Like "Bonfire of the Vanities", in which a momentary event opened the door to a tale of desperation and intrigue, but with the added color of characters that could have come straight from "The Gang That Couldn't Shoot Straight", this story is based on the true accounts of Josh Berman, a once highly-regarded Wall Street Guru with an unblemished 25 year track record whose life went into an irreversible tailspin when two FBI agents appeared at his home in the suburbs of Connecticut home at 7 a.m. on a brisk Monday morning in October 2002.
Waving a letter that Josh had purportedly written almost two years earlier, one that attested to the bonafides of long time close friend Jake Bronstein, a flamboyant Las Vegas entrepreneur with interests that extended from indie film financing to pay-day lending, the two “Feebs” claimed that Berman, a former stock exchange floor trader- turned-deal maker, was “single-handedly responsible” for defrauding a Hollywood bank out of $25 million in connection with the botched remake of a 1940’s film noire based on a novel by a Pulitzer Prize winner.
Aside from the starkly ironic similarities between the protagonist in this real life story and that of the main character who sold his soul to the Devil in the award-winning novel, this true-to-life story’s principal character, along with his cohort, were to be indicted by a federal grand jury on various charges, including conspiracy to commit bank fraud, all as a result of Josh's pal allegedly reneging on a promise to invest in the production of a major Hollywood movie. Because the “remake” of film included a cast of world famous actors, leading producers, and high profile Hollywood banks, the story of the arrest was reported by entertainment news media around the world.
Booked and fingerprinted within two weeks after his first encounter with the Feebs, it took only a matter of days before Berman was forced to resign his partnership with a venerable Wall Street firm; so much for the concept of innocent until proven guilty. Unemployed, soon to be living in a state of emotional despair, and surviving on borrowed time and borrowed funds, as Berman’s saga unfolds, it opens the doors to true tales of conspiracy, Hollywood corruption, zealous prosecutors, mobsters, and fatally frantic acts.
To casual observers, Berman’s case was one of thousands of seemingly innocuous files within the black hole of the U.S. criminal justice system. But for Berman, the circumstances were anything but mild; his life was on the line. Although the letter that displayed his signature appeared incriminating, the charges were trumped, and it took him little time to realize that he was being used as a scapegoat to divert attention away from a Hollywood banking scandal, one that important people on both sides of the law needed to keep under wraps.
Berman’s options were limited. According to each of New York City’s top-rated white collar mouthpieces that reviewed his case, including the world famous defense lawyer that represented White House Chief of Staff Scooter Libbey, the letter was a smoking gun. Without the bank roll necessary to underwrite a fully-armed defense, including gumshoe resources to secure the proof he needed to vindicate himself, Berman struggled to find a lawyer whose opinion differed from all the rest. They all said the same thing; the best course of action was to plead guilty to the convoluted charges and accept the fact that he faced Federal sentencing guidelines that called for a minimum 21-36 months in prison, not to mention the wide impact of being branded a convicted felon for the rest of his life.
His other choice was equally unpalatable; he could plead not guilty and go to trial with a half-baked, under-funded defense strategy spearheaded by the only criminal lawyer in New York who was actually willing to try the case. But the risk of this strategy was crystal clear; it would otherwise expose Josh to a jury of his hypothetical-only peers within a climate of proletarian rebuke to the excesses of Wall Street-related greed, and where everyone had their cross hairs on the sharpies that were minting money and further separating the divide between the haves and the have-nots.
Between the headline news of the day spot-lighting corporate bankruptcies that forced thousands to lose their jobs, the scandals surrounding Enron, Tyco, Martha Stewart and the rest, the media talking heads like Bill O’Reilly were all chanting the same “hang ‘em high” mantra instilled by born-again George W. and his “get-tough-on-crime”, hypocritical cronies. When it came to purported financial crimes, everyone was screaming for blood, and it didn’t matter whose. Prosecutors angling for notches in their gun belts were encouraged to shoot first and ask questions later, and they were primed to serve up raw meat and slow cook anyone that might satisfy the hunger for white collar criminals.
Even if not as appetizing as a flambéed Frank Quattrone, or a sautéed Dennis Kozlowski, the otherwise ‘front burner’ dishes of the day in the Eastern District US Attorney’s office, Berman was a juicy morsel for the Feds. He was the antipasto portion of a meal that would hopefully lead to a main course of his buddy Jake from Las Vegas, who the feds wanted to have grilled on a skewer, and if they were lucky enough, they might even land a few Hollywood big shots. The Feds figured that Berman was already caught on the hook, and with his blood in the water, he could be used to draw in a shark, and help, voluntarily other otherwise, to put his pal from Las Vegas into a steel cage.
In addition to having the playbook for what seemed like a slam dunk case against Berman, the government also owned the home court advantage. The federal courthouse where a potential trial would take place was located on the outskirts of civilization, in the town of East Islip, New York. To save money on transport, jurors were typically pooled from the blue collar community nestled against the East Islip off ramp of the Long Island Expressway, where the average house sits on a 20 x 50 ft plot, and populated by low income renters and sub-prime mortgage home owners that struggle two and three jobs just to cover their monthly nut, all the while transfixed by the parade of BMW’s and Mercedes zipping past Exit 52 and carrying mini-millionaires to and from their beach front mansions in the Hamptons, merely 10 miles away.
If he chose to take his case to trial, Berman would be tasty enough for the jurors all right; after all, his profile was the antithesis of those that would be selected to determine his fate; Jewish, works on Wall Street, lives in an exclusive community on the shores of Connecticut where the average house sold for more than a $1 million, and he made more money in one year than all of the jurors combined. If going to trial, his legal strategy would have to focus on getting a hung jury. At least one of the jurors, he thought, would have to believe that he was a pawn in a much bigger game of chess. If that didn’t work, than Berman would hang; the penalty for putting the government through the exercise would result in an even lengthier mandatory jail term, perhaps as much as five years, and a veritable economic death sentence that would ruin is career and devastate his family.
The options offered by the legal system were simply unpalatable, and the options of circumventing the legal system could prove deadly. Berman was facing the fight of his life, and desperate times called for desperate measures.
