Zeif testified that he began working for Badische a year before the loan program started turning a profit. That he had reviewed the $50 billion special deed of trust from the Kingdom of Mombessa, and that he had discussed its particulars with both of its principal signatories, Prince Robert and King Henri-François Mazzamba. Given his familiarity with the specifics of the scheme, it’s hard to imagine Richard Zeif was entirely irreproachable. But by agreeing to forfeit some $100,000 in purloined performance guaranties (parked in a London bank account managed by Robert Gurland), and by further agreeing to testify at trial, Richard Zeif avoided the fate of his clients.
“WHAT QUILTY WANTS, QUILTY GETS”
The Richards—Mamarella and Zeif—were relatively cooperative compared to the other two lawyers Quilty was determined to interview. David Glass and Robert Gurland both tried to rebuff the investigator by wrapping themselves in the mantle of attorney-client privilege. Both learned very quickly the futility of that gambit.
“I went after Glass before I took on Gurland,” Quilty remembers. “He was in New York. That made him easier to pursue.”
Easier but not easy. The moment the senior partners at Clifford Chance found themselves dragged into a federal fraud investigation, they reviewed their malpractice insurance and compelled David Glass to surrender all of his Trust-related materials to the firm’s compliance team. A quick survey of those files revealed that Glass hadn’t been the one to add the Badische Trust Consortium to the Clifford Chance client roster; two senior partners had served as liaisons before he took over. It had been their job, not his, to vet the bona fides of the Trust. Nor was Glass alone in providing counsel. At least six Clifford Chance attorneys had attached their names to documents prepared for Badische. The firm had no choice but to circle the wagons and hire outside counsel.
“When lawyers lawyer up, they really lawyer up,” Quilty says with a chuckle. He describes one pretrial conference with particular relish. “There were two federal prosecutors, Tim Coleman and Jay Musoff, the assistant US attorney who took over from Coleman just before the case went to trial. There was Glass and his lawyer. There were the Clifford Chance lawyers that Glass worked with. And there were the lawyers representing the Clifford Chance lawyers. It was a bunch of lawyers and me.”
Pressed for an exact head count, Quilty drily notes, “Let’s just say there were a lot of billable hours in the room.”
Soon after the investigator introduced himself, a member of the Clifford Chance defense team made a passing reference to Clare Quilty, the cryptic pedophile who appears in the more baleful passages of Lolita. “I always display my most stern and disapproving face when that book gets brought up,” Quilty tells me. “If anything, I’m more like Inspector Javert, the cop in Los Mizzer-whaddever-it-is. The one who says, ‘You know what is going to happen, don’t you? I will take you in the end!’”
After the literary small talk had run its course, the defense lawyers invoked two superficially compelling arguments to keep mum: attorney-client privilege and the confidentiality protections that shield attorney “work product” from discovery.
That didn’t go over well with the prosecutors, Quilty recalls. “Coleman told the guys straight out that the crime-fraud exception nullified all privilege.* The defense countered with all sorts of legal nuance. About what was ‘privileged,’ what was ‘confidential,’ and what was ‘private information.’ I don’t know how many hours we wasted on that bullshit.”
When he’d had enough, Quilty made an argument of his own. “‘Fellas,’ I told them. ‘It’s simple. What Quilty wants, Quilty gets. I have three years left until I retire. I’ll work on this case night and day if that’s what it takes.’” The investigator’s good-natured swagger was bolstered by the two prosecutors, who made clear that the government would file a motion against Clifford Chance if it refused to cooperate.
In the end, the law firm relinquished thousands of pages of redacted work product and David Glass agreed to serve as a “witness of fact.” In return, the government furnished a so-called proffer agreement guaranteeing that anything Glass revealed in his depositions could not and would not be used against him or his firm at trial. In the jargon of the profession, Glass was made “Queen for the Day,” a fitting metaphor given the aristocratic masquerade in which he and his colleagues had unwittingly participated for the better part of two years.
