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  “This is something we should take up with counsel,” Darr said, “to see whether we can do business with this guy.”

  D’Elisa couldn’t understand why they were even trying. There was no actual deal on the launching pad, just the idea of doing one. They could cut their losses now and walk away clean. Even E. F. Hutton, with its aggressive push into market share, had taken a look at Harrison just a few months earlier and turned up its nose. Why did Bache have to chase this business?

  The biggest problem, of course, would be disclosure. Under the federal securities laws, material information about a general partner had to be told to investors. D’Elisa could not imagine what investors would think after finding out that the man Bache recommended to look out for their savings had stolen money from a bank.

  Darr checked with Peter Fass, who served as one of the department’s outside lawyers. Word started coming back to the department that Darr was pushing the lawyers to get Harrison approved. At one meeting on another topic, Fass took D’Elisa aside to talk to him about what was happening.

  “What do you need this for?” he asked. “Darr is putting a lot of pressure on me to get a resolution on this guy.”

  Later, D’Elisa spoke to Derek Wittner, a lawyer who worked under Fass. He was appalled. “What, are you guys fucking crazy?” he asked. “We don’t need this.”

  Finally Fass approached the attorney general for the state of New York for an opinion. If a general partner was convicted of a felony but received a presidential pardon, did the partnership have to disclose the criminal record to investors? After some review, the attorney general decided that the answer was no. Investors could be kept in the dark.

  Harrison was delighted with the outcome. To celebrate, on October 31, he went to Schumer’s Wine & Liquors at 59 East Fifty-fourth Street and ordered three magnums of Dom Perignon for $388.04. He sent the expensive champagne to the lawyers who had played so critical a role in getting him approved to sell tax shelters through Bache.

  About that time, Darr called Curtis Henry to talk to him about Harrison. Henry was stunned. He thought that the deal had been killed during their earlier telephone call.

  “I’m going to have Clifton come and see you,” Darr said. “We need to talk about his previous life. We’re proceeding to do some due diligence on him.”

  Henry could not imagine that a Harrison deal would get done. Bache would be the laughingstock of the business if it used a convicted felon as a general partner. With so many possible real estate promoters available, he could not think of any reason why the firm should waste its time on Harrison.

  He also had another concern. At that point, the Bache investigation of Darr was secretly in full swing. The whole thing could become a horrible scandal. Harrison already seemed to be trying to get close to Darr. With his record, Harrison might get unfairly tarred by the association, once the whole story came out. It would be best for everybody, Henry thought, to tell Harrison to stay away.

  Harrison came to Bache’s Dallas branch a few days later, nattily dressed in an expensive suit and tie. He told Henry the whole story, circling again and again back to President Ford. “I have a full presidential pardon,” he drawled repeatedly.

  Henry wanted none of it. “I don’t know how we can do anything with you,” he said. “I don’t know how people will react to it. The fact that you have a pardon from Gerald Ford doesn’t mean that you haven’t been in prison and these events didn’t occur.”

  “But the president of the United States . . .” Harrison began.

  “Look, Clifton, let me tell you something,” Henry said. “I know you have become associated with Darr in the last few months, and he is your new maven here.”

  Henry leaned closer and lowered his voice. “But if I were you, I would take a low profile right now. I will tell you right now, Darr is under investigation for some things he did at his last firm, and there is a pretty strong belief that he will not be here soon. With all your problems, I really think you should get yourself some distance from him.”

  Harrison looked at Henry, his poker face not registering the slightest surprise. He bantered halfheartedly with Henry for a few seconds and then stood up. The meeting was over. “Well, thank you very much, sir,” Harrison said, shaking Henry’s hand. “Hope to see you soon.”

  Henry watched Harrison walk toward the branch office door. He was sure that after his blunt honesty, this would be the last time he would have to speak to Clifton Harrison. He was right, but for reasons far different from what he imagined.

