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The Power of Attorney

The most powerful man in finance talks to Worth about corruption, Wall Street and how to get ahead without getting arrested.

BY Richard Bradley | Work | Oct 1, 2014

Plenty of people would be happy never to set foot in Preet Bharara’s office, but even if you want to, it’s not easy. The headquarters of the United States attorney for the Southern District of New York is in an antiquated and rather menacing government building crammed between Chinatown and the Brooklyn Bridge. Steel barriers guard an exterior staircase, which leads to a sort of antechamber in which visitors and their possessions are X-rayed. A walkway leads you to another guarded door; you cannot pass through it without an escort.

Since becoming U.S. attorney in 2009 (see the Preet Bharara Timeline ), Preetinder Singh Bharara has made a lot of enemies. His office has successfully prosecuted wrongdoers ranging from terrorists to gang leaders to Mafia crime bosses to a purveyor of cheap wine in expensive bottles. But Bharara has attracted the most attention for his prosecutions of financial fraud cases, particularly those involving insider trading. By pressuring suspects to turn government witness and introducing the use of wiretaps into financial fraud investigations, Bharara has convicted dozens of financiers at hedge funds such as Galleon and SAC Capital—both of which are no longer in the hedge fund business.

In person, Bharara is affable, funny, self-deprecating. We met twice, and at one of our meetings I had to ask him to turn off his radio for fear that my tape recording would be filled with the lyrics of “Sweet Home Alabama.” But underneath Bharara’s casual demeanor is an intensity that, one senses, never disappears for long; he does not joke about the rule of law and the work of his office.

Some of that conviction may come from his own life story: Bharara is the son of Indian parents who came to this country when he was just 2 years old, in part because his father was frustrated with corruption in India. “My parents were strict,” Bharara told me. “Very strict.” To any number of criminals, that won’t come as a surprise.

Q: LET’S TALK ABOUT POWER. YOUR OFFICE IS WIDELY CONSIDERED THE MOST POWERFUL U.S. ATTORNEY’S OFFICE OUT OF 93 IN THE COUNTRY. WHY?

A: Power comes from a lot of sources. It comes from legal authority, from statutory authority. It also comes from respect in the community and people’s understanding of what you’re capable of. In the prosecutor’s office, some of the power to effect change and to get people to give you evidence comes from an understanding on the part of people that you’re investigating that these guys don’t mess around and aren’t afraid to go to trial. The lawyers here don’t care who you are, how much money you have, how much influence you have. If you’ve broken the law and we can prove it, then we’re going to bring the case.

I’D LIKE TO READ YOU A QUOTE FROM NEIL BAROFSKY, THE FORMER INSPECTOR GENERAL OVERSEEING THE DISTRIBUTION OF TARP FUNDS, AFTER YOUR INSIDER TRADING CONVICTION OF RAJ RAJARATNAM, THE FOUNDER OF THE GALLEON HEDGE FUND. BAROFSKY SAID THAT TRADERS ON WALL STREET NOW UNDERSTAND THE LENGTHS THAT THE PROSECUTOR’S OFFICE WILL GO TO IN ORDER TO PROSECUTE THESE CRIMES, AND THAT THE CONVICTION WOULD CHANGE THE FINANCIAL BUSINESS. WAS HE RIGHT?

Some things have changed. Before, people who were insider trading might have thought, I might pay a penalty and there might be an SEC fine and harm to my reputation—but I have plenty of money, so it’s not a big deal. After we brought some of the first arrests, we heard speculation on [wiretaps] that it may not be worth it to be separated from your family for periods of years. There’s also been institutional change. A lot of funds have employed lawyers and compliance people to figure out how to have better systems so that they can pick out the bad apples themselves.

SOME SKEPTICS HAVE ARGUED THAT INSIDER TRADING IS ACTUALLY NOT THAT IMPORTANT RELATIVE TO OTHER FINANCIAL CRIMES.

I have never said that insider trading is the crime of the century. It has not been my personal focus. It’s the focus of the press because there are a lot of wealthy people that like the reporting of it. Occasionally—very occasionally—someone will ask, “Hey, what about trying Al-Qaeda terrorists in [nonmilitary] courts?” These terrorists are the people, by the way, who want to destroy Wall Street. And yet everyone’s a lot more interested in who was sleeping with whom in the Galleon case. Go figure.

