Whitebox In A Box

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HFA reports that multi-strategy shop Whitebox Advisors has suspended redemptions on the half a dozen hedge funds it runs, informing shareholders of the plan "over the phone while drafting a formal letter for release later this week." According to HFA, Whitebox "was in a strong position to fulfill any yearend redemption requests until this month, when Goldman Sachs ordered the firm to double the amount of collateral it puts up against margin loans used to trade convertible bonds." Related?

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I Sell Cardboard Boxes For A Living

Excuse my agitation. It's rare I get a Friday night off. Such evenings go to shit when I'm at a party and I get introduced by my real profession. Can you imagine introducing casual acquaintances at a party with “Yeah, so this is Jimmy. He's a meth dealer”? I don't know, maybe you can. In which case I don't really want to be invited to your parties. As for me, left to my own devices, I tell people I'm a cardboard box salesman. That suits me nicely. Nothing against people who sell cardboard boxes: I've never actually met one. But when I tell people that's what I do, nobody ever asks me to elaborate on my workday. It's actually a backstory I stole from another bookie—a guy who always had an identity or two to spare along with a great mind and approach to the profession. I started by telling people I was an electricity meter reader, and then once some guy asked me “isn't that all done by computer now?” and I had that So-Totally-Busted look on my face. So my colleague got me into the cardboard box business, which never goes out of style by always being precisely out of style. So this time I got introduced as The Bookie and my head immediately starts scanning the room for Feds. I've watched all the movies—I'm looking at everybody's shoes, looking for G-man wingtips. No immediately suspicious footwear—and no way out as the crowd starts circling me asking me all the Usual Questions. No, I don't break people's kneecaps. No, I don't lend people money at 1% a week. No, I don't fix games or know more about sports than anybody else. It was turning into one of those Wizard of Oz moments: I'm just the old, fat guy behind the curtain, which suits me, when I was asked a question I felt the need to rant on: How come I'm living in he shadows here when I could be living large in Costa Rica? Believe it or not, I'm safer here. The US government is this two-headed beast. One head wants to raise tax revenues by legalizing more gambling. Whoops, “gaming”. If it's legal, it's no longer gambling, it's “gaming." That's not quite as Orwellian as “collateral damage” (dead civilians), but it still makes me smile bitterly. The government's other head is trying to shut down the offshore industry. Poker sites, online casinos, sports books—it's all in the crosshairs. And they're rounding up anybody on The List who sets foot in the Good Old USA. When that doesn't work, they try extraditing people, from everywhere. Costa Rica, Canada, the UK, Antigua, wherever. The extradition policy is the worst of it. Consider Bob Eremian. His client base was mostly Southern New England, with a little NYC and Jersey thrown in. He moved his operation to Antigua in the mid 90s, figuring that even if what he was doing in the US was illegal (the trial of Jay Cohen showed it would be), since it was legal in Antigua, he couldn't be extradited. That's a key part of extradition law, I'm told: what you're doing has to be illegal in both jurisdictions. Except Uncle Sam didn't come after Bob for making book, just like how he didn't actually go after Martha Stewart for insider trading per se. The Eremian charges were money laundry, tax evasion, and so on—things that were illegal in Antigua. 11 years after he was originally deported, the civil cases just kept coming. The US government's current instrument of choice is the Unlawful Internet Gaming Enforcement Act. It was tacked onto a bill about port safety. Honest. Life is too short. So I'm onshore and offline. Any trouble I'm going to get from the Law is going to be local. If caught, I'll spend some time doing graffiti removal or cleaning up a park. I'll sleep in my own bed. I don't need 16 hours a day in front of a computer screen trying to move my numbers faster than internet wiseguys can pick me off. I don't need to try to figure out Costa Rica's ever changing tax code. (When I left, sports books were charged, among other things, $1000 per computer monitor on the premises, per year.) I don't need to court the DOJ's wrath. But I still don't need my cover blown at parties. I sell cardboard boxes, period. It didn't help that a very good customer and his wife, my new part-time employee, were in the room making faces at me to see if they could get me to crack up or soil myself as I took questions. If the rant hadn't gotten me four new customers, the night would have been a total bust.

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