Cure

6

March 25, 2010

Thursday, 11:10 a.m.

Ben climbed out of the cab in front of Michael Calabrese’s building. It was a new spire of granite and reflective glass a stone’s throw from Ground Zero. He signed in with security on the first floor, got a nametag that he stuck on the breast pocket of his jacket, and took the elevator up to the fifty-fourth floor.

Michael’s office arrangement was rather unique. He and a group of other individual financial wheeler-dealers shared the entire floor, paying rent only for the proportion of the square footage they occupied as a private office. As for the office help and office equipment, including secretaries, receptionists, copy machines, computer monitors, computer servers, janitorial service, and common areas, such as conference rooms and restrooms, they all paid a common fee based on month-to-month occupancy. The relationship created an opportunity for the individual practitioners to enjoy far better quarters and services than they would have if they were all on their own. They even had a full-time computer wizard in-house.

Ben went directly to Michael’s office. As the communal secretaries and receptionists were not close, Ben went to Michael’s open door and knocked on the jamb. Michael was on the phone, as he always was, tipped back in his chair with his feet up on the corner of his desk. Looking up, he used his free hand to wave Ben inside and motioned for him to take a seat on a black leather couch.

Ben took in the surroundings as he sat. It was immediately evident by the furnishings that Michael’s boutique placement firm was highly successful. The French polished mahogany walls gleamed with a finish that reminded Ben of his brand-new Range Rover. Various bronze knickknacks, including a large telescope on a tripod, shone like gold. On the coffee table was a black walnut humidor with a flush inset humidity gauge.

The office was a corner office with floor-to-ceiling walls of glass, not mere windows, as in Ben’s office, and a stunning view out over the Hudson River. To the left was the elegant Statue of Liberty, standing stolidly on her tiny island.

A loud burst of laugher brought Ben’s attention back to Michael. Although Ben tried not to listen to Michael’s conversation out of courtesy, he now realized Michael was talking to someone about Angels Healthcare, a company that had proven how much money there was to be made in the hospital industry. Angels Healthcare had been an early entry into the boom associated with surgical specialty hospitals in such diverse fields as cardiology, orthopedics, ophthalmology, and plastic surgery. By having no emergency rooms and servicing only the insured or paying patents and ignoring the truly sick, the noninsured, and those on Medicaid, such hospitals were moneymakers, and Angels Healthcare’s market value went through the roof. In fact, it was because of Michael Calabrese’s pivotal role in the initial stages of raising capital for Angels Healthcare that Ben had heard of him and his boutique investment firm, Calabrese and Associates.

Ben’s impression of Michael did not start out very well, as Ben had heard Michael had been indicted for a number of white-collar criminal activities and even one count of violent crime. But subsequently all charges had to be dropped because the evidence obtained by the police and the prosecutors turned out to have been tainted and had to be thrown out.

As soon as Michael had been absolved of any wrongdoing, Ben had scheduled a meeting with him to talk about iPS USA. From that very first tête-à-tête meeting, the two men had hit it off: Michael was enamored with biotech and had specialized in biotech start-ups, while Ben had extensive biotech experience and had come up with a terrific business plan of cornering the intellectual property associated with the commercialization of induced pluripotent stem cells. In many ways it was an ideal match, as they shared certain personality traits: Both were excessively vain in appearance and accomplishment, both were excessively competitive in work and play, both saw individual wealth as a crowning motivator, and both considered overly ethical behavior as a potential handicap in life’s journey.

As soon as his phone call was concluded, Michael’s feet dropped from the corner of his desk. He stood up, stepped over to Ben, and the two shook hands. “What’s happening?” Michael asked with his strong New York accent. He reached for a straight-backed chair and turned it around to sit on it backward.

Although Michael’s comment was more a figure of speech than a real question, Ben answered, “Not much,” but then quickly corrected himself: “Actually, a lot is happening.”

“Like what?”

Ben told Michael about the biotech journal and its article concerning the new method for increasing the formation of iPS cells by a hundred times.

“Is that significant?”

“Very significant. In fact, so significant I think I want to change what I came here to talk about.”

“You mean about giving the Lucia people and the Yamaguchi their walking papers?”

“Exactly,” Ben agreed. “I think we might want to buy this new company or at least exclusively sublicense the new process. We’ve been in negotiations with another company up in Worcester, Massachusetts, for their process to do the same thing, but their process is nowhere as efficient as this new one in San Diego.”

“What kind of money are we talking about,” Michael asked, “and how do you see doing it? As stock or as a bridge loan?”

