The First Billion (21 page)

“Calm down, Yuri Ivanovich. We have nothing to hide.” Closing the door behind him, Konstantin Kirov came face-to-face with the prosecutor general. Behind him stood two of his deputies, breathing hard, pink-cheeked, and Boris. Discreetly, Kirov glanced at his watch. Eight minutes remained until the files were erased. He noticed his jacket jitter ever so slightly with the beating of his heart. “You don’t mind if I have a look at the warrant.”

“Afterward,” said Baranov heatedly. “Move aside. I wish to enter this room.”

“No need really. It’s only a—”

Brusquely, Baranov and his deputies pushed past Kirov and entered the accounting office. Seeing the men and women shredding documents, Baranov shouted, “Stop. You know who I am. Stop at once. Anyone who does not obey will be placed under arrest.”

Several clerks stopped shredding, but most continued. Baranov’s cheeks flamed red. “Anyone who does not stop immediately will spend the night in the Lubyanka. With your families. Your children, too.”

The shredding ceased at once. Baranov passed from desk to desk, picking up random papers, studying them. He dashed off instructions to one of his deputies, who immediately began gathering all the papers together.

Baranov had found a receipt that interested him. “And what business do you have with the Banque Prive de Geneve et Lausanne?” he asked, holding the paper in his hand with a victorious smile.

“A private matter. Nothing to concern so august an office as your own.”

“We shall see.”

Baranov spent another minute or two examining the shredders, digging his hands into the basket and coming up with wads of slivered paper. “We will take this, too. I know some people who can reconstruct these documents.”

“All yours,” said Kirov munificently. He was beginning to sweat. He could only pray that the most secret of his documents had already been shredded. Reconstructing them would take a year’s time.
A year!
Anything could happen by then.

“Now, I wish to go to your IT center,” said Baranov.

“Do you mind if I ask what it is exactly you want?”

“You know damned well what I want. Now let’s go. I believe it’s on this floor, just down the corridor.”

“If you know your way around so well, I’ll allow you to find it yourself.” Kirov had no intention of helping Baranov do his job. He had opened the barricade when requested. He had greeted the man cordially. No charges could be brought for obstructing justice. The rest the prosecutor could do on his own. Fuck him!

Baranov left one of his deputies behind in the accounting office and hurried into the long, airy corridor. Kirov followed. A few offices were open, windows raised to let in the warm afternoon breeze. From outside came the sound of car doors slamming, voices shouting, and footsteps entering the building.

Finally!

Kirov hastened to a window. A delegation of ten young spies from the FIS had confronted the OMON troops outside. Their leader was a handsome blond man in business attire. His deputies were similarly dressed, but were less handsome and had exchanged neckties in favor of Kalashnikov assault rifles. Shoving broke out between the two groups. One FIS man fell to the ground, pistol-whipped. Then it was the OMON’s turn, losing a storm trooper to more conventional means: a well-aimed kick to the balls. Voices rose, then fell.

“Good boy, Leonid,” said Kirov softly.

“What is it?” demanded Baranov, bustling alongside.

“See for yourself.”

Baranov looked down at the sparking confrontation. “Leave them,” he called to his men. “There is to be no fighting. We are all comrades. Let them be.” He stormed out of the office, looking this way and that before getting his bearings. He arrived at the entry to the data center as the delegation from Yasenevo poured out from the elevator nearby. Trying the handle, he found it locked. “Konstantin Romanovich, I demand you open the door.”

Kirov checked his watch. Fifteen seconds until the files were deleted. He took a breath, rummaging in his pockets for a key. “Ah, here it is.” He managed another delay fitting the key into the lock. “There.”

Kirov opened the door.

The tech in the red Adidas shirt sat at his desk, studying a manual. “Ah, Mr. Kirov. I have bad news,” he said, springing to his feet, his clever eyes taking in Baranov and his deputies. “Terrible, really.”

“What?”

“A bug has hit our computers. I’m afraid we have lost all our data.”

Baranov stared first at Kirov, then at the technician, and then at Kirov again. Without a word, he turned and left the room.

Kirov found Janusz Rosen waiting for him in his office.

“Yes, Janusz, what is it?”

“Good news, sir. Great news, even. I found him.”

After standing by impotently as Yuri Baranov had carted off two dozen boxes full of Mercury Broadband’s financial records, Kirov needed some good news. “Who?”

“ ‘Who?’ ” Rosen registered a look of gross disappointment, his glasses falling to the tip of his nose. “Why . . .
him
.”

“Him,” of course, was the Private Eye-PO. “About time. What is his name? Where does he live?”

“His name is Raymond J. Luca. An American, naturally. A resident of Delray Beach, Florida. I found him trawling the web early this morning. Another investor invited him into a private chat room and I was able to sneak in.”

