Flash Crash Read online

  A heavy silence pervaded the room. Jake watched a blur of motion through the plate glass separating the conference room from the rest of Montgomery Noyes’ bullpen. A man was running their way. After another moment, a breathless Tyler Stanton dashed into the conference room.

  “NASDAQ called. They’ve tracked the routing patterns of hundreds of thousands of cancelled trades made just as the crash started,” he said. The entire room turned to hear Tyler speak. “It was definitely an algo. This was intentional. But, uh . . .” Tyler struggled to select the appropriate words to express the next shocking statement. “The algo was running off our servers.”

  “What the hell are you talking about?” Howard fumed.

  “We found the executable in fourteen machines, spread across the entire intranet system. Someone put it there—on purpose. The logs indicate that we ran it all day long,” Tyler said.

  “How is that possible?” Howard asked.

  “It’s not.”

  “That is not an answer. Did a hacker do this?” Howard asked again.

  “I really don’t think so.”

  “Why not?” Jake asked.

  “Some of these computers aren’t even connected to the internet. They only provide processing power to our ecosystem, behind fierce firewalls. And to get into them you’d need to literally have physical access to our server room,” Tyler responded. “So unless someone Mission Impossibled themselves into our office, an insider is responsible—an employee.”

  Howard leaned over to the company lawyer. “Report this confidentially to the SEC.” Then he turned back to Tyler. “Is it still in our system?”

  “No. IT just shut the last one down.”

  “We have logs of who went in and out of the room, right?” Howard asked.

  “We do. Not only that—we have cameras, too,” Tyler said.

  “Then who was it?”

  Tyler gazed around the room for a long, pregnant moment. He took a deep breath. “The quant,” Tyler said. “David Belov.”

  TEN

  WHEN A COMPANY SUCH as Montgomery Noyes is physically robbed for over a hundred million dollars, they can easily handle the loss. That’s why insurance exists. What Howard and the bank were not as well prepared to deal with was the inherent reputational risk. There’s a large gap between the theory of something and the execution of it, and nowhere is that more evidenced than in the money business. There were trillions of dollars of gold and cash floating around the world, and Montgomery Noyes had always been known as one of the most secure places to store that loot.

  Howard Bergensen was quite aware that Montgomery’s reputation must stay intact. That’s why he gave Jake Rivett the address of his quant within a moment’s notice. If David Belov was responsible for this, he was going to pay, and do so dearly. The first force of reparation that David would encounter was an elite counterterror-trained SWAT team, pumped up on sugar-free Red Bull and adrenaline, and their own personal demons, ripping deep track marks into his front lawn in Bensonhurst at five o’clock in the morning with merciless intent.

  The SWAT team spread out around David and Marina’s house, covering all the exits. A decidedly “no knock” situation, they announced their arrival by means of a reinforced-steel entry battering ram. SWAT splintered the door into multiple fragments. The ram crashed a few times more before completely destructing the wood and the SWAT team filed into the house quickly, screaming bloody murder. The SWAT philosophy, part and parcel from military doctrine, was one of extreme violence of action. They did not disappoint.

  Fortunately or unfortunately, depending on one’s perspective, the Belov household turned out to be a bunk target that evening.

  “Kitchen clear!” one SWAT member screamed. The rest of the team fanned out in all directions with precision. But as the seconds ticked into the minutes and the chaos cleared inside the home, all Jake could discern was the cacophony of “clears” echoing throughout. He finally entered the house himself and conferred with the SWAT team’s captain, Markle.

  “Nobody’s home,” Markle said.

  “Personal items in there?” Jake asked him.

  “No sir—no cell phones, no wallets,” Markle replied.

  Jake thought for a moment. “Then start dusting.” Jake turned to Tony Villalon, another detective from SID who was trailing him. “What’s Verizon saying?” Jake asked Villalon.

  “We put the pen-register request in six minutes ago. Let me see if they’ve gotten anything yet,” Tony said as he walked off, cell phone already glued to his ear.

