The Metronome (The Counterpoint Trilogy Book 1) Read online

  She leans back, enjoying the effect as both Jack and I drop our jaws in surprise.

  “Voron?” Jack and I say in unison.

  Greg Voron is a rising star amongst private equity managers in New York City. He was profiled not long ago in New York Finance magazine. At 36, he already manages reportedly over $7 billion. Originally from Russia, he came to the United States in 1999 for an executive management study at Columbia. Started the Eastern Cottonwood private equity fund in 2001, in the midst of the post-Internet bubble recession, purchased distressed companies cheaply and rode the market recovery.

  “Yes, Voron,” confirms Suzy. “He was there at the beginning of The Birch Grove. His name disappears after 2002, but it’s on the early documents.”

  “Perhaps he figured out that they are money-laundering fronts and resigned?” My suggestion earns me a You are such an idiot look from Jack, who wryly observes, “Yes, I am sure this is just an innocent coincidence. And all these funds named after trees…”

  I see Jack’s eyes suddenly narrow and I instinctively start turning around. Before I have a chance to do that, I spill my drink because someone hits me on the shoulder, too hard to be friendly

  “Look who’s here! An old Luddite from the risk management, a Russian quant that blew up his hedge fund, and a pretty Oriental woman. Are you planning a little ménage-a-trois?”

  It’s Bob Cleyton from the trading desk. Loud and obnoxious, he despises all quants because “it’s the sales skills that matter.”

  Cleyton laughs at his own joke, then turns to Jack. “Mikulski, I am warning you, I have had it with your memos trying to sabotage my business!”

  Jack turns red from anger: “Your business? You are trying to sell that poor county in Missouri a lousy swap deal that will end up losing them tens of millions! A deal that you’re betting against behind their back! If you don’t care about the hardships and layoffs you are going to create for them, perhaps you should think about the potential lawsuit that you are subjecting our bank to!”

  Cleyton stabs his index finger at Jack. “Mikulski, I am telling you again, sit quietly in your office, wait for retirement, and do not interfere with me!”

  “Or what? You have not screwed enough grandmothers in California, you now have to screw some in Missouri?”

  Cleyton leans his fists on our table, spits out, “I will bury you!” and leaves.

  “What was that about screwing California grandmothers?” Suzy sounds very confused.

  “Bob Cleyton used to be a trader at Enron,” explains Jack. “It was his group that gamed the electricity market in California and that was caught on tape laughing how they screwed ‘Grandma Millie.’ He should have never been allowed back into the business, but here he is, racking up tens of millions in potential damages for the bank. I’ve been trying to stop him for a while, but nobody listens. The bank president’s motto now is ‘Take risks!’ At the weekly executive meetings, they sometimes ask me to leave the room so I don’t remind them of exposure or liability.”

  Jack glares across the room at the table where Cleyton is laughing with three other men. “Look at them. The one with a goatee, sitting across from Cleyton, loaded our bank’s balance sheet with billions of dollars in high-risk CDOs and dicey mortgages using leveraged funds. The one in dark glasses is an analyst who a few years ago took a dozen internet companies public. He knew them to be worthless, but there was a lot of IPO money at stake. He is now handing out recommendations for technology stocks. The main requirement for a positive opinion is for the company to give our bank some business. The last one, with his back to us, is a lawyer that makes sure that none of them is personally liable when things go wrong. They are all way too smart not to know that what they are doing is a fraud. But they don’t care, they want their multi-million dollar bonuses and to hell with the consequences! Greedy predators, preying on others.”

  Suzy seems to be taken aback by Jack’s outburst. “But Jack, there are laws in place to prevent this. There are underwriting standards, securities laws….”

  Mikulski shakes his head. “Even if we enforced the laws, which we don’t, it’s next to impossible for the regulators to deal with the organized, complicated thievery of extremely clever financial criminals. There is that great lie at the core of our financial system. We evolved a massive network of thieves that propagate this false narrative of creating value.”

