Trump Surrounded

I write thrillers based on my over 25 years experience on Wall Street about shady financiers, crooked lawyers and megalomaniacal CEOs who cheat on their taxes, use offshore shell corporations to hide their assets, and launder money.

Sound familiar based on current events?

  

Andrea Kudacki for the New York Times

Yesterday, Michael Cohen, President Trump’s longtime personal lawyer, did a plea bargain acknowledging guilt for campaign-finance violations, tax evasion and bank fraud, and Paul Manafort, Trump’s former campaign chairman, was convicted of tax and bank fraud and failure to report a foreign bank account.

Drew Angerer/Getty Images

When someone is surrounded by slimeballs, it's not guilt by association, just the old adage restated Tuesday by Representative Tom Cole, a former House Republican campaign chairman: "Where there's smoke, and there's a lot of smoke, there may well be fire." And there's so much of it here that Trump is not only surrounded, but engulfed.

When the FBI stormed Cohen’s office and hotel room by surprise in April, Rudy Giuliani, former U.S. Attorney who honed his hardball tactics in bringing down many of the 1980s insider traders—decades before he became Trump's attorney—said something very telling: “Is this surprising? Yes. Is it extraordinary? No. This is the way prosecutors get information…”

Giuliani spoke from experience; he knows how prosecutors like Mueller work. They throw lines in the water where they smell something stinky, then reel them in and see who they catch. Then use those peripheral crooks to turn States’ evidence, or just get early convictions and then squeeze the convicted for cooperation in exchange for short sentences. All as part of going after their ultimate prey.

So for Robert Mueller & Co., here's the score so far. Guilty pleas from Michael Flynn,(Trump’s first national security advisor), Rick Gates (Manafort’s longtime associate), and George Papadopoulos (a Trump campaign foreign policy advisor), 32 indicted individuals, and 187 charges regarding evidence of Russian tampering with our 2016 election.

And yesterday, Cohen and Manafort. More significantly, Cohen, in the process of copping his plea, implicated the president on the record in open court in baldly specific terms. He said he made payments to Stormy Daniels and Karen McDougal to keep them from talking about affairs they had with Trump “in coordination with and at the direction of a candidate for federal office,” and, “I participated in this conduct, which on my part took place in Manhattan, for the principal purpose of influencing the election” for president in 2016.

Does anybody really think this is going away?

Representative Jerrold Nadler of New York, the top Democrat on the House Judiciary Committee, remarking upon the potential for an impeachment inquiry, allowed that, "this is getting deeper, and it's going to get more and more serious."

So where do we go from here? Or where does Mueller go?

All I can say is if I were writing this story as a novel it wouldn’t turn out well for the president. Stay tuned.

Nincompoopery Redefined

Rep. Chris Collins is in major hot water, according to a recently unsealed 10-count, 30-page indictment from the U.S. Attorney for the Southern District of New York. Allegedly, Collins, from an upstate New York district near Buffalo, tipped off his son to inside information before it was publicly disclosed about the failed drug trial of an Australian biotech company’s only drug with any prospects of success.

Ironically, or sadly, or pathetically or outrageously, or all of the aforementioned, Collins was at the time the largest shareholder and a board member of the company, Innate Immunotheraputics Limited. He was also on a subcommittee of the Energy and Commerce Committee that oversees the healthcare and drug industries and had been under investigation for months by the Congressional Ethics Office as a result of serving on the company's board and promoting its prospects. To make matters worse, he allegedly lied to the FBI about the whole thing.

Whew. If all this is true, Collins is about the biggest nincompoop in Washington. (Well, maybe the second biggest.) That’s a photo of Collins at left from his Facebook page, showing him at a recent constituent event holding a plate of fried dough. Fried dough is exactly what he’ll be if the U.S. Attorney has the goods on him. And it sounds like it does.

The indictment says that after Collins’ tip his son, Cameron, sold almost 1.4 million shares of Innate in 54 trades starting the next morning, avoiding some $570,000 of losses he otherwise would have incurred when the stock tanked over 92% the day the failed drug trial was announced. Cameron is also under indictment for passing on the insider info to his fiancé’s father, Stephen Zarsky, his fiancé and other of their relatives and friends, who also sold their stock and avoided close to $200,000 in losses.

All that is documented in the indictment by emails, texts, phone records and stock trading data. That includes the email Collins got from Innate’s CEO saying the drug failed the trial while Collins was on the South Lawn of the White House attending the annual Congressional Picnic. It includes Collins’ email back saying, “Wow. How are these results even possible???” It also includes records of Collins’ frantic seven phone calls to Cameron, in the last of which he finally got through to him. Also the substance of a phone call from Zarsky to one of his tippees, a longstanding friend in which he said Cameron intended to buy a house so he would have an ostensible excuse for the timing of his trades if he were ever asked about them (Cameron is also indicted for lying to the FBI). Ditto a press release Collins had his staff release, stating that Cameron sold his stock only after a halt on its trading had been lifted, and at “substantial financial loss.”

