Then Tortora invited a few others to join: Including his friend Sam Adondakis, an analyst at David Ganek’s fund, Level Global.
He told Tortora never to email him: U.S. v. Steinberg, testimony of Tortora.
“Rule number one about email list”: U.S. v. Steinberg, GX 327, testimony of Tortora.
home prices in ten major U.S. cities: Ben Rooney, “Home Prices: Down Record 11%,” CNN Money, March 25, 2008.
almost $17 billion in assets: U.S. v. Mathew Martoma, No. 12 Cr. 0973 (PGG), testimony of Dan Berkowitz.
SAC’s returns had averaged 30 percent: Katherine Burton and Anthony Effinger, “How Hedge Fund Manager Steve Cohen Averaged 30% Returns for 18 Years,” Bloomberg Markets, April 25, 2010.
SAC had doubled in size: U.S. v. Martoma, testimony of Berkowitz.
He had purchased the work in 2005: Colin Gleadell, “Saatchi Sells Another Key Work in His Collection,” ArtNews, May 10, 2005.
Damien Hirst’s shark: Carol Vogel, “Swimming with Famous Dead Sharks,” The New York Times, October 1, 2006.
Between 2000 and 2007: Kelly, Ng, and Reilly, “Two Big Funds at Bear Stearns Face Shutdown.”
It was the worst June: Alexandra Twin, “Stocks: Mixed Day, Brutal June,” CNN Money, June 30, 2008.
“I want to buy 750,000 to 1 million Elan”: U.S. v. Martoma, GX 302.
6. CONFLICT OF INTEREST
He sent a similar note for Wyeth: U.S. v. Mathew Martoma, No. 12 Cr. 0973 (PGG), GX 305.
“I spoke to Steve about it”: U.S. v. Martoma, GX 302.
He and his first wife, Linda: Michael Betzold, “The Corruption of Sid Gilman,” Ann Arbor Observer, January 2013.
Gilman’s mother, who had taken her own life: According to “Not My Father’s Keeper: Unveiling the Skeletons in Dr. Sid Gilman’s Closet,” a book proposal by Todd Gilman that was submitted to publishers in 2014.
he and his father stopped speaking: Gilman, “Not My Father’s Keeper.”
“The man worked himself to distraction”: Patrick Radden Keefe, “The Empire of Edge,” The New Yorker, October 13, 2014.
He led research projects: Betzold, “The Corruption of Sid Gilman.”
He barely knew what a hedge fund was: U.S. v. Martoma, testimony of Dr. Sidney Gilman, cross-examination.
“It paid well”: U.S. v. Martoma, testimony of Gilman.
For a thirty-minute phone call: U.S. v. Martoma, cross-examination of Gilman.
hundreds of thousands of dollars a year consulting: U.S. v. Martoma, January 23, 2014, cross-examination of Gilman. “Outside consulting” brought in $340,000 in 2006, $420,000 in 2007, $425,000 in 2008; earlier, during direct testimony, Gilman said it was $200,000. See also Jenny Strasburg, “Doctor’s Alleged Role Highlights Ties Between Investors and Medical Field,” The Wall Street Journal, November 20, 2012.
“He was not a flashy guy”: Tim Greenamyre, a former student of Gilman’s, who runs the Institute for Neurodegenerative Diseases in Pittsburgh; from Keefe, “The Empire of Edge.”
he started to allow himself certain luxuries: Nathaniel Popper and Bill Vlasic, “Quiet Doctor, Lavish Insider: A Parallel Life,” The New York Times, December 15, 2012.
the medical profession was being infiltrated by Wall Street: Eric Topol and David Blumenthal, “Physicians and the Investment Industry,” Journal of the American Medical Association, June 1, 2005.
Gilman was recruited by Elan: U.S. v. Martoma, GX 20, also testimony of Gilman. Gilman had been chair of the safety monitoring committee during the test of bapi’s predecessor, AN-1792, in 2005. Having seen the disastrous side effects of that drug, which had caused a dangerous swelling in the brain, Gilman felt apprehensive about the safety of the new set of patients. Gilman’s fee was $350 an hour, up to a maximum of $25,000.
