Randy Singer - The Justice Game

He knew that two of his guests would never cross him, never dare to argue with a Robert Sherwood recommendation. But then there was Felix McDermont. McDermont was the most unimposing man in the room-slender and soft-spoken with feminine features and wire-rimmed glasses, protruding cheekbones that made him look like a POW, and teeth too large for his mouth. He always aggravated Sherwood with a persistent list of innocent-sounding questions, but Sherwood kept inviting him back because McDermont routinely made the biggest investment of any of Sherwood’s clients. And once McDermont made his play, a dozen other hedge funds would follow suit within twenty-four hours.

Plus, he had one other endearing trait. Every time he made a hundred million or so for his fund, McDermont donated generously to Sherwood’s current philanthropic cause, which at this moment happened to be the AIDS epidemic in Kenya. Sherwood could put up with a lot of nonsense for someone as generous as McDermont.

At 2:30, Sherwood led his guests into the ornate main cabin area, pulled out his laptop, and hit a switch that caused a large television screen to rise out of a cabinet. The hedge fund operators poured themselves stiff drinks from the bar-they knew their way around-and settled into the plush leather furniture. All but McDermont, who quietly drank water and sat on a barstool, his laptop open on the bar in front of him.

Sherwood turned on the cabin lights and lowered the power blinds on the windows. He lit a fat stogie-not an expensive imported brand but a blue-collar Phillies cigar manufactured in the City of Brotherly Love-and pulled up a PowerPoint presentation that had been prepared by Andrew Lassiter. Sherwood roamed the cabin as he talked, blowing smoke and stopping occasionally for a nice long pull on the cigar, pointing with the lit end to emphasize his arguments.

Sherwood had done this drill forty-one times before. He had correctly predicted the winner in thirty-four cases, and five other cases had settled during trial. He had been wrong only twice. One of those times, in the early days of Justice Inc., had nearly bankrupted the startup operation.

As of today, Sherwood was on a nineteen-case win streak. Each win further emboldened his clients, causing them to raise their bets on subsequent cases. Sherwood would never know exactly how much each hedge fund gambled, but on a big case like the Van Wyck trial, with the ripple effects that might impact a number of different companies, a savvy hedge fund operator could easily put a hundred million dollars at play without raising suspicions. With the right jury verdict, Sherwood’s investors would double their money.

For thirty minutes, Sherwood bored the men with background information they already knew-the charges against Van Wyck, the perceived strengths and weaknesses of the lawyers, general information about the jurors. The real trial had started four days earlier, and the lawyers had estimated it would take three weeks to finish. Public opinion was split on who was winning-a perfect scenario for Justice Inc.’s advanced research techniques.

The hedge fund operators listened patiently. Felix McDermont typed as fast as Sherwood spoke, recording every detail, presumably so he could scrutinize it later. The other guests didn’t need details-they just wanted the bottom line.

Sherwood walked over to a glass bowl containing mixed nuts, picked out a few cashews, and munched on them before calling up a new slide. This one featured information about Juror 7, including complete details about her husband’s affair.

“How good are your sources?” McDermont asked without looking up.

“We used Rafael Johansen’s company, same as every other case.”

McDermont made a note. Johansen’s information could be trusted.

The next slide was the clincher, the reason each firm in the room paid Justice Inc. nearly $150,000 apiece, enough to recoup every dime of the company’s cost for the mock trials.

“Two out of three shadow juries returned a guilty verdict,” Sherwood said. He paused, allowing this information to sink in. Justice Inc. typically made recommendations only when all three shadow juries reached the same result. He watched the disappointment register on his guests’ faces. “But we think the third jury is an aberration, driven by Juror 7’s emotional connection with the defendant. In hindsight, we think Juror 7 on the third shadow panel has a much stronger personality than Juror 7 on the actual jury. We’re prepared to predict a guilty verdict despite the outcome of the third shadow panel.”

“Doesn’t the scientific evidence favor the defense?” McDermont asked. “Jurors hate to ignore CSI evidence these days.”

Sherwood agreed but took the next several minutes to talk about the holes in the hair testing evidence, weaknesses that had been exposed by Jason Noble. He showed a video of Jason’s cross-examination of a toxicologist who was playing the role of Dr. Kramer. By the time Jason finished, it was clear to everyone except Felix McDermont where the case was headed.

“I watched the prosecutor’s opening statement and examination of the first few witnesses,” McDermont said. “Frankly, I wasn’t that impressed. From what I’ve just seen of your man’s cross-examination, he may be better than the actual prosecutors, invalidating the results.”

It was a good point-and one that troubled Sherwood as well. The previous night, he had argued with Andrew Lassiter for nearly two hours. Maybe we just need to be patient. Juror 7 worries me. Jason Noble is better than the actual prosecutors. And maybe Austin Lockhart isn’t as good as the actual defense lawyers. Seventy-five million is a lot to put on the line when we have split results from our juries.

But Lassiter had been insistent. He had verified this sixteen different ways, he said. The third shadow jury was an aberration. There were no guarantees, but this one was close to 90 percent.

He had eventually sold Sherwood, who that morning had authorized the investment of seventy-five million dollars in short sales and put options on various companies that would be hurt if Van Wyck was found guilty. Seventy-five million of Justice Inc.’s own money! It was too late to turn back now.

Sherwood calmly took another drag on his cigar.

McDermont spoke into the silence. “I don’t like the prosecution’s theory of the case. They don’t understand the scientific evidence. I’ve looked at their credentials. They aren’t used to trying circumstantial cases like this.”

This was what Sherwood hated about McDermont. Sherwood had been a successful trial lawyer. He had an instinct for juries. McDermont had probably never seen the inside of a courtroom. “Do you want me to send one of our trial lawyers over to your company so they can give you advice on natural gas futures?” Sherwood asked.

McDermont stopped typing, crossed his arms and leaned back on his bar stool.

“We’ve tried dozens of these cases,” Sherwood said, meeting his stare. “This is our area of expertise. If we’re not sure, we don’t come to you with a recommendation.”

“Give me a percentage,” McDermont said.

“Ninety,” Sherwood said.

McDermont thought it over.

The silence was broken when two of the hedge fund managers pronounced themselves in. Even in the midst of the Wall Street turmoil, Justice Inc.’s predictions had generated enviable returns and earned their trust.

“What about you?” Sherwood asked McDermont.

“I’ll think about it. Your track record is strong. But this one has some hair on it.”

Sherwood knew McDermont was a stubborn man. Sometimes, the harder Sherwood pushed, the more McDermont resisted. “You pay us to give our best recommendation,” Sherwood said. “We’ve done that. The rest is up to you.”