Authors: Stephen Douglass
“Trust me, Louis. If there’s a boat, you won’t miss it.”
Visconti hung up, now more desperate than ever.
CHAPTER 24
New York. Thursday, December 24, 1987.
The final days of 1987 were nightmarish for Visconti. Shortly following the last day of December, the annual report for the King’s trust was due, and would have to be mailed to Mike King. In it, Visconti would be compelled to reveal that by virtually any standard, he had failed miserably. For weeks he had struggled with the possibility of including a covering letter with the report. It would be carefully crafted to cushion the blow, but in the end it was brutally obvious that words were totally inadequate. A letter, irrespective of how well written, could not possibly obscure the enormity of the disaster.
When King cast his eyes on the report, he would be furious. In addition to showing no increase in the trust’s value after seven years of Visconti’s management, the report would reveal Visconti’s failure to do the minimum he had promised: to preserve the purchasing power of the trust’s original capital.
Clearly, Visconti had run out of options. To salvage the respect he had once enjoyed, there was only one solution. King would have to read a fraudulent report. Instead of sending a document containing the potential to ruin him, Visconti elected to falsify it, merely by adding an extra line indicating a cash reserve of two hundred and fifty million in the trust. In addition to satisfying King, the fictitious amount would buy the time Visconti needed to recover the money lost in the stock market. No one would ever have to know. He was always the last to see the report before it left the office, and the Kings would be the only humans reading it.
Fully aware of the risk he was taking, Visconti took it willingly. Even though the action was patently fraudulent and flagrantly illegal, it was by far his best option.
Mike received the contrived report in early January. He studied it carefully, as he did all of Visconti’s quarterly reports. “I’m surprised it’s done so well,” he said, then handed it to Karen. “I expected the October crash would have hit it harder. I guess Visconti was smart enough to have a lot of cash at the time it hit.”
Karen briefly scanned the report, then frowned. “Where are we going with this? What are we doing with this money?”
For some time Mike had asked himself the same questions, but pride had prevented him from talking about it, and memories of the harsh treatment the Feds had given both of them had prevented him from doing anything about it. “I’m torn, Babe,” he admitted. “Half of me wants to keep it forever, and the other half wants to get rid of it. All my life I’ve been an honest man. I can’t even tell a lie without breaking out into hives, but this one’s different. As long as I live I’ll remember how those sons of bitches treated us like numbers. I’ll never spend a dime of that money, but I’d rather die than give it back to them.”
The stock market continued its gradual recovery in 1988. Capital gains were slow and difficult to achieve, however. Even worse, the price of crude oil had continued to sag, never once coming close to twenty dollars a barrel. Each time it showed any sign of strength, Visconti called Dennis, anxious to get his blessings to proceed with his planned short sale. Each time Dennis advised him to wait, his advice driving Visconti to unchartered levels of desperation.
The spot price of West Texas Intermediate had dropped to fifteen dollars a barrel by the end of May, and Visconti’s hopes had plunged with it. Convinced he had missed his seat on the boat intended to deliver him from his nightmare, it was apparent that he would have to falsify a third consecutive quarterly report to Mike King. Deeply discouraged, he telephoned Assif Raza in Kuwait City. After an agonizing delay of more than twenty minutes, Raza finally answered, “Sorry to keep you waiting, Louis. To what do I owe the pleasure of your call?”
“I need some information, Assif. It’s extremely important… When we first met over a year ago, you told me that you and your fellow investors expected the price of crude oil to drop a long way. Do you still think it will?”
“Nothing has happened to change our opinion. There is no factor, with the exception of the Saudis, which we think is capable of providing sustained support to the price of crude oil.”
“If that’s true, what’s keeping it up?”
Raza chuckled. “Forgive me, Louis. I have difficulty understanding your question. We haven’t seen the price as low as fifteen dollars for a long time.”
“That’s true,” Visconti conceded. “But you said it would drop to five, didn’t you?”
“Yes, and we still believe it will, because we don’t think the Saudis can continue to carry the full weight of world crude prices on their shoulders for ever.”
“How soon? Can you give me an informed opinion?”
“I can only assure you that we believe in the inevitability of a crash. The longer the price of crude oil defies gravity, the further and faster it will drop.”
Raza’s words were sweet music to Visconti’s ears, nourishment for his obsession.
CHAPTER 25
Toronto. Friday, June 24, 1988.
Phillip received his high school diploma in late June, a bittersweet experience for Mike and Karen. His marks were abysmal, barely high enough to pass. His teachers spoke of their enormous frustration with the boy. Tests had confirmed his extremely high intelligence level, yet consistently low marks had revealed a low level of motivation. His teachers agreed that his poor academic performance would make it nearly impossible for him to be accepted at any reputable university, and strongly recommended a repeat of his final year.
Armed with that information and Phillip’s final marks, Mike and Karen confronted him. Karen was stricken with the embarrassment most mothers feel when one of their children does poorly in school. Mike felt a strong sense of failure and frustration. In spite of all his efforts and attention, he had been unable to motivate Phillip to realize his potential.
Instead of eating alone in front of the television set in the den, as Phillip normally did, he joined his parents for dinner in the dining room, planning to remind them of the car they had promised to commemorate his high-school graduation. He dressed for the occasion; baggy blue jeans, a heavy multicolored T-shirt, and scruffy sneakers.
While Karen stared at her son, she was brutally reminded of her former husband. His baby fat had given way to muscle, forming a firm body structure very similar to that of his father. She was horrified by his unshaven face and the tiny gold earring in his left earlobe. She winced as he jerked a chair from beneath the table, then allowed himself to flop onto it. “Phillip, how many times have I told you to sit gently?” she scolded.
“Sorry,” Phillip said, smirking as if he took pleasure in annoying her. “I forgot.”
