Perhaps Libby’s perjury was yet another instance of loyalty trumping honesty. When Patrick Fitzgerald suggested that there was a “cloud over the White House,” he was clearly referring to Vice President Cheney. In Libby’s telling, the campaign to retaliate against Wilson and “out” his wife as a CIA agent was set in motion by other reporters, not his boss. Yet Cheney’s notes on the Wilson op-ed piece, Libby’s admission that he first learned Valerie Wilson’s identity from the vice president, and Libby’s admission that it was “possible” the vice president had suggested on Air Force Two that he call reporters point to the possibility that Cheney initiated the campaign, and that Libby was covering for him. If so, it’s no wonder that Cheney argued so forcefully for a presidential pardon–and saw Bush’s failure to do so as leaving a “soldier on the battlefield.”
Barry Bonds would have been a justly celebrated athlete without using steroids; as he himself asserted, no drug has been invented for hand-eye coordination. But he would never have been the greatest baseball player ever; he probably would never have overtaken Sammy Sosa and Mark McGwire (McGwire has admitted using steroids and Sosa reportedly tested positive, although he denied using them), and he would never have dethroned Hank Aaron as the all-time home run king. Bonds seems to have been afflicted both by privilege–born into baseball royalty, as he put it–and a sense of racial inferiority. The rules, such as they were, didn’t apply to him, whether it was his parking space in college or fidelity in marriage. Nor, evidently, did they apply before the grand jury, where Bonds was at no risk of prosecution as long as he told the truth. Apart from living with his own conscience, which gives no sign of troubling him, Bonds–alone among the major characters in this book–has escaped any serious consequences.
How could it be that with the combined investigative resources of the FBI, the IRS, and the Justice Department, it took the government four years to obtain an indictment of Bonds? Or that even by 2011–eight years after the raid on BALCO’s headquarters–Bonds had still not come to trial?
Bonds and the other BALCO cases are a vivid illustration of the threat that perjury and false statements pose to the judicial system: they essentially paralyze it and render it dysfunctional.
From the beginning, the BALCO investigation was marked by false statements and perjury on a massive scale. Critical witnesses lied, dissembled, or refused to answer. Greg Anderson’s false statements and subsequent refusal to testify posed enormous obstacles for the investigators. If Anderson were to testify fully and honestly, he would essentially be the only witness needed at Bonds’s trial. He could go a long way toward exonerating him, or he could all but prove his guilt.
No wonder, then, that prosecutors have diverted enormous amounts of time and resources toward securing Anderson’s testimony, including pursuing contempt charges and Anderson’s imprisonment, all unavailing. Further proceedings–and more years of litigation–loom should Anderson continue to defy subpoenas. Meanwhile, prosecutors have opted to go forward against Bonds without Anderson, even with a much weaker case.
Even with grants of immunity protecting them from liability for anything except perjury, other critical witnesses lied. Marion Jones pleaded guilty to two lies in the BALCO case, but she told many more. Prosecutors had to turn from the original targets of the investigation–suppliers like Conte and Anderson–to a perjury investigation. Even then, Jones would probably still be under investigation and continuing her denials if she hadn’t gotten involved in a brazen and amateurish check fraud scheme–and then lied about that too.
How many others lied at some point in the investigation? Trevor Graham lied flagrantly and put the government through a costly and time-consuming trial. Nearly all the track athletes interviewed in the Graham case initially lied. In stark contrast to Douglas Faneuil, who had to plead guilty to a crime once he recanted his testimony about Martha Stewart, none of them were charged. Nor has Angel Heredia faced any sanctions for either his lies or his brazen steroid dealing. The government even helped him with his immigration status.
Alone among people in this book who lied, Faneuil demonstrated character, integrity, and courage by coming forward with the truth for no other reason than that his conscience demanded it. He was yelled at, castigated, handcuffed, and forced to plead guilty, albeit to a misdemeanor. His life was shattered. Given Faneuil’s experience, why would anyone in a similar position come forward? When lying is prosecuted only selectively–when a Faneuil is punished and Heredia and other athletes lie with impunity–injustice results. The system is corrupted.
