Nothing but Money_ How the Mob Infiltrated Wall Street Part 1

Nothing but Money.

How the Mob Infiltrated Wall Street.

by Greg B. Smith.

AUTHOR'S NOTE

Long before U.S. taxpayers began bailing out Wall Street with billions of their hard-earned dollars, there was the original Black Friday of 1869. It was spectacular and disastrous and caused millions in losses to investors from coast to coast, and it was mostly the work of one man-Jay Gould. When he died of tuberculosis at age fifty-six, one of his peers told reporters a.s.sembled on the doorstep of his Fifth Avenue mansion, "Wall Street has never seen his equal and never will."

In 1869 Gould was one of the richest men in America, a man who controlled one out of every ten miles of railroad in the nation. Although he was truly a very wealthy man, wealth has a way of making its owners believe there is always a little more just down the road. The source of just a little more, Gould decided, was gold.

His scheme was simple but inspired. He would run up the price of gold, which would, in turn, pump up the price of wheat. Western wheat farmers would then sell their wheat as fast as they could, which would require wheat to be transported East over Gould's railroads. He was counting on fear and greed to line his pockets. It was a clever idea, and therefore, it turned into one of the worst financial disasters in Wall Street history.

Gould and his co-conspirators began buying up gold, inspiring others who saw his investment choices as a bellwether to jump in, too. The price of gold began to rise at an alarming pace, awakening the administration of Ulysses S. Grant from its slumber. President Grant then tried to put the brakes on the runaway train, ordering a major sell-off of government gold.

The sell-off had a different effect. That morning gold had reached a peak of $162. The White House "sell" message reached Wall Street at five minutes past noon that Friday, September 24, 1869, and within 15 minutes the price of gold had dropped to $133. In the words of the Brooklyn Eagle, "Half of Wall Street was ruined."

In a system that relies on self-interest, these things are bound to happen. Gould had his reasons and explanations for his behavior, and he sought to make the case that he was just doing what capitalism demanded. Of course, this was not to be the final Black Friday or Unholy Thursday or b.l.o.o.d.y Monday or whatever other modifier the press could dream up to ill.u.s.trate the shock and horror of a sudden and allegedly unexpected crash. There would be many more, and although results of these market "corrections" were often different-sometimes the crash lasted awhile, sometimes there was a quick rebound-the underlying explanation often seemed quite similar. Everybody saw a run-up and wanted to get their's before the money stopped flowing. Sometimes that involved cutting corners here and there. Sometimes that involved breaking laws. But the logic of Wall Street was consistent-if everybody else is doing it, I'd be a fool not to.

Such was the case during the dot-com craze of the late 1990s, a time of irrational exuberance that, looking back, now seems merely irrational. This was a time when small "companies" with absolutely no a.s.sets went public and money fell from the sky. This was the dawn of "pump and dump," when the American Mafia decided it was time to take what they could out of Wall Street. It didn't last long. Just as Jay Gould's brilliant idea became Black Friday back in 1869, the party ended in a bad way. But if you were there when it all took off, for a while it seemed like there was nothing but money.

Greg B. Smith March 9, 2009

CHAPTER ONE.

December 17, 1987.

Arthur Kill Road is the far end of nowhere in New York City. Running along the western edge of New York's smallest borough, Staten Island, it is not what you'd call a tourist destination. The camera-wielding busloads that flood Manhattan religiously check out the Statue of Liberty, the Empire State Building, the Brooklyn Bridge. These are icons meant for collecting. Tourists might even hop the ferry to Staten Island, but then-immediately-return to Manhattan. If any out-of-towner found himself on the winding curves of Arthur Kill Road heading into the heart of Staten Island, the borough of landfills and subdivisions, he would only be there because he got lost. Very extremely lost. There is really no reason to go there if you are a tourist, or even a regular person. There are no pleasant sights to see. There are no hip restaurants, no cutting-edge galleries, no timeless museums. This is the working edge of New York. This is where people dump things.

In the frigid darkness of almost midnight, there were no cars of any type-save one. A lone driver made his way down the road, his headlights knifing into the December darkness. He couldn't see it, but out there, just a few yards away, dividing New York from New Jersey, was the Arthur Kill, a fetid river that had been polluted by the captains of industry since the nineteenth century. The fish were dead; birds avoided the place. The water was the color of black coffee, and on this night, its petroleum content kept it from freezing. The driver pa.s.sed refineries with peppery smells and midnight fires. He pa.s.sed a s.h.i.+p graveyard where the sad skeletons of freighters and tugboats named after somebody's mother or girlfriend were left to rot. n.o.body else was in sight. He was happy the road was so lonely. He could see if he was being followed. He pa.s.sed an auto graveyard, capturing it in his headlights, and then, finally, a lone sign-"Island Wholesale Fence." The driver, Robert Lino, dutiful son of a hopelessly corrupt father, had arrived.

