Bloodmoney

34

On the third morning of the witch hunt, the chief of the Special Fraud Office himself, Herbert Crane, OBE, paid a visit to Perkins’s office. He was in his late forties, young to be decorated, but he had distinguished himself in cleaning up the City of London, to the extent that was possible, after the financial meltdown. He had a chip on his shoulder; he didn’t like the world of Mayfair, and he especially didn’t like American interlopers like Thomas Perkins, who had used the relatively relaxed rules of the British financial markets to take risks and cut corners-and bring ruin on themselves and others.

Crane brought with him to the meeting a red-haired Scotsman named Angus Ward, who was his chief forensic accountant. Ward had been combing the files for the previous two days and had the eager, twitchy look of a hunting dog closing in on its prey. The investigators sat on one side of the conference table; Perkins and his lawyer sat on the other. The two British men had three briefcases lined up between them, a veritable archive. They both were leaning forward as if ready to spring.

Perkins and his lawyer were slouched back in their chairs, their body language advertising that they wanted to be anywhere but in this room. Tarullo’s bulky frame and slicked-back hair gave him the look of a lounge singer on a bad night.

The fraud chief turned on a tape recorder, introduced himself and his colleague and asked Perkins to do the same. Perkins’s voice, drained of energy, was barely audible, so Crane asked him to speak up. The American spoke again in the same flat voice, so the interrogator simply repeated the name loudly, for the record, and then began with his questions.

“I want to show you a series of trades made by your firm,” said Crane, “and I would be grateful if you could affirm that these trades were, indeed, made by Alphabet Capital.”

The SFO chief passed a series of papers across the table, while his accountant read a summary of what they contained. The first was dated in late 2007, and there were other trades in the succeeding months.

“UK gilts,” intoned the investigator, as Crane pushed his document across the shiny tabletop.

Perkins studied it and nodded. Tarullo, the American lawyer, interjected that he reserved the right to challenge the accuracy of the document later, along with all the others, in the event that there was a formal legal proceeding. His reservation was noted and the inquisition continued.

“UK credit-default swaps, on four separate trading occasions, in March, April, May and June of 2008,” continued the investigator. Four sheets passed from hand to hand.

“I get it,” said Perkins. “You’re just going after the old stuff, when I was on my own.”

“Shush!” said Tarullo.

“Excuse me?” queried the fraud chief.

“Nothing,” muttered Perkins. Now that he understood the game, he was losing interest.

Tarullo, the lawyer, objected that Crane was using copies of documents, and that unless the originals were produced they were useless as evidence, and this objection was also duly noted.

Crane rolled on with his recitation of suspect trades.

“British sterling, intra-day trading and futures, very large movements.” Once again, the documents were transmitted, over legal protest.

So it went, as the investigators peeled off their deck of cards. The transactions all involved assets whose movement was affected by the activities of the Bank of England. Some trades involved the securities of certain large corporations that had been subject to British legal and regulatory proceedings over the period.

When they reached the bottom of their stack of papers, the representatives of Her Majesty’s government collected them and set them in a neat pile.

“Now, Mr. Perkins, I want to show you affidavits we have received, anonymous for the moment. They link each of these transactions with specific insider information from the Bank of England that was relevant to the trade in question. My accountant, Mr. Ward, will read a summary of this information. You needn’t respond to these crown exhibits, unless you choose to do so.”

“I object to this procedure,” said Tarullo. “You are presenting uncorroborated allegations with no explanation where the information comes from. That’s outrageous.”

“Of course you object. That’s what lawyers do, but it won’t make any difference. This isn’t a trial. It isn’t a formal hearing. It is an informal interview. So, please, don’t be tedious.”

Ward rehearsed the evidence of insider trading, without ever saying precisely how the information might have been transmitted. He noted central bank meetings that had been coincident with trades, news events at the bank’s headquarters in Threadneedle Street that had followed Alphabet Capital’s moves by hours or days. It was a devastating catalogue of inside information, from somewhere in the bank, which evidently had fueled trades resulting in many hundreds of millions in arbitrage profits to the firm.

Tarullo at first made a show of objecting, even though the fraud chief had warned him it would be useless. But Perkins waved him off. He knew they had the goods. He could remember most of the instances in question; the phone calls to his special cell from his “friend” in the parlors of the bank.

