Switchback (19 page)

The message ended, and the machine beeped.

Timothy walked across the kitchen to the coffee maker. He spooned the beans into the drip basket, filled the carafe with water, and poured it into the machine. He had given up trying to measure. It was hit or miss now. Usually miss.

The doorbell rang. Timothy walked to the foyer and peered out the keyhole. A pleasant-looking black woman, all smiles, wearing corn rows and a happy pink blazer, grinned back at him. He opened the door.

‘Mr. Van Bender?' she asked.

‘Yes,' he said, ‘what can I do for you?'

From behind her back she pulled a quarter-inch stack of papers and pushed it into his chest. He took it. ‘You just did it,' she said pleasantly. ‘Have a good day.' She turned and trotted down the stairs to the driveway.

Timothy looked at the papers. It said: ‘SUMMONS (Citacion Judicial) – Notice to defendant: Timothy Van Bender; and Osiris LP – You are being sued by Plaintiff: Peter Dewer; Dewer Family Trust I' and proceeded to list, in twelve pages, the exact nature of the lawsuit, in which Pinky Dewer was requesting both the return of his money, and damages in the amount of twenty million dollars.

25

At the office the Kid delivered another piece of bad news: that Refco had overnight raised its margin requirements – that is, the amount of collateral it insisted on holding while Timothy and Osiris gambled on a risky trade – and had issued a margin call. At noon it would begin to liquidate its portion of the yen trade unless Osiris could deposit another ten million dollars cash in its brokerage account. The yen, apparently, had had a busy night, rising briefly to eighty before settling down at seventy-nine.

Refco's demand for another ten million dollars was of course impossible to meet. Osiris' loss had now grown to thirty million dollars since the beginning of the month. Refco rightly suspected that Osiris was in trouble, and that the trouble would only grow larger with each passing day. They realized that soon Osiris' other brokers would issue margin calls, too, and that the last broker to do so might be left holding the bag, on the hook for millions of Osiris' losses, without enough collateral to make good. In this game of million-yen musical chairs, no one wanted to be left standing when the Hagaku stopped.

It was only a matter of time, Timothy understood, before the other brokers would follow suit with their own margin calls – perhaps they would do so as early as that afternoon. They would insist that Osiris buy back the yen contracts that it had sold short – but at the price of seventy-nine, or even eighty – which would turn that hazy, ephemeral,
potential
loss of thirty million dollars into a concrete, actual fact. Once that loss was reported to investors, that would be the end of Osiris. When investors learn that they have lost forty percent of everything they have invested, practically overnight, it is hard to convince them to stick around a while longer to ‘make it back.'

It did not take long for the phone calls to start. As Timothy sat down at his desk, Tricia patched through Hans Drexler, another Yale classmate, who had invested five million in Osiris a year earlier.

‘Hans, my friend,' Timothy said, as he picked up the receiver. ‘How are you doing?'

Hans had a vaguely European accent. He was actually American, but the product of Swiss boarding schools, and so sounded like he had been raised somewhere between the two continents. Perhaps, Timothy thought, on a yacht in the middle of the Atlantic.

‘Timothy, I am hearing some disturbing things about Osiris.'

Which meant, Timothy understood, that he had heard them from Pinky Dewer. Pinky was now out to destroy him.

‘What kind of disturbing things?' Timothy asked.

‘Would it be possible to get some transparency into the fund? I know August statements will arrive shortly. But perhaps you can fax me some kind of interim results? Surely you must know where you stand at this moment, give or take.'

Oh, I surely do, Timothy thought. I stand in a pile of shit about knee high, and the elevator is going
down
. But he said: ‘Hans, you've got to be kidding me. You want me to spend a couple hours putting together make-work financials for you, instead of earning you money? August P&Ls are coming out in just a few days.'

‘But what I've heard—'

‘You've been talking to Pinky? That son of a bitch is playing hardball with me. He wanted me to cut my management fee to a half a percent. When I refused he threatened to call the rest of you and make life difficult. You know why he's doing this, don't you?'

‘Why?'

