why you stopped.”
Kim backed away from the door, then turned to let Gage pass by and into the long marble hallway. Gage waited for Kim to close it, then followed him past the two-story living room and through the French doors and onto the redwood deck. Kim directed Gage to one of four teakwood chairs surrounding a matching table. Gage adjusted the umbrella to shade their eyes against the midmorning sun reflecting off the pool, then sat down.
“We were kids when we started the company,” Kim said. “We didn’t know anything about taxes. I don’t think I’d even filed a tax return before. I was just out of Caltech. The second year I owned the company, the bottom line on my 1040 was larger than all the money my father made in his whole life.”
“What was Marc Anston’s pitch?”
“It was the other way around, at least at the beginning. Somebody said we could make a lot of money by offering extended warranties on the electronics we sell and we went to Anston to set it up.”
“And he told you a warranty is like insurance.”
Kim smiled. “How’d you know?”
“And he told you that you could make a lot more money by setting up offshore.”
Kim nodded. “Basically. The customer bought the warranty from us, and then we’d buy reinsurance. We keep a little money here to pay off claims, like when somebody’s iPod crashed, but ninety percent of the money went offshore. We didn’t have to pay taxes on any of it. Tens of millions of dollars a year.”
Gage glanced back the house. “I take it some of the money came back to pay for this.”
The county assessor records Alex Z had located placed the value of the property at four point two million. The recorder’s office records showed Kim paid off the property a year after he bought it.
Kim reddened. “Anston said I could. And not just me. All the guys I started the company with did it.”
“Sounds like a good scheme.”
“Anston’s a shrewd guy, about lots of things. He talked us out of going public years ago, said if we held the company close we’d make a lot more money down the road.”
“Are you sure he didn’t want you to go public for fear that a new board of directors might audit the books?”
“I thought about that.” Kim shrugged. “But he was right in the end.”
“How’d he get you to agree to use some of the offshore money for political contributions?”
Kim drew back. “Shit. How’d you…”
“You’re not the only one.”
“Anston told us we needed to spend some money to fight having to charge sales tax on Internet purchases. Not having sales tax gave us a real edge on brick and mortar stores.”
“Did he tell you how the money would be spent?”
“No. He just said to trust him.”
“And every year it was something else.”
“Like clockwork. Eventually he just took money without asking.” Kim spread his hands. “What were we going to do? Sue him?”
“Sounds like extortion.”
Kim blew out a breath. “Sure felt like it.”
“Then how’d you get out of it?”
“The IRS saved our asses. Can you believe it? Four or five years ago, Anston found out they were investigating us, so he shut the thing down. He was really pissed. Apparently he had a lot of clients paying money into the company-”
“Pegasus.”
“Yeah, Pegasus. And he had to make the company evaporate. He kind of blamed us because we were the only one doing warranties. And blamed himself because we were the only dot-com in the group. The rest were all old line, old money companies. Dow thirty and all that.”
“Did he explain what forced the issue?”
Kim squinted into the distance, then looked back.
“Once he complained about cash flow but I didn’t understand what he meant.” Kim smiled. “If other companies were paying in as much as us, cash flow should’ve been the least of his problems.”
“Did the IRS ever come after RaveTron for back taxes?”
“Nope. Anston had that covered. First, he got a senator to call the IRS commissioner and tell him to lay off by saying we were young guys and the company grew too fast. It was a bunch of bullshit. He never said who it was, but I can guess.”
“Who?”
“Landon Meyer. Because his brother used to be Anston’s law partner.”
“And second?”
“I’m not sure I understand it exactly, but Anston had some gimmick where we wired the insurance premiums to the Cayman Islands, but the money ended up somewhere else. We never figured that part out. And after we were a few payments into the scheme, we were afraid to ask.”
“I take it the reason for the somewhere else was so the IRS would never be able to connect the money you paid for premiums offshore with the money that came back to the U.S. as loans.”
Kim nodded, then gestured with his thumb toward his house. “Ex-actly.”
H ow’d you pick me?” Kim asked Gage as he poured coffee into oversized blue RaveTron mugs in the kitchen. “You could’ve knocked on a lot of doors. I guess you figured me for the weakest link.”
“Just the opposite. I read over some of the press coverage you got when your early investors were pressuring you into going public years ago. You said you didn’t want to become a gone-tomorrow dot-com millionaire. You wanted to build a real company.” Gage leaned back against the kitchen counter. “You made a mistake getting involved with Anston, but you weren’t the kind of person who’d take millions and leave investors with an empty shell. A lot of others did.”
Kim handed Gage a cup. “Well, we sure screwed up in that tax thing.”
“I think you’re the only one of Anston’s clients who looks at it that way.”
Kim lowered his head, then swallowed hard and looked again at Gage.
“Do you happen to know what the statute of limitations is on tax fraud?”
“Sorry, but there isn’t one.”
Chapter 75
Instead of walking directly to the redbrick St. Francis Yacht Club, Gage grabbed his binoculars from his glove compartment and found a spot along a stepped sea wall with an unobstructed view of the Golden Gate. It took only seconds to spot the purple sail on the sixteen-foot Australian Mosquito catamaran, then a slight turn of the focus to capture international lawyer Jack Burch, feet locked on the rail, stretched out against the harness, back brushing the whitecaps as he shot under the bridge. They hadn’t spoken in detail since Gage telephoned him in Moscow.
Gage tracked Burch until he arrived near the spit of land on which the club stood and that formed the boat harbor, then he began the long walk across the parking lot to meet Burch near the dock entrance. Burch looked like a wet St. Bernard wrapped in yellow Gore-Tex as he came through the gate and reached out his hand. He pulled it back and inspected it.
“Maybe I better dry off.”
Fifteen minutes later Burch emerged from the locker room and directed Gage into the restaurant and then to a table by the wall of windows facing the harbor. It was set for five: Burch, Gage, their wives, and Alex Z, whom Gage had invited to Burch’s birthday lunch so he could talk to the lawyer about using his offshore connections to investigate the ownership of the banks Anston was using.
Gage nodded toward the marina after they sat down. Nearly all the slips were occupied. “How come the members aren’t out on the bay?”
“Big awards banquet this evening for those who didn’t drown themselves during the Hawaii race.”