YOU HAVE ALSO RECEIVED CRITICISM FROM SOME ON THE LEFT—INCLUDING WRITER MATT TAIBBI AND WALL STREET DOCUMENTARIAN CHARLES FERGUSON—WHO SAY THAT WHILE YOU’VE CONVICTED INSIDER TRADERS, YOU’VE MISSED THE BIG GUYS WHO COMMITTED THE MORTGAGE FRAUD THAT LED TO THE FINANCIAL CRISIS. HOW DO YOU RESPOND TO THAT?

I would suggest that some of these critics should go to law school and apply themselves and become prosecutors and make the case that they think we should be making. This is by reputation and track record the most aggressive office in white-collar crime in the country ever, and if we’re not bringing a certain kind of case, it’s because the evidence is not there. Pure and simple.

LET ME REPHRASE: IS IT AS FRUSTRATING TO YOU AS IT IS TO YOUR CRITICS THAT YOU HAVEN’T BEEN ABLE TO BRING THAT KIND OF CASE?

Sometimes. Sometimes the frustration is, you have a belief that somebody has committed a crime and you just can’t get the evidence because no one has flipped or because there are no recordings or because they did a really good job of getting a law firm to give them a legal opinion that blesses [their actions], which basically takes criminal prosecution off the table. Sometimes there’s frustration because the things that have happened don’t rise to the level of criminal conduct. People are being jerks and stupid and greedy and negligent, but you can’t pin a criminal case on them.

“I have never said that insider trading is the crime of the century.”

THE DESIRE TO CONVICT TOP BANKERS SOMETIMES FEELS VISCERAL—KIND OF BLOODLUST.

Some of these critics want to behead the heads of all these financial institutions.

SO IT’S UNFAIR TO SAY THAT THE BANKERS HAVE GOTTEN AWAY WITH IT?

It’s not putting someone in jail, but there is some accountability when you’re exposing the truth of some financial institutions, and you’re going to trial against others, and you’re exacting huge financial penalties.

IN A ROLLING STONE ARTICLE, TAIBBI ARGUED THAT PROSECUTIONS AREN’T HAPPENING BECAUSE THERE’S A REVOLVING DOOR BETWEEN PROSECUTORS AND WALL STREET.

Ridiculous. It’s actually worse—it’s idiotic. Because when people are in government and they are responsible for prosecutions or for enforcing regulations, every single one of them knows that the bigger case they make, the bigger person they become and the bigger opportunities they have. That’s not a good reason to go do these things. But some people speculate that human nature being what it is, that’s how it works.

MAKING BIG CASES DIDN’T HURT THE CAREERS OF FORMER PROSECUTORS ELIOT SPITZER AND RUDY GIULIANI.

They don’t ever hurt anybody’s career! And so for people to suggest that people like me or career prosecutors in this office are holding back from bringing a case against a bank president because that would hurt their career prospects, that’s idiotic.

YOU GAVE A SPEECH AT NEW YORK UNIVERSITY IN 2013 IN WHICH YOU DECRIED “A CULTURE OF CORRUPTION” ON WALL STREET. WHAT LED YOU TO THAT CONCLUSION?

Because not every institution is corrupt, and some institutions—some hedge funds, some banks—have more scandal at them than others do. What is different about Company A, where nobody ever seems to get arrested, versus Company B, where every week you’re arresting someone? The difference is, in part, what the culture is.

WHAT WERE YOU HOPING TO ACCOMPLISH BY GOING PUBLIC WITH THAT ACCUSATION?

Every year I speak to Harvard Business School students, NYU business school students. I go to Stanford, I go to Wharton—I go to all these schools. I begin by saying, I’m not here as a sort of white-collar scared-straight program. It’s not to direct my words to the two or three of you who, statistically speaking, will likely commit securities fraud when you get older. It’s to talk to all the good people who are ethical and honest who will be in a position to do something about corruption and the culture of a place, but don’t. I talk to them about what it means to have the courage to report something if you see something bad going on—what it means to have integrity.

IS THE CULTURE OF WALL STREET CONDUCIVE TO CORRUPTION?