Everyone involved in the bapi trial: U.S. v. Martoma, January 13, 2014, testimony of Allison Hulme, Elan Corp., testimony of Gilman. Two hundred thirty-four Alzheimer’s patients from around the country were enrolled in bapineuzumab’s Phase II trial. Twenty physicians were contracted to serve as investigators in the study and to give the drug to their patients and closely monitor their reactions.
“Analysts, hedge fund employees”: U.S. v. Martoma, testimony of Hulme, testimony of Gilman.
“Trading in Elan or Wyeth”: U.S. v. Martoma, GX 7, also testimony of Hulme, Gilman.
This time seemed like it might be different: U.S. v. Martoma, GX 103, testimony of Gilman, memo to Enchi Liu of Elan.
“Bapsolutely!”: Keefe, “The Empire of Edge.”
Martoma reminded him of his first son, Jeff: U.S. v. Martoma, testimony of Gilman.
Martoma referred to Holman: U.S. v. Martoma, Defense Exhibit 269, email from Martoma to Chandler Bocklage, introduced during testimony of Chandler Bocklage.
Cohen contributed $800 million: U.S. v. Martoma, testimony of Peter Nussbaum, SAC general counsel.
Holman signed a consulting agreement: Deposition of Steven Cohen before the SEC, In the Matter of: Elan Corporation, plc, File No. NY-8152, May 3, 2012.
Martoma was “tagged”: U.S. v. Martoma, GX 297, Cohen sector position-alert email, introduced during testimony of Katie Lyndon.
“I think Mat is closest to it”: David E. Kaplan, et al., v. SAC Capital Advisors, et al., No. 12 Civ. 9530 (VM) (KNF), exchanges on March 28, 2008, and April 6, 2008, cited in Elan Shareholder Second Amended Complaint.
7. STUFF THAT LEGENDS ARE MADE OF
an application to wiretap Raj Rajaratnam’s cellphone: U.S. v. Rajaratnam, No. 09 Cr. 1184 (RJH), October 6, 2010, Franks Hearing, testimony of FBI Special Agent B. J. Kang.
They must show that a wiretap: Title 18, United States Code 2518, (1) (c), statute regarding wiretapping.
“Unless oil trades down”: U.S. v. Mathew Martoma, No. 12 Cr. 0973 (PGG); Defense Exhibit 505, dated July 7, 2008, introduced during testimony of Timothy Jandovitz.
Martoma arranged a private dinner: David Kaplan et al., v. SAC Capital, et al., No. 12 Civ. 9350 (VM) (KNF), Elan Shareholder Second Amended Complaint, pp. 80-81.
Elan and Wyeth announced: “Elan and Wyeth Announce Encouraging Top-line Results from Phase 2 Clinical Trial of Bapineuzumab for Alzheimer’s Disease,” press release dated June 17, 2008.
Cohen also had a large position: U.S. v. Martoma, GX 298, 299.
“The hair on my head”: U.S. v. Martoma, GX 53, testimony of Gilman.
On July 15, Gilman flew by chartered plane: U.S. v. Martoma, GX 9.
everything he was about to see had to remain secret: U.S. v. Martoma, testimony of Allison Hulme.
“ICAD presentation confidential”: U.S. v. Martoma, GX 11.
“Dear Sid,” it read: U.S. v. Martoma, GX 12.
At home that evening: U.S. v. Martoma, GX 710, testimony of Gilman.
Just after 10 A.M.: U.S. v. Martoma, testimony of Nathan Brown, University of Michigan, re campus-access control system.
he boarded a 4 P.M. Delta Airlines flight: U.S. v. Martoma, GX 1307, introduced during testimony of Mark Manhan of Delta.
They talked for twenty minutes: U.S. v. Martoma, GX 459.
After they hung up: David Kaplan, et al., v. SAC Capital, et al., No. 12 Civ. 9350 (VM) (KNF), Elan Shareholder Second Amended Complaint, p. 86. Before the market opening on July 21, 2008, the portfolios held 10.6 million Elan ADRs, worth $366 million, and 19 million Wyeth, worth roughly $900 million.