Robert Lino was twenty-two years old, and he had barely finished the sixth grade. His writing was like that of a fourth grader. He had spent his entire life in the middle of Brooklyn, where he learned what he learned and never thought that there might be another way to live. While other kids from Brooklyn thought about basketball scholars.h.i.+ps or nailing their Regents exams in high school to go on to a decent college and all the rest, Robert Lino acquired different expectations. Robert Lino was going to be part of the American Mafia. This was an almost unstoppable destination. He had grown up surrounded by it. His father was in the Mafia, his father's brother, his father's cousin. All were made members of organized crime, the way that some fathers were vice presidents of international banks or partners in law firms or professors of French literature.

Robert a.s.sumed his father was already at the spot on Arthur Kill Road where Robert had been told to show up. His father was Robert Lino Sr.-Bobby Senior. He was a drug dealer. He dabbled in loan-sharking, collected protection payments, ran sports betting. He could also be called upon to shoot you in the head and roll you up in a rug. He had an official t.i.tle in one of New York's five crime families, the Bonanno group. He was what they called a soldier, although the concept of rank and hierarchy was pretty flexible within the Bonanno group. Bobby Senior earned that t.i.tle by being as devoted to a life of perfidy and deceit as a priest is to his order. Getting over was his religion. He loved the life, and he was hoping his son, Robert, would someday follow in his footsteps. That was why the father had phoned the son late on this December night and asked him to drive out to this desolate spot on the edge of the edge, on Arthur Kill Road in Staten Island.

It was heading toward midnight, and Robert Lino had to know what was about to occur. He was twenty-two years old now. No longer just a kid taking bets for his dad's sports-bookmaking operation. This was more than getting coffee for the guys at the social club. This ride in the middle of the night, this was the real deal. He knew his father well. He knew his father's friends and cousins. He knew that when they called him to come out here like this, he was now officially on his way to becoming just like them.

There was cousin Frankie Lino. Officially, he was another honored soldier in the legion of deceit named after Joseph "Joe Bananas" Bonanno. Frankie was a made guy ten years in now, one of the originals. He was famous among a certain set for a photograph in the newspaper from a long time ago. There he was being led by two detectives in that great New York tradition known as the perp walk, and Frankie was leering into the camera, his eyes black-and-blue, his cheek bruised, his hair wild. He was the very image of the stand-up guy. The New York City Police Department had dragged him to the precinct to ask him some questions about the shooting of a cop. This was 1962, and Frankie had said nothing, even when they enthusiastically applied cigarettes to his genitals. When Frankie limped out of court with his arm in a sling and his face all black-and-blue, Frankie's brother, Anthony, had hollered out for the benefit of the a.s.sembled press, "Lookit what they did!" Frank had dutifully scowled and muttered, "Shut up, you moron-ya!" and walked away. This experience with the cops and the cigarettes had a profound effect on Frankie. From that day, he would be unable to control nervous blinking, earning him a second nickname, "Blinky," among a small number of acquaintances from the neighborhood.

Then there was cousin Eddie Lino. Officially he was a proud member of the Gambino organized crime family, run by the world's most famous gangster, John Gotti. Eddie was considered a big deal within the Lino family. The FBI had told everyone that Gotti was Public Enemy Number One and that the Gambinos were the worst of the worst, more powerful than Bechtel or IBM. And Eddie was one of them. He told people John Gotti was one of his close personal friends. Plus Eddie was known to be crazy. He once decided to shoot a man in the head because the man said something nasty about the wife of one of cousin Eddie's friends. Actually Eddie shot the guy because he just didn't like him. In a few years Eddie would be found sitting in his Lincoln, shot in his own head, but for now he and Robert Lino's father and cousin Frankie were the best of friends. They broke all the laws they could find together-New York Penal Code, Federal Criminal Code, you name it.

Driving in Staten Island in the dark hours before dawn, Robert Lino knew what was coming. He pulled off Arthur Kill Road into the fence company parking lot he'd been instructed to find. His tires growled on the gravel, the spokes of his headlights swimming through a sea of blackness. The Island Wholesale Fence sign was the only object providing light, a ghostly presence in the claustrophobic blackness. There was nothing else out here but the lonely Outerbridge Crossing, the southernmost bridge in New York City that took you out of Staten Island and into the wilds of New Jersey. In the headlight beams, Robert could make out a beat-up white trailer, probably the fence company's office, stacks of concrete barriers choked with weeds, rusting rows of abandoned vehicles with leering gap-toothed grills. And then he saw what he was looking for-a group of men standing around, rubbing their hands and stomping their feet against the cold. In the center of the group something lay on the ground, unmoving.