Three of the four lawyers Quilty contacted responded expeditiously to his inquiries. There was only one holdout: Robert Gurland.
“Gurland was key to building the case. Fraud investigation is all about deposits and withdrawals. Who gives the money and who gets it. I had proof that Gurland handled a lot of the stolen funds. He maintained an account in London on behalf of Badische. The problem was I couldn’t subpoena UK bank records.”
The matter of his foreign residency presented additional obstacles. “Going after someone, especially a lawyer residing outside the country, can add six months or a year to an investigation,” Quilty explains. “Extradition was not a realistic option. It costs a fortune, and you never know how it’ll play out. I had to figure out another way to make Gurland compliant.”
Quilty found the leverage he needed in the London counsel’s background. Despite the bespoke suits and posh accent, Robert Gurland was not to the manor born. True, he had attended the very finest of public schools. But the schools in question weren’t Eton or Harrow, Rugby or St. Paul’s.
“The guy went to P.S. 86 in the Bronx.”
The lawyer many Badische victims presumed to be an English barrister was neither English nor a barrister. He was a tax specialist with a law degree from NYU who had lived in England for thirty years.
“I knew some of the stolen performance guaranties were still under Gurland’s control. I told him, through his lawyer, that those monies were the fruits of fraud and that if he failed to relinquish them, he could be charged with a felony. An outstanding arrest warrant might make it tough to visit his family in New York.”
Gurland, like Glass, tried to invoke attorney-client privilege. But that argument, to use a British loan phrase favored by the Bronx-born expat, “fell on stony ground.” (Translation: Fuggedaboutit.) Quilty clarified the difference between legal representation and illegal misrepresentation; the crime-fraud exception trumped all privilege that might otherwise protect the lawyer-client relationship.
After six months of transatlantic negotiation, Robert Gurland signed a nonprosecution agreement with the US Attorney’s Office that immunized him from all potential criminal charges stemming from his representation of the Badische Trust Consortium. In return, he promised to furnish prosecutors with redacted copies of his client files, hand over all monies in the Trust-related accounts he controlled, and testify at trial.
The Gurland materials revealed that the Trust’s American loan agreements constituted only a fraction of their bogus deals. Wire transfers from all over the world flowed in and out of the Badische bank accounts he controlled like planes at Heathrow.
And where did the money eventually land? A substantial chunk covered overhead. “Imaginary banks usually cost a lot less to operate than real ones,” Quilty jokes. “But Badische had higher expenses than your standard advance-fee scam. It used lawyers instead of PO boxes, and lawyers tend to cost money.”
Forgoing his usual hourly fee of £200, Gurland worked for Badische on commission, taking 10 percent off the top on all performance guaranties that he handled. He later testified that the arrangement netted him some $250,000, suggesting that he managed $2.5 million in stolen funds tied to bogus loan contracts with face values totaling $2.5 billion. His records also revealed that the bulk of the stolen funds ended up in bank accounts in Switzerland, Liechtenstein, and Austria.
Quilty contacted finance officials in Zurich, Vaduz, and Vienna. Only the Viennese proved cooperative.
Following a yearlong waltz between the US State Department and Austrian bureaucrats, Quilty obtained an inch-thick dossier from the Vienna-based Credita
nstalt bank. It confirmed that $2.3 million in performance guaranties had moved through a personal account controlled by Brian David Sherry. Only a few hundred dollars remained by the time Quilty received copies of the account history, but the paper trail was invaluable nonetheless. “The Austrian records helped us substantiate the existence of a conspiracy. It showed how money moved back and forth between Barclay and Badische.”
“I can’t believe how much energy it took to pull the case together.”
“Fraud investigation is all about stamina,” Quilty says. “To do the job right you have to review and re-review evidence. Patterns only emerge after you’ve gone over everything two, three, four times.”
“I’m familiar with that sensation. But what you call stamina others might call obsession.”
“Doesn’t matter what you call it. It comes down to the same thing. The fraud investigator has to have paper in his blood.”
