by Ira Glass
“The wife brought that goddamn computer into this house in the first place,” Greg said, hurling a thumb at Connie. “Ever since that computer came into the house, this family was ruined.”
Connie absorbed the full-frontal attack with an uncomprehending blink, and then said to me, as if her husband had never spoken: “My husband has a lot of anger. He gets worked up easily. He’s already had one heart attack.”
She neither expects nor receives the faintest reply from him. They obey the conventions of the stage. When one of them steps forward into the spotlight to narrate, the other recedes and freezes like a statue. Ten minutes into the conversation, Jonathan slouched in. Even that verb does not capture the mixture of sullenness and truculence with which he entered the room. He was long and thin and dressed in the prison costume of the American suburban teenager: pants too big, sneakers gaping, a pirate hoop dangling from one ear. He looked away when he shook my hand and said “Nice to meet you” in a way that made it clear that he couldn’t be less pleased. Then he sat down and said nothing while his parents returned to their split-screen narration.
At first glance, it was impossible to link Jonathan in the flesh to Jonathan on the Web. I have a file of his Internet postings, and they’re all pretty bombastic. Two days before the FedEx package arrived bearing the SEC’s subpoenas, for instance, he logged on to the Internet and posted two hundred separate times the following plug for a company called Firetector (ticker symbol FTEC):
Subj: THE MOST UNDERVALUED STOCK EVER
Date: 2/03/00 3:43 p.m. Pacific Standard Time
From: LebedTGl
FTEC is starting to break out! Next week, this thing will EXPLODE. . . .
Currently FTEC is trading for just $2 1/2! I am expecting to see FTEC at $20 VERY SOON.
Let me explain why. . . .
Revenues for the year should very conservatively be around $20 million. The average company in the industry trades with a price/ sales ratio of 3.45. With 1.57 million shares outstanding, this will value FTEC at . . . $44.
It is very possible that FTEC will see $44, but since I would like to remain very conservative . . . my short-term target price on FTEC is still $20!
The FTEC offices are extremely busy. . . . I am hearing that a number of HUGE deals are being worked on. Once we get some news from FTEC and the word gets out about the company . . . it will take off to MUCH HIGHER LEVELS!
I see little risk when purchasing FTEC at these DIRT-CHEAP PRICES. FTEC is making TREMENDOUS PROFITS and is trading UNDER BOOK VALUE!!!
And so on. The author of that and dozens more like it now sat dully at the end of the family’s dining-room table and watched his parents take potshots at each other and their government. There wasn’t an exclamation point in him.
Not long after his eleventh birthday, Jonathan opened an account with America Online. He went onto the Internet, at least at first, to meet other pro-wrestling fans. He built a Web site dedicated to the greater glory of Stone Cold Steve Austin. But about the same time, by watching his father, he became interested in the stock market. In his thirty-plus years working for Amtrak, Greg Lebed had worked his way up to middle manager. Along the way, he accumulated maybe twelve thousand dollars of blue-chip stocks. Like half of America, he came to watch the market’s daily upward leaps and jerks with keen interest.
Jonathan saved him the trouble. When he came home from school, he turned on CNBC and watched the stock-market ticker stream across the bottom of the screen, searching it for the symbols inside his father’s portfolio. “Jonathan would sit there for hours staring at them,” Connie said, as if Jonathan is miles away.
“I just liked to watch the numbers go across the screen,” Jonathan said.
“Why?”
“I don’t know,” he said. “I just wondered, like, what they meant.”
At first, the numbers meant a chance to talk to his father. He would call his father at work whenever he saw one of his stocks cross the bottom of the television screen. This went on for about six months before Jonathan declared his own interest in owning stocks. On September 29, 1996, Jonathan’s twelfth birthday, a savings bond his parents gave him at birth came due. He took the eight thousand dollars and got his father to invest it for him in the stock market. The first stock he bought was America Online, at twenty-five dollars a share—in spite of a lot of adverse commentary about the company on CNBC.
