Costly Vengeance

By Ian MacDonald

The banking collapse of 2008 hit many people hard and financially destroyed some of them. One Wall Street banking family dynasty acted with callous disregard to its clients' and called them grasping and greedy peons who knew the risks involved in the stock market. "These whiners should not be investing if they are so clueless as to not understand what they are doing" - plus other insulting remarks.. This was a nightmare for the PR department at Mason and Mason's bank, but they had to deal with it as best they could. In West Virginia, however, one or two disgruntled clients became incensed by this banking family's attitude towards the plight of their clients and decided to teach them a lesson. Humility was lost on these people they thought, and that they were about to correct - one way or another. They got together, plotted, schemed and connived and finally came up with a plan. However, revenge can sometimes not go as expected and when that happens it can be counterproductive. The price to be paid for such events can be rather expensive - and one these participants would rather not have had to pay when fate steps into the mix.

• Language: English
• Publisher: Ian MacDonald
• Release date: May 29, 2013
• ISBN: 9781301699889

Ian MacDonald

The author was born and educated in England and served in the British armed forces and briefly as an officer in the British Prison Service. He subsequently became a financial adviser and retired as an executive in a financial planning firm. He took up writing as a hobby upon retirement and he now lives in Ontario with his wife. His writing has a military or law enforcement theme to it as his interests lie in that field.

Book preview

Costly Vengeance

By

Ian Macdonald

Copyright 2013 Smashwords Edition

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The financial collapse of 2008 affected a great many people worldwide. However, one banking dynasty in New York was less than sympathetic to its clients who had invested in good faith. They considered them to be grasping Peons who deserved what they got for being greedy. Their chairman even went on National TV and said so. One or two good people in West Virginia took exception to their attitude and decided to teach this arrogant banker and his pompous wife a lesson in humanity. They then discovered far more corruption than they had ever imagined. Although revenge can certainly be sweet – it can also come at a price. One perhaps that in hindsight these good folks would rather not have had to pay.

Acknowledgements

Cover Designer: Rita Toews

Photo credit:

http://www.flickr.com/photos/75001512@N00/5171191501/>Joelk75 via http://photopin.com>photopin http://creativecommons.org/licenses/by/2.0/>cc

Chapter One

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Paul Marshall sat quietly on the floor of the exercise yard in his orange prison suit gazing absently at the clouds as they floated aimlessly across the sky. It was a comfortably warm and sunny day and he let his mind drift back wistfully to the days when things were so very different. They were not all that long ago, only a few years in fact. How had things gone so wrong and just how had he ended up in here? They were compelling questions; but John knew the answer to them only too well. He was thirty eight years old now, had dark curly hair and he was still in good physical health. He had worked out at his local gym regularly and also performed physical tasks at work when necessary, so overall he was in pretty good shape. As he glanced around the yard and took in the others who were present, he knew he didn’t fit in here. There were all kinds of criminals in this prison and their crimes covered the whole spectrum of human depravity. Darwin’s theory of man descending from the animals could certainly be validated in here by casual observation. The age old jungle custom of kill or be killed was very much in evidence within these walls. He had not been in here long, but he could easily read the faces of the inmates and determine whether or not they were the hunters or the hunted. The hunters had that air of arrogance about them as they strutted around the yard yielding to nobody and glowering at those who didn’t get out of the way fast enough. They were the lords in this jungle and they most certainly acted like it too. The hunted exuded fear and it showed clearly on their faces and in the furtive glances they gave in scanning the yard to ascertain where the hunters were at any given moment. You could see the fear in their eyes and their bodies were always tense. Their sense of situational awareness was acute and it was in effect 24/7 and very finely tuned – their very survival depended upon it. There were some evil men in here, men who were totally devoid of compassion or, for that matter, any humanity either. Paul knew he did not deserve to be in here and yet here he was. What was once his idyllic life, and one envied by many, had fallen apart. He had not foreseen this happening and it was those unforeseen events that had finally landed him in here awaiting trial.

