Tangled Webs (2 page)
Authors: James B. Stewart
Tags: #History, #United States, #General, #Law, #Ethics & Professional Responsibility
Perjury has infected nearly every aspect of society. Consider a sampling from recent years, in roughly chronological order, all involving prominent, successful people:
• Former Los Angeles detective Mark Fuhrman was convicted in 1996 of perjury during the O. J. Simpson trial for testifying that he never used the word “nigger” after an audiotape and numerous witnesses contradicted him.
• British novelist Lord Jeffrey Archer was convicted of perjury and perverting the course of justice in 2001 after he sued the
Daily Star
for libel and testified that he hadn’t slept with a prostitute. He also created a fake diary and asked a friend to provide a false alibi for the night in question. The judge called it “as serious an offense of perjury as I have had experience of and have been able to find in the books.” Archer was sentenced to four years in prison.
• Merrill Lynch executive James A. Brown was convicted in 2004 of perjury and obstruction of justice for false testimony that he didn’t know important details of a Nigerian barge investment that enabled Enron to book a fake profit and falsify its financial results, defrauding investors. He was sentenced to three years and ten months in prison. Three other Merrill Lynch executives were also convicted in the Enron barge scheme and given prison sentences.
• Recording star Kimberly Jones, the rapper known professionally as Lil’ Kim, was convicted of perjury and sentenced to a year in prison in 2005 after testifying to a grand jury about a shooting outside radio station Hot 97 FM in New York. She testified she didn’t know her manager and a friend were at the site; a videotape showed them there together.
• In 2006, the powerful Milberg Weiss law firm, which made its name representing plaintiffs in large class-action suits, and four of its long-term partners pleaded guilty to federal charges of obstructing justice, perjury, bribery, and fraud. The complaint accused the partners of paying three plaintiffs $11.4 million in illegal kickbacks in about 180 cases spanning twenty-five years, and then repeatedly lying about it to the courts.
• Lord John Browne, the chief executive of international oil giant BP, abruptly resigned in May 2007, after a forty-one-year career at the company. He admitted that he lied in a deposition to the court when he said he met his former lover, Jeff Chevalier, while exercising in London’s Battersea Park. They had actually met through an escort service.
• In March 2008, the mayor of Detroit, Kwame Kilpatrick, and his chief of staff, Christine Beatty, with whom he denied having a long-running affair, were charged with multiple felony counts including perjury, misconduct in office, and obstruction of justice. Kilpatrick pleaded guilty to obstruction of justice and served ninety-nine days in jail. He was subsequently convicted of lying under oath about his affair with Beatty and sentenced to up to five years in prison.
• The former Chicago police commander Jon Burge was convicted in June 2010 of perjury and obstruction of justice for lying in a 2003 civil lawsuit about his use and knowledge of torture of criminal suspects.
• John McTiernan, the director of
Die Hard
and
Predator
, pleaded guilty in July 2010 to two counts of making false statements to the FBI, and one count of perjury for lying to a federal judge. McTiernan denied hiring private investigator Anthony Pellicano, the mastermind of a long-running wiretap conspiracy on behalf of his famous Hollywood clients. Pellicano is currently serving a fifteen-year prison term.
• In August 2010, the baseball legend Roger Clemens was indicted on three counts of making false statements, two counts of perjury, and one count of obstruction of Congress. Prosecutors allege Clemens lied repeatedly to Congress, particularly when he stated under oath, “Let me be clear, I have never taken steroids or HGH [human growth hormone].” He pleaded not guilty and a trial was set for July 2011.
• The governor of New York State, David Paterson, was accused of lying under oath to a state commission about whether he had solicited free tickets to a Yankees baseball game. In August 2010, an independent commission, chaired by Chief Judge Judith Kaye, found that Paterson gave “misleading and inaccurate” testimony, and referred the case to the Albany prosecutor for possible perjury charges.
• Robert Allen Stanford, chairman of Texas-based Stanford Financial Group and the first American to be knighted by the Caribbean nation of Antigua and Barbuda, was accused in June 2009 of running an $8 billion Ponzi scheme and indicted on numerous counts of mail fraud, wire fraud, and obstruction of justice, including making numerous false statements. Laura Pendergest-Holt, his chief financial officer and a Stanford board member, was charged with obstruction and conspiracy and with lying to the SEC in sworn testimony in February 2009. Stanford’s knighthood was revoked in 2010.
This surge of perjury cases at the highest levels of business, politics, media, and culture poses some fundamental questions: Why would people with so much to lose put so much at risk by lying under oath? Whatever they may have done, why would they compound their problems by committing an independent felony, punishable by prison? What were the consequences? And what price are all of us paying for their behavior?
