The Ivy: Scandal (31 page)

“Hey—” Vanessa called in hushed tones. “Where are you going?”

Instead of answering, Callie sprang to her feet, slipped out into the hall, and then pushed open the door to C 23.

All the lights were off; it looked as if Adam, Matt, and OK had returned from the dance and retired for the evening. Callie headed straight for Gregory’s bedroom, flipping on the light. Everything appeared to be in its place, including the large perforated, metal wastebasket next to his desk.

Callie stared at the crumpled piece of paper at the very bottom of the basket. Through the crisscrossing metal only part of a headline was visible: “Behind the Ivy-Covered Walls, Part—.” Callie hesitated for only a moment before she dumped the entire contents of the basket onto the floor—previous assignments, tissues smeared with lipstick, tests, old receipts dating back months before he left, and all. Reaching for the article where it had fallen facedown, she flipped it over and read:

Behind the Ivy-Covered Walls: Part III (DRAFT)

On the evening of March fifth, a privileged few gathered inside the Fly Club for Gentleman for one of the oldest, elitist, and most exclusive affairs on campus: a party whimsically entitled The Great Gatsby…

THIRTEEN

The Hearing

http://www.nytimes.com/pages/business/index.html

May 14

Business

Bolton Teen Exonerated in Hedge Fund Scandal

Pierce Bolton Testifies Before the SEC That Son Gregory Had No Involvement Though His Trust Fund Was Depleted to Pay Off Investors

By ROB DUNBARTON

Published: May 14

MANHATTAN – For weeks the hedge fund industry has remained in turmoil following the declaration of personal bankruptcy by Pierce Bolton, founding partner at Bolton and Stamford Enterprises. This week Bolton finally testified in front of the Securities and Exchange Commission, which has in conjunction with the State of New York been conducting an ongoing investigation of his fund. Three unnamed sources who attended the proceedings confirmed on the condition of anonymity that Bolton admitted to paying off investors with personal funds.

Over the course of the past two years Bolton failed to inform investors regarding the perilous state of their assets after a series of bad investments, instead paying out withdrawals from his own accounts. “It was easy enough to see after we started examining the books,” said one SEC official, who also wished to remain
anonymous. “[Bolton’s] set showed severe losses, but the numbers released publicly to investors told quite a different story—of growth unparalleled by almost any other firm. [The fund] claimed a unique trading algorithm, when in reality the only magic ingredient, so to speak, was Bolton’s immense personal wealth.”

“We cannot comment on the actual proceedings,” said Eliza Chapham, director of the hedge funds division at the Securities and Exchange Commission. “But criminal charges are highly unlikely to follow given Bolton’s cooperation and the apparent overall financial health of the firm. I cannot speak to the ramifications this might have in the civil courts,” she added, “but since no one is actually owed any money and Bolton no longer has any to award in a settlement, civil action seems, again, unlikely.”

Widespread speculation among insiders in the financial services industry and various news outlets in the city indicated that Bolton’s son, Gregory, a freshman currently enrolled at Harvard University, might be implicated in the ongoing investigation. A former summer intern at Bolton and Stamford, Gregory was rumored to have authorized his father, Pierce, to access his trust fund (once estimated at upward of 88 million, rendering him by far the richest teen in Manhattan) for the purposes of defrauding investors.

Late this afternoon the Bolton family attorneys issued a statement alleging that this is not the case. “As our client will soon testify,” Noel Rubenstein wrote in an e-mail to the
Times
, “his son, Gregory, had no involvement in these events. While [Gregory] did realize that his trust fund had been accessed without his consent a month prior to the bankruptcy filings, he did not authorize the transactions.”

An employee of the firm who worked closely with Gregory during his summer there spoke with the paper, again on the condition of anonymity. “If I had to guess, I would say that Gregory knew to what end his father was using his inheritance. Ethics may not run in the
family, but mathematical gifts and economic savvy certainly do. But it’s also probable that by the time he figured it out, the investigation was already underway, so who’s to say what action, if any, he might have taken against his father.”

Gregory Bolton came into possession of the trust fund (now estimated at less than the tuition cost of a Harvard education) following his eighteenth birthday last summer, left to him by the late Mrs. Bolton, who passed away after a long battle with breast cancer in 2005. Neither Gregory nor his stepmother, Trisha Bolton, could be reached for comment.

Mr. Rubenstein echoed Ms. Chapham’s previous remarks, insisting that, due to recent large investments, “the fiscal health of the firm is quite robust.” He added: “Pierce Bolton has cooperated and taken responsibility for his actions to the fullest extent and, in spite of this minor lapse in judgment that has yielded no consequences for anyone other than his family, will remain a pillar of the financial services industry. The media has certainly been relentless—particularly with regard to his son—but we hope that this statement and account of the SEC proceedings will pave the way for the teenager to soon resume his normal life.”

