“There are going to be some awfully red faces down in Linda Vista.” (continued)

By Jim (Sherlock) Stein

Mysteries squared. Jim

Mysteries squared. Jim

The Case of the Vanishing Greenbacks

L.A. MathThe phone rang just as I stepped out of the shower. It was Allen.

“Freddy, are you available for an embezzlement case?”

My biggest success had been in an embezzlement case involving a Wall Street firm specializing in bond trading. Allen had given me a whopping bonus for that one, which was one of the reasons I could afford to take it easy in L.A. I had done well in a couple of other similar cases, and had gotten the reputation of being the go-to guy in embezzlement cases. It never hurts to have a reputation for being good at something. Besides, you don’t see many guys in my line of work who can read balance sheets.

I’ve always felt it’s important to keep the cash flow positive, and the truth was that I was available for a jaywalking case if it would help the aforementioned cash flow. But it never hurts to play a little hard-to-get.

“I can probably clear my calendar if it looks interesting.”

Allen paused for a moment, either to collect his thoughts or to take a bite of one of those big greasy pastrami sandwiches he loves. “I’m pretty sure you’ll find it interesting. It’s stumped some people in L.A., and I told them I had a good man out there. BTW, that’s you.”

It’s nice to be well thought of – especially by someone in a position to send you business. I knew that Allen’s firm, though headquartered in New York, had arrangements with other firms in other cities. I didn’t really care about the details as long as the check cleared – which it always had.

“I’m certainly willing to listen. What’s the arrangement?”

“Consulting and contingency fee. Fifty-fifty split.”

That was our usual arrangement. Burkitt Investigations got a guaranteed fee, plus a bonus for solving the case. Allen and I split it down the middle.

“OK, Allen, fill me in.”

“Ever heard of Linda Vista, Freddy?”

Temporary blank. Movie star? Socialite? Then I had it. Linda Vista was a town somewhere in Orange County with a big art community.

For those of you not up on California politics, Orange County is a bastion of conservatism. You have Orange County to thank, or blame, for Richard Nixon and Ronald Reagan. But Linda Vista, which my fragmentary Spanish translates as “pretty view”, was different from your basic Orange County bastion.

The vista in Linda Vista was sufficiently linda that it had attracted a thriving artistic community.   There were plenty of artists in Linda Vista, and most of them were liberals.

As a result, Linda Vista was highly polarized. The moderates were few and far between. On the left, you had the artists, with their funky bungalows and workshops. On the right, you had the stockbrokers and real-estate moguls, living in gated communities so they wouldn’t have to have any contact with the riff-raff, except for the tradesmen delivering or repairing stuff. However, there were enough artists and hangers-on to acquire political clout – after all, it’s still one man-one vote in a democracy, rather than one dollar-one vote. Pitched battles had raged over practically every issue from A (abortion) to Z (zoning), and many of these battles had made state and even national news.

That’s all I knew about Linda Vista, other than not to try to drive down there at rush hour, which turned one hour on the 405 to more than twice that. The obvious question was: what kind of a contingency case had they got? So I asked it.

Allen filled me in. “The city is out a bunch of bucks, and each side is accusing the other of fraud and embezzlement. Because of the split in the political situation, the City Manager gave half the budget to the conservatives, and the other half to the liberals, letting each determine how to spend its half. Both sides claim to have been shortchanged.”

Allen paused to catch his breath. “I’ve got a friend who works in the City Manager’s office. I told him I had a good man out there who’d done a lot of first?class work in embezzlement cases. Want to take a look at it?”

“Sure. How much time should I put in before I throw in the towel?” In other words, how much is the consulting fee?

“As much as you like.” In other words, since Allen’s meter wasn’t running, feel free to burn some midnight oil. “The consulting fee is $3,000, upped to ten if you figure it out and get proof.” You don’t have to be an expert at division to realize that I was guaranteed a minimum of $1,500 for the time I put in, and $5,000 if I doped it out. You also don’t have to be an expert at division to realize that Allen was getting the same amount for making a phone call. I decided to be reincarnated as an employer rather than an employee.

Allen gave me a brief description of the protagonists, and I spent a good portion of the evening with a pot of coffee and my computer, getting some background information on them. I’ll say one thing for the Information Age; it’s a lot easier to run a background check on people than it used to be. What with search engines and social networks, you save a lot on gas money and shoe leather.

The next morning, I waited until after rush hour, and made the trek to Linda Vista. The City Hall was located in a section of town where the vista was a long way from linda, unless strip malls filled with 7?11s and fast-food stores constitute your idea of attractive scenery. I found a place to park, straightened my coat and tie, and prepared for the interviews.

