From legendary short seller to god of American capital

Chapter 309 Justice Bonds Profit from Prejudice

Chapter 309 Justice Bonds Profit from Prejudice

As Sunday evening approached, the gas streetlights were just coming on, casting a warm, yellow glow over the streets of New York.

Larry led Mr. K and Dunbar through the narrow, noisy streets of the Lower Town to the Lucky Star Billiards Room, located between Bowery Street and the Five Points District.

Just as Mr. Dunbar had said, there are indeed some places in the Lower City that are really not suitable for good people.

Along the way, these chaotic areas were filled with shifty eyes and palpable poverty.

Larry was very sensitive to smells; he could easily distinguish the mixed smells of alcohol, tobacco, horse manure, and the unwashed stench of alcohol on people's bodies.

There are some small theaters on both sides of the street, but they don't show any proper operas or plays. Instead, they show striptease shows and song and dance performances full of dirty jokes and exposed thighs.

Besides that, there are dance halls and oyster bars, as well as numerous small pubs.

As the three walked along, many young suspects stood to one side, staring at them with hostile eyes. According to Mr. K, these were members of the Irish Dead Rabbit gang.

Occasionally, you can see police officers patrolling the streets, but these officers are either bribed by casino gangs or corrupt cops collecting protection money. Ordinary people shouldn't expect to find any safety or protection here.

Inside the billiard hall, the scene was both bustling and orderly. A dozen or so green clay billiard tables were neatly arranged, and the ivory-white cue balls made a crisp sound as they struck each other.

A large Irishman stood guard at the door; his skin was very pale, which made his red hair stand out even more.

"What are you doing? Are you going to play billiards?" The other person crossed his arms and looked the three of them up and down.

"Check out the prices, friend," Mr. K said, pointing to the large blackboard next to the bar.

"Looks unfamiliar—" the big guy muttered, stepping aside to let the three of them in.

Is there a jury?

"Yes! This is a death penalty case, and a grand jury will be used," Larry replied.

The fat man scoffed and said, "With a jury, he'd die even faster! You can't rig the trial to bribe the judge because the jury is all white; the market doesn't believe in miracles!"

Larry smiled ingratiatingly and waited for the other person to quiet down before continuing, "We plan to issue 20 YES and 20 NO cards, each for one dollar. The initial price is 25 cents for a YES card representing acquittal and dismissal, and 70 cents for a card representing any guilty verdict."

The fat man nodded. "You're quite savvy. You've already left us with a 5% profit through the price difference, so I won't ask you for any more fees. But 20 tickets, are you serious? Then you'll need to prepare $20 in redemption reserves."

The second half of the sentence was spoken by the fat man to Mr. K.

Mr. K's facial muscles twitched as he heard the figure of $20; clearly, he felt sorry for someone else losing so much money.

After a few seconds, Mr. K said, "To be honest, I have a boss too. Who knows what he's thinking? But I'll tell you the truth: my boss said to lower the price so that poor people can afford it."

Mr. Honesty nodded. "But it's nothing. After all, betting tickets aren't a pairing transaction. You can set a limit."

"Clever, Honest Mr. K. Are you afraid I'll be ostracized?" Mr. K said with a smile.

The fat man glanced at him. "I'm afraid you'll miss a ridiculous spectacle. I've never seen such an absurd betting game before. Are you trying to make money or lose money?"

Larry interjected, "Mr. Honesty, you said you'd only issue 20 'yes' tickets, but what if the final number of 'yes' and 'no' tickets doesn't match?"

The fat man turned to look at Larry and patiently explained, "When the bets are settled, it's not a one-to-one transaction. Instead, a closed pool of funds is used. All the money that bets on yes and no goes into the same pool first. On the day of the verdict, all the money in the pool goes to the winner, no matter how many people win."

Larry lowered his head and thought for a moment, then said, "How about this, the limit for 'yes' tickets is 20, and for 'no' tickets, there's no limit initially, so anyone can buy them."

The fat man frowned as he listened to the distribution plan. "What the hell does this mean?"

"Manipulation!" Larry explained with a smile, "Those who believe the Chinese are doomed will rush to spend 70 cents to buy into the illusion of a guaranteed 30-cent profit. Once they've invested $15 or $20, the pool will have over $20. Even if all 20 'yes' are redeemed, each person will still get back a dollar, or even more."

The fat man narrowed his eyes. "You've done the math?"

"Yes, in short, limiting the number of 'yes' cards limits the risk. If all 20 'yes' cards are purchased, the funds raised will be $5. I only need to make sure that the total funds in the pool are greater than $20, and we will not lose money."

"What if the people who bet on no win? For example, if they bet 30 tickets, you have to give them $30."