They’d sold roughly 1.5 million shares: U.S. v. Martoma, GX 431, introduced during testimony of Phillipp Villhauer.
“400k at 34.97 all dark pools”: U.S. v. Martoma, GX 432, introduced during testimony of Villhauer.
Cohen shorted 4.5 million shares: Elan Shareholder Second Amended Complaint, p. 86; see also SEC v. CR Intrinsic Investors, Mathew Martoma and Dr. Sidney Gilman, and SAC Capital Advisors, No. 12 Civ. 8466 (VM), Amended Complaint, March 15, 2013.
Harvey Pitt arrived: U.S. v. Martoma, GX 595, introduced during testimony of John Casey, SAC compliance officer.
One of SAC’s c
ompliance officers: U.S. v. Martoma, some details from lawyer discussion at bench, January 16, 2014; others from testimony of Casey.
“Stop and think before trading”: U.S. v. Martoma, GX 595, Harvey Pitt talk email invitation, and GX 591, Pitt slide presentation, introduced during testimony of Casey.
Dennis had learned about: SEC v. Matthew G. Teeple, David T. Riley, and John V. Johnson, Complaint, United States District Court, Southern District of New York, March 26, 2013.
When Foundry went up: SEC v. Ronald N. Dennis, No. 14 Civ. 1746, March 13, 2014.
Ross said goodbye: This account is drawn largely from Ross’s trial testimony, U.S. v. Martoma.
He’d had a series of chemotherapy treatments: U.S. v. Martoma, chemotherapy treatment schedule elicited during Gilman cross-examination.
his twenty-two slides: U.S. v. Martoma, GX 19, introduced during testimony of Hulme.
“I can remember gasping”: Nathaniel Popper and Bill Vlasic, “Quiet Doctor, Lavish Insider: A Parallel Life,” The New York Times, December 15, 2012.
“I saw what u did with WYE”: The stock symbol for Wyeth. U.S. v Martoma, GX 294, Martoma Lyndon email, introduced during Katie Lyndon testimony.
“We’ll catch up over a beer”: U.S. v. Martoma, Defense Exhibit (hereafter “DX”) 328/GX 313, testimony of Jandovitz.
“Anyway,” he added, “no need to call”: U.S. v. Martoma, GX 235, email date September 28, 2008, introduced during testimony of Gilman.
Diamondback Capital, was paying Goyal for his Dell tips: U.S. v. Michael Steinberg, No. 12 Cr. 121 (RJS), testimony of Jesse Tortora. Goyal’s source, it turned out, worked in Dell’s investor-relations department. In 2015, charges against Goyal were dismissed, after the reversal of the Newman and Chiasson convictions.
“Dell checks”: U.S. v. Steinberg, GX 214.
his weekend house in the Hamptons: U.S. v. Steinberg, GX 631.
“Interesting…”: U.S. v. Steinberg, GX 631.
The next day, the stock dropped: Laurie J. Flynn, “Dell’s Profit Drop Surprises Investors,” The New York Times, August 28, 2008.
His boss covered his short: SEC v. Dennis; Patricia Hurtado, “Former Level Global Analyst Says Two SAC Friends Got Inside Tips,” Bloomberg News, November 29, 2012.
8. THE INFORMANT
Tactical Behavior Assessment training: Eamon Javers, Broker, Trader, Lawyer, Spy: The Secret World of Corporate Espionage (HarperBusiness, 2010).
referring to the friend, who worked at the Blackstone Group in London: Michael J. de la Merced, “Blackstone Executive Is Charged with Insider Trading,” The New York Times, January 14, 2009.
as if he were a gangster: Peter Lattman and Ben Protess, “How Pursuit of Billionaire Hit One Dead End,” The New York Times, January 14, 2013.
Lee had been wiring $2,000 payments: U.S. v. Richard Choo-Beng Lee, et al., No. 09 Cr. 0972 (PKC), information filed October 13, 2009; also see Sentencing Submission by government.
