CHAPTER THREE

Detective Sam Morel shook his head. He’d seen cleanout jobs before, but nothing quite like this one. The office space was absolutely bare, not a stitch of furniture or paper. The forensics crew dusting for fingerprints was almost finished and they had yet to find one usable print. Morel snapped his notebook shut as two men in dark suits entered through the main doors. Morel knew cops, and these ones reeked of feds. He waited for them to approach him. At ten feet the badges came out, and at five feet one of the suits introduced himself.

“Detective Morel, I’m Special Agent Hawkins, and this is Special Agent Abrams. We’re with the San Francisco office of the FBI.”

Morel glanced at the creds. He didn’t quite loathe FBI agents, but it was close. They always dressed the same, talked the same and most importantly, thought the same. Brent Hawkins was six feet tall and thin, his face chiseled rather than formed. He wore his dirty-blond hair short to his scalp, which only served to highlight his intense blue eyes. His hawklike nose was a touch too big for his lean face, and his jaw was set in a permanent scowl. John Abrams was softer, in the eyes and around the midsection. He topped out at five-ten, and his face was caught somewhere between full and chubby. His hair was at the maximum length the Bureau would allow, and his suit was off the rack, not tailor-made like his partner’s. Both men were mid-thirties.

“What makes an agent special?” Sam Morel asked. “As compared to just a regular agent?”

Hawkins ignored the barb. “We understand you’re in charge of this operation,” he said.

“Yes, I am,” Morel said, knowing full well that he wouldn’t be for long. FBI agents didn’t show up at white-collar crime scenes for no reason. Somewhere, somehow this scam had crossed state lines, and it was now federal.

“We have reason to believe that the people involved in this fraud were also operating in New York, Chicago and New Orleans. The information is still coming in, but this appears to be a well-organized setup, with offices across the country. And if they are tied together, then the case will come under federal jurisdiction.”

“I understand,” Morel said. There was no up-side to arguing with the suit. The best approach was to cooperate and hand over the file. Hell, his department was already busy, he hardly needed the business. The FBI could have this one if they wanted. In fact, just that morning he had stared at himself in the mirror, seeing the creases running back from the corners of his eyes to the tufts of hair he called sideburns. His face was thicker than when he was in his thirties. Not pudgier, thicker. He didn’t seem to have as much neck either, almost like his head was settling into his shoulders. That wasn’t good; he’d never been taller than five-nine at any point in his life. He still had all his body parts, a healthy head of graying hair and sturdy teeth. And his prostate was in fine form. Life was good; no sense letting a few wrinkles mess with his mind-set.

Morel said, “We had the place sealed for two days until we got search warrants, so we only got in this morning. My CSU guys are almost finished. If you want to bring in your own experts I’ll arrange for access.”

Hawkins nodded. “Thanks. Have you requisitioned the phone logs?”

“First thing. The company operated out of this space for eight months. We’ve got a request in for a complete list of incoming and outgoing calls over that period. We’ve also identified the bank they used to pay their operating expenses and have asked for copies of the corporate seal, the directors’ names and all transactions since inception. I’ll forward that ahead to your office.”

Hawkins raised an eyebrow, then handed Morel a business card. “We appreciate the cooperation, Detective Morel.”

Morel smiled. “We’re on the same side, Agent Hawkins. I try to keep that in mind.”

“Thanks.”

Morel glanced at his watch. “I’ve got a meeting with two of the victims in half an hour. Want to come along?”

“That would be good,” Abrams said. They had planned on conducting their own interview within twenty-four hours. This just made things easier.

Morel scribbled Alan and Taylor’s address on a piece of paper and held it out. Abrams took it. “See you there at five,” he said. He started toward the door, then stopped. “Hey, I’ve gotta know something.”

“What is it, Detective?” Abrams asked.

