel—he’d sell his own children to plea-bargain a deal. And you can’t seriously think Don has anything to do with this.”

“Oh, ‘Don,’ is it? Jesus, Michael, you’re on a first-name basis with this guy? Don’t you see how clouded your judgment has become? The SEC noticed some suspicious trading activities in X-Tronic’s shares a few days before the fraud was announced at the shareholders’ meeting. We think Seaton was involved.”

“What suspicious trading? What are you talking about? It doesn’t make sense that Don was involved,” Michael protested.

“There’s an angle here that you’re not seeing. Think! How could Seaton profit from this?” Glazier asked.

“He couldn’t. The stock value could only go down after the announcement. He lost nearly seven billion dollars saving the company from bankruptcy after the announcement.”

“Not necessarily. Someone very wealthy shorted three hundred million dollars’ worth of X-Tronic shock two days before the fraud announcement. In shorting the shares, they had committed buyers to the market price at the time of the short, before the announcement. When the price dropped, they called the shorts, selling the shares and profiting from the difference. Whoever pushed the shorted stock derivatives on the open market made almost three billion dollars. Whoever it was is obviously wealthy and well connected. The transaction was hidden through dozens of offshore venture funds that are privately owned. I have people from the Treasury and the SEC investigating the transaction for insider trading. We haven’t turned up much yet, but we will.”

“I can’t believe it,” Michael said. Leaning low over the desk with arms spread, he craned his neck up at Glazier. “I can’t believe Don would be capable of that.”

“He fooled all of us, Michael. He’s even made it look like his top executives committed the fraud behind his back. They’ve been at odds with Seaton for years, trying to get him to sell the business to a larger competitor. He must have known he was losing control of his company. Even the board of directors was against him. This way he could get rid of these executives without the board’s approval and regain a majority control of the company without losing much money.” He pointed a beefy finger at Michael. “You told me how calmly he reacted to his son’s death. What kind of father reacts that way? He didn’t care. As far as he was concerned, you did him a favor. Maybe it was even part of his plan. His sons are probably the only ones that could successfully implicate him in the fraud in front of a judge. That’s why we must find Lance,” he said, making a fist in front of his face. “He may be the only one that can really give us enough evidence to prosecute his father.”

“You think Don will try to kill his only remaining son?” Michael asked.

“That’s exactly what he’ll try to do. For all we know, Lance may already be dead.”

“Look,” Glazier continued, “I’m sorry we have to separate you from the remaining investigation. We just need to be careful where we place you because of your public exposure from the case. Plan on being here in Denver for six months. Let things calm down. Then we’ll move you into a departmental role in D.C.”

Glazier left, and Michael turned back to the pile of cardboard boxes. He had a meeting with the project manager in twenty minutes, but he couldn’t concentrate on anything other than the new suspicions against Don Seaton. Was Glazier right? Had he really let his long-held admiration for his business idol set him up to be the unwilling participant in a scheme by Seaton to regain control of X-Tronic? Had the entire drama been nothing more than an internal power struggle for the software company? Had Michael played right into the hands of the true master conspirator behind the X-Tronic fraud? He wrestled with the questions plaguing his mind, knowing all the while that it didn’t matter anymore—he had been cut loose. Glazier and his team of investigators were prowling through the ruins of the financial catastrophe, searching for any clues to what had really taken place. And Michael now understood why Glazier had taken him off the investigation: he had made a huge mistake and could no longer be trusted now that Don Seaton was fingered as the master conspirator.

Michael had become so used to his undercover life that he found reality a shock to the system. Was he just supposed to resume a normal career in the Treasury Department after such a fast start as an undercover agent? He now found life as hopeless as it had seemed when he was trapped in his world of lies and subterfuge. 

The biggest piece of the puzzle was still missing from the X-Tronic investigation. What was Don Seaton’s true involvement in the events leading up to the fraud? But then an idea occurred to him. As he sat in the room full of boxed documents for a boring Federal Reserve project, he realized just how the true mastermind of the conspiracy could have played everyone involved in the fraud in order to benefit secretly from its eventual fallout. Glazier was right: the X-Tronic fraud had always been meant to be exposed at the right moment. The answer to everything was now so clearly illuminated in his mind that he was surprised no one else had figured it out. But there was something even Glazier had missed—one last thing Michael needed to do before he could put the X-Tronic incident behind him. And there was only one man he could contact to help him bring the curtain down on one of the darkest chapters in the history of corporate America—the one man powerful enough to challenge Don Seaton.

69

SARAH MATTHEWS KNELT in front of her brother’s tombstone and brushed her hand across his name. Behind her she heard the growl of a car crawling up the hill in low gear. Turning her head, she saw Michael’s silver Audi come to a stop next to her Jeep. She returned her gaze to Kurt’s epitaph and listened as feet swished through the wet grass toward her.