I was scheduled to have three of them. I had been hoping to arrange for longer interviews, but everyone’s in a rush nowadays, and I was getting a quarter-hour with each, tops. They’d all been interviewed previously – Allen had mentioned that this case had stumped others – and people are generally less than enthusiastic about being asked the same questions again. And again. The first interview was with Everett Blaisdell, conservative city councilman, who would explain why the conservatives happened to be short. The next was with Melanie Stevens, liberal city councilwoman, ditto. The last interview would be with Garrett Ryan, City Manager.

“They are going to build a scale replica of the Statue of Liberty and submerge it in Coca-Cola”

I have a bad habit. My opinion of members of groups tends to be formed by the members of those groups that I have seen before. Consequently, I was expecting the conservative Everett Blaisdell to look like a typical paunchy southern senator with big jowls. So I was a little surprised to discover that Everett Blaisdell was a forty-ish African-American who looked like he had spent years twenty through thirty as an NBA point guard.

He got right down to business. “I want you to know,” he barked, “that everything that we have done with our budget allocation has been strictly by the book. Our expenses have been completely documented.” He handed me a folder full of ledger sheets and photos of checks, which I glanced at and stashed in my briefcase.

Blaisdell was clearly angry. “The business community is the heart of Linda Vista, and it is ridiculous to suggest that it would act in a manner detrimental to its citizens. We are $198,000 short in our budget.”

You don’t expect NBA point guards to get out of breath too easily, considering the time they have to go up and down the court, but maybe Blaisdell wasn’t in shape. He paused, giving me a chance to get a question in edgewise. “Just what do you think has happened, Mr. Blaisdell?” I inquired mildly.

“I know what has happened. Melanie Stevens and her radical crowd have managed to get hold of that money. They want $200,000 to fund a work of so?called art which I, and every right?thinking citizen of Linda Vista, find totally offensive. It’s mighty suspicious that the missing funds, $198,000, almost precisely cover the projected cost of the statue.”

I was curious. “If you don’t mind my asking, exactly what is this statue?”

Blaisdell’s blood pressure was going up. “They are going to build a scale replica of the Statue of Liberty and submerge it in Coca?Cola. You may know that Coca?Cola is acidic, and it will eventually dissolve metal. They say that this so?called dynamic representational art represents the destruction of our civil liberties by over?commercialization. Well, let me tell you, we’ll fight it.”

He looked at his watch. “Sorry, I’ve got another appointment. When you find out what those scum have done with the money, let me know.” He walked me to his door.

It took a few minutes to locate Melanie Stevens’ office, as it was in a different wing of the building, possibly to minimize confrontations between her and Blaisdell. It was a bad day for stereotypes. My mental picture of Melanie Stevens, ultra?liberal, was that of a long-haired hippie refugee from the ’60s. The real Melanie Stevens was a pert gray?haired grandmother who looked like she had been interrupted while baking cookies for her grandchildren. She, too, was evidently on a tight schedule, for she said, “Sorry, I can only give you about ten minutes, but I’ve made copies of all our expenses.” More ledger sheets and photos of checks went into my briefcase.

“Let me tell you, Mr. Carmichael, that we could have used that $198,000. We planned to use it for a free clinic. I know exactly what has happened. Blaisdell has doctored the books. I’m sure glad that Ryan had the guts to ask you to look into it.”

“Blaisdell seems to think that your people are responsible for the missing funds,” I observed.

She snorted. “That’s just typical of what they do. Whenever they’re in the wrong, they lie and accuse the other side of lying. They rip off the community, and channel money into PACs. Political action committees. Or worse. Blaisdell knows he faces a stiff battle for re-election, and I wouldn’t be the least bit surprised to find that money turning up in his campaign fund.”

“He seems to think that you are going to use the funds for an art project, rather than a free clinic,” I remarked.

“He’s just blowing smoke. He knows quite well that the statue will be funded through private subscription.” She looked at her watch. “Let me know when you pin the loss on them.”

I left Stevens’ office for the last interview, with Garrett Ryan, whose anxious expression made it clear that he was not a happy camper. “Have you got any ideas yet?” he asked.

I shook my head. “I’ve just talked to Blaisdell and Stevens. They’ve each handed me files containing what they consider to be complete documentation. They’ve each given me a story asserting their own innocence, and blaming the other. I take it that the missing amount is $198,000?”

Now it was Ryan’s turn to shake his head. “No, each side says that it is missing $198,000. Quite a coincidence. And I’ll tell you, Mr. Carmichael, despite the animosity between them, I think that they are both honorable individuals. I find it difficult to believe that either would rip the city off.”

I focused on Ryan’s coincidence. “It’s funny that they are both short exactly the same amount. Perhaps you could tell me a little more about the budgetary process.”

