The Garden of Betrayal (31 page)

“One thing at a time,” she chided. “Documents first, maybe mail later. I’m copying the backup files to my Google account now, but if you get your laptop out, I can log you on simultaneously, and you can start looking through his records right away.”

“You’re the best,” I said, kissing her on top of her head.

“Never forget it.”

I looked at Claire. She smiled at me, and I smiled back.

“Shit,” I said, tossing my pencil at my computer screen. “I’m an idiot.”

“I already knew that,” Kate shot back deadpan. “What idiotlike thing have you done now?”

It was just after eight. Claire and Reggie had left ten minutes before to pick up dinner from an Italian place a few blocks away.

“Spent the better part of four hours trying to figure out Mohler’s bizarre trading strategies without ever spotting the obvious. Come look.”

She carried her chair around the table we were working at and sat down next to me. I picked up my pencil and touched the eraser to my screen.

“Thanks to your genius, I was able to copy all Mohler’s positions and transactions for the past six months into an Excel spreadsheet. He’s operating in thirty-four different accounts, so I copied each one to a separate page. The first thing I noticed is that he only trades on the first business day of every month.”

“Is that unusual?”

“So-so. There are a lot of money managers out there who practice something called ‘technical trading,’ which means they make buy and sell decisions based on statistical measures, like the moving average price of a stock and the daily trading volume, and pretty much ignore fundamental information, like how much money a company happens to be earning at any given point in time.”

“Wait a second,” Kate objected. “That’s crazy, isn’t it? How can you invest in a company and not care how much money it makes?”

“Two reasons. First, because you assume that any news a company might release is already reflected in the price of the stock—”

“There’s something wrong with that logic,” she interrupted, frowning.

“You’re not the first to think so. There’s an old Wall Street joke about two economists walking to lunch. The first spots a ten-dollar bill on the sidewalk and tries to point it out to the second. The second refuses to look, asserting that if there were a ten-dollar bill on the sidewalk, someone would have picked it up already.”

“I thought jokes were supposed to be funny.”

“Nice. At any rate, the second reason technical traders don’t bother with fundamentals is that they believe that stocks go in and out of favor, like women’s fashion, and that it’s more important to figure out what stocks other investors want to buy than it is to have an opinion on what stocks they actually should be buying.”

Her lips moved silently for a moment as she parsed my explanation.

“So, they just follow the crowd, no matter how stupid the crowd might be.”

“Pretty much. You remember the whole dot-com bubble?”

“Not personally, but I’ve heard of it.”

“The dot-com bubble was this weird period where people paid crazy prices for Internet companies that didn’t have any realistic prospect of making money. Fundamental traders recognized that the stocks had no value, sold them short, and got murdered. Technical traders didn’t care that the stocks were junk. They bought them because other people were buying them, and made buckets of money on the ride up.”

“But the dot-com bubble collapsed, right?”

“Right. In the long run, stocks tend toward the value of their discounted cash flow, which for many of the dot-com companies was zero. But it’s a basic trading aphorism that the markets can stay irrational longer than most people can stay solvent. The fundamental guys were wiped out years before the bubble burst. The technical guys who were long on the way up sold out and went short when the market started going down, just because everybody else was selling. They made money both ways.”

“So, are you a technical guy?” she asked dubiously.

“No. I pay attention to technicals, because they drive so much flow, but I’m a fundamental guy at heart. The real problem with technical
trading is that it’s easy to get whipsawed, which is what happens when you’re constantly buying on small up moves and selling on small down moves, and losing a little bit of money each time. All of which brings us back to Mohler. One way the technical guys try to avoid getting whip-sawed is by not reacting to every small up and down move, and only trading at fixed time intervals. Once a day is pretty standard, and once a week isn’t unusual. Mohler trades once a month, which is less common but still regimented enough to make me suspect he had some kind of technical program going.”

“And does he?”

“Nope. That’s why I’m an idiot—because I kept looking for the pattern I wanted to see and ignored the one that was staring me in the face. Check it out,” I said, clicking over to a second Excel workbook. “These are all Mohler’s trades. This particular box here lists a group of trades he did in Intel about a month ago. You notice anything unusual?”