  None of the Futon Five could believe it: Somehow, some way, Darr found out about the Bache investigation. Somebody must have told him. Besides Jones and Gosule, no one outside the department was supposed to know. And they knew that none of them had an interest in giving Darr a chance to protect himself.

  But there was no doubt Darr had found out. His terror was palpable. His cocksure attitude vanished; now he walked around the department like a zombie. His face seemed heavily lined, and he stopped talking to his staff. Even executives who knew nothing about the investigation could tell something was wrong with their boss. Whenever Darr left a meeting, the gossip flowed. Jim looks worried. What’s the matter? Is he getting fired? The Futon Five listened to their colleagues in silence. Too many people knew what was happening already.

  Soon, though, the word spread everywhere. Bill Pittman, whom Darr had promoted from administrative manager to marketer, became Darr’s biggest defender.

  “How could you be so disloyal?” Pittman snapped at Dennis Marron. “How could you turn on the man who signs your checks?”

  “As far as I know, my checks come from Bache, not from him,” Marron replied coldly. “My loyalty is to the firm.”

  Pittman challenged almost every member of the Futon Five, but no one took him seriously. He was not a senior member of the department. His uncontrollable temper made him the butt of jokes. Many were still laughing about how, a few weeks earlier, Pittman lost control in a restaurant when Kemmerer played a joke on him. In response, Pittman picked up a plateful of strawberry shortcake and heaved it at his tormentor’s head. The plate missed its target but flew across the restaurant, shattering into tiny pieces. If this was the best defender Darr could find, the Futon Five quipped, then he must be sunk.

  Jones’s investigation was going very badly for Darr. He had tracked down Alan Gosule, who in recent weeks had obtained more damning information about Darr. A friend at Josephthal had given Gosule an envelope containing copies of checks and deposit slips from Darr’s transactions with clients. He agreed to turn the documents over to Jones.

  Gosule and Jones agreed to meet on November 13 at the Plaza Hotel in midtown Manhattan. At the appointed time, Jones took the elevator to a suite where Gosule was waiting. Jones lightly tapped on the door, and Gosule let him in. They spent no time with small talk—Gosule handed Jones the envelope and suggested that he examine the contents. Then Gosule told Jones he had someone for him to meet. The lawyer brought out his client, who had claimed that Darr had put the squeeze on him before moving to Bache. Gosule introduced the two men and walked out of earshot as the client answered Jones’s questions. After about twenty minutes, Jones stood up and thanked both men. Gosule escorted the investigator to the suite’s door.

  Before opening the door, Jones turned to him. “I want you to know,” he said, “Darr is as good as dead.”

  Jones spoke with John D’Elisa that same day. “We’ve got him nailed,” the investigator said. Jones was ready to let senior Bache executives know what he had found. His report would be done in a day or so. D’Elisa called the other members of the Futon Five. Hayes had heard the same thing from Jones. They needed to start getting ready for a transition of leadership. It would be tough for the firm, particularly for Lee Paton—he had just been named a director a few months before. Now one of his first big hires was about to be labeled a crook.

  Darr’s mood blackened. He began to seek out other senior executives in hopes of finding an al
ly. He visited George McGough, the head of Bache corporate resources, and poured out his fears. These rumors were swirling around and they just weren’t true, Darr said. He didn’t know what to do about it.

  “Look, if you’re innocent, and these rumors are untrue, take a polygraph,” McGough said. “We’ll give you the questions in advance, or you can help formulate the questions. Then everyone will know what the results are, and it’ll be over with.”

  Darr looked pensive. “Yeah, that would probably be the best way,” he said softly. “Who would see the record?”

  “It would be whoever is heading this thing up. Who do you think should see it?”

  The two men chatted another few moments about Darr taking the test. Then Darr got up to leave, saying he would get back to McGough.

  McGough heard nothing back from Darr about the test. But soon after he received a telephone call from John Curran, Bache’s general counsel.

  “Did you try to convince Jim Darr to take a polygraph?” Curran asked.

  “Yeah,” McGough said. “I think he is going to take it, too.”

