The Novel of Financial Deception
Enters Its Third Year Online
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Casing Wal-Mart
Miller Risk Advisors

Rigged Chapter 4



Ross M. Miller
Posted June 21, 2004

If I’ve told you once, I’ve told you a thousand times: No . . . playing . . . with knives . . . in the car!”

“I’m not playing,” Zero insisted. “I’m slicing up my ID, Tara. The first one.”

“Find anything?” she asked.

“Not yet. Just plastic. I’ll microwave the others later.”

“I hear that they’re just yummy with some marinara and mozzarella on top,” said no one in particular.

We drove through what remained of Albany’s rush hour and turned Boston-bound onto I-90 with the setting sun at our backs. Just after the Taconic exit, Tara turned to me and said, “This Simon Lowell, the chairman and CEO of The Lowell Group, really made out like a bandit.”

“How so?” I asked.

“He gets the lion’s share of the six billion dollars from the sale of Lowell to GFF. The other partners have to settle for a measly ninety-five million each.”

“It makes you wonder why they even bother.”

“And they aren’t guaranteed a job. Only Simon Lowell and Kenneth Paine were offered contracts—Simon for two years and Kenneth for five. At least Kenneth gets to pocket an extra hundred million up front and twenty million a year after that. Not bad for a guy who picks stocks for a living.”

“Are you sure that GFF can afford it?”

“Well, they certainly plan to increase the efficiency of Lowell’s operations. Aside from fewer partners to pay, they look to be outsourcing the back-office operations.”

“Anything unusual in their backgrounds.”

“The only thing unusual is that nothing is unusual. A bunch of Harvard College guys—some went on to business or law school there.”

“Did you know any of them?”

“Are you kidding? They come from the Love Story days, or even earlier, when men were men and Cliffies were . . . whatever. And even if they weren’t so old, these guys must have lived in the River Houses and no doubt belonged to a final club—Porcellian probably. Harvard alums wanted so little to do with my student house that for years it was known only as ‘North House’ because it was north of South House. We used to joke that it was named after Ollie North, but they did finally get someone to pony up for the name right after I graduated.”

I was not in the mood to hear about the socioeconomics of Harvard undergraduate life and so I let things drop for a while. After we passed under the Appalachian Trial, I pressed on. “Anything else interesting?”

“There’s a whole section on legal and environmental liability.”


“Last year,” Tara said, “Lowell spent over a million dollars defending itself from accusations of discriminatory hiring. It looks like they fight everyone who takes action against them and they’ve never lost a case that went to court. Now that I think of it, every name I’ve seen is associated with one of Boston’s First Families—Lowell, Perkins, Warren, and so on. Not an O’Keefe, Goldstein, or Nguyen among them. And, of course, none of the partners are women.”

“Sounds like the passenger list of the Mayflower,” Randy chimed in.

“Actually, it’s not,” Tara replied, “if you knew your history, you’d know that the Pilgrims landed in Plymouth while the Puritans, led by John Winthrop, founded Boston roughly ten years later. From what I remember learning in school, an oversight in the charter of the Massachusetts Bay Company freed them from the usual requirement that the company’s board be located in London, allowing them to set up shop in and around what we now know as Boston without interference from the crown.”

“That sounds like a familiar story,” I said. “What happened to their enterprise?”

“When England eventually figured out what was going on, the company’s charter was revoked and Massachusetts then became a royal colony. But that initial taste of real independence lived on for generations, eventually sparking the Revolutionary War, and the rest—as they say—is history.”

“Did Simon Lowell’s ancestors have any discrimination issues?” I asked half-jokingly.

“They were an awfully exclusionary bunch from the moment they arrived, mostly on religious grounds.” Tara replied. “Anne Hutchinson, Roger Williams, and other with their own notions of the divine were banished to Rhode Island.”

“A death worse than fate,” said Randy.

“And then there was the whole Salem witch thing. The dissidents ultimately prevailed, but I’m not sure that they were much of an improvement over the Puritans.”

I wondered aloud, “Could purchasing The Lowell Group be the Mighty Quinn’s revenge?”

“It’s possible. In Boston, bad feelings fester. I remember when I was a kid seeing some old photographs of Boston with the ‘No Irish Need Apply’ signs. From the look of things, the Mighty Quinn and I would have a hard time getting a job at The Lowell Group.”

“Does Lowell have any other legal issues?”

“Only one that looks significant to me. The Lowell Group paid out two million dollars to settle claims by several women that Simon Lowell sexually harassed them.”

