CHAPTER SIXTEEN

A TALE OF TWO TRIALS

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RAJ RAJARATNAM WAS LIKE A BLACK hole. That’s not a ding on the man’s legendary physical girth. Rather, I use those words because, as the head of one of the most impressive hedge funds on the planet—one that managed to stay afloat and even prosper right up until his arrest on October 16, 2009—Raj sucked all of us into his orbit. Pulled us in whether we wanted to be there or not. My destiny became inextricably tied to Raj’s, even though he and I had never exchanged more than a few innocuous pleasantries.

Raj’s company had become the Enron of hedge funds. Remember that before Enron’s collapse, the big investment banks had wanted in and all the savvy financial journalists touted its impressive success. That was Raj. That was Galleon.

Just as Enron’s undoing had surprised so many, Raj’s arrest also came as a total surprise, even to some of his own staff. (An unnamed colleague of Raj’s at Galleon famously came into work, noticed the changed environment, and asked if Raj had been arrested for terrorism.*)

Roughly a year and a half would pass until Raj stood trial, professing his innocence till the very end, even while the folks tied most closely to him—most notably Danielle Chiesi and Anil Kumar—pled guilty or cooperated with the prosecution. Raj’s trial was the big one. The one the Feds all dreamed about and looked forward to. Feds looked forward to trials like this the way Wall Streeters like us looked forward to deals big enough to put us out of the game. We all knew that grandstanding was going to be a massive part of the proceedings. The lead prosecutor Preet Bharara saw this—perhaps correctly—as his career-defining case. The importance of its outcome, on the eve of my own trial, cannot be overestimated.

So I wasn’t going to miss it for the world.

In the real world, even the most scintillating trials—featuring marquee defendants and famous lawyers—would be shockingly disappointing to a generation raised on the likes of Law & Order and Ally McBeal. On those shows, evidence is all sexy smoking guns, and whichever side delivers the most spectacular bombshell finale is the winner. In the real world, both sides must telegraph their evidence, witnesses, and lines of questioning well in advance. Instead of showing fireworks and passion, counsel spends huge chunks of time mindlessly setting the foundation, just to get some minor piece of evidence admitted. Even a desperate insomniac would flip past a Court TV broadcast at 2 a.m. for a random Law & Order rerun. Any sane insomniac, anyway.

When the highly anticipated “Raj trial” began, it was a sensation on Wall Street. Not since the days of Giuliani v. Boesky had the public and the press been treated to the spectacle of such a good white-collar criminal case at 500 Pearl Street, the Manhattan Federal Court—home field of the Southern District of NY (SDNY), and also known as “The Office.” The SDNY prosecutors consider themselves (and generally speaking probably are) the best the country has to offer. Their track record is 98 percent conviction rate, courtesy of an extremely uneven playing field, with the laws and procedures heavily tilted in the government’s favor, not to mention their near unlimited resources. And pitted against them are many defendants who can’t even afford to pay for a competent attorney. A big part of the drama in Raj’s case was that the boys at the SDNY would be facing a well-heeled defendant with enough resources to pay for—not just a good attorney—but for practically any attorney he desired.

Raj eventually settled on a team from powerhouse DC law firm Akin Gump Strauss Hauer & Feld, captained by John Dowd, a grumpy old Marine famous for defending Senator John McCain during the Keating Five debacle, and repping Major League Baseball in its case against Pete Rose. Dowd had been practicing law longer than I’d been alive.

Of course, we all went to watch.

Before the first morning court session, I was in the eighth-floor Federal Cafeteria, trying to order an egg sandwich from a surly cook, his government tenure empowering him to provide neither service nor a smile while working. Nu and Zvi came up behind me and tried to strike up a conversation.

“How long before Dowd puts that runt Brodsky in a headlock?” Zvi asked, a big smile on his face, referring to Reed Brodsky, one of the AUSAs prosecuting the case.

I offered a quick hello after looking around to make sure the cafeteria was empty of possible enemies.

“No fireworks today,” I opined in low tones, “but by the end of the first week I expect the prosecutors to be pleading for an intercession from Judge Holwell over hurt feelings stemming from some Dowd comment. He’s going to hurt their feelings a lot.”

I was confident when it came to Raj’s lawyer. I thought he had hired the ultimate badass. Zvi thought so too.

“They’ll be crying like little bitches when Dowd gets through with them,” Zvi agreed. “Anil Kumar is going to be called ‘Anal FUBAR’ by the time Dowd’s done with him.”

It was a bit inelegant, but I liked it.

For Zvi, this was all sound and fury—prologue to a dance that could end in only one conceivable way. Raj would be acquitted, and then so would he. Zvi was sure of it. At that point a woman and a man walked through the door in classic government haircuts, short and combed to the side, deliberately unstylish. I turned my back so they couldn’t see my face and, after they passed, rotated back to the Brothers Goffer.

I said: “Listen, I’m not trying to be an asshole, but I can’t be seen talking to you guys here.”

Nu scrunched his face like he wasn’t sure what I was talking about. But Zvi got it instantly. The government’s case against me operated on the assertion that the three of us were thick as thieves. The government needed me to be part of the mega-conspiracy.

I didn’t know if Zvi knew it, but my only real avenue to salvation at this point was to convince Zvi to plead guilty, to own up. The AUSAs on my case had not only offered me a generous probation-only deal to plead guilty to one count, but in further discussions, they had also indicated that if Zvi and Nu were to take a plea, they would drop my case and offer me a “deferred prosecution”—the home run outcome. So it was friends close, but enemies closer until I could pry open Zvi’s stubborn eyes and wake him to the fact he was DOA, facing a “dime” if he saw this through to the end.

“You got me?” I continued. “This is just the way it’s gotta be for now. I’ll meet you later at Sutton Place if you want to compare notes, but not here.”

Zvi nodded. He understood.

The government’s opening statement was delivered by Jonathan Streeter. Prior to Raj’s arrest, Streeter had actually been in the process of interviewing for a job with my lawyer, Michael Sommer. With Raj’s arrest, he’d decided to stay where he was to captain the high profile prosecution. It’s easy to understand why. Such cases come but once in a lifetime. The opening statement was just about laying out the government’s case in broad strokes. There were a few dramatic details to hook the jury, but mostly it was just the overview of what the government would “prove” throughout the course of the trial.

By then, most everyone knew that the case against Raj was strong. The government wasted no time painting Raj and Galleon as a cesspool of dirty money, and as corrupt insiders bending good men to their will and making obscene, unlawful profits. Making more in a day than decent folks like “you and me, who play by the rules” will make in a lifetime.

When Raj’s champion John Dowd took the podium, the entire gallery waited in eager anticipation … and kept waiting. He reminded me of a former heavyweight champ climbing back into the ring after an extended absence, a dusted Ali in his fight against Larry Holmes—thirty pounds overweight, no bounce in his step, no sting in his jab. Dowd droned through a long, scripted opening that did little to dampen the government’s theory. It was the last proof I needed that Dowd was finished, a warrior past his prime living off a once-vaunted reputation.

