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 i
dea 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 sta
ndup 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.
Confessions of a Wall Street Insider Page 24