“Any details?” Then, remembering GFF’s sexual harassment guidelines, I added, “If it makes you uncomfortable, we can change the topic.”

“Thanks, but it’s no problem. Anyway, I don’t see anything. I guess we’ll have to leave the details to our imaginations.”

“No such luck,” Randy said. “I’ve got my wireless link up and there’s some fascinating stuff about Simon in the Boston scandal sheets. He had a thing for sending the pretty young things who worked for him what the company dismisses as innocuous love poems.”

“If Simon worked at GFF,” I said, “he’d know that love poetry is at the top of the list of Code Blue sexual harassment offenses.” GFF had distributed a pamphlet with a complete listing of the actions that constitute sexual harassment. It ranged from relatively innocent acts (Code Violet) to serious criminal offenses (Code Red). Whether or not a Code Blue offense was sexual harassment depended on the state of mind of the recipient. Only “undesired” love poetry qualified for treatment as sexual harassment.

“If Tara won’t be offended, they’ve even included a sample of Simon’s work,” Randy said, now fully involved in our conversation.

“I’m a big girl, I think I can take it,” Tara smiled back at Randy.

“I must warn you. Simon wrote bad poetry in a crazy kind of urgency.” Randy feigned clearing his throat:

Caroline, sweet Caroline, of whom all angels sing.
I tingle and shiver at the sight of your luscious body.
My Jaguar roars through the Sumner Tunnel of eternal desire.
I think of your thighs when my hand is on the stick shift
And when my Bean boot pushes the accelerator to the floor.

“That nails it,” I said. “Forget about sexual harassment. I would think that poem alone should have gotten Simon drummed out of the Lowell family.”

“I’m deeply offended,” Tara added. “Caroline deserved at least five million dollars, not to mention that Neil Diamond and every Sox fan should get their cut.”

“But Jaguar and L.L. Bean got free product placements,” Randy said. “And I see here that Simon’s already the black sheep in the Lowell family.”

“Speaking of black sheep, are there any clues as to what might have caused Lowell Aggressive Growth to separate from the rest of the herd?” I asked Tara.

“Nothing obvious,” she said as she flipped to the back of the binder. “Their accounting, information systems, et cetera, all got high marks from the audit team.”

“Oh, well, if the audit team approved, then I guess we can turn around and go home. After Zero gets done with Lowell, we’ll see just how high their marks really are.”

Zero acknowledged the mention of his name, but quickly turned his attention back to his computer. Like most Alaskans, Zero liked his written communications concise and showed no interest in what was in the binder. As many of the younger Alaskans would say, “If it hasn’t been made into a movie or a videogame, why should I care?”

On our way over the Berkshires, the car was quiet except for the rustling of pages beside me and the clicking of keys behind. Just after the first Springfield exit Tara said, “You know, the same names keep popping up all over the place. For example, the four brokerage houses that handle the bulk of Lowell’s trades also are responsible for most of the retail sales of their funds. Not only that, the retired chairman of their largest broker, Randall & Russell, has a seat on the board of every one of their funds.”

“Ah yes, the old ‘you scratch my back, I’ll scratch yours’ at work. The thing of it is, I’d imagine it’s all on the up and up; otherwise, GFF’s lawyers would never have signed off on the deal. Isn’t American business wonderful?”

“Half of their directors are listed as being independent,” Tara said, “but they are all affiliated with corporations that have some connection back to The Lowell Group. In fact, one of them retired from Lowell five years ago.”

“Independence just doesn’t mean what it used to.”

“And even the independent directors report to Simon—he’s chairman of the board for every fund.”

“GFF’s lawyers must approve,” I said.

“If you say so. Still, in a universe this compact, the potential for mischief is unbounded.”

Every minute or so, Tara tossed me a Lowell tidbit. Aside from its main asset—the billions of dollars that it managed for its clients—Lowell had a smattering of holdings. The largest of these was a collection of American art, mostly from the nineteenth century, that was (so the appraisers say) conservatively valued at two hundred million dollars. Lowell also owned bits and pieces of real estate, mostly in the Boston area, including several Beacon Hill and Back Bay townhouses, worth almost as much the art. Finally, it owned one business with no apparent link to investment management—a bakery located near as its corporate headquarters. Looking at the photos of Lowell’s partners, only Simon showed any evidence of immoderate scone consumption.