“Do you guys take a course on always talking in proper English? You know, never using slang or saying ‘Sure’ instead of ‘That would be good.’ ”

Abrams looked like he was going to blow, but Hawkins smiled. “They teach us to be polite, Detective. And to never swear.”

“See you in half an hour,” Morel said, grinning. Life at the Bureau was certainly different from SFPD.

Morel was fifty-two and three years from a full pension with the department. His waistline, a steady thirty-six for fifteen years, had recently ballooned to a forty. Grecian formula couldn’t stop the constant flow of gray hair, and he needed an hour a week now just to pull out the unsightly nose and ear hairs. This was early fifties. What the hell was coming when he hit seventy or eighty? His energy levels were dropping as fast as his waistline was expanding. There was a time in his career when he would have fought the feds tooth and nail for jurisdiction, but not now. That surprised him, given the scope of what was fast becoming a major scam. White-collar crime in America was huge, and this one was shaping up to be one of the largest he had ever seen. First indications were that this was going to run into the tens of millions in San Francisco alone, even before the dollar amounts from the other cities were added in. He slid behind the wheel of his unmarked car and checked the map. Octavia Street—Pacific Heights. The high-rent district.

Twenty-five minutes later, he parked outside the restored Victorian belonging to Alan Bestwick and Taylor Simons. He called in his location, locked the car and hoofed it up the stairs to the front door. An extremely attractive woman with red hair and pale skin answered the doorbell. He slipped his badge out and held it up for her.

“Detective Sam Morel from the major crimes division,” he said.

“Taylor Simons,” she said, scrutinizing his ID. “Please come in.”

“Thanks,” he said, entering the house. He went through the introductions again as Alan Bestwick appeared. “Someone from the District Attorney’s office will be here shortly. The FBI as well.” He thought it best to warn them before the doorbell rang and more warm bodies began showing up.

“Well, I suppose that’s a good thing,” Alan said, leading Morel into the living room. He and Taylor sat beside each other on one of the couches, and Morel chose a wingback. “Is this normal procedure?”

“Yes and no,” Morel said, settling into the chair. It was uncomfortable. “The DA’s office is on the front lines in consumer and corporate fraud. We secure the site and then share the information with them. They handle some of the investigation and all the prosecution. Having someone from the District Attorney’s office is normal, but the FBI isn’t.”

“Then why are they coming?” Taylor asked as the doorbell rang.

“That’s probably them,” Morel said. “I’ll let them explain, if that’s okay.”

“Fine,” Alan said. He disappeared into the hallway and returned a minute later with the two FBI agents. A woman dressed in a gray pantsuit and carrying a briefcase accompanied them. Sam Morel nodded to the woman and she returned the gesture.

The woman introduced herself to Taylor. “Julie Swimaker. I’m with the District Attorney’s office.”

Taylor shook her hand. “Detective Morel said to expect you.”

Hawkins and Abrams flashed their creds and took a seat on an empty couch. Hawkins started the conversation. “Mr. Bestwick, Ms. Simons, fraud cases such as this one would usually be handled by the San Francisco DA’s office, but the FBI is involved in this investigation because we have evidence that suggests this fraud is country wide. We have confirmation of similar scams being run in New York, Chicago, New Orleans, and we just received a call that the perpetrators were also active in Dallas. Since the crime is in more than one state, jurisdiction is federal.”

“I understand,” Alan said.

“What we need from you are the details of your involvement with NewPro,” Hawkins said, taking a small tape recorder from his pocket and placing it on the coffee table. “I’m going to tape this conversation, if that’s okay with you.”

Alan and Taylor both nodded, and Hawkins hit the record button.

“Who introduced you to NewPro, and how did you first meet?”