Over 25 years working on or around Wall Street, Josh had skated on thin ice plenty of times; it was a high risk business, and Josh was an Olympiad in risk.
Throughout a career that had more peaks and valleys than the streets of San Francisco, and more potholes than Manhattan’s FDR Drive, Josh would more than once have a front row seat to a stage full of schemers, in a production whose scenes would cover everything from stock market manipulation to phony investment schemes, to off-shore insurance companies that never pay claims, and to the world of Hollywood banking, where movie financing is fiction and fraud is fact.
He had become acquainted with a full deck of players, some were shrewd Kings and business moguls, and some were unsavory jokers who preyed on the greed of others. It was part of the territory, and despite the temptations to push the envelope, he never crossed the line. He was raised in world where your word is your bond and your reputation is the only thing of value, and Josh knew better than to take a plunge that would send him up shit’s creek. Or at least he thought so, until that one fateful Monday morning in October when the FBI came knocking on his door, introducing him to the bizarre and hardly just world of the U.S. criminal justice system
Based on the true story of a man whose life started with a silver spoon in search of the brass ring, and where one seemingly minor transgression would set off a chain reaction of events, indoctrinating him to the world of federal persecution, witless government agents, white and stained collar crooks, and ultimately, to plots of extortion and murder.
Tuesday, December 23, 2008
Tuesday, December 16, 2008
Chapter 23- The Inside of a Cell
If you've clicked on this chapter, you've either read all of the other chapters that have been posted and are hoping to see how the story unfolds, or you're the type that wants to jump forward and find the juicy and titillating parts.
The only disappointment that you'll experience is that you won't find those parts online.
The story rapidly unfolds from where you've left off. There's violence, there's gratuitous sex, there's the sweet taste of revenge, and there's justice. Maybe not the type of justice that our esteemed court system is supposed to uphold, but justice none the less.
Leave a comment. We'd love to know your thoughts..
The only disappointment that you'll experience is that you won't find those parts online.
The story rapidly unfolds from where you've left off. There's violence, there's gratuitous sex, there's the sweet taste of revenge, and there's justice. Maybe not the type of justice that our esteemed court system is supposed to uphold, but justice none the less.
Leave a comment. We'd love to know your thoughts..
Sunday, December 14, 2008
Chapter 17- The Plot Thickens
Wednesday October 9.
I had spent the night tossing and turning, and when I got to work the next day, I made another stab at burying myself in RTM work. I had culled enough research that should give Sercowitz a good foundation to work with, and I’d simply have to wait to see what he thought it all meant and how to handle it.
There wasn’t much point in reaching out to Jake today, I’d let him mull on the articles that I had sent the night before, but I kept an eye on the IM buddy list to keep tabs on whether he was in his office.
At 4 pm, Sercowitz phoned me.
“Mr. Berman, Morris Sercowitz here. I wanted you to know that I just spoke with the Assistant US Attorney, Mr. Shulman.” His tone and tenor remained consistently flat.
“And.?” I said.
“He seems to be a pleasant enough fellow. But, we don’t need to discuss this on the phone. Why don’t you come to my office tomorrow afternoon, lets say 5 pm.”
I didn’t like his bedside manner, or the cryptic response, and the hairs on my neck bristled as the paranoia meter ticked up another ten degrees.
“How about I call you this evening? I found a bunch of interesting things on the web that might help.”
“I’m glad you’re doing your homework. Print out whatever you have, and bring it with you tomorrow; our conversation can wait until then.”
Since Sercowitz had more than a few mobsters as clients, I could only surmise that its better to be safe than sorry when communicating with clients, especially in these days, when the FBI was apparently doing a great job of exploiting the new wire tap guidelines within the recently introduced Patriot Act. News reports in the past few months had pointed to least six different corporate white collar cases and five mob-related cases where the Feds had tapped phones using Patriot Act–related requests. The 9/11 attacks had otherwise given the US Attorney carte blanche in pursuing anyone and everyone for anything.
As I was getting ready to leave, my private line rang.
“This is Josh Berman.” I answered.
“Glad to hear your voice. “I guess you haven’t been put behind bars yet.” It was Seth.
“That’s very funny” I replied.
“Just checking in, and if you’re headed back to Connecticut, I thought I’d offer you a ride home. I could use some entertainment by hearing the full story.”
“So far I’m not entertained, but I guess you will be. Maybe even intrigued” I said. :Based on what I’m finding, there might even be a retainer assignment for Knoll.”
“If only I thought you could afford it.” He said, lampooning me. “Our retainer would scrub Charlie’s college tuition. Why don’t you meet me at my office, and we’ll drive home together.”
Seth’s office was on 56th and Third Avenue, and by the time I walked up the fourteen blocks from my office, he was standing outside the building waiting for me.
He greeted with me a warm and sensitive, “Gee, I hope you can move faster on the court this weekend than you can walking a few blocks.” At least I was still on his invitation list.
We crossed over to the garage on 55th and his brand new, red Miata convertible had already been pulled out to the curb.
“I hope you don’t use this car for stakeouts” I said.
“Actually, this fits in pretty well when considering how many Wall Street engagements we have at the moment. Checking out hedge fund managers is a brisk business these days.”
Knoll’s list of services looked like a Chinese menu, more than two dozen practice areas that included everything from evaluating facility security systems to counseling on foreign travel to background checks, and the hedge fund industry was growing exponentially, providing a burst in business for Knoll.
The number of non-regulated money managers marketing esoteric strategies, an arena once dominated by the George Soros’s and the Paul Tudor Jones’s of the industry, had grown from less than a few hundred to more than a thousand in the past three years alone. Most were domiciled off-shore so as to avoid regulatory, and in many cases tax oversight, and all were promoting outsized returns. The sizes of the funds ranged from $5 million to over a $1Billion, and the common denominator was secrecy. With so-called sophisticated investors seeking higher ground after the Internet IPO bubble had burst in early 2001, the hedge fund industry was attracting tens of millions of dollars every day and that money was going into discretionary accounts managed by newbie traders specializing in derivatives and exotic fixed income instruments.