Michael watched Sarah’s back as he approached: her stooped shoulders hidden beneath a cascade of red hair that stood out among the gray tombstones. He knelt down next to her.

“I saw your article in the
Denver Post.
It got picked up by both the AP and the Dow Jones Newswire. You told the story of X-Tronic better than anyone.”

She kept her gaze on her brother’s tombstone without replying.

“Kurt always said you’d become a great journalist—one of the best investigative journalists of our generation.”

“How much do you think he really knew?” she finally asked, still looking ahead.

“Enough to be curious . . . enough to be suspicious.”

“But not enough to know for sure?”

“No, not that much. But he was on the path. He would have figured it out.”

“What about the day he died? You were in the trees with the twins, just like he was. What would it have been like for him?”

Michael lowered his chin to this chest. It was a question he had often asked himself. “It would have been a surprise,” he finally said. “They would have caught him off guard . . . It would have been quick.”

Sarah closed her eyes. A cold wind pushed through the cemetery and blew her long hair across her face. She opened her eyes and looked at him for the first time. “I’m running a story in tomorrow’s
Post
that reveals suspicions of Don Seaton as the mastermind behind the X-Tronic fraud.”

“You should hold the story. You don’t want to run it yet.”

“Why not?”

“Because it’s more complicated than that. There will be a lot of other papers running a similar story tomorrow. The Treasury Department will be leaking it to the press, but I want you to stay away from it.”

“Why? Is Don Seaton guilty or not? What’s going on, Michael?”

“Give me some time. We’ll know everything there is to know about Seaton’s involvement soon. I’ve put something together that will answer all our questions. Give me a little time, and I’ll give you an exclusive that will be bigger than you can imagine.” He sniffled in the cold air. “All the other papers are just guessing—they have zip in the way of details. I’ll give you everything you need. I’ve spoken with people at the Treasury. We all want you to be the one who breaks the final story when we’re ready to release the information to the public. You’ll know how to keep things in perspective. You’re the only one who will truly understand how to write about everything that’s about to happen.”

Sarah opened her mouth as if to ask another question, or perhaps to say thank you. But she turned back to Kurt’s tombstone without a word. Michael knew she wasn’t the kind to hold back a probing question, so he pretended that it was a word of gratitude she had been tempted to offer him. 

Knowing the difficult task before him, he looked out at the rolling field of weathered tombstones and found that she had just given him reason to be happy. She finally understood his sacrifice, and must know that he was about to make good on his promise to give Kurt justice.

70

A WEEK AFTER Michael had met Sarah in the cemetery, on one particularly stultifying afternoon at the Denver Fed field office, Michael couldn’t imagine continuing on his current course for the next six months of his life. He knew what he had to do. The time was right. He sat up at his desk and composed an e-mail to Fredrick Kavanaugh, president and CEO of Cygnus International—an offer that the Texas tycoon would find hard to refuse.

That evening, he walked under the lights along the Sixteenth Street pedestrian walkway downtown. It was cold out. As Michael strolled past inviting Italian restaurants and stylish boutiques, he kept reciting in his mind the e-mail he had sent to Kavanaugh three hours ago. In it, he had requested that Kavanaugh call Michael’s cell when he was prepared to discuss the offer. Stopping near the Pavilion Theaters, he moved away from the crowds out for a bit of nightlife and looked at his watch for the umpteenth time since sending the message. Three hours and ten minutes. Knowing Fredrick Kavanaugh to be the kind of man who moved quickly to resolve problems, he was increasingly nervous that it was taking so long to get a response. Perhaps he had made a mistake in trying to contact Don Seaton’s nemesis. Taking a deep breath, he walked the remaining blocks to his apartment.

Entering his apartment, he noticed a foreign smell in the darkness. Reaching to turn on the lights, he was puzzled when the switch failed to illuminate the room. Muttering a curse, he fumbled through the darkness to a reading lamp in the corner, flipped it on, and turned back toward the center of the room. Then he gasped in alarm to find two men standing against the opposite wall.

“That’s quite a view you have,” said the taller of the two. The man who hadn’t spoken was stocky, with a flat nose and ears that had taken considerable abuse in the ring. At first glance, he seemed the muscle for the man who had spoken.

Michael forced a smile. “I was surprised that Mr. Kavanaugh hadn’t phoned me yet,” he said. “For a moment I was concerned that I hadn’t gotten his attention.”

“Oh, you got his attention,” the gangly one replied.

“So what now?” Michael asked.

“Now you come with us.”

Just outside Austin, the limousine pulled into a gated community, then through a second gate to a private driveway, stopping at an estate surrounded by stately cottonwoods and live oaks. Still trying to get his bearings after the two-hour flight, Michael stepped out of the car and was greeted at the front door. The servant led him into a wide hallway inside. “Just up the stairs here to the second level. This door, sir. Go right in. He’s waiting.”