by Scott Turow
“January 18, 2017. We had this very lavish bash at headquarters—Champagne fountains and chilled lobsters. A celebrity chef. It was otherworldly for me. I had worked twelve hours a day for years to get the company on its feet and this amazing medication onto the market. Now I was done. Kiril, naturally, gave me more stock options and a gorgeous severance package—salary, moving expenses, business cell, use of the condo here when I need it—for two years, way more time than I needed, even with the various restrictions, to liquidate almost all of my stock. I was completely set, rich as an heiress. But when I walked out the door, I was leaving most of my life behind, and only because I felt I’d been forced to do that.” With that, Innis flushes. “Hmm,” she says, clearly surprised by the rush of emotion. She shakes her head of tight curls and touches the linen napkin to her eyes daintily, still careful of her makeup.
“Better to stop?” asks Stern.
“There’s not much left. Where were we?”
“Kiril was going to tell Donatella after that party.”
“He did apparently. I never would have believed it. But Lep says he did.”
“Any idea from Lep how Donatella responded?” Stern could imagine. Mrs. Pafko was near eighty-five then and had put up with more than her share for decades.
“According to Lep, Donatella stared at Kiril for a minute when he said he was leaving and then said, ‘No you’re not.’ And walked out of the room. And, at least at that point, the subject was never discussed again.”
“And how did Olga receive that?”
“Exactly as you would think. She cut it off with Kiril immediately.” Sitting here, Stern finds the first thing in this entire conversation he is glad to hear: Kiril actually told him the truth when he maintained that Olga is part of his past. Innis, too, is smiling about the same fact. She says, “I’m sure Olga is bitter and pissed off. Even after all the litigation—this trial and the civil cases—Kiril will be a very rich man, meaning Olga would have been a very rich widow, sooner or later. It probably killed her to find out that her ship had sailed. I can’t believe she stayed at the company. She probably still thinks Kiril will change his mind if she keeps shaking her ta-tas in his face.”
Innis enjoys her own humor and Stern’s smiles. He’s half inclined to say a word on Olga’s behalf. When you have been very very poor, it is often difficult to think of money as anything but the first element of life. People who tell you there are more essential ingredients to happiness might as well be telling you there are more important activities than breathing. He knows that for all his internal laments when he walked in here this morning, it is not merely accidental that he migrated into this world of wealth. Yet Stern knows that Innis would get up and leave, if he started speaking up for Olga.
As it is, for Innis the tale is at an end. Given her emotional reaction a minute before, Stern is happy to let the subject go. They chat for the next half an hour about Naples. Innis says that after a lapse of roughly fifty years, she has started going to Presbyterian services again every Sunday and has been shocked by the comfort she takes from it, perhaps because it connects her again to her parents. The church and the people she’s met there are the better part of her social circle, since she has never managed the knack of becoming truly friendly with the women she plays tennis against.
They stand up as the time for court nears. In the lobby, Innis takes his hand, moves toward him, stops, and then on second thought, finishes her motion by kissing him swiftly on the cheek.
“So I will see you next in court?” she says. She is back to being herself: The tennis player, the competitor, brilliant Innis McVie smiles at the thought. She might as well have put up a sign that reads, YOU DON’T SCARE ME.
IV. INSIDER TRADING
22. The Reporter
As Stern and Marta assess the case, the murder charges are preposterous and the fraud counts are vulnerable, in large part because g-Livia has proved to be such a valuable medication. But the insider trading charges are another matter. Less than an hour after Kiril heard from the Wall Street Journal’s Gila Hartung that she was going to report that g-Livia users were dying of suspected allergic reactions, and while those facts were unknown to the public, Kiril’s broker received orders to sell over $20 million worth of PT stock that Pafko had previously gifted to trusts he’d set up for his grandchildren. Publication of Hartung’s story sent the price of PT shares crashing. By selling early, Kiril had saved his grandchildren over $19 million, measured by the stock’s low point.