“It’s apparent that isn’t all you forgot,” Mike barked.
Phillip flashed a defiant stare. “What do you mean by that?”
“Your marks clearly indicate that you forgot to work hard in school. Your mother and I were so concerned that we arranged interviews with each of your teachers. They all confirmed that you achieved far below your ability. When we asked them for specifics, they said you frequently failed to turn in assignments and to complete your homework. In addition, they suggested that you repeat your final year, to have another chance to elevate your marks to a level consistent with your ability, and that required for acceptance at university… What do you think of that?”
Phillip hung his head. Clearly, it was the wrong time to ask for a car. “The only thing I can say is that I hate school,” he said, attempting to feign as much regret as possible.
“If you hate it so much, why waste any more time at it?” Mike asked, assuming he had successfully challenged Phillip’s bluff. “You should get out and do something you don’t hate.”
Mike had said exactly what Phillip wanted to hear. The statement had actually sanctioned his most fervent desire. “You really think I should?” he asked, struggling to conceal his joy.
“It’s your call. You have to decide what’s more important. You’re almost eighteen. You should be making your own career decisions. Do you have any plans?”
“Nope.”
“Then I suggest you take at least a year out of school and get a real job. Maybe you’ll hate work so much, you’ll want go back to school.”
Phillip seized the opportunity. “But how can I get a job if I don’t have a car to get me there?”
“Take a bus,” Mike retorted, amused by Phillip’s infantile attempt at manipulation. “If you work hard enough and long enough, maybe you’ll make enough money to buy your own car.”
It was impossible for Phillip to hide his disappointment. Time to protest. “But you promised I could have a car when I graduated from high school.”
Mike relented. “Tell you what I’ll do. If you promise to work, and work hard, I’ll give you a job with the company. If you’re interested, I’ll teach you everything I know about the business… Who knows? Maybe some day you’ll want to run it.”
“Can I drive a company car?”
“We can arrange that.”
Phillip tried to appear excited and grateful, but was neither.
New York. Friday, July 29, 1988.
After a brief flirtation with the seventeen dollars a barrel level in July of 1988, the spot price of crude oil resumed its descent. As it knifed through the fifteen dollar resistance level, there was joy among the world’s consumers of oil, even speculation that O.P.E.C. had finally failed as a cartel and lost its pricing power, perhaps forever. The price continued to decline through the summer of 1988. In October it hit thirteen dollars.
Enraged and convinced he had lost the opportunity of a lifetime, Visconti called Miles Dennis. “You son of a bitch!” he shouted. “Crude’s at thirteen dollars! Do you have any idea how much money you’ve cost me? I don’t know who the idiots are that give you advice. Obviously they don’t know a goddamned thing about what’s happening in the real world.”
Dennis’s response was cool and professional. “Relax, Louis. I’m still confident those idiots are right. I still think you should wait for twenty dollar crude before you jump in. Patience is crucial in this game.”
His comments failed to placate Visconti. “That’s unmitigated bull-shit! You gave me that same crap a year ago. If I had done the short then, I’d be sitting on a paper profit of over a hundred million.”
“That’s probably correct,” Dennis conceded. “If you had done the short, would you take your hundred million and run, or wait for still lower prices?”
“I’d hang in there,” Visconti replied without hesitation. “A hundred million is peanuts compared to what I could make when crude really crashes.”
“If you’re patient, you might still do it.”
“Do what? Die with the bat on my shoulder?” Visconti countered.
Dennis chuckled, then changed the subject. “Do you know where I could find a good secretary? I’m looking for one that’s young, beautiful, intelligent and eager to learn?”
“If I did, I sure as hell wouldn’t tell you.”
CHAPTER 26
New York. Monday, October 24, 1988.
North winds howled and the temperature was plummeting when twenty-one year old Kerri Pyper left her two bedroom Manhasset apartment and climbed into a yellow cab. Rain droplets splattered against her window, blurring everything in her field of vision as her taxi inched its way through heavy Manhattan traffic. The inclement weather compounded the emptiness and loneliness she had confessed to Brian.
Kerri was alone in a city of millions of people, none of whom knew her or cared she existed. With the exception of her marriage to Brian, her job search was the only brightness in her life. In spite of being frustrated and offered nothing but rejection, she thrived on it. The challenge of finding a job kept her busy and helped her to forget her loneliness. Instead of tolerating each day by making tedious boring domestic jobs last, she now found herself hurrying. She had a focus and liked it.
In an attempt to broaden her resume and to fill some of her empty evenings, she had enrolled in a course on commodities at Long Island Community College, near Smith Town. The forty hour course was to be given in two hour segments, every Tuesday and Thursday evening. Kerri’s business courses at university had given her an elementary exposure to the world of commodities. She discovered an intense fascination for the subject. In her final year of university she won a prize for her brilliant essay on the subject of the supply and demand equation for soybeans.
She arrived for her first session at one minute after eight and ran as fast as she could to Lecture Room Four. She took a seat in the back row near the door, then looked around the room, an amphitheater with seating capacity for one hundred. Almost all seats were occupied, by men. Including herself, she counted only three women.
The lecturer entered the room through a door to the right of the blackboards. He was tall, thin and sharp featured, with thinning gray hair. He wore a dark blue suit, matching tie, a buttoned-down pale blue shirt, and tasseled black loafers. He marched to the middle of the podium and stood behind a maple wood lectern. He reached into the inside pocket of his jacket and removed his notes, then looked up and scanned the audience. “Good evening, ladies and gentlemen,” he said with a warm smile. “I had to scan the audience to confirm that I could include ladies in my salutation. I’m pleased that I can. Welcome to the Long Island Community College, and to the fabulous world of commodities.”