I’d gotten a sinking feeling this might be the case during the pretrial hearing when Dowd had inexplicably allowed Agent Kang to wiggle off the stand during the Franks wiretap hearing (a hearing to determine whether a search warrant was legally obtained). Pretrial, Judge Holwell had granted Raj’s motion for a Franks hearing to determine whether the government had filed a misleading wiretap application. The mere fact that a Franks hearing was held at all was a huge victory. It meant that Raj’s team had demonstrated to Holwell that they had met the preliminary burden of proof showing that (1) the government had knowingly and intentionally, or with reckless disregard for the truth, included a false statement in the wiretap affidavit and (2) that “the allegedly false statement was necessary to a finding of probable cause.” In other words, the government had lied their way through the wiretap affidavit.

But then, Dowd had not pursued it. He had not delivered the knockout blow. This was more than a little disconcerning.

The Goffer brothers attended Raj’s trial with Kucharsky, their “paralegal,” a balding, chain-smoking friend from SUNY Binghamton, who struck me as more of an inept hatchet man than any sort of actual paralegal. When Zvi introduced me to him, I asked what firm he worked for (none) and what kind of legal experience he had. (“He’s good at that stuff,” Zvi said, which also meant none.) But a lack of education or legal experience didn’t stop Kucharsky, or Zvi for that matter, from opining with absolute certainty on every aspect of Raj’s case.

Even though the deadline for a deal had passed, I knew the government would accept a plea from Zvi up to a month before trial. The Raj case was my last real chance to convince Zvi that his decision to go to trial was pure suicide.

I wanted to say: “If Raj has a 10 percent chance, you have a 1 percent chance. Take the deal.”

But Zvi’s focus was, unbelievably, elsewhere.

“Did you see that smoking blogger for Biz Insider?” he asked me one day. “Tall brunette with an accent? She’s all over my dick. Kept asking who I was, who my brother was. I finally told her with a wink on the way out of the courtroom, ‘You’ll find out soon enough.’ Teased her perfectly. I bet she was soaking.”

It was infantile. It was insane. Ten years of Zvi’s life were on the line, and he was talking like Donald Trump in an Access Hollywood trailer.

Sure enough, the next morning Business Insider’s Katya Wachtel posted a blog entry about the three mysterious men, sweating in their Jos. A. Bank “Buy 1, Get 2 Free” ill-fitting suits and mismatched dress shirts, looking like contract killers from Belarus.

On Day Three of the trial, I called my good buddy, Peter Bogart.

“You’ve got to see this, man,” I told him. “Trust me. Come into the city.”

Pete and I linked up around 8:45 a.m. for the 9:00 a.m. start. A healthy crowd was already buzzing. Press from the Wall Street Journal, New York Times, and other top media outlets and cable channels were camped in the front, along with the Brothers Goffer, their “paralegal,” and a colorful mix of Raj team members right behind them. A few news anchors stood in front of cameras, announcing highlights of the trial. When they ran out of specifics, a woman with the NY Post pondered what it must be like for Reed Brodsky’s wife to have given birth to her first child while he was spending eighteen hours a day on a case. Others offered bland congratulatory words, while mentioning the incredible sleep deprivation and pressure Brodsky must be feeling, working to balance such a high profile case and the birth of his new baby girl.

Zvi took in snippets of all this. It made him grind his teeth. Brodsky’s recent fatherhood was news to Zvi. He had a slightly different take on the event, which he shared with Nu in a voice loud enough to be overheard.

“So he had a baby girl, huh?” Zvi said. “Fuck. I was praying the baby would come out stillborn.”

It was insane. Unbelievable. (Fucking Zvi!) Nu tried to shush him, but Zvi was only spurred on by the wide eyes and dropped jaws rotating in his direction.

“What?” Zvi said, gesturing to no one and everyone. “He wants to take my children away from me, and for what? For hearing a few secondhand ideas and not making a penny? Fuck him. I want to see how that scumbag likes losing a child.”

Even Nu was smart enough to know that praying out loud for the death of a prosecutor’s newborn in front of the press wasn’t wise. Nu stepped in front of him and physically shut him up. Zvi had gotten what he wanted, though. He had successfully shocked the press corps. For me, it was the final proof I needed that my fate was tied to a madman, to a sociopath that cared for and about no one other than himself.

Pete leaned and asked: “Did Zvi just say what I thought he said?”

I nodded.

There had always been a part of me that had feared Zvi on some primal, animal level. Now I feared him even more—and on new levels. Zvi could hurt me from a legal perspective, he could hurt my reputation, he could hurt my chances of going free, and he could still hurt me physically. There were probably other ways he could hurt me too, that I hadn’t even thought of yet.

Desperate people make desperate moves.

I was finding that out the hard way.

Hundreds of trials take place every day around the country. No more than one quarter of those courtrooms are anywhere approaching full. In fact, a completely full courtroom is a rarity. Yet that was precisely what we had for the trial of Raj. The stiff marshals were reveling in their newfound attention and power, directing traffic like it was opening night at a Broadway show.

“No drinks! No papers! No magazines! Agents and press first. Please sit in the first row.”

After fifteen minutes of waiting, the crowd busy scoping and gossiping, one of the marshals barked the only part of a trial that would be familiar to Law & Order fans: “All rise.”

In strolled Judge Holwell, a deliberate, soft-spoken Sam Elliot lookalike, and we were seated.

He offered a courteous “Good morning” and asked if there were any issues that needed to be discussed without the jury present. When both sides demurred, he instructed the marshal to bring the jury in. After a minute, there was a loud knock at the jury room door and in sauntered Raj’s jury, sixteen of the most motley-looking individuals you’d ever seen. These were not the folks you wanted juggling with your fate. In Hollywood, “wardrobe” dresses Law & Order jurors in generic, dull, business casual clothing that doesn’t stand out. In real life—as anyone who has been in a courtroom can attest—jurors often don’t hesitate to dress like they want to be the center of attention. This jury was no different. They wore everything from neon lime-green Hawaiian shirts to long, disheveled dreads that made them look like the monster from Predator.

“Can you imagine having your life in the hands of that crew?” Pete whispered, looking them over, having the same thoughts.

“Can I?” I asked incredulously.

“Oh yeah. Shit. I forgot.”

Pete hung his head.

At the break, Pete and I stood in the hallway, where I pointed some of the players out to him. “That’s Nathanson. He’s one of Galleon’s attorneys from Shearman and Sterling. And that’s Susan Pulliam. She’s a reporter at the Journal.”

“Who’s the sailor from Nantucket?” Pete asked, referring to a bespoke-dressed man in his forties. He had a double-breasted navy blue sport coat with a white silk pocket square, and looked like an extra in a yacht club’s “Boating Safety” video.

“Oh, that’s McCarthy,” I said. “Raj’s PR guy.”

Just then, the door to the stairs was yanked open and FBI Agent B. J. Kang and another agent I didn’t recognize—a burly dude with his brown hair shorn to the scalp—shouted, “MAKE A HOLE!”

Each had a hand on one of Anil Kumar’s arms, and speed-marched him into the courtroom. Anil’s head stayed lowered. The FBI agents were barking and swiveling their heads, scanning the room for potential threats. The crowd of reporters and spectators parted like the Red Sea, and Anil was pushed into the relative safety of the courtroom. It seemed laughably silly to treat Kumar like a stool pigeon at a mob trial, but I guessed the feds weren’t taking any chances.

When they were through the courtroom doors, Pete turned to me, an inquisitive smile on his face.

“Make a hole? Who talks like that? How about ‘Excuse me, please’?”