CONSPIRACY
I found nearly everything Quilty said fascinating. But it was also distracting. I hadn’t flown down to Florida to amplify my understanding of fraud. I was there to learn about Cesar.
“I had doubts about him from the outset,” Quilty eventually tells me. “The name of his firm raised an immediate red flag. Barclay Consulting Group? It sounded about as authentic as the Rolexx watches—make sure you spell that with two or three x’s—you see guys selling on the street.”
Cesar’s bank records justified his skepticism. They confirmed the obvious; Cesar had no connection to Barclays of London. When he began working with the Trust, he was receiving regular biweekly paychecks from a manufacturer of laminated jewelry display cases based in Hayward, California. As for the $9,000 he charged clients for each of the offshore companies he registered, his credit card statements revealed that a Bedford, Texas, outfit took care of the paperwork for a flat fee of $595.
“Cesar told his clients he had an arm’s-length relationship with Badische. That was bullshit. We proved that he received money from the baron. That he sent money to Sherry’s mother. That he took out an AmEx card in the colonel’s name. That he paid their bills and that they paid his.
“And there was the matter of the retainer check Sherry wrote to Rogers & Wells.”
“You lost me.”
“It had Cesar’s home address in the corner. That made it kind of tough for Cesar to claim ignorance of the fraud.”
“Did you establish the nature of his relationship to Sherry?”
“No, but it didn’t much matter. We had what we needed to prove conspiracy.”
Perhaps the most intriguing evidentiary link between Badische and Barclay surfaced during a forensic analysis of two versions of a single photograph. The altered picture, which appeared on the Badische website, showed the president of Malta receiving Colonel Sherry at the palace in Valletta. However, the original photo depicted Prince Robert, not the colonel, shaking the president’s hand. More relevant to the charge of conspiracy was the presence of the Zelig-like figure standing at attention in the top-left corner. It was Cesar. Date-stamped 2-1-90, the photo confirmed that a relationship among the con men existed years before either Barclay or the Badische Trust Consortium existed. (The Trust, the older of the two enterprises, was only incorporated in 1997.)
Evidence of conspiracy: The Badische administrator charged expenses on a Barclay AmEx card paid by Cesar.
Despite the ostensible arm’s-length relationship between Badische and Barclay, Sherry’s bank checks displayed Cesar’s residential address.
Once Quilty had assembled the evidence proving fraud and conspiracy, he did one more thing. He shared that evidence with the suspects.
“I always give the defense everything—everything. Why? To prove the hopelessness of their situation. If they want to fight, I tell ’em, ‘Go right ahead. The government pays Quilty every two weeks whether we go to trial or settle.’ I tell ’em, ‘Fellas, the choice is all yours.’”
“And Cesar chose to go to trial?”
“At first it seemed he might be willing to cut a deal. We talked for a while. I said to him, ‘Did any of your clients ever get financing?’ He said, ‘No.’ I said, ‘Didn’t you suspect something was fishy when no deals ever took place?’ He said he hadn’t thought to ask. I told him, ‘Why don’t you come in and talk?’ He was about to. Then his lawyer got involved. She said her client would cooperate if the US Attorney’s Office reduced the charges to a misdemeanor.”
“What did you say to that?”
“I said, ‘Quilty don’t work for no stinkin’ misdemeanors.’ The proposal was ludicrous. I only consider a case a ‘win’ if the criminal spends more time in jail than I spend putting him there. I had two years into the case. I told the lawyer Cesar had to cop to a felony, which the government proposed offsetting with a 5K1 letter.”
Named for a section of the US Sentencing Guidelines, a “5K1” is a lot less generous than the nonpros Gurland negotiated or the proffer deal signed by Glass. It promises nothing more than a recommendation for sentence reduction if the defendant pleads guilty and provides the “substantial assistance” to the prosecution.
The Badische website included a photo (left) showing Colonel Sherry being received at the Valetta Palace by Vincent Tabone, the president of Malta. The undoctored original includes Cesar in the background.
“A 5K1 can shave a few months or years off a sentence, but it also brands you a snitch.”