Robert Lino now knew precisely what he would be doing for the next hour. He got out of the car, and there was his father and cousin Frankie. There was also a guy everybody called Kojak because he'd shaved his head, along with a friend of Frankie's named Ronnie, and worst of all, a guy named Tommy "Karate" Pitera. Robert knew all of these guys, but sometimes wished he didn't know Tommy Karate. Tommy was the kind of guy who liked to kill people, really enjoyed it. Plus he liked what happened after, when he would personally cut up his victims into pieces convenient for disposal. He was known to have his own method. He'd shoot you in your house, drag you to your own bathtub, slit your throat to drain the blood, cut off your head and hands to eliminate identification issues, then go to work with a hacksaw to create four or five bagfuls of parts. On this night, however, Tommy Karate apparently did not have access to a bathtub because there, on the frozen ground, was Gabriel Infanti-dead, but in one piece.

This was the reason the father had summoned the son in the middle of the night. Not to take in a baseball game. Not to help paint the living room. Not to spend some quality time chatting about the best way to land a striper or who was the best athlete of all time, Babe Ruth or Muhammad Ali or Michael Jordan. This was an unusual father-son outing, one chosen by the father. And the son had done his part. He'd shown up. He had not questioned the father. Something needed to be done, and like any good son, Robert Lino did what he was told.

It was just a job. It was like everything else about this life. There was a problem; you fixed it. Take the guy on the ground, Gabriel Infanti. For years, Infanti was not a problem. He was a go-to guy within the family Bonanno, doing a piece of work when requested, kicking tribute up the ladder, the whole thing. He was one of the guys, a man of honor. Now he was just a problem. First he had failed what would appear to have been a fairly simple a.s.signment. He'd been told to dispose of the body of yet another colleague. The colleague had been placed inside a metal drum and concrete poured in with him, and Infanti was supposed to make sure the drum and its contents disappeared. It didn't work out as planned, and the New Jersey State Police discovered this special little package inside a warehouse in New Jersey days after the homicide. Strike one against Infanti. Then, during another bad day at the office, Infanti-the only made guy on the scene-was supposed to be present when another victim was dispatched. If Infanti had been where he was supposed to be, he would have had the authority to call off the hit because the victim was waiting to meet another guy who wasn't supposed to be a victim. As it turned out, Infanti got nervous before the job and stepped out for coffee at Nathan's. As a result, the hit went forward, and now they had to kill two guys-the guy they were supposed to kill and the guy who showed up without making an appointment. All of this caused much anxiety for the leaders.h.i.+p down at Bonanno corporate headquarters, plus it raised doubts about Infanti's commitment to the cause. If a person is a partic.i.p.ant in a murder conspiracy, that person is as vulnerable as everyone else. He is a part of the team. If that person chooses to step out for coffee at Nathan's at just the right moment, questions are raised as to motive. The implications are that a person is attempting to extricate himself from criminal activity, something that implies the person may actually and truly be secretly cooperating with other organizations. Specifically, the FBI. The bosses of the Bonanno family decided Infanti was about to sign up as an informant and go on the government payroll, so it was decided that Infanti had to go.

Not surprisingly, Tommy Karate was the guy who did the deed. Everything was arranged. Infanti was supposed to meet a guy at an empty office s.p.a.ce in Ridgewood, Queens, unaware that Tommy Karate was there already, waiting. So was Frankie Lino, who waited outside as lookout while Robert's father, Bobby Senior, waited inside in the dark. Cousins in crime. Frank saw Infanti driven up to the office in Queens by a Bonanno gangster named Louie, and he saw the two men walk into the building. Frank waited a minute or two, then followed them inside. There lay Gabriel Infanti on the floor of the empty office, blood pouring from a head wound. The guy Louie looked like he was going to wet himself. He'd been standing next to Infanti when he was shot. Tommy Karate was still holding the pistol with the silencer. They rolled Infanti up in a rug and carted him out to Arthur Kill Road.

And here Infanti was, stretched out on the ground, no longer a man of honor. And there was Robert Lino, ready to help out his dad.

It wasn't going to be easy. The problem was obvious. It was December, and the earth of Staten Island was harder than Arctic ice. Tommy Karate and Kojak were banging away with their shovels. Frankie Lino tried for a bit. So did Bobby Senior. Now Robert Lino stepped in and took the shovel in his hand. The only light came from the headlights of the a.s.sembled cars.

Robert Lino was a small guy-five feet two inches tall, squarish but not terribly bulked up. Little Robert, his uncles called him, mostly because of his father with the same name but also because of his size. He looked a lot like the other Linos-prominent nose, thick black eyebrows, hair black as a Lincoln. Here he stood, the youngest man in the group, ready to do his part. He swung the shovel and hit the ground and nothing came of it. Again and again. They all did. Tommy dug, Kojak dug, Frankie, Bobby Senior and Robert Lino-they all tried their best, chipping away at the hardened ground, all to no avail. It was like trying to clear a beach of sand with a tablespoon. You worked and worked and nothing seemed to change, and digging a hole the size of a man is a lot of work. Ideally you have to dig pretty deep so if the rain comes a hand or a leg or a head won't come popping out of the ground. In December, with the ground frozen, getting the job done right could take a long time.