“No.”

“Mohler’s buying in some accounts and selling in others. If he was a technical guy, he’d be getting a buy signal
or
a sell signal, not both. When I dug a little deeper, I noticed that all of his buying was through one broker, and that all of his selling was through a different broker.”

“Which tells you what?”

“The benign explanation is that he’s stupid. He’s paying two spreads and two commissions to buy and sell the same security, when he could just be moving stock between the accounts and saving himself the transactions costs.”

“But he’s not stupid?”

“I don’t think so.” I dragged my cursor down the screen and highlighted a box at the bottom. “Look. This number here is the net profit of all of his purchases and sales of Intel in all his different accounts on this particular day.”

“Zero?”

“Zero. Exactly. And it’s the same with every stock he trades, every time he trades. He buys in some accounts and sells in others, always through different brokers, and the net always works out to zero.”

“I don’t get it.”

“You will.” I tabbed to another section of the workbook. “This is the profit and loss generated by each of the thirty-four accounts, listed month by month for each of the last three years.”

“Four of the accounts always lose money,” she said hesitantly, “and the other thirty always make money.”

“And the net of the money lost and the money made?”

Her eyes flicked to the far right-hand column of the spreadsheet.

“Zero?”

“Right. Which only makes sense because Mohler isn’t really trading. All he does is buy stock through one broker and sell it through another.…”

“And then put the losing trades in the first four accounts and the winning trades in the other thirty,” she finished in a rush. “It’s like the whole IPO thing with Petronuevo. It’s all just a way of moving money from one pocket to another pocket.”

“Bingo. And not just moving money. Mohler’s making payoffs to people and simultaneously laundering the money so the gains look legitimate. All of which explains why he can spend his entire day looking at Internet porn. He doesn’t care if the market goes up or the market goes down. All he has to do is allocate the winners and the losers to the right accounts at the end of the month.”

Reggie and Claire entered, laden with carryout food. Kate stood up to intercept them.

“Let me deal with that,” she said. “You have to listen to Dad. He’s figured this whole thing out.”

“Hardly,” I protested.

“Almost,” she insisted. “You were only wrong about one thing. You’re not an idiot at all.”

“Okay,” Reggie said, pushing his empty plate away fifteen minutes later. “Bottom line, we know what Mohler’s doing.”

“Right,” I said. “The problem is that we don’t know who he’s doing it for. There aren’t any names in his trading records.”

“Any luck breaking into his hard drive?” Claire asked, glancing toward Kate.

“Nope,” she replied glumly. “I’ll check with Gabor again when he wakes up, but whatever kind of firewall Mohler’s running is doing what it’s supposed to do. No matter what I try, his machine just doesn’t respond.”

“So, what are our options?” Claire persisted.

“Beyond breaking in and just grabbing his computer? A couple of things, I guess. We can send him a virus and hope he’s dumb enough to open it, and that he’s not running any antivirus software. That would let me into his computer. And we can keep an eye on his incoming and outgoing mail. We might learn some names that way.”

I stood up from the table where we’d been eating dinner, feeling restless and frustrated.

“No. I don’t want to lose momentum. Kate’s supposed to be at school. And the more time we spend screwing around with Mohler’s records and his network, the more likely it is that someone figures it out and comes right back at us. We need to keep the initiative.”

“I like that idea,” Reggie said.

“What idea?”

“The idea of trying to get these guys to come back at us. The one thing we know about this gang is that they’re not shy. Maybe we can use that against them, to set a trap.”

