Book 1 in the Maltese Cat Book Series entitled Escheatment continues with new chapters. Enjoy
Chapters 1 & 2,
Chapters 3 & 4,
Chapters 5 & 6,
Chapters 7 & 8,
Chapters 9 & 10,
Chapters 12 & 13.
Two Years Earlier –
Steven Van Houten’s Background
Steven Van Houten liked to think of himself as a self-made man. In actuality, he wasn’t. He was born into a wealthy family. Grandfather Titus had come from the Netherlands at the end of the 19th Century and settled down in San Francisco. He was a hard-working merchant who dealt in hardware goods. His son, Steven’s father Cyril, went to Dartmouth College and majored in business. Unfortunately for Cyril, he graduated in 1929, right before the Wall Street Crash and the beginning of the Great Depression. Fortunately for Cyril, he had paid acute attention to his lectures in college. He studied the reasons for the Wall Street Crash and saw that it was unwise and risky trading practices that had resulted in the demise of the stock market. He also saw that, whereas banks had failed at record levels, well-run
mutual funds were surviving. He went to work for the Pioneer Fund in Boston after graduation, learned the general ins and outs, and after an apprenticeship there which lasted 18 months, he came back to San Francisco and started his own mutual fund company. His clients were far from the New York despair and reacted well to his pleasing personality. He built up a large clientele rapidly and they profited from his prudent investments. The Van Houten Mutual Fund was a success and over the years he prospered.
Steven also attended Dartmouth. He came back to work for his father but Steven was ambitious and wanted to create something on his own. During the 1980’s he saw mergers and acquisitions and leveraged buyouts were the greatest winners in the financial world. Steven created Van Houten Holdings as a separate department to get in on the takeover game, but the train had already left him at the station. The big companies like Kohlberg Kravis Roberts gobbled up the choice takeovers, including the mammoth Nabisco deal. With his father already in his seventies going into retirement, Steven yearned to find a way to do more than just the predictable and lucrative but altogether boring mutual fund. He saw that another San Franciscan, Charles Schwab, had revolutionized the stock trading business by
offering self-service, no advice, and discount commissions. Steven created a boutique stock trading department. It generated little income and seemed to be a poor decision at first. But then the internet explosion hit and San Francisco was its center. The mantra became ‘IPO’, or Initial Public Offering, for new start-up companies who wanted to raise capital in the public markets. Steven had his company in place for this and fought tooth and nail for business.
His Van Houten Holdings became the lead manager in many of the successful IPO’s and his fortunes soared. This was exactly what he had dreamed of. By the coming of the new century, the tide had turned and the internet bubble had burst, but Van Houten was unaffected. The Fund brought in steady business. After the 2008 stock marketmeltdown, Van Houten had started picking up more IPO and stock trading business. With his only son, James, having completed his formal education, it was time for Steven to relax more.
Unfortunately, James was not made of sturdy stuff as was Steven and Steven’s father before him. James liked to play, not work. After graduating, without distinction, from Dartmouth, he decided to acquire an MBA there, not so much as to learn business than to spend more time in school away from any obligations. He finished his Master’s degree in three years instead of the usual two, and then he decided he needed time to tour the world. After 12 months of partying in Europe, and with the threat of his father cutting off all funds to him, James reluctantly returned home to embark on a career at his father’s company.
The Lieutenant Governor and the State Controller
California State Lieutenant Governor Grant Thornton could have passed for James Van Houten’s older brother ifever one had existed. The similarities did not stop with their style of attire or with their hairstyles. Both were slick -oleaginous slick. In spite of his appearance, Grant was popular at the polling booths. Three years ago, Governor EdFoley, then a senior State Senator and gubernatorial candidate, had been told by his party that the young, up-and-coming San Diego Town Councilman was too popular to ignore. He would help Foley win the Governor’s election. Infact, that is what happened. But even though Foley was old enough to be Thornton’s father, the younger man lackedrespect for the senior statesman. It was a characteristic of Grant Thornton. In almost all things, he lacked respect. This was just one more commonality he had with James Van Houten.