“There’s an interesting appendix,” Tara remarked, “that gives a checklist of possible legal and ethical issues and Lowell gets a clean bill of health.”

“What kind of problems?” I asked.

“You name it. Most involve either actual or potential conflicts of interest. Some funds have cozy relationships with hedge fund managers—guys who escape regulation by registering their companies outside the U.S. and by limiting their business to fat-cat investors—others have dubious political connections to state and local governments whose pension funds they help manage. The big investment companies that also own brokerage operations are also red-flagged.”

“There’s nothing wrong with that? Is there? Don’t some of the really big funds do that, like that one with the guy who looks like Andy Warhol?”

“It certainly looks that way. But whoever wrote this appendix sees it as a scandal waiting to happen. He doesn’t see how one could ever be certain that the fund managers aren’t taking advantage of the brokerage customers. But that’s one problem Lowell doesn’t have.”

Tara continued to read the report, but found nothing else worthy of comment until she asked Zero for a laptop computer. She clicked away for a few minutes and then said, “I’ve been thinking about those thirty-seven consecutive quarters that Lowell Aggressive Growth beat the market. Based on this quick calculation, the odds against beating the averages as soundly as Kenneth Paine did through random chance for thirty-seven straight quarters are—dare I use the word—astronomical.”

Tara’s observation grabbed my attention. “Just how astronomical?”

“Oh, it might happen once or twice in the history of the universe. And only then if each galaxy has several hundred planets with stock exchanges.”

“That might explain the fondness that extraterrestrial visitors to our planet have for impolitely probing our populace,” Randy said.

I was unable to fashion a suitable rejoinder to Randy’s comment, but I didn’t have to when Zero said, “I’m into Lowell’s web site.”

“What does it say?” Randy asked as he looked over at Zero’s screen.

“Anything you want it to say.”

“I see. You’re really into their site.”

“More than that. I’d say from where I am I can get to any server on their network.”

“Let’s not do anything illegal,” I said to Zero.

“I can’t give you a definitive legal opinion, but since GFF owns Lowell we are in the clear as long as we only look around,” Zero said.

“Did you get in because you’re so good or because they’re so incompetent?”

“Some of both. To their credit, they did apply the latest security patches. Client and transaction data doesn’t appear to be exposed either, which means it’s on a separate network. Getting in wasn’t trivial, but it didn’t take many neurons either. Still, it’s no problem for me to change their home page to say ‘The Alaskans are Coming.’”

“Let’s not warn them,” I said. “Does either of you back there know how GFF’s stock did today?” The price of GFF shares was the most visible link that Alaskans had to their absentee parent. We were all enrolled in the company’s 401(k) plan, which provided ample incentive (in the form of dollar-for-dollar matching) to buy and hold GFF stock. GFF’s own mutual funds, run by the same folks who managed GFF’s massive pension fund, were the only investment alternatives.

“Up ten cents, but then almost everything was up today and there wasn’t any real news,” Randy replied as Zero continued his excursion through Lowell’s network.

“Or at least any news that’s made it onto the Net,” I said. I could only imagine how much word of Lowell’s woes, beyond those apparent to holders of its biggest fund, might have leaked out already. With a smile I quickly turned to Randy and asked, “Are you pondering what I’m pondering?”

“Is there any way to get a pizza delivered to a car zooming down the Mass Pike?”

“Not that I know of, but if you come up with one, it sounds patentable to me.”

“Well, what then?”

“How did the Lowell Aggressive Growth Fund do today?”

“Same old, same old. It’s down almost half a percent.”

“What about their other funds?”

Several clicks later, Randy said, “They’re all up, some more than others.”

“Curiouser and curiouser,” I said, returning my attention to the road ahead. It was not long before we crossed the two highways that looped around the city and were headed into Boston proper. We passed under a grocery store and then a hotel that were somehow built to straddle the road. The traffic advisory sign that welcomed us to the city said:


 Leaving the Mass Pike behind, we went underground for a short while only to reemerge into the darkness of the early evening after we took the exit marked “South Boston.”

I turned to Tara and said, “So this is where the Mighty Quinn spent his formative years cracking skulls with a hockey stick.”

“Technically, yes. When I was growing up this waterfront area was mostly a wasteland with a few buildings, the fish pier, and some of the best seafood restaurants in town. Now it’s a wasteland with tall buildings and new construction everywhere. But the real Southie is over there.” Tara pointed out her side of the car.