There’s nothing inherently corrupt about Wall Street. But common sense tells you that there are certain intersections in the world where there is more temptation than in other places. A lot of people like money. And where there’s an opportunity to make lots and lots and lots of money, and you are bringing in people who have an interest in making lots and lots and lots of money, there will exist temptations to cut corners.

YOUR BROTHER, VINNIE, HAS MADE A LOT OF MONEY…

He’s a very rich guy, yeah.

…BY COFOUNDING DIAPERS.COM, WHICH AMAZON EVENTUALLY BOUGHT FOR A REPORTED $540 MILLION. PEOPLE IN TECH, LIKE YOUR BROTHER, ARE MAKING THE KINDS OF MONEY THAT FOLKS ON WALL STREET ASPIRE TO MAKE. AND THEY’RE DOING IT BY ACTUALLY CREATING PRODUCTS AND BUILDING COMPANIES, NOT BREAKING LAWS. SHOULD WALL STREET BE LEARNING FROM SILICON VALLEY?

There’s a lot of entrepreneurial thinking in Silicon Valley that can meaningfully be applied both in government and also on Wall Street.

LET ME TRY THAT AGAIN. YOU HAVE WHAT YOU MIGHT CALL A CULTURE OF ENTREPRENEURSHIP VERSUS WHAT SOME SAY IS A CULTURE OF…

Greed?

I WAS GOING TO SAY, “NOT REALLY DOING ANYTHING.”

It’s a little bit outside of my wheelhouse to opine on the best ways for capitalists to do their thing. I do think that there are very, very smart people on Wall Street who might better serve the universe by applying their genius a little bit less to thinking of creative ways to exploit legal and tax and other enforcement loopholes to grow wealth for people who are already wealthy, and a little bit more time becoming immensely rich, as we see is possible in this country, by creating things. And by bettering the lives of others.

I’D LIKE TO ASK YOU ABOUT YOUR OWN LIFE. YOU MOVED HERE FROM INDIA WITH YOUR PARENTS WHEN YOU WERE 2 AND GREW UP IN EATONTOWN, NEW JERSEY. WHAT WAS THAT LIKE?

We had an ordinary all-American childhood except that we were one of the very few Indian families in our school. My dad was a pediatrician with an office in Asbury Park. And my mom cooked Indian food for us, but she also knew how to make spaghetti and burgers—with a little bit of spice.

YOU ONCE SAID THAT, GROWING UP IN NEW JERSEY, IF SOMEONE INSULTS YOU, YOU’VE GOT TO HIT BACK.

True.

DID YOU GET INSULTED BECAUSE YOU WERE AN INDIAN IMMIGRANT?

That happened sometimes. But I was also a nerd. I was the geeky kid with the glasses. My sense is that when kids are mean to other kids, they find whatever it is to make fun of them.

YOU WENT TO A PRIVATE SCHOOL CALLED RANNEY. WAS THAT A FUNCTION OF YOUR PARENTS’ FEELINGS ABOUT EDUCATION OR THE QUALITY OF THE LOCAL PUBLIC SCHOOLS?

First, I went to public school. My dad was a pediatrician, we did fine, but there was not a ton of money. I had a paper route—I was a hardworking kid. I think I made about $8 a week. But I had friends who went to Ranney, and by the time I was in fourth grade my dad decided he could afford it. He thought it was a better school.

WHY DID YOU DECIDE TO GO INTO LAW?

I read Inherit the Wind when I was in seventh grade and wanted to be like those guys and argue in a court of law. The only job I ever plotted to get, and every day tried to figure out how to get, was to be a prosecutor in this office. I remember going to Chinatown with my parents and seeing this building and saying, “That’s the place I want to work one day.”

AFTER COLLEGE AT HARVARD AND COLUMBIA LAW SCHOOL, YOU WORKED IN PRIVATE PRACTICE FOR SEVEN YEARS, THEN WORKED AS AN ASSISTANT U.S. ATTORNEY UNDER NOW-SEC CHAIR MARY JO WHITE, AND SUBSEQUENTLY WENT TO WASHINGTON TO WORK AS LEGAL COUNSEL FOR SENATOR CHUCK SCHUMER. WHAT DID WASHINGTON TEACH YOU ABOUT POWER?

That even when you’re in a political environment, still the best path to success—and I feel this very deeply—is, do your job. People respect you and trust you even if they don’t agree with you if you’re the guy who does his job.