Thornton was now in the State Controller’s office. This was not the first time that the two had butted heads. Andy Cho had come up with Governor Foley. He had originally been Foley’s personal tax accountant. When Foley first ran for the State Senate, Andy was instrumental in the campaign and guarded Foley´s finances, both personal and those of the campaign. Running for the office of Governor, Andy Cho handled all manners of funding and appropriations.
Foley rewarded him by supporting Andy’s election campaign for State Controller. Andy was fiercely loyal to the governor and that was the basis for his quarrels with the Lt. Governor.
“I told you before, I need that appropriation money,” said Thornton, heatedly.
“As soon as the Governor approves it,” replied Andy patiently, although he had told Thornton this same answer at least twice in the past.
“You know, your days are numbered. It would be wise to work with me. When I win the next election, I’m going to have to make a clean sweep of everybody.”
Andy considered that Thornton would have to do just that. All of the appointed positions were filled with people like himself, all devoted to the Governor.
“May I remind you that not only is the next election over a year away, but the Governor will be running for a second term,” Andy replied.
“He won’t win. He won’t even make it to the ticket. I have the party in my pocket. The old man won’t have their backing.”
“Still, I can’t release that money yet.”
“You know something, little guy. I don’t need you. I can bypass you any day. You’re really only window dressing.” Thornton marched out of Andy’s office.
Bypass me? I don’t think so, Andy thought to himself. The state government might be large but everything needs to go through procedures. That’s the only way things worked here.
He decided he needed to talk to the Governor. Thornton was becoming a loose cannon. No way of telling what he might be scheming. Better the Governor knows too early than too late. Andy picked up the phone and spoke, “Get me the Governor, please.”
Tommy Explains the Boys Club Poverty
Tommy was speaking with the Cat in the Zapp, Inc. office.
“Your boys just don’t seem to be what they appear to be. They are penurious. They spend huge amounts of money but they have nothing. They all earn well, but there is nothing left at the end of the month in their personal accounts. And they don’t earn enough to pay for what they are spending.”
“That seems a trifle dubious.”
“Perhaps their parents are supporting them.”
“Even less plausible.”
“Take a look at the spreadsheets. Left side income. Right side outflow. Doesn’t balance.” The Cat studied the chart for several moments.
“None of these properties are in their own names?” Tommy shook his head, No. Even James’s ponies, the Cat wondered.
“What about their cars and their houses?”
“What cars and houses? They own nothing. The cars are leased. They rent their apartments and houses. They own nothing.”
“I was told they own a yacht.”
“No yacht. If they are using one it must be leased also, although I have no financial records of one.”
“So, what are they spending their money on?”
“Just shows cash withdrawals. The credit cards list all sorts of places, from restaurants to clubs, to gas stations.
Their credit cards are all maxed out. They earn well but not well enough to afford all the things you mentioned, like polo ponies, tournaments, Pacific Club membership, top of the line sports cars, a yacht and expensive vacations. But here’s the interesting part. Every month their bills are all paid off, in full. From somewhere.”
“And the beginning of every month?”
“Goes back to zero again. Like an automatic reset. The credit cards go back to zero. The salaries come in. Then they spend it all again.”
“I looked into who these fellows are. All from rich families, except for one. Maybe their families are supporting their lifestyles.”
“Highly unlikely. From what I have heard about James, his father wants him to make his own way.”
“Well, they are all doing something right because come the beginning of every month it’s Groundhog Day,” referring to a movie in which every new day was a repeat of the day before.
“All the better,” grinned the Cat. “That means they are dependent, which means they are vulnerable. OK. Find out who holds title to all these things. I would be interested to see the connection.”
Tommy promised that he would get on it forthwith The Maltese Cat pondered over this new development. His aim was to bankrupt the Boys Club through identity theft. But it would appear that they already were bankrupt, at least until the new month started.
How were they getting by? Who was footing the bill?
The questions piled up and he had no answers.
As the Cat rode the elevator down from the office, he couldn’t help but get the feeling that something here was more awry than what he had just been shown.