I drove a few blocks on service roads and past construction sites and pulled up to our hotel. The front entrance of the hotel indicated that it had both valet parking and self-parking. I was wary of leaving our car with a valet, so I dropped everyone else off at the door and drove into the underground parking lot and around it until I found a space. You can never tell what might happen to your car once someone else gains control of it, not to mention saving Roland eight dollars a day.

My crew, unfazed by the long drive, was waiting for me in the lobby. Zero had already tapped into the hotel’s wireless network through one of its public access points. I guessed that Randy was privately ridiculing and mentally undressing the conventioneers and their companions. Tara was on the phone to her family.

The hotel’s lobby was decorated in a manner calculated to impart a nautical feel. It featured seascapes, scrimshaw, and bottled sailing vessels. Looking past the faux-marine decor, it was clear that we had entered one of the higher echelons of soulless corporate America—a vast complex that includes not just hotels, but also airports, restaurants, office buildings, and yes, even casinos. The day’s events scrolled by on monitors and international newspapers were neatly arranged on a table. I no longer had the home field advantage.

We checked in together and I observed that our reservations had “VIP” in large letters in the upper right-hand corner of the screen display. Things had been set up to bill all charges back to the hive with the exception of pay-per-view movies and health club “extras.” (Puritanism lives on at the audit team.) While the clerk was magnetizing our room keys, a man in an olive suit speaking to the other clerk was becoming irritated.

“You don’t have any rooms—I can’t believe this!” he said in a voice loud enough to catch the attention of people across the lobby. “What do I have to do to get a room in this town?”

The clerk calmly said, “During convention season I’d suggest making reservations at least a week in advance. For the bigger meetings, we’re sold out months ahead. I am very sorry for the inconvenience, but the concierge will be happy to call around and find you a room somewhere else.”

The man stomped off. With that drama past and our keys in hand, we jostled with the bellhops to keep hold of our luggage, but allowed them to show us the way to our rooms and give their spiels detailing the hotel’s plentiful amenities. On the ride up to our suites, I was more interested in the news being displayed on the elevator’s two video monitors than in the choice of aromatherapy.

As we exited the elevator, Randy interrogated our bellhop about the hotel’s health club while I familiarized myself with the new physical surroundings—ice machines, fire exits, hiding places. This required considerable conscious effort because after the long drive I was having trouble switching off my freeway brain.

Alice had gotten us fabulous accommodations. Randy and I shared the Admiral’s Suite, while Zero and Tara got their own (unnamed) executive suites on either side of ours. Zero may have been disappointed not to share, but I doubt that Tara was. For security reasons, any work that was the least bit sensitive would be done from the hotel and even there we had to be careful. As Randy and I entered our suite, he said, “Nice comp. Wouldn’t you say? And with all those conventioneers, there’s probably a high-stakes poker game just down the hall.”

“Don’t get any ideas. Anyway, I’ve seen better.” Early in my gambling career when I was counting cards at the blackjack tables, a casino that noticed my presence would offer me the door, not a complimentary room. When I switched to poker and went on to join the tournament circuit, I became more appreciated as my winnings came from my opponents and not the house.

The suite’s living room was obscenely spacious and had ornate furnishings that included a baby grand piano. Everything was meticulously put together in an obvious effort to convey the impression of old Boston money. All of the details were there from the vases to the oriental rugs to the moldings. It almost made you forget that the land beneath the hotel had not so long ago been reclaimed from the sea.

As the bellhop was showing the two of us our separate bedrooms and providing us with instructions on how to use the various gizmos that the hotel had installed to appeal to the high-tech crowd, the phone rang. I picked it up and said, “Yes, hello.” A sonorous voice on the other end said, “Welcome to Boston. Let me know if there is anything that I can do to make your stay more pleasant.” I thought it was someone from guest services until I heard him say, “Oh, yes, this is Simon. Simon Lowell. We’re looking forward to seeing you tomorrow.” It was clear that part of his game was to wait before identifying himself and part of mine not to identify myself at all.

I responded noncommittally, “We’re fine for now, but I’ll let you know if we need anything.”

“Well, I’m glad you got in safely. Cheers.”

I replied, “Cheers,” something I never felt like saying to anyone, though an occasional Brit has said it to me upon leaving the poker table. No matter how Simon knew that we had just arrived, I could hear in his voice that nothing would make him happier than to see us leave.

Copyright 2004 by Ross M. Miller. Permission granted to forward by electronic means and to excerpt or broadcast 250 words or less provided a citation is made to