WORKING WITH SCHUMER, YOU LED AN INVESTIGATION INTO THE FIRINGS OF SEVEN UNITED STATES ATTORNEYS BY THE BUSH JUSTICE DEPARTMENT, APPARENTLY TO REPLACE THEM WITH MORE POLITICALLY PLIABLE FIGURES. WAS THAT JUST DOING YOUR JOB?

It is one of my proudest accomplishments from that time. People tried to make it into a partisan thing, and I think if you ask anybody from that time period, was I partisan, was I unfair, they would all say no. Including staunch Republicans.

SO WHAT DID THAT EXPERIENCE IMPRESS UPON YOU ABOUT THE IMPORTANCE OF U.S. ATTORNEYS?

That independence is incredibly important. Because once people think that decisions are being made because of personal or political agendas, not only is justice not done, it ruins the reputation of a great institution.

IN A SPEECH YOU DELIVERED AT HARVARD LAW SCHOOL LAST SPRING, YOU SAID THAT WHEN YOU ARRIVED HERE IN 2009 YOU WERE NERVOUS, AFRAID AND FILLED WITH SELF-DOUBT. REALLY?

Did you see the pictures [of past U.S. attorneys] in the hallway when you walked in? They go back to 1900. This office was founded in 1789. The first U.S attorney for the district of New York was nominated by George Washington on a handwritten piece of paper. On the same piece of paper, he wrote the nominee for secretary of state—Thomas Jefferson. And, you know, you’re 40 when you become U.S. attorney, and you’re in awe of the institution…

IT WAS YOUR FIRST PUBLIC ROLE. WERE YOU PREPARED?

Some people are takeover artists—they like to take something over and turn it around. And other times you have the honor and the privilege of coming to an institution that’s already great. That’s a whole other kind of throw-up-in-your-mouth experience. There’s nowhere to go but down.

SO YOU’RE AT THAT POINT RELATIVELY UNKNOWN TO WALL STREET…

I would say a complete unknown.

WHAT’S THE LEARNING CURVE LIKE?

Pretty steep. But most people who take over large institutions do not have deep experience in all aspects of the institution. No U.S. president came in as an expert on the economy and also the military and also on politics—it’s not possible. You just hope that the leader has judgment and integrity and vision and some inspirational qualities. And then, because you don’t know everything, you hire the absolute best people to put around you.

“You just hope that the leader has judgement and integrity and vision and some inspirational qualities.”

WHAT DID YOU LEARN FROM THIS SUMMER’S TRIAL OF RENGAN RAJARATNAM, WHICH YOU LOST—THE FIRST LOSS YOUR OFFICE HAS SUFFERED IN 86 INSIDER TRADING CASES?

Look—it is hard to convict people. You can’t win every case. If you had told me at the beginning, you’re going to be 85 and one, I would have raised an eyebrow.

YES, BUT YOU’D RATHER BE 86 AND 0.

Of course. But we have the highest conviction rate of any office in the country. We bring cases that other people have turned down, and we still have a high conviction rate because our people are the best.

WHAT’S THE IMPACT OF LOSING THAT CASE?

Nothing. I remember watching CNBC when they were reporting a verdict in the case. It’s kind of an out of body experience to hear people talking about you and saying, “Well, if it’s a not-guilty verdict, Preet Bharara’s campaign against insider trading”—and I’ve never called it a campaign—“is in trouble, and his career is stymied and it’s the end of the road.” And I’m thinking, I don’t know what they’re talking about.

LAST SPRING, YOUR OFFICE TOOK POSSESSION OF THE FILES OF GOVERNOR CUOMO’S MORELAND COMMISSION, WHICH WAS INVESTIGATING POLITICAL CORRUPTION IN ALBANY UNTIL CUOMO ABRUPTLY SHUT IT DOWN. WHEN DID YOU DECIDE TO MAKE THAT INTERVENTION?

I don’t know if I’d call it an intervention. When the commission shut down, we took the step of meeting with the remaining commission chairs and taking all the documents.

YOU RELEASED A LETTER STATING THAT THE COMMISSION’S WORK WAS OVERLAPPING INVESTIGATIONS THAT YOUR OFFICE IS ALSO PURSUING. ARE YOU CONTINUING THE WORK OF THE COMMISSION, OR ARE YOU INVESTIGATING WHY GOVERNOR CUOMO KILLED THE COMMISSION?