And then there is Bernard Madoff. His motive for lying is uniquely self-evident: his entire career was a lie. Giving credence to Adolf Hitler’s admonition in
Mein Kampf
that people “more readily fall victim to the big lie than the small lie,” the SEC officials who examined him simply couldn’t believe it was all a giant Ponzi scheme. Like all creators of Ponzi schemes, Madoff claimed he was soon going to recoup his losses and return to the straight and narrow. He claimed he wished he’d done so when the losses were only a few hundred million dollars.
This doesn’t ring true. To the extent his lies took on lives of their own, Madoff seemed to revel in them. He created a vast illusion of a successful investment firm with a potent top-secret trading formula. He flaunted the trappings of wealth and luxury. He cultivated the admiration and envy of his peers. He lied repeatedly and flagrantly every time he was questioned by the SEC, committing a felony each time. His oath to tell the truth meant nothing.
But what may be most disturbing is that Madoff’s fraud–and the countless lies that supported it–continued unstopped for twenty years, ensnaring thousands of additional unwitting victims as it metastasized like a virulent cancer. Madoff was not an especially good liar. The SEC officials Ostrow, Lamore, and Suh knew he was lying. Their superiors Meaghan Cheung and John Nee knew or should have known, given the evidence, and they should have pressed the issue with officials higher up. The consequences of their failure to pursue perjury charges were staggering. At the time of his sworn testimony in 2006, Madoff purported to have approximately $20 billion under management. By the time his scheme collapsed, he had $65 billion. Failing to pursue his lies cost innocent victims another $45 billion.
The SEC lawyers brushed Madoff’s perjury aside and seemed worn down by the prospect of proving a case. Perhaps they’d been lied to so often they’d become inured and jaded. Nee and Cheung seemed primarily interested in wrapping up the investigation and moving on, not in uncovering any wrongdoing. Considering that their primary mission is to protect the public and uncover fraud, they showed a striking lack of enthusiasm when confronted–not just once, but repeatedly–with evidence of wrongdoing on an unprecedented scale. On the contrary, they seemed eager to vindicate their own preconceptions and disprove the complaints. They just didn’t seem to care that Madoff lied. Indifference is the enemy of virtue.
I asked David Kotz, the SEC’s inspector general, if the SEC had
ever
referred a perjury or false statement case to the Justice Department for further investigation unrelated to an underlying securities fraud, and he said he could think of none. “Normally the SEC doesn’t investigate false statements,” Kotz said, “but false statements are serious issues and they should be referred and prosecuted.” Of course, referring a perjury case doesn’t mean there is no underlying crime, as Madoff vividly illustrates. But the SEC seems to have ignored the fact that perjury and false statements are crimes in and of themselves, often with tragic consequences.
There is no way to know how many other instances of perjury have gone unprosecuted, but anecdotal evidence suggests the number is legion. Madoff may be an extreme example, but is hardly an isolated case. The failure to prosecute perjury, and the resulting widespread perception that there is little risk in committing it, has only exacerbated the problem and bred widespread contempt for the law.
Ultimately, the reason why people at the pinnacle of their careers–respected, acclaimed role models like Martha Stewart, Scooter Libby, Barry Bonds, and Bernard Madoff–committed the crimes of perjury and false statements seems only too obvious: they thought they could get away with it. As long as perjury goes uninvestigated, unprosecuted, and unpunished, the problem will get worse. In Bill Clinton, America had a president who committed perjury, and in his successor George W. Bush one who condoned it by commuting Libby’s sentence. What message does this send, both to Americans and to the rest of the world? The Obama administration–any administration, Democratic or Republican–needs to reaffirm the rule of law, the importance of truth, and embark on a sustained, visible, and public campaign to hold accountable those who commit perjury and false statements.
We appear to be on the brink of becoming a society where perjury is the norm. One assistant U.S. attorney told me, “I came to work every day expecting to be lied to. The only question was how good they’d be at it.” As these stories make clear, perjury has infected virtually every aspect of American life. We lionize those who win, and turn a blind eye to cheating. We demand perfection and withhold forgiveness. We promote self-interest at the expense of others. The consequences are devastating.