“Don’t look so proud of yourself,” said Kirov. “That’s what I pay you for, remember?”

Minutes later, Kirov stood alone in his office, phone to his ear. He had banished Rosen with a handshake and the promise of more shares in the Mercury IPO. He had told his secretary to hold all calls. The room was silent, a quiet compounded by the absence of sirens and army boots.

“Damn it, girl, answer.”

Five rings. Six.

“
Da?
Allo.”

“Tatiana, you don’t know how happy I am to hear your voice. I hope you haven’t any pressing plans for the evening.”

“Konstantin? Is this you? I am tired. I have had a long day. What is it, please?”

Rude, wasn’t she? Sometimes he found it hard to believe she was a convent girl. Then again, he hadn’t hired her for her good manners.

“Tatiana, I have a trip in mind for you. A junket abroad, actually. Tell me, my little bird, how do you feel about Florida?”

25

Ray Luca was in the zone.

Perched on the edge of his secondhand office chair inside his four-by-four-foot cubicle on the floor of Cornerstone Trading in downtown Delray Beach, Luca was a model of concentration. All of him—his eyes, his ears, his mind, his square, compact hands with the nicely buffed fingernails, even the downy black hairs on the back of his neck—was dialed into the cascade of information spewing from the twin columns stacked on the desk in front of him.

Ten inches from his all-seeing brown eyes, the wall of color super-VGA displays broadcast a blinking, stuttering, ever-changing array of graphs, bar charts, and streaming price quotations advertising real-time fluctuations of the twenty-seven stocks he was currently following. The setup was called a Level II quotation system, and it allowed him not only to see markets being made in each of these stocks but to directly place a buy or sell an order via an electronic communications network, or ECN. One hour after he’d glued his bottom to the chair, he was finally where he needed to be: deep in “the zone,” the Zen-like fusion of focus, mental agility, and intuition necessary to master the godless art of day trading.

It was in this church of unbiased information that Raymond J. Luca, five-foot-five-inch native of Worcester, Massachusetts, and Florida transplant, one-hundred-forty-pound washout from the United States Marine Corps and the Catholic faith, chronic sufferer of duodenal ulcers and incurable myopic, divorced father of three wonderful daughters and Ph.D. from M.I.T., ex–altar boy, ex-tycoon, ex-con, and soon to be ex–day trader, also known as the Private Eye-PO, took his daily communion, a high mass beginning at 9:30 A.M. Eastern Daylight Time and ending at 4 in the afternoon, every day of the year save weekends, holidays, and the running of the Flamingo Stakes at Hialeah.

Luca had five open positions at the moment, all buys: Nokia, Solectron, Merck, Juniper, and Amgen. He didn’t care what they marketed, manufactured, or sold, who ran them or whether they had a chance in hell of making a decent return over the long run. It didn’t matter where they traded—Nasdaq, Amex, or the Big Board—only that they were high-volume stocks that bounced around like a kid on a pogo stick. Volatility was the name of the game.

At the moment he was concentrating on Solectron (symbol SLR), a box maker that after years of double-digit growth and the accompanying rise in share price had suffered a violent tumble to earth. He’d bought eight thousand shares of the stock a few minutes earlier, just after it had made a “double bottom,” meaning that twice in the last thirty minutes it had tested its lows and rebounded. Classically, a stock exhibiting this behavior goes on to break through its earlier intraday high. Watching the market makers enter their orders, he noted a couple of things: One, buyers were pouring into the market (also reacting to the double bottom). And two, sellers were few and far between. The stock was set to pop.

Sellers inched into the market, eager to accept the quickly appreciating bids. Luca held on as the stock advanced an eighth, a quarter, a half. An eye flicked to the volume chart and a sixth sense told him the stock was running out of steam. Spotting a bid for eighty round lots, or eight thousand shares, that would lock in his half-point profit, he dashed off an order to sell. Bingo! Four grand in the plus column. In and out in twenty minutes.

“Trade, don’t invest.” The diligent day trader’s motto.

Luca turned his attention to his position in Merck as a gaggle of male voices burst out shouting down the aisle. One raucous laugh stood apart from the others. It was Mazursky—or “the Wizard of Warsaw,” as he called himself—and he was crowing about taking down three points on a position inside an hour.

“Thirty grand, baby. Thirty fuggin’ large! Oh, yeah! The beers are on me tonight, fellas. And whoever wants to buy me the first shot of Jagermeister will be the recipient of my daily tip. Ooh-yeah!”

Luca shuddered at the Pole’s shameless bragging. He didn’t need to look to know that Mazursky was doing his victory dance, the revolting little number where he clasped his hands behind his head and rotated his hips and potbelly in ever-widening circles.

