The Patriots Club (14 page)

20

It was nine o’clock, and the senior executives of Jefferson Partners had gathered in James Jacklin’s spacious office for the morning meeting.

“Morning, Guy,” said Jacklin, Jefferson’s founder and chief executive, as he crossed the office. “Morning, Mike. Everyone here? Good. Let’s get started.”

“Bob’s in New York,” said Guy de Valmont. “This is it, then.”

“So he is. Well, I’d say we have a quorum nonetheless.” Jacklin descended a step to the seating area. “Today’s the day,” he said. “Dinner starts at eight. I want all of you there a little early. We don’t want our guests wandering around like lost sheep. And black tie across the board. I don’t want to see any white dinner jackets. We’re not showboats. Spread the word.”

Jacklin sat down in his lacquered Princeton chair, the only one in the office that didn’t torture his back. “So, then . . . tell me, people, everyone’s clients coming?”

“Coming? We’re overbooked,” said de Valmont, the firm’s co-founder, a tall, elegant man of fifty. “We’ll be sending half of President McCoy’s cabinet to the inauguration with a hangover. It’s the hottest ticket in town.”

“Should be,” said Jacklin. “We’re serving enough caviar to gut the Caspian Sea for a decade.”

Fifty pounds of beluga caviar, to be exact, grumbled Jacklin, followed by mixed summer greens, capellini with shaved white truffles (another mind-numbingly expensive delicacy), dry-aged prime New York steak, and chocolate mousse. When his back had forced him to give up golf, he’d taken up cooking instead. He’d planned the menu himself.

The dinner was to take place at his estate in McClean, Virginia. Officially, it was a fund-raising affair. For the first time in the private equity industry, a company had raised ten billion dollars in a single fund. (Or at least said they had. The fact was that they were more than a billion short. Jacklin had to do everything in his power to close the gap by the time supper was put on the table.) The press had gotten wind of the proceedings and dubbed it the Ten Billion Dollar Dinner.

Jacklin smiled inwardly. You couldn’t buy that kind of publicity.

A short, brown-skinned man in a blue jacket, gold braided epaulets at his shoulders, approached. “Yes, Mr. Jacklin, may I take your order for breakfast?”

“Thank you, Juan. I’ll have an egg-white omelet, with some smoked salmon, and a rasher of that applewood bacon. Crispy. Very crispy.”

“Mrs. Jacklin tells me your doctor said ‘no bacon.’ Your blood pressure, sir. Too much salt.”

Jacklin took his Filipino steward’s arm and patted it gently. “To hell with him, Juan. A man’s got to live a little. Oh, and don’t forget my Bloody. You know how I like it. It’s going to be a busy day.”

“Yes, Mr. Jacklin. Coffee? Chef has a new blend from Sumatra. Very good.”

“Fine idea, Juan. There’s a good boy.”

Jacklin’s office was divided into two functional areas, and ran in an L shape anchored by the northeast corner of the twentieth floor. The working quarters ran up the north side of the building, and comprised his desk, an ornate mahogany monstrosity that had belonged to Georgie Patton when he’d been governor of Bavaria following the second war, chairs for partners or principals, and shelves adorned with the dozens of de rigueur tombstones. “Tombstones” were Lucite trophies commemorating completed deals. Somewhere in there, he’d placed photographs of his family. Sneaking a look, he’d be damned if he could find them.

His fellow partners had taken up their spots in the “guest quarters,” and sat on the comfortable, low-slung couches that faced one another over a travertine coffee table. There was Joe Regal, who’d spent thirty years at Langley in operations. And Rodney Bridges, who’d done twenty years as a Wall Street lawyer before jumping the fence and playing top cop at the Securities and Exchange Commission, and who had now jumped back. There was Michael Remington, recently retired secretary of state, and aide to three presidents.

