Chapter 12
Houston, Texas
3Two years ago
It only took James two weeks of sneaking around for he and Tim to get the trading system set up, open the account, and for James to write the script that would execute the trade. They had decided after some quick research that they should be doing foreign currency trading, known as “Forex”, and they decided to watch the UK Pound vs. the Australian dollar and the Euro vs. the Australian dollar, due to volatility and the common side of the Euro. The broker offered a four hundred to one leverage ratio and Tim put two thousand dollars into the account, so they could trade up to eight hundred thousand dollars.
They had to hit it just right. James programmed the system to watch for a drop of two percent or more for either of their two currency pairs to occur within a two hundred and fifty millisecond time window on the fast feed, and then the computer would buy low currency on the fast feed and then sell it when it hit the high value on the slow feed, which was delayed about three hundred milliseconds. If this worked, and they got lucky enough to hit a big drop, they might double their money. James would get four hundred thousand dollars or more after all was said and done, which was enough to pay off all of his debts and leave some left over to get ahead on a car and get back into a house.
The beauty of this plan was that they just had to let the system start listening, and once the conditions were met, it would automatically perform the trade without them having to watch it or do anything about it. James had set it up to send him an email alert when it had made the trade.
James didn’t like having to sneak around behind Melissa’s back while he was setting this up, but he didn’t want to tell her about it until he was sure it would work. He didn’t want to have to explain the whole scheme to her, convince her the way that Tim had to convince him. Number one, she wasn’t a finance genius. Number two, she would worry. James was convinced that there was no risk, but she wouldn’t be. By the time he could explain it to her, the deal would already be done. He’d rather break it to her when he had a half a million dollars in his pocket.
They kicked off the script Sunday night. The London market session opened at two in the morning Monday, Houston time. The email came while James was asleep only minutes after the market opened. Things got interesting as soon as James woke up and checked his phone.
“Hello?” Tim said sleepily into his phone.
“Why did I get three emails?” James demanded without greeting his friend.
“James? Man, it’s… dude, it’s six in the morning. We can talk about this when I’m awake.”
“We’re talking about it now! It looks like someone reset the script after it hit our number. Now, I don’t know how that could have happened, since only you and I had access to it. I was sleeping and you promised me we would be done once we hit the number. So what happened? Tell me, Tim. What happened. How did this happen?”
“Calm down, man. It’s no big deal. Look. I logged in and checked on it when it kicked off. I just wanted to make sure it was working, not that I didn’t trust your code. But I had to be sure. I mean, that’s my money on the line and if it went south I would owe the broker eight hundred thousand dollars,” Tim explained. “And in like two minutes, the script kicked in and made a trade. It worked like a charm! We made about thirty-six K. In two minutes. So I rebooted it, ran it again, and this time we got close to a half mil.”
“Yeah, Tim. That was the whole idea! The plan was, we button it up and get out after we hit half a million. That was the deal!”
“I know, but James! It was just so perfect. Your script, our system, worked like a charm. It’d have been a total waste to shut it down after the second trade. Look. The first time it hit, we made over four percent, which is pretty good. But that still was only about thirty-six K. So I reset it. This time we had the money from the first run in the account. It took only like ten seconds, and this time when it was done, even though it hit only about three percent, we had nearly half a million dollars. I could have stopped there but I couldn’t help myself. I reset it with the half mil again and let it ride. It took a little longer the third time and we only caught just over two percent, but by the time it was over we had made over four point six million dollars!”
“Say what? Four point six million dollars?” James was running the math in his head but it was hard to nail down considering the leverage, his emotional state, and the fact that he hadn’t yet had any coffee.
“That’s right. Two point three million each. It’s sitting in the forex account. I was tempted to run it again but I was afraid the bank would recognize a pattern and then we might get in some kind of trouble.”
“Trouble? I thought you said this was legal.”
