The goofy Galleon gang: Wacky hedgies play cops and robbers...with real cash!
Filed under: Economy, People, Investing, Media
As the full extent of the Galleon Group's insider trading comes to light, its story is starting to resemble something out of the movies. Although Raj Rajaratnam's house has already been compared to both The Sopranos and Goodfellas, the sad truth is that the real-life criminal ring lacks both the class of Tony Soprano's gang and the gravitas of Joe Pesci's. As details emerge, the whole mess seems to fall closer to the cartoonish excess of Animal House.The central member of the gang -- the Otter, if you will -- may well be Zvi "The Octopussy" Goffer. Robert Khuzami, director of the Securites and Exchange Commission's Division of Enforcement, noted Thursday that Goffer got his James Bond–originated nickname "because of his reputation for having arms in so many sources of inside information." Goffer used his web of spies to cut trades both at Galleon and at his previous employer, the Schottenfeld Group.
Octopussy's spycraft went far beyond information-gathering. Goffer used security measures associated with spies and drug dealers, such as a cell phone he gave an insider, with two programmable numbers ("you" and "me"). When the inside trade was completed, Goffer removed the SIMM card, bit it, and broke the phone in half.
Ultimately, these precautions were useless; the FBI complaint filed on Thursday alluded to cell-phone conversations Goffer had had with various spies.
Whether the nicknames of Goffer's colleagues ("the Greek," "the Rat," "Artie") were borne of a quest for security or frat-boy bonhomie, the traders' playacting was certainly extensive. It's unclear which nickname belonged to which Galleon member, but Artie may have been Arthur Cutillo, an intellectual-property lawyer with M&A law firm Ropes and Gray who allegedly passed inside information to Goffer about such companies as 3Com, which Goffer then traded illegally.
For good measure, the Galleon gang used their tough-guy talk to talk about targets and trades, discussing "the Hilton Hit," going after "the Apple" -- and even worrying openly about going to "the Big House." Of course, these would-be gangsters were a bunch of tender-palmed Wall Street players. A conversation between Goffer and Galleon lawyer Jason Goldfarb noted that "the boys" were "hungry" because one had spent "a chunk of change" on his honeymoon, and another had "bought a new kitchen." "Now they're ready to replenish," Goldfarb said, "and that's what we're going to do."
And replenish they did. The 24-page complaint against Galleon contains accounts of a bundle of money "approximately the size of a VHS tape" passing from Galleon employee Craig Drimal to Goffer, and "a white bag" of money going from Goffer to Goldfarb. Goldfarb, presumably, passed the cash on to "the boys."
It's amusing to imagine self-styled bad boys playing Mafia thugs, but there's nothing funny about what they've allegedly stolen. Prosecutors say the Galleon gang netted approximately $51 million from just those conspiracies under investigation -- which, given the duration and extent of the gang's dealings, may be just the tip of the iceberg. For all of Goffer's playacting, the funding cuts of the last few years meant that the actual cops -- the SEC -- were barely in the game.
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health bill?
Fed stalls on Chinese bank deal, costs taxpayers $1.7 billion
Dell in a handbasket: Should founder Michael Dell resign?
Reader Comments (Page 1 of 1)
11-06-2009 @ 4:39PM
Jake said...
LMAO .. HOLLYWOOD and AUTHORITIES distract AMERICNA with mafia fatasy stories while the REAL ORG CRIME FAMLIES like MADOFF are Wall Street Corporations.
Reply
11-06-2009 @ 5:22PM
clint3434 said...
Well said my friend our country is such a blind mess!!FML!!!!!!!!The Islamic loving Obama has appointed Arif Alikhan a devout Sunni Muslim to assistant secretary for the Office of Policy Department of Homeland Security. Mr. Alikhan was instrumental in taking down the LA Police Department's plan to monitor it's Muslim community.
Alikhan is affiliated with MPAC, the "Muslim Public Affairs Council".WE ARE FU#$ED!!
11-06-2009 @ 5:12PM
Alistair Henderson said...
This greed and exploitation have been seen before in the same types. Remember Michael Milken, Ivan Boesky,.....? Madoff and his ilk deserve to be gassed, for the pain and suffering they have wrought on decent, honest, hardworking Americans who play by the rules and are not into worship of Mammon!
Reply
11-06-2009 @ 5:10PM
lgnu said...
Any holdover SEC commisioners should be impeached or whatever the procedure is for getting rid of them. They were, at best timid rabbits guarding the hen house. More likely, they were complicit felons and should be dealt with accordingly. No political commity, just prosecutions
Reply
11-06-2009 @ 5:13PM
Tom Fort said...
Don't kid yourself. $51 million is peanuts. The US taxpayer handouts, to Wall Street thugs, amounted to 51 million dollars each ....for 40,000 scumbags.
Reply
11-06-2009 @ 7:11PM
Oscar said...
now, incrementally add to every case that comes up a longer prison sentence to drive across the message to these thieves that it will not be tolerated. No more prison country clubs for them. That would be a stronger deterrant.
Reply
11-06-2009 @ 7:33PM
Sam said...
Be careful, there is people out there that are not looking for your best interest, greed gets worse in hard economic times.
Reply
11-06-2009 @ 8:47PM
politicalpost said...
GOP voted for illegal war in Iraq that cost us over $1.6 Trillion but when it comes to healthcare for all US citizens for the same cost they refuse.