“This is your one chance”: Anita Raghavan, The Billionaire’s Apprentice (Business Plus, 2013), p. 302.
The fund had been doing relatively well: Susan Pulliam, “How Associates Helped Build Case,” The Wall Street Journal, October 20, 2009.
The only way to satisfy them: U.S. v. Choo-Beng Lee, Sentencing Submission.
PGR, was one of the worst offenders: In the Matter of: Application of the United States of America to Authorize to Intercept Certain Wire Communications, 11 Cr. 00032 (JSR), filed July 12, 2011. PGR Wiretap Application, pp. 20–25. Kang’s suspicions had been corroborated by Karl Motey, who was working with FBI agents Dave Makol and James Hinkle. Motey, a married father of three, was a consultant who had five portfolio managers at different hedge funds paying him a total of $500,000 a year for his insights on the technology industry, and some of what he passed on to them was inside information. When Motey was asked if there was anything he had observed in the financial industry that struck him as shady but that he wasn’t necessarily involved in himself, he answered: “Expert networks.” U.S. v. Motey, 10-cr-1249.
PGR’s biggest customers: Patricia Hurtado, “SAC Trial Seen by Probe Convict as Latest Abusive Tactic,” Bloomberg News, January 7, 2014.
Dave Makol and James Hinkle, started gathering evidence: PGR Wiretap Application.
getting permission to send out subpoenas: Devin Leonard, “The SEC: Outmanned, Outgunned, and on a Roll,” Bloomberg Businessweek, April 19, 2012.
It was 3 A.M.: U.S. v. Raj Rajaratnam, Rajiv Goel, and Anil Kumar, No. 09 Mag. 2306, October 15, 2009.
At 6 A.M. the following morning: Danielle Chiesi, a trader at New Castle Funds; Chiesi’s boss, Mark Kurland; an IBM senior vice president named Robert Moffat; and Raj’s friends Rajiv Goel, an Intel executive, and Anil Kumar, from McKinsey. Chiesi had allegedly been having affairs with both Kurland and Moffat, whom she’d milked for leaks about IBM. Michael J. de la Merced, “Hedge Fund Chief Is Charged with Fraud,” The New York Times, October 16, 2009.
9. THE DEATH OF KINGS
“If you got a 98”: Ed Beeson, “When U.S. Attorney Preet Bharara Speaks, Wall Street and the World Listens,” The Star-Ledger, August 19, 2012.
“School, studying, grades”: Carrie Johnson, “Family Ties,” Columbia Law School Magazine, Fall 2011.
Michael Mukasey: Also the father of Marc Mukasey, Dr. Sidney Gilman’s defense attorney.
inspired Bharara to become a prosecutor: Benjamin Weiser, “For Manhattan’s Next U.S. Attorney, Politics and Prosecution Don’t Mix,” The New York Times, August 9, 2009. Preet wasn’t the only Bharara son with the overachiever gene. The younger Bharara brother, Vinny, also attended Columbia Law School, three years behind his older brother. He co-founded an Internet retailer that sold diapers, which was sold to Amazon for $540 million in 2010; see also Johnson, “Family Ties.”
“Schumer Aide Is Confirmed”: Benjamin Weiser, “Schumer Aide Is Confirmed as United States Attorney,” The New York Times, August 8, 2009.
“Greed, sometimes, is not good”: U.S. v. Raj Rajaratnam, et al., 09-Mag-2306, October 16, 2009; prepared remarks for U.S. Attorney Preet Bharara in press conference announcing charges.
Rengan had even worked at SAC: Rajarengan Rajaratnam testimony before the SEC, In the Matter of: Sedna Capital Management, file No. NY-7665.
People could only speculate: Just three days after Raj’s arrest, The Wall Street Journal posted an article on its website that publicly identified C. B. Lee and Ali Far, for the first time, as government cooperators. It was hugely damaging to the investigation. Susan Pulliam, “How Associates Helped Build Case,” The Wall Street Journal, October 20, 2009.