And then there was Jacklin himself. The pictures adorning his wall counted as an illustrated record of his rise to power. There was Jacklin, age twenty-four, fresh from OCS, standing in the middle of a rice paddy in ‘Nam. There he was, at thirty-two, being sworn in as congressman, and ten years later, taking office as secretary of defense. More recent pictures showed him recreating with the last three presidents—playing tennis, fishing for striped bass, and attending an event at the Kennedy Center. The pictures never failed to elicit the requisite oohs and aahs. Yes sir, ole J. J. was connected.

If there was a class system to every industry, Jefferson belonged to the aristocracy of finance. “Private equity” was just the newest name for an old game. The English called it merchant banking way back when Britannia ruled the seas and the East India Company owned everything worth having. Junius Morgan, J. P.’s father, had perfected the game and brought it back with him from London. Jacklin had helped tweak it, introducing the concept of “leverage” to give the investor more bang for his buck. Twenty-five years earlier, when Jacklin set up shop, Jefferson was called a leveraged buyout firm, or LBO for short. And the tone used was more fitting for freebooters and buccaneers than royalty.

Time, and an unrivaled track record of success, had tempered any criticism. Since its founding, Jefferson Partners had invested some $185 billion in over three hundred deals, and delivered returns averaging a phenomenal twenty-six percent per year. Ten million dollars invested with Jefferson back at the beginning was worth a billion-two today. By contrast, the same amount invested with the Dow Jones Industrial Average would have brought you barely $200 million. Chump change.

Pension funds, college endowments, corporate treasurers, and the larger family trusts comprised the backbone of Jefferson’s clientele. For years, they had fairly begged to invest their money with Jefferson. There was a $100 million minimum and the line started at the door.

The last years, however, had seen a surge in the number of private equity firms. With the market in the doldrums, investors began seeking out “alternative instrument classes” where their dollars could work harder. Foreign markets? Too risky, and who could forget Russia in ’98? Derivatives? One word: “longtermcapital.” Then there was Jefferson, quietly buying and selling companies, not making any waves, and all the while raking in the chips. What had everyone been thinking? The answer had been there all along.

From the outside, private equity looked like an easy way to make a buck. After all, what did it take? A few smart guys with a little experience and a Palm filled with the names of their nearest and dearest. Drum up some money, find an undervalued company, do a little pruning, and you were off to the races. Best of all, there was no need to have the costly infrastructure of a bank behind you. Ideas were the equity investor’s capital. Brainpower. Savvy.

It only got better from there. The profit structure was set up to reward those with the ideas. This was no fifty-fifty split. Most funds promised a certain return on the clients’ investments. They called this return the hurdle rate. Usually, it stood at around twenty percent. While the return wasn’t guaranteed, Jefferson could not take a profit itself until it had paid its investors their twenty percent.

The rule was that once the hurdle rate had been met, and the clients paid out, the rest was divvied up according to an eighty-twenty split, with the equity firm getting the lion’s share. What made this all the more irresistible was that the private equity firm, or financial sponsor, as they were referred to within the industry, put up the least amount of money, usually just five percent of the purchase price.

Say a company cost one billion dollars. The equity firm would put twenty percent down and use the services of a friendly bank to finance the remaining eighty percent through a debt underwriting. But look closer at the twenty percent, or two hundred million dollars, that the equity firm pledged. Of that amount, $160 million, or eighty percent, was paid out of the fund. The firm itself chipped in just forty million dollars of its partners’ money. Come time to sell that lump of coal turned diamond, it was the firm’s turn to shine.

If in a year they sold the company for two billion dollars, the profit would be divided up thusly: Investors in the fund would receive their investment back plus the twenty percent on top of it, a total of approximately $192 million. They would then receive another twenty percent of the remaining $968 million, or $193 million, bringing their grand total to $386 million earned on an investment of $160 million. In one year! A home run, to be sure. But it was nothing compared to what the private equity fund earned.