I’m not going to talk about particular things that we are investigating, but we are a particularly thorough lot here. Where there’s smoke, there is often but not always fire. And our job is to go and inspect the smoke.

YOUR INVOLVEMENT PROMPTED HEADLINES LIKE “CUOMO VS. BHARARA: THE BATTLE OF NEW YORK.” IS IT NERVE-RACKING TO TAKE ON THE GOVERNOR?

Those are silly headlines. Nothing is personal. I’ve also seen headlines that say Preet versus the banks, or Preet versus Jamie Dimon. We don’t think of it that way.

BUT YOU ARE CHALLENGING THE GOVERNOR OF THE STATE OF NEW YORK. THAT’S A BIG DEAL.

We do a lot of things that are a big deal. We prosecute Al-Qaeda. We prosecute the Cosa Nostra, the Latin Kings, the Bloods and the Crips, the world’s biggest Ponzi schemer ever. We are fearless and we go wherever the facts and the law take us.

YOU ARE FEARLESS?

I’m scared of a lot of things in my personal life, like heights. But as far as the job goes, yeah.

IT’S THAT SIMPLE?

I’ll give a more expansive answer. Nobody ever asks me, Why are you fearless? It’s not that necessarily I was born with that much more courage than anyone else. A, I’m steeped in the tradition of this place. B, I learned a lot from the investigations into the firings of the U.S. attorneys and what happens if prosecutors’ offices are not independent and fearless. And C, I don’t owe anybody anything, I don’t want anything. And if you don’t owe anybody anything, and you don’t want anything, you have the ability to be independent. A lot of people are cowed by, are they going to get the next job or are they going to be supported for elective office or are people going to write bad things about them? I really don’t care about any of those things.

YOU’RE NOT SETTING YOURSELF UP FOR YOUR NEXT JOB?

The job I have right now is so beyond what I ever thought would happen to me when I became assistant U.S. attorney that I really don’t care. I really don’t. I let the chips fall where they may.

“If you don’t owe anybody, and you don’t want anything, you have the ability to be independent.”

YOU HAVE SAID PREVIOUSLY THAT POLITICS HAS NO INTEREST FOR YOU. WHY NOT?

It’s just not my cup of tea.

LET ME TRY THAT AGAIN. WHAT IS IT ABOUT POLITICS THAT YOU DON’T LIKE?

The reason I like this job so much is that by definition it is nonpolitical. You’re making your decisions based on the law and the facts. My job has a much lower quantum of BS than a politician’s job, and I’m not sure how well I would do in having to deal with the daily BS.

IT’S BEEN REPORTED THAT YOU’D LIKE TO EARN MORE THAN THE $140,000 SALARY THE GOVERNMENT PAYS YOU. IS MONEY A CONCERN FOR YOU?

I’m OK for now. But eventually…I have a family and I want to make sure I provide very well for them. I would like my kids to have the opportunity to do whatever they want and choose jobs that make a difference in people’s lives and not have to worry about how they fatten their paycheck. And that requires a bit more savings than I have at the moment.

IS IT IRRITATING TO HAVE A BROTHER WHO’S IMMENSELY RICH?

No! It’s great. He’s one of the only people in the world that I can ethically and legally mooch off.

WE’VE TALKED A LOT ABOUT WALL STREET. WHAT CASES DON’T GET ENOUGH ATTENTION FROM THE PRESS?

Everything else. The gang work—we are every day making people’s lives better in communities like Newburgh, and in Yonkers and areas of the Bronx. Shootings have gone down, people can be less fearful in their housing project, their kids can play outside. And that’s incredibly important. The Wall Street stuff is important, but nobody ever died in an insider trading case.

YOU RECENTLY RELEASED A REPORT DETAILING THE ABUSE OF JUVENILE INMATES BY GUARDS AT RIKERS ISLAND PRISON. HOW DID THAT COME ABOUT?

People associate this office with holding bad guys accountable and sending them to prison for long periods of time, and that is part of our job. But another part of our job—and in some ways more important—when you have abuse is to make sure that the people in law enforcement who are responsible are also held accountable.