The LaGuardia Motor Court in Queens is an architectural throwback to the 1950s—a rambling, pink-painted, two-story wooden structure that surrounds an asphalt parking lot on three sides, with rooms that open directly to the central lot at ground level and a long, open-air gallery above. My room was upstairs. Four steps carried me from the cigarette-burned nightstand to the peeling veneer of the wall opposite. Another four carried me back. I pushed the yellowed curtain from my window for the tenth time and checked for activity outside. The view was of the half-empty parking lot, a narrow, brown finger of the East River, and the raw concrete buildings of the Rikers Island penitentiary beyond. The only change in the last two minutes was that the lights of the prison had come on, gleaming with a false cheerfulness through the wintry mid-afternoon gloom. A plane roared low overhead from the adjacent airport, making the floor joists tremble. I doubted anyone got much sleep at the LaGuardia Motor Court. The carpet underfoot seemed to seep desperation, and there was something crusted on the curtain. I let the curtain fall, electing to wipe my hand clean on the leg of my jeans rather than wash it. Lord knew I didn’t want to enter the bathroom for any reason. Reggie had been at pains to explain that he was familiar with the LaGuardia Motor Court only because it was owned by the nephew of a city councilperson, and hence one of the dumps where the local court system housed jurors unlucky enough to be sequestered. He’d recommended it as a place that had good sight lines and a management that was simultaneously adept at cooperating with law enforcement and at ignoring most of what transpired. I was too nervous
to care much about the ambience, although I felt a vague sense of relief that I’d never been sequestered.

My phone rang as I resumed pacing. I answered it and heard Amy’s voice.

“Everything okay?” she asked.

“Fine,” I said, spotting a cockroach the size of my thumb on the ceiling. “What’s up?”

“Susan called. Walter wants to see you.”

“That’s a surprise.” Alex’s funeral had been held that morning.

“I know. I asked what it was about. All Susan knew was that Walter’s at home in the city, and that he wants you to stop by as soon as possible.”

The hubris that led Walter to believe I’d drop everything and hustle on over to his town house after the way he’d treated me was offensive, and I was more than a little tempted to insist that he call on me instead. Regretfully, I couldn’t afford the luxury of holding a grudge. I still wanted to know who he’d seen and what he’d learned in Washington.

“Not going to work for me. Tell her that I’ll call in later to set something up for tomorrow.”

“You sure?”

“Waiting won’t kill him.” A shadow fell on the window curtain; someone was in the gallery just outside my room. “Text or e-mail me if you have anything else,” I whispered. “I have to go now.”

I hung up without waiting for her answer and moved silently to the door, imagining I could sense someone on the other side. I touched the gun in my pocket to reassure myself. Reggie and Claire had been united in insisting that I carry it, much to my surprise. I took a deep breath and jerked the door open.

Mohler was hunched over on the other side, head angled as if he’d been trying to eavesdrop. He was wearing a black trenchcoat with the collar turned up and a Clouseau-like herringbone hat. Startled by my sudden appearance, he leaped sideways, his stupid hat falling to the ground. My nerves had been stretched taut, but it was impossible to feel intimidated by him. My initial impression came back—he was a little man in over his head. I picked up the hat and offered it to him.

“I know you,” he said, snatching it from me and working his fingers along the brim. “You’re the guy who was in my office the other day. The telephone guy.”

“And I know you,” I answered. “You’re the guy who surfs spanking porn all day and transfers money between numbered accounts once a month.”

His lips twitched, exposing crooked front teeth.

“You’re fucking with the wrong people. You have no idea what kind of trouble you’re in.”

“Maybe not. But I know what kind of trouble you’re in. So, why don’t you come on in, and we’ll talk about it?”

“There’s nothing to talk about.”

“Then why are you here?”

His lips twitched again, but he seemed to have run out of bravado. He entered the room slowly, head darting from side to side. There was nothing to see except the bed, the nightstand, a low chest of drawers, and a green tartan–upholstered chair. I flicked on the overhead light, shut the door, and sat down on a corner of the bed. I figured it had to be marginally cleaner than the chair.

“You’re not any kind of cop,” Mohler said, turning to face me. “You wouldn’t be alone if you were. Which makes you—what? A shakedown artist?”

“An interested party.”

“An interested party who broke into my computer system,” he said, reaching into his shirt pocket and pulling out a hard copy of the e-mail I’d sent him. “And who’s threatening to expose me to the SEC.” He ripped the printed e-mail into pieces and threw it to the ground. “And what’s the SEC going to do about it? My customers and my accounts are all offshore.”