Absolute Risk Read online

  Abrams had passed through Chicago on his way back to MIT. He showed the documents to an economist at a think tank founded by a Friedman disciple, hoping that the evidence would persuade them that the attempt to impose their economic theories on the people of Chile through shock and terror had been disastrous.

  Days later, Ferrada was arrested at his office by Pinochet’s National Intelligence Directorate.

  “What happened to Hennessy is not your fault,” Gage said.

  “I feel it in my gut. It’s Orlando Ferrada all over again.”

  “Who did you tell about Hennessy?”

  “My assistant, the director of the FBI, and his deputy. Who they later told, I couldn’t say. But only my assistant knew I was meeting him in Marseilles.”

  “If history is repeating itself, then it’s Ibrahim we should be worried about, and not because of anything that you did, but because of what Hennessy may have done or learned.”

  “History is already repeating itself. You got hurt rescuing Ferrada. You got hurt yesterday.”

  Gage smiled. “The first time was my fault. I was driving too fast.”

  “Only because they were shooting at you.”

  Gage had broken Ferrada out of a jungle prison, then had missed a turn on the dirt track leading from Chile into Bolivia. His jeep rolled down a hillside and came to rest in a frigid Andean streambed, fifty yards upstream from a Bolivian customs checkpoint, and they swam across the border.

  This morning he’d also driven back roads, from Albany to Manhattan, hoping to determine whether Gilbert or his people were on his tail and whether they were set up around Abrams’s apartment house. He’d only hoped that he could use Strubb to shake them off long enough to get a few steps down the trail ahead of them, but listening to Abrams now, he wasn’t sure that would happen.

  Gage glanced at the television. It was the start of the local weather report. The reporter announced that it was cold outside. The mysteries growing about the fates of Hennessy and Ibrahim made Gage wonder why weather reports always began by telling people what they already knew.

  “I have the feeling that you’ve made the Orlando Ferrada-Michael Hennessy connection before,” Gage said.

  “I was thinking about that while you were gone, but it’s not Chile that worries me. It’s the Relative Growth Funds. They’re supposed to be based on the work Ibrahim did when he was at MIT—but I don’t believe it. For political reasons they don’t use Ibrahim’s name, but when they refer to fractal analysis, insiders know what they mean.”

  Abrams sat down and folded his arms on the table.

  “I think it’s a scam,” Abrams said, “at least an intellectual one. Ibrahim being right about the markets tending toward the extremes doesn’t mean that you can build an investment model on it. But that’s what Relative Growth says is the reason they’ve beaten the performance of every other hedge fund over the last ten years, even through two economic collapses.”

  “And you don’t see how it’s possible to predict the unpredictable.”

  “Nobody can—and not just as a matter of logic, but of fact. Despite that, they’ve attracted almost two trillion investment dollars into their funds. Most from the U.S., the rest from Europe.”

  “How did you find out? I thought Relative Growth was based in the Caymans.”

  “The CIA director. He was concerned about the foreign entanglements of former U.S. government officials. Their board of directors has three former U.S. presidents, two former defense secretaries, and two former secretaries of state. After Time magazine called Relative Growth Funds ‘a Republican administration in exile,’ he felt he’d better make some inquiries and warn those guys about conflicts of interest.”

  Abrams glanced at the television screen. A reporter stood in the middle of the Rockefeller Center ice skating rink surrounded by racing, screaming children.

  He looked back at Gage.

  “There are only three explanations I can think of for Relative Growth’s success. The first is simple market manipulation. Shorting a stock like Apple or Microsoft, then planting false stories in the press. But you can’t do that too many times before even the most dim-witted reporters figure out they’re being used.

  “The second is insider trading. Altogether, the Relative Growth members sit on about a hundred corporate boards. No major move happens without them knowing about it.” Abrams bit his lip and shook his head. “But I don’t think that’s what’s going on. I know former president Randall Harris well. Very well. He’d blow the whistle, regardless of the personal cost to him.”

  “There’s only one other possibility,” Gage said.

  Abrams nodded. “It’s a Ponzi scheme with an offshore loop. Running new investors through a Cayman Island black hole, then back in to pay off old investors. And something like that could be concealed from the board by a first year accounting student.”

  “How solid is the two-trillion-dollar number?”

  “Only little better than rumor. For the most part, the CIA can only track the money when it moves from place to place. They don’t have access to the inner workings of private banks. Relative Growth could have a lot more stashed.”

  “Or a lot less.”

  “That, too.”

  “You think that Hennessy figured it out?” Gage asked.

  “Which, the total or the method?”

  “The method.”

  “If so, not in the same way I did. There’s no way anyone other than someone with a graduate-level mathematics background could’ve figured out that you can’t build portfolio allocation and risk models based on Ibrahim’s theories.”

  Gage thought of Hennessy’s highlightings in the books in his home-office library.

  “I think he tried,” Gage said. “Maybe he made a kind of intuitive leap and came to the same conclusion you did.”

  “It’s possible, but I didn’t ask. I was less interested in Hennessy’s financial theories than in what he knew about Ibrahim and where he is. If I could get Ibrahim to cooperate, then I could do something about the Relative Growth Funds.”

