"Where?"
"Massachusetts. A town on the Mass-New York border. We've got someone on it already. Fletcher sent someone down from Boston to check it out."
"Has the rental car been spotted?"
"No. But now I'll get APBs out in New England."
"Good," he said. "How go the e-mails?"
"Ellis may be the most boring writer who ever lived. But anything you want to know about who's screwing who at Rockworth, just ask."
"Nothing at all?"
"I wouldn't say that. I'm pulling anything that seems remotely relevant. A lot of it has to do with specific trades, so I'm not a hundred percent sure what I'm looking at. I'm flagging anything that has to do with any of the companies on our lists. Oh… and Jay… just for the hell of it, I e-mailed you the article in the paper, the one about the truck that turned over. With the platinum."
"A particular reason?"
"No. It's like one of your hunches. It just interests me. Something pops up in one mystery, the same thing pops up in another, I think it's better to assume it's not a coincidence. How's your pal Roger doing?"
"He needed a few hours. I'm just about to find out."
"Well, you let me know how that goes, okay?"
"I'll call you later," he said.
"Later," she told him.
Roger Mallone looked as if he hadn't moved since Justin and Jonathan had left two and a half hours ago. He was sitting on the living room couch, papers spread all around him-on the coffee table, on the couch, on the floor. When they walked in the door, he looked as engrossed as if he were reading the most exciting thriller ever written.
"We brought you a sandwich," Justin said.
Roger looked up, a look of confusion on his face, almost as if he didn't understand Justin's words. Then he said, "Oh-oh, thanks. I'm not hungry."
Justin waved his hand at the stacks of papers. "Is it that good?"
"It's fascinating," Roger said.
"Let me just make some coffee," Justin said, "then you can lay it all on me."
He went into the kitchen, turned one of his electric stovetop burners on high, boiled water, and made eight cups of strong coffee, filling his plunger-style coffeemaker to the brim. Roger was not normally the most stimulating teacher, so Justin figured he'd need the jolt. When it was ready, he poured the coffee into the thermos he kept by the stove. He yelled in to ask if anyone else wanted some and got two no's. Happy to have it all to himself, he poured a mugful and took it back into the living room.
"Ready," he said.
"Okay," Roger said, and Justin could hear him trying to rein in his excitement. "I can't say for absolute certain without a lot more studying and possibly even further access to their records, but there's something very, very strange going on."
"Is there a simple version?"
"I've tried to organize this as simply as possible," Roger said, "but if it was simple, they wouldn't be able to pull this off."
"What is it they're pulling off?" Jonathan asked.
Roger spoke to Justin now. "The way a hedge fund works is exactly the way the name implies. It's one large fund and if you put your money in, you're investing in that fund as a whole entity. The fund is split up so it can invest in as many different stocks and companies and commodities as it wants to. But it's one fund. That's key."
"Okay," Justin said. "I grasp the meaning of the word 'fund.' You going to define 'hedge,' too?"
"I am, as a matter of fact. I know you've got a business background, but I do remember that that part of your brain is a little, shall we say, rusty?"
"Sure," Justin agreed. "Let's say that."
"So 'hedge' is also exactly what it means when attached to a fund. It means that at any time you can hedge your bet. You think a stock is going to tank, you can short it." Roger beamed. He loved talking about his business and nothing puffed him up quite so much as explaining to other people how that business worked. Justin decided this had to be one of the greatest days of Roger Mallone's life. He got to snoop through another company's records and he got to explain it all to Justin. "When you short something you're betting that the price is going to go down. Let's say you want to short a thousand shares of Company X, which is selling for ten dollars a share. You think it's going to be selling for half price before too long. So you make a contract that lets you buy it at a later date when it drops to five and sell it back to someone for the ten-dollar price. The beauty of it-and the danger-is that you don't put up any money. Your broker borrows a thousand shares from someone else's portfolio. That person usually doesn't even know they're being borrowed. The broker just transfers those shares into your portfolio and then automatically sells them back to someone else at ten-and you've made your profit."
"And if it goes up instead of down…"
"Same thing, only in reverse. You short at five and it goes up to twenty. You gotta buy all thousand shares at twenty-you've lost your bet. I know people who've lost tens and tens of millions of dollars sinking money into stocks they know will come down. Only they don't."
"How does this apply to Ascension?"
"Well, if I'm reading this right, and I'm pretty sure I am, they're violating all the tenets of hedge fund management."
Now Jonathan leaned forward. "How so?" he asked.
"Again, I can't say this with one hundred percent certainty because I don't have access to all their accounting records, but it looks as if they're making separate trades for certain companies that are outside the main fund."
"Trading shares to and from the main fund?" Jonathan asked.
"Exactly."
"That illegal?" Justin asked.
Roger shrugged. "It's difficult to say what's legal or not when it comes to hedge funds. It's not honest. But it's for the SEC to decide if it's legal."
"It's not something that would make Ascension investors happy, however," Jonathan said. "It means they can pick and choose who makes money from their fund."
"And here's where it gets trickier," Roger said, tapping one stack of papers. "It looks as if they made some of the trades themselves-just transferring funds back and forth between different investors, in and out from one fund to another. And it looks as if some of the trades were made using an outside broker."
"Rockworth and Williams," Justin said.
Roger nodded. "That's right."
"Is there more?" Justin asked.
"There's a lot more. One is that what they're shorting isn't consistent at all with a lot of the other trades they're making."
"What are they shorting?"
"Platinum," Roger said.
"Are you sure?!"
"You want to see my MBA?"
"No, of course not, sorry. It's just… go on."
"Well," Roger said, "you're not wrong to be so confused by that. Considering their connections, especially. And their timing is very curious considering what's going on in the platinum market. And then I have to say, their luck is extraordinarily bad."
"What about the timing?"
"Well, I don't think there are too many people shorting platinum heavily these days. Not with what's happening in China."
"What's happening in…?" Justin started to say, then stopped himself. "Cars. Cars are happening, right?"
"Very good," Roger said. "Very good."
"China's going into the car business in a big way," Justin said slowly. He could hear Daniel French saying to him, up at Rockworth and Williams: The wave of the future. Chinese cars… Chinese everything.
"And you can't go into it in a big way without platinum," Roger said. "Not if you want to crack the international market."
"Right," Justin said quietly. "Platinum for-what the hell is it-platinum for substrates. Substrates for exhaust devices. It's all about emission controls."
"You have definitely been paying attention," Roger said. "I'm extremely impressed."
"What was the first thing you were questioning, the connections? No, never mind," Justin said. "I understand that, too. They're tied to China because of H. R. Harmon."
"I know that Rockworth does an incredible amount of business with the Chinese. They're the envy of everyone on the Street because of their connections. They advise them, they trade for them, they've got access to business opportunities no one else can ever get close to…"