I set out to answer these questions by examining recent cases of perjury by people at the pinnacle of their fields. They come from the worlds of media, business, politics, sports, law, and Wall Street–just about every center of power and influence in American society. They enjoyed money, fame, power, and celebrity to a degree that most people can only dream of. Yet they shattered their lives and those of people around them while inflicting untold damage on society as a whole. I believe that only by exploring these fascinating cases in depth do the answers to my questions emerge.
Most instances of perjury are very difficult to assess, because sworn testimony is often delivered in secrecy, before a grand jury, or as part of a confidential investigation. All of the lies in these cases were told in circumstances that at the time were veiled in secrecy. In each of these cases, I was able to obtain transcripts of such testimony or notes taken by FBI agents or other investigators. They provide a rare look at the very moment these people made the fateful choice to lie.
That a witness will raise his hand, swear to tell the truth, and then do so is a breathtakingly simple proposition on which the entire American legal system rests. These cases tell us what happens when that proposition breaks down.
Part One
MARTHA STEWART
ONE
“Can I Go Now?”
D
ouglas Faneuil hurried into the Merrill Lynch office, on the twenty-second floor of 1251 Avenue of the Americas, one of the large office towers across from the Radio City Music Hall. It was December 27, 2001, and Rockefeller Center was still decked in its holiday decorations, but the midtown streets had a subdued post-holiday feel. Faneuil was looking forward to a quiet week; his boss, Peter Bacanovic, was away on vacation. Merrill Lynch’s Rockefeller Center offices had the dark paneling and conservative decor common to investment banks and trust companies, suggesting nothing reckless would ever happen there.
ouglas Faneuil hurried into the Merrill Lynch office, on the twenty-second floor of 1251 Avenue of the Americas, one of the large office towers across from the Radio City Music Hall. It was December 27, 2001, and Rockefeller Center was still decked in its holiday decorations, but the midtown streets had a subdued post-holiday feel. Faneuil was looking forward to a quiet week; his boss, Peter Bacanovic, was away on vacation. Merrill Lynch’s Rockefeller Center offices had the dark paneling and conservative decor common to investment banks and trust companies, suggesting nothing reckless would ever happen there.
Faneuil had neatly cropped dark blond hair, a slender build, and boyish good looks. He wore a suit and tie, both to emulate his boss, who was always impeccably dressed, and to appear professional.
From his cubicle Faneuil could see through the interior glass wall of Bacanovic’s office and out the windows to the neighboring skyscrapers. Faneuil knew little about Bacanovic’s life outside the office, and Bacanovic rarely discussed it. Bacanovic was thirty-nine years old, handsome, often sought after as a desirable single man for society dinner parties. His name regularly appeared in society columns. He’d been educated at a Swiss boarding school and spoke fluent French.
Since Bacanovic was on vacation in Florida, Faneuil was answering all calls and handling anything that came up. He and Bacanovic had split the Christmas holiday period; Faneuil had taken off the week before Christmas. Faneuil thought it was typical of Bacanovic’s thoughtfulness. Indeed, Faneuil considered Bacanovic the best boss he’d ever had, the first who seemed genuinely interested in him as a person.
Sometimes Faneuil wondered how he’d ended up with a budding career in the financial industry. At Vassar College he’d studied art and wanted to be a sculptor. After he graduated, he moved to Brooklyn, hung out with other artists, and struggled to make ends meet. He couldn’t count on any assistance from his divorced parents. His father lived in Boston on a modest inheritance that left little for his son. Faneuil wasn’t quite sure why his father had never held a regular job. His mother had remarried and lived on Cape Cod. Pressed for funds, Faneuil had responded to an ad for artists looking to supplement their income. D. E. Shaw, a hedge fund, had placed the ad in a quest for some people with unconventional backgrounds, people with interests outside of finance. When told the salary was $38,000 a year, Faneuil laughed. It seemed like a fortune. After he took the job, his mother baked a sheet cake, which she decorated like a dollar bill.
Faneuil began with relatively routine back-office accounting tasks, but within a few years was compiling and delivering to Shaw the firm’s daily profit-and-loss statement. While he still lacked any burning interest in finance, he found he had a knack for it. He worked hard and tried to do a good job. He got steady raises and by 2001 was earning $60,000. Compared with his artist friends, he was wealthy.