“I’m going to use that from now on. When I’m boarding the subway during rush hour, I’m just going to scream at the people in front of me, MAKE A HOLE!”

We laughed and went back inside.

Kumar, a longtime friend of Raj, testified competently and did the two things the government needed him to do. One, he made clear that he had been getting illegal information from his employer, Intel, and two, that he had been passing that information along to Raj—who also knew it was illegal. On cross, Dowd made a few minor dents, but did nothing to really damage Kumar’s core testimony.

From a psychological perspective, the most interesting part wasn’t the trial itself—which provided few surprises and even fewer moments of drama—rather, it was the reaction that Zvi’s presence was beginning to produce in others. His miscarriage tirade had made him a marked man. Everybody looked his way now. You could feel a palpable hatred emanating from the FBI agents in the courtroom, many of whom may have assisted on our case. They all knew the cocky, handsome fool parading around the courtroom with a permanent smirk on his face, awaiting his turn.

It was almost unheard of for a high profile defendant like Zvi to attend the related trial of another defendant. So much so, that Bloomberg wrote an article on the spectacle Zvi was creating, again referring to him as Octopussy, and including a big photo of him, unshaven and in one of his many loud track suits. Prosecutors and FBI agents alike gave Zvi a wide berth, but their sneers made clear that they considered him nothing more than a common street hoodlum. They were salivating at the prospect of sending him to rot in jail.

I could hardly blame the Feds for their reaction. I knew Zvi had crossed a line. At the same time, there was still something about the parading of Zvi and Raj around like two financial super criminals that reeked of disinformation and propaganda. And maybe even something else. Here they were, two foreign-looking swarthy gangsters, up against the white-bread boys of Washington. (Preet Bharara was the lone brown face on the government’s side.) The big banks had collectively just lifted somewhere in the order of $1 trillion from America, but nobody there was ever shackled. A few people got slapped on the wrist. That was it. Yet these “ethnic” boys with their strange names had been targeted for financial misdealings that weren’t all that different from what the big banks had done.

However you looked at it, Raj had not “stolen” millions from anyone, and Zvi had not made a dime from his trades. Their crimes were technical violations. No one lost their life savings (which is more than could be said for the pre-recession machinations of Goldman Sachs, Merrill Lynch, Bank of America and the rest), and no one, ever, was physically hurt. These weren’t con men stealing Social Security pensions from hapless widows a la Madoff. What Raj and Zvi—along with dozens of others in the money management industry—had done was the financial equivalent of jaywalking. They had broken a technical rule that those in the know had been breaking since the turn of the eighteenth century when traders would gather underneath a large Buttonwood tree at the foot of Wall Street to trade securities. Type up any chart of any stock before a takeover or major event, and you can see the movement before the announcement—someone always knows. But it was easier to present Israel Brooklyn and the Dark Man as the bad guys to a hurting American populace hungry for justice, than it would ever be to go after the big banks, or the bought and paid politicians who had changed the rules to make it easier for crony capitalism and power consolidation to take place. It was a PR blitz, designed to show the American public that while the feds had missed Madoff, Stanford, and others stealing billions over the last twenty years, and that mortgage fraud in the trillions had been going on right under their noses for years—the Good Guys were fighting back … and winning!

To a way of thinking, this trial was Oligarchs 1, Outsiders 0.

Zvi was an asshole and a bully. Raj was an information junkie and a glutton. These were not “good” men. But neither did they play any role in the financial collapse our country was suffering through, nor were they even remotely the most egregious or high-level insider traders out there. And that being the case, it did lead one to ask why they had really been put on trial.

I never for a moment forgot that I was caught up in a staged drama.

The week of our arrest, AUSA Brodsky had told Cynthia, the first of Zvi’s many attorneys, that he had no interest in negotiating separate pleas. “Come in for a global plea and everyone will be in much better shape. Otherwise he’ll spend the next fifteen years in prison. The case against Zvi is airtight.”

When Zvi relayed the story to me later, he added his own color: “If that’s his definition of airtight, it’s a good thing he’s not a submarine commander—he’d kill his entire crew.”

The real value in Zvi lay in his ability to string up Raj and Gary Rosenbach. The government knew Zvi could be a devastating cooperator if he’d only turn informant. The standard modus operandi of prosecutors is to extort and coerce a defendant until he’s under unbearable duress. Keep adding new charges and more dollars until the defendant faces the unbearable prospect of bankruptcy and decades in prison, and then flip him and work up the chain.

According to Brodsky, the deal for Zvi could get pretty sweet. All he had to do was offer up info on Raj, Gary, and, get this … me. Billionaire I, Billionaire II, and a mortgage-saddled nobody. It was strange, but indicative of the phantom nature of their case that they were pressuring Zvi to flip on me downstream, along with those two whales upstream. The mantra typically went, “Work up the ladder, not down.”

I was way, way down.

After watching the first week of Raj’s trial, I was having serious doubts that he would be able to win. It looked like they were going to prove that Raj had done what they said he’d done. But Raj still had a strike force of the best lawyers money could buy, and they’d been working on his case 24/7 for the past eighteen months. The entire back row of the courtroom was filled with Raj’s lawyers, and there still weren’t enough seats. His team also occupied the first row of the spectator gallery—paralegals, PR people, and other miscellaneous assistants. Raj was using a large chunk of his billion-dollar fortune for his own version of the Powell Doctrine—if you choose to go to war, go all in with overwhelming force. Think Iraq as opposed to Vietnam. Raj could afford to pursue every investigative avenue and every litigation tactic out there. I, on the other hand, couldn’t afford any investigative work. Neither could I afford jury selection consultants or trial strategy focus groups. I couldn’t even mount the proper and necessary pre-trial motions because of my financial limitations. But even with this “one hand behind my back” reality, I knew I had to fight. I was innocent.

Sommer still believed there was a chance that the government would blink and offer me something. Unfortunately, this was based largely on his analysis of Zvi and Nu as rational actors who would realize they had no other good choice than to cop a plea. I had long ago given up on this possibility, and knew that we were either going to trial with Zvi, with Zvi and his brother together, or with the entire group of derelicts including Drimal, Jenkins, and Cutillo. I knew it was going to be uphill. Forget 3Com; that was a sideshow. But “conspiracy,” as my lawyers constantly told me, while it sounded like a fictionalized nightmare charge from 1984 or The Hunger Games, was, in the end, brutally real.

Zvi and I nearly came to blows over “conspiracy” on more than one occasion at Sutton Place. I tried to convey the high-caliber spiderweb that “conspiracy” could become in the hands of a motivated prosecutor, but Zvi poo-pooed my concerns.

“You don’t understand,” Zvi scoffed.

“You’re not worried about this?” I said sarcastically. “Then why don’t you explain it to me?”

“I’ve done my own work,” Zvi began.

In trading, when Zvi talked about doing his “own work,” it usually amounted to little more than piggybacking someone else’s idea, or spending a few hours on Google spinning his wheels and selecting articles that confirmed his preexisting bias, while disregarding any evidence that might have made him think again. Not exactly an exhaustive, top-notch approach. The phrase was disturbing to hear because I now realized Zvi had likely used it while passing off extra-legal information as his own regarding trades.

“And I’ve come to the conclusion that no one … no one! … has ever been convicted of conspiracy unless they were also convicted of an underlying substantive trade.”