“It’s really quite simple. Each resident of Linda Vista is taxed a fixed amount. Any complicated tax scheme would just result in a full employment act for accountants. The previous census resulted in a $100 assessment per individual. The population of Linda Vista increased by 20% since the last census. We didn’t need any increase in operating expenditures; under my guidance we’ve done a fiscally conservative and frugal job of running the city. As a result, the Council voted to reduce everybody’s taxes by 20%. Needless to say, this was a very popular move.”

“I’ll bet it was. Did everyone pay their taxes, Mr. Ryan?”

“Everybody. We’re very proud of that ?? a 100% collection rate. Despite what you may have heard, the citizens of Linda Vista are very civic?minded. Liberals and conservatives alike.”

I’ve spent enough time with balance sheets to know that accuracy is extremely important. “Was this population increase exactly 20%, or is that merely an approximate figure?”

Ryan consulted a sheet of paper. “Exactly 20%. I have a sheet of printout that gives information to four decimal places, so I can be quite sure of that.”

Just then a phone rang. Ryan picked it up, and engaged in some political doubletalk. After a few minutes he replaced the receiver. “Sorry, Mr. Carmichael. I’m behind schedule. Let me know if you make any progress.”   We shook hands, and I left.

A couple of hours later, I got home, having stopped for a bite but still avoiding rush-hour traffic. Pete noticed my presence, and asked, “So how’d things go in Linda Vista, Freddy?”

“I had a pretty interesting day. Want to hear about it?”

He nodded. I took about fifteen minutes to describe the problem and the cast of characters. “It looks like I’ll have to spend a day or so looking over the books.”

Pete shook his head. “It seems pretty clear to me.”

I’d seen it before — everybody’s a detective. Amateurs always think they know who the guilty party is, because it fits in with their preconceptions. I didn’t know whether Pete had cast Blaisdell in the role of a political fat-cat out to line his campaign war chest, or whether he was a conservative who saw Melanie Stevens as a radical troublemaker. Anyway, you’ve got to learn not to jump to conclusions in my line of work.

“You can’t do it like that, Pete. You’ve got to trace down the paper trails. I’ve done this lots of times.”

Pete grabbed a piece of paper, scribbled something on it, and sealed it in an envelope. “Five dollars will get you twenty that the name of the guilty party is inside this envelope.”

Pete needed taking down a peg. Maybe two pegs. Besides, I liked getting four?to?one odds on what was obviously an even? money proposition. “You’ve got a bet,” I said. We wrote our names on the envelope, and Pete put it on the table next to the HDTV.

“Whenever you’re ready, we’ll unseal the envelope.” I headed back to the guesthouse for a session with the books.

Forty?eight hours later I was bleary?eyed from lack of sleep. I had made no discernible progress. As far as I could tell, both Stevens and Blaisdell were completely on the up?and?up.   Either I was losing my touch, or one (or both) of them were wasting their talents, doctoring books for penny?ante amounts.   Then I remembered the envelope Pete had sealed. Maybe he’d actually seen something that I hadn’t.

I went over to the main house, to find Pete hunkered down happily watching a baseball game. I waited for a commercial break, and then managed to get his attention.

“I’m ready to take a look in the envelope, Pete.”

“Have you figured out who the guilty party is?”

“Frankly, no. To be honest, it’s got me stumped.” I moved to the mantel and unsealed the envelope. The writing was on the other side of the piece of paper. I turned it over. The name Pete had written on it was “Garrett Ryan and the City Council”!

I nearly dropped the piece of paper. Whatever I had been expecting, it certainly wasn’t this. “What in heaven’s name makes you think Ryan and the City Council embezzled the money, Pete?”

“I didn’t say I thought they did. I just think they’re responsible for the missing funds.”

I shook my head. “I don’t get it. How can they be responsible for the missing funds if they didn’t embezzle them?”

“They’re probably just guilty of innumeracy. It’s pretty common.”

“I give up. What’s innumeracy?”

“Innumeracy is the arithmetical equivalent of illiteracy. In this instance, it consists of failing to realize how percentages behave.” A pitching change was taking place, so Pete turned back to me. “An increase in 20% of the tax base will not compensate for a reduction of 20% in each individual’s taxes.   Percentages involve multiplication and division, not addition and subtraction. A gain of 20 dollars will compensate for a loss of 20 dollars, but that’s because you’re dealing with adding and subtracting. It’s not the same with percentages, because the base upon which you figure the percentages varies from calculation to calculation.”

“You may be right, Pete, but how can we tell?”

Pete grabbed a calculator. “Didn’t you say that each faction was out $198,000?”

I checked my figures. “Yeah, that’s the amount.”

Pete punched a few numbers into the calculator. “Call Ryan and see if there were 99,000 taxpayers in the last census. If there were, I’ll show you where the money went.”