  In the meantime, Jake wandered throughout David’s house. The place was a picture of domesticity. It reminded him of his own childhood home in Albany. But Jake knew to never trust a first impression. On the surface, everything might look great. Especially when the sun was shining. The flaws lay underneath. Jake proceeded through each room on the first floor. He eventually found himself in David’s cluttered sunporch office. Jake’s gaze immediately fell to the garbage can. It was filled to the brim with shredded paper. Jake pointed to the paper. He nodded at Villalon, who was still on the phone.

  “Scan that shit,” Jake said. Then he was reminded of his manners. “Please,” he added. Jake always had to remember to be polite, especially to his own colleagues. It wasn’t so easy for him. It didn’t come naturally. Actually, the whole charade was a bit of a curse. There was nothing worse than the knowledge that his social deficiency was so evident to the world. His indifference to protocol and normal human relationships seeped through his personality in an unavoidable manner. His mother had taught Jake to be polite, and he loved her, but she didn’t teach him to stay that way. She hadn’t listened when he needed her to hear, nor protected him when his father was raging and screaming and pushing him around after getting home from the bars with the rest of the ol’ boys in blue.

  Jake snapped on a pair of evidence gloves and began to pull David’s desk drawers open. He found financial records, letters regarding health-insurance coverage at Montgomery Noyes, a couple of programming manuals, and old student ID cards from Stony Brook. Jake pulled out his phone and began taking photos as evidence, even though he knew that he wouldn’t necessarily find a smoking gun there.

  That’s not how big cases worked. The highest-priority investigations were generally solved in one of two ways. Primarily, a person who was one or two links of the chain away from the evildoers would hear something implicit, but understand it as explicit, and allow an informant or police connection to become aware. That was the main way in which crimes were solved. The suspect’s name came first, and the evidence to put him or her away was subsequently acquired in whatever manner possible.

  The other method that Jake found his crimes resolving themselves was the hard way, which thankfully occurred less—the slog. The slog could manifest itself in a million different ways, but it usually began with the evidence itself, and not just one piece of evidence. It would be through the relationship between two or more information points that Jake would build a case. Cross-referencing, collating, mosaic-building—these were the ways that the rubber really hit the road for Jake and his detectives. So while Jake was well aware that the Belov’s random files and personal detritus would yield very little by themselves, he also knew they might be his only hope in the long run.

  Scanning atop one of David’s bookshelves, Jake’s eyes eventually fell across an old, worn photograph. The picture captured two couples in the Florida Keys: David and Marina Belov and another couple that Jake didn’t recognize. The foursome was sitting on a boat with used scuba tanks and gear lying around their feet. Jake took a picture of the photo for the slog. Then Tony appeared at the door again, cell phone glued to his ear as per usual. But instead of Villalon’s usually dour demeanor, there was a wide smile on his face.

  “We got it Jake,” Tony said. He listened to whatever the Verizon technician was telling him over the line and then continued. “The family has three lines on their plan. Two are off. But the third line is still connected to the net
work. Position coming in as . . . Union City, New Jersey.”

  ■

  Forty-five minutes later, the sun rose on the morning after the crime over the vast warehouse districts of Union City. Markle and his SWAT team snaked their way through the extensive, rough industrial zone. They were tired, but this was their bread and butter. It had only been about ten hours, and every single member of the team could operate at an efficient and professional level for twenty-four consecutive hours. Following protocol, they covered one another through firing zones until they located a side door. They quickly breached entry with an explosive charge, and the door swung open. SWAT moved slowly into the building. They took care to examine the most dangerous angles of exposure. First, a visual check around the door for booby traps, and then a ninety-degree scan with separation to the left and right of the inside of each door. All seemed clear. The entire team moved inside.

  SWAT pulled down their night-vision goggles. Infrared lights lit the place up in an otherworldly green. It was completely uninhabited.

  “SWAT! Hands up!” Markle screamed.

  No one responded in any way.