“No one?” I said doubtfully.

“Nobody. And Cynthia couldn’t show me a case either.”

Zvi’s lawyer at the time, Cynthia, had probably tried to tell him that his idea was absurd, and Zvi had likely responded by being Zvi. By saying something like: “Then, prove it. If it’s silly, show me a case; that shouldn’t be too tough.”

“I can show you a dozen cases in an hour of legal research of people just convicted of conspiracy,” I growled at Zvi. “I’ve been told more than half the people in jail are there on a conspiracy charge alone.”

“I’m only talking about insider trading. Find me an insider trading case where the guy gets convicted of conspiracy, but acquitted on the other charges.”

Zvi’s filter of insanity and narcissism had just cut about 99.99 percent of the cases out there. Very few people in our industry actually go to trial, and those that do tend to be convicted of all counts, both substantive and conspiracy. Zvi’s idea was that he would not be convicted on the underlying substantive of 3Com or Axcan, and thus his dozens of hours of conspiratorial phone calls and informant testimony were irrelevant. It was novel—I’ll give it that—but ultimately meaningless. He was going to get convicted on both substantive charges, every conspiracy charge, and anything else the government wanted to throw into the indictment. He was glomming onto minor inconsistencies, while in the big picture, he was already a dead man.

“Remember I didn’t trade Axcan,” Zvi wheedled.

“I know, but the guy you gave it to did, and he made a few million,” I pointed out.

“I told him I heard an idea,” Zvi said. “I didn’t even believe it myself, and that’s why I didn’t trade it. How could I be held responsible for what some other guy does?”

“Because the lawyer that stole the idea is going to get up on the stand and say he passed it to your buddy. And then one of the traders downstream is going to say he got the idea from Drimal who told him he got it from you and … and that he knew it was inside info at the time. And then if that isn’t enough, the government is going to play an hour of recorded calls of you telling Drimal that shit. So just because you didn’t trade it doesn’t mean they’re not going to hang you.”

“You’re fucking insane, you know that?” Zvi replied aggressively. “Try telling a guy on the jury, one of those $35K a year bums, that if you had a lotto ticket worth a million dollars, you wouldn’t cash it? That’s essentially what you’re telling them. I had an idea worth over a million bucks and did nothing with it. And I should go to jail for that?”

It was true that Zvi could describe a situation in which he had heard big inside information and chosen not to act on it himself for financial gain. And yet he had received something for it. As the recordings would show, he had received the gig at Galleon.

“Raj isn’t going to win,” I reminded Zvi quietly. I didn’t want to fight the real battle now, and my tone told Zvi that I was just voicing an opinion, not looking for a challenge.

Moe had been right virtually every time, whether it was the wiretaps, Contorinis*, or any of the motions we had filed. From Day One, Moe had said “Raj has no shot,” and I agreed with him. I knew Raj was done. I think by this time everybody in the Northern Hemisphere knew that, with the exception of Zvi (and of course Nu, who was only following his brother).

What I didn’t say aloud was that I suspected Zvi had an even worse shot at winning than Raj.

“You don’t understand,” Zvi fired back, incapable of letting it go. “Anil Kumar is done. They made him look like a fool. His whole testimony was suspect.”

“Why? Because he forged a doctor’s note?” I asked incredulously.

“Goes to credibility,” Zvi said, suddenly turning nebulous and general.

“No, goes to sleep … as in the jury was going to sleep. You don’t get it. Raj is like a murderer with the victim’s blood all over him, fingerprints on the weapon, and three eyewitnesses—but wait, one of them says he thinks the shirt Raj was wearing when he butchered that woman was sky blue, yet it turns out the shirt was actually robin’s egg blue. And you think that’s going to save him? It won’t make a fucking difference. Every witness has the same story on the important parts, and most of it is on tape!”

Tapes that aren’t a tenth as bad as your tapes, I’m sure, you fucking scumbag, I thought.

By now, Nu had sidled over to listen. Accustomed—addicted?—to drinking every night with me, or Zvi, or the other friend or two he still had, Nu heard the same propaganda from Zvi day in and day out. At this point, I wouldn’t have been surprised if Nu genuinely thought there was no chance of Zvi being convicted.

“What about the tapes and Santarlas?” I asked again, since Zvi was mugging for the crowd around us with a “Ya believe this guy?” shake of his head

But before Zvi could respond, someone pulled the string out of Nu’s back and he began squawking.

“You know, the government thought they had a much bigger case. This was so trumped up … six stocks … the Octopus, whatever … And now it’s just one stock.”

Nu drank every night until he couldn’t remember. Not to black out, per se, but just enough to wipe the slate clean. Tabula rasa. On multiple occasions he would repeat the exact same stories on Wednesday night that he had regaled us with on Tuesday. His absentmindedness had become increasingly worse as Raj’s trial dragged on. Now, hanging out with Nu was like having my own personal Groundhog Day.

“Nu, that doesn’t fucking matter,” I barked at him. “None of that matters. Just shut the fuck up.”

I wanted to hear Zvi’s answer, not his. I had already told him fourteen times in the last fifteen months that the government could charge 200 stocks, 200 different counts, and you could be innocent on 199 counts, but if there’s one—just one—that you’re not clean on, jail still awaited.

“Remember that terrorism case that was going on during the Contorinis trial?” I cried. “The guy that was acquitted of literally 199 out of 200 counts? Literally 199 out of 200! But guess what? The one count he was convicted on still carried a life sentence.* Big win for the defense lawyer and defendant, huh? Is that what you’re saying?”

“I don’t know,” Nu said as though I were quibbling over something minor “The government blew this whole thing up out of proportion. They kept saying this was a massive conspiracy, $20 million run by the Octopus. But where’s the money? Where’s the …”

“The Octopus?” I interrupted. “Are you fucking serious, man? It’s Octopussy! Not Octopus.”

“Well, Octopussy. Whatever. You got what I’m saying.”

“Yeah, we do,” I said, shaking my head, and turned back to Zvi, who was, by now, red from both alcohol and glowering.

“So the government drops the entire case except 3Com?” I said to Zvi. “Now what?”

“We throw that in their face and make them look stupid,” Zvi said. “Agent Makol perjured himself all over the arrest warrant and wiretap applications. Shankar perjured himself at his own allocution. Plate’s whole story is a fabrication he made up to cut a deal.”

Here it was again, the same litany. A broken record when the entire world had moved onto MP3s. It might have carried some weight back in 2005, when everyone was rich and getting richer, unemployment was below 5 percent, and nobody gave a fuck about what Wall Streeters did. Now, people were ravenous for justice, and the government had to toss Main Street some banker-trader red meat.

“All we need is one,” Zvi said, repeating a familiar refrain.

He meant one juror, one angry man, one lone wolf nutcase.

Nu and Zvi tossed this revelation back and forth like a baseball. Then Zvi commanded Nu to fire up another round along with some shots while he went to the bathroom. I turned to take in the scenery and try to remember why I was here again—what was the damn point of coming to this place? The utility had passed, and now it just seemed like punishment, penance, Sisyphus on Wall Street. The drinks were large, top shelf, and free. Would I have been there without that perk? I didn’t know the answer, and didn’t want to think too hard about it because a “no way” meant I had a serious problem elsewhere.

