Faneuil was stunned. “No!” he said. “I won’t do it.”
His lawyers stressed that he could go to trial, but that the government, they said, won 90 percent of the time, which was why most people pleaded guilty. They added that the federal prisons weren’t so bad, especially for white-collar offenders. There wouldn’t be any walls or fences; he could go somewhere near his parents in Massachusetts. “You wouldn’t have to worry about your personal safety,” Pickholz added.
Faneuil felt a surge of fear. What did that mean? He was afraid even to ask.
Faneuil left dejected. It had been horrible seeing the devastating impact of his sister’s suicide on his parents. Now they would be losing their son to jail. As the prospect sank in, he started to sob.
That night Faneuil’s despair turned to anger. It seemed surreal. What had he done to deserve this? After brooding about his fate, he called Powers. He was surprised by the anger in his own voice. “If you and Marvin ever mention me going to jail again I’m going to fire you. It’s like a doctor telling a cancer patient to get ready to die. I’d hire a new doctor. I never want to hear another word about my going to jail.”
The next day he returned to his lawyers’ office. “This is insane,” he told them. “You keep talking about Karen Seymour and Jim Comey. These people want to decide my fate and throw me in jail. They haven’t even met me. They don’t know me, the kind of person I am. I want them to see me before they decide to ruin my life.”
Pickholz and Powers looked at each other. It wasn’t a bad idea. Could Faneuil prepare a written statement? If so, they’d try to set up a meeting.
Faneuil threw himself into the task.
Faneuil and his lawyers returned to the U.S. Attorney’s office, this time to Karen Seymour’s office. Though spartan, it was large, with a sofa and several chairs in addition to her desk. Most of the lawyers who’d attended the previous session had crowded in. Seymour stood behind her desk. Pickholz was eager for Seymour to meet Faneuil in person. He thought she might relate to Faneuil’s plight.
Once Faneuil was settled on the sofa, she said, “I understand you have something to say to us. But first, you need to understand the position you’re in.” She went around the room and introduced each person there. “If you take this to court, we’re going to get on the stand, each one of us, and call you a liar. Who do you think the jury will believe? The ten of us, or you?”
Seymour outlined the case against him, which sounded only too compelling. She gestured at the notes from the Merrill Lynch lawyers. These, too, supported the case. “You have to understand the consequences of saying no to this deal,” she said, referring to the plea to two felonies.
Faneuil didn’t care. By now he was sure that if he did go to trial, he’d lose. That wasn’t the point. He didn’t care how much pressure they put on him. He was going to stand up for himself.
Faneuil started to read his statement. He planned to stay strictly to the script. But a few words in, he was overcome by emotion and couldn’t speak. He sobbed; he felt he’d never cried so hard in his life. He struggled to pull himself together and finally made it to the end. No one said anything, but even Pickholz was wiping away tears.
Finally his lawyers suggested he leave the room. With FBI agent Catherine Farmer behind him, he walked out and took a seat on a bench in the corridor. Farmer sat next to him. Just then an inmate walked by in an orange jumpsuit, handcuffs on his wrists, shackles on his legs, armed guards at his side. Farmer noticed the stricken look on Faneuil’s face. She put her arm around him. “We don’t get many people like you around here,” she said gently.
Faneuil felt a surge of emotion. He felt it was the only nice thing anyone had said to him since he decided to come forward and tell the truth. It was the only time he felt like anyone in the government had treated him like a human being.
Back in Seymour’s office, the government lawyers were weighing Faneuil’s performance. Seymour had seen plenty of defendants cry. Tears alone didn’t impress her. But Faneuil had seemed sincere. He was a young kid; this was his first job; he was pressured. This was hard on him. He was emotionally distraught. Could he stand up to the pressure of the witness stand? Was he a little unstable?
Faneuil was in the men’s room when Pickholz burst in. He flashed him a smile and gave him the thumbs-up sign. “Immunity came up!” he said. He didn’t want Faneuil to get his hopes up, but at least the government didn’t reject the idea out of hand. He thought Faneuil had been great. He’d made an impression on the government lawyers. Pickholz returned to the negotiations, but they left without any resolution.