The remaining eighty percent of the $968 million profit, some $774 million, less twenty or thirty million dollars for fees to investment banks, lawyers, and accountants, flowed directly into the partners’ pockets. Remember, the equity firm only put up forty million dollars of its own money. One year later, they wrote themselves a check for $774 million, and, of course, another forty million for the money they’d invested originally. These were profits on a biblical scale.

Jefferson had kept its position as an industry leader by virtue of its record, and its constant drive to close bigger and bigger funds. A few years back, one had topped out at five billion dollars, making it the first to be called a megafund. Tonight, they would gather to toast Jefferson Capital Partners XV, which was set to close with over ten billion dollars committed. No one had thought of a name yet for a fund that big.

“A word?”

Guy de Valmont took Jacklin by the elbow and led him to a corner of the office. “See the article in this morning’s
Journal
?”

“No,” said Jacklin. “Didn’t get a chance yet.”

“It’s about Triton. It claims that if the appropriations bill doesn’t pass, Triton will have to declare Chapter Eleven.”

Jacklin tugged at his chin. Triton Aerospace was a manufacturer of antiaircraft systems that Jefferson had purchased eight years earlier. Eight years was an eternity in private equity. Speed was the name of the game. Buy a company, turn it around, ratchet up the free cash flow, then sell the thing. That was the ticket. Jefferson’s average holding period of four years led the industry.

“Company’s really in the shitter. We’re never going to find a buyer unless that ass Fitzgerald signs off on that bill.”

“That ass Fitzgerald” was Senator Hugh Fitzgerald, chairman of the Senate Appropriations Committee, and the bill being bandied about was the $6.5 billion Emergency Defense Funding Bill, of which $265 million was earmarked for the Hawkeye Mobile Air Defense Units manufactured by Triton.

Jacklin gazed down at the Potomac. In the sodden, gray morning, the river looked lifeless, dead. He thought of the dinner planned that evening, the care and preparation expended to ensure that it was the event of a lifetime. Not to mention the expense. Truffles. Caviar. Peter Duchin’s big band was setting them back a hundred thousand dollars alone. Word that one of Jefferson’s companies was due to declare Chapter 11 would be a fly in the soup. A goddamned hairy Texas horsefly! Jacklin tightened his hand into a fist. He’d be damned if Hugh Fitzgerald would single-handedly shut down Triton.

“I’m due to testify on the bill later this morning,” he said with a glance over his shoulder. “I’ll have a word with the senator afterward, and see if I can’t convince him to recommend its passage.”

“Fitzgerald? Good luck, J. J. The man’s left of Gandhi.”

“I know. I know,” said Jacklin, with a wave of the hand. “But the senator and I go way back. Just a matter of having him reconsider his career options. He’s seventy-four years old, after all. Time he did something else with his life.”

“And if he doesn’t?” De Valmont yanked out his silk pocket square and began to carefully refold it.

“I’m sure we can find a way to convince him. Either with a carrot or a stick.”

De Valmont nodded, but his eyes said he wasn’t convinced.

Jacklin returned to the center of his office and sat down in his Princeton chair. It wouldn’t be easy, he admitted, but it could be done. It was no coincidence that many of the senior partners at Jefferson had served in high government positions. Some called it access capitalism. J. J. Jacklin preferred “good business.”

“Gentlemen,” he called to his partners. “Shall we get down to brass tacks?”

21

Thomas Bolden sat in the back of the taxi, his cheek pressed to the cold metal door frame. Traffic moved in fits and spurts. The sky had hardened to a steely gray, the clouds fused into a solid, darkening wall. The taxi came to a halt. Pedestrians hurried along the wet sidewalks, one eye for the sky wondering when the hesitant snowflakes would yield to the real McCoy.

Bolden glanced at his lap. His right hand trembled as if palsied.
Stop,
he ordered it silently, but the shaking didn’t lessen. He took a breath and placed his left hand on top of it, then stared back out the window.