Tuesday morning is absorbed with testimony from lawyers, first an attorney from the SEC who testifies as an expert on the insider trading laws, and then Mort Minsky from a big Kindle County firm that acts as PT’s principal outside counsel. He details the elaborate restrictions on the PT executives about selling company stock, except under the 10b5-1 plan, and the many steps Minsky and his firm took to impress those limitations on PT’s officers and employees. Stern has never cared that much for Mort, whom he has known for years, and so he enjoys cross-examining him. Mort grows increasingly frustrated in trying to explain the questionable distinctions in this area between insiders and tippees, those who owe duties to shareholders and those who don’t. By the end, Stern is able to propose a series of hypotheticals to which Mort must repeatedly answer, “I don’t know, the law is unclear.” His answers are correct, but given the pompous certainty he exhibited on direct, Mort ends up looking just a little bit silly.
After lunch, the prosecutors are ready for perhaps their most damaging witness on these counts, Gila Hartung, from the Wall Street Journal. Ms. Hartung’s name is announced by Moses, and the journalist walks briskly through the heavy upholstered doors of the courtroom, with three lawyers from the Wall Street firm that represents the Journal following her like spaniels. All three—an older man, a middle-aged man, and a young woman—clutch their briefcases in their right hands and proceed single file behind their client, before taking their seats in the narrow area reserved for them in the first row. The space on the front courtroom pews set aside for the press has been full since the trial began, but is so overcrowded today that many of the reporters have room only to put their butts on the edge of the seats where they’ve wedged themselves in. The testimony of another journalist is always of great interest to people in the news business, not to mention the fact that Gila Hartung is a celebrity in her own right.
Like so many of the government’s witnesses, Ms. Hartung does not arrive on the stand without some baggage, although the Sterns expect to take advantage of only one set of problems. Stern has read about Gila Hartung for at least twenty-five years, since her personal life began making news. At the time, Hartung was a well-established investigative journalist with the Boston Globe and a part-time teacher at Boston University. One of Hartung’s students paid an unannounced visit to her teacher’s Swampscott home and was stunned to find Hartung answering the door in a shapeless housedress, a brown wig, and pearls. In those days, Hartung’s first name was Gilbert, and in public she lived the role she’d been doomed to by her birth anatomy.
The moment between teacher and student—her name was Joanna Riles—is taught these days in virtually every journalism class in America, because Gilbert Hartung refused to stand in the way of the student’s scoop. Riles’s fond account of her reactions to discovering her teacher’s secret, and her testimonial to the enduring value of Hartung’s mentorship, appeared in the Globe, Hartung’s own paper. The freelance piece ended up propelling Riles’s career—she is now a well-known sports reporter who appears often on talk shows. For her part, Hartung took being outed as an occasion for self-scrutiny. Gilbert began gender reassignment treatment and wrote a celebrated book about her transformation. She continued her journalistic career, marked by two different Pulitzer Prizes for investigative work.
On the witness stand, Hartung’s appearance is unorthodox, since she stands nearly six foot three without high heels, and still favors her old men’s suits, albeit restructured for her new shape. Her hair is long and gray and untamed b
y a stylist’s hand, and she applies little makeup. In her early sixties, she is jowly and somewhat stout. But she seems accustomed to and unfazed by the first reactions to her looks. It is an unseemly aspect of the trial lawyer’s job occasionally to exploit the benighted opinions of some jurors, but the Sterns have studied enough videos of Gila Hartung to know that would be a losing ploy. Once she starts speaking, the eccentricities of her appearance vaporize. Something wise and deeply humane emanates from Gila Hartung. Most of the jurors would simply regard her as strange-looking, as people sometimes are—consider Pinky—but also quite appealing.
The other issue that bedevils Hartung’s testimony is likely to be more problematic for her, although it is the same one that always preoccupies journalists whenever they are called to the witness stand. Members of the press, fierce champions of the free flow of information, who regularly go tearing off to the appellate courts to battle a judge’s orders sealing transcripts or trial documents, promptly forget all about the public’s right to know when they are required to testify. Now they try to conceal anything that might betray the sources for their stories.