“I’ve heard enough,” Perkins said eventually, with a dismissive wave of the hand. The recitation of his supposed “insider trading” had made him angry, all over again, at the people who had seen his weakness several years before and been manipulating him ever since.

“Why don’t you go after my other sources?” Perkins asked.

“I beg your pardon?” said Crane.

“Shut up!” said Tarullo.

“This is all crap,” continued Perkins. “I can’t believe you would fall for whoever is dishing it out. You should be embarrassed, Mr. Crane. Someone is playing you. You’re going to regret this, deeply, later.”

“Not likely, that, Mr. Perkins, but brave try.” The chief of the Serious Fraud Office wasn’t quite done. He looked at his watch.

“I have just a bit more information that I would like to review with you, and then we can call it a morning. Then you can retire with your lawyer and say whatever venomous things you like.”

The accountant opened a locked briefcase. Inside was a sheaf of banking files with detailed markings, noting the foreign provenance of the exhibits and the controls applying to them.

“These are Swiss bank records,” said Crane. “We have obtained them under seal from the Swiss Financial Market Supervisory Authority. They have been transferred to us under the European Union’s agreement to share information when there is evidence of money laundering or other illegal financial activity, such as insider trading.”

“Big deal,” said Perkins. He was tired of this show. Crane was an actor being manipulated by strings he didn’t even see. It was a waste of time. This wasn’t the main event; it was the shadow play.

“I object,” said Tarullo. “Where did Switzerland come from?”

Crane continued with his narrative. He opened the folder and spread the records before Perkins, keeping a copy for his own reference.

“Do you recognize these documents, Mr. Perkins?”

“Nope. They look fake.”

“These are records of the numbered account that is maintained on your behalf at the Federation des Banques Suisses. I am informed that you inquired about this account as recently as yesterday.”

“Prove it,” said Perkins.

“I will prove it, I assure you. Now, these records show that the account was opened last September. As you can see from an examination of the records, the total sum in this account is currently one billion nine hundred eighty million dollars. And as you will further see, there have been regular monthly additions to this account. These deposits do not appear to have been declared properly to the Inland Revenue. That would be illegal, if true.”

“This is all bullshit, Crane. You are a fool.”

“Shhh!” said Tarullo, putting his hand on his client’s shoulder. “No need for that.”

“Okay. You’re not a fool. You’re a dupe. This isn’t your fault. You don’t even understand it. Where’s the other FBS account?”

“I beg your pardon? What other account?”

“See? You don’t even know your own case. There was another numbered account at FBS that had three times what was in this one, allegedly. What about that account? That’s where the real money went, assuming for the moment that there was any.”

“You are delusional, Mr. Perkins. There is no other account. We have checked with the Swiss authorities, and the only account at FBS related to Alphabet Capital is the one before you. You are shooting blanks, sir.”

Perkins turned to his lawyer.

“This is a joke. Honestly. It would be funny if it wasn’t such a serious goddamned menace.”

“Serious it is. You are quite right there, Mr. Perkins. And I would advise you to consult with the most serious legal representation as to your situation. We will be making a presentation soon to the director of public prosecutions as to the proper disposition of these facts-yes, I would underline that word, ‘facts’-by the crown prosecutors. It will require a most sober judgment on your part.”

“Sobriety isn’t my strong suit, normally, but I’ll work on it. Now I want to ask you a question, Mr. Crane. Is that allowed?”

“Of course. This is an informal interview. You can ask whatever you like. That doesn’t mean we will answer.”

“Who’s your informant? It’s obvious that you have a snitch who’s telling you all of this nonsense: trades, information, bank deposits. So who’s your source? And I don’t mean the poor dope at the Bank of England. I mean the person who put you on to him.”

“That question is out of order, obviously. You can’t expect me to answer it.”

“No. But I would expect you to know the informant’s identity. If you were doing your job properly, that is. But I would bet my last dollar that you don’t know, in this case. You have an anonymous tipster who’s sending you all these shit sheets. And maybe you have someone from the ‘Foreign Office,’ meaning MI6, who’s whispering in your ear that it’s legitimate. But you yourself don’t really know. Am I right?”

Crane didn’t answer. But there was just a touch of red on his pasty, pallid, high-born cheeks-the “tell” that the British have been unable to hide since the days of Jane Austen. They blush, the British. That is one of their few national weaknesses.