And time was important on a job like this. For instance, it would not be a good idea to be standing out there with Gabriel Infanti lying on the permafrost when the sun came up and people started showing up to buy split rails or pickets or whatever they needed to fence in their little slice of Staten Island heaven. The men continued chipping away. In a few minutes, everybody was out of breath.

Tommy Karate and Kojak said they would handle the job themselves. Tommy was a very practical guy. He had brought along a bucket of lye. The lye would go on Gabriel Infanti, and in no time at all, Gabriel would be all gone. For Tommy Karate, Gabriel Infanti was just another job. Standing there in the headlights, he and the bald guy, Kojak, began to joke about how scared Louie looked the moment Tommy shot Infanti in the head. Kojak cracked up thinking about how he'd fished $2,500 cash out of Infanti's pants after Tommy had put a bullet in the guy's brain. All that was easy. This business of making Gabriel Infanti disappear, this was anything but. They'd thought they'd come out here and dig a hole and dump in Gabriel and the lye and then everybody goes home to their nice warm beds. Who would have thought they'd still be out here after two miserable, frigid hours, with nothing to show for it but Gabriel still lying there and the sun coming up at any time?

But they kept at it, and soon the hole was dug, the body dumped, the lye applied. The work was over. Robert Lino, the good son, said good night to his father, as if they had just watched a baseball game at Yankee Stadium and now it was time to go home. Bobby Senior and cousin Frankie drove off for a late dinner at one of their favorite restaurants, Villa Borghese in Brooklyn. They were hungry. That's what you did when you were hungry. Robert didn't quite have the appet.i.te. He drove back to his home in Midwood, Brooklyn. The night's work was done.

It was different now for Robert. Now he was officially implicated. He was what the lawyers called an accessory after the fact, the fact being a homicide, the after being the digging part. And this was because of his own father. This was how the father wanted it for his son. In murder, if you're there when they bury the body and you don't run to the police, you're an official accomplice. A co-conspirator. That was Robert Lino's new relations.h.i.+p with his father; instead of "Hey Dad," or "Hey son," they could say, "Hey co-conspirator." Perhaps the father thought this would bring him closer to the son. Perhaps the father did not think at all.

In a few hours, the sun rose on Arthur Kill Road. Off the gravel road by the Island Wholesale Fence warehouse, a mound of freshly dug dirt could be seen-if you knew where to look. The crew had done a good job of making Infanti disappear. He was hidden by rotting wrecks and weeds and concrete barriers. Customers would show up and buy their wares, and business would be transacted as it had been yesterday and the day before. In a few days, Gabriel Infanti's wife in New Jersey would report Infanti as a missing person. She'd tell the police that he'd left the house with a big pile of cash. He was going to buy a car from a guy. That was all she knew. That was pretty much the extent of what she knew in general about her husband. He was always going off to see a guy about a thing. She was upset, but for the Bonanno crime family, it was as if nothing had happened at all. Christmas was coming, and Gabriel Infanti would be spoken of no more.

CHAPTER TWO.

October 19, 1987.

The young man of means awoke in his thirty-eighth-floor Manhattan aerie high above the East River. Below he watched the sun rise up over Queens and spread across the towers of the Upper East Side. He could see the millions just beginning to awaken. The lights on the 59th Street Bridge still twinkled in the gray dawn, and one by one, the good people of Manhattan were rising to face the day. Lights went on all around him. He was up at 5:30 a.m. every weekday, out the door by 6:30, at his desk by 7. He embraced his early morning enthusiasm. He couldn't wait to get to work. He was going to make money, lots of money, more money than a young man of twenty-seven deserved to make. This was it. He had arrived. He stepped into the shower and prepared to march forward.

He told people he lived on Sutton Place, an address synonymous with wealth and Upper East Side taste. He told people he lived down the street from the secretary general of the United Nations, who lived in a house built for the daughter of J. P. Morgan. Henry Kissinger was his neighbor.

Marilyn Monroe and Arthur Miller once lived within these city blocks of exclusivity. Sutton Place was a place unto itself, blocks from the subway but attractive to people who wouldn't think of riding the A train. Buildings designed by architects famous twenty years ago. A "TAXI" light from the 1940s on the corner of Sutton and 57th Street that hadn't stopped a cab in years. This was Sutton Place, a neighborhood that stubbornly clung to Old New York. An address steeped in old money. A place where guys who wanted everybody to know they'd made it might choose to live.

Of course, he really didn't live on Sutton Place.

Actually he lived a block away, on East 54th Street and First Avenue. But he still had the views, and for somebody who didn't know the difference, he could keep the line going. Sutton Place was where he lived, as far as he was concerned. And Sutton Place or not, he had come a long way.