There have already been several skirmishes with the Journal’s lawyers, who have proven equally hostile to the government and the defense. What they want from both sides is to go away and leave Ms. Hartung alone. They have argued long and hard with Moses that Hartung’s testimony is unnecessary in light of what Kiril said in his recorded phone call with Innis McVie. But the prosecutors could not accede, because Kiril made at least one critical statement to Hartung that he hadn’t repeated later to Innis.
In their dealings with Moses, Miller Sullivan, the lead counsel, and his colleagues ultimately conceded only that Ms. Hartung would testify to what had been published in the paper. Beyond that, the attorneys were as fearsome and unbending as New York lawyers often are as a matter of style, and they wouldn’t even produce Ms. Hartung’s notes of her conversation with Kiril until the Circuit Court of Appeals affirmed Sonny’s order to do so a few days before trial. After all that, briefs and counter-briefs and oral arguments in two courts, Stern and Marta were chagrined to find that the notes fully corroborated Hartung’s story.
At the start of Ms. Hartung’s testimony, Moses introduces himself to her and asks whether they have spoken before. They have not. All preparations, including the questions Moses will ask, have been relayed through the lawyers. Reduced to the basics, her direct examination lasts no more than a couple of minutes.
After getting Hartung’s name and occupation, Moses asks, “On August 7, 2018, did you call the office of Dr. Kiril Pafko at Pafko Therapeutics?”
Hartung is precise in her response. “I dialed 322-466-1010.”
“Did you believe that to be Dr. Kiril Pafko’s office?”
“I did.”
“Did you reach him?”
“Not at first. I left a message and my cell phone number with a person who said she was Dr. Pafko’s assistant. I received a return call approximately half an hour later.” Calls from business journalists were routine for Kiril in those days, almost all of them fawning over the extraordinary success of PT.
“And how did the person on the other end identify himself?”
“He said he was Kiril Pafko.”
“Were you familiar with Dr. Pafko’s voice?”
“I had seen several YouTubes of Dr. Pafko in the course of researching my article.”
“Did the voice of the person you spoke to match that of the person you’d seen on the Internet?”
“That was my strong impression.”
“And what did you say to Dr. Pafko?”
“I introduced myself and explained that I was an investigative reporter with the Journal. I said that I had now spoken to several physicians who all told me that they had patients who had been taking g-Livia for a little over a year when they had experienced a sudden and violent death, which the doctors now felt was consistent with an allergic reaction. I asked Dr. Pafko for his comment and whether, specifically, he was aware of any reports of sudden deaths, perhaps an allergic reaction, related to the product.”
“And what did he say?” asks Moses.
“At first, nothing. He was silent for some seconds. Then he said, ‘I know nothing about that. I’ve never heard anything about sudden deaths or allergic reactions with g-Livia.’” It is that statement, in particular, that required Moses to call Gila Hartung to the witness stand, since the screenshot from Kiril’s computer proves he was lying.
“Did he say anything else?”
“He asked if he could have a couple of hours to investigate further. He promised to call me back before my deadline at four p.m. Eastern.”
“Did he?”
“No.”
“Did you hear from anyone else on behalf of PT?”
“A lawyer named Ringel from New York called me. He told me they represented Pafko Therapeutics and were investigating what I had said to Dr. Pafko. Mr. Ringel asked me to withhold publication until they had sorted things out.”
“And what did you say?”
“I said I would speak to my editors and that I did not expect them to agree. He then warned me about the legal consequences of publishing false and damaging information. That was the end of our call.”