The combination of greedy investors, both institutional and ‘high net worth”, and their acquiescence to being provided limited information about the respective funds’ workings provided a perfect opportunity for Ponzi schemes; exactly like the world of Indie film financing. More than a few hedge funds had already blown up, leaving investors with nothing more than phony account statements, a disconnected phone number, and only speculating where their money had actually gone.
Knoll had carved out a niche doing background checks on hedge fund managers, and Seth’s partners had tapped me more than once to help them discretely network around the Street to uncover any personal tidbits about aspiring fund managers, the majority of which usually have at least a few years experience working for a bulge bracket investment bank, or on a trading floor. Wall Street is a small place, and odds were that six degrees of separation became closer to two degrees, and Knoll knew that I had a solid network of relationships in that arena.
Seth got onto the FDR Drive at 61st Street, and the rush hour traffic was moving at a snails pace. The story that Seth had waited to hear was a relatively short one so far, and in the half hour that it took us to cross over the Triborough Bridge, I had shared with Seth most of what I knew.
“Well, Ollie, You’ve certainly made a fine mess of this one.” Seth said, in his Stan Oliver mocking manner. “Your buddy in Vegas certainly did you no favors when he asked you to do him a favor.”
Seth was only a few years older than me, but he felt obliged to take on a parental role.
“Look,” he continued. “All kidding aside, as a former prosecutor, I can only tell you that FBI agents don’t need to have a brain in order to make your life miserable, however irrelevant a role you might have played in the grand scam, so to speak.”
“I didn’t scam anyone, Seth. They all knew that.”
“Actually Josh, it sounds like you were scammed, and you weren’t even smart enough to get paid anything for your trouble. I thought I taught you better than that” he said mockingly.
I decided not to rebut.
“OK, you didn’t intentionally defraud anyone.” Seth said. “I’m not sure whether that matters. That’s something that a good lawyer can help you with.
“And trust me, while we do have several former Bureau people at Knoll, we’ve turned away more former FBI agents than I can count. Based on your description of the ones that are on your case, it sounds as though they’re pretty much the normal field agents; guys that like to flash badges and show holsters.”
“That said,” he continued, “Given the jurisdictional issues, which I’m really not an expert in, if the agents that came to you are from Long Island, and a government-owned facility on Long Island was stiffed on a bill, and your old friend Baldson was shouting “Call the FBI”, and then the FBI gets hold of a letter that has you making a false representation on a federally-chartered Bank’s letterhead, they don’t need much more in order for them to close their file, go back to their box of donuts, while you dine on bread and water.”
“For something as ridiculously low level as this?” I asked.
“The Feds are doing a lousy job of catching terrorists, so they’re busy bunting and trying to score a few runs by bagging some Wall Street types”
“So what you’re saying is that I should just let myself out of the car while its moving and let the truck behind us trample me?”
“I’d suggest that, but I’d probably get some kind of a moving violation, and I still need a tennis partner this weekend, you’ve got the best serve of anyone that I know.”
I sat glumly for the next few minutes, staring out the window as we headed toward the Merritt Parkway.
Seth reached into the Miata’s console and extracted a leather cigar holder, it was dark purple and it had his initials branded on the outside. Seth was a cigar aficionado, and he loved saying “It might fog up the room, but it clears the head.” He unzipped the flap, and even though the top to the convertible was down, the tobacco’s aroma engulfed us.
He extended the pouch to me and said with a smile, “A dying man always requests a last smoke. Take one, it’s a Cuban. Just came in, courtesy of our office in London.”
“No thanks. But as long as I’m terminal, I’ll just have a cigarette while you stick that big thing in your mouth.”
“You know.” he said, “Some people say that the size of a man’s smoke tells as much about him as the size of a dog’s feet.”
“And if you’re wife hadn’t told my wife that what you lack in size, you make up with enthusiasm, I might be impressed.” I responded.
He laughed and deftly clipped off one end of the cigar with a sterling silver Dunhill cutter, extracted a thick wooden match from the pouch and lit up. I lit up one of the remaining Marlboro Lights that I had.
While enjoying his stogie, Seth had apparently been pondering as we continued to drive, and after ten minutes, he turned to me and more thoughtfully than usual said, “While you’ve been sitting there sulking, I’ve been thinking.” He was turning serious.
“Aside from what was presumably a momentary lack of judgment, from the sound of it, you’ve tripped over a can of worms, and at least some of the worms are bigger than the ones in a Godzilla movie.”
“I know about HLO.” continued Seth. “We actually had to fire them as a client a few years ago. The guy that runs that shop, Morowitz, is a pretty shrewd operator. I don’t remember the exact details, but he was involved in some kind of litigation and wanted one of our LA field staff to do some things that even we don’t do.”
“More than rifling through garbage I take it.”
As intrigued as I was, Seth would have expected no less from me. A few years ago, The Wall Street Journal ran a story that one of Knoll’s people had actually been caught rifling through a garbage bin outside the townhouse belonging to a supermarket chain’s CFO. The accountant was allegedly cooking the books in order to bolster his own bonus.
“Josh, rifling through garbage is not only legal, but you’d be amazed how productive it can be.” Seth said, with a smile.
“Anyway, when the head of our LA office told Morowitz that what he wanted was out of bounds, Morowitz called Jules to complain. Jules told him to take his retainer back and stick it up his ass, and also told him that he’d be better off hiring a good criminal defense lawyer with the money.”
“Wow.” I said. Jules was Knoll’s name founding partner, and his picture had appeared on the front page of Forbes Magazine, wearing a fedora and trench coat.
“Wow is right. Aside from him wanting us wiretap a bunch of phones of people he does business with, he wanted us to use some scare tactics as a way to intimidate a potential witness in the lawsuit. That kind of stuff is for amateurs, not that there aren’t PI’s that do that crap, especially in Hollywood. Some guy named Pelican has made it a niche, that’s where Morowitz ended up taking his business too.”
“Sounds like I should be hiring him”, I said, trying to sound sarcastic.
“Not. You know that we have our own ways. All of this means that you’ve once again found yourself dealing with some nefarious types, but this one is very well insulated and he has very deep pockets.”
