“What was the gimmick? How’d they pull it off?”
“Well, I did a little digging when I heard you were coming down. From what I understand, it was pretty straightforward. He and Eckert had about two hundred fifty investors, some of them putting up twenty-five to fifty thousand dollars apiece. CLS took fees and royalties off the top.”
“On the basis of a prospectus?”
“That’s right. First thing Jaffe did, he bought a shell of a company and renamed it CSL Inc.”
“What kind of company?”
“This was trust-deed investment. Then he made headlines with the purchase of a one-hundred-two-million-dollar complex, which he announced he had sold six months later for a hundred eighty-nine million. Truth was, the deal never went through, but the public didn’t know that. Wendell hands his investors this impressive-looking, unaudited financial statement showing assets in excess of twenty-five million dollars. After that, it was a piece of cake. They’d buy real estate and show a paper profit by selling it back to another of their shell companies, inflating the value of the property in the process.”
“Jesus,” I said.
“It was a typical Ponzi. Some of the people who came on board early were making out like bandits. Returns of twenty-eight percent on their initial investment. It wasn’t unusual to see them turn around and invest twice that sum, cashing in on the bonanza of CSL’s financial savvy. Who could resist? Jaffe seemed to be earnest, knowledgeable, hardworking, sincere, conservative. There was nothing flamboyant about the man. He paid good salaries and treated his employees decently. He seemed happily married, devoted to his family. He was a bit of a workaholic, but he managed to take occasional time off: two weeks in May on his annual fishing trip, another two weeks in August when he took the family camping.”
“God, you really do know this stuff. What about Carl? How’d he fit into this?”
“Wendell was the front man. Carl did everything else. Wendell’s talent was the hustle, which he did with the kind of low-key, drop-dead sincerity that made you want to pull your wallet out and give him everything you had. The two of them put together various real estate syndicates. Investors were told their money would be held in a separate account, devoted exclusively to a particular project. In actual fact, the funds for the various projects were commingled, and some funds intended for a new project were used to complete the old.”
“And then the bottom dropped out of the market.”
Tommy feigned a slam dunk and pointed a finger at me. “You got it. CSL suddenly began to have trouble finding new investors. Eventually, Jaffe must have realized the whole house of cards was collapsing. He also got a notice about an IRS audit, from what I hear tell. That’s when he went off on his trip. I’ll tell you one thing. This guy was so persuasive that even when it became apparent the investors had lost their shirts, a lot of people still believed in him, convinced that there was some other explanation for the missing funds, which is where Carl Eckert really ate the big one.”
“Did Eckert realize what he was doing?”
“If you want my opinion, he did. He’s claimed all along he had no idea what Wendell was up to, but Eckert himself did the nuts-and-bolts end of the biz, so he must have been aware. Hell, he had to know. He just maintained his innocence because there wasn’t anyone to contradict him.”
“Same thing the Jaffe kid is pulling now,” I said.
Tommy smiled. “In matters like this, it always helps if your confederates are dead.”
It was 1:15 when I left the building, zigzagging my way across the crowded lot to the far corner where I’d parked. Once I left the complex of government offices, I hung a left, heading back toward 101, managing to catch every traffic light between me and the freeway. At every stop, it amused me to watch women drivers take advantage of the moment to check their eye makeup and fluff their hair. I adjusted my rearview mirror, taking a quick look at the state of my own mop. I was nearly certain the little spiky patch near my left ear had grown some.
Almost inadvertently, I glanced at the car behind me. I got a quick hit of adrenaline, as though a hot wire had touched me. Renata was at the wheel, frowning slightly, her attention focused on her mobile phone. She was alone in the car, which didn’t look like a rental, unless, of course, Avis and Hertz have taken to using Jaguars for their “full size.” The light changed and I pulled away with Renata right behind me, moving at the same pace. I was in the inside lane of two moving in a southerly direction. She angled into the curb lane, her speed picking up as she passed me on the right.