Confessions of a Wall Street Insider

by Michael Kimelman

  Suddenly conscious of my posture and demeanor, I brought my shoulders back, elevated my chin slightly, and tried to affect the countenance of someone innocent and wrongfully accused.

  “You may be seated,” Judge Sullivan said to the room with a friendly, serious smile. “Thank you, ladies and gentlemen, for being on time and I hope you had a good night. Now that you have been sworn in, it will be your duty as jurors to find from the evidence what the facts are. You and you alone are the judges of the facts. You decide what happened based on the evidence presented at trial.”

  Through a targeted combination of humor, flattery, and time-tested material vetted on hundreds of previous juries, judges massage jurors and make them feel special and unique, their “service” on par with those in uniform fighting over in foreign lands to defend truth, justice, and the American Way. The flattery from a booming, authoritative figure assures the jury that they are equipped for and worthy of this challenge, and humor dissipates the suffocating tension, mostly originating from the skulls of the defendants. Like wayward children seeking the approval of an intimidating yet beneficent father figure, the jurors want nothing more than to please their Judge Father.

  I futilely attempted to perform some stealth deep breathing exercises to slow my heart, which was pounding against my breastbone like a fundraiser at my front door during dinner. The insanity and stress I felt was, once again, off the charts.

  Being on trial is not dissimilar from being in a presidential debate that lasts six weeks. Your every move is scrutinized and watched, even when you’re not the focus of attention. For eight hours each day, a pure and permanent poker face is required. You can’t react to anything; even scribbling furiously on a legal pad can be misconstrued negatively. For someone used to smiling a good part of the day, freezing one’s face in a mask of neutral consternation can be physically painful. To be on full alert all the time takes a mind-breaking toll. But you still have to do it. One bad cross exam, one stumped question, or one missed angle and it can be game over. To observe and record for eight hours a day and betray no emotion or reaction is beyond tough; it’s torture. And after the court session ends for that day, it’s not like you get to wind down and relax. There is no break. After court, it’s right back to your lawyer’s offices to prepare for court the next day. That goes until 10 p.m. or later. Home by eleven if you’re lucky. Kids, if you have them, will already be asleep. Your parents will have questions you can’t or don’t want to answer. Your partner will be drained, scared, and concerned for you—but won’t really know how to engage with you because what’s happening to you is so unique. Then you’ll wake up the next morning and be out the door by seven to do it all over again. It’s like hopping on a horrible treadmill that you can’t get off for weeks. The speed varies up and down, but it never actually stops. And maybe at the end of it, you go to jail.

  The treadmill of horror gets worse as you get closer to the end of the trial. The tension and torture climb as the trial progresses. During jury selection, the stress and tension are extremely high, but that’s like a theater dress rehearsal compared to opening statements. Each step gets worse, and your mind feels like you couldn’t possibly handle any more. But then you always do. You find a way, and you do. If you think opening statements are bad, wait until closing statements. At least with opening statements, you still have time. Things can still happen. Closing statements means it’s over, and you have to hope it went well. Soon you will know the outcome that will determine the coming months and years, or possibly the rest of your life. Closing statements, which have the ability to produce dancing spots of whiteout in your vision, nonetheless pale beside the horror of deliberations. During deliberations, the jury knocks on the door to alert the marshal when they have a note for the judge. The note could say, “We have a decision,” but it could also simply be a request for more information, for a replay of some evidence, or some other clarifying question.

  It’s an arrhythmic, insta-migraine moment every time a fist pounds that jury door.

  For me, every single knock brought on a flashback to the FBI pounding on my front door the day I was arrested. It’s horrible, and yet it can’t compare to, or prepare you for, VERDICT.

  Verdict is the last note in the song. Then there is a sickening delay of two hours which the judge uses to give members of the press and family members and friends of the defendants time to arrive at the courtroom.

  What do you do when you feel like your head is going to shatter, like your temples are pulsing so violently that people can see it, and like your heart is skipping beats? What do you do? Do you pray? Do you scream?