  “And you think they killed Hennessy to keep him from bringing you and Ibrahim together.”

  Abrams nodded.

  “And they’ve been following you, and then me, to see if we were trying to pick up the scent again.”

  Gage then realized that it was a mistake to have used Strubb to shake off Gilbert. It would’ve been smarter to have led Gilbert into a trap. But it wasn’t too late. Even if Gilbert had been scared off the case, he still knew what he knew, and while he might not have known why he’d been hired, he knew who hired him.

  “You have a phone book handy?” Gage asked.

  Abrams reached over and pulled out a drawer of the counter under the television.

  The screen showed a view down a commercial alley, and a voiceover said, “New York private investigator Anthony Gilbert was found beaten to death in downtown Albany this morning. Homicide detectives are—”

  Gage shook his head, and then said, “Don’t bother.”

  CHAPTER 19

  You all right, man?”

  Kenyon Arndt blinked up at the personal trainer kneeling over him where he lay twisted on the floor of the 24 Hour Fitness center in Scarsdale.

  “Don’t move him,” someone yelled. “Nobody move him. And turn off the goddamn treadmill.”

  A second face appeared. “I’m a doctor. Can you bend your arms or legs? ”

  Arndt looked past the woman toward the television screen hanging from the wall he’d been facing as he jogged. Anthony Gilbert’s photo had appeared, followed by a report of the discovery of his frostbitten body in a dumpster behind a market and by a description of his injuries: crushed skull, smashed fingers.

  Arndt now remembered the tread belt ripping his legs out from under him, his knee hitting and then his shoulder, and the machine spinning him onto the carpeted floor and bouncing him into the crossbeam of a weight bench.

  “I think I can move,” Arndt said. He roll
ed over onto his back. Nausea waved through him and his mouth watered. He swallowed hard and tried to sit up. Dizziness stopped him. He closed his eyes. He let the doctor support the back of his head and ease him back down again.

  Arndt felt a towel press against his forehead. He opened his eyes again as the doctor pulled it away. He winced at the splotch of blood.

  “Don’t worry,” she said. “It’s not as bad as this makes it look.”

  “I need to get to my office.”

  She smiled. “The first sign of a concussion is talking nonsense. And the idea of you driving to your office in your condition is nonsense.”

  Arndt rolled back onto his side and pushed himself to his knees. She helped him to his feet, steadied him as he found his balance, and then sat him down on the weight bench.

  “You’ll need to make a stop at the emergency room before you can even think of going into work.” She handed him the towel. “Hold this against your head.”

  The club manager walked up. “We’ll have to insist that you get examined,” he said to Arndt, then to the trainer, “Rope off the machine until we can determine whether there was a mechanical problem.”

  Arndt shook his head, then looked up. “It was my fault. I forgot to hook the emergency stop cord onto my shirt.”

  Someone in the crowd laughed and said, “It’s worse than a concussion. It’s actual brain damage. Who ever heard of a lawyer passing on a lawsuit.”

  Maybe he’s right, Arndt said to himself. Maybe I should sue. It may be the only way I’ll be able to make money now that my career has gone down the tubes.

  Instead, he said, “I’ll telephone my wife. She can take me to the hospital.”

  “What’s her number?” the manager asked, pulling out his cell phone.

  Arndt shook his head again. “I’ll call her from the locker room.”

  Five minutes later, Arndt felt strong enough to make his way across the gym. He pretended to call his wife, then got dressed and went out to his car.

  His boss answered on the first ring.

  “I know,” Wycovsky said. “I got a call.”

  “I quit,” Arndt said, staring through his windshield at the gym, imagining Gilbert’s face on the television screen. “I want out. I didn’t sign up for this.”

  “You need to have your head examined.”

  “Craziness is staying involved in this, not in getting out—and I’m getting out.”

  “Do you have a single shred of evidence that Gilbert’s death has anything to do with us?”

  Arndt cringed. His mind locked up. He couldn’t think of an answer.

  “We don’t know what else he was working on,” Wycovsky said. “He sure as hell didn’t work for us full-time. And the guy was a royal asshole. Good at his work, but still an asshole.”

  By that criterion, Arndt thought, Wycovsky would’ve been murdered ten times over and a hundred people would still be standing in line to kick his lifeless body.

  “Look, kid,” Wycovsky said, “every tree that falls in the forest isn’t aiming at you.”

  Arndt knew that Wycovsky was right, logically, but he felt, more than he knew, that the logic was an evasion. Even worse, Wycovsky had once again beaten him back into line with an analogy.

  “Anyone who says capisci,” Wycovsky said, “is just asking for his head to get kicked in. I’ll expect you to be in the office at the usual time.”

  As Arndt disconnected, he felt a rumble in his stomach, then a sour taste in his mouth. He got the door open just before his half-digested breakfast sprayed out of his throat and onto the slush and snow.

  CHAPTER 20

  Vice President Cooper Wallace scowled, looking past his wife sitting across from him in front of the inglenook fireplace in their official residence at the Naval Observatory.

  “It was what?” Wallace said into his cell phone. “Arson? A billion-dollar arson?”