“I said I thought it was legal. Anyway, it wasn’t worth the risk one way or the other. I figured over two million each was plenty. But we have to move it out of the forex account. And this might be difficult. It’s hard to keep a two million dollar deposit off the radar with your ordinary bank account, you know?”
“What, are you saying we need a Swiss bank account?”
“I don’t know, man. Swiss, Cayman Islands, something like that?”
“Tim, that’s what criminals do.”
“No point in attracting attention, you know?” Now, Tim was sounding like a criminal. But James wasn’t ready to attract Melissa’s attention.
“Okay. We’ll figure something out.”
“We have to figure it out today, James.”
“Okay, we’ll figure something out, today.” James hung up. Oh my God. Two point three million dollars, he thought. This was a whole different story. He had dared to hope for enough to break even on his debts and have a little left over, but this was life-changing money. This was quit-your-job money. Play it halfway smart, this was no-more-debt-ever kind of money. Even after paying off their debts, buying a house and tucking away college money, they could just about live on the interest alone.
James had a very hard time focusing on work that day. He had a lot to do. He had to figure out where to put the money, to find a bank somewhere. He had to figure out how he was going to explain this to Melissa. He had to think about his future, his job. And suddenly he found himself constantly looking over his shoulder. He had some kind of sneaking feeling that he was going to get caught. For what, he wasn’t sure.
Tim had done a little homework and they transferred the money electronically into two numbered Swiss bank accounts, one for each of them. James was planning to let this tense energy he had blow over for a while, let the money sit in the Swiss bank and then pay off some debts before telling Melissa what was up. But all day Monday, it was driving him absolutely mad. He just couldn’t get it off of his mind. He realized it was mostly guilt he was feeling, and it was probably mostly guilt for not having told Melissa. He didn’t lie to her. He didn’t keep things from her. This was not who he was.
Monday evening went as usual. Eli was studying for finals at home, while Mark and Joseph were pretty much done with school for the year and watched TV as Melissa cooked dinner. James pretended his way through dinner and decided to break the news to Melissa as they were going to bed.
“You know Tim Chandler, from work?” James started.
“Umm, Tim? Yeah. What’s up with Tim?”
“You know how he’s always coming up with get-rich-quick ideas, right? Well, he came up with one a couple of weeks ago involving foreign currency trading.”
“Foreign currency?”
“Yeah, you know how you hear on the news, the dollar is weak and the Euro is strong and all that? Well it turns out you can make money pretty quick trading different currencies.” James was trying to make it sound routine.
“Yeah. Well people trade all kinds of things and make money,” she said skeptically.
“Well, Tim came up with this idea, a way to make money doing foreign currency without any risk, but he needed my help to write a script to make it work. He offered to put up the original investment money
if I would write the script, and we would split the profit.” Again, with the “no-big-thing” tone.
“How can you make money without any risk?”
“It involves tuning the network performance a certain way so that you can buy and sell currency after you already know which way the price is going to go.”
“You mean, like cheating,” she frowned.
“It’s not cheating. They give you a window of time to make a trade and we just use that window of time to make a guaranteed winning trade,” James said, trying to convince himself almost as much as he was trying to convince his wife.
“Guaranteed, huh? Sounds like cheating.”
“Well, it does. But it’s not.”
“How much money did Tim ‘invest’?”
“Tim put in two thousand dollars. I wrote the script that makes it work. The deal was that we’d split the profit.”
“This sounds pretty shady, James.” He had to admit, saying it to her, it did sound shady.
“That’s what I thought at first, too, until Tim explained it to me.”
“Okay. So what are you saying? You did this deal? Did it work?” She said this not with a hopeful tone, but more bored, and consoling. Almost condescending. Almost.
“Yeah, we did it, and it worked just like it was supposed to. Like I said, there really wasn’t any risk.” James realized his own blasé candor probably was leading to her low expectations.
“Well, stop with the suspense. How much money did you make?”
“Two point three million dollars, give or take,” James said, as if he were saying ‘I found a quarter on the sidewalk today’.