  He takes a drink, puts down his glass. “Let’s get back to Pavel’s business. Suzy, any more surprises in that folder of yours?”

  “Not in this one.” She smiles and picks up the second folder. “But there is a bonus: Brockton! I only had a few hours, so I started by looking at the history and performance of the Russian Leveraged Equity fund he ran. One thing jumped at me immediately.” She starts pointing to circled and underlined numbers in the printout. “In 1995, the fund underperformed its peers. In 1996, it outperformed them by a bit. In 1997, Brockton hit it out of the park, Number 1 fund in Eastern Europe, mentions in the financial press, etc., etc. But when the Russian financial crisis hit in 1998, the fund was by far hit the worst. Brockton was already gone.” Suzy catches her breath and continues. “I reviewed the holdings in the quarterly reports and noticed a pattern. Look at this.”

  Jack and I lean in.

  “Mobile Electrosvyaz. If you round the numbers, you can see how their holdings go from six million shares to five million, then back to six, back to five, back to six.”

  “That does not make any sense,” I say. “A fund manager usually builds a position and then sells it.”

  Jack asks Suzy, “What’s the float?”

  She smiles. “Mobile Electrosvyaz had 10 million shares, after the 1993 privatization insiders owned 40%.”

  “He made the market,” says Jack.

  “He made the market,” agrees Suzy. “And that was true for the four of his largest positions that I had the time to check on.”

  Even I get it by now. “It was a Ponzi scheme, sucking in new investors into his fund by showing jacked-up returns. He’s been running up the market in his holdings by trading back and forth, recycling the shares. That’s why the fund dropped so much: when the music stopped, there was no buyers. But he had to have partners in order to do this.”

  “He had to have partners,” agrees Suzy. “And at least one of these partners must have been hurt badly, because they had the shares that were being recycled at the moment. The fund holders were not the only ones who got burned.”

  “There must have been quite a few people that wanted to kill Mr. Brockton,” observes Jack. He laughs, surprising me. “How well do you know history? Brockton’s scheme is exactly what Goldman Sachs did in the late 1920s with various investment trusts they controlled, like Shenandoah and Blue Ridge. Different time, different place, same grift.”

  Suzy has to leave, to see her fiancé who was coming into town from Boston. As she walks away, Jack says, “Isn’t she something?” He looks as proud as if he trained her himself, then turns to me. “You still not going to tell me more?”

  I shake my head. I feel like I am protecting people by not giving them too much information.

  “Pavel, Pavel…if you were not in such a hurry to become a fund manager, you could have paid for a good attorney with some investigative capabilities and smelled a rat before they got you.”

  Yes. But they knew my weaknesses. I change the subject. “Jack, what do you think is going to happen when this real estate bubble blows up? It’s a big one.”

  Jack rattles ice in his glass, contemplates for a moment. “Yeah, it’s a big one. I don’t think it’s the big one though. There is a lot of resiliency in the U.S. system; we can take a few body punches, we can afford a few trillions in losses. This blow won’t fell us. The next one after that, who knows?”

  “Do you think there will be a next one?”

  “I am afraid so. We took some heavy hits in the past, and we recovered by changing how we do things. When we had a crash seventy something years ago, we took
the bitter medicine and enacted new laws to prevent the next one. Six years ago, we had a bubble and a crash, and we responded by blowing another bubble. It’s the hubris of very smart people: they think they can control everything, that there is always another adjustment they can make, another knob to turn. But the more knobs they turn, the more fragile the system becomes.”

  “I am such a slut,” says Sarah. “Run into your bed whenever you are in town. But I feel like you are my comrade in arms, a survivor of the same battle.”

  During dinner, she asked me how my trip to California went. I told her about my father investigating the Brockton murder but skipped the part about Streltsova’s notes. I talked about Jennifer and her troubles with my father-in-law.

  Sarah asked carefully, “And how was it seeing Karen?”

