The Rothman Scandal (25 page)

“I don't want to make you cry. I love you,” he had replied.

13

Of course there had been very little publicity about the dispute between the IRS and Ho Rothman so far. And, since the case had not yet come to trial, there was no way of knowing what the government might be planning to introduce as evidence. The case was still in what was called the discovery phase.

But, as Lenny understood it, it boiled down to this:

Rothman Communications, Inc. had always been a tightly held, privately owned family corporation. As a result, it had always enjoyed a high degree of secrecy in terms of its bookkeeping operations. Indeed, Lily Rothman, who started with the company as its bookkeeper, still bore the title of vice-president and secretary-treasurer. There was nothing wrong with any of this. But the government's contention was that, since the company's inception, H. O. Rothman had been its sole proprietor and owner, and that all corporate decisions had always been, and still were, handed down by him unilaterally. The company, the government charged, had been Ho Rothman's personal dictatorship. Therefore, they were claiming that the company's entire annual earnings should have been reported as individual income by Ho Rothman. Any disbursements of cash to other members of the family, the government said, were made in the form of gifts, the way a benevolent patriarch might hand out allowances to his children and grandchildren.

The cynicism of the government's timing was obvious. If it could prove, at this advanced stage of Ho's life, that no one but Ho had ever owned or controlled the company, it could move in, at the time of his death, and tax his estate at the full book value of the company. The Rothman lawyers even suspected that the government was conducting its case in such a manner that the case would not even come to trial until after Ho's death, so that it could claim not only back taxes, but also huge estate taxes.

The Rothman lawyers—and there were presently a battery of 126 attorneys from the firm of Waxman, Holloway, Goldsmith & McCarthy working on the case—were taking a very different stand. Rothman Communications, Inc., they claimed, was not now and never had been a one-man operation. The company was owned, they countered, by a consortium of family shareholders. The lawyers contended that the company was not run like a monarchy, but like a democracy, with shareholders meeting regularly, and making decisions by majority vote. Decisions concerning acquisitions, sales, and so forth were not handed down from on high, but were reached after lively—often heated—discussion and debate among the stockholders. Obviously, the question of whether Ho Rothman owned his entire company, or only a share of it, was an important one. If the government pursued its case successfully, it could expect to collect some $600,000,000 in back income taxes, plus a possible additional $450,000,000 in fines, penalties, and interest. The government was not after chickenfeed. Lenny Liebling was sitting with Aunt Lily Rothman right now, in her red-and-gold drawing room—red damask walls and window hangings and upholstery coverings, gilt frames on all the furniture—at 720 Park Avenue, balancing a Sevres teacup on his knee.

“Yes, people say I'm remarkable,” she was saying. “Remarkable specimen for a woman my age, and I guess they must be right. Look at me. Perfect eyesight, perfect hearing, all my own teeth, still a perfect size six. This is my natural hair color.” She touched her ash-blonde curls. “Oh, I won't say that I don't give it a little help from a bottle now and then, but it's still my natural
color
, and that's the important part. It isn't fair, is it, that I should be in perfect health, while poor Ho is in there just wasting away … wasting away. It just isn't fair, but then life's not fair, is it.”

“It certainly isn't,” Lenny said.

“Of course you remember him when he was in his prime. The drive, the power, the personal magnetism he had, the intellect of that little man! The energy he had! The wisdom, the creativity! It was all there, and now it's gone. And yet this is the man the IRS is now accusing of being the singlehanded mastermind of the entire corporation, when everyone knows there are lots of stockholders, who all have votes. I said to our lawyers just this morning, I said, ‘If it were possible to move him, we should take this man—this vegetable—down to that Federal Court House in Foley Square. We should carry him in on a stretcher, and say to the IRS—“Here's the man you're calling a press lord, a communications czar, the sole power behind the Rothman empire! Take a look at your czar, lying there like that day after day—his mind gone, a vegetable.”' The lawyers thought that was a pretty good idea.”

