Tangled Webs (64 page)
Authors: James B. Stewart
Tags: #History, #United States, #General, #Law, #Ethics & Professional Responsibility
At Graham’s sentencing hearing on October 21, 2008, Judge Illston conceded that the government had introduced “compelling evidence” that he had distributed illegal steroids and then lied about it. But she said she saw no reason why Graham should suffer a stiffer penalty than Conte, whom she described as the “mastermind” of the BALCO conspiracy, and who had only gotten a prison sentence of four months. She may also have been swayed by his probation report, which stressed his childhood poverty in Jamaica and glowing tributes to his character, personal qualities, and devotion to his family. She sentenced him to one year of home detention to be followed by five years of probation and a $5,000 fine.
At the time of his sentencing, his lawyers said Graham was driving a bus for special-needs children in North Carolina. Nike terminated his endorsement deal. The USADA imposed a lifetime ban on his participation in any track-and-field event, the first time it had ever imposed such a ban on a coach. In May 2010 Graham sued the USADA in North Carolina for $30 million, saying the agency had “slandered my name for all the world to see.” Graham denied ever supplying any athlete with illegal performance-enhancing drugs. The USADA said the suit was meritless.
Marion Jones was released from prison in September 2008. As part of her community service, she gave lectures to high school students, recounting her rise and fall and the perils of lying under oath. Still, she continues to deny injecting any performance-enhancing drugs, sticking to the story she told at her sentencing. While still on probation, she went on
Oprah
and reiterated that “I thought I was taking a supplement. . . . Never knowingly did I take performance-enhancing drugs.” When
New York Times Magazine
contributing writer Maggie Jones asked her in 2010 how she could square that claim with statements by Hunter, Montgomery, and Conte that they witnessed injections, she replied, “I don’t know why they made the decision to say or do certain things–what I say is true. And people can believe it or not.”
Oprah
and reiterated that “I thought I was taking a supplement. . . . Never knowingly did I take performance-enhancing drugs.” When
New York Times Magazine
contributing writer Maggie Jones asked her in 2010 how she could square that claim with statements by Hunter, Montgomery, and Conte that they witnessed injections, she replied, “I don’t know why they made the decision to say or do certain things–what I say is true. And people can believe it or not.”
Though banned from track and field, Jones had played basketball in college, and she returned to professional sports in 2010, joining the WNBA’s Tulsa Shock. In October she published a book,
On the Right Track
, and embarked on a national publicity tour. Publisher Simon & Schuster described the book as “the candidly told story of how Marion came to grips with her lies and the consequences of her actions, and how she found meaning in all of it.”
On the Right Track
, and embarked on a national publicity tour. Publisher Simon & Schuster described the book as “the candidly told story of how Marion came to grips with her lies and the consequences of her actions, and how she found meaning in all of it.”
While still awaiting sentencing in the check-fraud scheme, Tim Montgomery was arrested in Virginia Beach for possessing and selling heroin. As Montgomery later told ESPN reporter Mike Fish, “I had been around bad people the whole time. When this all happened, I had to turn to them because I was trying to get some money. . . . I made money, yeah. That’s just part of the game on the street. That’s part of the business. A lot of money is made in drugs. . . . The simplest way to raise the money that came to mind was to sell drugs.”
Montgomery pleaded guilty and was sentenced to five years in prison. “What we find here is someone who has wrecked his life,” a prosecutor told the judge. Montgomery entered the federal prison camp in Montgomery, Alabama, in 2008. He told ESPN reporter Fish that he’s had no contact with his son and that a letter he sent Jones went unanswered. As for Jones’s ongoing claims she never knowingly used performance-enhancing drugs, he said, “She is a great actor. She doesn’t believe in reality. She thinks she can say something and make it stick. And like most athletes, the first thing we say is ‘I’m not guilty.’ ”
Despite her appearance with Geraldo Rivera, Kimberly Bell failed to find a publisher for
Bonds Girl.
In November 2007, Bell told her story again and posed for six pages of photos in
Playboy
. “A lot of people have said a lot of rotten things about me,” she said. “It comes to a point where you have to defend yourself,” she told the
New York Daily News
. The photos are “tasteful. They are not sleazy in any way at
Playboy
. Why not do the pictures? I’m thirty-seven years old and they made me feel beautiful.” She said she hopes to go back to school, get an education degree, and teach middle school.
Bonds Girl.
In November 2007, Bell told her story again and posed for six pages of photos in
Playboy
. “A lot of people have said a lot of rotten things about me,” she said. “It comes to a point where you have to defend yourself,” she told the
New York Daily News
. The photos are “tasteful. They are not sleazy in any way at
Playboy
. Why not do the pictures? I’m thirty-seven years old and they made me feel beautiful.” She said she hopes to go back to school, get an education degree, and teach middle school.