Melissa chuckled, “You don’t say. Well don’t forget about us little people, mister moneybags.” She really thought he was kidding, and she was giving back the good-natured ribbing.
“Honey. I am not joking. I made two point three million dollars.”
“Really, James? It’s not that funny. And how did you come up with that number?”
James produced his phone and opened the web browser. “Just a second…” he said as he typed in the account number and password, then handed her the phone. It showed the balance of a numbered account on HSBC in Switzerland: $2,304,011.00.
“What… what is this? Is this ..?” she was speechless.
“That is the balance in my bank account. Our bank account. I opened it this morning.”
“James… that’s… that’s two million dollars!”
“Right. I told you. Two point three million.”
“How did you get two million dollars?” she said with eyes like silver dollars.
“It’s just like I said. We used a script to monitor a network feed for currency trading, and then made a couple of automated trades when the conditions were right.” James was deliberately leaving out details, because he was now starting to realize that he had lied to himself. If this wasn’t illegal, it was at least unethical and probably immoral. His actions would not withstand his wife’s scrutiny.
“A couple of trades? How is that possible? How do you turn two thousand dollars into two million dollars?”
“Well, we actually made over four and a half million. This is just my half,” James said, digging the hole deeper.
“Oh, well that explains everything! Excuse me. How do you turn two thousand dollars into four and a half million?”
“We used leverage. The broker sort of loaned us the money at a four hundred to one ratio against what we had in the account. So we were able to buy eight hundred thousand dollars worth of one currency and then sell it for more in a different type of currency, and we keep the profit. Then we used the profit to do it again with the four hundred to one leverage, two more times. We had a good system, and we did three trades to make this money.”
“If the system is so good, why on earth did you stop after three trades?”
And there it was. That was the dagger. She had cut right to the root of the matter. Why indeed, would anyone in their right mind stop using a system that turns two thousand dollars into four and a half million every fifteen minutes after only three trades? James knew why, but he didn’t like it and didn’t want to say it to his wife. He was ashamed. He knew at that moment, clear as day, that what he had done was wrong. He had lied to himself. Suddenly it was as if the very ground beneath him had vanished and he was beginning free-fall. He was taken for a fool. He made a deal with the devil, and now he was feeling his soul being ripped away.
Now he had a choice to make. He could tell her the truth: we stopped so we wouldn’t get caught. Or he could make up a lie. Something like, we stopped because it quit working. Or we let it run but that’s all we could get out of it. Or they only had a limited number of trades available from the broker. He could make something stick.
What am I thinking? Am I a crook, and a liar? Am I going to lie to my own wife? What have I become?
He decided to come clean. Right here, right now. “We stopped because we thought the bank might recognize it as a pattern. We thought we might get caught.”
“James, how could you? You knew all along this was illegal, and you did it anyway?”
“I didn’t know it was illegal. I still don’t know that. And we need the money. Plus, we didn’t expect to get this much. The best I had hoped for is to get us out of debt with Greer and maybe get us back on track to get a house and get back to normal, like it was before the lawsuit. We never expected to make millions of dollars.” It was the best he could do, but he couldn’t rationalize this away.
“James, you have to give it back. This isn’t right. We can’t do this.”
“I can’t give it back. There’s nobody to give it back to. It’s done. There’s really nothing we can do about it now. I thought I was doing something good for us.” And that much was true.
“I can’t deal with this right now. We will settle this in the morning,” she said. But she didn’t really mean it. They wouldn't settle this for a very long time.
James called in a personal day Friday morning, and after sleeping on it, Melissa had warmed a little to the idea of being a millionaire. They paid off Greer in full and then started finding reasons to keep the money, two million of them to be fair. Melissa began to hate herself for what she had let herself become, and she began to hate James for doing this to their family. But more than that, James hated himself for letting her down, for abusing her trust. And mostly he hated himself because he led her into this. This must have been what Eve felt like after Adam took a bite of that apple. This must be what hell feels like.