Luca felt himself being dragged from the zone, his cerebral connection to the ether evaporating. Annoyed, he leaned even closer to his precious screens, clenching his jaw and grinding his molars in a desperate attempt to lock out the distraction. But it was too late. His connection was severed. He was free-falling back to earth and his place among mortals. Ducking a head outside the cubicle, he saw the regulars crowded around Mazursky’s hangout—Krumins, Nevins, Gregorio—all giggling like teenagers.

“Hey, Ray, that goes for you, too,” said Mazursky, spotting him and waving him over. “First beer’s on me.”

Surprised, Luca smiled. It wasn’t like Mazursky to count him in. Ray Luca wasn’t one of the guys. He didn’t share tips on what stocks were about to pop. He didn’t discuss his trades or offer advice on how others could make as much money as he did. Part of the reason was that he was naturally a timid person who never did well in groups. People often mistook his shyness for aloofness. Another part was that, well, they were right: He did operate on a different level than these ham-and-eggers did. He was a theorist, an inventor, an evangelist. He was the father of the Synertel fiber-optic switch, a cutting-edge technology that almost—
almost
—revolutionized the web. If he shared a work space with them it was only a temporary measure, a fluke in the cosmic plane.

Standing, he tucked an errant shirttail into his trousers and ventured a wave. As long as he was out of the zone, why not try to socialize a bit? Truth was it got lonely being a theorist and an inventor. “Hey, Maz,” he said. “Beer sounds good. Where you guys heading?”

“What? A word from his highness?” cackled Mazursky. “We serfs are touched.”

“Come on, Maz,” said Luca. “You guys going to El Torito or what?” Luca felt all eyes on him. Don’t look away, he told himself as he jammed both hands into his pockets. Keep your chin up. But already he was fighting for the gray, neutral comfort of the carpet, his chin bobbing up and down, the blinking going haywire. “Umm, what time?”

“I’ll be happy to tell you,” said Mazursky, “just as soon as you put your stuck-up wop nose up my hairy ass and tell me what I had for dinner last night.”

The teenagers burst out laughing and the victory dance began. Round went the hips. Jiggle went the belly.
Ooh-yeah.

Luca dropped like a stone into his chair, his cheeks afire with humiliation. Instinctually, his eyes began trawling the bank of computer screens, checking stock prices, volume charts, news alerts—anything to lessen the pain of rejection, his shame at wanting to fit in, his anger at himself for not knowing better.

Mazursky, you jerk, he cursed silently. Just you wait. Another month and everything will be different. You’ll be begging to buy me a drink, to spend even a minute in the presence of the owner and editor of
The Private Eye-PO,
the nation’s hottest investment newsletter.

And with that he went back to work.

For the past three years, Ray Luca’s life had been divided into two halves. Nine to five, he was another “hard-timer” trying to put together a decent grubstake trading the market. It wasn’t easy. With alimony claiming six grand a month off his paycheck and child support another three on top of that, he had to make a killing just to keep his head above water. In a good month, he cleared thirty grand. Nine went to his ex-wife, seven to the IRS, and five to settle his penalty to the federal government’s Department of Corrections. Living expenses ate up another two grand. Small wonder he was never able to put together a decent capital base.

But every evening he devoted himself to a systematic and thorough dissection of the market for initial public offerings. He educated himself about particular businesses going public. He researched their viability and analyzed their business plans. He compared each upcoming offering against past issues in similar market segments. If the market for IPOs had cooled down, it was to his benefit. Ray Luca was a dyed-in-the-wool contrarian, and he didn’t frequent pastures where the grass had been chewed to the roots. Working alone, he was unable to analyze more than two offerings a week. The current market conditions suited him fine. As long as three or four solid new issues hit the street each month, he was on track. His goal was to build a reputation as the nation’s foremost prognosticator of IPOs, and on this sunny summer day he could say with equal degrees of modesty and certainty that he had succeeded. Forty thousand hits a day on his website qualified what some might label “hubris” as a mere statement of fact.

Luca sighed, thinking it was a long way from Sand Hill Road in Palo Alto to Cornerstone Trading in Delray Beach. Unlike other casualties of the boom that went bust—the dot-wronged and the dot-bombed—he had no one to blame but himself. He’d been positioned at the right time at the right place with the right technology. Synertel was bulging from two hundred million in VC funding. A white-hot investment bank was set to take the company public. Market capitalization was projected to be eleven billion, leaving Luca’s 5 percent stake worth a little more than five hundred million dollars . . .
and that was before the issue hit the market.

