Then No One Can Have Her Page 14

  The straw bale structure became Carol’s art studio and Steve’s workout area, with lots of shelves for storage, then later was turned into a guesthouse. They also built a double-car garage, a horse barn and a corral on the secluded parcel, which was surrounded by fruit and nut trees and by trails used by people and horses on the ranch land behind it. Far from the urban life, the house provided privacy and quiet, with a magnificent view of Granite Mountain.

  Katherine Morris had heard of Carol and her great reputation as a teacher before they’d even met, and she was determined, even as a sophomore, to take one of Carol’s upper-division courses. These popular classes were tough to get into, but Katherine managed. She started with Carol’s “Yoga Psychology” class in 1994, then went on to take her “Dream Work” course in 1995.

  In the process Katherine impressed Carol. After the midwife and nanny affairs, which Carol didn’t discuss with her until years later, she wanted someone she could trust to babysit her girls.

  “I couldn’t believe that Carol Kennedy was calling me to watch her children. I was so honored that I was nervous,” Katherine recalled, laughing. “I truly, truly was. She spoke about [the babysitting] at my graduation when she gave me away. It was funny.”

  As Katherine was getting to know Carol and Steve, and she first heard people gossiping about his affairs, Katherine thought, “These people are crazy. There’s no way.”

  Initially she couldn’t see Steve as a cheater. “I just didn’t believe that he was that type of person,” she said. He never came on to her, although she did get the sense that he would have been willing if she’d given him the nod.

  “Do I think I could have gotten with him if I’d wanted to? Absolutely. But had he [come on to me], I would have told Carol,” she said.

  For Katherine, Carol and Steve were the ideal parents. When she started taking care of the girls, the family was still living in the guesthouse. Katie was about six years old and quite headstrong.

  Katherine liked leaving the house cleaner than she found it so Carol and Steve wouldn’t come home to a mess. But this practice annoyed little Katie. “My mom pays you to play with me, not to clean up after me,” Katie would say, stomping her foot.

  Katherine tried to explain. If she didn’t clean up, she told Katie, “your mom will think I’m a horrible sitter.”

  Mealtimes were interesting as well. When she asked Katie what she wanted to eat, the child often gave her conflicting responses.

  “I’m a vegetarian,” Katie said.

  “Do you want a peanut butter and jelly sandwich?”

  “No, I want a hot dog.”

  But Katherine would oblige. “Okay, I’ll make you a hot dog.”

  Carol sometimes brought the girls to campus with her. “They were just precious kids,” Katherine recalled. “Charlotte was so soft-spoken, quiet and angelic . . . gentle. She was the total essence of peace and peacefulness. She would just look up at you, with her white blond hair, and go, ‘I’m so glad you’re here.’”

  Charlotte liked to pick flowers, make bouquets for her mom and dad and put the blossoms in vases. She even made a crown of flowers for Katherine to wear during her graduation ceremony.

  “I thought she was sent from heaven,” Katherine said.

  Katie had some of the same nature-loving traits and compassion for animals that Charlotte did. “Katie was extremely vibrant,” Katherine said. “Extremely stubborn, passionate from an early age about whatever she was interested in, which at that time was primarily dolphins and horses. She would go after what she wanted, she was determined and she would get it. Katie was loving, way more of an adventurer and very independent.”

  “They both had a phenomenal imagination,” she added. “They were both extremely creative in whatever they were doing.”

  While the girls were growing up, Carol and Steve thought it was important to expose them to the outdoors. The whole family often went hiking and camping, wearing backpacks and climbing mountains.

  By all appearances they looked like the perfect American family: fit, healthy and attractive. As Debbie Wren Hill put it, they were “physically amazing specimens. Truthfully, if Steve could have been different in that way, I think they could have been a family that people would be envying to this day.”

  CHAPTER 19

  After working at Prescott College for seven years, Steve decided to make a radical career change on October 1, 1995, when he moved into the world of finance by taking a job with much higher-earning potential at A.G. Edwards.

  He and his best friend, Sturgis Robinson, made the jump together, entering a stockbroker training program at the urging of and sponsorship by one of Steve’s poker buddies.

  Steve’s withdrawal from academia prompted a sit-down between mother and son, during which Jan asked Steve why he’d decided to stop helping people. He told her that he was still trying to help them—by investing their money so well that they could retire five or ten years earlier than they could otherwise. He also wanted to help nonprofits, such as those helping kids or the homeless.

  “If I could increase the income they get from their investments by even two or three percent, that’s more kids they’re going to be helping. That means a lot to me,” he told her.

  During the first six months at the new brokerage house, Sturgis developed a relationship with a senior broker who was retiring, and who promised to give him his “book of business,” worth about $40 million in assets. The broker, who also sent off a letter introducing Sturgis to his clients, was going to retire on a Friday, and Sturgis was going to start calling the wealthiest clients on Monday.

  But as Sturgis began making those calls, he got a sinking feeling in his stomach that just kept getting worse. It took him about twenty calls before he could truly believe it, but Steve had already called every single one of them over the weekend, and had persuaded them to give him their business instead.