T
he conference room in University Hall was cold and sterile, same as it had been the Monday after spring break when Callie and Grace initially appeared before Dean Benedict and two other administrators. All three had returned for her Student-Faculty Judicial Board disciplinary hearing today, in addition to another female faculty member and three students, one of whom was—to Callie’s great dismay—Alexis Thorndike. They all sat along one side of a large rectangular table. A single empty chair waited on the other.

Callie swallowed, clutching a folder containing several papers and what would have been the third Ivy Insider installment. She almost would have preferred to have arrived with nothing.

“Ms. Andrews, please, be seated,” Dean Benedict instructed from the center of the table. The male and female faculty members on either side of him remained expressionless, as did the two male students, whom Callie had never met, but a faint smile flickered across Alexis Thorndike’s face.

“We have established this Student-Faculty Judicial Board,” the dean continued, “including a representative from the school newspaper, the
Harvard Crimson
, and an English professor from your intended major’s department, to allow you the chance to speak to the strong evidence that you are responsible for authoring a series of anonymous articles published to the newspaper’s former
FlyBy blog and signed by the ‘Ivy Insider.’ You have received copies of relevant materials identical to those distributed to this board, featuring documentation of your log-in records on the computers at the
Crimson
offices. Six weeks ago in this very room, you maintained your innocence in these matters, even though yours was the only password-protected username online during every instance of an Insider posting. Is that still the case?”

“Yes,” Callie murmured.

“What was that?” he asked.

“Yes,” she repeated, forcing herself to look up and face the board. Several of them had started taking notes or were reexamining the “relevant materials” from manila folders similar to her own. Lexi, however, reclined in her chair as if she were settling in for the series finale of her all-time favorite television show.

“After we have heard your arguments,” Dean Benedict explained, “we will determine what—if any—disciplinary action ought to be taken.”

Lexi beamed. Callie imagined that the older girl was using every ounce of strength she had not to scream, “
EXPULSION!
”

“Needless to say,” the dean continued, “this is an incredibly grave matter, given that a private document went public containing harmful comments that could even be construed as harassment targeting individual students.”

Callie nodded.

“And you acknowledge, for the record,” piped up one of the female faculty members, “that you are a current member of the organization the Hasty Pudding Social Club, which authored this
document, and that you were in possession of the password needed to access the so-called Punch Book?”

Callie nodded again.

“Well, then,” said Dean Benedict. “By all means, the floor is yours.”

Callie set her folder on the table and opened it, staring unseeingly at the papers inside. In all her life her throat had never felt so dry. She wished she had thought to bring a water bottle. Or, better yet, that she had taken Mimi’s advice and elected to skip the hearing altogether.

Seven sets of eyes honed in on her. Each second felt like an hour. “Um…” Callie shuffled the pages in front of her, finding the unpublished draft of “Behind the Ivy-Covered Walls: Part III.” It was supposed to be her trump card, and yet, in her possession, it proved nothing. In fact, just displaying it without any evidence of the true author might make the case against her, since the first question out of their mouths would be: “Where did you get that?” And if she replied, “I found it,” they would follow with, “If you didn’t write it, then who did?”

Even if she told them, it would sound like a lie: the final, desperate diversion of a girl who clearly only had an unpublished draft because she was in fact the Ivy Insider.

And in the next-to-impossible event that they
did
believe her, what then? Expulsion, probably, for the very person she’d spent weeks praying would return.

Callie flushed, furious that she could even consider defending
him after what he’d done. No explanation—on a Post-it, or in the pages of a book, or even in person—could possibly account for
this
.

The faculty member who’d questioned her a moment ago coughed pointedly. “Ms. Andrews, as I’m sure you can imagine, we’re all busy people who don’t have the whole day to sit—”

“What,” Lexi suddenly said shrilly, staring at the door, “are
you
doing here?”

“Callie—” said a voice, deep and serious, at the exact same second she turned.

Her lips formed the shape of his name, but no sound came out. She inhaled sharply, wanting to cry—to scream—to throw her arms around him and hold him—no,
hit
him until he admitted
why
he’d done the things he’d done—

“Young man,” said the faculty member Lexi had interrupted, “these are private proceedings that you’re interrupting—”

“I know,” he said, his eyes never leaving Callie’s face and looking—to her horror—like he was on the verge of smiling.

Was he actually…enjoying this?