Until now, it had all been a terrible mistake. The mugging, his abduction and interrogation, the botched attempt to kill him. He’d been willing to consign all of it to the trash. Guilfoyle had the wrong man. It was that simple. Yet, as they drove up Fifth Avenue, his eyes aching in their sockets, his trousers stained with cooking grease and yesterday’s veal piccata, he realized that he’d been wrong. It didn’t matter if he could forgive and forget. They would not.

“They” had followed him into his workplace.

“They” had gotten to Diana Chambers.

“They” had killed Sol Weiss.

It didn’t matter that he had no knowledge of “Crown” or a man named Bobby Stillman. The fact that he knew of them was enough.

“They” would not go away. Not now, Bolden told himself. Not ever.

He thought of Jenny.

If Diana Chambers was fair game, she might be next.

“Driver,” he said, tapping his knuckles on the Plexiglas screen that divided the cab. “Take me to Fourteenth Street and Broadway. The Kraft School. There’s a twenty in it if you can make it in ten minutes.”

22

Of course, they couldn’t stop talking about the mugging.

“Calm down, you guys,” said Jennifer Dance. She sat on the front of her desk, legs dangling. “One at a time. Remember, once someone else starts talking, keep your thoughts to yourself until they’ve finished.”

“Yo, Miss Dance.” A tall, fleshy Hispanic boy with a crew cut and a green tear tattooed at the corner of his eye stood up.

“Yes, Hector, go ahead.” Then, to the rest of the class: “It’s Hector’s turn. Everyone give him your attention.”

“Yeah, like shut up,” added Hector with real venom, casting his eyes around him. “So, Miss Dance, like I’m wondering, if it was this razor-sharp knife, why didn’t it cut right through your arm? I mean, like deep, like you guttin’ a cat or somethin’.” He shot his buddy a glance. “Ten stitches, man. I could do better than that.”

“Thank you for your comment, Hector, but I think I’ve already answered that. I don’t know why he didn’t hurt me worse. Just lucky, I guess.”

“ ‘Cuz you good-lookin’,” a voice rumbled from the back of the room. “Them boys wanted to slam yo’ ass.”

Jenny stood and walked briskly down the aisle. It was a normal-size classroom, one student per desk, blackboards running the length of each wall, map cartridges she’d never even thought of using, hanging behind her desk. She stopped in front of a hulking young man seated in the last row.

“That’s enough, Maurice,” she said firmly.

Maurice Gates shrugged his massive shoulders and dropped his eyes to the floor as if he didn’t know what the big deal was about. He was a huge kid, well over six feet, at least 220 pounds, braided gold necklace hanging outside his football jersey (in defiance of school rules against jewelry), his baseball cap turned halfway to the back.

“Jes’ the truth,” he said. “You a good-lookin’ woman. Wanted to get him some gash. ‘At’s all. Know’d you’d like it, so he didn’t want to mess you up real bad.”

“Stand up,” said Jenny.

Maurice looked up at her with sleepy eyes.

“Stand up,” she repeated, softer this time. The classroom was all about control. Lose your temper and you’d already lost the battle.

“Yes, ma’am.” Maurice rose to his feet with enough moans and grimaces to do Job proud.

“Mr. Gates,” she said, “women are not bitches. They are not ‘ho’s,’ or ‘gashes.’ Is that clear? We, females, do not live in a constant state of arousal. And if we did, we wouldn’t require the attentions of a crude, chauvinistic musclehead like yourself.”

“You go, girl,” said one of the students in the back row.

Maurice shifted on his feet, his face a blank, as Jenny continued. “You have been in my class for two weeks now,” she said, standing toe-to-toe with him. “At least once a day, I have asked you to refrain from using offensive language. If I can’t teach you algebra in this classroom, I would, at least, like to teach you respect. Next time I have to waste a second of the class’s time keeping your butt in line—
one second—
I’ll have you kicked out of school.” She delivered the last part on her tiptoes, her mouth a few inches from Mr. Maurice Gates’s ear. “Your attendance here is a condition of your release from Rikers. So unless you want a ticket right back there, you’ll sit down, shut up, and keep your comments about the superior sex to yourself.”