“Would he be up to that, Lily?”

“No. It would probably kill him. But then we could sue the IRS for murder.”

“Oh? I didn't know it was possible to sue the federal government,” Lenny murmured.

“Well, we'll see. It's only an idea, and the lawyers liked it. We'd only do that if worse came to worst. His doctors say he has the constitution of an ox. The heart of a teenage boy, and the constitution of an ox. But it's his mind that's gone, totally gone.”

“I'd like to step in and see him,” Lenny said.

“No, no. Doctors' orders. No visitors. Nobody can see him anymore except the doctors, the duty nurses, and me. Anybody else, and his blood pressure shoots up.”

“Interesting that a man with the heart of a teenage boy should be having blood-pressure problems,” Lenny said.

“Doctors' orders,” she said again. “Anyway, it's not his heart that's involved, as I told you. It's his arteries. They're completely hardened. It's the arteries that cause the blood pressure, and arteries have nothing to do with the heart. They're not even connected.”

“Hm,” Lenny said. “Interesting case, from a medical standpoint.”

“Well, I didn't ask you here to discuss Ho's health, which you know all about anyway. There's something I want you to do, Lenny.”

“Ah,” he said, setting down his teacup. “Now we get to the point of this meeting.”

“Ex
act
ly,” she said. “Now, as I said before, there have always been lots of stockholders of this company. But the thing is, we never got around to issuing any actual stock. We were always—just too busy to do it, I guess. But now, with this IRS business, I think it's high time we did it. If we can show the IRS the actual stock certificates, we can prove that there were individual stockholders all along. They'll have no case.”

“I see,” Lenny said.

“So. Here's what I need you to do. I want you to get lots of stock certificates printed up. The certificates should bear various dates, to reflect splits, et cetera, et cetera, over the years, dating back to nineteen twenty-three, the year Herbie was born. Have them printed up in different colors—you know what stock certificates look like—some in yellow, some in green, some in blue, and so on. And in different amounts. Also, I want some of them to look really old. Have some of them printed on distressed paper, the kind that looks old.”

“I believe that papers, and inks, can be tested for age,” Lenny said.

“Ha! The bozos at the IRS won't know about any of that. At least that's what I'm betting on. Once they see these certificates, they'll call off their dogs.”

“Hm,” Lenny said. “Have you discussed this with your lawyers, Lily?”

“Of course not! This is my idea. You know what Ho always said about lawyers. ‘The more you tell a lawyer, the more it costs you.' To hell with the lawyers.”

“I see,” Lenny said. “I believe there's a word for what you have in mind, Lily, or rather two words. It's called stock fraud.”

“No. It's called estate planning. It's something Ho should probably have done long ago, but didn't get around to. Now he's getting around to it, but the IRS doesn't need to know any of that. This is just between you and I.”

“I see,” Lenny said.

“Now here's the way I want everything divided up,” she said, and withdrew a slip of paper from the front of her dress. “I've got it all written down, who's going to get what. Twenty percent of the company will belong to Herbert Oscar Rothman, that's Ho. Fifteen percent of the stock will belong to Anna Lily Rothman, that's me. Herbie will be given fifteen percent, and his wife, that Pegeen, will get ten percent, though it kills me to give the bitch that much. Arthur will get another fifteen. We'll put twenty percent into the estate of Steven Rothman, to be held in trust for Alex and Joel, and a final five percent in a separate trust for Joel, to be his when he reaches age thirty, but to be voted by his mother until then. Got that? That will prove to the IRS that nobody in this family has ever owned more than twenty percent of this company, which is what our lawyers have been claiming all along. That's the beauty part.”

“I see,” Lenny said. “But I wonder, Lily, why you have chosen me to carry out this bit of—creative paperwork?”

“Because you're someone I can trust,” she said.

“Or,” he said, “is it because if, as we say, someone has to take the fall for all this, the fall won't be taken by a member of the Rothman family? The fall will be taken by Dear Old Lenny. Isn't that it? If someone ends up having to sit for this—and, if your scheme is discovered, someone will—the person who sits will be me.”