Bell is identified as a witness in the Bonds trial who will testify that Bonds “told her that he was taking steroids prior to the 2000 Major League Baseball season,” will identify “changes in the defendant’s body” after 2000, and will describe occasions when Bonds and Anderson were together.
After the 2007 season, Barry Bonds and his family lived in the gilded seclusion of their Beverly Park mansion high above Los Angeles. In February 2010, his wife, Liz, filed for divorce, citing irreconcilable differences. She said the marriage had ended in January and they were no longer living together. She asked for custody of their daughter and said their assets would be divided pursuant to a prearranged agreement.
The San Francisco Giants didn’t offer Barry Bonds a contract when his expired after the 2007 season. Nor did any other major-league team after he was indicted in November, despite reports that Bonds was willing to sign for $400,000 a year, a small fraction of the $17 million he was earning under his previous contract. He didn’t play in any of the ensuing years. In his mid-forties and out of practice, it seemed his controversial but still celebrated career as a professional baseball player was over.
In February 2009, Judge Illston ruled that substantial parts of the government’s case against Bonds–the positive drug tests and the alleged doping calendars seized at Anderson’s house–could not be admitted unless Anderson testified that the samples were in fact from Bonds and that the calendars referred to Bonds. Without Anderson’s testimony, she ruled that the evidence would be inadmissible hearsay. Anderson’s lawyer reiterated that Anderson would never testify.
The ruling set back the case over a year, while the government appealed the decision to the Ninth Circuit Court of Appeals. A divided court upheld Illston’s ruling, setting the stage for Bonds’s perjury trial–sometime in 2011.
Could Bonds be innocent? Did he use no performance-enhancing drugs other than what he believed to be flaxseed oil and a pain-relieving cream, and then only after 2002, as he testified under oath?
Bonds is constitutionally entitled to a presumption of innocence in any trial, and to convict, the government must prove him guilty beyond a reasonable doubt. But these are requirements that apply to jurors. There is nothing to prevent everyone else from reaching a judgment based on the undisputed facts and common sense.
And those facts are extensive. Although the calendars and drug tests were excluded from evidence, Hoskins turned over to the government the tape he made of Anderson in the locker room, and Judge Illston ruled it admissible. (The FBI investigation of Hoskins’s handling of the Bonds memorabilia business hadn’t resulted in any charges.) So was a positive drug test of Bonds obtained by the USADA. According to the government’s witness list, Kathy Hoskins, Steve Hoskins’s sister who worked as a personal shopper for Bonds, will testify that she saw Anderson give Bonds an injection. Steve Hoskins and Bell will testify that Bonds admitted using steroids. Professional baseball players Marvin Benard, Jason Giambi, Jeremy Giambi, Armando Rios, and Benito Santiago will testify that they received illegal drugs from Anderson and were told what they were and how to use them. Doctors will describe Bonds’s physical changes and their ties to steroids.
The critical question, of course, is not whether Bonds used steroids–he admitted in his grand jury testimony that he used what appear to be the “clear” and the “cream.” It’s whether he lied when he said he used nothing before the end of the 2002 season, used no other illegal performance-enhancing drugs, and didn’t know what the “clear” and the “cream” were. For this to be true, Bonds would have to be unusual among Anderson’s clients whose files were found in his house, since others acknowledged that the calendars reflected their scheduled drug use and that Anderson explained it to them.
In this regard, Judge Karas’s statement to Marion Jones applies with equal force to Barry Bonds: “That’s a very difficult thing to believe; that a top-notch athlete, knowing the razor-thin margins separating the best from the others, would not be keenly aware and very careful about what he or she would put in his or her body and recognize the effects immediately on their performance.”
And, of course, there was Bonds’s remarkable physical transformation over the period he is alleged to have used drugs, which was on display for every fan to see.
Major League Baseball has imposed no sanctions on Bonds. He still holds the all-time home run record; Commissioner Bud Selig has said he needs “more evidence” before he would consider restoring the title to Hank Aaron. But in declining to hire an athlete at the peak of his career, when he had just set the all-time home run record, Major League Baseball effectively rendered its verdict on Bonds. And so have the fans.
The ball Bonds hit for his record-setting home run was caught in the stands by a tourist from Queens, New York, who sold it in an online auction for over $750,000. After Bonds’s indictment, the winning bidder, fashion designer Marc Ecko, set up a website for voters to decide its fate, and ten million people voted. The verdict: brand the ball with an asterisk and donate it to the Hall of Fame.
