Chapter 105: Gerald Fitch
The regulatory investigation had been running for seven months before Gerald Fitch’s capital structure began to visibly dissolve, which was approximately the timeline his attorneys had projected when they first briefed him on the inquiry’s scope.
The investigation had been initiated by the financial services regulatory authority following a referral from the federal agency that monitored cross-border financial flows — a referral that had originated, through a chain of administrative steps that Fitch’s legal team had traced but could not interrupt, from the records disclosure that had accompanied the Carter cross-border estate case. The disclosure had surfaced the Fitch facility’s documentation in a form that required the monitoring agency to flag it for review. The review had identified the predatory lending structure of the facility’s terms and the absence of standard bureau reporting — both of which were operating in a regulatory grey zone that Fitch had occupied for years without attracting sustained official attention.
The investigation had attracted sustained official attention.
The investigators had found, in the course of their inquiry, that the Carter facility was not anomalous. It was one of forty-three private credit facilities Fitch had originated over the past six years, structured in substantially similar ways, directed at borrowers in vulnerable positions with limited access to conventional financing. The terms across the portfolio showed a consistent pattern: above-market rates, early repayment provisions executable at lender discretion, origination fees that compounded the real cost of capital to levels that would not have been permissible under standard consumer lending regulations. The unsecured debt recovery rates for borrowers who had defaulted on the facilities were, in aggregate, negligible.
Several of those borrowers were being contacted by the investigation’s victim services component regarding potential credit damage remediation.
Fitch’s private credit regulation exposure was substantial. His attorneys had advised a settlement posture. Negotiations were ongoing.
The Luxembourg entity that had funded portions of his capital structure — the entity whose acquisition of secondary vehicles had been noted in the Moretti foundation’s quarterly summary as an unscheduled inflow — had quietly divested its position in Fitch’s primary funding vehicle eight months prior, through a standard commercial transaction that had not required any disclosure and had not attracted attention.
The divestiture had been a clean exit.
The exit had been timed, Fitch’s attorneys noted in a memo that would not become public, with a precision that suggested either remarkable coincidence or foreknowledge of the investigation’s initiation.
They did not pursue this observation further.
Fitch attended his first regulatory interview on a Wednesday morning. He arrived with three attorneys. He was professional and prepared. He answered questions with the measured fluency of someone who had spent years making difficult things sound straightforward.
The investigators had fourteen months of documentation.
The interview lasted four hours.