The Hilltop (51 page)

“You know where I saw wooden balls?” Roni paid no attention to the drunken jabbering, and Jonathan answered his own question. “At Googleplex. They have this amazing old-school table.”

Roni, bent over the green table, raised his eyes. “What were you doing at Google?” he asked, his curiosity drawing him momentarily out of the fog of the Guinness.

“Oops, I didn't say a thing.” Jonathan Bronco giggled and mimed zipping his mouth shut. “My turn now?”

That same night, despite his inebriation, Roni canvassed the Web and reviewed the data, and he came to an unequivocal conclusion: Google was set to purchase Bronco's location services company. The following day he traded and invested accordingly. He spoke with the manager of his portfolio, Dale Savage, and received a onetime approval to exceed
his trading budget. Announcement of the acquisition came the following week. To the Goldstein-Lieberman-Weiss clients, and to his Israeli friends, it was worth a lot of money.

Over the next year Roni received a few more tips from Bronco and from others, some inadvertent and alcohol-based at Ulysses, some with greater intent. The gamble he took on Google's negative fourth-quarter earnings report was based on a mixture of sharp wits, luck, and the balls of a bull. Bronco dropped something he had heard, Roni crossed it with reports he read and with a conversation he'd had with a classmate who worked at an investment bank in California. This time he didn't request approval, and traded in sums that exceeded his ceiling. The bank and its clients earned $8.5 million from the short-position gamble on a drop in price that he took on the Google stock.

One evening in January, Eliot Lieberman called him in for a talk. When he walked into the office, Dale Savage was there, too. Roni could feel his heart in his throat. Employees had been told that an announcement on the bonuses for the previous year was expected only in February, so he figured he'd been summoned on some other matter. They both appeared stern-faced. He was sure they were onto him, that they'd reviewed his portfolio and realized that he wouldn't have achieved the successes he had achieved without inside information and without deviating from his trading budget. That the supervisory mechanisms entrusted with ensuring fair trading had picked up on his activities.

“Sit,” Dale said, and ran a hand through his straight blond hair. Roni sat, ill at ease.

“You've caught our attention, Roni,” Dale continued. Roni noticed out of the corner of his eye that Lieberman was nodding. “You had a nice year. Several impressive deals that earned us a decent sum.”

“And more importantly,” Lieberman said, “you've shown you know how to manage risks; you don't panic when the market goes crazy.”

Here it comes, Roni thought, and lowered his head slightly, almost ready to raise his hands to defend himself.

“Your bonus for two thousand six is two hundred and seventy-five thousand dollars. Just so you're aware: it's one of the biggest bonuses
we've given to traders in their first year with the company. You deserve it.” Roni waited for the “but” that was about to come, but it didn't come. “We've decided to increase your investment budget,” Dale Savage went on, “and to give you more freedom to be aggressive, in order for you to present us with an even better number next year. So go out there and own that desk, big man, pull the strings you pulled this year, work your fine network, go out and grab them by the balls!” By the time he got to the last sentence, Dale was shouting, and when he was done, he stood and began clapping. Lieberman joined in, although he remained seated. Roni didn't know what to do, so he smiled and looked from one executive to the other.

He continued to shine in 2007. Jonathan Bronco showed up at the Hummus Forum less and less, and Roni's efforts to contact him were met with a somewhat chilly reception, but other opportunities arose. One, to Roni's surprise, came via Meir Foriner. Foriner—the guy from Savyon he had studied with, and who had turned Roni off with his rich-boy blue-eyed arrogance and his groveling at the feet of the Americans. Foriner, like Tal Paritzky, Roni's friend from Kfar Shmaryahu, was a regular at the Hummus Forum. As time went by, Roni got the feeling they wanted to cozy up to him, which wasn't surprising—his success at Goldstein-Lieberman-Weiss and in managing the investment portfolios of a number of the forum members wasn't a secret.

“One more drink at Ulysses before calling it a night?” Foriner asked one evening.