When he started out, he had almost nothing. He had come to believe that, through sheer force of will and a good story line, he could do anything he wanted to do and be anyone he wished to be. Women inevitably loved him. Men wanted to be him. He was handsome in a predictable way. People often told him he looked like the actor Mickey Rourke, with square jaw and sly smile turned up at the corner. He was always tan-summer, winter, spring or fall. He knew how to turn on the boyish charm. He was a Wall Street buccaneer, the lone rider on the plains of Capitalism with no attachments, no real responsibilities other than to continue making money for people who already had plenty. He was up with every sunrise and ready to be at his desk at Oppenheimer by seven. That was the Wall Street way.

This was the 1980s. This was Reagan and supply-side and trickle-down. This was a market trading in the thousands after trading in the hundreds for decades. Money was the new frontier. Every day the heroes of Wall Street came up with new ways to make more and more money. And there was so much money floating around, you couldn't spend it all. There weren't enough hours in the day. Maybe the old guard still took the subway to work, but the new guard knew better. Why hide success? Screw the subway. Hire a limo. Order top-shelf, smoke Cubans, collect Italian suits. Spending theatrically sent a message, made a statement, proclaimed that you were a man of substance who spent only what he'd earned. Excess was acceptable, even expected. The young man's apartment may have been a block from Sutton Place, but the suits and the guy waiting to drive him down to Broad Street were real enough. They were what was required if you wanted to be somebody down on Wall Street.

Getting ready for the office, the young man was quite aware that he was the luckiest guy in the world. Ten years earlier a lot of guys his age would have been struggling to work their way up the ladder, nowhere near this wealthy this soon. His timing had been impeccable. He lived top-of-the-line, in a high-rise with a twenty-four-hour doorman in an old-money section of Midtown Manhattan perched over FDR Drive and inhabited by people whose money dated back to the robber barons of the last century. Some of these people had been born into it, but some had had to sc.r.a.pe their way up to be allowed to live on Sutton Place (or at least near it). Many of these people would have been shocked at all that the young man had a.s.sembled in such a short period of time.

There was the art collection. He knew almost nothing about art, but understood its ability to create credibility. He'd bought matching black Mercedes convertibles for himself and his sister. He owned a $500 Rolex. He visited a tanning salon once a week, no exceptions. The stove in his apartment was top-of-the-line, but he never turned it on. He ate out every night and placed himself in nightclubs and bars frequented by models. Models were part of the deal. You let models know you were a Wall Street guy and that got their attention. The sound of money always got attention. They may have had a hard time naming the president or filling out a customs form, but they well understood the ramifications of the Wall Street hurricane of the 1980s. In fact, all of America knew about the Wall Street buccaneers and the glamour and the glory. They worked hard, they played hard. They were doing lines of c.o.ke at midnight and were back at the office by seven, ready to reap the rewards they believed they so richly deserved.

On this day, the young man hoped for a little more reaping, although he was painfully aware that this Monday might be anything but a sure bet. The previous Friday had sort of been dubbed Black Friday. It was really kind of ridiculous, but it had spooked a lot of normally intelligent people. The Dow had gone and fallen more than one hundred points (108 points precisely), a feat it had never accomplished before in its history. The percentage drop, 11.7 percent, was not as bad as the 12.8 percent drop of the Crash of '29, and that disastrous moment in U.S. history had kept going for two days and then started a depression. This time the young man hoped it would be different. The Dow had been slowing since August, when it peaked at 2,700. It was down to 2,200 by the end on Friday, which meant a lot of the young man's colleagues had spent the entire weekend obsessing about what was going to happen come Monday morning. The young man tried to ignore it and go about his business.

Now here it was, Monday morning. He knew rewards required risk, and make no mistake, the rewards were endless. Just look at the numbers. He was making mad money. Crazy money. And there was no reason to believe he would not make more. n.o.body had seen trading like this in the history of the New York Stock Exchange. No one had seen so many people getting rich so fast-even ordinary people investing their savings and pensions. Risk was good for the soul. Wall Street of the 1980s was spreading the wealth, and the young man was part of the mission. Here he was, a mere twenty-seven years old and already he had acquired and then walked away from a high-six-figure partners.h.i.+p at Bear Stearns-the biggest brokerage house on the Street. He would make a point of bringing this up and reciting the perks in detail as proof of worth.

"I came over to Bear Stearns as a vice president," he'd tell people. "It was right around my twenty-fifth birthday. I was given a private office. I was given a secretary. I was given a trading a.s.sistant. At one point in time, I had three trading a.s.sistants, and in the 1986 partners.h.i.+p announcements right before my twenty-sixth birthday, I was made partner at Bear Stearns."

He had a unique way of describing things. The language wasn't exactly Wharton School. He'd say he "purposely pushed the back of the envelope."

He wore his hair in a ponytail. He'd show up in the partners' dining room without socks. They called him "the kid" because he was the one who could spout financial judgments like he was at a spelling bee. They'd say, "Let's get the kid's opinion on where the market's going." At least, that was what he thought. It didn't last.