Biovail’s lawsuit against SAC had been dismissed: Valeant Pharmaceuticals eventually bought Biovail, and in 2010 settled claims brought by SAC Capital for vexatious litigation by agreeing to pay SAC $10 million. Shira Ovide, “SAC Capital, Biovail Finally Bury the Hatchet,” The Wall Street Journal, November 4, 2010.
SEC had charged the company with fraud: Judith Burns, “SEC Charges Biovail Officers with Fraud,” The Wall Street Journal, March 25, 2008.
In the course of reading the SEC files about Cohen: Patricia Cohen v. Steven A. Cohen, et al., First Amended Complaint, No. 09 Civ. 10230 (WHP), April 7, 2010.
Lurie was bankrupt, a wrecked man: Steven Cohen and SAC Trading Corp. v. Brett K. Lurie and Conversion Trading Corp., No. 8981/87, Affidavit in Support of Order to Show Cause, N.Y. State Supreme Court, May 12, 1987. See also Douglas Montero, “Slippery Scammer an Elusive Daddy, Too,” New York Post, October 26, 2004, and “Agents Catch Up with U.S. Citizen on the Run,” A.M. Costa Rica, Vol. 5, No. 224, November 11, 2005.
she demanded $300 million in damages: Patricia Cohen v. Steven A. Cohen, et al., December 16, 2009.
The son of a nurse and a fighter pilot: Story of the Riely family: Virginia Grantier, “Four Boys Thank Her for Courage After Husband’s Death,” Bismarck Tribune, May 11, 2002.
Martoma had received a $9.38 million bonus: U.S. v. Mathew Martoma, No.
12 Cr. 0973 (PGG), GX 555, Dan Berkowitz testimony.
whether Esbriet would obtain FDA approval: Andrew Pollack, “FDA Rejects InterMune’s Drug for Fatal Lung Disease,” The New York Times, May 4, 2010.
almost 4.5 million shares: Suzy Kenly Waite, “Hedge Funds Hemorrhage on InterMune,” Institutional Investor, August 31, 2010.
“Federal authorities, capping a three-year investigation”: Susan Pulliam, Michael Rothfeld, Jenny Strasburg, and Gregory Zuckerman, “U.S. in Vast Insider Trading Probe,” The Wall Street Journal, November 20, 2010; Ernest Scheyder and Matthew Goldstein, “U.S. to Lift Lid on ‘Pervasive Insider Trading’: Report,” Reuters, November 20, 2010.
he became friends with another SAC portfolio manager in Boston named Noah Freeman: Steve Eder, Michael Rothfeld, and Jenny Strasburg, “They Were Best of Friends, Until the Feds Showed Up,” The Wall Street Journal, February 17, 2011.
Freeman was so intense: Eder, Rothfeld, Strasburg, “They Were Best of Friends, Until the Feds Showed Up.”
“the log”: FBI notes from interviews with Noah Freeman, hereafter Freeman 302s.
his numbered Gmail accounts: Details of Longueuil’s Gmail accounts; Freeman 302s.
most of his instant-message chats through Skype: Longueuil use of Skype; FBI notes from interviews with Samir Barai, hereafter Barai 302s.
They didn’t get home until 2:30 A.M.: U.S. v. Samir Barai and Donald Longueuil, No. 11 Mag. 332, February 7, 2011; reference to video surveillance, exit and return times from affidavit filed by FBI Special Agent B. J. Kang. See also Eder, Rothfeld, Strasburg, “They Were Best of Friends, Until the Feds Showed Up.” Note: Longueuil’s fiancée was never charged with any wrongdoing.
Barai and Longueuil had developed a close, if nasty, friendship: The three of them merged all their ill-begotten information every quarter, a week or so before earnings season, by meeting at the Santa Clara Hilton, which they referred to in emails as planned “threesomes” or as “Don, Sam, Noah—sex”; Barai 302s.
increasingly ugly divorce: Bree Sposato, “One Enchanted Evening: Bhavana Pothuri & Samir Barai,” New York, April 15, 2006; Barai 302s.
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