Chapter 4: Test Results

August 4, 1983, Chicago, Illinois

“What was so urgent we had to have lunch today?” I asked Marcia when we met at a diner on Illinois Avenue.

“I have a rumor that you need to hear, but you can’t ever reveal where you heard it.”

“I don’t have protection as a member of the Press, but short of an official investigation, I won’t say a word.”

“A friend of mine, who is a court clerk, says that the FBI has been investigating corruption in the courts. Supposedly, it’s going to run in the Trib tomorrow.”

“What kind of corruption?” I asked. “Fixing traffic tickets?”

“Fixing a murder case, among other things.”

“Whoa!” I exclaimed.

“And bribes in divorce court and family court, too,” Marcia added.

“How widespread is this?”

“At least a dozen judges, thirty lawyers, some Sheriff’s deputies, and others.”

“Damn,” I said, shaking my head. “And you say this is going to hit the Trib tomorrow?”

“Yes.”

“Does Nelson know?” I asked.

“I have no idea,” Marcia replied. “I’m not hooked into Jeri’s cabal.”

“Then I’m going to call him when we finish lunch. I’ll use a payphone, and I won’t reveal who told me.”

“Thanks. How are things otherwise?”

“Our wedding plans are moving along. I’ll pick up the invitations tomorrow, and we’ll address them on Saturday. You should receive yours sometime next week. It’ll be for you and a guest.”

“I’m not sure who I’d invite; maybe I’m being too picky.”

“I don’t think so,” I replied. “Why lower your standards? That seems to me to be a recipe for being unhappy and unfulfilled, or worse.”

“I think that’s easy for you to say because you found your soulmate.”

“I’m not sure you’re evaluating things correctly,” I replied. “I messed up badly with Bev, who was clearly my soulmate from the time I was little.”

“YOU messed up?!” Marcia objected. “She’s the one who ran off with other guys, including one old enough to be her dad!”

“And yet, that would probably never have happened had I not kept my intention to move to Chicago secret until it was a done deal. Even then, if I’d asked her to come with me, including if that meant waiting a year until she graduated from High School, those things would not have come to pass. Obviously, I can’t prove that because it would have fundamentally changed my life and how I handled things here in Chicago, so who knows what might have happened? There’s no question my failure to communicate with her and failure to ask her to come with me led her to see other guys. I can’t imagine her having done that otherwise.”

“I see your point,” Marcia replied, “but she’s still responsible for her actions.”

“Of course she is!” I agreed. “But she took my behavior to be complete rejection, so it’s not as if I can escape responsibility for my actions that set the stage for hers. We’re both responsible, but I was the one who created the conditions that led to things falling apart.”

“Is that how you see our relationship? I mean, before Keiko?”

“I think that was more about compatibility of worldviews.”

“Sex,” Marcia said flatly.

“Not just that,” I replied. “Politics, relationships, communication styles, and a host of other things. That’s not to say they couldn’t have been overcome, but we were not in a place where I felt that was possible. Then there was the whole trust issue.”

“You mean the trip to Wisconsin?”

“Yes, though I’d say that was a symptom of a clash of worldviews and an extreme difference in communication styles and approaches to relationships than anything else.”

“It was pretty clear you’d sleep with anyone who asked except me.”

“That’s not true,” I replied. “First of all, I did sleep with you. And you know what happened.”

“You hated it,” Marcia said flatly.

“That’s not how I’d characterize it. I think it’s better to say that taking into account our views and experiences, that encounter was evidence for me that we weren’t compatible. Had we been on the same page, or even in the same chapter, things might have been different. But that would require one or both of us to have had a very different personality. Our second encounter was different, but at that point, there was so much baggage that it made a romantic relationship difficult, at best.”

“Do you analyze everything that way? Never mind! What am I saying? Of course you do!”

“It’s just my nature,” I replied. “And that nature has served me well for the past two years.”

“Given how quickly you’ve moved up, I don’t think I could argue with that.”