For some, leaving Bear Stearns would have been devastating. For the young man, it was just a means toward a more lucrative end. He knew things weren't working out as he'd planned at Bear Stearns. The lack of socks in the executive dining room, the ponytail-all of that was okay when he was making judgment calls that resulted in profit. But the calls weren't going his way of late, and "the kid" was now more of a nuisance than an a.s.set. The partners were bored with the kid. He began to look around until he found a new spot-a tabula rasa opportunity at Oppenheimer.

Now on this unseasonably warm October Monday, he was headed into work at Oppenheimer, the black car picking him up outside his apartment for the slog from the Upper East Side through downtown traffic to Wall Street. It was good that Oppenheimer had made him a senior vice president, let him write daily financial futures reports and given him a one-year payout that came to more than anything Bear Stearns had ever offered. It was a great job-better than Bear Stearns. It was the kind of job he could talk about to friends and family, let them see just how well he was doing. He looked forward to going to work every single day, even if it was the Monday after Black Friday.

The young man arrived at the office before his secretary and checked his messages. Usually he'd check prices for commodities like wheat and soy and look at overseas markets, where this stuff was sold, to see whether any new wars or coups or a.s.sorted panics had screwed around with price. Then he'd look at gold and silver and how the U.S. dollar was holding up. Lately the dollar hadn't been doing too well. There were a lot of people out there worried that foreign investors were getting tired of its slow spin toward the abyss and would start getting out of the American stock market. This was something to think about in his latest line of work-derivatives.

At Oppenheimer, the young man was paid to foretell the future, so he had to weigh all manner of factors. He was working as an a.n.a.lyst now, so he didn't have to deal with that intense buy-sell nonsense of his early years, but he surely paid attention to it. Dealing with derivatives was tougher. You had to predict correctly all the time, and people tracked your percentages. If your batting average hit a slump, you could be out the door. If you were good at guessing, the client was able to sell his futures contract when the per-pound or per-ounce price was up, and everybody was happy and the Christmas bonus was in the bank. If anything unexpected or just plain random happened, profit could go out the window and then anything could happen.

In his office, the young man sat back, prepared. He waited for the opening bell the way the bullfighter waits for the bull.

One thing was clear: the young man certainly needed Black Friday to turn into Suns.h.i.+ne Monday. He had much to lose. He'd come so far and didn't want to go back. He hadn't grown up like the exclusive residents of Sutton Place. He hadn't been immersed in affluence, comforted by a sense of ent.i.tlement, possessing only an abstract notion of what it was like to have nothing. The young man had experienced living with no means of support before and was not interested in revisiting that period of his life. Anything good that had come his way, he had put there himself. And he knew one thing above all-everything you have acquired over years of hard work can go away in the time it takes for some fool out there to begin yelling "Sell!" at precisely the wrong moment.

His problem had always been timing. He was born into money that quickly disappeared. For his first eight years, he lived the upper-middle-cla.s.s suburban life of bicycles and private school in Oyster Bay, Long Island. His mother had married a real estate developer who already had three children, so when the young man arrived, he became part of a family that wasn't really his. He had no idea his two older brothers and one older sister weren't blood relatives, because n.o.body told him. He learned about this the day his siblings' real mother showed up screaming and yelling about custody. A nasty battle ensued, and in the middle of it all, when he was a mere nine years old, his father collapsed on the kitchen floor of their comfortable home, victim of a fatal heart attack. When Dad died, so did the comfortable life.

Wall Street had been a pretty simple choice for a guy who'd suffered uncertainty for so long. It was not a question of what he felt felt like doing with his life, or whether he enjoyed one vocation or another. It was a matter of obtaining certainty. To do this you got and kept as much money as possible, as quickly as possible. He went to college, got a degree in biology, and naturally got a job with all the implications of Darwinism-a clerk at a commodity trading house. He took the Series 7 and became a registered broker, and in nine months he'd jumped to a new twenty-four-hour-a-day brokerage house with a higher salary. The money poured in, and as far as he was concerned, Wall Street was where he had always been meant to be. like doing with his life, or whether he enjoyed one vocation or another. It was a matter of obtaining certainty. To do this you got and kept as much money as possible, as quickly as possible. He went to college, got a degree in biology, and naturally got a job with all the implications of Darwinism-a clerk at a commodity trading house. He took the Series 7 and became a registered broker, and in nine months he'd jumped to a new twenty-four-hour-a-day brokerage house with a higher salary. The money poured in, and as far as he was concerned, Wall Street was where he had always been meant to be.

"I would believe I had, I should say, I don't want to sound egotistical at all, there were points in time when I was the largest producer or second largest producer at Oppenheimer or at Bear Stearns and I believe during that time period I had only one [customer] complaint."

No way was somebody going to take it away. He had already come close to losing it all through no fault of his own. The way he saw it, you worked all the time and got only what you deserved-lots and lots of money. You benefited from rules that existed to ensure those with the most talent would receive the maximum profit, as long as they were ambitious enough to take it. But you could always lose it. His first job as a licensed broker was with a London-based firm, Johnson Mathie, one of four that fixed the price of gold and silver twice a day. It seemed like a sure bet, even if his abuse of the English language didn't exactly fit in at a London investment house.

