CHAPTER 39

March 2, 1979.

Alex McDowell, aging head of Canada’s Security Intelligence Service, was deep in thought as he quietly read a letter in his spacious office on Sparks Street in Ottawa, Canada. A consummate bureaucrat, McDowell was jowled like a bloodhound. His dress code was distinctly antique, and his colleagues gave him the reverence due to a modern day Sherlock Holmes.

The letter’s author was McDowell’s longtime friend John Hill, head of the Criminal Investigation Department of the IRS, in Washington, D.C. The subject of the letter, designated “Sensitive and Confidential,” was the federal gasoline sales tax. Hill’s department had recently been advised of unsettling anomalies in the data, which had identified substantial and growing revenue deficiencies.

“I have Mr. Hill on line seven,” McDowell’s secretary announced.

McDowell nodded and opened up the line. “How are you, John? It’s been a very long time.”

“It has indeed,” Hill confirmed. “I’m well and fine. It’s good to hear from you, Alex. How are you?”

“The years have been unkind to my body. Every day it takes me a little longer to get up to speed.”

“And your brain, does it still function?”

“With considerably reduced capacity,” McDowell responded.

“Did you get my letter?”

“That’s why I called. It was very timely.”

“How so?”

“Elementary. Where there’s smoke, there’s fire.”

“Fire! We’re dealing with a raging inferno, Alex, and who knows what else… I mentioned in my letter that we have reason to believe your problem and mine might be connected in some way. I think it would be a good idea for us to get together and discuss it in detail.”

“I agree. My place or yours?”

“Mine. Washington is a little warmer than Ottawa at this time of year.”

“Fine. I can be at Dulles by about eleven tomorrow morning. Is that too soon?”

“That’s perfect. I’ll pick you up at the airport. What’re you flying these days?”

“I haven’t the slightest idea. Every time I look around, the government has a new toy. I’ll get my secretary to call you later this morning to confirm.”

Hill met McDowell at Dulles Airport sharp at eleven the following morning. McDowell had arrived on board a government owned Gulfstream III, which regularly ran the route. Hill instructed his driver to proceed directly to The Garden, a chic new restaurant in nearby Georgetown.

After several martinis, followed by Caesar salads, rare fillets, and coffee, Hill and McDowell had exhausted all pleasantries and the library of stories they had gathered in the years they were classmates. Pointing to his briefcase, Hill changed the subject. “Alex, I brought a number of studies along to show you my motivation for writing. I could haul them out right here, but I think it would be better if you reviewed them at your leisure. I’d like to talk about them now.”

“Where do we start?”

“At the beginning. We became involved in this thing about a year ago, when I received a letter advising me that New York State gasoline tax revenues were going south. This was happening at the same time gasoline consumption was going north. Normally, we wouldn’t get involved in a state tax problem, but this one was different. We figured if there was some state gasoline tax missing, there was a pretty good chance some federal gasoline tax would be missing also.”

“Was it?”

Hill frowned and nodded. “We interrogated tax officials in other states and found that Michigan was experiencing the same problem. Ohio, Pennsylvania, and a number of other states were hurting, too, but to a lesser extent. All the data’s in my briefcase… By the way, can you tell me what New York and Michigan have in common?”

“They’re border states,” McDowell replied without hesitation.

The corners of Hill’s mouth turned upward, forming a wry grin. “Obviously your brain does maintain some functionality. I was serious when I said we had a raging inferno here. It’s not only a matter of money—it’s Goddamned embarrassing. Neither the states nor the feds want any information about this to find its way into the hands of the media. Can you imagine politicians appearing on a televised press conference and trying to explain why they can’t find hundreds of millions of gasoline tax dollars?”

McDowell chuckled. “Some of them can’t even find their way home at night…” The two shared a wry grin. “Seriously John, I’ve got the same problem. My boss is a politician from top to bottom. He made it crystal clear that he’ll have my ass on a platter if the press gets one sniff of this fiasco.”

Hill chuckled. “Do you remember when we actually believed in the system?”

McDowell nodded, and then frowned. “How bad is it, John? Give me numbers.”

“It makes the New York State Lottery look like a Sunday school collection.”

“Of course.”

“What’s the situation in Canada?” Hill asked.

McDowell sipped brandy and leaned back in his chair to light his pipe. “Pound for pound, we have the same problem. Ontario and Quebec borders are the hot spots. If you insist, I could bore you with the data.”

Hill shook his head. “Let’s talk.”

“You mentioned something interesting in our telephone conversation yesterday—you said you had reason to believe our problems might be interconnected in some way.”

Hill nodded. “We had a number of fact finding meetings with the tax people in the states involved. They described how they collect the gasoline tax from the oil companies, particularly when it comes to inter-state gasoline transfers. Did you know that the transfer of gasoline across the international border is taxed on blind faith—an honor system? And our monitoring systems are not up to the task of accounting for every transfer.”

McDowell sucked on his pipe several times. “Do you have any particular criminal in mind?”

“Yup,” Hill replied with tightened lips. “Do you?”

“Jim Servito.”

Hill’s face lit up like a bulb. “Bingo!” he declared. “How did you come to that conclusion, may I ask?”

“We stumbled across a trucking company by the name of Amerada Tank Lines during the course of our normal surveillance work. The company is extremely active in the Buffalo area and is by far the largest hauler of gasoline across the U.S. and Canadian border. A corporate search revealed that Servito is listed as the controlling shareholder.”

Hill looked bored. “So what connects him to tax evasion?”

“Let me drop another name on you,” McDowell said. “Mike King. Does that name ring a bell?”

Hill shook his head. “What’s his connection?”

“He’s a big player in the retail gasoline business—his company retails gasoline in all of the areas of mutual concern. When we took a closer look at him, we discovered Amerada’s trucks were dropping a lot of gasoline at his outlets, on both sides of the border. The activity certainly suggests a connection.”

“It suggests a connection, but doesn’t prove it.”

“We certainly don’t suspect the major oil companies. They’ve got far too much to lose to be fooling around with tax evasion. Amerada is the only independent hauler large enough to play the game on the scale we’re talking about but small enough to stay under the IRS radar. We suspect King might be guilty of complicity. A lot of Servito’s gasoline is going through his outlets.”

“Well, they’re your pigeons, Alex. Both Servito and King are out of our jurisdiction.”

McDowell turned his pipe upside down over the heavy glass ashtray and clanged it three times, filling the tray with ashes and unburned tobacco. He squinted at Hill. “We’ll deal with them,” he vowed.

“I’m sure you will. I’m willing to bet my pension that both Servito and King are up to their asses in tax evasion.”

“I suspect you’re right about Servito, but I must say I have reservations about King.”

“Why?”

“We did a profile check on him. Would you believe he doesn’t even have a parking ticket?”

“What about Servito?”

“Servito’s a horse of another color. He entered Canada from the U.S. in 1963, and became a Canadian citizen in 1970.”

Hill frowned. “Probably a Goddamned draft dodger.”

“We’re entertaining quite a few. Would you like us to send them back?”

“No thanks. You can keep them.”

“Servito keeps an airplane at his farm north of Toronto. Almost all of the flight plans he’s filed in the last several years are to a single location. An island. Can you guess which one?”

“Grand Cayman,” Hill responded without hesitation.

McDowell smiled and nodded. “And you can bet your ass they aren’t pleasure trips.”