We finished our lunch, and after I paid the bill, I went to a payphone in the lobby and called Hart-Lincoln and asked to speak to Nelson. When he came on the line, I explained what Marcia had related to me at lunch, but without identifying her.

“If that’s true, all hell is going to break loose,” he said. “How much do you trust the person who gave you the tip?”

“I’d say on a scale of one to ten, it’s a nine, at least.”

“I promise you I’m not involved in any way,” Nelson said, “and I hope nobody at my firm is. This is going to create a, well, shitstorm.”

“You think?” I asked. “I mean, fixing a murder case? Taking bribes to decide divorce and child custody rulings? That’s corruption beyond the usual stuff that happens in Chicago.”

“Thanks for the heads-up. I’m going to talk to my supervising partner as soon as we hang up. I’ll state it comes from an anonymous, but entirely trustworthy, source.”

“Thanks, Nelson.”

We said ‘goodbye’, I hung up, and returned to the office, where I immediately asked to see Mr. Matheson. It was nearly an hour before I could see him, an hour I spent looking for any evidence of what Marcia had told me, but finding none. What I needed was a contact inside the Department of Justice who would be willing to talk, and the chances of that happening were near zero.

“How reliable is your information?” Mr. Matheson asked after I explained what Marcia has said.

“I trust the source, but I can’t find anything to back it up. That makes sense if it’s an undercover operation by the FBI and other government agencies.”

“When will the story break?”

“My source indicated someone had spoken to a reporter at the Trib, so I’d say tomorrow for sure, if not in the ‘Green Streak’ afternoon edition.”

“Do you see it having any market effects?”

I shook my head, “No. I mean, Chicago municipal bonds might take a hit of a few bips, but they’ll recover right away. This appears to be a court and police problem, not a financial governance concern. Yes, there will be obvious political ramifications, but I think Mayor Washington will, rightly, lay it at the feet of Byrne, Bilandic, and more directly, Mayor Daley, or to put it more succinctly — The Machine. If Mayor Washington is able to do that, and I believe he’ll be successful, it actually helps him with the next election, both for mayor and for the City Council. In the end, though, none of that much matters to our strategy.”

“That sounds about right,” Mr. Matheson said. “Write a short analyst note for me so we can show when we knew.”

“Will do.”

I left his office, returned to my desk, and wrote a brief analyst note detailing the conversation I’d had with Marcia and my conclusions. I left a copy for Mr. Matheson and put the original in my file, then returned to my usual analysis work, which occupied the rest of the afternoon.

August 5, 1983, Chicago, Illinois

As we’d speculated, the news broke on Friday morning, with the Chicago Tribune reporting on what was being called ‘Operation Greylord’. The news article confirmed Marcia’s information, and while indictments weren’t being handed up just yet, the investigation had uncovered bribery and other malfeasance in the courts, which had affected the outcome of trials and other judicial proceedings. Both the FBI and the IRS were involved, as was the Postal Inspector, as there were mail fraud changes in the offing, in addition to racketeering, bribery, and conspiracy.

“This is bad,” I said as I read the article at breakfast on Friday.

“It’s Chicago!” Jack exclaimed. “What do you expect?”

“This is even beyond the usual graft and corruption! And beyond Capone, who was simply providing goods and services the people of Chicago wanted and which were denied them by the government!”

Bianca and Jack both laughed.

“So, it was just capitalism?”

“Free market trade!” I chuckled. “Not that I’d advise breaking the law that way, and especially not advise ignoring the tax code!”

“What’s your serious take on Capone?” Jack asked.

“I think Prohibition was ill-conceived and impossible to enforce, similar to the current ‘War on Drugs’. In the end, if people want something badly enough, someone will provide it, and that will be lucrative and spawn battles for control of the market in ways government regulation cannot control. Both Prohibition and the War on Drugs spawn violence and increase lawlessness, while not actually preventing the sale or use of the things they purport to control. We all know where to buy coke, just as everyone knew where to buy whisky or beer during prohibition.”

