Installment 7.1: Diversification

McDevitt had a text on his phone.  It read, “Call me. -S”

McDevitt had no idea what part of the world Sergi, his stockbroker worked out of.  Sergii always sounded peppy regardless of the time when McDevitt called.

McDevitt pulled a simple flip-phone out of his nightstand drawer.  He selected a SIM card out of his briefcase...actually a backpack... and inserted the SIM and a battery into the phone.  He stored his burner phone without the battery installed ever since he learned that all phones sold in Cali had the ability to turn themselves on and shake hands with the internet.

McDevitt called a number from memory.  There was a noticeable time lag as the call routed through various anonymous sites and encryption algorithms.

Sergi answered with a big smile in his voice.  “Tom, how very nice to be hearing from you!”

McDevitt, who was a bit sleep deprived these days, was short and to-the-point, “What do you need?”

Sergi's mood was not dampened.  “I need to know, how does it feel to be a billionaire...approximately $11 billion...on paper?”

McDevitt perked up at the news.  “Did the contracts transact?”

Sergi said “The contracts executed and the principals have 30 days to pay.”

Changing subjects, Sergi asked “Do you have plans for the proceeds.  That is a lot of money to have sitting idle.”

McDevitt said, “I have given it some thought.  I think I should pay 'income tax' to the Cartel.  It is only fair.  I never would have been in a position to make that money if it were not for them.  Also, I want to demonstrate that I am still loyal and have my priorities in order.”

Sergi was not totally surprised.  More than one high ranking Cartel official had let success go to his head and attempted to part ways with the Cartel.  They had a very, very short life expectancy.  McDevitt was a canny operator.  He was showing fealty to the Cartel.

Sergi waved off the offer.  “That will not be necessary.  I talked to the bosses.  You made a mountain of money between saving the Cali business and this investment.  As you probably know, I invest money on the side for the Cartel and I invested along side you.  You personally put a lot of money into my pocket, both in commission and in my mirroring your investments.”

“So, what do you want to do with the rest of the money?” Sergi persisted.

McDevitt paused for a second as he tried to figure out an elegant way to ask for what he wanted.  Nothing came to mind, so he plunged ahead.  “I want to use 10% of it to buy bonds in the new SD-LA.”

Sergi sighed.  “There is no such thing as SD-LA bonds.  I can buy you Cali bonds but I think that would be really stupid.”

McDevitt said, “I know there is no such thing as SD-LA bonds.  I want you to start marketing them or I want you to find somebody who can.  I think this SD-LA thing is going to take off and the government will need to finance itself through debt.”

Sergi echoed back, “You want me to handle the sale of sovereign debt for a nation of 40 million people?”

“I would appreciate it if you could.”  McDevitt said.  “I know it takes a lot of juju in the market to make that happen.  You might not want to be that visible but I bet you know some reliable people who would be happy to swing it.”

Sergi was quickly running calculations in his head.  Even a very, very small skim on the take would be enormous and it would be generated year-after-year like clockwork.  “I think I can work something out.”

“What else do you have in mind?” Sergi asked. 

“This is the ticklish part.” McDevitt announced.  “I want to look like I am going legit.”

Sergi cringed.  “What is your thinking?” he temporized.

“Selling drugs is a young man's game.  Also, the profit margin is falling off a cliff.  The Cartel needs to have a game plan to transition to traditional types of business.” McDevitt said.

“Look at the Kennedy family.  They made their grubstake running whiskey in the prohibition and then leveraged that into a fortune in real estate.” McDevitt said.

“My thinking is that if I start infiltrating traditional businesses, then Cartel members will have a safe place to send their sons, daughters, nephews and nieces...a place where they will be out of the line-of-fire when the next Cartel tries to muscle their way in.”  McDevitt said.

“Let me bounce that off the big families.” Sergi said.  “There is much merit in what you are proposing.”

It was not possible for McDevitt to know, but Sergi was the head of one of those 'big families' and his foray into the world of finance was motivated by reasons very much like the ones McDevitt had shared.

“Still, getting back to the immediate business at hand...how do you want me to invest the $10 billion?” Sergi persisted.

“I would consider it a great favor if you managed that for me.” McDevitt said.  “I have a lot on my plate and I trust you to invest wisely.”

“I have been looking over your shoulder for the last fifteen years” Sergi said “so I have kind of a feel for your investment strategy.  But having $11 billion changes things.  You no longer need to take on a lot of risk to build wealth.  Have your priorities changed?  Do you want me to focus on growth? Wealth preservation? Social causes?”

McDevitt said, “My dad told me that people in our business need to know three people:  A young man with a fast boat, an old man with a gun that shoots straight, and somebody working in the government mail room.  My dad was a very wise man.”

McDevitt pursed his lips in thought.  “So I want you to invest that money with the intention of using it to create leverage.” McDevitt said.  “You know how that works better than I do.  I want to buy the ear of everybody working in the mailroom.

“The US is our biggest neighbor.  I want their arms industry to hold SD-LA in higher regard than the SJWs in northern Cali.  There are also some industries in the US that are not well loved.  I think investing in tobacco and distilled goods would cause the Senators from Kentucky, Tennessee and the Carolinas to regard SD-LA favorably.” McDevitt explained his thinking.

“Maybe some investments in oil equipment and automobiles...that would gain influence in Louisiana, Texas and Michigan.”  McDevitt said.

Sergi noticed that McDevitt was using SD-LA and himself interchangably.  He chose not to say anything.

“Let me read my notes back to you to confirm that I heard you correctly:  You want me to actively manage your money.  You want me to invest your money primarily in the US and other potentially close allies of the new SD-LA.  You want me to invest your money with a primary goal of creating political influence and secondarily of preserving wealth.” Sergi said.

McDevitt contradicted Sergi, “I did not say 'political' influence.  I said leverage.  There are a lot of decisions made outside Washington DC.  For example, DC sets limits on the capabilities of weapons systems that are exported in the very coarsest terms.  The industry executives and engineers make a lot of decisions that are not covered by those limits.  I want them to be very generous to SD-LA when making those decisions and far less generous to northern Cali.”

“Gotchya.”  Sergi said.  “I have enough to work with.  Sergi out.”  And with that, Sergi broke the connection.

McDevitt removed the battery and SIM card and destroyed the card by heating it with a cigarette lighter.

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