Zvi seemed to be turning even more aggressive, if that were possible. We hadn’t yet had a serious altercation; I knew an actual fistfight or serious argument would mean the end of my opportunity to persuade, the end of my information conduit. But still, now I could barely contain my disgust when looking at Zvi. The way he acted, what he had become.

Yet the sad fact remained that we were likely to be linked, now. Barring a miracle, the window had all but certainly closed, and we were going to trial. I saw little to be gained in making open enemies of Zvi and Nu at this point.

So instead, I mostly watched Zvi prattle on. I tried to feign interest in his lies about the different attorneys falling over themselves to represent him.* Or the fantasy of Raj winning.

A week later, Zvi’s new attorney was David Markus—the second attorney he hired that he claimed had “never lost in Federal Court.”

“What happened to Glover?”

“Grover. It’s not Danny Glover. It’s Grover. Douglas Grover.”

“Okay. What happened to Grover?” I asked. The image of the Muppet Grover still popped into my constantly aching head.

“Nothing happened. He still wants the case, bad, but I think I may have found someone better.”

“Better how?”

“Undefeated better, that’s how.”

I looked up the resume and saw David Markus had few “name” cases. There was no place to find actual stats on lawyers—there was no Bill James Handbook or ESPN.com equivalent for an athlete, to confirm career home runs or touchdowns. However, a Google search quickly revealed that this was the guy representing Buju Banton, the big-time reggae superstar indicted for conspiracy to distribute cocaine.

“He’s fighting them. You watch this case,” Zvi exhorted.

I had heard of the case. At this point, I didn’t care. Anyone would be superior to Cynthia. Zvi needed someone that would smack him in the face, make him stand up straight, then look him in the eyes and tell him to play ball because he had no fucking shot. Zvi had no legal ground to stand on. If he was intent on fighting, his lawyer’s only real shot would be to put the government on trial—put on a show and do anything he could to divert the jury from the fact that his client sounded like the offspring of a Bonanno family street goon and Bernie Madoff. Yet even that, I knew, would probably not work in the end.

It didn’t matter. Nothing mattered. Zvi was still thrilled with the new development.

According to Zvi, the best part of “hiring” Markus had been that the deal included getting his partner, William “Bill” Barzee, for free.

“Barzee thought the case was so outrageous that he agreed to help Markus with the defense—no charge!” Zvi gleefully announced.

A former federal public defender, Barzee had tried hundreds of cases and had what Zvi claimed was “invaluable” courtroom experience. At this point, of course, I knew I couldn’t believe a word coming out of Zvi’s mouth regarding anything. At least the falsehoods he was telling now showed that he had taken my criticism of his former attorney’s lack of actual defense experience to heart. There’s a world of difference between prosecution and defense. The biggest difference is probably that it’s challenging to get evidence admitted when you’re on the defense side. It’s an art, and you have to learn it. The prosecution, on the other hand, is allowed to present virtually anything, no problem.

Then, within a week of Zvi’s hiring him, Markus lost his first case ever when Buju Banton was convicted of conspiracy to distribute cocaine. The next time I saw Nu, I made sure to tell him that Buju’s case was 100 percent more triable than Zvi’s, and that Zvi’s “undefeated superstar” had just gotten his ass kicked by a prosecutor who wouldn’t get a call back after a first round interview in the Southern District. After a few drinks, Nu admitted for the umpteenth time that his brother’s case might have some “problems.” Not his brother, mind you, just the case.

“I guess it’s not going to be easy to explain some of those tapes to a jury …” he allowed.

Yet Nu stayed committed to following his brother.

Once Zvi started running with the ball, it was going to take an immovable object to stop him. Abstractly, I sort of admired this—or at least stopped to realize I was seeing something rare and remarkable. Almost no one has that type of faith and persistence when faced with long odds. He was just wired differently. But would that save him? Could that kind of insane focus and denial of reality save anybody?

I realized I was going to find out very soon.

“Holy shit, turn on the TV. Did you see the news?” I shouted into my cell phone. President Obama was standing at a podium in front of the White House telling the American people that an elite special forces unit called Seal Team Six had just killed the world’s most wanted terrorist, Osama bin Laden. The man responsible for September 11th, the man who had caused greatest heartache of the young century, was apparently now in a pine box after being killed in a raid deep inside of Pakistan.

“It’s about fucking time!” I continued.

“Yeah, no, it’s great news,” Moe replied into my ear. “Great for everyone … except you … and bin Laden, I suppose.”

I assumed he was joking and laughed. But the tone in his voice and lack of follow up told me he was serious.

“Wait, what are you talking about?”

“You’re a smart guy, Mike. Do the math.”

After a brief pause, it registered. And I wanted to puke.

“Fuck that. No way.”

But even as I offered these protestations, some part of me already knew the answer.

Bin Laden’s capture was sure to cause a spike in American pride and patriotism. The greatest country on earth had offed its greatest nemesis, and the outpouring of love and nationalism would surely engender chants of “USA … USA … USA” as it was now literally doing in corner bars and town squares all across the country. It was great for everyone. Except bin Laden and me. Except for Case No. S1: 10 Cr. 56-06 The United States v. Michael Kimelman. The prosecutors I was facing wore American flag pins and called themselves Team USA in public. In light of the current mood, I was going to come off like one of Osama’s henchmen going up against Ronald Reagan with a bald eagle on his shoulder.

“The United States v. Michael Kimelman,” Moe announced in case I hadn’t made the link yet. “You’ll be lucky if the judge doesn’t ask for a moment of silence and the jurors to recite the Pledge of Allegiance before deliberation. When they get done with you, Zarqawi will be more sympathetic.”

I knew that Moe was right. It was only a question of “To what degree?”

After two weeks of deliberate, persuasive testimony from informants and lots of circumstantial evidence on trade timing, the government rested its case against Raj. During cross-examination, Raj’s all-star legal team had managed to isolate some small discrepancies in the cooperator’s testimony and actions, but nowhere near enough to challenge the fundamental idea that they had been engaged in a criminal conspiracy headed by Raj to secure inside information. I had to hand it to them. The feds had presented a compelling case, and unless one of the jurors was looking to pull an OJ and vote for Raj just because they were a melanin match, Raj was cooked.

Not surprisingly, the Brothers Goffer still maintained a different view of things.

“Now that the defense gets to put on their case, you’re gonna see what Akin Gump is all about,” Zvi boasted to me at Sutton Place while fist bumping Joe Mancuso and Nu.

“What Akin Gump is all about?” I scoffed. “They’re all about collecting $50 million in legal fees and saying we did the best we could with an unwinnable case. You’re still fucking kidding yourself, Zvi. This isn’t a poker tournament, where Dowd’s been hiding an ace up his sleeve. This game is over.”

Zvi bristled.

“That’s exactly what Dowd has. You’re naive if you don’t think so, Michael. You don’t spend $50 million on lawyers and not get something special. These guys are the A-team. You’ll see.”

“Dude, this isn’t a TV show,” I replied. “Dowd is not going to call Agent Kang to the stand and make him break down and say he made the whole thing up. Defense cases are made during the government’s case, by blowing up the government’s witnesses and destroying their credibility. What could Dowd possibly come up with at this point? Give me an example, Zvi. What’s going to rebut the things that Raj said on tape, or that Adam Smith and Anil Kumar said on the stand? All these people have made it clear that Raj received inside information, and knew precisely what it was. And how about his good buddy Rajat Gupta calling him the second after the Goldman board meeting ended and teeing up the Buffet investment for him? C’mon. Give me an example of something that rebuts that?”