“What’s your solution?” Bianca asked.

“Legalize it, regulate it like other over-the-counter drugs, and tax it! That basically eliminates all the gang crime because people can just go to Osco or Rexall and get their coke or pot. Yes, you’ll still have the crime committed by the users who need to feed their habits, but that can be dealt with much easier than a Colombian drug cartel with insane amounts of money and access to automatic weapons!”

“Deal with it how?” Jack asked. “I mean crime by drug users?”

“Rehab and education. If they aren’t breaking the law by using, there is a better chance they’ll seek help. Look at the anti-smoking campaigns as an example. Taxes make up the bulk of the cost of a carton of cigarettes, so the government gains revenue, but they’re also working to reduce the number of smokers and having some success.”

“Don’t you think more people would use drugs if they were legal?” Bianca asked.

“I suspect there would be some increase from that, but a concerted effort at education and rehab would likely be as successful as the anti-smoking campaigns. At least the government had the sense not to try the Prohibition model with cigarettes!”

We finished breakfast, and I drove the three of us to work. I completed my usual morning routine, including updating my daily analyst report. With Bianca’s help, I’d created a new index to go along with what I had called my global volatility index — a financial volatility index. I now had two ratings, one which was more or less subjective, and one which was objective.

The renamed ‘political volatility index’ was purely subjective, but the ‘economic volatility index’ was based on the change in prices of precious metal contracts, changes in interest rates, changes in major currencies, and the S&P 500 index. Unsurprisingly, Mr. Matheson called me in mid-morning to explain my method and my thinking.

“We used the absolute values of the changes because this isn’t meant to measure trends only volatility, and eventually, combined with the political volatility scale, develop a global risk score. By plotting a line with the daily numbers and comparing it to market volumes, we’ll have a good indication of what the herd is thinking.”

“I like it,” Mr. Matheson said. “If we can find any type of predictive correlation between that number and exchange rates, we’ll have even more arbitrage opportunities. Every bip in our favor is significant money. Is this something you can get on everyone’s desk?”

“It’s one of Bianca’s spreadsheets, so there’s no reason others can’t use it and modify it to suit their needs. One important thing Bianca pointed out — if we change the formulae, we need to go back and recalculate all the previous ratings for comparison. The spreadsheet will do that automatically when it generates the chart, but that will invalidate any previously printed charts and reports.”

“Similar to how the Dow has a fudge factor when they change out stocks so that the numbers aren’t skewed.”

“Except, in our case, we’re not going to include a fudge factor to avoid invalidating past numbers. At the moment, I see the trend line on the chart as being the key thing — as overall volatility increases, risk increases, but also opportunity. Technically, it’s the first derivative, that is, the slope of the line, that matters. The computer can’t tell us what to trade or when to trade it, but it can provide information to help make those decisions.”

“Computers can’t develop client relationships, so I don’t think we need to worry about being replaced by computers!”

I chuckled, “That wasn’t my point, but I can see how you could get there from what I said. Even if things advance to where computers can make decisions, I think they’d be limited to arbitrage or flips, because there’s no way a computer can do the kind of analysis you do.”

“Nor what you do,” Mr. Matheson replied. “Computers are tools, like hammers and screwdrivers. And we’ll use them to gain an advantage. That means anything you two develop is company confidential.”

“Absolutely. I’m not about to give up our edge to anyone outside Spurgeon!”

“Keep up the good analysis work. Did you finish rebalancing your fund?”

“Yes. The final trades were made earlier today. I’ll have a revised version of my asset allocation plan to you on Monday morning.”

“Any major changes?”

“Just reflecting the amount I have to keep in Treasury instruments to allow for the cash withdrawals for the retirement plan and benevolence fund, and a few things I decided not to sell because they have decent upside potential. I did receive the notice from the bank in Kansas City that handles the Overland Park city accounts, and they’ll forward the pension contributions on a quarterly basis, with the next contribution due on September 2nd. The benevolence contributions come on the first Friday of each month.”