‘You must have heard about his … troubles? With the takeover?' Timothy had no idea what he was talking about. But it sounded sufficiently ominous, and vague enough, that Hans would be able to read into it whatever he liked. For good measure he added: ‘With the SEC?'

‘I hadn't heard.'

‘Well, there you go. I'll tell you what, Hans. I will make sure you get the August statements first, before anyone else, hot off the presses. When are you coming out west? I owe you some drinks.'

‘I don't have plans.'

‘That's a shame. The weather out here … well, you know.'

‘Yes.'

‘All right, Hans. You want me to call you when the August statements are ready?'

‘I would appreciate that, Timothy.'

‘All right, my friend. I'll speak to you soon.'

‘Cheers.'

Timothy hung up. He leaned back in his chair, stared at the ceiling, and exhaled.

‘Timothy?' It was Tricia, leaning her head into his office. She smiled at him.

‘Yes, Tricia?'

‘I have Frank Arnheim from Perkins Coie on line one.'

‘Put him through.'

Frank got right down to business. He was like a warrior in battle, his voice hoarse, adrenaline coursing through his blood. This was his element. He loved lawsuits. That they were directed at his client did not seem to decrease his enjoyment.

‘Yeah, I got a copy of the summons here,' Frank said. ‘Son of a bitch. Twenty million dollars. Holding you personally liable.' Then: ‘Hey, you even
got
twenty million dollars?'

‘Yes,' Timothy said. ‘In gold bullion. I carry it around in the trunk of my car.'

Frank laughed. ‘That's a good one. Gold bullion.' His voice dropped. ‘Say, why don't you just give him his money back?'

‘I was hoping to hold onto it maybe a week longer.'

‘What's going to happen in a week?'

‘I'm hoping Japan will throw in the towel. You know, just give up the whole industrialization thing, go back to Samurai swords and rice farming. Then the yen might fall.'

‘I see.' Frank asked again: ‘Can you give the money back?'

‘Soon.'

Frank sighed. ‘Okay, Timothy, have it your way. You're paying by the hour. I don't think a twenty-million-dollar judgment is gonna stick. But I'll give you my professional opinion.'

‘Do I really want it?'

‘No, but here it is. You should give him back the money. The cost of not doing it is too high. I'm not talking about this lawsuit. We'll make that go away. I'm talking about your reputation. In your business, you don't need attention. Quiet is best. Do you really want a nosy CFTC investigator poking around your files, looking at your emails?'

Timothy was silent.

‘That's what I thought.'

‘All right, Frank. I'll think about it.'

Timothy was about to hang up, but Frank quickly spoke. ‘Hey, Timothy.'

‘Yeah?'

‘Forgive me. But we're going to need the monthly retainer paid in advance from now on. Let's just start with twenty thousand. Not my decision. Just policy, in situations like this.'

‘I understand, Frank. I'll take care of it.'

‘Thanks, Timothy.'

Timothy hung up and then said to the phone on his desk, ‘You son of a bitch.'

At noon, Refco bought back a thousand yen future contracts for Osiris' account. The huge order, quickly and sloppily placed, sent the price of the yen up another half-point on the Chicago Merc – Osiris effectively paid eighty and a half for contracts it had sold at seventy-five. The loss – real and irreversible, not just a paper marked-to-market loss – was six point eight million dollars. And that was only the portion of the yen gamble that had been placed using Refco as a broker. When it made the bet, Osiris had divided the trade among five brokers. Timothy knew that soon the other four would be calling, insisting that he close out their portions of the trade, too, effectively quintupling the loss. Timothy was sure that, despite their promise of confidentiality, the brokers spoke
to each other often about client disasters, and perhaps even now the phone wires between Chicago and New York were burning with talk of Osiris and its impending flame-out.

The Kid came to Timothy's office and handed him a printout detailing the loss. Timothy pretended to study it. What did the Kid expect him to say?

The Kid said, ‘It doesn't look good.'

‘It ain't over 'til the fat lady sings,' Timothy said. He glanced upward and half-expected a giant opera soprano, dressed as a Norse Valkyrie, with bear-skin pelts and a winged helmet, to drop out of the ceiling onto his desk.

‘I think I need to tell you,' the Kid said, ‘that I'm interviewing at other firms.'