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It had all started in 2008 on Wall Street when the banking structure collapsed and the resulting financial tsunami swamped nations around the globe. The Marshall family of Markville, West Virginia was a well known family in the area due to their operating one of the largest lumber mills in the state and for the community services they were involved in. It had been founded by Paul’s great grandfather in the late 1800’s and it had grown substantially over the years. Paul had started working in the sawmill as a young boy and gradually worked his way up to a management position by his hard work and positive attitude. After a few years when he had gained more experience, he had borrowed money from his father to set up a pallet making business on the vacant lot next to the sawmill. It was a completely separate business, although Paul bought all of his timber supplies from his father. He did not ask for, nor did he receive any concessional rates for that lumber; he paid the same wholesale rate as other contractors. The general public however was obliged to pay standard retail rates of course. As a result of his efforts he had now acquired a lovely home high up the hillside with a commanding view of the valley below and the glistening Lake George. The home was surrounded by trees on three sides but it still allowed them a panoramic view of the valley below and the intrinsic beauty it contained. His wife Nancy and his two children, Grace and Wayne, were the most important people in the world to John and he worked hard in order to provide for them and things were now coming together nicely. Those seemingly endless days at the office were now starting to pay off. The waters of Lake George shimmered in the sunlight by day and danced in the moonlight at night making it look simply magical. He had spent many a romantic evening just sitting on the porch with Nancy with a glass of wine in his hand smelling the fragrance of the flowers. It really was peaceful up there away from the bustle of the traffic in the town below. He could see the traffic and their blinking lights at night quite clearly, but it was silent and totally relaxing and that was most welcome after a long and tiring day. Nancy just loved it up in those hills and she and the kids would romp around those hiking trails for hours looking for exotic flowers or animal tracks. Paul was putting in long hours at work just like his father had; that after all is what it takes to run a successful business. He was happy doing it as he knew that one day he could slow down and really appreciate a more tranquil lifestyle. Right now he had to become established first and he simply had to pay his dues like any other businessman.

A few hundred miles to the north east of Markville lay New York and the merchant banking firm of Mason & Mason. Like the Marshall’s, their business also went back to the 1800’s and it was now being run by the great grandson of its founder. Bruce Mason had inherited his position upon the death of his father. His shareholdings were such that the board had little choice but to appoint him as Chairman and also CEO. Bruce was more of a bully than a gifted financial wizard and he enjoyed a maniacal thirst for power and influence. He displayed a mean and aggressive personality most of the time and he was certainly unpopular with his staff. His younger brother George and his sister Elizabeth were also board members of the bank but they paid homage to Bruce’s whims thus giving him even more sway. In essence they paid very little attention to the banks business affairs and chose to lead their own lives away from Wall Street. It was a toss up who was more pleased by that; Bruce for having total control, or George and Elizabeth for escaping from Bruce’s tyrannical clutches. Mason & Mason were rather smaller than the other major players on Wall Street and Bruce was determined to change that. The financial world was all moving along Tickety Boo, but Mason & Mason was slowly falling farther behind. They were being too conventional and playing by the rules, just as they had in the early days. In today’s cut throat economy risks had to be taken in order to earn the reward. All the other major banks were marketing CDO’s (Collateralized Debt Obligations) and Mason’s, as they were known on the street, were not. Essentially CDO’s are a collection of debts, i.e. credit cards, car loans, mortgages etc. that all pay back interest. These are then packaged together in bundles and sold off to others. On the face of it it looks good and, based on the hype put out by the banks, quite lucrative too. On paper it should have been, but there was one major flaw built into that. The underlying securities were little more than smoke in a box. A beautifully wrapped gift box perhaps – but a box none the less. If you and everyone else who owned such a box left that box alone everything would be fine. The minute you or someone else opened that box – Puff – all the smoke just floated away and you were left with nothing. The mortgages for example were given out on buildings worth far less than the mortgage was for and in many cases to people who simply couldn’t afford to pay for them.