Jenny stared into the boy’s eyes, seeing hate flare in the way his eyelids twitched, sensing his anger at being humiliated in front of his classmates. The kids called him Mo-fo, and they used the words with all due deference. Make no mistake, he was an angry, volatile young man. His case files pretty much came out and said that he’d been a player in several unsolved homicides. But Jenny couldn’t worry about that. She had a class to teach. Order to keep. She owed the kids that much. “Sit down,” she said.

For a second or two, Maurice Gates remained standing. Finally, he bunched his shoulders and sat.

The hush in the classroom lasted ten seconds.

“We were discussing what an appropriate punishment might be for mugging someone,” Jenny said, retaking her place at the head of the class. “Remember, I got my watch back. All I got was a little cut and very scared.”

“You popped one of ’em, too.”

“Yes, I did,” said Jenny, adding a little swagger to her step. “A right hook.” A few of her knuckles were swollen and painful to the touch.

She checked the clock. Nine-thirty. Her school planner called for her to teach math and English before recess. Math was a goner. She still had hopes for salvaging English. She was reading the class “The Most Dangerous Game,” the story where a mad hunter sets men loose on his private jungle island to track down and kill. There were plenty of metaphors in the story that the kids could relate to, especially at the end when “the Man” gets his comeuppance.

“Twenty years,” someone shouted. “Sing Sing.”

“Nah, ten, but no parole.”

“Ten years?” asked Jenny. “For grabbing a watch and giving someone a little cut? Don’t you guys find that kind of harsh?”

“Hell no.” It was Maurice Gates. “How else you think they gonna learn?”

“Excuse me, Maurice, do you have a comment?”

The supersized teenager nodded. “You got to teach those muscleheads a lesson,” he said, eyes boring into Jenny. “You got to be tough. No mercy. Unnerstand? Less’n you want ’em to come for you in the middle of the night. They mad enough, they even cut you in your own bed. Door locked. Don’t matter. They gonna get in. Take care of bidness. You be sleepin’ alone. They gonna get in. Cut you good. Ain’t that right, Miss Dance? You got to put ’em away.”

Jenny held his eyes, wondering if she might have to go to security on this one.
Don’t you dare come after me,
her look said.
I can take care of myself.

“Ten years,” said Hector, banging his feet on the ground.

In no time, the class raised a chant. “Ten years. Ten years.”

“Enough!” said Jenny, patting the air with her hands. She looked from face to face. Hector had robbed a bodega in his neighborhood. Lacretia had gotten into “the life” when she was twelve. For the most part, they were a decent bunch of kids. They weren’t angels, but she hoped she could just drive home what was right and what was wrong.

“Miss Dance?”

“Yes, Frankie.”

Frankie Gonzalez walked up alongside her and put his head on her shoulder. He was short, and skinny, and rubbery, the class runt and self-appointed clown. “Miss Dance,” he said again, and she knew he was making his wiseass smile. “Yo, I kill them muthafuckers they touch you.”

The class cracked up. Jenny patted his head and sent him back to his desk. “Thank you, Frankie, but I think that’s a bit extreme, not to mention against the law.”

She dropped off the desk and walked to the chalkboard. She wanted to make a list of appropriate penalties and take a vote. Crime and punishment passed for reading and writing.

Just then, the door to her classroom opened. A tall, rangy man with close-cropped gray hair and a weathered face peered in. “Miss Dance, may I have a word? Outside, please.”

Jenny put down the chalk. “I’ll be right back,” she said to the class. She smiled as she entered the corridor. A parole officer, she thought, or a cop come to tell her about one of her new charges. “Yes, what can I do for you?”

The man approached her, the smile bleeding from his face. “If you ever want to see Thomas Bolden alive again,” he said, his voice hard as a diamond, “you’ll come with me.”