Part Four
BERNARD L. MADOFF
ELEVEN
“Keep Your Eyes on the Prize”
T
homas Thanasules paused as he sifted through a pile of e-mails he’d gotten from Renaissance Technologies, arguably the most successful hedge fund in the world. “Please keep this confidential,” one said. “I have kept this note to a restricted circulation,” read the reply.
homas Thanasules paused as he sifted through a pile of e-mails he’d gotten from Renaissance Technologies, arguably the most successful hedge fund in the world. “Please keep this confidential,” one said. “I have kept this note to a restricted circulation,” read the reply.
What was so secret? It was April 2004, and as a young compliance examiner for the Securities and Exchange Commission in New York, Thanasules was struggling to keep up with the burgeoning number of new investment vehicles known as hedge funds. Hedge funds themselves weren’t new–Long-Term Capital Management, whose near collapse in 1998 triggered a global financial crisis, was a hedge fund, and the earliest example dates to 1949. But in the wake of the
dot.com
bust and technology bubble, their popularity had exploded. The funds were generally open to a limited number of wealthy investors; could pursue a broad range of investment strategies, many of them risky; and charged both a management fee and a percentage of the gains, or incentive fee. Other than that, they had little in common. They engaged in a myriad of investment styles and approaches. They’d gotten their name because many of them took both long and short positions, thereby “hedging” against a market downturn. (More traditional mutual funds can’t short, or bet on market declines.)
dot.com
bust and technology bubble, their popularity had exploded. The funds were generally open to a limited number of wealthy investors; could pursue a broad range of investment strategies, many of them risky; and charged both a management fee and a percentage of the gains, or incentive fee. Other than that, they had little in common. They engaged in a myriad of investment styles and approaches. They’d gotten their name because many of them took both long and short positions, thereby “hedging” against a market downturn. (More traditional mutual funds can’t short, or bet on market declines.)
After the technology bubble burst in 2000, triggering a collapse in stock prices and a recession, investors poured into anything that promised to protect them from a downturn. Institutions, long accustomed to a straightforward buy-and-hold approach divided between stocks and bonds, embraced hedge funds as something that would protect their endowments, and billions in new money poured into the secretive funds. Scores of new billionaires were minted, seemingly overnight. The fees were exorbitant, but clients didn’t mind as long as their gains surpassed alternative investments and helped smooth out volatility, as many hedge funds did.
Some of the most mysterious of the funds were the so-called quantitative, or “black box,” funds, which used complex computer programs, often created by MIT-trained PhDs, to guide and execute strategies. Renaissance Technologies had soared to the top of this secretive world. RenTec, as it was known to traders, was founded in 1982 by James Simons, an MIT- and Berkeleytrained mathematician who six years earlier had won the prestigious Oswald Veblen Prize in Geometry. As chairman of the math department at the State University of New York at Stony Brook, he had built the school into one of the world’s top centers for geometry. Then in 1976 he quit abruptly, saying he was seeking new challenges, and began using sophisticated mathematical models to invest in markets. He hired theoretical physicists, philosophers, statisticians, mathematicians like himself–but no MBAs. They worked at a gated, leafy estate in Setauket, near Simons’s home on Long Island, far from the clamor of a Wall Street trading floor. They gathered for tea and wide-ranging intellectual conversation every Friday afternoon. The atmosphere was more like Harvard’s senior common rooms than the hurly-burly of a Wall Street trading floor. Simons had little or no interest in traditional fundamental investing, the kind practiced by investors like Warren Buffett. What interested him were statistical anomalies that could be exploited and used to predict even tiny market moves in virtually every asset that is traded. His was the ultimate black-box trading operation.
Renaissance had several funds; its best known, the Medallion fund, was largely restricted to Simons himself and other Renaissance employees. Medallion had racked up astounding average returns of over 30 percent per year, and
Forbes
estimated Simons’s worth in 2004 as $2.5 billion (he earned an estimated $1.5 billion in 2005 alone). The fund’s assets under management had surged to over $5 billion. Nat Simons, James’s son, ran the Meritage fund, a sister fund that was run from offices in San Francisco. Meritage was a so-called fund-of-funds, meaning that it invested its assets in a variety of other hedge funds, which added diversity and helped lower risk. Meritage, too, was largely restricted to Renaissance employees.
Forbes
estimated Simons’s worth in 2004 as $2.5 billion (he earned an estimated $1.5 billion in 2005 alone). The fund’s assets under management had surged to over $5 billion. Nat Simons, James’s son, ran the Meritage fund, a sister fund that was run from offices in San Francisco. Meritage was a so-called fund-of-funds, meaning that it invested its assets in a variety of other hedge funds, which added diversity and helped lower risk. Meritage, too, was largely restricted to Renaissance employees.
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