“I don’t know what it is,” Zvi said confidently. “But I know it’s going to be spectacular.”

Nu nodded along.

I wasn’t buying it.

“The only thing that even raises the possibility of something interesting happening is if Raj gets on the stand,” I told Zvi. “That’s all they can do. There’s no Galleon analyst out there that’s going to get up there and say, ‘Yeah, I gave Raj the same exact picks based on my research and that’s what he traded. He did nothing wrong.’ So, unless Raj gets on the stand, there is no defense case.”

This was winding me up tightly, so I paused to take a large gulp of vodka. As per usual when we got to talking after watching the proceedings, I felt like punching Zvi in the fucking mouth. I had been warned by Moe that if we actually had a fistfight one night, it was likely both of us would be remanded to Brooklyn MCC until trial. (“Good luck preparing for trial in that hellhole. No sunlight, no outdoors, TVs blaring 24/7 and predators roaming everywhere.”) Moe’s words kept my hands in my pockets. For the moment.

“And even if Raj takes the stand,” I continued, “there’s nothing he can say that will be credible. What’s he going to do? Convince the jury it had all been a misunderstanding? And good luck handling the prosecutors on cross exam. They’ll tear him a new asshole.”

“I don’t see why he couldn’t handle himself,” Zvi said. “He fooled the SEC when he was in front of them for a full day’s deposition.”

“He didn’t fool anyone, Zvi. They knew he was lying, they just didn’t have the proof yet. That’s why they referred the case to the FBI. You guys are insane. I told you before, there’s a one percent chance Raj gets acquitted. Now I think I’m down to zero percent. This one’s done. But for the fact that it’s the job of most of the spectators to be there, that courtroom would look like Dodger Stadium in the seventh inning—empty.”

Zvi shook his head dismissively.

“Okay,” he said sarcastically. “You know more than Dowd and Terrence … and Raj. That’s why they’re worth tens of millions or billions and you’re walking around with a Poland Spring bottle filled with vodka.”

“That’s your brother, not me.”

“Yeah, you’re worse,” Zvi snapped, oozing scorn. “At least he bought that vodka. You’re begging for free drinks from bartenders I have a relationship with.”

It was the first time he had said something like that. I was sick of his idiocy, and he was tired of my “negativity.” Only I was right, and he was a fool. Our relationship, long in limbo, was starting to seriously disintegrate. I couldn’t humor his blind confidence anymore. He just wanted to remain a super-optimist until the moment the cell door clanged shut.

For the rest of the night I drank silently, and kept my fists curled in my pockets.

The next morning was Day One for the defense. Everyone was on tenterhooks to see what they would do. As their first witness, Raj’s team called Rick Schute, a smart and tough analyst and portfolio manager. The defense team had him lead the jury through the basics of Galleon, the industry, and the regular flow of information for traders. I wasn’t sure if it would connect with the jury, but he was putting some real yardage on the board—making sense and being engaging.

At the lunch break, Team Raj spilled out of the courtroom in high spirits, apparently thrilled with Schute’s performance. They weren’t the only ones. Zvi, Nu, and Kucharsky came out with big grins, practically high-fiving each other. This was all part of the master plan. A Raj acquittal followed by a Zvi acquittal. The only thing missing was the four of us riding off into the sunset together while the credits rolled. The plan had been diagrammed for me in at least a half dozen late night boozefests at Sutton over the last year. It had always felt like a guy planning in detail how he’d spend his future Powerball winnings. (At least with Powerball, if you lose, your life is technically no different than it was before the drawing. Here, if you lose, you’re cut off from your family and locked in a cage for an indefinite period of time.)

But after Schute’s testimony, Zvi felt like The Plan was within reach. If we’d been on the Sutton Place deck, he would have had a big cigar in his mouth, saying: “I love it when a plan comes together.” For the moment, Zvi spoke to his brother in a voice purposely loud enough for a nearby fed to hear, “That just erased all the government’s gains from last week in one morning!”

A team of federal agents, looking like they had been sucking on Lemonheads for the past hour, marched right past him to the break room. The prosecutors were not far behind. It was then, with Zvi standing near the elevator, still cackling and smiling, that I saw Raj walk out of the courtroom, surrounded by his cadre of Akin Gump sycophants and cheerleaders. After a brief exchange, he patted one of them on the shoulder, excused himself, and headed straight towards Zvi. My codefendant turned away from Nu and locked eyes with his former boss, the man he idolized. Zvi’s arrogant smile was now in check, his lids all aflutter. Raj had been arrested eighteen months ago, Zvi seventeen. They had not spoken since. Zvi had claimed that Raj had acknowledged him in the courtroom, with the occasional nod, but I hadn’t seen it, and I had been watching carefully. Yet here was Raj, in the middle of his trial, at the center of a feeding frenzy of press, lawyers, and other random observers, heading straight for Zvi. My mind flooded with images of Hinckley, Jack Ruby, or Squeaky Fromme. Was this what it was like for witnesses at those kind of events? Did you freeze while everything moved in slow motion? Because that’s what was happening for me. Raj opened his arms for Zvi while they were still several feet apart, and Zvi walked right up to Raj and returned a giant hug.

“I know,” was all that Raj said to him, making some powerful eye contact, then breaking it off and returning to his cadre of lawyers.

It was probably the single most important moment of Zvi’s life. He turned to Nu, perhaps to see his response, but probably to hide his face from the crowd. Zvi was tearing up. The crowd moved past and slowly dissipated. Soon it was just us.

“I’m the only one … the only one,” Zvi said to his brother. “He knows, Nu. I’m the only one. Everyone else stabbed him in the fucking gut. His lifelong friends? They couldn’t wait to walk up to him and twist the knife. But I’m the standup one. Raj’ll never forget that. You can’t put a price on that type of loyalty. He knows. He might put $50 million down with Incremental Day One. Our future is wide open. This is gonna be real.”

Zvi eyes were misting over as he stared out the eighteenth-floor window at the East River. In a year that had been painfully short of hope and good news, I let him enjoy his moment. I didn’t have the heart to tell him a $50 million investment was about as likely as an acquittal.

The feeling of exhilaration we got from Schute’s spirited bunker defense lasted less than twenty-four hours. I took a pass on Sutton Place that night, knowing that it was going to be an unabashed Raj lovefest. My last best hope was still to have Zvi cop a plea. And now I was farther away from it than I’d ever been before.

The next morning, it was Assistant United States Attorney Reed Brodsky’s turn to tackle Schute on cross examination. Little did we know he had a golden gun in his pocket. After a couple of opening feints, Brodsky let it fire.

“So, Mr. Schute, Raj Rajaratnam gave you $25 million for your fund, isn’t that correct?” Brodsky asked, already knowing the answer.

“Yes. Mr. Rajaratnam is an investor in my fund,” Schute had answered.

Little did we know, but that was already checkmate.

Schute spent the rest of the morning trying to explain that the $25 million was still Raj’s money, and he could take it back whenever he wanted. That it wasn’t really his money, and that Raj had not really given it to him. But Schute’s protestations did little to help. The jury, mouths agape, simply heard that Raj had given him $25 million. No wonder this guy was up here testifying about how aboveboard Raj was.