  You won’t know until you face it yourself.

  Between us, I sincerely hope you never do.

  * The best “fake heart attack” in finance was that well-known floor trader who hit the ground when the stock he was making a market in on the floor of the NYSE received a takeover offer and his firm was heavily net short. The “victim” was able to stop the action long enough for the price action to slow down and the person that filled in for him ended up taking the majority of the blame.

  * Hoboken Snooki, our sole potentially sympathetic juror, ended up being removed from the jury pre-verdict due to a family illness.

  CHAPTER NINETEEN

  GUILTY

  ______________

  “THIS EMAIL ADDRESS IS CURRENTLY AT a re-education camp for the indeterminate future and will not be checked. Please try back once its lesson has been learned. Mike.”

  If you had sent me an email on or around December 11, 2011, that’s the automated answer you would have received.

  In the New York Times, journalist Peter Lattman, who was reaching out to me, referred to my response as “wry.” Wry, indeed. Let’s try a tongue-in-cheek attempt to divert all the other emotions I was feeling, such as “devastated,” “destroyed,” “distraught,” “despondent,” “bitter,” “outraged,” “terrified,” and even, in my darkest moments, when the world seemed such a dark and horrible place, “borderline suicidal.” I admit that there were a few moments during the trial when, with an unsettling clarity, I could understand why poor Ephraim Karpel* had hanged himself with a leather belt in that small subleased office on lower Fifth Avenue, hounded by Federal agents, ruined professionally, and driven to despair.

  If I had been a fatherless lush, living in a child-free vacuum, then who knows—although deep down I do know. Why? Simple. For all the suffering my poor parents had been through since my arrest two years earlier, to cap it off with their son washing up against a jetty on Long Island Sound, bloated, with a belly full of aspirin and vodka, or swinging, blue-faced, from a chandelier, would have been the ultimate act of thoughtless selfishness. But there were my children to think of. Three little kids, who had already lived through this gut-wrenching ordeal.

  They were what kept me going—my parents and my children—through this terrifying and confusing time. I could not let them down. Any more than I already had.

  If you know anything about me, you already know that I was found guilty. Here’s how it shook out.

  Throughout my trial, my defense team called only one witness on our behalf, but it was the FBI’s lead case agent, Jan Trigg. Please consider for a moment how unprecedented this was. The lead FBI case agent is supposed to be the linchpin of the government’s case. She was the one who captained the investigation and built the Fed’s case from scratch. We blew up the government’s case on cross exam, either shredding their witnesses or mostly getting them to admit they had no idea who I was or that they didn’t believe I was a part of the conspiracy. And then, the coup d’etat was calling Agent Trigg again as a witness for our side, and getting her to reiterate under oath on the stand what she had admitted under cross-exam when she’d testified on the government’s behalf.

  “Do you need some time to review the transcripts and evidence?” Sommer had asked her.

  Sommer had Agent Trigg in an armlock, and she was doing everything she could to squirm out.
<
br />   “Perhaps, your Honor, this would be a good time for the morning break to allow Agent Trigg to refresh her memory,” Sommer suggested with a tinge of sarcasm.

  “I think that’s a good idea if no one objects—let’s break for fifteen,” Sullivan noted, dismissing the jury and calling my lawyer’s bluff.

  Upon return, Sommer repeated the question before Agent Trigg, to make sure the jury really grasped the implication of what she was being asked:

  “Can you show me one wiretap, one body wire, one phone call, one email or instant message where Zvi Goffer, or anyone, passes my client Mr. Kimelman inside information and he trades on it?”

  After a few seconds of silence, Trigg reluctantly admitted, “No, I can’t.”

  I know it wasn’t the movies, but amid the murmuring in the gallery that followed her answer, I couldn’t understand why Sommer didn’t just leap up and shout: “Your honor, I make an immediate motion for dismissal of all charges against my client!”