"Everything was to be done correctly and articulately and properly. Clients' interests were at heart-to use a mis nomenclature, the best way to describe it was, it was a cla.s.s act. It was a nice place to work. Right down to the euphemism, they did have tea at twelve in the afternoon. It was a really nice place to work."

True he would always sound like a Yank, but he was making them money. That was a language anyone could understand. Then the biology major discovered a very biological fact about economics-one day you're here, the next day you're not. Mathie went bankrupt. He had to find a new job. It was his first time. On Wall Street, jumping around from employer to employer is not really that uncommon, but it's rarely pleasant. When Mathie shut down, he took what he could find and wound up at a smaller brokerage called Clayton.

This was difficult to explain on a resume in a world where there was only one acceptable direction, but there was always a way to explain anything if you had the desire and imagination. He was particularly adept at explanation.

"I should say that Clayton was not an upward move. That was definitely a sideways or downward move. And I was with Clayton Brokerage for maybe nine months to a year and I became their biggest producer. But I want to define producer. Producer means commission dollars: how many commission dollars one is generating for the firm. I believe the last month-now this is 1985, the last month that I was at Clayton Brokerage, my commissions were approximately $150,000 to $160,000 a month, which my payout was 50 percent on. I had several months at Clayton Brokerage where I would earn that kind of money, right before my twenty-fifth birthday. I really didn't want to stay at Clayton Brokerage. It lacked a certain amount of sophistication."

Sophistication. Prestige. Sometimes it seemed these were more important than even the money. It was important to him that he be seen as sophisticated, a man of wit and worth. He never really spent much time acquiring the cultural education necessary to be truly sophisticated, because that would have taken away from the time he spent making money. And he had discovered that on Wall Street, you really didn't have to know a Mondrian from a Monet; you could pay someone to know the difference for you. What was important was the effect the Monet had on people who didn't know any better. It was Manhattan name-dropping. It was being part of something you could never really be a part of, simply by writing a check.

To be more precise, lots of checks. The need to improve the net was all-consuming. It was just as John D. Rockefeller had said when he was asked how much money is enough: "Just a little more." The hunting and gathering never ended. The young man was motivated by a desire to acquire, but once he'd begun acquiring, he learned a distressing fact: there was only one direction-up. You could never sell off property and you had to have more. Once you attained a certain lifestyle, you were obligated to maintain it and improve upon it as soon as possible.

"I was making very good money, and I was constantly broke. I never had a penny in the bank. I rented what I couldn't buy."

Whatever money he got, he spent. If he wanted more, he borrowed. He would never recommend a company that did business the way he lived. If he saw something he liked, he bought it. If he drank wine with his dinner, he'd never look at the price. That was something only ordinary people had to do. Cost was meaningless when you believed the supply of cash would never stop. And if he came up short, that was no problem. There was credit. American Express and MasterCard and Visa were delighted to help out, sending off friendly solicitations with zero-percent financing for the first six months. After that, you switch to another card. There was no reason to save. Saving was for fools. Sink some of your paycheck back into stock and get rid of the rest as fast as you can. The art hanging on his walls was worth a fraction of what he told people it was worth, but still he could use it as collateral to borrow more. Collection agencies hammered at the door, looking to seize first his Mercedes convertible and then his sister's. When he jumped over to Oppenheimer, most of the up-front payout went immediately to cover debts, some of which had been festering for quite a while. If Wall Street collapsed, that could be a problem. The revenue stream would have to be replaced immediately. Bankruptcy was not an option.

Which was why he was growing increasingly concerned as he watched the ticker on this Monday morning after Black Friday.

From the opening bell the Dow began to drop and didn't stop. It looked odd, the trading volume numbers he was seeing. He was used to seeing the same numbers every day.

A dip like this hadn't been seen since the worst day of all time, October 29, 1929. The idea that something like that could happen again was too much to think about. But here it was, and it wasn't slowing.

At 11 a.m., the Dow was down to 2,100.

The young man and all the other brokers and a.n.a.lysts and managers and clerks and receptionists at Oppenheimer sat transfixed, the numbers on their computer screens gliding by like tracer bullets.

For a while, there was hope. The drop stopped shortly after eleven and the Dow began to rise again, until noon, when it began to hold steady. n.o.body went out on the street for lunch. The hot dog and knish guys on Broad Street outside the Exchange stood around scratching themselves, victims of slide. The shoes.h.i.+ne guys outside Trinity Church smoked cigarettes and talked Yankees and Mets. The usually bustling lunchtime crowd evaporated.