  I took my time to answer, not sure what to say. “She is angry at me. Angry about becoming dependent on her father again. Angry about the coffee girl. Angry about you.”

  “About me?”

  “Yes, her father told her we are seeing each other.”

  “But how, how…” Sarah stared at me in horror.

  “How did he know when we only met a couple of times?”

  She nodded silently.

  “He probably had me followed, to gather dirt for the upcoming divorce.”

  Sarah took an angry breath: “Well, let’s go to my place then.”

  Now she sits up, the sheet slides, her small breasts exposed.

  “I saw the beautiful assistant that you and Martin had in the office in NYC and I wondered who was doing her. Then one night I came by the office late to pick up Martin and she was coming out of your office, buttoning her blouse, straightening her skirt. She looked at me, she knew that I knew and she did not care. I wish it was him, not you. It was such a cliché, a successful finance guy banging his secretary. I wanted to cry.”

  I remember Oksana, young, dark-haired, elegant, the fine fabric of her clothes, the contour of her body with the sun shining through the fabric as she stood in front of my desk. It was Martin who hired her. When she would leave the office afterward, I would feel an exhilaration of power, the thrill of having everything available. I hid behind my “master of the universe” mask, free from guilt and scruples.

  I clench my fists until they hurt.

  Friday, June 16

  In the morning, I look for Jim Morton, find him at a respectable boutique investment bank. The web page shows a confident-looking man in this late forties. He could be a walking advertisement for a hair coloring system, with just the right touch of silver in his hair to demonstrate a proper combination of energy and experience. I call the bank and leave a message “from a friend of Anya Weinstein.”

  He calls me back quickly, anger in his voice seeping through politeness. “Mr. Rostin? Why are you calling me?”

  “Mr. Morton, I’d like to talk to you. How about lunch today?”

  “I already have plans. What do you want, and why did you mention Anya?”

  “I have no intention of blackmailing you.” I figure mentioning the word will make him more amenable. “I just need some first-hand information about the Russian financial markets in the 1990s.”

  He breathes into the microphone, considers his predicament, decides to play along. “I can meet you next week.”

  “I am afraid it must be today, I have to leave for Moscow.”

  We arrange to meet at a coffee shop two blocks from his bank.

  My phone rings. A smooth, confident, friendly voice, speaking in an accented English. “It’s Mark Bezginovich. Mr. Rostin, you were looking for me?”

  “Yes, I was. If you have time, I wanted to ask a couple of questions,” I say neutrally, not sure if there is a connection between him and my father.

  Bezginovich clears this up immediately. “I was wondering when I would hear from you, Pavel. I am sorry about your father.”

  “Why did you think you were going to hear from me?”

  “Don’t play mind games with me, Pavel.” Bezginovich sounds more weary than irritated. “We both lost loved ones.”

  This stings, because he must have truly cared about his sister, while I thought of my father as a cold-blooded bastard.

  “OK,” I concede. “Can we talk?”

  “I’d rather not. It’ll be best for both of us to leave this behind.” But he does not hang up.

  I rush with, “Mark, please. I just want to know what my father worked on. I am not trying to reopen anything.”

  Hesitation on the other end, then “OK, but don’t expect much and not on the phone. We can talk in person. Call me when you are in Moscow. Write down the number.”

  I look up what I can find on Greg Voron. A degree from Moscow State University, but after I was already gone. Not a whole lot about his early years. A puff piece in the New York Finance magazine informs me about Greg’s tastes in pets, music, literature, colors and more. I wondered whether the magazine had a matchmaking business on the side, because that’s what the article feels like, a matchmaking agency profile. I glanced at the history of the Eastern Cottonwood private equity fund, the list of acquisitions includes a building materials manufacturer, a company making home security systems, a subprime mortgage lender, a mid-size bank, and more. His recipe is to shake up the management, bring in the latest technology and financial tools, aggressively acquire market share. All the usual buzzwords.