Reply
11-07-2009 @ 8:14AM
puubare said...
politicalpost
how can a war be illegal when approved by congress, it can't be. Then again you are one of those that would not mind the Radical Islamist access to our country and play their Jihad games in our country. we have kept them detained here in their own back yard and are helping countries that are havens for terrorist fight them. Don't you care that one of the countries we are help has Nukes and if the Jihadist win. They will be coming to the United States and delivering them to your door. Not because of what Bush Sr. or Bush Jr did but what Carter and Clinton didn't do and what the current administration hasn't the knowledge or the guts to do. So whine about it, I am sure that you do everthing in your power not to support your country when it needs you and you believe the BS you are hearing from the Extreme Liberals that are doing everything they can to bring down our country.
11-06-2009 @ 9:30PM
brian05487 said...
Poor , poor whiny repubs. Gee all of a sudden its happening . Go figure this has been going on for years. Kind of like when the nut Cheney ordered certain stoicks sold out of his blind trust. Guess he had illegal knowledge. He should be in jail with the Bush and his WMD's.
Reply
11-06-2009 @ 10:12PM
bob said...
I'll bet at least 60% of wall street is dishonest, not just these clowns.
Reply
11-07-2009 @ 2:08AM
Tech said...
They only go after the little guys whie the big crooks always get away! Where is the line of all the crooks that lied about S&P ratings and sold crap all over the world? Who has gone to jail? Hardly anyone because crooks are running this country and they stole 23.7 trillion and refused to say what they did with our money! Haul the FEDsters into court and make them talk-the hard way! End the FED/IRSscam foisted on us by the robber barons in 1913-bunch of hooligans like JP Morgan and Rockefeller who used terror and hired guns to steal everything. Go into it far enough you get to the Rothchilds who actually owned most of JP Morgan's bank. Still do run the show and they have the absolute gall to pass out bonuses-billions for stealing trillions they just pumped into the stock markets? Raid Goldman Sachs, JP Morgan Chase and hang the loan shark gangsters!!! How about the 500 billion they flushed to foreign banks!!! Give me a break, America collapsed from the Bush/Cheney junta and we have been looted and no-one does anything? The gangsters are running this country and ran us into the ground-we're over 100 trillion in the hole now! Fire the FBI and cops and get some real ones like Marshal Dillon or Jack Webb and form the posse! I'll spring for the rope! Are Americans brain dead today? I've never seen such nonsense and then the CEO's who bankrupted their companies have the nerve to walk away with bonus money and golden parachutes after lining their pockets with regular investor's money through options they never paid a dime for? Sure, the cops work for them and throw you out of your homes and jobs. I'm disgusted and can't beleive the lies and BS from the media and "government". We should be having public trials and hangings! All red blooded Americans need to keep their powder dry and ready and when the time comes.......this crap is beyond crime it's traitors who have sold out the entire country! Flush all the polticians and shoot the 34,000 "lobbyists" we've got a massive problem and we better stop the baloney and lies soon. Obama is a fraud too.
Reply
11-07-2009 @ 4:21AM
Margie said...
Very, Very WELL Said - TECH!
Yours are my thoughts EXACTLY.
Reply
11-07-2009 @ 10:02AM
Richard Keane said...
http://www.crimeandfederalism.com/2009/10/aleynikov-case-continued-again.html
secret software
Reply
11-07-2009 @ 7:36AM
Duke from Decatur, Ga. said...
D@mn, Tech you said a mouth full...Many of the comments are true...except to do any harm to our beloved President!!!i vote for Barack and i wish him alot of success, its not his doing that put our country in periles...he's trying his best but alot of people with money & power are putting roadblocks in his way...i do believe he will succede...most american want their people to be strong & healthy...personally, i think it's not the muslims, we must worry about its the christians & jews on wall street and hollywood...check the names Tech was refering too...ok,ok,ok lets leave religion out of this "my bad, iam sorry if i offended anyone". however, with all the negative things going against our country, internal and external, we will raise above them all and remain the most powerful, wealthy, giving and, and, and, and SOMEWHAT lovable country in the world...btw, off the subject matter iam just a little curious, why would many non-christians or non-jews come to a conservative/liberal country with their families and kill their kids or relatives because, they act to american/western???
Reply
11-07-2009 @ 8:44AM
david said...
Who in there right mind would invest into the stock market with all of these parasites behind the curtains? I sometimes think that maybe new world order may be a good idea, the system we have now isn't working and I don't know what the answer is to fix the problems. Both parties sold us out and it doesn't matter what party you vote for you end up being screwed. I know that the privately owned Federal Reserve is our main problem and no person in Washington will go after them, the last man that did was JFK when he signed the executive order 11110 and we know what happened to him. Our only hope is to educate people on these boards and hope that the information gets passed around.
Reply
11-07-2009 @ 9:08AM
kluji said...
Nothing has really changed. Over centuries, history has shown, it just repeats. How many "new" laws were enacted after 1929? Hundreds? Thousands? They were supposed to stop what just happened. Now, after the bubble burst in 1999/2000 what did they do? They enacted another couple thousand laws. In the end, history will again repeat. In th eold days they used to lynch and stone those at the top. Today, in a more civilized society, they show them being led away in hand cuffs. It all comes down to human nature. Greed & Fear. These guys in the article, bunch of idiots. 51 million? Chump change when you think of how many people were involved. Look at this kid who was an attorney for Ropes and Gray. 33 years old. How many years of Law School? An attorney at a prestigious firm at a young age. Now he is facing 35 years. The greedy punk should do 35 years. Along with all his cronies. 33 years old. What a shame but hey, he made the decision. GREED!
Reply
11-10-2009 @ 11:42AM
Virginia said...
I'm just impressed that you managed to use gravitas and Joe Pesci in the same sentence.
Reply