  I imagined Sullivan pounding his gavel and asking for “Order in the court” before asking the prosecutors if they had any other evidence against me.* It was a pleasant fantasy. Fleeting, but pleasant.

  If there was any bright spot for me during my trial, that was it.

  I’m not going to drag the rest out.

  Despite the above—despite the government not even calling Franz Tudor, who wore a wire and sat next to me on the trading desk for over a year, doing his best to incriminate me; despite a year-plus of phone taps, and wire taps, and several informants coming up with nothing; and despite Zvi having done everything he was accused of before he became a partner with Incremental, the jury didn’t look past the dollar signs. They were blinded by the money. That, and the fact that Zvi and I had become partners and friends at Incremental. Then they offered the damning conclusion: “Guilty.”

  We were “Wall Street,” in a country still feeling the sting of the recession. We were looked on like French nobles after the storming of the Bastille. I could write about the legal minutiae that happened before the verdict, how there were several legal firsts in this trial, but in the end it’d be fascinating to about fifty people. You’re likely not one of them.

  Sommer wasn’t even there for my verdict. He had a kidney stone and was in the hospital, so we put it on speaker for him. Probably the only way to make it worse to hear that your client has just been convicted is to hear it in a hospital with a catheter in your penis. It was just Moe and me at the table.

  Just as we were tried in triplicate, so did we hear that we were guilty. The jury said that Zvi was guilty, that Nu was guilty, and that I was guilty. One two three. We were three of what would eventually be twenty-four persons who were either convicted by juries or who pled guilty in the Galleon and Incremental cases.

  I don’t have precise memories of how Zvi or Nu reacted, or even how I did. I was disappointed and numb and not thinking clearly enough to be very observant.

  The horror was now complete.

  Or so I thought.

  I was not immediately taken into custody, and would have several months more of freedom until Judge Sullivan finally rendered his sentence.

  That meant months to let whatever traces of hope and optimism I still had fizzle and spark and sputter. And life still went on. The week after my verdict there were games for the Little League team I was coaching. It was also Father’s Day. I had to put on my coach/daddy hat and smile, while inside it felt like the world had ended and I could barely breathe.

  Two days after the trial ended, Lisa came bounding onto our outside deck where I was seated, staring at nothing and trying to calculate for the thousandth time how my life had reached this point. She was smiling, which totally unnerved me as I hadn’t seen Lisa with even a hint of a smile in weeks.

  “I’ve got an early Father’s Day present for you,” she said mysteriously, which now really had me alarmed. “So I’m in Stop & Shop with Phin getting some groceries when I see someone who looks familiar. We pass in one aisle, and then in the next aisle. When we pass a third time, I realize who it is. Juror number nine!”

  “You’re kidding me, right?”

  “Nope. It’s definitely him and I think he recognizes me too. This time when we walk by each other I say hello and tell him I think we know each other. I introduce myself as Lisa Kimelman. I say ‘I believe you were one of the jurors on the case that was just decided.’ Then I ask him if I could just ask him one question. He’s clearly a little uncomfortable. But I just jump right in and ask it: ‘Can you tell me how you came to the verdict of guilty against Michael?’”

  Lisa pauses.

  I’m blown away at this point. I didn’t think she still cared about the case. Frankly, I’m amazed she had the nerve to confront one of the jurors. I wondered if I would have had her courage in the same situation.

  “Are you serious?” I asked with a rapt grin. “What did he say?”

  “After giving about a half dozen ‘umms’ and ‘uhhhs’ he said, ‘There were just a lot of really bad tapes against that guy Zvi Goffer.’”

  My face fell, and I nodded. The answer was crushing, but not unexpected. Guilt by association is always your biggest fear in a situation like mine. Turns out I was right to be afraid.

  “So that was it, huh?” I finally said.

  “Please,” Lisa said, with an expression that screamed, Give me some credit, willya? “I’m not going to let him wiggle off that easily. I said, ‘I know there were some bad things in those tapes when it came to Zvi Goffer. But I’m talking about my husband, Michael Kimelman. Would you mind just telling me what was compelling in the evidence against him? We’d really like to know what swayed the jury.’”