“He said that it was a stupid company and that it would go to two cents,” Jonathan chimed in, pointing at his father, who obeyed what now appeared to be the family rule and sat frozen at the back of some mental stage. AOL rose five points in a couple of weeks, and Jonathan had his father sell it. From this he learned that (a) you could make money quickly in the stock market, (b) his dad didn’t know what he was talking about and (c) it paid him to exercise his own judgment on these matters. All three lessons were reinforced dramatically by what happened next.
What happened next was that CNBC—which Jonathan now rose at five every morning to watch—announced a stock-picking contest for students. Jonathan had wanted to join the contest on his own but was told that he needed to be on a team, and so he went and asked two friends to join him. Thousands of students from across the country set out to speculate their way to victory. Each afternoon CNBC announced the top five teams of the day.
To get your name read out loud on television, you obviously opted for highly volatile stocks that stood a chance of doing well in the short term. Jonathan’s team, dubbing itself the Triple Threat, had a portfolio that rose 51 percent the first day, which put them in first place. They remained in the top three for the next three months, until in the last two weeks of the contest they collapsed. Even a fourth-place finish was good enough to fetch a camera crew from CNBC, which came and filmed the team in Cedar Grove. The Triple Threat was featured in the Verona-Cedar Grove Times and celebrated on television by the Cedar Grove Township Council.
“From then, everyone at work started asking me if Jonathan had any stock tips for them,” said Greg.
“They still ask me,” said Connie.
By the spring of 1998, Jonathan was thirteen, and his ambitions were growing. He had glimpsed the essential truth of the market: that even people who called themselves professionals are often incapable of independent thought and that most people, though obsessed with money, have little ability to make decisions about it. He knew what he was doing, or thought he did. He had learned to find everything he wanted to know about a company on the Internet; what he couldn’t find, he ran down in the flesh. It became part of Connie Lebed’s life to drive her son to various corporate headquarters to make sure they existed. He also persuaded her to open an account with Ameritrade. “He’d done so well with the stock contest, I figured, let’s see what he can do,” Connie said.
What he did was turn his eight-thousand-dollar savings bond into twenty-eight thousand dollars inside of eighteen months. During the same period, he created his own Web site devoted to companies with small market capitalization—penny stocks. The Web site came to be known as Stock-dogs.com. (“You know, like racing dogs.”) Stock-dogs .com plugged the stocks of companies Jonathan found interesting or that people Jonathan met on the Internet found interesting. At its peak, Stock-dogs. com had maybe one thousand five hundred visitors a day. Even so, the officers of what seemed to Jonathan to be serious companies wrote to him to sell him on their companies. Within a couple of months of becoming an amateur stock-market analyst, he was in the middle of a network of people who spent every waking hour chatting about and trading stocks on the Internet. The mere memory of this clearly upset Greg.
“He was just a little kid,” he said. “These people who got in touch with him could have been anybody.”
“How do you know?” said Jonathan. “You’ve never even been on the Internet.”
“Suppose some hacker comes in and steals his money!” Greg said. “Next day, you type in, and you got nothing left.”
Jonathan snorted. “That can’t happen.�
� He turned to me. “Whenever he sees something on TV about the Internet, he gets mad and disconnects my computer phone line.”
“Oh, yeah,” Connie said, brightening as if realizing for the first time that she lived in the same house as the other two. “I used to hear the garage door opening at three in the morning. Then Jonathan’s little feet running back up the stairs.”
“I haven’t ever even turned a computer on!” Greg said. “And I never will!”
“He just doesn’t understand how a lot of this works,” explained Jonathan patiently. “And so he overreacts sometimes.”
Greg and Connie were born in New Jersey, but from the moment the Internet struck, they might as well have just arrived from Taiwan. When the Internet landed on them, it redistributed the prestige and authority that goes with a general understanding of the ways of the world away from the grown-ups and to the child. The grown-ups now depended on the child to translate for them. Technology had turned them into a family of immigrants.