  “Well, we don’t want him to take it,” Curran said. “Just forget about it.”

  It sounded to McGough like Bache was getting ready to resolve the Darr matter somehow. “OK, John, that’s fine,” he said.

  In mid-November, Douglas Kemmerer called Dennis Marron at home on the weekend. The calls had become almost a daily ritual. Kemmerer seemed to have become the most plugged in on the developments in the Darr investigation. This time, his information seemed too incredible to be believed.

  “Darr’s going to beat the rap,” Kemmerer said.

  “Oh, come on, Doug, that’s crazy,” Marron replied. “How could he beat the rap? The firm is not going to keep a guy around that does that kind of stuff.”

  “I’ll bet you a dinner.”

  “Fine,” Marron said. “You’re on.”

  But in the office that Monday, it began to sound as if Kemmerer might be right. Word started getting around that Darr had appealed to one of his bosses, who were just learning of the investigation. Darr promised that he had done nothing improper, saying that the money he received was for work he had done on an airplane lease deal and other consulting. The members of the Futon Five started to fear that the investigation might be on the verge of backfiring.

  Gosule arrived in the office that day after a weekend of relishing victory. He was sure he’d put a dirty player out of the business and solidified his relationship with the tax shelter department. It thrilled him to think that his contribution to the investigation could well lead to more business for Gaston & Snow from a thankful Bache.

  That morning, he received a telephone call from John D’Elisa. “I can’t believe it!” D’Elisa sputtered. “Darr beat the rap!”

  “That’s impossible!” Gosule replied.

  But when Darr arrived that day, everyone could tell he had won. His fearful look gone, Darr strutted into the office with his chest out and his head high. He took obvious delight in his sudden comeback.

  A number of executives in the department, including all of the Futon Five, were called to an emergency meeting at Bache a few days later. They gathered in a conference room, where Darr was sitting quietly, glaring at them. Someone started discussing a new deal that was in the works. As a speaker droned on, Lee Paton’s secretary came into the room. Darr’s eyes locked on her as she walked around a table to where David Hayes sat. She tapped him on the shoulder.

  “Lee would like to see you,” she said.

  Darr smirked as Hayes walked out of the room. Hayes had heard the rumors but couldn’t believe Darr was getting cleared. He walked apprehensively into Paton’s office a few minutes later and shut the door.

  “All right, David,” Paton said, his tone of voice betraying deep anger. “This little investigation is finished. Darr has checked out. He’s clean as a whistle.”

  Hayes felt light-headed, blown away. He knew about the checks. He knew about Gosule’s client. Jones himself had told him that everything he suspected was true.

  This is a total political cover-up, Hayes thought. Maybe it was because of the silver crisis a few months before. Maybe Paton didn’t want to admit a mistake. Either way, it was clear to Hayes that somebody at Bache was trying to avoid a scandal.

  “How could you be involved in something like this?” Paton asked sharply.

  Hayes didn’t know what to say.

  “David, how could you be involved in something like this?”

  Hayes sat there, numb, silent.

  “David, how could you be involved in something like this? ” Paton demanded.

  Hayes finally mumbled something about doing what he thought was right. He staggered to his feet and headed to the door. He couldn’t wait to get out of Paton’s office. Back in the conference room, he slumped into his chair. Paton’s secretary then returned and tapped Wally Allen on the shoulder.

  “Lee would like to see you,” she said.

  One by one, Paton spoke to almost everyone who had been involved in the investigation of Darr. Later, he announced to other senior officers in the department that Darr had been cleared, so as to dispel any rumors. Only Dennis Marron did not hear the news that day. He was out of town on business and wasn’t expected to catch up with anyone in the department for more than a week, when all of them were supposed to travel to Puerto Rico for an oil and gas conference.

