Part 31 (1/2)

”Just before Valentine's Day,” I said.

”Hang on a second,” he said. He put down the phone and I heard some background noise. The rustling of papers, the opening and closing of file cabinet drawers. ”Here it is,” he said. ”There was a big conference on s.e.x crimes in Boston that week. I was gonna go myself, but I canceled because of my daughter's health problems.”

”Polk goes to a s.e.x crimes seminar. Underwood's death is set up to be autoerotic death.”

”I still don't have enough to charge Polk with Fontaine's murder,” he said.

”No,” I said. ”You don't have his prints on the weapon and you can't place him in your area at the time of the offense.”

”How'd you find out he was in Boston?” Gilbert asked. I told him. ”I'll see what I can do on my end,” he said. ”Maybe I can place him here or in Nebraska.”

33.

MORNIN', PEPPER,” WANDA SAID. She reached for my Foghorn Leghorn mug.

”Mornin', Wanda,” I said. As always, the place smelled wonderful, the aroma of just-baked treats saturating the air.

”You look happy,” she said.

”Been waiting a long time for something,” I said, ”and it looks like it's finally going to happen.”

”Glad to hear it,” she said. I treated myself to a hot pecan roll, poured some coffee, left three dollars on the gla.s.s counter, and found an empty booth. It was ten-thirty A.M. and I'd just come from the post office.

Gilbert had sent the doc.u.ments in one of those large bubble envelopes. I tore it open and began studying its contents. The letters, memos, graphs, and other papers had been jammed into the package in no particular order. It took nearly two hours to arrange them in chronological order and review them. I ignored some pa.s.sages that were simply over my head, but I understood enough to learn what had brought Paul Fontaine, Carolyn Chang, and Douglas Underwood together.

At about the time she started dating Dale Hawkins, Carolyn Chang developed an interest in the possible applications of fractal mathematics in the business world. She immersed herself in the literature and learned that many academics and investors were already using fractal mathematics and related concepts to predict market behavior.

As Carolyn became more familiar with the subject, she realized that everyone who had written on the topic had treated the concept of time in the same fas.h.i.+on. A second was a second, a minute was a minute, and so on. Identical units of time each received the same weight. This was the conventional approach, but Carolyn thought it simplistic.

In real life, Carolyn knew, activity frequently occurs in cl.u.s.ters. Little happens when people sleep, for example, but much happens during the day. She wondered whether models designed to predict market behavior might be improved if time periods filled with activity received greater weight than those during which nothing happened. She called this approach ”intrinsic time” and formalized her idea in an unpublished paper ent.i.tled ”The Use of Intrinsic Time in Predicting Market Behavior.” In explaining her concept, she wrote: Quite simply, intrinsic time compresses time when little happens and expands time when much happens: Seconds consume less time during the Asian lunch break than during the American lunch break, for example, because American traders eat lunch at their desks while continuing to trade.

She shared her idea with Fontaine because she knew him and knew of his interest in the stock market. Fontaine liked Carolyn's concept of intrinsic time and helped her refine it. He urged Carolyn to contact Underwood because of Underwood's ability to develop software to implement her theoretical ideas.

Working together the three developed mathematical models and corresponding software designed to predict the behavior of various economic markets. For months they monitored various markets and sent highly technical papers back and forth. Their preliminary studies demonstrated that Carolyn's concept of intrinsic time had tremendous potential. They continued to refine the idea and finally decided to subject it to a more rigorous ”real world” test.

To test Carolyn's idea the three decided to focus on one particular market index. Fontaine suggested they use the S&P 500. Using Fontaine's theoretical ideas about market behavior, Carolyn's concept of intrinsic time, and Underwood's skill in creating computer programs, the three developed a model designed to predict the behavior of the S&P 500. Underwood created a sixteen-gigabyte database containing every tick in the S&P 500 dating back to 1983. Then he put his neural networks to work and started looking for fractal patterns.