I got on the phone to Ryan the next morning. He confirmed that the tax base in the previous census was indeed 99,000. I told Pete that it looked like he had been right, but I wanted to see the numbers to prove it.

Pete got out a piece of paper. “I think you can see where the money went if you simply do a little multiplication. The taxes collected in the previous census were $100 for each of 99,000 individuals, or $9,900,000. An increase of 20% in the population results in 118,800 individuals. If each pays $80 (that’s the 20% reduction from $100), the total taxes collected will be $9,504,000, or $396,000 less than was collected after the previous census. Half of $396,000 is $198,000.”

I was convinced. “There are going to be some awfully red faces down in Linda Vista. I’d like to see the press conference when they finally announce it.” I went back to the guesthouse, called Allen, and filled him in. He was delighted, and said that the check would be in the mail.   As I’ve said before, when Allen says it, he means it. Another advantage of having Allen make the arrangements is that I didn’t have to worry about collecting the fee, which is something I’ve never been very good at.

I wondered exactly how they were going to break the news to the citizens of Linda Vista that they had to pony up another $396,000, but as it was only about $3.34 per taxpayer I didn’t think they’d have too much trouble. Thanks to a combination of Ryan’s frugality and population increase, the tax assessment would still be lower than it was after the previous census, and how many government agencies do you know that actually reduce taxes? I quickly calculated that if they assessed everyone $3.42 they could not only cover the shortage, but Allen’s fee as well. I considered suggesting it to Ryan, but then I thought that Ryan probably wasn’t real interested in hearing from someone who had made him look like a bungler.

My conscience was bothering me, and I don’t like that. I thought about it, and finally came up with a compromise I found acceptable. I went back to the main house.

Pete was watching another baseball game. The Dodgers fouled up an attempted squeeze into an inning?ending double play. Pete groaned. “It could be a long season,” he sighed.

“It’s early in the year.” I handed him a piece of paper. “Maybe this will console you.”

“What’s this?” He was examining my check for $1,750. “Your rent’s paid up.”

“It’s not for the rent, Pete. It’s your share of my fee.”

“Fee? What fee?”

“That embezzling case in Orange County. It was worth $3,500 to me to come up with the correct answer. I feel you’re entitled to half of it. You crunched the numbers, but I had the contacts and did the legwork.”

Pete looked at the check. “It seems like a lot of money for very little work. Tell you what. I’ll take $250, and credit the rest towards your rent.”

A landlord with a conscience! Maybe I should notify the Guinness Book of Records. “Seems more than fair to me.”

Pete tucked the check in the pocket of his shirt. “Tell me, Freddy, is it always this easy, doing investigations?”

I summoned up a wry laugh. “You’ve got to be kidding. So far, I’ve asked you two questions that just turned out to be right down your alley. I’ve sometimes spent months on a case, and come up dry. That can make the bottom line look pretty sick. What’s it like in your line of work?”

“I don’t really have a line of work. I have this house and some money in the bank. I can rent out the guesthouse and make enough to live on. People know I’m pretty good at certain problems, and sometimes they hire me. If it looks like it might be interesting, I’ll work on it.” He paused. “Of course, if they offer me a ridiculous amount of money, I’ll work on it even if it’s not interesting. Hey, we’re in a recession.”

“I’ll keep that in mind.”   I turned to leave the room. Pete’s voice stopped me.

“Haven’t you forgotten something?”

I turned around. “I give up. What?”

“We had a bet. You owe me five bucks.”

I fished a five out of my wallet and handed it over. He nodded with satisfaction as he stuffed it in the same pocket as the check, and then turned his attention back to the game.

Copyright Princeton University Press, 2016

##

Credits for the video trailer: Jim says: The narrator is Stu Rosen, who is the faculty advisor for Film Arts 360, the class at Cal State Long Beach that produced the video. Stu is a retired Emmy-winning TV producer who also did voice-overs professionally. He and I got along great, and he consented to do the voice-over.

The script for the video was written by Carl Andrew Stone and myself. Surfside Productions is a company run through Cal State Long Beach which is used for projects such as these. The Film Arts 360 class teaches film students about the business end of the film business, and different Film Arts 360 classes have produced a number of videos for various local organizations, such as the Signal Hill Police Department.

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  • Roman L Weil July 27, 2016 at 3:37 pm

    Jim: Good to know where you are and have been. We teach that lesson this way. Imagine the stock market goes up 1% [or 10%] today and down 1% [or 10%] the next. And repeats this for each pair of days for a year. Where will the market be after a year of such pairs of days? Most students, most business people are sure: right where it started.

    Get out your calculators. Or, watch mine on the screen. You’ll be broke. Your intuitions about percentage changes are wrong.

    I think we can teach that lesson in about five minutes.

    Roman