"Mr. K couldn't help but ask."

"30 tickets, at 70 cents each, totaling $21. Add to that the $5 from those who bought 'yes,' and the total is $26. If the court finds the Chinese guilty, they'll only have to pay $4 at most, but—"

Larry turned to Mr. Honesty, "Mr. Honesty only needs to have a pool of funds exceeding $20 to cover yes."

After taking the risk of winning, we can limit our risk by raising the price of "no" to 80 or 90 cents, or even suspending the acceptance of large orders.

Mr. K frowned and asked, "But what if they are found guilty? Although it is very likely that the Chinese will be found not guilty, what if they are?"

"What if?" Larry chuckled. "Sir, please remember, your boss never wanted to make money; he wanted the whole case to be discussed. As soon as a poor person bets on 'yes,' they'll ask, 'Why was a Chinese man sentenced to death?' As soon as the newspapers report the odds, they'll investigate: Was the deceased really drunk? And was he carrying a knife?"

Once public opinion is in control, judges won't dare to make arbitrary rulings. That makes it even more likely that the "yes" side will win. My concern isn't who bet on "no," because those who bet on Chinese people dying are full of prejudice, and the stronger their prejudice, the bigger their bets. And once those 20 "yes" bets are sold, 20 people will ask—why!

The fat man was silent for a moment, then nodded. "I understand. This betting odds are interesting. I will sell these bonds at various betting sites in New York and Boston. Of course, as usual, you need to prepare the redemption funds first and put them in a fair account."

Mr. K looked at Larry. "No problem—hmm, so we weren't gambling on the lawsuit, but on whether Boston would have a change of heart?"

Larry smiled, glanced at the fat man "Mr. Honesty," and said nothing.

The fat man nodded and said, "No, this is using their money to help them discover their conscience. Hahaha, okay. Hey, young man, what do you call this thing?"

"Hedge," Larry replied calmly.

Mr. K glanced at Larry, then at Mr. Honesty, and said nothing.

Mr. Honest tapped the table with his fingers, his voice hoarse but strong, and concluded, "Okay, I'll take this job, but remember one thing: if you dare to cheat me, I'll make you count coins at the bottom of the sea, but if you win this round—I can give you exclusive betting odds in the next election."

The message was clear: if Mr. K reneges on his promise or fails to pay in the end, the fat man will make Mr. K go to the sea to feed the fish.

Mr. K looked at Larry with a slightly aggrieved expression, as if to say, "I'm risking feeding the fish with your bet," but he still nodded in agreement to this betting game with a fair price.

The issuer represented by the fat man also profited this time. They would sell as many NOs as possible because they would receive a 5-cent commission for each NO sold. If the final pool of funds reached $0, they could pocket $20. This was an enormous profit compared to the usual $1 stake in betting.

However, the issuer won't actively sell yes tickets unless someone bets on high odds. Firstly, they can't profit from the stakes; secondly, Larry will precisely target audiences in New York and Boston before the trial.

The matter of issuing judicial betting tickets regarding the Chinese man's murder case was thus settled. Larry, Mr. K, and Mr. Honest checked some details, and Mr. Honest would arrange for someone to print the tickets first, and they would begin selling them after the court date was set.

After both parties verified that everything was correct, the matter was truly settled.

Mr. K placed 50 cents on the counter to pay for two glasses of whiskey.

The three turned and walked towards the entrance of the billiards room. The fat, honest man watched Larry's retreating figure, repeatedly whispering the word, "hedge, hedge—"

But when the three of them reached the door, they stopped. Larry turned his head to look at the blackboard and began to whisper to the other two.

A moment later, Larry ran back to the counter alone and said to Mr. Honesty, "Hey, Mr. Honesty, my boss just said he'll put $250,000 in the fair account, and he wants you to buy some bets on the U.S. election for him—bets that Democratic candidate Mr. Cleveland will win the presidential election."

The fat man was stunned. "Really? My God, buying so much—why? Why?"

Keep in mind that even professional gamblers would typically place bets of a few hundred to a few thousand dollars at this point. For someone to bet $5 right off the bat is an astonishing amount, extremely rare. After all, $5 is enough for someone to run their own betting line!

Faced with Mr. Honest's questioning, Larry just smiled and casually said, "It's probably also for hedging. He wants to use the presidential election results to hedge the risks of this stock issuance."

"But what if he guesses wrong? Then we'll lose those $50,000!" the fat man emphasized, his eyes wide.

Larry maintained his smile, turned to look at Mr. K, and as if receiving a signal from the other man, said, "My boss is never wrong; he has absolute confidence every time he places a bet!"

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