  “I was blown away,” Sturgis recalled.

  When Sturgis came into the office, he confronted the man he’d thought had been his best friend for the past twenty-five years.

  “You called them over the weekend? What the [hell]?” he asked.

  But Steve looked right through him and put his head down as if Sturgis wasn’t even there. “No, it didn’t happen like that,” he said.

  This sparked a paradigm shift for Sturgis, who, after all these years, had shrugged off all the horrific remarks people had made about his friend.

  “All the terrible things I’d been hearing about Steve for years were true,” he said. At that moment Sturgis finally came to the painful realization that he was “the idiot. I’m the deluded person.”

  “I realized that he had some progressive narcissistic sociopathic mental disorder—and the more power he could get, the more this sort of disease took him over,” he recalled in 2014.

  Back in college, he said, Steve had seemed like such a great guy. But as soon as he got access to power, he started to veer downward. And as he acquired more access to money and wealth, this “really set him off the tracks.”

  “It was clear that during the years that he was the dean that he was alienating more and more people,” Sturgis said. “I was blind to it—I always took his side—but in retrospect people would associate me with him and look crossways at me because I was friends with him. . . . So there was no question that in his last year or two at Prescott College, he was in hot water.”

  Their traumatic and hurtful “breakup,” only six months into their new careers as stockbrokers, “completely altered my understanding of who he was as a person and what our relationship meant,” he said.

  Sturgis said the fellow college alumnus who had sponsored them both in the brokerage program also became estranged with Steve around the same time because of his business practices.

  As of 2014, records from the Financial Industry Regulatory Authority (FINRA) showed that Steve had four customer complaints against him, all of which essentially claimed misrepresentation of securities. Two comp
laints were settled; the other two were dismissed or denied.

  The most serious one was filed in September 2010, two years after Steve no longer worked as a broker, alleging damages of $947,000. Settled for $297,500 in August 2011, the complaint summary states in part: Claimants allege that UBS and their broker did not adequately advise them that the Lehman Brothers structured notes in which they invested would lose a substantial part of their value in the event of a Lehman bankruptcy filing, and allege that the Lehman Brothers structured notes were unsuitable for them and were misrepresented to them. Claimants also allege that other structured products that they purchased from other issuers also were misrepresented by UBS and their broker at UBS. The firm, they said, also did not “adequately supervise the broker.”

  UBS responded that Steve wasn’t asked to and didn’t contribute to the settlement, which came out of repurchasing the client’s securities at “par value” and “was not based on the merits of the client’s specific concerns or any finding of fault or wrongdoing” by Steve.

  The other complaint, filed in March 2008, claimed damages of more than $5,000. Settled in December 2008, it either didn’t seek damages or they were determined to be less than $5,000. The summary states in part: Client states that the auction rate securities were represented as cash alternatives with 7-day liquidity, and the triple AAA. Steve blamed that outcome on “unprecedented market events” that caused the “breakdown of liquidity in the market for auction rate securities.”

  About 12 percent of the nation’s 75,846 registered brokers have had such complaints filed against them with FINRA. Steve’s former boss at UBS, Jim Van Steenhuyse, who recruited him from A.G. Edwards, said that only 5 to 10 percent of financial advisors typically last in this tough industry.

  Katherine didn’t see the changes in Steve come as fast or as extreme as Sturgis did, probably because Steve had always treated her well. In her view Steve seemed to try to stay true to himself for the first couple of years after moving into the finance world. He was still the same outdoorsy family man who went golfing, boating, hiking and biking with friends and family, and who attended kids’ events with the girls. He also still enjoyed reading and following the news.

  “He was an intellect,” Katherine said. “Steve was very bright. He was worldly. He talked about worldly current events, always listened to NPR, classical music.”

  But over time, she said, his interests began to turn toward more material things, and his friendships with former colleagues at the college faded away. “They didn’t find they had much in common with him anymore, so I think a lot of those friendships just dissipated,” she said.

  Money took center stage in Steve’s life, she said. As a result he made friends mostly through his job, and not so much with men anymore. “Mainly a lot of women,” she said.

  The more money he made, the more he would spend on nice things, expensive trips, luxury items and athletic equipment. In the process people around him saw him becoming more arrogant and selfish.

  He still held on to some of his old self, Katherine said, but at some point “his whole person changed.... He still loved the outdoors, but in a different way. Instead of being in a tent, he was at the Four Seasons.... Instead of duct-taping a hole in a jacket, he would go out and buy a new one.”

  And although she personally didn’t view this change as dramatically as some, “I would hear of him being that way. That was the perception—and that was Carol’s perception,” she said. But “he was always wonderful with me. I still believe that he is truly that person and he just lost it.”

  Sturgis saw the change in Steve from a different perspective. He recalled the young Steve talking a “great game about spirituality, about attaining spiritual development, about being a good person, but I think the true Steve came out when he got access to wealth, and he became very focused not only on wealth itself, but all the trappings of wealth, the nice suit, the nice condo and the multiple girlfriends.”