Cesar found himself confronted by a variant of the classic prisoner’s dilemma. Option A: Plead guilty, betray your accomplices, and receive a reduced punishment. Or option B: Keep your mouth shut and hope the jury finds you innocent.
“A lot of times it comes down to every man for himself,” Quilty notes. “But these guys never ratted each other out. That’s unusual.”
“Could Cesar have been paid off?”
“Can’t say. What I can tell you is most of the stolen money was never recovered.”
“So it is possible the bankers bought Cesar’s silence?”
“Possible? Sure. But I don’t believe money was the reason Cesar clammed up. The impression I got was he refused to cooperate because a 5K1 compels the admission of all prior crimes. Not just the one being prosecuted.”
“Meaning?”
“Meaning Cesar had stuff in his past.”
Finally! The conversation zeroes in on the question I’m most keen to have answered. “Stuff? What kind of stuff? Violent stuff?”
“All I can tell you is that Cesar was involved in other things, criminal things, that prevented him from cooperating. When he realized he had to come clean on his entire criminal history, that’s when he shut down.”
For two or three minutes, I press Quilty, but my efforts get me nowhere, so I approach the subject from a different angle.
“Do you think Cesar has cleaned up his act?”
Quilty shrugs. “All I can tell you is that I put him out of commission for the time he was in jail. After that, guys like Cesar are usually back to their old game, or a new version of it. Fraud is an addiction and addictions are very hard to break. Fraud is what con men know. It’s what they’re best at. It’s what they love.”
“CRIMINAL THINGS”
A few days after I return from Florida, I receive an email from a Department of Justice staffer I had cold-called months before. To my surprise, he agrees to sit down with me at the headquarters of the US Attorney’s Office. Although I can’t be sure, I suspect some sort of back-channel intervention by one of my informants—Quilty? Feeney? Feiter? I have no clue—has prompted the outreach. Once more, I travel to New York.
Security is tight at the Southern District Headquarters of the US Attorney’s Office. To enter the building it’s necessary to relinquish one’s driver’s license and cell phone, and submit to metal detectors and inspection by a guard with a wand. Once that’s done, the visitor is issued an ID sticker and directed to a waiting area.
Ten minutes after completing those preliminaries, I am escorted into an elevator fill
ed with guys carrying sidearms. From there I’m led in silence to an overheated windowless interrogation room. Eventually, the staffer who contacted me enters the room. We speak for about an hour. What he tells me is only mildly illuminating since I already know way, way too much about all things Badische. I explain what I’m after: evidence of Cesar’s criminal activities prior to his federal conviction on multiple counts of wire fraud and conspiracy. The staffer sidesteps the subject entirely.
“Right,” he says at the end of our interview. “I pulled some files from Varick Street. These here are the public records.” He sets two boxes down on a grimy Formica table. “Government exhibits entered into evidence at trial are public. As such, I’m authorized to provide these materials to you,” he adds redundantly.
“Great.”
“And those boxes over there”—the staffer cocks his head toward some cartons stacked near the door—“those materials were not introduced at trial. I am not authorized to release them. Do you understand?”
I give a nod, though I’m not really sure I do understand.
The staffer looks at his watch. “Right. It’s eleven a.m. now. I’ll be back to get you at three.”
“Great,” I repeat, this time more tentatively.
Then, just like that, I am left alone.
The staffer has made it clear that he has not authorized me to inspect the boxes near the door, so I stick to the public records on the table. Leafing through the sanctioned materials reminds me of my manic law-firm excavations during the blizzard. Five years have passed since I first figured out that my former roommate is a convicted con man. Yet here I am, still immersed in paper, still trying to get a bead on Cesar’s criminal life.
The government files are scrupulously arranged. Each piece of evidence, organized by witness, is cross-referenced to a master list of the government exhibits. The material doesn’t help me much, but it is exciting to hold the physical evidence introduced at trial. Using a point-and-shoot camera overlooked during the security screening, I snap some pictures:
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