S
eymour and her colleagues faced a dilemma. However sympathetic Faneuil might be, the U.S. Attorney’s office followed strict guidelines about charging a cooperating witness, which did not permit pleas to reduced charges. The reason was trial strategy: if a cooperating witness guilty of a crime was offered too lenient a plea bargain or immunity, it might appear to a jury that he was simply telling prosecutors what they wanted to hear in exchange for favorable treatment. Unfortunately for Faneuil, the more serious the charges against him, the more credible he was as a witness. Of course, should Stewart or even Bacanovic decide to cooperate themselves and plead guilty, the need for Faneuil’s testimony would vanish. In that case, any charges against him might well be dropped.
But there were no signs of any weakening on the Stewart-Bacanovic front, and neither had demonstrated any concern for Faneuil’s fate beyond Bacanovic’s efforts to keep him “on board.” Schachter, Peikin, and other supervising lawyers in the office were adamant that Faneuil had to plead guilty to a felony, admit guilt, and face the likelihood of jail time.
Seymour felt differently. She felt on a gut level that making him plead to a felony was wrong. They could have given him a grand jury subpoena and he could have invoked the Fifth Amendment and remained silent. Instead he told the truth. It was a brave thing to do. He was just a kid. He’d been taken advantage of, pressured by powerful people. But this was not standard policy.
Seymour and her colleagues debated the issue for hours. Ultimately the decision was referred to Comey and his top deputy, David Kelley. They, too, felt that Faneuil deserved a break, although they recognized that any leniency might weaken his credibility as a witness. It was a tough call.
When Pickholz called to summon Faneuil to his office, he sounded pleased: The government had made a new offer. It wasn’t immunity, but it was better than he’d hoped for.
Once Faneuil arrived, Pickholz explained that Faneuil would have to plead guilty to a single misdemeanor. He wouldn’t lose his right to vote. “A misdemeanor is not a big deal,” Pickholz said. “There is a jail term, but the government has assured us they’ll recommend a departure from the sentencing guidelines. You won’t go to jail.”
So what was this misdemeanor? Faneuil was curious to know, since his lawyers had insisted they couldn’t come up with one. It turned out to be a rarely invoked corner of the criminal code: receiving something of value in consideration for not informing law enforcement officials of a crime.
Faneuil was taken aback. What did that mean? It sounded like some kind of bribery. What of value had he taken? The dinner at Gramercy Tavern? Knicks tickets? The hot chocolate Bacanovic had bought him? Surely they weren’t serious. He had rejected nearly everything offered him. He had lied out of loyalty to Bacanovic, not because he was offered anything. The very idea was insulting. “I can’t do this,” Faneuil said, shaking his head.
His lawyers seemed shocked. “Look, Doug, we’re doing the best we can. You want to walk away from this deal? Then you’re a complete and total idiot. This is the best deal you’re ever going to get.” (Pickholz later said he wouldn’t have used the word “idiot.”)
Finally Faneuil gave in. He’d take the plea. His lawyers explained that he’d have to appear in court, enter the plea, and deliver a statement admitting guilt and assuring the judge he understood the consequences. He went home and started working on his statement. It wasn’t easy. He looked up the word “consideration” in the dictionary. It confirmed his suspicion that he was being asked to admit to something that was essentially a bribe. Yes, he had misled the government. He had, in effect, lied. But that was a felony. He had not taken a bribe, but that was a misdemeanor. What Monaghan had offered him–the dinner, the tickets, the week off–were simple acts of kindness toward an employee under obvious stress. They hadn’t bought his silence. It seemed incredible that he was being asked to admit something he didn’t believe to be true in a case that was supposed to be about honesty.
So he wrote a statement he believed to be accurate, insisting he had not been bribed to be untruthful.