  When Katherine took Carol’s “Dream Work” class, it was the most powerful and intense course she’d ever taken, right around the time that Steve made the move to A.G. Edwards.

  The class lasted about eight hours a day, starting in the late morning—late enough that no one needed an alarm to wake up. This was on purpose, because Carol wanted her students to wake up naturally, then write down whatever they could remember from their dreams, even if it was in the middle of the night.

  They were to write them out in the first person and in present tense, as if they were happening in the moment. Then she had them go through the narrative and circle recurring symbols or images that seemed to carry energy. Only the dreamer could interpret his dreams, she said, and determine what in his waking life he needed to work through by interpreting what issues were playing across his subconscious mind. One of the goals was to become lucid in dreams so as to actively control them.

  The students would share their dreams with each other and talk them through. Carol even had them sleep together for a night, head to head, with the hope of entering each other’s dreams.

  “She always believed in some sort of ritual to honor that dream and the gift that dream is giving you,” Katherine said.

  Carol also shared her own dreams. She told them about one in which she was wearing an elegant gown, fit for a presidential inauguration ball, topped off with a lavish jeweled necklace. The outfit was gorgeous, she told the class, “but so not me, I’m in this, so uncomfortable, walking around, like, ‘What am I doing? Why am I in this?’”

  As she processed the dream with her students, she attributed it to her discomfort “with Steve’s career change, and how different what he’s doing is for me and how out of my element I am with that.” The dream told her that she “must really be very uncomfortable” with the vastly different direction her life with him was taking and showed “how she wanted it to slow down.”

  “It’s all a different world for me, and it’s not a comfortable one,” Carol said.

  Like Steve, Carol finally left Prescott College as well, but for different reasons. It’s unclear exactly when or why she left, details that college officials said they were unable to disclose because of privacy laws.

  Katherine got a much closer view of Steve’s personality shift after she graduated from Prescott College in 1997 and moved down to a condo in Phoenix that she occasionally shared with him while she attended graduate school at Arizona State University. Her sister lived in the condo for a time as well.

  Steve and Carol stayed at the condo together sometimes, and when he was in town for work, he stayed there without Carol, bringing over his assistant Barb O’Non instead, under the guise that they were working together. He and Barb would relax by the pool before a meeting, or before they drove back to Prescott together after work.

  One day Barb put on Carol’s bathing suit and paraded around in it, which really rubbed Katherine the wrong way, especially when Barb said, “I feel just like Carol.”

  In 1999 or 2000, Barb came to a Christmas party hosted by Steve and Carol, during which Katherine watched Barb act “all goo-goo gaga” toward Steve in front of his wife and their guests. The behavior was so noticeable that Katherine even remarked on it afterward.

  “If that woman doesn’t have [a thing] for Steve, I don’t know who does,” she said.

  Around that same time Steve came down to stay at the condo before a meeting, showing up after work around five o’clock.

  “I can’t believe it,” he told Katherine and her sister. “I’ve left my wallet up in Prescott. Thank goodness for Barb. What an amazing assistant she is. She’s going to drive down and meet me halfway.”

  Before he left, Katherine’s sister needed to move Steve’s car to go somewhere, because it was blocking hers in. Grabbing his keys, she got into his car, where she was surprised to see his wallet sitting on the console.

  Steve left for the night and snuck back into the condo at 6 A.M. When she and Katherine compared notes, she mentioned seeing the wallet in his car t
he evening before. Katherine was just as surprised as her sister had been.

  “Really?” she asked. Katherine didn’t want to believe that Steve—even though he could be a jerk and controlling at times—had concocted such a tall tale.

  “Maybe it’s not really his wallet?” she offered.

  But they had to face that he’d made up the whole wallet story as a way to hide the fact that he was staying the night with Barb.

  There were days when Steve disappeared around dinnertime and couldn’t be reached, so Carol just went ahead and took the girls out for pizza. On those occasions he offered some excuse when he showed up later, saying that his phone died or he was in a meeting, but he didn’t take responsibility for his absence.

  “He would always blame it on [Carol],” Katherine recalled. “It was her fault.”

  Carol’s response was not to yell or scream, although Katherine did see her neck getting noticeably tight as she calmly disputed whatever excuse he’d given. “Steve, that is not what happened,” she would say.

  “Carol was so tolerant,” Katherine recalled. “She wanted to believe the best in people. And that’s why she stuck with Steve for so long. She fought for her marriage. Hard.”

  Katherine never really liked Barb, especially the strange way Barb seemed to be trying to win her over. But Katherine never tattled on Steve to Carol, because she couldn’t be sure what was going on between him and Barb, and she didn’t want to cause trouble unnecessarily. Instead, she waited until Carol brought it up.

  One day Carol got so upset by something Steve had done that she finally told Katherine that Steve was having an affair with Barb. When Katherine apologized for not having said anything sooner about her suspicions, Carol told her not to worry. She never rebuked Katherine for not reporting what she’d witnessed.