YOUR OFFICE HAS ALSO PROSECUTED TERRORISM CASES AGAINST, FOR EXAMPLE, OSAMA BIN LADEN’S SON-IN-LAW. HOW ARE WE DOING AT COMBATING TERROR?

I’ll leave that to the people who see all the intelligence reports and the threat reports. But what we can be happy about is that the government of the American people has done a pretty good job of holding accountable and incapacitating large numbers of terrorists. And one of the leaders in that is this office.

AND HOW ARE WE DOING AT BALANCING THE PROTECTION OF CIVIL LIBERTIES AND THE FIGHT AGAINST TERRORISM?

The successes you’re talking about have come at the cost of some personal freedom in this country.
Be careful not to conflate law enforcement bodies with others—military, intelligence gathering or otherwise. Every case that we bring has to be done in accordance with all the laws and of course the Constitution. And when we bring cases to trial, they are very open and robust and adversarial processes in which abuses are not tolerated.

WHAT ARE YOUR THOUGHTS ON EDWARD SNOWDEN?

I’m not going to comment, because I don’t know the facts of the case, just what I read in the newspapers. There are those who are inclined to be upset at government and think that government intrudes too much. I’ll let others judge whether or not there have been excesses in the current time period.

WHY OTHERS? YOU’RE AN IMPORTANT GUY, YOU HAVE A LOT OF POWER…

But I’m not a policy-making guy.

BUT YOU HAVE EXTENDED THE USE OF SOME SURVEILLANCE TECHNIQUES, SUCH AS WIRETAPPING, IN YOUR OWN FINANCIAL FRAUD CASES — YOU’VE CLEARLY THOUGHT ABOUT THESE ISSUES. IF YOU CAN’T TALK ABOUT THEM, WHO CAN?

There are plenty of people in Washington talking about them.

ISN’T YOUR PERSPECTIVE RELEVANT?

They speak for the country on these issues. What worries me is when—on both sides—people don’t appreciate that those who are making difficult decisions about what techniques should be used and what intelligence gathering methods should be used, that that is being done for the most part in good faith and for the noblest of reasons—to protect people. They are trying to prevent planes from being flown into buildings that topple and kill thousands of people.

OK. LET ME COME BACK TO SOME BIOGRAPHICAL QUESTIONS. IN 2011 THE TIMES RAN A PROFILE ABOUT YOU AND YOUR BROTHER AND YOUR PROFESSIONAL ACCOMPLISHMENTS. THE HEADLINE WAS “ELITE BROTHERS.” MANY OF THE READER COMMENTS ONLINE APPEARED TO BE FROM INDIAN AMERICANS WHO CLEARLY SAW YOU FIRST AND FOREMOST AS AN IMMIGRANT SUCCESS STORY. IS THAT HOW YOU SEE YOURSELF?

In five years in this office, I’ve had the opportunity to speak at various places. But the best thing was, I presided at a naturalization ceremony at Federal Hall [in Manhattan]. I wanted to do this because I’m a naturalized citizen. There were 75 new Americans from 31 different countries. And I said to those 75 people, I bet you cannot identify any other country where this is happening right now, where 75 people from 31 different countries are becoming citizens. You know why? Because there is no such country.

HAS THE FACT THAT YOU ARE AN IMMIGRANT WHO HAS SUCCEEDED BY DINT OF HARD WORK SHAPED YOUR ATTITUDE TOWARDS PEOPLE WHO DON’T PLAY BY THE RULES?

I don’t feel like I’m harsher on people because of my own experience. And by the way—I had a comfortable childhood. My father had a tough childhood. But it sticks in the craw when people who have so much privilege and every opportunity given them in life feel the need to cheat other people out of money to line their own pockets when they already have more than most people in the world have. It’s not just that I’m an immigrant—it’s not unusual for that to stick in people’s craw.

ONE LAST QUESTION. WE TALKED EARLIER ABOUT THE PHOTOS ON THE WALL, THE INFLUENCE OF YOUR PREDECESSORS — HOW DO YOU WANT TO HAVE SHAPED THIS OFFICE WHEN YOU DO LEAVE?

That’s an easy one. I would like people to think that I left the office in a better position than when I inherited it. Because it’s really a treasure. If it can be said that I maintained the level of integrity and excellence and innovativeness during my tenure that other people have, then I think that’s a home-run success.

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