Collins & Son and Zarsky are all named in the indictment that alludes to six other unindicted co-conspirators (Zarsky’s wife, daughter, two brothers and that longstanding friend, and a friend of Cameron and his fiancé). I stress unindicted, because if the U.S. Attorney’s previous modus operandi—and that of any other methodical prosecutor—is any guide, it started at the bottom and got the six minnows to flip by squeezing them into ratting out the bigger fish.

One of my first novels, Bull Street, is about an insider trading ring, and I never would have put a character in it who behaved as idiotically as Collins is alleged to because nobody would believe it.

A few years ago I wrote a blog entitled You Can't Make This Stuff Up on the psychology of insider traders based on my experience on Wall Street. They seem to have no shame or no memory of previous convictions for the crime. The practice will go on forever.

And they’ll keep getting caught. The U.S. Attorney for the Southern district of New York has a winning record in getting convictions for insider trading. They’re the guys who sent Ivan Boesky, Marty Siegel, Dennis Levine and Mike Milken to jail in the 1980s. Preet Bharara, the previous U.S. Attorney for the Southern District of New York, won over 85 insider trading cases in a row at one point. They don’t go to a grand jury unless they’ve got the goods. Collins’ tip to his son occurred over a year ago, the FBI took until April of this year to interview Collins & Son and Zarsky, and the U.S. Attorney until now to indict them. They’re efficient, systematic and relentless. Usually when they surface, where there’s smoke there’s fire.

In the few days since his indictment, Collins has been kicked off the Energy and Commerce Committee and suspended his re-election campaign for his House seat in November. “Meritless,” is what Collins has called the charges. We’ll see. Unless Collins has redefined the word.

He may also have redefined the word “nincompoopery.”

The Gravy Train

My novel, The Gravy Train, is the story of a novice banker who tries to help an aging chairman buy his company back before the Wall Street sharks who drove it into bankruptcy can carve it up for themselves.

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Finn Keane is a starry-eyed, freshly-minted MBA who lands a job at Abercrombie, Wirth & Co., the hottest firm on Wall Street in a red-hot market. He’s assigned to work on his first deal under the firm’s biggest producer, Jack Shane. Finn is thrilled. The deal is an ambitious acquisition by northeast regional department store chain Kristos & Co. of the high-end retailer, Milstein Brothers Stores, that will create a nationwide retail department store juggernaut. Finn immediately bonds with Nick Christanapoulas, the chairman of Kristos & Co., who has handed the day-to-day reins of the 160-store chain he built to his idiot son-in-law, Stanley, who Shane talked into the ill-conceived deal.

Shortly after the deal closes, the economy tanks and the markets crash. The merged company defaults on the junk bonds that Shane orchestrated to finance the deal even before it makes its first interest payment.

It’s at that point that Finn learns that Shane isn’t only ABC’s biggest producer; he’s also its biggest SOB.

Immediately after the company is forced to file for bankruptcy, the Wall Street sharks close in, led by Shane, and things move quickly after that. Finn gets fired by Shane and he aligns himself with Nick. Finn and Nick team up with a streetwise old bankruptcy lawyer in an effort to help Nick buy the company back out of bankruptcy.

Finn and his rag-tag group face off against Shane, the creditors and their battery of numbers crunchers, led by one of the most sophisticated and brazen bankruptcy lawyers on Wall Street, who knows all the dirty tricks of the trade and then some.

As in all minnow-versus-whale stories, you wonder how the good guys can possibly win because the odds are so stacked against them. But even if they can’t, half the fun is seeing if they can at least land a few solid punches against the bad guys before they go down swinging.

The book is based in part on the first bankruptcy deal I worked on early in my career, and it has some colorful characters based on a number of the oddballs and SOBs I encountered in the course of it.

And the title of the book is taken from real life as well: it’s the nickname of the Amtrak train from New York to Wilmington, Delaware, the site of the court where many of the main bankruptcy cases are decided. It’s on the cars of The Gravy Train on the way to court where the lawyers, bankers and creditors committees who populate the bankruptcy world huddle together. They posture, haggle and yell at each other to cut the deals they present to the judges.

I hope you’ll give The Gravy Train a try. It’s a fast-paced read that will give you some insight into how the bankruptcy game works, and hopefully entertain you.

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