  Markle couldn’t hear anything—not a single footstep or shuffle, nor the distinctive clack of a round entering a gun barrel. Nothing but silence. The inside of the building consisted of a graveyard of towering milling machines once used to manufacture enormous engine gears for submarines, each a few stories tall. The SWAT team snaked around every nook and cranny. As they neared the far side of the warehouse, Markle noticed a table sitting out in the open. Three cell phones sat on the table. One of them was still on. Odd.

  Markle took a step back, and SWAT reformed their assault formation. Under no circumstances would Markle simply pick up one of the phones without Villalon and his technical team present. The gyroscopes inside the devices could be rigged such that a slight movement would blow up an explosive charge. While deciding on the next course of action, Markle heard a slight moan. Definitely human.

  Markle ran swiftly towards the noise. Something was undulating behind the table. His flashlight caught sight of three black shapes on the floor—huge black duffel bags. They were human sized, and they were moving. Each bag was padlocked. Markle pulled a knife from his belt and ripped away the zipper around the padlock. He opened the first bag to find Mikey Belov, shaking and losing consciousness. The second and third bags contained Marina and David. All three had duct tape wrapped around their mouths. Their feet and legs were bound, but they were alive. Markle and the SWAT team rapidly unbound the hysterical family.

  Just a moment after he’d been freed, Mikey’s entire body began to spasm. It was a seizure. David and Marina pulled Mikey towards themselves, trying to comfort him. After a few moments of shaking, his motions turned into a horrific, full-fledged grand mal.

  “No! Mikey . . . Hold on, honey. You’ll be okay. You’re good. We’re here,” Marina cried out. “We need an ambulance here! Right now!” David and Marina held Mikey’s body down as the seizure continued. They rolled him on his side when he went unconscious. None of this was particularly new for Marina and David, except that it had been a long time since Mikey had been completely off his medicine. Having been saved, the last thing they wanted was a cluster bomb of seizures blowing their son to Kingdom Come.

  Jake Rivett watched both of the parents working to console their son. Whatever he’d hypothesized about David as it related to the case at hand, he could tell that the man was dedicated to Mikey. He nodded at Markle, who used his radio to call up the ambulance that was waiting a few blocks away. Within a minute or two, paramedics came racing through the warehouse to aid Mikey. Jake kept his eye on David the entire time. Yes, David was a victim. But Jake was already beginning to sense that there were many moving parts to this crime’s equation and that he was nowhere close to seeing the whole game board for what it was. Mikey’s tragic circumstances aside, Jake was sure that David Belov was the man standing closest to the epicenter.

  ELEVEN

  AT KINGS COUNTY HOSPITAL in Brooklyn, David and Marina stood vigil while Mikey rested in the hospital bed. The doctors had described his condition as a severe hypoglycemic coma. IV tubes fed potassium, sodium and insulin into his body. The parents didn’t hear as Jake entered the room.

  “Mr. Belov?” Jake asked.

  David turned around.

  “I’m Jake Rivett. The sooner we can speak, the better.”

  “Who are you?” David asked.

  “NYPD. Lead detective,” Jake replied.

  “For us?

  “Yes”—Jake nodded—“and a number of unfolding situations.”

  “Situations?”

  “It sounds like you know more than I do, David.”

  “Excuse me?” David asked.

  “Can we speak outside?” Jake said.

  ■

  Out in the hallway, David recounted his version of the last two days exactly as they had occurred. He told Jake his truth. It had been a normal Sunday—just a tad over perfunctory. He went into work and talked to a few co-workers, including Tyler Stanton and Howard Bergensen. He hit the gym.

  “Where?” Jake asked.

  “Bensonhurst. The boxing ring down on Cropsey,” David answered. He then completed the rest of his nightmare.