Faneuil was at a birthday party for a coworker when he ran into Zeva Bellel, a friend from Vassar who had moved to Paris. She in turn introduced him to Rob Haskell, who was working as an editor at
W
magazine, a spin-off from
Women’s Wear Daily
that chronicled the fashion and society elite. Haskell had grown up in Brookline, Massachusetts, close to Faneuil. He’d graduated from Yale, and their paths had crossed briefly when Haskell visited Bellel at Vassar. The two agreed to have lunch. That same week, Faneuil was devastated by news that his sister had committed suicide. Haskell was sympathetic and supportive. Soon they were dating.
W
magazine, a spin-off from
Women’s Wear Daily
that chronicled the fashion and society elite. Haskell had grown up in Brookline, Massachusetts, close to Faneuil. He’d graduated from Yale, and their paths had crossed briefly when Haskell visited Bellel at Vassar. The two agreed to have lunch. That same week, Faneuil was devastated by news that his sister had committed suicide. Haskell was sympathetic and supportive. Soon they were dating.
Haskell seemed enamored of the glamorous, wealthy Manhattan lifestyle chronicled by
W
. He kept encouraging Faneuil to become a trader and make even more money. Haskell knew a stockbroker who needed an assistant. By chance they met at the ballet, and Haskell introduced Faneuil to Peter Bacanovic. He seemed charming; Faneuil followed up with a call, and then an interview at Bacanovic’s office. Bacanovic confided that he hadn’t really planned on being a stockbroker either and always thought he wanted to be a Hollywood agent or film producer. Bacanovic told Faneuil that if he got the job, he’d take him under his wing, and eventually Faneuil could have clients of his own.
W
. He kept encouraging Faneuil to become a trader and make even more money. Haskell knew a stockbroker who needed an assistant. By chance they met at the ballet, and Haskell introduced Faneuil to Peter Bacanovic. He seemed charming; Faneuil followed up with a call, and then an interview at Bacanovic’s office. Bacanovic confided that he hadn’t really planned on being a stockbroker either and always thought he wanted to be a Hollywood agent or film producer. Bacanovic told Faneuil that if he got the job, he’d take him under his wing, and eventually Faneuil could have clients of his own.
Faneuil didn’t say much. He listened, but he had other ideas. He thought about starting a nonprofit to help struggling artists find affordable studio space. His ambitions were vague but altruistic.
Deeply shaken by his sister’s death, and still unsure about his career choice, Faneuil quit his job at D. E. Shaw in April 2001. With his savings, he and Haskell took a trip to Paris, where they visited Bellel. Faneuil continued on his own to Spain. He figured he’d ponder his future while traveling. One evening he climbed a hillside outside Toledo and sat looking down on the beautiful old city. He watched the sunset. Later he wrote about his thoughts in his diary: “What is this inclination of mine to help other people before I have a life or any money of my own?” Haskell was right. He should make some money and then help others. When he got back to New York, his savings exhausted, there was a message from Bacanovic’s assistant: “Congratulations! You got the job.”
W
hen Faneuil got in that morning, December 27, he already had phone messages. Even before he could retrieve them, the phone started ringing. When he answered, a woman identified herself as Aliza Waksal. She sounded a little groggy, as if she’d just been awakened from a sound sleep. Faneuil had never spoken to her before, but he knew she was the daughter of Sam Waksal, one of Bacanovic’s most important clients and the chief executive of ImClone Systems. Aliza, a graduate student at New York University and an aspiring actress, had never called the office or executed a trade, so far as Faneuil knew, but now she was interrupting a ski vacation in Idaho, where it was just 7:00 a.m. “I want to sell all my ImClone shares,” she said.
hen Faneuil got in that morning, December 27, he already had phone messages. Even before he could retrieve them, the phone started ringing. When he answered, a woman identified herself as Aliza Waksal. She sounded a little groggy, as if she’d just been awakened from a sound sleep. Faneuil had never spoken to her before, but he knew she was the daughter of Sam Waksal, one of Bacanovic’s most important clients and the chief executive of ImClone Systems. Aliza, a graduate student at New York University and an aspiring actress, had never called the office or executed a trade, so far as Faneuil knew, but now she was interrupting a ski vacation in Idaho, where it was just 7:00 a.m. “I want to sell all my ImClone shares,” she said.
Faneuil looked at her account on the computer and saw she owned 39,472 shares, worth over $2.5 million. He wasn’t sure he could simply sell the shares when her father was the company’s CEO. Still, they didn’t seem to be restricted. He said he’d get back to her.
The phone rang again. “Did you get my fax?”
It was Alan Goldberg, Sam Waksal’s accountant. Faneuil rarely dealt with Goldberg himself. He usually spoke directly with Bacanovic, who’d often said he was pushy and offensive.
“No, I haven’t had a chance to check the fax machine.”
“Is Peter there?”
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