“So, you think there’s a big picture strategy here?” I asked hopefully.
“Maybe. The connection could be coincidental, even if I’m not a big believer in coincidences. But, if the Feds have incriminating evidence against you, then they’ve got you with your pinky in the cookie jar. But, the Government is always looking to cut deals with cooperators, so they’re probably going to pressure you to finger your friend Jake. If he can finger somebody else, all the better. If you’re lucky, they’ll give you your pinky back.”
‘Not happening.” I said. “For one thing, my life insurance policy isn’t paid up”, I said half-jokingly.
“For another thing, Jake’s already started funding the legal expenses, and I certainly don’t have an extra hundred grand lying around. And, if this winds up with my pleading guilty to something, I’ll be out of the industry, and the only job I’ll be able to get is working in Jake’s food warehouse in Vegas. I’ve got nothing to finger him with anyway, and even if I did, I don’t know that I would, we’ve been friends way too long.”
“Sorry for saying this, but he’s not the type of friend you need to have.”
“Maybe, but that’s not the point.” I debated. “They made the fucking movie without him. It was actually Glassman, along with the insurance company guy and the other guy from HLO that dictated the letter.”
“Like I said, it’s a mess, but that’s why lawyers get paid the big bucks. By the way, have you connected to Tom Russo?”
“I spoke to him, but he can’t see me until Friday. At the moment, I’ve got Maury The Mobster Lawyer” on my team, he s already made the first outreach to the prosecutor. I’m meeting with him tomorrow afternoon to find out more.”
“Well, you’re at least doing as good a job as possible in staying in front of this mess, and I’m always impressed with your research skills. I don’t know who Sercowitz is, but I’m guessing you’ve already checked him out, but I’ll ask around about him too. I won’t tell you which lawyer to go with, but I do know that Russo is one of the best, and his previous life in the US Attorney’s might be helpful. Keep an open mind. It’s an important decision.”
Seth then added, ‘Josh, it also sounds like we’re both merely speculating; you haven’t even spoken with the prosecutor in charge of this. If and when the time comes, we can have your lawyer get on the phone with Mike Friedling in our LA office, I’d think that Mike would be more than happy to lend a hand, especially if Morowitz is involved.”
“Right now, I’d like a helping hammer, the kind that moves after you pull a trigger. But I appreciate your advice.”
“That’s not a place you want to go to, Josh. With your luck, you’d shoot yourself in the foot.”
“Maybe,” I said. But the PI you introduced me to in Philly a few years ago was kind enough to take me to his pistol range. I actually outshot him.”
We turned the conversation to our kids latest activities, and before long, Seth was pulling his Miata into the Westport train station parking lot so that I could pick up my car. When I was getting out of the convertible, he tossed his spent cigar ten feet through the hoop of an adjacent garbage can, and said, “No more smoking for the rest of the week, we’ve got a big match on Saturday and I need you in one piece.” He winked and drove off.
I had spent the night tossing and turning, and when I got to work the next day, I made another stab at burying myself in RTM work. I had culled enough research that should give Sercowitz a good foundation to work with, and I’d simply have to wait to see what he thought it all meant and how to handle it.
There wasn’t much point in reaching out to Jake today, I’d let him mull on the articles that I had sent the night before, but I kept an eye on the IM buddy list to keep tabs on whether he was in his office.
At 4 pm, Sercowitz phoned me.
“Mr. Berman, Morris Sercowitz here. I wanted you to know that I just spoke with the Assistant US Attorney, Mr. Shulman.” His tone and tenor remained consistently flat.
“And.?” I said.
“He seems to be a pleasant enough fellow. But, we don’t need to discuss this on the phone. Why don’t you come to my office tomorrow afternoon, lets say 5 pm.”
I didn’t like his bedside manner, or the cryptic response, and the hairs on my neck bristled as the paranoia meter ticked up another ten degrees.
“How about I call you this evening? I found a bunch of interesting things on the web that might help.”
“I’m glad you’re doing your homework. Print out whatever you have, and bring it with you tomorrow; our conversation can wait until then.”
Since Sercowitz had more than a few mobsters as clients, I could only surmise that its better to be safe than sorry when communicating with clients, especially in these days, when the FBI was apparently doing a great job of exploiting the new wire tap guidelines within the recently introduced Patriot Act. News reports in the past few months had pointed to least six different corporate white collar cases and five mob-related cases where the Feds had tapped phones using Patriot Act–related requests. The 9/11 attacks had otherwise given the US Attorney carte blanche in pursuing anyone and everyone for anything.
As I was getting ready to leave, my private line rang.
“This is Josh Berman.” I answered.
“Glad to hear your voice. “I guess you haven’t been put behind bars yet.” It was Seth.
“That’s very funny” I replied.
“Just checking in, and if you’re headed back to Connecticut, I thought I’d offer you a ride home. I could use some entertainment by hearing the full story.”
“So far I’m not entertained, but I guess you will be. Maybe even intrigued” I said. :Based on what I’m finding, there might even be a retainer assignment for Knoll.”
“If only I thought you could afford it.” He said, lampooning me. “Our retainer would scrub Charlie’s college tuition. Why don’t you meet me at my office, and we’ll drive home together.”
Seth’s office was on 56th and Third Avenue, and by the time I walked up the fourteen blocks from my office, he was standing outside the building waiting for me.
He greeted with me a warm and sensitive, “Gee, I hope you can move faster on the court this weekend than you can walking a few blocks.” At least I was still on his invitation list.
We crossed over to the garage on 55th and his brand new, red Miata convertible had already been pulled out to the curb.
“I hope you don’t use this car for stakeouts” I said.
“Actually, this fits in pretty well when considering how many Wall Street engagements we have at the moment. Checking out hedge fund managers is a brisk business these days.”
Knoll’s list of services looked like a Chinese menu, more than two dozen practice areas that included everything from evaluating facility security systems to counseling on foreign travel to background checks, and the hedge fund industry was growing exponentially, providing a burst in business for Knoll.