Two-bit corner drug dealers might leave $15K cash in a manila envelope under the door when they wanted to see a witness change their tune, but here’s how we do it in the hedge fund world, folks! The jury saw it as an enormous bribe.

“For $25 million, he better be a good witness,” I joked to the agent sitting in front of me, just to see if I would get a response. He gave me a big smile and a knowing snicker.

As the prosecution continued, the gist of the cross became clear. It was a very simple idea, and would be easy for the jury to understand. This guy has been … PAID. You can’t believe anything he’s saying. For $25M, I’d tell you Raj was better looking than George Clooney and hung like John Holmes.

Once again, it felt like game over.

The next day’s witness was Geoffrey Canada, founder of the Harlem Boys Club. His was a tremendously inspirational story, and Raj was a critical and consistent backer of Mr. Canada and his vision. At the same time, at this stage of the game, a character witness wasn’t going to cut it. I could almost hear the jury thinking: You’re a billionaire. Giving to community improvement organizations is what rich people are supposed to do. So what?

The mood in 2011 was so angry and rife with socioeconomic envy, a billionaire wasn’t about to get extra credit for giving a little of his hard-earned (stolen?) millions to charity. And the racial connections between the communities Mr. Canada served and some of the jurors left a bad taste in many people’s mouths. Raj had given his money to this organization years before any investigation—and it was obviously a heartfelt gift of incredible generosity to a worthy cause—but why bring it up now, like this? In the hallways during the bathroom breaks, everyone whispered about “black jurors and little black kids.”

Soon, the only question remaining was whether Raj was going to take the stand and testify himself. The first three defense witnesses, Schute, Canada, Gregg Jarrell (an expert paid a small fortune to present charts and stats showing Raj could have received his info from publicly available sources), had proven ineffective at best. After Jarrell concluded, it wasn’t clear that Raj had any other witnesses left to call.

So either the big man himself was going to take the stand, or Akin Gump was going to fold and hope a “king high” hand was good enough to win. When pondering whether or not a defendant should testify, the standard defense playbook instructs the defense to always make it seem as if the defendant will testify. This makes the prosecution lose precious time preparing to cross examine the defendant. It’s time that could be better spent on other witnesses. Raj’s team went with the textbook bluff.

Each time Judge Holwell asked Raj’s lawyers—usually at the prosecution’s behest—whether their client would testify, Dowd gave the standard response: “We plan on making a game time decision, but believe the defendant will in fact testify.”

Dowd uttered it in such a deliberate and believable fashion that by the end of the trial, every article predicted Raj would take the stand. The defense bluff may have been standard operating procedure, but it worked. I also felt it was likely Raj would indeed testify—if only because if he chose not to, at this point, to any educated observer, he was clearly finished. Done. Why not play that final card? You never know.

Unless Raj had a juror in his pocket, this trial was over, and the King of Hedge Fund Kings was going to jail for a very long time. Raj taking the stand was the sole remaining chance for the defense to present a compelling alternative to the prosecution’s narrative and correct the “misleading” portrait of the defendant that had been presented by the government. Raj and his lawyers had to know that.

Then it came.

Dowd stood up and mucked the defense’s final hand.

“The defense rests, your Honor.”

It prompted surprise murmuring from the gallery, and quiet exhalation from Streeter and Brodsky. Closing statements were to begin the following day.

“The defense rested!” were my first words to Moe and Sommer as I walked through their conference room door.

“Doesn’t matter,” Moe quipped. “That one was over before it began.”

“So how long do they deliberate for? Want to do a pool?”

“Sure,” said Sommer. “Seventy-two hours.”

“We’re doing days, forget hours. So you’re at three days?” I said. “Moe?”

“Two days.”

“I guess I’m at four,” I decided. “I like three, though. I think that’s the real number.”

What we left unsaid was the expected verdict.

“So what are we doing today?” I asked my team.

“I want to review some of the 302s,” Sommer began.

I agreed that this was a good idea. I had been looking through the 302s myself.

302s were written FBI records of statements proffered by cooperators. You’d think, in the twenty-first century, that such things would be kept as digital audio files. According to Sommer, there was a reason the FBI wanted to hang on to the paper transcript format. Namely, because they could selectively omit (unintentionally, of course) any part of a statement given by a cooperator that did not help their cases.

“I don’t see how Shankar and Tudor don’t come off as completely insane, in these,” Sommer said. “So where should we start?”

“I’ve been compiling sort of a ‘greatest hits’ sheet on the 302s,” I said. “Why don’t we start with Shankar, since he’s about half the case with Hilton?”

Hilton was one of the trades I was charged with having made improperly.

“Shankar it is,” Sommer said. “What are your thoughts so far?”

“Well, as you know, before we were arrested, Shankar was the only part of the case that I knew about,” I told him. “Like, I didn’t know at the time I traded it, but eventually I found out that the Hilton call originated with Shankar. On the afternoon of July second, Zvi called me when I was trading at Quad and told me he was ‘hearing that Hilton might be in play.’ That was what he said and how he said it. Nothing illegal. No inside info. I bought a small position and sold most of it the next day, when it was up pre-market. Not long after, the Jeffries analyst came out with a note saying Hilton was in late stage talks with private equity. I added to my position and the stock started ramping from there. That evening, Blackstone announced it was buying Hilton for $47 in cash. The stock had been trading in the $34–$37 range beforehand.”

Sommer said, “Okay, I’m with you so far. How much stock did you own?”

“About 15,000 shares.”

“So you made around $150K?”

“A little more. I traded it that day too, and made some more money.”

“Go on.”

“So it seemed like a good call, but not too suspicious. The Jeffries note was right on, and the trading action before the note seemed to indicate there was some speculation. There were multiple instant messages coming out of Schottenfeld and other firms that the Hotel Group was under accumulation and the rumor was that a top-tier analyst was going to upgrade the group. At the time, I didn’t give the call a second thought. Zvi didn’t know where Gautham got the call from, or if he did, he wasn’t telling, and based on the Jeffries note, clearly there were some leaks and management was talking to someone. A second-tier bank like Jeffries doesn’t publish a note like that unless the news is outrageous. So it didn’t bother me until Raj got arrested and the criminal complaint specifically mentioned Hilton. That made me think maybe Shankar got Hilton from Raj or maybe they both got it from the same person. It turned out to be a little more complicated.”

Moe stepped in.

“Deep Shah, who worked at Moody’s, gave it to Roomy Khan. Roomy passed it on to Raj directly, but she also passed it on to Tom Hardin, who worked at the Lanexa Fund, a hedge fund affiliated with Tiger Management. Then Hardin to Shankar to Zvi, and from Zvi to Mike and about fifteen other people.”

“That’s correct,” I said. “Tiger and SAC are the two big dogs in the equity hedge fund game. They’re responsible for seeding and spinning off more managers than nearly every other fund combined. As to Gautham, I only met him twice—actually three times; once was when he interviewed for a job at Incremental. He seemed odd—annoying and egotistical, and a bit shady. After Raj’s arrest, Zvi ‘confessed’ to me that he thought Shankar was the rat mentioned in the Raj complaint. Zvi also believed Shankar had worn a wire. I asked Zvi if he had anything to be concerned about and he basically said no. However, he did reveal that he paid Shankar cash on multiple occasions. Zvi paid Shankar cash for his calls as a ‘thank you,’ he said, and also because Shankar kept asking to borrow money. Zvi said Shankar needed cash to pay his dying grandfather’s medical bills in India, and because he was having trouble paying his mortgage. Zvi made it sound like he paid him not because it was a part of a tit-for-tat arrangement, but because he wanted to help a guy out when he was struggling.”