He found them. In one year of testing, the Chang-Fontaine-Underwood model had beaten the S&P 500 threefold. Intrinsic time worked. That fact established, they began working on a paper intended for publication. After again explaining the concept of intrinsic time, they wrote: Having redefined time in this way, the computer then draws a series of graphs incorporating a.s.sumptions about how the different traders in the market will react to a price change in intrinsic time. Each graph has the same overall shape, but with different slopes according to each trader's time horizon or risk profile. The model a.s.sumes each trader will react in a nonlinear way: little at first to a price rising above its moving average, then with increasing interest, and finally to slacken off as he thinks he has invested enough. The computer merely adds up these models and arrives at an estimate of how the market as a whole will react to an event. It does not work with normal time, but it works quite well in intrinsic time.

Nothing in the doc.u.ments suggested that the three had ever attempted or even considered selling their idea to a brokerage house or consulting firm. I remembered asking Russ Seifert how one who had developed a good model could make money if it wasn't really possible to sell the model. ”You go into business for yourself,” he had said. ”Either that or you publish and hope to win the n.o.bel Prize.” But what if making money had never been their goal?

Nothing indicated that the three had ever considered going into business for themselves. They had intended to publish their work for all the world to see. Their correspondence contained no mention of seeking the n.o.bel Prize or any other award. Maybe they never felt their contribution was that significant.

But someone had learned of their work and concluded that the idea was valuable. Worth killing for. I didn't know who that someone was, but as an economist and Carolyn Chang's occasional lover, Dale Hawkins seemed a good bet.

”Hey, Wanda,” I said from my booth, ”can I use your phone?” My cell phone does not work in Nederland because there are no cell phone towers up here.

”Sure,” she replied. I dialed Scott.

”McCutcheon,” he said.

”You got any time this afternoon?” I asked.

”I have to help Bobbi put down some mulch, then I'm free.”

”Two o'clock at Moe's?”

”I'll be there,” he said.

”It's an interesting concept,” Scott said as he finished reviewing the stack of doc.u.ments. He wore tan shorts, a white T-s.h.i.+rt with gra.s.s stains on it, leather sandals, and a baseball cap with the National Rifle a.s.sociation's logo on it. He's not really a member, but he gets a kick out of wearing things like that in the liberal enclave of Boulder. I'd summarized the chronology of events for him, then allowed him to study the model and test data while I read the News. We were seated at an outside table on a warm but overcast afternoon. ”How much do you think you could get for something like this if you sold it to one of these consulting firms?” he asked.

”You probably wouldn't sell it,” I said. ”You'd probably go into business for yourself.” I told him what Russ Seifert had told me.

”Doesn't look like they were planning to go into business for themselves.”

”Looks like they planned to publish their research in some academic journal,” I said. ”I'm guessing Carolyn shared her work with Hawkins. He saw dollar signs and decided to claim the idea as his own. We find the connection between Hawkins and Polk, we solve the case.”

”What about Underwood?” he asked. ”He worked for an economic consulting firm, didn't he?”

”New Paradigm Systems.”

”Maybe he presented the model to them and they decided they wanted it.”

”I thought about that,” I said, ”but the guy who runs that company didn't strike me that way. And I'm not aware of any connection between New Paradigm Systems and Polk. We know there's a connection between Polk and the Koch Group.”

”So in addition to connecting Hawkins and Polk, we have to connect Hawkins with the Koch Group.”

”There's a connection,” I said. ”Koch got real fidgety when I asked if he knew Dale Hawkins.”

”I can work on the connections,” he said, ”but you're talking about phone records and bank records. The bureau can do that a lot easier than we can.”

”I know,” I said, ”but let's see what we can do on our own in the next few days.” He gave me a skeptical look; he knew I had a long history with Polk and wanted to go as far as I could on my own. I went inside to refill my drink.

”Oh, by the way,” Scott said as I resumed my seat, ”I think I've about exhausted the airline reservation angle. I can't find any evidence that Polk flew to Nebraska before Carolyn was murdered. If he did, he didn't use his own name and he didn't use any of his credit cards.”

”He might have driven to Nebraska,” I said. ”I can't believe I forgot to tell you this.”

”What's that?”

”There's a retired homicide detective who lives near Jayne. He told me the federal agents all drive Crown Victorias now. He saw a dark blue one, brand new, park near Jayne's town house the day she called me about the break-in. The guy driving it fits Polk's description. Guess what the plate prefix was.”

”A-M-K.”

”Yeah. He thinks it's a dummy plate-the kind they use for undercover ops-but he promised to run it for me.”

”Why would he drive to Lincoln?” Scott asked.