The number of non-regulated money managers marketing esoteric strategies, an arena once dominated by the George Soros’s and the Paul Tudor Jones’s of the industry, had grown from less than a few hundred to more than a thousand in the past three years alone. Most were domiciled off-shore so as to avoid regulatory, and in many cases tax oversight, and all were promoting outsized returns. The sizes of the funds ranged from $5 million to over a $1Billion, and the common denominator was secrecy. With so-called sophisticated investors seeking higher ground after the Internet IPO bubble had burst in early 2001, the hedge fund industry was attracting tens of millions of dollars every day and that money was going into discretionary accounts managed by newbie traders specializing in derivatives and exotic fixed income instruments.
The combination of greedy investors, both institutional and ‘high net worth”, and their acquiescence to being provided limited information about the respective funds’ workings provided a perfect opportunity for Ponzi schemes; exactly like the world of Indie film financing. More than a few hedge funds had already blown up, leaving investors with nothing more than phony account statements, a disconnected phone number, and only speculating where their money had actually gone.
Knoll had carved out a niche doing background checks on hedge fund managers, and Seth’s partners had tapped me more than once to help them discretely network around the Street to uncover any personal tidbits about aspiring fund managers, the majority of which usually have at least a few years experience working for a bulge bracket investment bank, or on a trading floor. Wall Street is a small place, and odds were that six degrees of separation became closer to two degrees, and Knoll knew that I had a solid network of relationships in that arena.
Seth got onto the FDR Drive at 61st Street, and the rush hour traffic was moving at a snails pace. The story that Seth had waited to hear was a relatively short one so far, and in the half hour that it took us to cross over the Triborough Bridge, I had shared with Seth most of what I knew.
“Well, Ollie, You’ve certainly made a fine mess of this one.” Seth said, in his Stan Oliver mocking manner. “Your buddy in Vegas certainly did you no favors when he asked you to do him a favor.”
Seth was only a few years older than me, but he felt obliged to take on a parental role.
“Look,” he continued. “All kidding aside, as a former prosecutor, I can only tell you that FBI agents don’t need to have a brain in order to make your life miserable, however irrelevant a role you might have played in the grand scam, so to speak.”
“I didn’t scam anyone, Seth. They all knew that.”
“Actually Josh, it sounds like you were scammed, and you weren’t even smart enough to get paid anything for your trouble. I thought I taught you better than that” he said mockingly.
I decided not to rebut.
“OK, you didn’t intentionally defraud anyone.” Seth said. “I’m not sure whether that matters. That’s something that a good lawyer can help you with.
“And trust me, while we do have several former Bureau people at Knoll, we’ve turned away more former FBI agents than I can count. Based on your description of the ones that are on your case, it sounds as though they’re pretty much the normal field agents; guys that like to flash badges and show holsters.”
“That said,” he continued, “Given the jurisdictional issues, which I’m really not an expert in, if the agents that came to you are from Long Island, and a government-owned facility on Long Island was stiffed on a bill, and your old friend Baldson was shouting “Call the FBI”, and then the FBI gets hold of a letter that has you making a false representation on a federally-chartered Bank’s letterhead, they don’t need much more in order for them to close their file, go back to their box of donuts, while you dine on bread and water.”
“For something as ridiculously low level as this?” I asked.
“The Feds are doing a lousy job of catching terrorists, so they’re busy bunting and trying to score a few runs by bagging some Wall Street types”
“So what you’re saying is that I should just let myself out of the car while its moving and let the truck behind us trample me?”
“I’d suggest that, but I’d probably get some kind of a moving violation, and I still need a tennis partner this weekend, you’ve got the best serve of anyone that I know.”
I sat glumly for the next few minutes, staring out the window as we headed toward the Merritt Parkway.
Seth reached into the Miata’s console and extracted a leather cigar holder, it was dark purple and it had his initials branded on the outside. Seth was a cigar aficionado, and he loved saying “It might fog up the room, but it clears the head.” He unzipped the flap, and even though the top to the convertible was down, the tobacco’s aroma engulfed us.
He extended the pouch to me and said with a smile, “A dying man always requests a last smoke. Take one, it’s a Cuban. Just came in, courtesy of our office in London.”
“No thanks. But as long as I’m terminal, I’ll just have a cigarette while you stick that big thing in your mouth.”
“You know.” he said, “Some people say that the size of a man’s smoke tells as much about him as the size of a dog’s feet.”
“And if you’re wife hadn’t told my wife that what you lack in size, you make up with enthusiasm, I might be impressed.” I responded.
He laughed and deftly clipped off one end of the cigar with a sterling silver Dunhill cutter, extracted a thick wooden match from the pouch and lit up. I lit up one of the remaining Marlboro Lights that I had.
While enjoying his stogie, Seth had apparently been pondering as we continued to drive, and after ten minutes, he turned to me and more thoughtfully than usual said, “While you’ve been sitting there sulking, I’ve been thinking.” He was turning serious.
“Aside from what was presumably a momentary lack of judgment, from the sound of it, you’ve tripped over a can of worms, and at least some of the worms are bigger than the ones in a Godzilla movie.”
“I know about HLO.” continued Seth. “We actually had to fire them as a client a few years ago. The guy that runs that shop, Morowitz, is a pretty shrewd operator. I don’t remember the exact details, but he was involved in some kind of litigation and wanted one of our LA field staff to do some things that even we don’t do.”
“More than rifling through garbage I take it.”
As intrigued as I was, Seth would have expected no less from me. A few years ago, The Wall Street Journal ran a story that one of Knoll’s people had actually been caught rifling through a garbage bin outside the townhouse belonging to a supermarket chain’s CFO. The accountant was allegedly cooking the books in order to bolster his own bonus.
“Josh, rifling through garbage is not only legal, but you’d be amazed how productive it can be.” Seth said, with a smile.
“Anyway, when the head of our LA office told Morowitz that what he wanted was out of bounds, Morowitz called Jules to complain. Jules told him to take his retainer back and stick it up his ass, and also told him that he’d be better off hiring a good criminal defense lawyer with the money.”
“Wow.” I said. Jules was Knoll’s name founding partner, and his picture had appeared on the front page of Forbes Magazine, wearing a fedora and trench coat.