“Shankar talks in the 302s about Zvi Goffer paying him $10,000,” Sommer said.

“Well that’s the thing,” I told him. “I was kind of willing to give Zvi the benefit of the doubt with the cash payments … that is, until one day when I asked him how much he had given Shankar. Zvi told me that, all in, it came to over $100,000.”

“Holy shit,” Sommer exclaimed.

“That was literally my response.”

Moe said: “Just the sheer amount, $100,000, makes it all feel … less clean.”

“Again, that was my reaction,” I said. “And when I kind of freaked out a little, Zvi started downplaying the significance. Shankar was talking about having to permanently move back to India, he said. Zvi just wanted him to be financially secure.”

“So he’s backpedaling a little,” Sommer said. “It’s like he’s just trying to keep you from panicking.”

“Yes and no. On the tapes, you hear Shankar—this is before he starts cooperating—you hear him telling Zvi he needs money for his mortgage and for his sick relative. So that part’s true. But I don’t think he’s asking for $100,000. Maybe that’s the cumulative total Zvi gave him over the course of a year. $10K here, $20K there. Who knows?”

“The best part about Shankar’s 302 is when he says he feels totally guilty about the $10K payoff so instead of keeping the money, he gave it away to an Eastern European homeless woman in Grand Central,” said Sommer.

“That’s basically the craziest thing I’ve ever heard,” Moe said, livid as hell. “It’s clearly bullshit. He just doesn’t want to have to give it back, or he knows something is up and is trying to make himself more ‘likable’ for the FBI and the judge who will ultimately sentence him.”

“A jury will laugh him out of the room,” I added. “It totally destroys his credibility when he says he felt so guilty about the cash. And then his next move is to go out and extort Dave Plate for another $5K!”

“Plate also said he didn’t think Shankar was paying anyone off,” Moe noted. “He thought Shankar was just keeping the money.”

“I am confident Shankar got a lot more than $10K from Zvi, and that he kept most of it,” I said. “I think there’s got to be a way we can nail him on that.”

Sommer said: “Unless you testify, or Zvi testifies, I’m not sure we can.”

“Anyway, it’s interesting that I wasn’t worried about 3Com or any of the R&G stocks at this point. I thought the case was pretty much Hilton. I knew Zvi had some issues though, Shankar or not. His time at Galleon overlaps with the time the government cares about in Raj’s criminal complaint.”

“Anything else for Shankar we should note?” Sommer asked.

“You mean besides the fact that during his allocution, he pled guilty to insider trading in Avaya? A stock that even the R&G guys had never heard of. It was just another Zvi vapor tip, but Shankar pled guilty to it. Also, in his allocution, he claimed that he now understands that 3Com was insider info, but didn’t at the time. He has to know it was insider info in order to be guilty.”

“That’s good; we can hit him hard on that during cross,” Sommer said with a smile. “Let’s step back now and review. The highlights for Shankar are as follows:

1.   He pled ‘guilty’ to a stock trade no one alleges there was inside info on, which shows the FBI and USAO were completely fooled by circumstantial evidence, the same circumstantial evidence they’re trying to convict you on. This is important. It shows they did not even understand what was happening.

2.   He testified Hilton ‘could be in play’ when he pled guilty. That’s a rumor, as opposed to real inside info.

3.   He lies about the size of the cash payments he got from Zvi and then compounds that lie by claiming he gave the money to an Eastern European woman in Grand Central.”

“Maybe we should hire OJ to find her?” I chimed in. “Because she’s so definitely real.”

“Or, we could do a five-person lineup and see if he can pick her out?” Moe added.

“And four,” Sommer continued, not missing a beat. “On the tapes, there is a tip Shankar gives to Zvi which Zvi doesn’t relay to you. There’s also a series of phone calls where Zvi clearly excludes you from the insider info he has and tells Raj and Drimal.”

“This is all solid stuff,” Moe noted.

“Now, ahem, Michael,” Sommer said as if broaching a delicate topic. But what on earth, I wondered, could be more delicate than these facts which would decide my fate?

“There’s one more thing I wanted to bring up,” Sommer said, doing his best Columbo. “I don’t think we’ve had this discussion before, but we are not going to get any surprises at trial about your background, are we? What I’m asking is, have you ever been in trouble with the law before or is this your first time?”

Technically this wasn’t my first experience with the FBI. Technically.

There had been a little incident in which my father-in-law had called the FBI after I’d failed to come home one night, felled by an all-night drinking contest against Jason Giambi. I awoke the next day around noon on Yankee reliever Tanyon Sturtze’s couch. (What do you want me to say? I was a Wall Street guy who sometimes did Wall Street guy things. Hanging out with MLB players was sometimes part of it.) I’d awoken to a series of worried messages from my wife, my father-in-law, and the FBI, but it had eventually amounted to nothing. I had apologized profusely to each, and promised to do a better job of letting my family know where and when I was about to black out in the future.

“Nothing more than a speeding ticket twenty-five years ago,” I responded, deciding to leave that tale untold.

“Good,” Sommer replied. “Our position is going to be that you’re a family man who is active in the community and in philanthropy. We’re going to say that you’re a guy who has never had even a hint of trouble with the law before. I want to make sure that story is intact.”

“It’s the truth, it’s not a ‘story,’” I said defensively.

“There is no ‘truth,’ only what we can prove to a jury,” Sommer responded with a hint of disgust at my naivete. “Now, let’s get back to work. Where were we?”

* Raghavan, The Billionaire’s Apprentice, page 317.

* While we were on pre-trial, Joseph Contorinis, a former Jeffries money manager, was convicted of insider trading that prosecutors say netted $7 million in profit. He was tipped off by UBS AG investment banker Nicos Stephanou about upcoming acquisitions and mergers. There were no tapes and only testimony by Steohanou (that was inconsistent). Contorinis also testified in his defense and was slapped with a perjury charge by Judge Sullivan for doing so. Contorinis was sentenced to six years in prison

* On November 17, 2010, Ahmed Ghailani was acquitted of all but one of the charges against him. He “was found guilty conspiring to destroy property and buildings of the United States.” (from an FBI press release) http://www.internationalcrimesdatabase.org/Case/954/Ghailani/.

* This week it was legendary defense lawyer Gerald Shargel. Zvi told me how Shargel had brought him into his lush, paneled office and clicked a hidden button under the desk that brought down a soundproof reflective black glass cover over the windows to prevent the feds, and other intrusive parties, from eavesdropping or reading lips—apparently a common practice against Shargel’s clients. Zvi claimed Shargel offered him a $500K “all-in” deal to represent him in this case. Shargel’s fees normally run minimum seven figures for a trial. Furthermore, another defendant had already met with Shargel and debriefed him, so it’s likely that he was conflicted out. But I would only learn those facts later. For now, as always, they weren’t about to get in the way of a good story from Zvi.