“What a way to talk! Nobody's going to take a fall. Nobody's going to have to
sit
. I've got it all worked out. Besides, if you did get caught—which you won't—they'd let you off easy. You have no record. Whereas Herbie, as you know—”

“Yes,” he said quickly. “So you do know that what you're proposing is quite against the law.”

“It's just estate planning! Just estate planning that should have been done years ago.”

“And I take it Herbert knows nothing about this—estate planning?”

“Absolutely not! This is strictly between you and I, Lenny.”

“Well, I just don't think I want to become
engagé
with this, Lily,” he said. “I'm sorry, but it's just too risky. Not for you, perhaps, but for me. After all, I have a certain reputation for integrity to uphold.”

“Oh?” She sat forward in her chair and eyed him narrowly. “Cab number thirteen has been awfully busy these last few months.”

“Honestly, Lily, I have no idea what you're talking about. What in the world is cab thirteen?”

“Just thinking aloud,” she said. “Cab number thirteen has been the busiest car in the fleet. Isn't it funny? It's just one of those little things a bookkeeper notices.”

There was a long silence, and he made a mental note to call his friend Jocko and arrange for a new code number, or perhaps several numbers.

“Oh, look,” she said, and lifted one hand and pointed. “Look at how the sun has just hit that crystal obelisk on the table there, and thrown colored lights all around the room. Every day, there's a certain hour when the sunlight hits that obelisk, and makes a rainbow in the room. So many aspects of things, aren't there, like the sides of a prism in the sun. ‘How far that little candle throws his beams! So shines a good deed in a naughty world!' You owe us a few good deeds, Lenny.”

“Yes, but—”

“And the liquor store on Forty-sixth Street. The bar in our conference room seems to need replenishing so often nowadays. Funny, isn't it?”

“Really, Lily, I'm not following your train of thought.”

“Just woolgathering,” she said. “Just woolgathering. And the little sandwich shop on Forty-fourth. So many conference room lunches sent up from there lately. And so many people who seem to order turkey club sandwiches. Doesn't that strike you as odd?”

“Perhaps. I suppose. But HoBo's is famous for their turkey club sandwiches.” He touched a bead of perspiration on his upper lip.

“Yes, well I suppose that's it. Our lawyers are trying to stay on very good terms with the people at the IRS right now. No point being hard-nosed with the feds, they say. That just gets their back up. Failure to report income—that's the big no-no, you know. That's Fort Leavenworth time. Thank goodness they're not accusing
us
of failure to report income. They're just challenging our accounting system. But if we could offer them somebody else who had really failed to report income—who knows? It might be a little bargaining chip. It certainly wouldn't hurt our side. Might even help.”

Lenny cleared his throat. “You say your lawyers know nothing about this stock-printing plan?”

“Nothing. Nada. Zip.”

“And how do you suppose they'll react to the sudden appearance of these—certificates?”

“I'll handle that. Don't forget, I've been cooking the books for this company for over sixty years. I'll just dump the certificates on them and say, ‘Here—you want proof of multiple ownership? Here's proof.' They're not going to question the treasurer of this company—the one who's paying their bills! Then they can dump the certificates on the IRS. That's why I want lots and lots of certificates, Lenny, dated from way, way back. I want huge bundles of certificates, enough to fill a couple of wheelbarrows, at least. That's the way to deal with bureaucrats—bury them in paper!”

“And how would I go about this stock-printing operation, I wonder?” he said.

“We own printing presses, don't we? That's the easy part.”

“Certain palms may have to be greased.”

“Certain palms are already being greased. I think you know how to go about that.”

He nodded, a little absently.

“And I want these certificates printed up as quickly as possible,” she said. “And you're just the man for the job.”

He nodded again. “Funny,” he said quietly, “when you said you wanted to see me, I thought it must be about this new woman Herb's putting on
Mode
's masthead—the new co-editor.”