“Perfect. I saw in your report that you’re targeting a dozen unions in the Midwest. That’s a good plan. Keep me posted, and I’ll come with you for any presentations.”

“I’d really like to land the IMRF, but Illinois law doesn’t allow that. It’s managed by a group of trustees with very specific asset allocation rules.”

“You’d have billions under management overnight if it were possible to bag them!”

“I take it you saw that I also intend to send prospectuses and other materials to every major law firm in Chicago.”

“I did. I’m behind you on all of those. It would be nice to bring in some high net worth individuals if possible.”

“Tougher because they tend to be like Margaret Lundgren. What I need is more trust fund kids like Jeri.”

“Ask her.”

“I intend to.”

“Keep up the good work and go find more ways to make some money!”

“On it!” I replied.

I went back to my desk to work for about an hour before Bianca and I had lunch together. I explained what Mr. Matheson had said, and she said she’d get the spreadsheet to the other analysts with personal computers. When we finished lunch, we left the office to head to the gym.

“Hi, Samantha,” I said to Noel Spurgeon’s daughter, who was in the hallway.

“You’re wearing a suit!” she declared.

“Since January,” I replied. “Your dad promoted me.”

“From the mailroom? Really?”

“Yes. Really.”

“That’s different!”

The elevator arrived, and we got in, ending the conversation.

“How old is she?” Bianca asked.

“Seven, I think,” I replied.

“She seems older.”

I nodded, “She does. Mr. Nelson calls her ‘the Pipsqueak’ and says she’s the ‘Queen Bee’.”

“Mr. Spurgeon doesn’t have a son, does he?”

“No. Supposedly, it’ll be whomever Samantha marries who runs Spurgeon after he retires.”

“That sounds as if Noel Spurgeon is going to pick her husband.”

“That’s the drift I get, or at least veto anyone who isn’t capable of running Spurgeon. I seriously doubt they’d ever willingly let a girl run the place.”

“All their dicks would shrivel and their balls rise back into their abdomens!” Bianca declared.

I laughed and nodded, “Pretty much.”

We worked out, showered, and returned to the office for a relatively routine afternoon. At the end of the day, Bianca took the L home, and CeCi and Kristy met Jack and me in the lobby of the Hancock Center. We headed to Star of Siam for dinner, then went to see Risky Business at Water Tower Place. The movie was fantastic, and had several really hot scenes with Rebecca De Mornay, several of them nude.

“I’ll never think of the L the same way!” Jack declared when we left the theatre.

“What do you think, Kristy?” CeCi asked. “Up for a ride on the L? I am!”

“We’d all be arrested!” Kristy declared. “That would be the end of my legal career before it even started, Jonathan would lose his securities licenses, and Jack would never get his!”

“It would be a badge of honor in Hollywood!” CeCi declared.

“Pretty much anything goes in Hollyweird!” Kristy observed.

“Would you do it, Jonathan?”

“Would I have sex with Rebecca De Mornay on the L? Absolutely!”

CeCi, Kristy, and Jack all laughed.

“I meant with me!” CeCi countered.

“If I wasn’t engaged and I could be sure I wouldn’t be arrested, I’d go for it!”

“The engaged part is the bigger impediment,” Jack observed.

“It is,” I confirmed.

As was our usual practice, we headed to Oberweis for ice cream, then headed home.

August 6, 1983, Chicago, Illinois

Bianca and I started our normal Saturday errands in the morning, rather than the afternoon, in order to pick up the invitations from the print shop. They were ready, as promised, and after double-checking they were correct, I wrote a check for the balance. Mr. Demerath wasn’t in the office, so I left him a note thanking him, and then Bianca and I headed to Jewel and the dry cleaner. We were home by lunch, and after lunch, I sat down with Keiko to address the invitations.