You Can’t Make This Stuff Up

Preet Bharara, U.S. Attorney for the Southern District of New York, was on a roll until earlier this month.  He’d successfully prosecuted 85 insider trading cases, including sending Raj Rajaratnam, head of the Galleon Group of hedge funds, to jail for 11 years.  This month, Bharara lost against Rajaratnam’s younger brother, Rengan.  He lost in part because the judge threw out two insider trading counts, and along with them much of the evidence.  Commentators suggest that evidence would've caused jurors to convict Rengan if they had been allowed to hear it.

Still, think about it: 85 to 1.  That’s an amazing batting average.  It’s also startling that Bharara had 85 cases for which he was able to amass enough evidence that he could prosecute them.

I can remember back to a time when, as a young investment banker in the 1980s, I thought I'd seen everything with insider trading cases.  That was during the era when Rudy Giuliani had Bharara’s job as top Wall Street prosecutor.  It was the era when Ivan Boesky paid a $100 million fine and went to jail for trading on inside information.  When Dennis Levine got sent up the river for trading on inside information on his investment banking firm‘s deals, and for cutting his friends in on the action.  When Marty Siegel, who had tipped Boesky on his firm's deals—and took a (big) briefcase containing $700,000 in cash from Boesky for it one night—went to jail and lost everything in fines.  When Mike Milken paid a $600 million fine as part of a plea bargain on securities and tax violations.

In those days I was naïve enough to think that after that era’s firestorm of public outrage, fines and the perp walks that Giuliani invented—dragging traders out of their offices in handcuffs, or from their apartments at 6 a.m. to the sound of press cameras snapping away—that anybody with a brain would know the rewards for stepping over the line weren’t worth the penalties if you got caught.

It didn't take me long to get slapped awake to the fact that it's all part of human nature.  The combination of old-fashioned greed and thinking you're smarter than anybody else is a powerful cocktail that can induce entranced walks to the dark side.  People can’t help themselves.

I was still working on Wall Street when I started writing novels.  I relied on my experiences for most of my material, but I made up a lot of it.  In one of my early novels, Bull Street, I had the Feds use wiretaps to catch insider traders, a technique until then reserved for trying to snare Mafia dons.  Recently, wiretaps were an essential weapon in Bharara 's arsenal in bringing down Rajaratnam and his co-conspirators.  Also in Bull Street, I had the SEC use a sophisticated MarketWatch computer program, run on Cray supercomputers, to analyze an insider trading ring’s stock trades.  That’s the equivalent of a hand-held calculator compared to what the Feds are using today against insider trading activity.

In my current novel, Spin Move, John Rudiger is a fugitive financier living in Antigua, who was tricked out of $30 million by an ex-girlfriend, Katie Dolan.  As he's running out of money and the local officials are insisting on ever more exorbitant bribes to keep his alias intact, does he decide it's time to go straight?  Does he go back to the States and turn himself in, do his time?  Nope.  He's still hot for Katie, so it's natural he'd look for her, but that $30 million is also on his mind.  And when he finds out a conman has swindled her out of it, he uses all his skills to come up with an elaborate scam to get it back.  He can't help it.

In my recent novel, Mickey Outside, Mickey Steinberg is getting out of a cushy white-collar federal prison camp after a slap-on-the-wrist sentence because he turned state's evidence.  His short sentence notwithstanding, he's been stripped of his securities licenses, banned from Wall Street for life, divorced by his wife and he's broke.  Has he learned his lesson?  He hatches a scam with another ex-con to sell a near-perfect forgery of a stolen van Gogh masterpiece in the shadowy underground market for stolen art.  Human nature.

I'm not going to spoil Mickey Outside for you, but there's a point where Mickey has to decide if he stays on the other side of the line or goes straight.  What does he do?

Somebody who's read my earlier Rudiger Stories with my John Rudiger character, called a book to my attention entitled How to Become a Professional Con Artist.  It’s an eye-opener.  I knew that Three Card Monte wasn't invented on the streets of New York in the 1980s, but I had no idea that scams like the Pigeon Drop, Change Raising, the Lotto Scam, the Oak Tree Game, or the Double-Play had been around for centuries.

So I guess I'm never going to run out of material as long as human beings are greedy enough to cheat, and suckers are equally greedy enough to allow themselves to get duped by con artists.  You can’t make this stuff up; you don’t have to.

The Theft of the Mona Lisa

In 1911, an Argentinian con man, the Marques Eduardo de Valifierno, came up with the idea for the signature scam of his life: the theft of the Mona Lisa.

But that was only half of it.  The other half was that, before the theft, he commissioned a famous French art forger named Yves Chaudron to paint six perfect copies of the Mona Lisa and had them shipped to different cities around the world.

Next, de Valifierno hired an Italian carpenter working in the Lourve Museum named Vincenzo Peruggia to steal the Mona Lisa.  On the day of the theft, Peruggia hid in a broom closet until closing, then stepped out of his closet and lifted the Mona Lisa off the wall.  He hid it under his smock and simply walked out of the museum.

After the sensational publicity about the theft, de Valifierno lined up six wealthy art buyers who fell all over themselves to buy his copies for millions, each thinking they’d bought the genuine article.

Peruggia hid the original in the false bottom of a chest in his spartan Paris apartment for two years until the Paris police dragnet ran its course.  Then he took it back to Italy with him.  Once there, he contacted a Florentine art dealer, Alfredo Geri, saying he had the Mona Lisa and wanted to sell it. Geri agreed to meet Peruggia, bringing the director of the Uffizi Gallery with him to authenticate the painting.  Once Geri knew he was looking at the real thing, he phoned the police and Peruggia was arrested.  By the time the world learned that the Mona Lisa had been recovered, de Valifierno had disappeared and it was too late for the buyers of his forgeries to do anything about it.

Some of that story is true, at least the part about Peruggia stealing the Mona Lisa in 1911, his means of accomplishing it, the fact he tried to resell it two years later and his arrest for it.  The stuff about de Valifierno, the forgeries and his wealthy art buyers are legend, and no one is sure whether or not any of that is real.  But it’s a story often retold, and probably embellished upon with each retelling.

That story inspired my new novel, Mickey Outside, about an art scam featuring Mickey Steinberg, one of the characters in my third novel, Bull Street.  And since novels are made-up stories, why shouldn't I use de Valifierno's apocryphal scam as the basis for Mickey Steinberg's story?

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In Mickey Outside, Mickey Steinberg, the financier of his generation and the mastermind behind a $2 billion insider trading ring, is getting ready to get out of Yankton, the cushy minimum-security Federal Prison Camp where he's been serving a reduced three-year sentence for cooperating with the Feds.  He's broke, banned from the securities industry for life, divorced by his wife, and none of his old hoity-toity friends from the world of high society and finance in New York will take his calls.

So he needs to come up with a creative way to get back on top.  He's always been a behind-the-scenes genius, but he's not much of a face man, so he recruits another Yankton con, Paul Reece, a good-looking, smooth-talking car-salesman type to help him put together his new con.  He knocks off de Valifierno's idea, researches famous art thefts and settles on Vincent van Gogh's View of the Sea at Scheveningen, a stolen masterpiece that’s never been recovered.  He hires an expert forger to copy it and he's off to the races.

After his release from Yankton and his return to New York, he contacts wealthy buyers in the shadowy underground art market for stolen masterpieces and embarks upon an auction process to sell the painting to the highest bidder.

Then things begin to come unraveled, and the real story begins.

Mickey Outside is caper steeped in the art world, the glamor of New York, mega-rich luminaries, and some good fun.  I hope you'll give it a try.

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