  “And?” I asked.

  “More ‘umms’ and ‘uhhhs’ and then finally he kinda goes, ‘Just the tapes against Zvi and him being in business with that guy. The fact he was in business with that guy. I guess that was it.’”

  Lisa still wasn’t done.

  “So then I asked him if he knew that the government was going to ask for a sentence of five years. He looked genuinely surprised. He said they’d spoken in the jury room about how white collar guys always get a slap on the wrist. That it’s always a year or two, tops. Then he walked off.”

  I shook my head. Everything I had feared, everything Moe and Sommer had warned me about, had come to pass. The evidence, in the end, hadn’t mattered. Guilt by association had. My decision to go into business with a firm even slightly associated with Zvi Goffer had. My decision to trust Zvi had.

  I was long past the point of feeling any anger. Lisa’s remarkable tale just left me numb.

  This juror had been one of only two jurors that my legal team had deemed even potentially “decent” and capable of making a rational, objective decision. And yet he had made this sort of decision. Used this sort of thinking. We had never had a chance.

  But the encounter with the juror did not end there.

  No good deed goes unpunished. While I was still awaiting sentencing, the juror went to the FBI and Judge Sullivan and filed a formal complaint saying he had been harassed and intimidated by my wife. (After proxy-interviewing Lisa and the juror, Sullivan decided that a five foot four, 100-pound woman holding an eleven-month-old infant in her arms had not been a significant threat to a six foot two, 220-pound man in a public grocery store. Not filing criminal charges against Lisa—for innocently asking what anyone else in her position would’ve wanted to know—was maybe the one time the system showed itself to be reasonable, objective, and decent.)

  With my verdict decided in June, I had to suffer through an entire summer to wait and see what Judge Sullivan had in store for me before I was finally sentenced in October. Sullivan had the power, under some established guidelines, to put me away for as little as a few months, or for as much as several years. The government had asked him to give me fifty-seven months. There was some genuine wiggle room here, but given the way Sullivan had behaved during the trial, my hopes were not up. I wasn’t sleeping
well, and was inhaling liters of wine and vodka.

  I would have to read a statement at the sentencing. Sommer wrote something for me, but it seemed a little too careful and perfect. Besides, I wanted to write something myself. Conflicted about what exactly to say, I decided to compose two versions. I wanted to write something that essentially refused to admit guilt for something I wasn’t guilty of, while acknowledging that I respected the judge and the jury’s decision. It was a very fine line. The standard playbook says that in these sort of situations, you’ll get the best result if you throw yourself down in front of the bench, beg for mercy and, prostrate, acknowledge your guilt. Show remorse and the judge will be more lenient.

  As you might imagine, Zvi had already taken this angle, giving it his own sleazy spin. Zvi had written a letter to the judge, claiming that he had seen the light, would forego any appeal in his case, and that now his former, greedy self was no more.

  To me, it seemed an obvious and pathetic attempt to manipulate the judge. Sullivan didn’t buy it, and sentenced Zvi to ten years. This was more than double the plea he had been offered initially. For a short time, it was the longest insider trading sentence in American history. Two weeks later and four floors down, in Courtroom 17B, Judge Holwell would slap Raj with eleven years.

  Raj had made over $63 million talking directly to people on Boards of Directors and other “classic” insiders. Zvi, on the other hand, made $380K by getting secondhand information of questionable value from a slip-and-fall lawyer in Brooklyn who was fed that information from his friend working at a law firm, and by eavesdropping at lunches. And yet, amazingly, the end result was almost identical. Laws are supposed to be uniformly applied. Clearly, from a defendant’s perspective, it was better to have Judge Holwell than Judge Sullivan presiding over your case. Zvi would go on to file an appeal several weeks later, all revealing that his transformation and contrition were about as honest and sincere as everything else he’d ever said in his life.