After lunch the drop started again. The execution of trades was beginning to get clogged in the machine. Trades were behind by two hours. n.o.body knew what the h.e.l.l was going on, so naturally everybody started to guess. Was it James Baker talking negative about the U.S. dollar? Was it the U.S. Navy choosing today of all days to blow up one of Iran's offsh.o.r.e oil platforms in the Persian Gulf? Was it millions of small-time investors spooked by Black Friday and fleeing the stock market altogether like lemmings into the abyss? Was it the dreaded program trading gone wild? Who knew? The Dow hit 2,000 at 2 p.m., then 1,900 by 3 p.m.

That was when the rumor started. The Securities and Exchange Commission was ordering the Exchange to halt trading. It could happen at any time. They had never done that before, and to do so now was surely a sign that the end of days was at hand for American capitalism. The fact that the rumor wasn't true didn't really matter. Rumor itself could easily have the same the effect as lightning hitting a pond. The panic began in earnest at 3 p.m. Investors began unloading as fast as they could. In one hour the Dow dropped from 1,900 to 1,800 and screeched toward 1,700.

At the closing bell of 4 p.m. the bloodletting stopped at 1738.74, and that was just an estimate because the trades were so far behind. They even shut down the Pacific Exchange a half hour before its usual 4:30 p.m. closing bell to stop further carnage.

It was over. There was nothing more to say. The Wall Street buccaneers sat back and looked at numbers.

This was history. This was big. They had witnessed the Dow skid like a kid on a sled headed for the interstate. You could almost hear the collective gasp. The money that everyone had made in the bullish eighties had swirled down the drain, all gone in six hours. Fortunes had evaporated between coffee break and lunch. The Dow had dropped 508 points-a 22.6 percent hit. That was well over the 12.6 percent of 1929, especially when you considered the scope of trading. In one day's activity, a stunning 604.3 million shares had been traded. That was nearly twice Black Friday's 338 million, which itself was a record. Who even remembered Black Friday? This was, by all accounts, a disaster. At close there were 52 stocks up, 1,973 down. The estimate was that the American stock market had just suffered a loss worth $500 billion in equity-more than the gross national product of India.

n.o.body moved from his or her desk. Everyone knew what had happened, and no one could have done a d.a.m.n thing to stop it-certainly not the young man who had much to lose, formerly "the kid," the guy who'd gotten quite used to making high six figures. The clients had panicked. Sell orders. .h.i.t the desk like a tsunami. The buccaneers were overwhelmed. They watched the spectacle, absorbed the moment, put off all deep reflection. They sat in a catatonic trance. The market they all believed in, the good times that would never end, had collapsed right there in front of them in a handful of autumn hours. The weekend seemed far away. This was sea change. This was a turning point. This was the decline and fall, the end of the Temple of Boom. Clearly the young man had not seen it coming.

He was, allegedly, as prepared as anyone else making a fortune through his acquired knowledge of how money and people interact. He had taken macroeconomics, microeconomics, accounting, calculus. He knew about the Laffer curve, the multiplier effect, the nuances of supply and demand. He understood how it was supposed to work. He understood that at times it was difficult to antic.i.p.ate arbitrary human emotion. He understood that voodoo superst.i.tion could sometimes play havoc with a system allegedly based on reason, but usually reason prevailed. Self-interest produced complex equations, but usually the answer was more or less equal to the sum of the parts. And it always worked out in the end. A bear was always followed by a bull. It had been that way since Alexander Hamilton established the first Federal Reserve. How had it come to this? Why hadn't he been on top of this?

For some of the young man's colleagues, the morning produced headaches, a deficit in the bank account, some heated arguments with demanding spouses or girlfriends or both. There might be some belt-tightening for a short bit, but they would weather the storm, wait until the seas had calmed, then wade back in and pull down the big bucks once again. Most had acc.u.mulated plenty of net and socked it away for events such as this. This would be a temporary setback, a speed b.u.mp. The money tree would sprout anew in no time at all.

For the young man, it was a different story. Surprise comes to those who seek the ends without heeding the ways and means. He knew where he stood.

If he thought about it, he knew it wasn't really his fault. It was the fault of unfortunate timing and, of course, his employer, Oppenheimer. In his opinion the firm had long been poorly managed and vulnerable to downturns like that day's implosion in ways it didn't need to be. If the company had not been so heavily leveraged, they would not now be facing the probability of severe cutbacks, which he knew were coming. He called it a "double whammy": making a "mistake" by leaving Bear Stearns (actually he would have been fired if he hadn't left) and then working for a company that was "grossly undercapitalized." Within days, he got the news.

It was just a job, of course, but work was his life. And when the market that would never end decided to self-immolate and bring half the economy down with it, "the kid" was quite aware that getting a new job as soon as possible was not just important-it was crucial. Oppenheimer had been comfortable, a serendipitous burst of good fortune. The Monday Ma.s.sacre or whatever the Wall Street Journal Wall Street Journal was going to call it, meant good fortune was at an end. was going to call it, meant good fortune was at an end.

His name was Cary Cimino. He was twenty-seven years old, and he knew it was time to start all over again.

CHAPTER THREE.