The Journal went to press. The headline read CANCER SUPERDRUG QUESTIONED and appeared on the first business page, with the lead paragraph carried in a squib on the front left of the paper, where the day’s big stories were summarized. “Physicians have begun to report unanticipated fatal side effects from the cancer superdrug g-Livia, which has made the manufacturer, Pafko Therapeutics, the hottest biotech stock of the last eighteen months. According to doctors contacted by the Journal, patients in their second year of treatment with the drug, a monoclonal antibody, have experienced sudden deaths that medical experts believe may be an unexpected allergic reaction to g-Livia. Dr. Kiril Pafko, a former Nobel Prize winner in Medicine who is the CEO of PT, said, ‘I’ve never heard anything about sudden deaths or allergic reactions with g-Livia.’”
PT stock lost 50 percent of its value the next day, and its price was reduced to pennies several weeks later when the follow-up story broke that the FDA was now questioning the clinical trial of g-Livia.
Job well done, Moses faces Stern with a tight smile and says, “Your witness.”
The old adage about trying cases says, ‘If you have the facts, argue the facts. But if you have only the law, argue the law.’ Because the Sixth Amendment to the Constitution guarantees defendants a right to confront their accusers, a witness has to be subject to full cross-examination. If the witness—Ms. Hartung—refuses to answer questions Judge Klonsky deems relevant, there will be two consequences. First, Ms. Hartung will be held in contempt and sent to the federal jail across the street. Without any cruel intent, that would be very good news for Kiril, because of the second result: the judge would probably also be forced to strike Hartung’s testimony and order the jury to disregard it. In fact, the Sterns might even succeed with a motion for a mistrial, meaning the prosecution would have to start the case again from scratch.
To exploit that possibility and to discourage Gila Hartung from testifying, Sandy and Marta subpoenaed Ms. Hartung’s phone records—cell phone, office, and home—her computer, and all her e-mails and notes from the period when she was working on her stories about PT. The New York lawyers chartered a private jet to fly in and file their emergency motions to quash the Sterns’ subpoenas. Rather than rule on the subpoenas in general, Sonny ordered the lawyers to bring the documents with them and said she will evaluate the need for the records one question at a time, as Hartung testifies.
Ironically, the reporter’s testimony has already changed the predictable geometries in the courtroom. Hartung’s lawyers would be happy if she weren’t cross-examined at all, but Moses will not support any restriction that would cause the judge to strike Hartung’s testimony or that would jeopardize a conviction on appeal. Then there is Sonny herself. Although the press seldom
chooses to report the fact, the Supreme Court of the United States decided long ago that a reporter has no privilege to refuse to testify in a federal criminal case. Despite that, Stern has no expectation that Sonny’s usual latitude with the defense will prevail here. Personal affinities always matter, and Sonny Klonsky has been happily married for over twenty years to a journalist, Seth Weissman, a syndicated national columnist who has had no end of legal confrontations throughout his career, including being called as a witness in criminal cases twice before. The Sterns know all about this, because Marta had been Seth’s lawyer on both occasions.
“Ms. Hartung. My name is Alejandro Stern. We have not met?”
“We have not. I’ve only read about you.”
He nods, smiling just a trifle, to acknowledge the compliment.
“And these three handsome people in the first row here, they are your lawyers?”
“They are the paper’s lawyers.”
“Do you know whether they have been willing to discuss your testimony with me, as opposed to with Mr. Appleton?”
Moses objects on relevance. Sonny lifts her chin to reflect then says, “Sustained.”
“Very well,” answers Stern. His tone is meant to say, as Pinky would put it, ‘It’s on.’
“You said you told Dr. Pafko that you had spoken to several doctors.”
“Yes.”
“May I have the names of those doctors, please?”
All three lawyers for the paper stand up in the first row, and Moses, just behind them, also comes to his feet.
“Beyond the scope,” Moses says, meaning that the question goes further than what is fairly invited by the questions and answers on direct. Sonny overrules him.
Hartung offers two guesses. “I can’t recall precisely,” she acknowledges.
“Do you have notes that would refresh your recollection?” asks Stern naturally, as if he does not know he is about to set off World War III.