“Nonsense,” said the fraud chief. “Sheer poppycock.”

The “informal” interview was over. Crane and his accountant packed up their kit of exhibits and left the building. Perkins huddled in his office with Tarullo, who was furious that he knew so little about the case and the activities that underlaid it. But on that, Perkins wouldn’t budge. He had done nothing wrong, he kept repeating, and that was all there was to say about it.

“Ask them in Washington about Anthony Cronin,” Perkins told his lawyer. “He’s the person who got me into this. Agency business, don’t breathe a word, special financial relationship. That’s where you have to begin, Vince. Start shaking that tree, and see what falls down. Cronin. C-RO-N-I-N. He works out of an office in New York on Fifth Avenue, next to the Apple store. He’s a member of the Athenian Club. At least that’s where I met him once. Brown hair, six feet, gym rat, stars in his eyes. CIA standard issue. Find him and maybe you can graymail me out of this mess.”

“You are an asshole, Peabody, really you are. Why didn’t you tell me this a year ago, before you were up to your eyeballs in shit?”

Perkins removed his glasses and rubbed his eyes.

“Retrospective analysis is not a useful guide to current problems. It’s a mistake to worry about ‘sunk cost.’ That’s what we taught our economics students. If they didn’t listen, we told them to pursue another course of study. Law, for example. Do me a favor: Find Cronin, then we’ll have something to work with.”

“Any other names?”

Perkins thought about Sophie Marx and the implicit pact they had made to help each other escape their situations.

“No,” he answered. “Just find Cronin.”

Perkins’s bad day wasn’t over yet. Late in the afternoon, as he was trying to negotiate a line of credit from some wealthy Saudi clients that would allow him to keep Alphabet Capital afloat, he received a visit from the senior Metropolitan Police constable who was heading the delegation that had invaded his workspace these past three days. Tarullo was down the hall, trying to fend off private litigants who were already preparing civil suits against Perkins. He raced back to Perkins’s office when the chief constable arrived.

The chief constable, followed by two of his officers, entered Perkins’s magnificent workspace. It was a glorious summer afternoon; the streets outside the local pubs were already filling with young people ready to drink away the summer’s night. Across Piccadilly at the Ritz, they were finishing up with afternoon tea, tidying up the scones and jam and cucumber sandwiches.

The policeman looked sheepish, like a doctor who was about to perform a procedure that wasn’t very dignified for the patient or himself.

“I must inform you that you are under arrest, Mr. Perkins. The Serious Fraud Office, in conjunction with my superiors in Scotland Yard and the crown prosecutors, have determined that there is a serious risk of flight in your case if you are allowed to remain at liberty. So I am afraid that we must take you into custody now.”

The two policemen stepped forward. They weren’t embarrassed in the slightest. They liked the idea of arresting a billionaire and frog-walking him down to the squad car.

“I object,” said Tarullo. “Mr. Perkins is a U.S. citizen. I demand that the U.S. Embassy be informed.”

Perkins laughed at this mention of the embassy, the first good laugh he’d had in three days. He put up his hand for Tarullo to be quiet.

“If you are prepared to come with us voluntarily, Mr. Perkins, I am willing to waive the usual formalities of handcuffs and the like. And we can take you down the freight elevator to the parking garage in the basement, where we have a car waiting. There won’t be any unpleasantness with the media that way.”

“I’ll come voluntarily,” Perkins said quickly.

“Wait a minute,” said Tarullo, repeating once more, “I object, goddamn it.”

“Shut up, Vince. A British jail is probably the safest place I could be right now. It will give me a chance to do some thinking.”

He walked toward the constable, his arms outstretched.

“Take me. I’m yours,” said Perkins with almost a laugh. There was something liberating about the act of surrender.

The two British cops were on either side of him now, grasping his arms. Perkins nodded to the constable, and they began walking out the door of the office, onto the trading floor. Most of the traders had gone home, but the ones that were left watched this little “perp walk” in astonished silence. What on earth had this brilliant man, seemingly impervious to bad fortune, done to bring about such a sudden and devastating reversal?

Perkins strode toward the back elevator, accompanied by his three escorts in their constabulary blue. As he passed the desks, he waved to several of his longtime employees. Though he had made them tens of millions of dollars over the years, they did not wave back.