Lying under oath that goes unproven and unpunished breeds a cynicism that undermines the foundations of any society that aspires to fair play and the rule of law. It undermines civilization itself.
ACKNOWLEDGMENTS
I am grateful to everyone who helped make this book possible in ways both large and seemingly small, starting with numerous sources who gave generously of their time and trusted me with what were in many cases sensitive personal disclosures.
Ann Godoff, my editor at Penguin Press, was a wonderful sounding board and provided just the right amounts of encouragement, patience, understanding, and good judgment while steering this manuscript to publication. Thanks also to her assistant, Lindsay Whalen; associate publisher, Tracy Locke; assistant director, publicity, Yamil Anglada; senior vice president for legal affairs, Alex Gigante; outside counsel, Gary Mailman; and cover designer, Evan Gaffney.
My agent, Amanda Urban, provided much needed advice, wise counsel, and encouragement from the inception of the idea for this book until the final manuscript and beyond.
Damian Fowler was my research assistant, working diligently and cheerfully far longer than I’m sure he anticipated. He contributed enormously to the book.
DowJones/
SmartMoney
magazine provided a professional home for much of my work on this book, and I’m especially grateful to editor Jonathan Dahl. My longtime assistant Julie Allen helped in countless ways on an almost daily basis.
I also appreciate the encouragement of my colleagues at Columbia University School of Journalism, especially Sylvia Nasar, Irena Stern, Bill Grueskin, Dean Nicholas Lemann, and Sam Friedman, who first drew my attention to the Barry Bonds case. I’m also grateful to my co-teachers and fellow authors from the Columbia Business School, Jonathan Knee and Bruce Greenwald.
My friends and family encouraged me and bore with me throughout this project, often providing sound advice, but even more important, offering a refuge from the sometimes stressful and solitary work of writing a book. I’ll only mention a few–Steve Swartz, Jane Berentson, Arthur Lubow–among the many who deserve recognition. Thanks also to Michael and Jane, my brother and sister, and their wonderful families. I’m especially grateful to my parents, who inculcated the values that have permeated my work as a journalist. I know my mother remembers a flagrant lie I told while in the second grade–and the “tangled web” that unfolded. Fortunately it proved an invaluable lesson at a young age.
Finally, I can never adequately repay my partner, Benjamin Weil, for sustaining me in every conceivable way through the years of this project. In the words of Troy Ellerman, I can only try to be better.
NOTES AND SOURCES
This book is based primarily on firsthand reporting consisting of hundreds of interviews and a review of thousands of pages of documents, including trial transcripts, grand jury transcripts, FBI interview notes, and other investigative materials. In each of these cases I was able to draw upon transcripts and notes of interviews in which the major characters, as well as many others, lied under oath or to a U.S. government official. That’s because many ordinarily secret transcripts of grand jury testimony, notes of FBI interviews, and other original source materials were made public in the course of judicial proceedings. I also made several successful requests pursuant to the Freedom of Information Act. I’ve identified these transcripts in the notes that follow, but not for every citation, which would be needlessly voluminous.
This book is also based on numerous interviews. Many of them were on a background or a not-for-attribution basis, and I’m grateful to those people who were extraordinarily generous with their time. Given that all of these cases are or were matters of criminal investigation, many sources were not free to speak for attribution. Where a source is quoted directly, that person spoke on the record. However, statements made to me, as the author, should be distinguished from dialogue, which is based on reporting like any other fact. Dialogue and thoughts attributed to many characters in this book often come from other sources, such as their lawyers or other confidants, or from their testimony or interviews by law enforcement officials. Readers should bear in mind that remembered dialogue often differs in its exact wording from actual transcripts or recordings, even when it is the subject of sworn testimony. To an unusual degree, many of the quoted statements do come directly from transcripts or recordings. In quoting from these materials I have generally corrected grammatical errors and deleted various verbal tics and repeated words and phrases, as I would in quoting a source. I have not used ellipses to indicate such minor deletions.