Bruce Mason took it upon himself to jump on this bandwagon and he told his senior mangers to compile a range of CDO’s and aggressively market them to qualified investors. He did not give instructions on how to set these up, just that he wanted it done and in significant volume. The truth however, or what was supposedly the truth, was not exactly prominent in the disclosure statements and prospectuses being issued to prospective investors. In fact it never showed up anywhere. People simply believed that all the underlying debts were of investment grade quality and that the bank had put them together as a sound investment vehicle. It certainly looked good on paper and the yield being offered was good, but not too good, so suspicions were not raised. Banking is a competitive business and a few percentage points can and does make a huge difference; especially in larger transactions. Mason’s CDO package looked pretty damn good and some of the smaller banks snapped them up for their customers based on Mason’s former track record. They enjoyed a reputation for being an honest and reputable institution with an enviable track record dating back to the 1800’s. However, the greed that Mason’s and the other large banks had been consumed by would soon come back to bite them. The debts became monumental and the banks simply couldn’t cover them. They all knew it, but they were counting on getting away with it by paying old creditors with new depositors money like a giant Ponzi scheme. However, somebody did open the box and suddenly discovered that the smoke was gone and all hell then broke loose. This was a financial calamity like no other and its ripples reached around the globe. Trillions of dollars were lost, businesses collapsed, retirement funds evaporated and ordinary people were shell shocked. They had nowhere to turn as their life savings became seriously depleted or worse, vanished altogether. Corporate greed was the reason for all of this and the culture of pursuing the almighty dollar in terms of profits and subsequently those glorious annual bonuses once the annual haul had been counted. Six figure handshakes were routine for the grunts - but higher up the food chain seven figure cheques were being strewn about like confetti. This was just how it was in investment banking. Now however, things had gotten out of hand and the gravy train was over, it had been seriously derailed – at least for now. The bankers were all wringing their hands and one or two offered their regrets, but actual genuine apologies were in short supply. When these schemes were drawn up and put into play they never gave the simple man any consideration whatsoever. The thought of default never even crossed their minds and certainly not the consequences to the poor Joe on the street. Countries were now on the brink of collapse as they too had been duped. That gaily wrapped box of smoke had them all fooled and there was some very serious tap dancing going on now amongst them in order to keep afloat.

The initial shock wave stunned them all just like an atomic blast. However, the fallout takes a little longer to become apparent, but it too is deadly. Bruce Mason and his ilk may have been responsible for this meltdown, but financially they were more than capable of withstanding the aftermath of it all. People like Paul Marshall however were not so well insulated. The Marshall family were not exactly paupers, they had a successful business empire, nice homes and cars and they were envied by many. However, in the modern world we are all inter-dependant on each other. A manufacturer soon realizes that there is no point in making his product if there are no customers to buy them and so the lay offs begin. The more people unemployed the less that they can buy and on it goes. Paul Marshall had found himself in that position and he had been forced to let some of his people go. It really broke his heart to have to do this, but he simply had no other options. These good folks had been responsible for his past success and now he was getting rid of them. He knew only too well that they would not get a job anywhere else – everyone was in the same boat. Putting food on the table would not be easy for any of them and they certainly didn’t deserve that. Paul agonized over these layoff decisions and he put them off as long as he could – but in the end he had little choice. As the crisis wore on more defaults took place as people had to choose between feeding their family or paying their rent or mortgage. It became a recurring theme and over the coming months things were destined to get even worse. The newspapers were full of explanations of what had occurred and why it had occurred, but while people’s positions may have been banded about, names certainly were not. Who was responsible for all of this mess? That of course would be the CEO of each organization, right? Well now, technically yes, he is the man who is finally responsible for his banks actions, but did he personally cause this? Did he, for example, formulate all those CDO’s and ABCP’s (Asset Backed Commercial Paper) personally or was he even made aware of their composition? Bank chairmen seldom get down and dirty in the trenches with the grunts – they may have been there once, but that was a long time ago. The blame, and there sure was enough of it to go round, was apparently difficult to pin down. Prosecutions have yet to be tried in court against any of the major players in this debacle. Nobody had the direct intent to defraud the public – at least it cannot be proven that they did, and therein lays the rub. Was there a lack of diligence on the job? Damn right there was. However, if that was a prosecutable offense, half of North America would be on trial. Negligence however was another matter, but even this somehow managed to evade prosecution. Mason’s fancy foot work during the investigation of his bank resulted in no charges being laid. On the face of it he had dodged a bullet and his greed had not caught up with him – Yet! The Senate Banking Commission may have absolved him, however reluctantly, but one or two others may be less forgiving. Lots of people’s dreams had been destroyed by all of this and they were looking for people to blame. Bruce Mason, amongst others, was on their list.

A few months before the collapse Bruce Mason had called a board meeting to discuss the profitability of the bank; it was more of an angry tirade than a discussion if the truth be known. He pointed out that all the other major players on Wall Street were issuing these CDO’s and Mason’s were not and they were losing business because of it. He went on to point out that if the current staff were unable to compile a collection of suitable debt vehicles and package them attractively, then perhaps he should find people who could. Nobody who attended that meeting was left in any doubt as to what they now had to do. Failing to comply was as good as asking to be fired. Severn figure incomes are hard to come by when one had been fired for what amounted to incompetence and Wall Street was unforgiving and very competitive.