  Jake wasn’t able to divine the truth from a lie. He wasn’t omniscient. But as his years on the force had progressed, Jake had become increasingly adept at separating an open witness from a closed one. There were familiar threads to narratives that desperate men told. Jake’s ear was picking up on something like that, in this situation, but he couldn’t be exactly sure what. The rhythm was off—like his drummer’s tempo a half step late. He hated when that happened. It put him on edge. This particular set of crimes was starting to make Jake feel as though he’d found a line in the inside stitching of his leather jacket. Once he had started to pull the thread, an infinite web of complications had begun to manifest in the fashion of a fractal series. He didn’t like that. That’s why Jake usually simply cut threads with his teeth. Unfortunately a case is much different from a garment malfunction or an errant bandmate, and Jake knew he had to dig further on this one, no matter what pure craziness was bound to result.

  “Do you recognize this man?” Jake asked. He held up his cell phone to David. On the screen was a surveillance frame of the mysterious Asian man—his face in shadow—who had been driving the magnetic crane rig during the gold heist. David stared at the photograph intently.

  “Never seen him before,” David said with confidence.

  “How do you know?” Jake asked.

  “First of all, the only time I saw anyone was when they picked me up from the office on Monday afternoon,” David said.

  “Go on,” Jake prompted him.

  “And even then, they were all wearing masks.”

  “What type of masks?” Jake asked.

  “Just like, wool—black. Holes for the eyes and mouth.”

  “Balaclavas. And what time did they pick you up?”

  “After the regular market close. So that’s four—probably four-fifteen.”

  “Where?”

  “Right in front of the building,” David said.

  “How did you know that was going to happen?” Jake asked.

  “What do you mean?”

  “How did you know to leave the building and be picked up?”

  “I told you about the phone on my counter. Right after the crash, they texted me—told me exactly where to go at the end of the day,” David said.

  “Where’s the phone?”

  “That was the first thing they took when I got in the car,” David said. He could sense that Jake wasn’t enjoying his responses, so he continued. “You have to understand, this wasn’t some prank. They had my family. They sent me photographs of Marina, tied up on a bed. I knew I could do it, and I also knew that it was the only way to see my wife and son alive. Think about my position. Are you saying you wouldn’t have done the exact same thing?”

  “I’m not
saying a thing, David. I’m asking questions.”

  “You don’t believe me.”

  “I trust what I see. I trust what I can prove,” Jake said. Jake observed David. He was nervous—tapping his fingers on the chair he was sitting on. “The problem I have right now,” Jake wound up, “is that you’re a liar.”

  “What?” David replied, astounded.

  “What you did . . . wasn’t all you could do. You could have called the police. Correct?”

  “I . . .”

  “I listened to your 9-1-1 call. You hung up. And when we called back, you said you’d found her. You lied to us there. Why’d you do that?” Jake asked.

  “Oh, come on, sir. There was only one safe bet: I had to do what they wanted. I do that and I get my family back. That’s all I could think about.”

  “What does one have to do with the other? Why not inform the authorities and keep working on your program?”

  “Because they were watching me,” David said.

  “How do you know?” Jake asked.

  “Right as I was talking to your dispatch, they called me again. The voice told me to hang up the phone on the police and never try them again,” David answered.

  “Pretty convenient,” Jake said.

  “Not for me.”

  “Then the next obvious question is . . . Why you?”

  “That’s been on my mind—obviously.”

  “So who knew you were capable of writing this type of program?”

  David shrugged. “Thousands of people? Everyone I work with? It’s not so simplistic, sir. My thesis at Stony Brook was on industrial control system kill switches—”

  “Sounds like complicated shit,” Jake retorted.

  “Microchips control everything. Not just computer programs. Your car. The electric grid. The water system . . . I found flaws in systems. Then I hacked them. A few years ago I wrote a virus that could destroy a refrigerator. At Stony Brook I built a device that forced the power supply into thinking that it could provide a higher voltage than it could. I’d run the current through the circuit board, fry every chip and make the milk go bad. I spoke at Black Hat about it. I was originally headhunted by Montgomery for my systems capabilities—because the quantitative work . . . you know . . . the computers at the bank? The software’s important. But it’s the hardware design that really can make or break a trading strategy . . .” David trailed off.