“I know, I know,” Greg said, turning to me. “I’m supposed to know how it works. It’s the future. But that’s his future, not mine!”
“Anyway,” Connie said, drifting back in again. “That’s when the SEC called us the first time.”
The first time?
Jonathan was fourteen when Connie agreed to take him to meet with the SEC in its Manhattan offices. When he heard the news, Greg, of course, hit the roof and hopped on the high-speed train to triple bypass. “He’d already had one heart attack,” Connie explained and started to go into the heart problems all over again, inspiring Greg to mutter something about how he wasn’t the person who brought the computer into the house and so it wasn’t his responsibility to deal with this little nuisance.
At any rate, Connie asked Harold Burk, her boss at Hoffmann-La Roche, the drug company where she worked as a secretary, to go with her and Jonathan. Together, they made their way to a long conference table in a big room at 7 World Trade Center. On one side of the table, five lawyers and an examiner from the SEC; on the other, a fourteen-year-old boy, his mother and a bewildered friend.
This is how it began:SEC: Does Jonathan’s father know he’s here today?
MRS. LEBED: Yes.
SEC: And he approves of having you here?
MRS. LEBED: Right, he doesn’t want to go.
SEC: He’s aware you’re here.
MRS. LEBED: With Harold.
SEC: And that Mr. Burk is here.
MRS. LEBED: He did not want to—this whole thing has upset my husband a lot. He had a heart attack about a year ago, and he gets very, very upset about things. So he really did not want anything to do with it, and I just felt like—Harold said he would help me.
The SEC seemed to have figured out quickly that they were racing into some strange mental cul-de-sac. They turned their attention to Jonathan or, more specifically, his brokerage statements.
SEC: Where did you learn your technique for day trading? JONATHAN: Just on TV, Internet.
SEC: What TV shows?
JONATHAN: CNBC mostly—basically CNBC is what I watch all the time.
SEC: Do you generally make money on your day trading?
JONATHAN: I usually don’t day trade; I just try to—since I was home these days and I was very bored. I wanted something to do, so I was just trading constantly. I don’t think I was making money. . . .
SEC: Just looking at your April statement, it looks like the majority of your trading is day trading.
JONATHAN: I was home a lot at that time.
MRS. LEBED: They were on spring vacation that week.
Having established and then ignored the boy’s chief motive for trading stocks—a desire to escape the tedium of existence—the authorities then sought to discover his approach to attracting attention on the Internet.
SEC: On the first page referring to a hard copy of Jonathan’s Web site, Stock-dogs.com, where it says, “Our six- to twelve-month outlook, eight dollars,” what does that mean? The stock is selling less than three but you think it’s going to go to eight.
JONATHAN: That’s our outlook for the price to go based on their earnings potential and a good value ratio. . . .
SEC: Are you aware that there are laws that regulate company projections?
JONATHAN: No.
Eventually, the SEC people crept up on the reason they had noticed Jonathan in the first place. They had been hot on the trail of a grown-up named Ira Monas, one of Jonathan Lebed’s many Internet correspondents. Monas, eventually jailed on unrelated charges, had been employed in “investor relations” by a number of small companies. In that role, he had fed Jonathan Lebed information about the companies, some of which turned out to be false and some of which Jonathan had unwittingly posted on Stock-dogs.com.
The SEC asked if Monas had paid Jonathan to do this and thus help to inflate the price of his company’s stocks. Jonathan said no, he had done it for free because he thought the information was sound. The SEC then expressed its doubt that Jonathan was being forthright about his relationship with Monas. One of the small companies Monas had been hired to plug was a cigar retail outlet called Havana Republic. As a publicity stunt, Monas announced that the company—in which Jonathan came to own one hundred thousand shares—would hold a “smoke-out” in Midtown Manhattan.
The SEC now knew that Jonathan Lebed had attended the smoke-out. To the people across the table from Jonathan, this suggested that his relationship with a known criminal was deeper than he admitted.