As a result those executives applied pressure to the senior managers who passed it on down to the middle management level. Everyone was now under the gun to perform or else. This all but guaranteed that corners were going to be cut - and they were. Local managers now found it necessary to fudge a few figures. They had been allocated so much to lend out and they had to ensure that it was. In order to lend out their quotas each month they had to get creative. Property assessments were inflated; borrower’s incomes were also inflated and also took into account future annual raises of meteoric proportions. The managers were filling their quotas and nobody up the line was asking too many questions as to how that was being achieved. The paperwork looked good, but it was never checked or independently verified. Millions of dollars was now invested in property valued only in the hundreds of thousands and the ability of the borrowers to repay even a portion of their loans was questionable to say the least. It was only a question of time before it hit the fan and when it did everyone would be affected.

The non-recourse mortgage system allowed borrowers to simply walk away from their contractual obligations and therefore leave the lenders holding the bag. This is a headache at the best of times as the banks are not in the real estate business – well not officially anyway. When it became apparent that they were holding discounted real estate the panic started. More and more people were walking away, property prices subsequently fell off a cliff and that caused even more good folks to walk away as unemployment forced them to re-evaluate their lives. This financial tsunami had an effect on everyone; but those on the lower rungs of the ladder were hit hardest. Those on the top rungs of the ladder didn’t even get wet, those lower down got progressively wetter the father down they were. Some on the bottom rungs were simply knocked off the ladder altogether. They were now completely helpless and they were being swept along by the tide. People that they had trusted had let them down. The only thing they had been guilty of was placing their trust in people who were no longer trustworthy. The days of honor and doing business on a handshake were gone, but many thought it was still that way amongst professionals. Unfortunately they found out that this is no longer the case. Greed and the pursuit of the almighty dollar, together with keeping up with the Jones’s is now the mantra being adopted.

Bruce Mason had adopted this viewpoint and as a result wiped out a hundred years of integrity and trust that his firm had previously enjoyed. It was gone forever now and he could never get it back. However, he personally was still a wealthy man. The loss of a few millions to him was simply a paper issue or an accounting exercise. To his investors however it was far more serious – people like Paul and Nancy Marshall for example. It was the ordinary man in the street who was in trouble, not the fat cats on Wall Street. People were losing their homes and their jobs and suffering from despair. Pride was a luxury many could no longer afford and they were obliged to attend food banks in order to feed their families. It was not their fault, they had done nothing wrong and yet they were the ones who were paying the price. This didn’t seem right and they now wanted to know just who was to blame. It was very reasonable question under the circumstances – but one with no answer. Simply saying that the big banks caused it just didn’t cut it; they wanted names and their heads on a stick. After all these good folks had cost them their homes, their jobs, their marriages, their self respect and they now wanted revenge. As they saw it they deserved nothing less. When one or two people realized that this was not in fact going to happen, they decided to take it upon themselves to seek the justice that they felt that they were entitled to. This was not the way things were supposed to be. This was America, the land of opportunity and free enterprise. Having your life savings stolen away from you and visiting food banks to survive was just not right. Some felt it was time to emulate Robin Hood and take action personally against the fat cats responsible. They wanted their heads on a stick even if the law was powerless to provide them with justice. If official blame could not be placed on a particular individual, then they would apply street justice to them.

The level of proof required in such cases was far less stringent. These vigilantes would determine the level of guilt and what appropriate penalty was to be imposed. The accused would have none of the usual legal safeguards or rights of appeal. Their justice would be quick and the legal niceties simply didn’t apply here. Common sense was the sole arbiter in these cases; what they saw as common sense anyway. Impartiality however was not a prerequisite and many people had made up their minds long before the defendant would have an opportunity to state his case. Pleas of ignorance would not be acceptable and things were now about to get ugly. It was time to seek revenge for these atrocities and to hunt down those responsible. Initially these good folks had been shell shocked, but as time wore on their anger had intensified as the misery became more pronounced and took its toll on them all. These formerly upright citizens were now hell bent on revenge and dispensing their own brand of justice to those they felt were responsible for their current plight. They were not in a forgiving mood and charity was not a concept they were embracing anymore. This was not a spontaneous response by any means. It took some time for the full impact of this financial collapse to filter down to the average man. Family life initially was not immediately imperiled – but a few months down the road things began to change and so too did the attitude of those affected by it all. They felt they were being victimized and they were just not going to sit back and take it – not this time.

Chapter Two

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Paul and Nancy were busy planning their annual vacation and this year they were taking the kids to Disneyworld in Orlando. Grace and Wayne were really excited by this prospect. One or two of their friends had been there already and the stories that had come back with made Grace and Wayne even more eager to go. They had seen