“Wow is right. Aside from him wanting us wiretap a bunch of phones of people he does business with, he wanted us to use some scare tactics as a way to intimidate a potential witness in the lawsuit. That kind of stuff is for amateurs, not that there aren’t PI’s that do that crap, especially in Hollywood. Some guy named Pelican has made it a niche, that’s where Morowitz ended up taking his business too.”
“Sounds like I should be hiring him”, I said, trying to sound sarcastic.
“Not. You know that we have our own ways. All of this means that you’ve once again found yourself dealing with some nefarious types, but this one is very well insulated and he has very deep pockets.”
“So, you think there’s a big picture strategy here?” I asked hopefully.
“Maybe. The connection could be coincidental, even if I’m not a big believer in coincidences. But, if the Feds have incriminating evidence against you, then they’ve got you with your pinky in the cookie jar. But, the Government is always looking to cut deals with cooperators, so they’re probably going to pressure you to finger your friend Jake. If he can finger somebody else, all the better. If you’re lucky, they’ll give you your pinky back.”
‘Not happening.” I said. “For one thing, my life insurance policy isn’t paid up”, I said half-jokingly.
“For another thing, Jake’s already started funding the legal expenses, and I certainly don’t have an extra hundred grand lying around. And, if this winds up with my pleading guilty to something, I’ll be out of the industry, and the only job I’ll be able to get is working in Jake’s food warehouse in Vegas. I’ve got nothing to finger him with anyway, and even if I did, I don’t know that I would, we’ve been friends way too long.”
“Sorry for saying this, but he’s not the type of friend you need to have.”
“Maybe, but that’s not the point.” I debated. “They made the fucking movie without him. It was actually Glassman, along with the insurance company guy and the other guy from HLO that dictated the letter.”
“Like I said, it’s a mess, but that’s why lawyers get paid the big bucks. By the way, have you connected to Tom Russo?”
“I spoke to him, but he can’t see me until Friday. At the moment, I’ve got Maury The Mobster Lawyer” on my team, he s already made the first outreach to the prosecutor. I’m meeting with him tomorrow afternoon to find out more.”
“Well, you’re at least doing as good a job as possible in staying in front of this mess, and I’m always impressed with your research skills. I don’t know who Sercowitz is, but I’m guessing you’ve already checked him out, but I’ll ask around about him too. I won’t tell you which lawyer to go with, but I do know that Russo is one of the best, and his previous life in the US Attorney’s might be helpful. Keep an open mind. It’s an important decision.”
Seth then added, ‘Josh, it also sounds like we’re both merely speculating; you haven’t even spoken with the prosecutor in charge of this. If and when the time comes, we can have your lawyer get on the phone with Mike Friedling in our LA office, I’d think that Mike would be more than happy to lend a hand, especially if Morowitz is involved.”
“Right now, I’d like a helping hammer, the kind that moves after you pull a trigger. But I appreciate your advice.”
“That’s not a place you want to go to, Josh. With your luck, you’d shoot yourself in the foot.”
“Maybe,” I said. But the PI you introduced me to in Philly a few years ago was kind enough to take me to his pistol range. I actually outshot him.”
We turned the conversation to our kids latest activities, and before long, Seth was pulling his Miata into the Westport train station parking lot so that I could pick up my car. When I was getting out of the convertible, he tossed his spent cigar ten feet through the hoop of an adjacent garbage can, and said, “No more smoking for the rest of the week, we’ve got a big match on Saturday and I need you in one piece.” He winked and drove off.
Chapter 16-Finding a Nugget in Pandora's Box
Although it was almost seven by the time I got home, the sun was still up, and it was a warm, October night. When I pulled into the driveway, I noticed that Charlie’s best friend Lizzy was visiting. Her Jeep was parked next to Charlie’s, and the two cars are almost identical, just like the two of them had been inseparable since first grade.
After I parked the Escalade, I could hear music coming from the back of the house. Charlie and Lizzy were most likely taking advantage of the pool before the weather started to change. Instead of interrupting them, I headed inside through the mud room. Lorna was busy at the sink and didn’t bother to look up. She wasn’t about to get over the experience from the day before, and I wasn’t going to incite her by telling her about my call with Alan.
When I went to pour myself a scotch, she did say “Just so you know, I’m pretty certain that Charlie shared yesterday morning’s event with Lizzy and Michele. You shouldn’t be surprised, they are her best friends.”
Lorna almost enjoyed pouring salt on the wound. Not only was Michele the school gossip, but her Dad and I had been buddies since the time the girls were in grade school. He was a serial CEO, with dozens of connections on Wall Street and throughout the venture capital community. He’d be one of the long list of people I didn’t want knowing that I was the target of an FBI investigation, let alone the parents of half of Charlie’s schoolmates.
I went to my study and phoned Sercowitz’s cell phone. I wanted to update him on what little I had learned about the film, and why I thought the FBI might be interested, as well as my conversation with the Feeb earlier in the day. I also wanted to find out what, if any progress he had made on his end.
An hour later he phoned me back and said that he had left a message with the AUSA assigned to my case, but hadn’t actually spoken with him. He was nonplussed when I expressed my frustration about the FBI shouting “fire” while visiting my former workplace, and otherwise poisoning my reputation. He was however intrigued by the articles that I told him I found on the Internet, and he instructed me to print them out and bring them with me the next time we met. He also told me that I had to zipper my lips the next time the Feebs call, and to point them to him.
I held off on trying to connect to Stuey. Instead, I went to my study and started a second night of digging into the Internet for anything additional I could find about Glassman, Nardone, Hutkins and LHO. And I found more crumbs about the crumbs, ones that I had overlooked the night before.
In a website focused on science fiction movies, I found an interview of Sir Tony Hipkisn, the film’s big star, it was from just three weeks before.
“Sir Tony Hipkin told SCI FI Wire that the new film version of the Pulitzer Prize winning novel, in which Hipkins plays the role of the lawyer representing a writer who sold his sold to the devil will never be finished. “They pulled the money out, apparently, so it’ll never be seen,” Hipkins said. “The producers have no money to finish it.”