‘You don't say,' Timothy said flatly, staring at the Kid's printout. He looked up. ‘I understand.'

‘But I'll stick around for as long as you need me.'

‘I appreciate that, Kid,' Timothy said. He stood up suddenly, removed the suit jacket that hung on the back of his chair, and slid it on.

‘Where you going?' the Kid asked.

‘I'm calling it a day,' Timothy said, fixing his shirt sleeves. ‘You're in charge while I'm gone.' The Kid's face said he had just been awarded a dubious honor indeed. ‘Don't worry, Kid. It's only money. OPM. Other people's money. Important lesson. Remember that.'

26

Timothy drove. He had no particular destination in mind. He simply wanted to go somewhere.

He headed north into Portola Valley. It was a town of green and gold grassland and cedar homes nestled cozily along the San Andreas fault. Strict zoning laws – large indivisible lots, low rooflines – kept it rural and thinly populated. So too did the fear that the town might simply disappear one day, swallowed by the earth.

Timothy sped down Alpine Road, through the town center – a cluster of shops offering video rentals and frozen yogurt – past horse stables, and into the foothills.

He turned left at Arestradero Road, drove another quarter-mile, then stopped his car at the Arestradero Preserve. It was a county-run open space preserve, six hundred acres of rolling hills and grassland, crisscrossed with horse and bike trails. Katherine had liked taking him here. She liked to lead him up Meadowlark Trail, to the tallest hill in the park. She would race ahead, calling over her shoulder, ‘Come on, Gimpy, you can do it.'

At the top of the hill, she would wait for him. There they had unobstructed views 360 degrees around, of brown grassland and crisp blue Bay – of fog and sun – of undulating hills strewn with California poppies and buttercups.

Timothy left the BMW and walked into the park. He began climbing Meadowlark. He was wearing his suit and Cole Haan shoes. The sun was bright and hot; he started to sweat. He loosened his tie and took off his jacket, bunching it into a ball under his arm. The grade was steep, and his knee ached, but he wanted to keep going.

He had traveled there to be alone, and to think in solitude, to
come up with solutions to his problems, and he was surprised that none came to him. He just walked. He knew that his company was ruined, and that soon the damage to his reputation would be irreparable. He thought about what he had done wrong. Doubling up the yen bet, hiding his original losses from his investors. It all seemed obvious now – like a pat after-school television drama, those programs designed to teach lessons to young people – but he was unsurprised when he looked inside himself and realized that he regretted nothing. If given a chance, he would do the same thing again. This is who I am, he thought.

From behind him came the sound of a rubber tire running over a pebble, sending the rock skipping over dirt. He turned to see a young woman on a mountain bike, riding up the hill toward him. Beneath her helmet she had a pretty face, coated in sweat and dust. She was just a girl, maybe twenty years old, probably a Stanford student. She smiled pleasantly at Timothy as she passed, and said, ‘Hi there.'

Timothy nodded hello. She biked past him, standing now as she pedaled, the bike rocking left and right as she struggled to push up the hill.

Like Katherine twenty years ago, Timothy thought.

Then the memories began. They came tumbling back, just one or two at first, happy ones – the memory of Katherine when he proposed to her in the Greenwich Village restaurant, by candlelight, when she was young and healthy, like that girl on the bike. And of Katherine on the day of their wedding – the way she looked radiant in her gown. But then quickly other memories began to rush in on him, one after another, a wild jumble: Katherine and Timothy in Big Sur, hiking up the switchback to the cliffs above the sea; Katherine making love to him, the feeling of the cold sheets and her warm thighs; Katherine sitting on the bed, writing her journal, and Timothy approaching from behind; Katherine cooking for him as he stood in the kitchen and watched – the memories came in no particular order, in and out of the slipstream of time, first from twenty years ago, and then from just two weeks past.

At that moment, he understood why he had come here. It
was true: he had come to be alone, and to find solutions to his problem. But the problem he cared about had nothing to do with Osiris and its impending liquidation, nothing to do with his tarnished reputation as a money manager; and nothing to do with Pinky Dewer or with investors or with the yen.