  For some of the Futon Five, Paton inadvertently signaled that their careers at Bache were over. In his meeting with Henry, Paton produced a document pertaining to Trace Management, the entity that provided a participation for him, D’Elisa, and Darr in some tax shelters. Paton said Trace angered the brokers, who wanted to share in the profits, too. So he wanted Henry to sign the document, which would liquidate his ownership stake and, Paton said, let Bache dissolve Trace.

  Well, this is certainly a blatant, bald-faced lie, Henry thought. He was sure Paton was trying to get him to surrender his stake in Trace so they wouldn’t have to pay him anything after he was fired. He told Paton that he would review the document with his accountant and get back to him the next week.

  He never had the chance. On Monday, Darr called D’Elisa into his office for a moment. “I want you to see something.”

  Darr turned on the speakerphone and telephoned Henry in Dallas. No one could find him at the branch. But just then, Henry called in from a pay telephone in the men’s restroom at a French restaurant in Dallas’s Quadrangle shopping center. He was having lunch there with his sister, Kay. His secretary told him to call Darr immediately.

  “I’m sitting here with D’Elisa, and I want you to know we are reconsidering the way the department is organized,” Darr said, staring at D’Elisa as he spoke. “There is no longer any room for you here. You’re fired.”

  Henry wasn’t surprised. “All right, Jim,” he said.

  “Well, I’m going to put this down as termination for insufficient production.”

  “Darr, you’re going to put down whatever you’re going to put down,” Henry replied. “But you know that’s not the reason and I know that’s not the reason. But I don’t care. I’m having lunch with my sister right now, and I’m going back to that.” Henry slammed down the telephone.

  As the days passed, the casualties spread. Darr fired Kemmerer, who didn’t attend the Futon Five meeting but was one of the biggest talkers. Gosule’s firm, Gaston & Snow, was never offered another assignment from the department. If the firm fired all of the Futon Five, the department would have collapsed from lack of manpower. So, for the time being, Darr just confronted the others but allowed them to stay. He talked to Marron in Puerto Rico at the oil and gas conference.

  “Looks like you owe Kemmerer that dinner,” Darr told him. Marron was stunned. Not only did Darr survive; somehow he found out about his private conversations. Darr smiled and walked out to the tennis court, with an obviously delighted Bill Pittman following him. At that moment, Marron realized that, because of Pittman’s loy
alty, the guy whom they all belittled was now Darr’s new favorite.

  In the days that followed, it became clear that Darr emerged from the investigation more powerful than before. Paton gave Darr an accelerated promotion to senior vice-president—a symbol of regret, Darr bragged, for the aggravation he suffered because of the investigation. Questions disappeared about I.E.I., the energy roll-up, and the deal was put on the fast track. Clifton Harrison reemerged and began dropping by the office more often. Darr became his champion, pushing the department to pursue deals with him. Within weeks, the department’s first deal with Harrison was being put together.

  Finally, when everything settled down, Darr called a meeting in his office of the department’s executives, including the surviving members of the Futon Five.

  “I am now the most investigated person in this firm,” Darr declared. “I have been given a completely clean bill of health.” To some listeners, the meaning was obvious. Darr’s ethics were now above question at Bache. No one could challenge him.

  “Some of you tried to destroy me,” he said, “and I won’t tolerate it. So I want this clear: If any of you ever attempt to do anything again that could harm me or my family, I’ll take decisive action.”

  Darr looked slowly around the room, checking to see that everyone was listening.

  “I’ll kill you.”

  CHAPTER 4

  HARRY JACOBS FLIPPED THROUGH the secret investigative file on his desk, reading each page carefully. The findings clinched it: Bache couldn’t possibly be involved with someone tied to illegal activities. It didn’t matter that no one had ever brought charges. Bache might cripple its already soiled reputation by associating with such people. Jacobs finished reading with renewed certainty: The Belzbergs had to be stopped.

  It was January 1981, and Bache’s massive, worldwide investigation of the Belzbergs was finally getting results. For months, the firm’s investigators had dug into the Belzbergs’ background, poring through corporate records, chasing down rumors in the Canadian business community, and leaning on friends in the government.