Richard Greener: The Knowland Retribution

Dinner arrived unordered and unannounced. Walter was not at all surprised, figuring they had to know what he liked by now. Two room service waiters laid out a simple yet elegant tray before him. On it was a bowl of tomato-based soup of some kind and a Caesar salad topped with both blackened shrimp and grilled chicken. Rolls and butter, coffee for later, and a chilled bottle of Chardonnay completed the spread. Nathan Stein had a steak, which sat alone on the plate with no side dishes. He would eat less than half of it. For Maloney, just a club sandwich. “Whoever ordered this stuff,” thought Walter, “has a pretty good take on whose life is in jeopardy and whose isn’t.” He had no idea it was Elizabeth Reid, patiently working out of sight elsewhere in the suite every day since Nathan Stein joined Maloney in this seven-thousand-dollar-a-day-tower prison.

“You’ve read this?” Tom asked Walter.

“I have.”

“Why didn’t you kill him?” Stein inquired, with only a small edge to his voice.

“He came to my house.”

“On St. John?” asked Stein.

“On St. John.”

“Gutsy sonofabitch,” said Maloney.

“That. And dangerous,” Walter said.

“Here’s what I want you to tell him…” Tom started.

Walter laid his soupspoon down, shook his head, and said, “I’m positive, certain as I can be, that I’ll never see or hear from Leonard Martin again.”

“Then what the fuck do we need you for?” Stein said, more frustrated than angry. “Why are you here?”

“I’ll be happy to leave-soon as I finish my salad, if you don’t mind.”

Tom said, “No, no. Don’t go. Nathan’s… upset. We’re all upset.” Walter continued eating as if nothing had happened. There were no secrets among them. Not anymore. Not Dr. Roy. Not Knowland. Not even Na Trang. Walter considered his surroundings. Three killers having an early supper, two of them trying desperately to stay alive.

According to Leonard, Alliance Industries Inc. had to come up with $3.8 billion. A lot of money, but not too much, said Stein, for a corporation that did not cook its books and was legitimately valued at somewhere between forty-five and sixty billion, and they had three to four years of lead-time. SHI Inc., Billy MacNeal’s old Second Houston Holding, was a different story. Leonard’s demands called for them to pony up $1.3 billion to The Center for Consumer Concerns. That was about three-quarters of the company’s net asset value, according to Tom Maloney. That amount pretty much put them out of business. But, Maloney said, since Alliance owned a controlling interest in SHI, they could effectively buy that company with a stock exchange-Alliance shares for SHI Inc.-roll it into the parent organization, and even after eating the $1.3 billion, still add about five hundred million to Alliance. SHI Inc. couldn’t survive on its own, but it didn’t have to. Walter mostly listened as Stein and Maloney discussed this part of the arrangement with each other. “This is what they do with their pathetic lives,” he thought. He realized they were actually enjoying themselves. After weeks jailed up here, they were finally working again.

When they were finished, when they had determined to their mutual satisfaction that the incredible amount of $5.1 billion could be successfully secured from the two corporations, they turned their attention to their own firm. To Walter, it seemed both men would do anything to avoid talking about their own individual situations.

Walter, as was his habit, had done his homework. He knew quite a bit about the company his clients directed and worked for. Stein, Gelb, Hector amp; Wills Securities Inc. traced its roots to a small investment banking company started in 1923. The partnership of two young men, Andrew Hiken and Michael Sears, known derisively on Wall Street as “the children,” had only sporadic success, and always seemed as if it were on the verge of dissolution. In 1929, the youngsters were bought out by a more substantial investment banking house, Brown, Roote amp; Higgins. While Hiken and Sears ran with the cash, Brown, Roote amp; Higgins ran headlong into disaster with the Great Crash. After the flames of their destruction subsided, the smoldering embers of that esteemed partnership were rescued by Benjamin Stein and Henry Witherspoon. In time, Witherspoon gave way to Larry Gelb, who many thought was Jewish but was not, and after World War II Randolph Hector joined the crew. They maintained a subtle yet influential presence in the financial world with a list of topnotch clients that read like a roll call of the capitalist nobility of the twentieth century. Then, in the full bloom of the Reagan deregulation frenzy in the eighties, Stein, Gelb amp; Hector merged with Lumpkin, Hewitt amp; Wills, a full service brokerage firm. While Messrs. Lumpkin and Hewitt found themselves unemployed-rich, but out of work-Mark Wills prospered in league with his new partners.

Nathan Stein, grandson of Ben, joined the firm right out of school. His rise to Vice Chairman was not without merit, though a little too meteoric for some. When his grandfather retired, Nathan became the ringmaster and Stein, Gelb, Hector amp; Wills his circus. He knew where every dollar was hidden and was, frankly, astonished at how accurate Leonard Martin’s analysis was. Nathan calculated his firm’s income from the Second Houston-Alliance Industries deal at $716 million. Leonard showed him where he’d missed seven million more. Rather than argue with it, Nathan was impressed, and not a little disturbed, that the people who worked for him had failed to see it. He wanted credit for every penny. As for Leonard, he wondered who helped him with all this. One way or another, almost all the data was public, but very little of it was easily accessible. What’s more, some of it required a sophisticated understanding of modern finance and an advanced computer capability to connect the dots. Leonard Martin had help, for sure. Good help.

Maloney and Stein agreed. Stein, Gelb, Hector amp; Wills could meet the payment schedule. True, this kind of money was certainly not chicken feed or chump change, but the discomfort of paying it could be managed in-house. Obstacles could be overcome. Besides, it was a matter of life or death. Theirs.

It was then they finally came to themselves. Both men had been astonished at the amount Leonard demanded: $123 million from Stein and $36 million from Maloney. Stein, in addition to the shock of his own amount, had been just as surprised and displeased with what he considered a low number for Tom Maloney. A careful review of the supporting data made Nathan more angry. He became both bitter and nasty. Walter sat there while the two went at each other, wondering why they would talk this way in front of him. True, he was familiar with the details of their contention, but still he was puzzled at their willingness to forego privacy. He had no way of knowing, of course, that Dr. Ganga Roy had encountered the same feeling in circumstances that were only slightly different.

“That’s bullshit,” Nathan said. “Thirty-six is a bullshit number.”

“Are you serious?” Tom Maloney was shaken at the obvious inability of Nathan Stein to grasp what was happening. “We’re being wiped out, Nathan. There’s nothing left. You know-your money or your life-and you’re more concerned with my number than your own? Are you out of your fucking mind?”

“I see what he did,” ranted Stein. “He’s left out everything in your wife’s name. But not with mine!”

“Nathan, you don’t have anything in your wife’s name. You have assets jointly owned-you and her-but there’s nothing of any value in her name only, is there?”

Nathan knew the score. He was just pissed. “Nothing worth anything,” he said.

Leonard Martin had been very picky. He’d examined the voluminous data Carter Lawrence gave him and pegged each man’s net worth, leaving out noncash assets held jointly. For stocks, bonds, mutual funds, and other financial instruments easily converted to cash, he’d figured the share for each man separate and apart from their wives, children, grandchildren, or any other partners. For real estate and other hard assets Stein and Maloney owned with others, Leonard assessed the value of their share. He required that the partner or partners in each deal buy out Stein or Maloney, and that the proceeds from such a buyout were included in the final figure for each man. Three to four years allowed more than enough time to make all these arrangements without damage to the equity position that would remain for Stein and Maloney’s surviving cohorts. Leonard did not hold wives, relatives, or even business partners liable for the sins of Nathan Stein and Tom Maloney.