Alan glanced at Taylor and gave her a nod. She replied, “I met Edward Brand, the president of NewPro, when he came to my advertising agency about seven months ago, looking for a firm to handle an upcoming ad campaign. His business idea was brilliant. He had researched a number of products that had been off the shelves for a long time. Products that had household names.” She named off about fifteen of them from memory. “All of these products had one thing in common: Their manufacturer had dropped them, and let those household names get stale. The companies that held the trademark didn’t care. They had other consumables on the market that were generating enough income to satisfy their shareholders and had little desire to reintroduce an old product to a new market. In fact, a lot of the companies had let their exclusivity to the product expire. They couldn’t care less if NewPro walked in and retabled the product.”

“Edward Brand wanted your company to devise a marketing strategy to reintroduce these products,” Hawkins said.

“Yes. It would have been a substantial account. The up-front costs to our firm, just for initial design concepts, research and planning were high. I asked him for a hundred thousand-dollar retainer. He wrote the check on the spot. When it cleared the bank and the money was in our account, we did a creative presentation for him. He loved it. He wanted a few minor changes, but went with the concept as we designed it. The total cost of a nationwide advertising campaign would have been over twenty-eight million dollars. I asked for another hundred thousand-dollars so we could begin to secure print and television space. Again, the check was in my hand inside two minutes. I was impressed with how he did business.”

“How did you come to invest in his company?” Swimaker asked.

“That’s a good question,” Taylor said, scratching the top of her head. “I don’t think there was ever a defining moment. It wasn’t like he ever said, ‘Hey, why don’t you guys invest in my company’ or anything like that. There were a lot of times when Alan and I would sit around and talk about what an excellent idea Brand had. He was organized, focused and well financed. NewPro had the legal rights to at least twelve of the products I mentioned, and was in negotiations for a handful more. They had manufacturing plants in New Jersey, Pittsburgh and Seattle ready to begin production given about three months’ lead-in time.”

“Did you visit any of the manufacturing facilities?” Hawkins asked.

She turned slightly to face the two FBI men. “We did, but not until a bit later, after we decided we might want to invest in NewPro.”

“Sorry, getting ahead of the game,” Hawkins said.

Taylor forced a smile, and Alan reached over and clasped her left hand. Her emotions were kicking in, and the brave face she had put on was beginning to crack. “I think the idea of getting involved may have surfaced when he talked about his intent to take the company public a couple of months before the products were scheduled to hit the shelves. He expected the Initial Public Offering, or IPO, would raise about four hundred and eighty million dollars, with an error margin of about three percent. The prospectus was already filed, and getting registered on the New York Stock Exchange was almost a rubber stamp.”

“We looked at the prospectus very closely,” Alan interjected. “It was extremely well done. There was no reason to suspect it was false.”

Hawkins nodded. “We pulled a copy of it. It was professional. And very believable.”

Taylor continued. “Brand’s projections for the company’s stock were amazing. Sixty million common shares would hit the market, priced at eight dollars a share. The IPO would sell out in less than a month and then, if someone wanted in, they would have to pay resale prices on the shares. According to the models he was using, the share prices would double in about six to nine months.”

“Did you see the models he was using?” Hawkins asked.

Taylor nodded. “Yes. We had full access to them once we expressed an interest in buying in. At first we thought we might invest a couple of million, but as time progressed and we realized what a gold mine NewPro was sitting on, we decided to up the ante.”

“Who decided?” Julie Swimaker asked. “One of you, or were you influenced by Brand?”

Taylor swallowed. “I did. Alan was the cautious one, but I thought the opportunities NewPro presented were too good to pass on. If Brand’s company had been legit and if they had met the targets he was projecting, we could have cashed out in two years with more than twenty million dollars and full ownership in G-cubed. It was almost like winning the lottery.”

“Almost,” Sam Morel said.

“When I see something I consider to be risky, I check it out,” Taylor said. “If it falls within my boundaries of acceptable risk, I go for it.”

“We felt it was manageable,” Alan agreed.

Taylor continued, “That was when we asked to see the manufacturing facilities. Brand told us we could pick any one of the three, or all of them if we wanted. We decided on New Jersey, mostly because we thought a few days in New York would be a nice break.”