“Stock if we decide to buy, and maybe as a bridge loan if we decide to exclusively sublicense.”

“How about the money. What are we talking about, approximately?”

“I’d say in the neighborhood of half a million if we sublicense, which is what I think we should do. At first I thought about buying, but it would be much more if we buy, and buying is more risky with how fast the technology is advancing.”

“After the signing yesterday,” Michael said, “I’d recommend we use stock whether we buy or sublicense. I can make a good case that our market value has gone up considerably.”

“You think our angels will go for it?”

“I don’t see why not. I know for a fact their business is booming, particularly in the gambling arena. They are virtually swimming in money.”

“I’ve never asked,” Ben said, “but something tweaks my curiosity about how their partnership works.”

“You mean between the Mafia and the Yakuza? It’s interesting you ask, because I had to ask as well. It’s actually quite simple. It’s the Lucia people who site, set up, and run the Italian restaurants that front the high-end gambling joints they have peppered around the Upper East Side. They’re also the ones who arrange for the women or whatever. It’s the Yakuza who find the clientele: mostly high-end businessmen from Japan, who, by the way, notoriously love to gamble. I mean really love to gamble. It’s also the Lucia people who provide the credit when and if needed, and it’s usually needed, as the Japanese clients more often than not run out of cash. As Japanese, they are encouraged to borrow as much as they want from the Mafia, with the understanding that they can pay back the loans on their next trip to New York. Of course, this affords the gamblers the opportunity to borrow much more than they ordinarily would, because they have the mistaken idea that, if needed, they can avoid ever repaying by never returning to NYC. But here’s where the partnership really works. The grossly in-debt Japanese businessman then returns to Japan, where he believes he is immune from the Mafia. But he soon learns that that’s not the case. It is the Yakuza who collect, and the Yakuza are very good at collecting, as they can be extraordinarily violent. The Yakuza then share the take with the Mafia, often in crystal meth, not cash. It is a very lucrative setup for both sides.”

Ben shivered with the thought of what a nasty surprise that would be for an unsuspecting Japanese businessman.

“So, let’s go over this again so there is no misunderstanding,” Michael said. “You want me to go to the Lucias’ capo, Vinnie Dominick, and Yamaguchi-gumi’s saiko-komon, Saboru Fukuda, and talk about increasing their stake in iPS USA even though just yesterday afternoon you were talking about sidelining them. Are we on the same page here?”

“Yes, unless you have another potential angel investor?”

“I have a couple of people I could go to, but I think it’s better to stay with what we got.”

“You’re the placement agent, not me!”

“I’m actually glad that you’ve changed your mind.”

“How so?” Ben questioned.

“I was worried you were coming in here this morning to insist on my going to them and telling them they were being demoted to garden-variety investors.”

“It will have to happen, but just not now,” Ben said. “But it will have to be before any IPO. Due diligence might bring it out in the open.”

“I think you’re being a bit naïve. You don’t tell either one of these guys what to do and what not to do.”

“I fully plan to reward them with extra stock for the role they’ve been playing.”

“I think the only thing you will succeed in doing is pissing them off, which is not a good thing to do. But let’s not argue and become distracted. Let’s keep our eyes focused on when we want to go for the IPO, because that’s when we all get our just rewards.”

“Maintaining a working relationship makes me nervous,” Ben admitted. “As soon as we don’t need them, I want to break it off.”

“I was open with you when you first came calling. These are not people you can order around.”

“I know you were open with me, and I appreciate that you were.”

“I’ll tell you what I’ll do,” Michael said. “I’ll call our friends and find out if I can see them this afternoon. I’ll tell them the good news concerning yesterday’s contract signing, then hit them up for more equity, which I’m sure they’ll like to hear. Then I’ll bring up the issue that they’ll have to fade into the background for the IPO. With the good news, maybe they’ll take it all in stride. I’ll see what I can do and get back to you.”

“I appreciate it,” Ben said, rising to his feet.

A few minutes later as he was on his way down in the elevator, Ben placed a call to Jacqueline and said he’d be back at the office soon and asked if she wanted to get lunch at Cipriani, located in the Sherry-Netherland up the street from the iPS USA office. What he really wanted was for her to tell him Satoshi had shown up, since he was superstitious about asking. When she didn’t offer the information, he finally asked and was told he hadn’t appeared. With similar superstition, Ben had avoided redialing Satoshi’s cell phone but finally did. What he got was voicemail, and passive-aggressively he chose not to leave a message. Ben was now angry that the man didn’t have the sense to call if he wasn’t planning on showing up.