Great, I sarcastically thought to myself. The film was made, but it wound up on the cutting room floor because it ran out of money before it could be completed.
My next query hit what I thought was a small jackpot.
I came across a news release from May, only six months earlier. It had been put out by a German entertainment company, one whose shares were publicly traded on the DAX Market. The news release was in German, so I ran a language translator on the website, and even though the translation software wasn’t perfect, it was good enough.
The company’s release focused on their most recent quarterly earnings statement, but also included a lengthy reference to a RICO law suit the company had just filed in Los Angeles District Court. The defendants in the action included the completion bonding company and a former parent bank of HLO. Morowitz’s HLO had apparently been bought and sold three times since its formation in 1989. The suit in question was connected to a time frame shortly before SecPac, its current owner, had acquired it.
According to the announcement, the plaintiff entertainment company had apparently agreed to provide 47% of the financing required for a slate of ten different HLO film projects over a two year period. In consideration for putting up almost half the financing, they’d be receiving the European distribution rights to each of the films. They apparently since discovered that the budgets on each film had been padded, in some cases by twice the amount that was actually spent making each film. The lawsuit charged that two of defendants, HLO and the insurance company, had conspired together to inflate the budgets, as in each case, the bonding company had provided the completion insurance and their insurance fee was based on the budgeted amount of each film, and they were necessarily was privy to the respective project budgets and accounting statements.
The suit was seeking $225 million in damages, $75 million representing actual ‘double billing’, and $150 million in punitive damages, including attorney fees. The Wall Street analysts that covered the entertainment company apparently thought the suit had strong merits, as the company’s share price surged 21% on the day the news release was issued.
Then I searched for Global Film Finance’s website, Cardone’s insurance company. When I found the URL in a film industry database, I clicked on the link, but the return page said “Site is Temporarily Down”. It was either being re-designed or something else had happened.
More than interesting, I thought to myself. $75 million in budget padding that tied together two of the groups that participated in the drafting of the letter. The article didn’t mention any specific film titles, but I thought there must be a link to Glassman as well. Aside from the obvious fact he had been doing deals with HLO and Cardone in the past, I had also discovered that Glassman’s production company, “Pushing Edge Productions” the one that was producing the movie, was a US subsidiary of another German entertainment company.
As stimulating as my research was proving to be, it didn’t explain who had instigated the FBI to come hunting for me, or where I fit into any of the possible scenarios. It was obvious that the film production had been green lighted, and apparently without any reliance on Jake making any investment. The fact that the movie had temporarily run aground was hardly unusual, but it smelled like someone was trying to collect on the insurance policy before the shoe store had burned down, and I was being made the fall guy.
I sat back in my chair and tried to figure out how The Letter had even gotten into the hands of the Feebs. I reached into my briefcase and took the file that I was becoming a bit heavier by the day, and pulled out the copy of The Letter that the Feebs had provided, along with the subpoena. There had to be a clue here.
How I had managed to miss it at first glance was beyond me, but I just found another crumb. On both the top part of the copy, it displayed time and date stamp, along with the sender’s fax numbers and the recipient’s fax number. The copy the Feebs had gotten hold of had apparently been one that had earned more than a few frequent flyer miles. On the top part of the copy, I could make out a date stamp of 05.01.2001, with a 213 area code. I did a reverse look-up on Google and discovered that the phone number belonged to Danny Glassman. On the bottom part of the page, there was a separate date and time stamp, it displayed “Sent from Louis Morowitz Organization May 20, 2001.” The recipient fax number was a 486 area code.
Why would anyone be faxing back and forth this letter five months after the fact?. Duh? I thought to myself, that’s when the shit was apparently hitting the fan with the film production.
On Wall Street, some traders, after making a bad trade, make the irrational decision of “hiding their trading ticket in a drawer.”, or not reporting it to their firm for processing. No different than hiding dirty underwear under a bed, but eventually, its discovered.
Somebody at HLO, obviously Glassman’s partner Lutkin, had hidden this particular letter in a drawer, and decided to pull it out months later, as if they had discovered the dirty laundry. Or maybe, Morowitz was in on the whole thing at the outset. After all, he had green lighted the twenty five million for the project. If it was starting to implode in May, maybe he had decided to put in a claim with the insurance company that provided the film completion bond, and maybe he was looking for a scapegoat.
The only thing I didn’t know was whether Jake knew about all of the shennigans that these guys were up to, or whether he was just a bit player, and perhaps didn’t appreciate the scale of what his film finance friends were up to. I emailed Jake the links to the articles, as it might be information that he could leverage, but I didn’t point out what I discovered, that the letter had been bouncing around between Glassman, LHO and who knows who else months after it was supposedly shredded. I’d save that bit of news for the next time I talked to him.
One thing that I was certain of, if Jake thought that he was being set up, or had been double-crossed, or was being made a fall guy, whoever was responsible would be getting more than just a long drive into the Nevada desert.
And if I was going to go down, I’d make sure to bring others with me.
After I parked the Escalade, I could hear music coming from the back of the house. Charlie and Lizzy were most likely taking advantage of the pool before the weather started to change. Instead of interrupting them, I headed inside through the mud room. Lorna was busy at the sink and didn’t bother to look up. She wasn’t about to get over the experience from the day before, and I wasn’t going to incite her by telling her about my call with Alan.
When I went to pour myself a scotch, she did say “Just so you know, I’m pretty certain that Charlie shared yesterday morning’s event with Lizzy and Michele. You shouldn’t be surprised, they are her best friends.”
Lorna almost enjoyed pouring salt on the wound. Not only was Michele the school gossip, but her Dad and I had been buddies since the time the girls were in grade school. He was a serial CEO, with dozens of connections on Wall Street and throughout the venture capital community. He’d be one of the long list of people I didn’t want knowing that I was the target of an FBI investigation, let alone the parents of half of Charlie’s schoolmates.
I went to my study and phoned Sercowitz’s cell phone. I wanted to update him on what little I had learned about the film, and why I thought the FBI might be interested, as well as my conversation with the Feeb earlier in the day. I also wanted to find out what, if any progress he had made on his end.