SEC: So you decided to go to the smoke-out?
JONATHAN: Yes.
SEC: How did you go about that?
JONATHAN: We walked down the street and took a bus.
SEC: Who is “we”?
JONATHAN: Me and my friend Chuck.
SEC: OK.
JONATHAN: We took a bus to New York.
SEC: You cut school to do this?
JONATHAN: It was after school. Then we got picked up at Port Authority, so then my mother and Harold came and picked us up and we went to the smoke-out.
SEC: Why were you picked up at the Port Authority?
JONATHAN: Because people, like, under eighteen across the country, from California . . .
MRS. LEBED: They pick up minors there at Port Authority.
SEC: So the cops were curious about why you were there?
JONATHAN: Yes.
SEC: And they called your mother?
JONATHAN: Yes.
SEC: And she came.
JONATHAN: Yes.
SEC: You went to the smoke-out.
JONATHAN: Yes.
SEC: Did you see Ira there?
JONATHAN: Yes.
SEC: Did you introduce yourself to Ira?
JONATHAN: No.
Here, you can almost hear the little sucking sound on the SEC’s side of the table as the conviction goes out of this line of questioning.
SEC: Why not?
JONATHAN: Because I’m not sure if he knew my age, or anything like that, so I didn’t talk to anyone there at all.
This mad interrogation began at ten in the morning and ended at six in the evening. When it was done, the SEC declined to offer legal advice. Instead, it said, “The Internet is a grown-up medium for grown-up-type activities.” Connie Lebed and Harold Burk, both clearly unnerved, apologized profusely on Jonathan’s behalf and explained that he was just a naive child who had sought attention in the wrong place. Whatever Jonathan thought, he kept to himself.
“When I came home that day, I closed the Ameritrade account,” Connie told me.
“Then how did Jonathan continue to trade?” I asked.
Greg then blurted out, “The kid never did something wrong,”
“Don’t ask me!” Connie said. “I got nothing to do with it.”
“All right,” Greg said, “here’s what happened. When Little Miss Nervous over here closes the Ameritrade account, I open an account for him in my name with that other place, E*Trade.”
I turned to Jonathan, who wore h
is expression of airy indifference.
“But weren’t you scared to trade again?”
“No.”
“This thing with the SEC didn’t even make you a little nervous?”
“No.”
“No?”
“Why should it?”
Soon after he agreed to defend Jonathan Lebed, Kevin Marino, his lawyer, discovered he had a problem. No matter how he tried, he was unable to get Jonathan Lebed to say what he really thought. “In a conversation with Jonathan, I was supplying way too many of the ideas,” Marino says. “You can’t get them out of him.” Finally, he asked Jonathan and his parents each to write a few paragraphs describing their feelings about how the SEC was treating Jonathan. Connie Lebed’s statement took the form of a wailing lament of the pain inflicted by the callous government regulators on the family. (“I am also upset, as you know, that I was not called.”) Greg Lebed’s statement was an angry screed directed at both the government and the media.
Jonathan’s statement—a four-page e-mail message dashed off the night that Marino asked for it—was so different in both tone and substance from his parents’ that it inspired wonder that it could have been written by even the most casual acquaintance of the other two.
It began:I was going over some old press releases about different companies. The best performing stock in 1999 on the Nasdaq was Qualcomm (QCOM). QCOM was up around 2,000% for the year. On December 29th of last year, even after QCOM’s run from 25 to 500, Paine Webber analyst Walter Piecky came out and issued a buy rating on QCOM with a target price of 1,000. QCOM finished the day up 156 to 662. There was nothing fundamentally that would make QCOM worth 1,000. There is no way that a company with sales under $4 billion, should be worth hundreds of billions. . . . QCOM has now fallen from 800 to under 300. It is no longer the hot play with all of the attention. Many people were able to successfully time QCOM and make a lot of money. The ones who had bad timing on QCOM, lost a lot of money.