“Sure, why not?” Roni replied. They went to the Irish pub; Roni drank a Guinness, and Foriner a Ballantine's on the rocks.

Meir Foriner worked at a credit-rating agency on the West Coast. Roni was aware of the importance of such companies, which determine the risk levels or viability of an acquisition or investment in companies or countries. Most important, Roni knew, was that the rating agency people were in the picture during the lead-up to acquisitions and mergers, and knew which way the wind was blowing long before the public at large.

What started out that evening as a veiled and alcohol-driven tip turned into a measured and consistent stream of valuable information. Foriner
dropped blunt hints ahead of large acquisitions, taking care always to do so in person, in Hebrew and in code, unmediated by electronic communication, because all the phone calls, e-mails, and chats between traders and clients and brokers were recorded. Roni knew that after several such gifts thrown his way by Foriner, he'd come calling for payback: Foriner asked Roni to open a fictitious account for him, and in that account Roni managed investments to the tune of millions of dollars that came via a convoluted and complex transaction from a Swiss bank account.

Foriner worked cautiously, maintaining a low profile for months until opportunity arose. One time he showed up at the Hummus Forum and with a whisper in Roni's ear arranged a meeting that Saturday, at a barbecue restaurant in Williamsburg. The small piece of information he gave Roni at Fette Sau's bar—the acquisition of an international hotel chain by a Texas-based holding company, a deal to be announced within days—had huge financial implications. Roni had to act with caution to ensure that he didn't attract attention or leave behind any traces. But to realize the potential of the deal, he again broke through his investment budget ceiling by forging Dale Savage's signature. The tightrope he was walking this time was thinner than ever.

He chalked up another success. Another rung on the ladder. And after that success, smoke still rising from the skid marks it left on the trading room floor, he gazed upward and searched for the next rung on the ladder. He increased the sums, upped the risks. (Once he took a $300 million position instead of $30 million. If someone asked: The extra zero sneaked in by accident. He wasn't asked.) Dale Savage and Jujhar Rawan-deep allowed him to continue, and even encouraged and fired him up and at a certain point demanded success from him and entrusted him with investment budgets in the hundreds of millions—he no longer had to add zeros at his own discretion. He knew that they were playing the game alongside him. Other brokers bought him drinks on their companies' expense accounts, and so did his own coworkers, and of course his Israeli clients, whose numbers grew, and who increased the sums they invested. Of that he was particularly proud, the trust they placed in him, his standing in the Hummus Forum, among the wielders of power and
influence—a fleeting recollection of the wooden deck in Basel Street flashed through his mind for an instant. He ended the year with a bonus of close to $600,000. He paid back his school loans well before the four years he had allotted to himself were up, and moved into the penthouse in his building—a few more rungs on the ladder. He felt invincible.

T
he bad omens, which had been evident in the market for quite some time, began making their mark. Two hedge funds folded. People lost jobs. Rumors were rampant about an approaching real-estate crisis and liquidity problems at banks and investment firms. All this served only to ramp up the pressure to succeed and the demand to bring in more profits. Falling markets and losses also had the potential to yield significant profits if you played your cards right.

Idan Lowenhof approached Roni at one of the Hummus Forum gatherings. The two had drifted apart of late—both were too busy for socializing and rarely went to the forum. That evening, when Idan asked how he was doing, Roni felt a little uneasy. He was indebted to him—Idan had introduced him to this world, encouraged him, helped him with the application forms and admission interviews. Moreover, Idan symbolized for Roni the right kind of success story. He was infinitely likable and a straight shooter. Roni was certain that every single dollar of the millions Idan must have already earned was squeaky clean. Idan and Roni weren't cut from the same cloth. Idan got to Wall Street and felt at home. He adopted the American accent, embedded himself in the culture, went with the locals to baseball games, mastered the rules. Roni refused. Way back when he was still a student and talking to the companies' recruitment people about Doron Sheffer and Nadav Henefeld, he felt that his way in would be on his terms, not theirs.