I’d just like to apologize and get this thing over with. But something tells me to speak up . . . One of the saddest ironies of this depressing circus is that lessons I’ve learned have not served me well (not yet). Things that I did wrong–like bow to intimidation–were things that often I had to repeat. In turning to the government, I had fears, but I expected to be treated with a sense of justice. Regrettably, it met with more disrespect, more intimidation, and more careerism.
I did not accept any gifts in exchange for my silence; in fact, none were offered. Merrill Lynch did shower me with rewards for “good behavior.” Out of disgust, I turned many of them down (like a free plane ticket to Argentina). Out of sheer misery, I accepted others (like a free dinner for two). My story hasn’t changed. The government will attest to that.
The government asked me some questions, and I didn’t answer them fully. I was hiding–hiding behind my age and inexperience, hiding behind my sense of fairness, and hiding behind a life I thought was in my hands . . . Sometimes it seems easier to go with the flow, don’t rock the boat, etc. I never wanted to be part of any of this. Since the very beginning, the behavior of all those involved disgusted me. I saw myself as an outsider, “just a kid”–certainly not an aspiring broker. And so, too easily, I tried to extract myself from the situation.
Yes, there was a conspiracy to obstruct justice. I never imagined–I never feared–that I was part of it. I felt betrayed, disappointed, and hurt by those involved from the start. They were not my friends, not anymore, and certainly we did not have the same interests. But in keeping quiet–in not coming forward with all I knew–I unwittingly embraced that conspiracy.
The thought of this makes my blood boil. I am angry with myself, among others. I never wanted to be part of any of this. I see now how I achieved less than that. To the government, to so many investors, to my family and friends, I am sorry. I should have come forward immediately.
If I take only one lesson from this mess, it will be this: if you’re called to bat, you must step up to the plate. Merrill Lynch, in making me witness to its crimes, placed upon my shoulders a great responsibility. I shirked my duties to a lawful, right society–something I believe in passionately–with the naive assumption that new responsibilities are like new people: that we can decide which ones to take on. This is not true of course. And I have learned that lesson with as much force as any other in my entire life.
Faneuil’s lawyers were apoplectic when they read it. “What the hell do you think you’re doing? You can’t say this!” Pickholz insisted. The whole point was to admit guilt to the misdemeanor, not deny it. “Just plead guilty.” Ultimately they wrote a statement for him, and he grudgingly agreed to read it in court.
On September 24, Faneuil signed a letter from the Department of Justice, specifying that he would plead guilty to one count of “receipt of money and other valuable things in consideration for not informing law enforcement authorities of criminal conduct.” The letter continued, “It is understood that, should Douglas Faneuil commit any further crimes or should it be determined that he has given false, incomplete or misleading testimony or information, or should he otherwise violate any provision of this agreement, Douglas Faneuil shall thereafter be subject to prosecution for any federal criminal violation of which this office has knowledge, including perjury and obstruction of justice.”
Faneuil’s life as a government witness was about to begin.
O
n October 2, Faneuil met his lawyers at Pickholz’s office and they got into a Lincoln Town Car. Faneuil was nervous. His lawyers told him something about what to expect, but he was distracted and didn’t remember much of what they said. They stressed that he had only two objectives: to plead guilty and to read the statement they’d written for him. He was not to say anything else.
The car stopped near some FBI offices in a building a few blocks away from the federal courthouse. As they approached the entrance, a CNBC reporter and cameraman intercepted them, thrusting the camera into Faneuil’s face. Faneuil said nothing and they kept moving, with the cameraman walking backward. Pickholz reached out to stop him from running into a pole. “The U.S. Attorney must have tipped him,” Powers surmised, once they were inside. “It’s not unlike them. But it could have been worse. There was only one.”
Catherine Farmer met them in the lobby, accompanied by two more agents. Faneuil’s lawyers said they’d meet him in the courtroom, and the agents took him to a garage in the basement, where a black SUV was waiting. As they were about to get in, Farmer said, “You know, there are certain rules we have to follow, and this is one of them. Please don’t take this personally.” One of the other agents took out a pair of handcuffs. Faneuil raised his arms and they snapped them onto his wrists. They were much heavier than he expected.