  “That’s what the RAID people on the ground in Chengdu are reporting,” Chief of Staff Paul Nichols told Wallace. “It withstood the quake, but the story they’re hearing is that a mob broke through the perimeter fence. The guards were no match. They were posted there only to prevent thefts from the construction site, not to stop a rebellion.”

  “What about the Spectrum distribution center?”

  “Still standing. Looted, but still standing.”

  Wallace pushed himself to his feet. “The Chinese government will have to pay RAID and Spectrum back every single dollar—”

  “Yuan. And I don’t think that’s going to happen. You may even want to think twice about asking for it.”

  “Why the devil not?”

  “Because what Tiananmen Square was to political protest, Chengdu will be to economic protest, except worse. The turmoil in the city is starting to spread to other towns and villages in the earthquake zone.”

  “What about the army?”

  “It looks like they learned their lesson in 1989 and are staying out of it—for now.”

  Nichols found himself once again looking for a way to dissuade Wallace from a course that would make a fool either out of himself or out of the president.

  “It only confirms what you’ve been saying all along,” Nichols finally said, suppressing what he was afraid might sound like a patronizing tone. “Neither RAID nor Spectrum should’ve gone in there. Let them learn their lesson by eating their losses.”

  Wallace paused and stared down at the morning’s Washington Times lying on the coffee table. His eyes fell on a profile of the marketing director of the Arizona Camelback mega-church. He then recited, more to himself than to Nichols, “Moses took the calf they had made and burnt it; he ground it to powder, sprinkled it on water, and made the Israelites drink it.”

  “You’re right,” Wallace said to Nichols. “Let them choke on it. I warned them. If they’d spent as much time reading the Bible as they did spreadsheets and profit projections and financial models, they wouldn’t be in this mess.”

  “I also think we should call the folks at the Baptist Missionary Convention and tell them not to send any kids over there. The mobs haven’t turned on foreigners yet, but they will as soon as they connect the dots.”

  “Connect the dots … What do you mean, connect the dots?”

  Nichols cringed. Wallace was the leading Republican contender for the presidency, but he sometimes displayed a provincial naïveté.

  “Corruption, Mr. Vice President. The RAID facility didn’t cost a billion dollars, it cost three-quarters of a billion, the rest was used to pay bribes from Beijing to Chengdu. And one of the things those payments bought was the right to pollute the countryside and poison the people. Right now the mobs are more focused on the corrupt officials who are responsible for the school and hospital collapses and the undrinkable water and the birth defects and rampant cancers, but in the Chinese way, it’s only a matter of time before they take revenge against the barbarian invaders.”

  “If it wasn’t the mob, then who burned down RAID? Environmental terrorists? Falun Gong? The ghost of Chiang Kai-shek? Who?”

  “We don’t know yet, and perhaps we never will. Whoever did it used the chaos that followed the earthquake to disguise who they were, otherwise they would’ve announced something on the Internet.”

  “We need to lean on the CIA. What are they for, if not to find out who’s attacking American economic interests? If it happened to a Chinese factory in Nigeria you bet your ass the Chinese intelligence service would be on it.”

  “I’ll make a call and see what resources they can put into it,” Nichols said, “but I wouldn’t count on getting definitive results very soon. They’re stretched pretty thin.”

  “Then maybe what I need to propose as part of my presidential campaign is that we establish a financial security agency, modeled on the NSA.”

  “Not a bad idea. Just make sure you figure out a way to control it better than anyone has been able to control the CIA.”

  “Don’t worry, that’ll be on my agenda. For now, lean o
n them as hard as you can. If you’re not getting anywhere, then send the director to me and I’ll take care of it.”

  CHAPTER 21

  Finding out whether Relative Growth is a Ponzi scheme is worth the risk,” Gage told Abrams before catching a flight to Boston. “The consequences of not learning the truth could be devastating. If it means locating Hani Ibrahim in order to do it, then let’s give it a try.”

  Gage had decided not to tell Abrams that Tony Gilbert was the person that Strubb claimed had hired him. He’d diverted Abrams’s attention away from the television by suggesting that he travel up to Boston to try to retrace Hennessy’s steps from when he first began investigating Ibrahim and try to discover what he learned about the professor and his connection to Relative Growth.

  Abrams had finally agreed and gave Gage a debit card that drew on a Federal Reserve bank account to cover his expenses. In order to disguise the trail back to Abrams, Gage decided to use his own and replenish it with the Fed card once the work was done.

  The storm that had swept through New York confronted Gage as he drove his rental car from Boston’s Logan Airport toward Back Bay. And by the time he’d reached the Harvard Bridge, he was once again in the midst of a blizzard and in the hands of his GPS. It got him to Memorial Drive along the Charles River and to the front of the Sloan School of Management where Hani Ibrahim had his office when he was on the faculty of MIT during the five years before his arrest.

  Professor Goldie Goldstein looked up from behind her desk in the Institute for Islamic Finance when Gage’s knuckles rapped on her open door. She blinked and smiled, and then made a show of rubbing her eyes.

  “I must be dreaming. For a second I thought you were Graham Gage, but he doesn’t have that much gray hair.”