“And the facilities were believable?” Julie Swimaker asked.

“Absolutely,” Alan answered. “The building was about forty thousand square feet, with a lot of equipment. There were packaging and labeling areas, lots of conveyors to move the product, and a large loading dock to get the product onto trucks and into the stores. The facilities were impressive, but what really sold us was the guy who showed us through. He explained the equipment, even going into how much money they had saved by buying used rather than new. I think that was one of the deciding factors for us. They were sitting on a gold mine, yet they were being very cautious about how they spent their seed money. In retrospect, we suspect the equipment was used because they leased the space with everything already in place.”

“I pushed Alan to invest heavily after we got back from New York. He had about a million-three in accessible funds, and I had about three hundred thousand. It was my idea to lever the extra money from the equity in G-cubed.”

“Your company must be in good stead for the bank to loan one hundred percent of its value. That’s unusual,” Julie Swimaker said.

“We had a very good relationship with our banker,” Alan said, then added, “unfortunately.”

“So your idea was to invest in the company before it went public, then reap the benefits of the IPO?” Julie Swimaker asked.

“Yes,” Taylor answered. “We knew there would be a lock-up period of two years from the IPO, but that didn’t worry us.”

“Lock-up period?” Sam Morel asked. “What’s that?”

“It’s one of the Blue Sky laws put in place to protect small shareholders when a firm first goes public. The large shareholders are required by law to hold their shares for two years from the IPO. That prevents them from driving up the price of a stock that’s based on a false prospectus and dumping their shares at an inflated figure right after it goes public. The two-year period gives the company time to establish its true value in the marketplace.”

Alan added, “It was the two-year lock-up that influenced our decision to invest. Brand couldn’t sell his shares for two years, and that gave us confidence in the company.”

“But NewPro never went public,” Taylor said. “They just disappeared in the middle of the night.”

“This is sure starting to look like a shell game,” Morel said, shaking his head.

“What?” Taylor said. “What’s a shell game?”

“It’s a con. A guy sets up a board in a back alley or a street corner—wherever—and puts three half shells on it. You know, walnut shells, something like that. Then he puts something under one of the shells. He moves them around and you have to guess which shell it’s under. But he always makes one move that you don’t see. Your chances of picking the correct shell are a whole lot less than one in three. They’re almost zero.”

“What’s going to happen now?” Alan asked dejectedly. “What can we expect from your investigation?”

Hawkins answered, “We’ll be working hand-in-hand with Ms. Swimaker and the rest of the San Francisco DA’s office to try to track down Edward Brand and his associates. We’ll run a complete forensic audit on the company, concentrating as much as we can on hard evidence, like the information they gave to the SEC on their stock exchange application. We’ll coordinate the investigation with the district offices in New York and the other centers we think are involved in this scam. Right now, Mr. Bestwick, I can’t give you any assurances or guarantees. But we’ll try.”

“Thanks,” Taylor said. She was verging on tears. “Anything you can do is appreciated.”

Taylor and Alan shook hands with the FBI agents and Julie Swimaker as they left the house. Sam Morel lingered for a minute after the others had departed.

“The FBI is going to take over the investigation,” he said. “But that doesn’t mean I can’t stay up to date with what they have and keep you in the loop. Sometimes these guys tend to hold things a little close to their chest. If it’s okay with you, I’ll call and let you know what they’ve got.”

Taylor touched him on the arm. “Thanks, Detective Morel. That would be helpful.”

“Not a problem,” he said. He grasped her hand for a second, then left.

Alan closed the door and caught his wife as she fell into his arms, the tears bursting forth. Her body was wracked with convulsions as she cried. Her knees collapsed, and her feet slipped out from under her on the hardwood. Alan clutched her tight and slowly lowered himself to the ground, leaning against the front door for support. They lay on the floor in each other’s arms for ten minutes, silent and unmoving.