They were both smart enough to understand the divide between them. Roni noticed at the time that Idan wasn't in any hurry to help him get into Goldman Sachs. Idan didn't recruit Roni into his company, but
tried to look out for him, to warn him not to stray off course. In all likelihood, Lowenhof had heard of Roni's success. And from his knowledge of Pilpeli and Goldstein-Lieberman-Weiss, he must have figured out things weren't entirely kosher. So, after inquiring into his well-being, Idan said, “Let's go get a drink.” Roni couldn't get out of it.

“Listen, Roni,” Idan began, as if he had prepared a speech. “I've thought highly of you ever since I showed up at your bar in Tel Aviv. I saw what you did there and recognized the potential. I knew you'd be successful here, too.”

“What's this, a pep talk?” Roni tried to joke, but he knew where it was going, and knew he had no choice but to sit and listen. He scratched at the label of the Mexican beer.

“I feel responsible for you, in a way . . . ,” Idan said.

“You're not. I'm a grown man. I'm responsible for the things I do.”

Idan ignored the remark. “I know the temptation is huge. The connections and information. That you see all these insane sums of money and you know you can simply reach out and grab them.”

Roni looked at him. “What do you want, Idan?”

“I know you're not a criminal,” Idan continued, gazing into Roni's eyes. “I know those people. They aren't people who were raised badly, who have no choice but to be criminals. It's merely greed. There are two principal behavioral patterns that make people operate within the law, a sense of right and wrong, or the fear of being caught, going to jail, losing a lot of money. I'm telling you this because it's easy to forget this stuff in this line of work, and because I care about you. I've seen people trip up. It's not pleasant. I don't know what you've done or haven't done. But I'm not stupid. Whatever you've done, you did well. But stop here. And be careful. I know you trade for many Israelis, and some aren't exactly the nicest people. If they fall on the ground because of you, you'll be in trouble.”

By this time in his career, Roni was trading almost exclusively in options. With the options, he bought or sold the right to purchase a share at a designated price by a predetermined date. The options were cheap—hundreds of thousands of dollars—but the opportunities and the risks inherent in option trades are exponentially greater than trading
in the share itself. A slight fluctuation in the value of the share could have a significant impact on the value of an option. A deal that costs ten thousand dollars can yield a profit of hundreds of thousands but can also run into a huge loss. An option is a gamble that's been raised to the power of itself: Juj once said to Roni that if trading on the stock market is roulette, trading in options is Russian roulette.

To counter such risks, the investment bank had several safeguards. One was the requirement that they maintain a special account, a margin account, with sufficient money to cover the risks. A debt could swell to terrifying proportions and have to be paid immediately, so the bank didn't permit going into the red. A second safeguard was the company's risk-management department, whose job it was to control and oversee transactions to prevent mishaps—to stop a trader from buying a large amount of options of the same kind without spreading the risks. Roni made an effort to get to know the department's personnel at Goldstein-Lieberman-Weiss.

He continued to make moves and yield profits. His network of ties at that stage was extensive enough to snare interesting snippets of information and translate them into cash almost every week. It was safe, because his informers were also invested in the fund. Everyone shared the same interests. But there were scary moments. There were fluctuations that momentarily carried him to the edge of debt. At those moments, Idan Lowenhof's words flashed through his mind. As the market turned more and more insane, people were being fired en masse, and the pressure he was under to turn a profit became overwhelming.

The story with the options of RIM, the company that manufactured BlackBerry devices, began at the Sunday pickup basketball game with some Israelis on the Upper West Side. He still went there whenever possible, to stay in shape and sweat a little, and also because he liked most of the guys.

A chance remark by one of them at the end of the game initiated the ballistic path that would end in Roni's crash: “Fuck this motherfucking iPhone, what a piece of shit.”

“Is it new? You don't like it?” Roni asked as he browsed through the e-mails on his BlackBerry.

“Yeah, I got it a week ago. The Internet connection is a joke, never works. And look at this.” He held out the device to Roni and turned it over. Pink stains had appeared on the smooth white plastic backing. Roni took hold of the device and frowned. “What's this, is it blushing?” He smiled.