An hour later he phoned me back and said that he had left a message with the AUSA assigned to my case, but hadn’t actually spoken with him. He was nonplussed when I expressed my frustration about the FBI shouting “fire” while visiting my former workplace, and otherwise poisoning my reputation. He was however intrigued by the articles that I told him I found on the Internet, and he instructed me to print them out and bring them with me the next time we met. He also told me that I had to zipper my lips the next time the Feebs call, and to point them to him.
I held off on trying to connect to Stuey. Instead, I went to my study and started a second night of digging into the Internet for anything additional I could find about Glassman, Nardone, Hutkins and LHO. And I found more crumbs about the crumbs, ones that I had overlooked the night before.
In a website focused on science fiction movies, I found an interview of Sir Tony Hipkisn, the film’s big star, it was from just three weeks before.
“Sir Tony Hipkin told SCI FI Wire that the new film version of the Pulitzer Prize winning novel, in which Hipkins plays the role of the lawyer representing a writer who sold his sold to the devil will never be finished. “They pulled the money out, apparently, so it’ll never be seen,” Hipkins said. “The producers have no money to finish it.”
Great, I sarcastically thought to myself. The film was made, but it wound up on the cutting room floor because it ran out of money before it could be completed.
My next query hit what I thought was a small jackpot.
I came across a news release from May, only six months earlier. It had been put out by a German entertainment company, one whose shares were publicly traded on the DAX Market. The news release was in German, so I ran a language translator on the website, and even though the translation software wasn’t perfect, it was good enough.
The company’s release focused on their most recent quarterly earnings statement, but also included a lengthy reference to a RICO law suit the company had just filed in Los Angeles District Court. The defendants in the action included the completion bonding company and a former parent bank of HLO. Morowitz’s HLO had apparently been bought and sold three times since its formation in 1989. The suit in question was connected to a time frame shortly before SecPac, its current owner, had acquired it.
According to the announcement, the plaintiff entertainment company had apparently agreed to provide 47% of the financing required for a slate of ten different HLO film projects over a two year period. In consideration for putting up almost half the financing, they’d be receiving the European distribution rights to each of the films. They apparently since discovered that the budgets on each film had been padded, in some cases by twice the amount that was actually spent making each film. The lawsuit charged that two of defendants, HLO and the insurance company, had conspired together to inflate the budgets, as in each case, the bonding company had provided the completion insurance and their insurance fee was based on the budgeted amount of each film, and they were necessarily was privy to the respective project budgets and accounting statements.
The suit was seeking $225 million in damages, $75 million representing actual ‘double billing’, and $150 million in punitive damages, including attorney fees. The Wall Street analysts that covered the entertainment company apparently thought the suit had strong merits, as the company’s share price surged 21% on the day the news release was issued.
Then I searched for Global Film Finance’s website, Cardone’s insurance company. When I found the URL in a film industry database, I clicked on the link, but the return page said “Site is Temporarily Down”. It was either being re-designed or something else had happened.
More than interesting, I thought to myself. $75 million in budget padding that tied together two of the groups that participated in the drafting of the letter. The article didn’t mention any specific film titles, but I thought there must be a link to Glassman as well. Aside from the obvious fact he had been doing deals with HLO and Cardone in the past, I had also discovered that Glassman’s production company, “Pushing Edge Productions” the one that was producing the movie, was a US subsidiary of another German entertainment company.
As stimulating as my research was proving to be, it didn’t explain who had instigated the FBI to come hunting for me, or where I fit into any of the possible scenarios. It was obvious that the film production had been green lighted, and apparently without any reliance on Jake making any investment. The fact that the movie had temporarily run aground was hardly unusual, but it smelled like someone was trying to collect on the insurance policy before the shoe store had burned down, and I was being made the fall guy.
I sat back in my chair and tried to figure out how The Letter had even gotten into the hands of the Feebs. I reached into my briefcase and took the file that I was becoming a bit heavier by the day, and pulled out the copy of The Letter that the Feebs had provided, along with the subpoena. There had to be a clue here.
How I had managed to miss it at first glance was beyond me, but I just found another crumb. On both the top part of the copy, it displayed time and date stamp, along with the sender’s fax numbers and the recipient’s fax number. The copy the Feebs had gotten hold of had apparently been one that had earned more than a few frequent flyer miles. On the top part of the copy, I could make out a date stamp of 05.01.2001, with a 213 area code. I did a reverse look-up on Google and discovered that the phone number belonged to Danny Glassman. On the bottom part of the page, there was a separate date and time stamp, it displayed “Sent from Louis Morowitz Organization May 20, 2001.” The recipient fax number was a 486 area code.
Why would anyone be faxing back and forth this letter five months after the fact?. Duh? I thought to myself, that’s when the shit was apparently hitting the fan with the film production.
On Wall Street, some traders, after making a bad trade, make the irrational decision of “hiding their trading ticket in a drawer.”, or not reporting it to their firm for processing. No different than hiding dirty underwear under a bed, but eventually, its discovered.
Somebody at HLO, obviously Glassman’s partner Lutkin, had hidden this particular letter in a drawer, and decided to pull it out months later, as if they had discovered the dirty laundry. Or maybe, Morowitz was in on the whole thing at the outset. After all, he had green lighted the twenty five million for the project. If it was starting to implode in May, maybe he had decided to put in a claim with the insurance company that provided the film completion bond, and maybe he was looking for a scapegoat.
The only thing I didn’t know was whether Jake knew about all of the shennigans that these guys were up to, or whether he was just a bit player, and perhaps didn’t appreciate the scale of what his film finance friends were up to. I emailed Jake the links to the articles, as it might be information that he could leverage, but I didn’t point out what I discovered, that the letter had been bouncing around between Glassman, LHO and who knows who else months after it was supposedly shredded. I’d save that bit of news for the next time I talked to him.
One thing that I was certain of, if Jake thought that he was being set up, or had been double-crossed, or was being made a fall guy, whoever was responsible would be getting more than just a long drive into the Nevada desert.
And if I was going to go down, I’d make sure to bring others with me.
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