The bad news had come one week before the IPO was set to begin trading. Luca was in Milwaukee on the fourteenth day of a sixteen-day road trip. He’d just emerged from his thirty-third face-to-face investor meeting, talking up Synertel and its position as a vanguard in Internet transmission technologies. The fund manager evinced interest and promised to put in for 10 percent of the offering. There was talk of Synertel’s stock tripling the first day. In Luca’s mind, his five-hundred-million stake had already grown to over a billion dollars. His days as a lab rat were near their end, his years of sixteen-hour days, forgone vacations, and forgotten family about to pay off. Ray Luca was as good as a billionaire, and as such qualified to call himself a visionary, a creator,
an evangelist of tomorrow.

And then it was gone.

Out of nowhere a team from Lucent bettered the speed of Luca’s fiber-optic dynametric switch by two gigaseconds.
Two fuckin’ gigs!
Less time than an atom took to circle a molecule, but an eternity in the world of high-speed Internet transmissions.

Black Jet Securities shelved the offering, Jett Gavallan, its CEO, publicly calling for a reevaluation of Synertel’s technology. Investor interest evaporated faster than rain in the Mojave. Luca was fired. His wife, doomed to another go-round as a start-up spouse, said “Screw this” and took the girls to live with her mother in Boston. In the space of seventy-two hours, Ray Luca went from billionaire-to-be to bum-in-training. Unemployed, unwanted, and unloved, dismissed by everyone and everything that had meant something to him, he was as instantly obsolete as his very own fiber-optic switch.

Taking in the agro-fluorescent lights, the soda-stained carpeting, and the chest-high cubicles, he wheezed dejectedly. It was time to get out of this jail.

The thought of escape drew his eyes to the battered Samsonite at his feet. Dropping a hand, he unlatched the silver briefcase and gingerly removed the fax he’d received this morning. Simply holding it made his fingers tingle, his stomach swoon. It was his pass to the big time. His golden E-ticket. His invitation to the major leagues. He reread it for the hundredth time, his eyes tripping over the mention of “Prosecutor General,” “Joint Russo-American Task Force on Organized Crime,” and “FBI.” He planned on spending the entire night calling sources in Europe—reporters for the
Financial Times,
the
Wall Street Journal,
and the
Washington Post
—asking if they’d heard anything about Kirov’s being arrested or a raid on his offices.

He considered calling Cate Magnus, too. She’d sent him the fax; maybe she could shed some light on what was going on in Russia. He discarded the idea immediately. The rules were clear. Only she was allowed to initiate contact.

“Hi, I’m Cate Magnus,” she’d said when he’d picked up the phone at his home on a sultry spring evening hardly four weeks before. “Jerry Brucker at the paper told me it would be worthwhile for us to have a little talk.”

“Oh?” He recognized her name, and Brucker was an old pal from M.I.T.

“I’ve got an interesting piece of news that could do you some good. Mercury Broadband,” she whispered. “Take a closer look. I think you’ll find something the Private Eye-PO might like to share with his readers.”

The next day he’d received an envelope containing the photographs of Mercury’s Moscow downlink facility. If her claims sounded sketchy, the Cyrillic letters and twin-headed eagle of the Russian crest stamped on the backs of the photographs did not. A friend had translated the words as “property of the Prosecutor General’s office,” and Luca had shivered. Next came proof of Mercury’s phony purchases from Cisco, then just this morning news of Kirov’s impending arrest. If everything Cate Magnus said was true, Mercury wasn’t just a scam dog—it was a monumental fraud. An international incident waiting to happen.

Envisioning the Black Jet name on the prospectus, he knew it was meant to be.

“Come on, Jett, just give us some time,” he’d pleaded with Gavallan at their last meeting. “Don’t cancel the offering. Six months and another round of financing and we’ll be in the clear. We’ll dust those losers from Lucent.”

“Sorry, Ray. I don’t think the VC guys would go for it. Six months is a lifetime, you know that. It’s tragic. We’re all disappointed for you. But unfortunately, this kind of stuff happens.”

“Four months,” Ray had pleaded, grabbing at Gavallan’s sleeve, pawing at him. “I’ll double the speed. . . . Come on, Jett. You gotta believe. Synertel can do it.”

“So will Lucent, Ray. It’s not the speed. You need a new technology.”

A new technology.
The words had defeated Luca. Four years later, they still did.

Luca put the fax away. He could only hope that when the raid mentioned in the memo took place, he would learn about it. Picking winning stocks, while worthy of admiration, was one thing. Revealing fraud and corruption on an international scale was quite another, and it turned Luca’s role from profiteer to patriot. He was defending his country against a new Red Peril. Any aspersions about his past would be bleached clean by the mantle of “Nation’s Defender.”