  I play a hunch and call detective Sal Rozen in Santa Barbara. “Sal, the home security system in Brockton’s house, was it made by…” I consult the list, “Hardrock Security Company?”

  “Hold on,” says Sal, “let me check.” He disappears for a few minutes, then comes back on the line: “It was installed by a local company, but the equipment was from Hardrock Security.”

  “When was it installed?”

  “Let me see…about two months prior to the murder. We questioned the installer because of the rear camera malfunction, he said Hardrock Security really dropped their prices and advertised very heavily in our area at the time. Do you want to tell me what this is about?”

  “Probably just a coincidence.”

  “Sure,” says Sal, “a coincidence.”

  That’s a second intersection between different strands in my diagram. I print out a page with Voron’s picture.

  Jim Morton is already waiting for me, looking a bit worse than his picture on the company’s web page. I introduce myself. Jim responds with, “I looked you up; I now understand how you know Anya.” I keep silent, so he continues, his eyes not focused on me. “So, about me and Anya…it’s really complicated…”

  I raise my hand to stop him. “I am not here to ask questions about Anya or David. I am interested in John Brockton. You must have known him when he was in Moscow.”

  Morton’s eyes widen in shock. “Yes, of course I knew him. What does that have to do with Anya or David?”

  “Absolutely nothing. I need to know who Brockton worked with in Moscow.”

  “Why do you think I know anything?” Morton hesitates – and that tells me he knows something.

  “Let’s not take this conversation to the place neither of us wants it to go,” I look to the side, then back at Morton.

  Morton chews his lip. “We all suspected that the wonder boy Brockton ran a Ponzi scheme, so I was not too sorry to hear he paid for it. I know he worked with Avtotorgoviy Securities, run by two brothers that hustled in Moscow during that time. They were meeting a lot, the brothers joined him during parties.”

  “Do you know how to get in touch with them?”

  “No, I don’t.”

  “What about their names?”

  “I am sorry, I don’t remember.”

  Back at home, I search for Avtotorgoviy Securities. A few small hits from the 1990s, nothing since 1998. Nothing about the brothers or their names.

  I update the notepad, adding Voron and Avtotorgoviy. All my leads are in Russia. Yakov was right when he said that I’ll be back soon. Truth be told, I am scared to go back.
But I don’t see another choice. Too many questions, I can’t figure out how the pieces of this puzzle fit together. I have to find out.

  I call Sarah to tell her I’ll be heading back to Moscow and to see if she wants to meet for dinner. She thinks for a minute, then says quietly, “No, I’ll wait until you are back…if you are back.”

  PART 3: SECRETS AND COINCIDENCES

  Airplanes are good for thinking. Paradoxically, despite being the quintessential modern products, they are also the last refuge from the distractions of modern life. I am afraid that at some point they will allow us to have our phones turned on, and then there will be no place to hide from people trying to reach you.

  There was my father’s death, possibly connected to his investigation of John Brockton’s case. And there was an early demise of the Grand Castle Rock hedge fund, together with the career of a certain Pavel Rostin. Nothing was tying the two events together except for my father and for a certain overlap in timing. Until today. Until the Hardrock Security Company appeared on both threads. Coincidence?

  Merriam-Webster defines coincidence as “the occurrence of events that happen at the same time by accident but seem to have some connection.” Seem to have some connection…Perhaps they do, perhaps they don’t. Coincidences are dangerously sneaky. Sometimes they are truly random unrelated events that we attach a meaning to. Karen told me later that a combination of falling snow and us getting separated from the main group felt to her like a sign that we were meant to be together. Later I discovered that she had a magnet sticker on her refrigerator that said, Coincidence is God’s way of remaining anonymous. – Albert Einstein, which may have predisposed her to seeing significance where none may have existed. I think that her ovulating at the time – as proven by an immediate pregnancy – made her more ready to embrace the possibility of love, and that may have had something to do with it. Regardless, she took the coincidence seriously, and it changed the course of her life. And mine and Anya’s.