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To listen to American scandal one week early and add free, join Wondry Plus in the Wondri app. Download the Wondri app in your Apple or Google Play mobile app store today. It's November 19, 2010. At his home in Manhattan, Donald Longiel sits down at a table and opens up a new window in his computer's web browser. He runs a hand over his shaved head and clicks over to the website for the Wall Street Journal. Then he begins reading, catching himself up on everything happening in the world of finance. It's a world that Longiel knows well. He spent years working on Wall Street and from 2008 to 2009, he was a portfolio manager for the hedge fund, SAC Capital. It was a dream job and Longiel made himself a very wealthy man. But things took a turn last April. Longiel hadn't been performing well on the job and with his boss Stephen Cohen disappointed, eventually he was fired. These days, Longiel has been spending his time staying on top of financial news and searching for a new job. It's been a slow process, but tonight, as he scans the website for the Wall Street Journal, something catches his attention. There's an article with the headline, US Invast Insider Trading Pro. Longiel begins reading the story, which details a government crackdown on the financial industry. It appears to be a broad campaign. The Justice Department and the FBI and the SEC, several federal agencies have all begun mobilizing to stop what the article describes as rampant insider trading across America's financial markets. As he reads, Longiel is filled with a feeling of suspense. It seems like the beginning of a sea change for the financial industry. If the government is leading an organized campaign to stop insider trading, Wall Street is going to be turned upside down. But then Longiel reads a paragraph that sends him into a panic. According to the story, the federal government is specifically targeting SAC Capital. For Longiel, it's terrible news. When he worked for SAC, his trades depended on inside information. Not only that, he kept extensive records of his tips, records that could now incriminate him. Longiel rises from the table and begins pacing the room. He's trying to get his life back on track. And in just three weeks, he's supposed to get married. He can't risk any kind of criminal charges. Longiel suddenly feels like he's drowning, gasping for air. And he realizes that right now there's only one thing that can solve his problems. He has to get rid of any evidence of wrongdoing. And do it fast. Longiel hurries to the closet in the hallway. He tears through several drawers, looking for a set of external hard drives where his records are stored. As he rummages through his belongings, his fiance steps to the room. Don, what do you do? Hey, honey, I'm... Could you give me a minute? How much are back in the other room? What's going on? Why are you tearing up the closet? Longiel stops and turns to his fiance. Well, look, I'm about to be honest with you. There's a possibility I'm in trouble. Apparently the feds are cracking down on SAC. But you don't work there anymore. That's true, but I still have my old records. These drives are full of information that came from insiders. Instead of trading? Yeah. Longiel returns to the closet and continues rummaging. But, God, I don't understand. What are you doing? That's my only option. I have to destroy everything. But what if they find out? They won't find out. That's the point. But we need to work fast. No, no, what do you mean we? I'm not getting involved. If you care about me, then yeah, you're going to help me out. This isn't an issue about me caring about you. This is about you getting involved in something illegal. You can't destroy evidence. Longiel suddenly spots the hard drives. Well, here we go. Okay. Let's take care of this. Don, don't do it. Honey, listen to me. There's no other way. Longiel walks the hard drives over to a table and sets them down. Then he grabs a pair of pliers. I'm telling you, Don, don't get yourself in deeper trouble. But it's too late now. Using the pliers, Longiel begins ripping out the circuit boards, tearing them into small pieces. Longiel continues destroying the hard drives, losing track of time. And when he finally looks up at the clock, he sees it's one thirty in the morning. Longiel sits back, exhausted. And as he catches his breath, he notices his fiance standing in the corner with a tender look on her face. She says she can see he's in over his head. And she's had a change of heart. She'll help him with whatever he needs. Longiel smiles in relief. And soon he gathers the broken hard drives, and the two step out together into the cold New York night. Out in the streets, he and his fiance are looking for somewhere they can toss the evidence. When suddenly there's a roar of a diesel engine. A garbage truck passes by, and Longiel doesn't hesitate. He throws the bag full of broken hard drives into the back of the truck, and watches it as it disappears down the dark road. His eyes are blood shut, his hands are shaky. The Longiel feels like he can let down his guard. It's done. His most immediate problem is taken care of. And while he doesn't know what the future might bring, one thing is clear. Everything is about to change on Wall Street. American scandals sponsored by Sachi Art. I'm lucky. Not only is my wife beautiful, funny, and smart, she also has great taste that matches mine, which has made decorating our home together a delight. But how do we go about finding the art for our home? Well, we agree on that too. Sachi Art. They have artworks from thousands of emerging artists around the globe in all styles. So you're guaranteed to find art that fits your style, space, and budget. Their view your room feature lets you visualize the art on your walls. 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That's proven winners color choice dot com slash wundry. From Wundry, I'm Lindsey Graham and this is American Scan. In the late 2000s, government investigators began taking a closer look at hedge funds. These firms were renowned for producing outside returns on their investments with profits that seemed too good to be true. As they dug deeper, federal investigators learned that hedge funds were engaged in potentially criminal acts, including insider trading. The firms seemed to be getting access to lucrative information about companies, information that wasn't available to the public. While corruption like this appeared to be rampant throughout the industry, SAC Capital stood out among the pack. The high flying hedge fund was run by billionaire Steven Cohen, and as FBI agent BJ Kang continued his investigation, he got closer and closer to incriminating Cohen himself. This is episode three, expert networks. It's December 2010 in Boston, Massachusetts. BJ Kang leans against a park car and looks out at the campus of a day school, but to private all girls academy with brick buildings and manicured lawns, a prep school for families with money. Kang checks his watch. Soon the school day is going to be over and the students will come flooding out of the building. It'll be a frenzy of activity. Except Kang isn't here for any of the students. Kang is waiting for one of the teachers, a former Wall Street trader who could be a key asset for Kang's FBI investigation into hedge funds. And these days, Kang could use the help. He'd secured another informant, a former SAC capital employee named CB Lee, and even set Lee up on a wiretapped call to Steven Cohen. But Cohen must have somehow gotten wind that Lee was compromised. And soon he stopped answering Lee's phone calls. With few options to directly implicate Cohen, Kang had to go back to the drawing board. And that wasn't the end of his problems. Kang's investigation suffered a major setback after the Wall Street Journal ran a story detailing the FBI's work. The Bureau and other federal agencies have been trying to operate in secret. But when the story hit, they lost the upper hand. Every trader and finance now knew that the FBI might be coming for them and could take steps to cover their tracks. So Kang has been trying to quickly regain his footing. And if all goes well this afternoon, you'll have himself a new informant. A few minutes later, school lets out. And children come pouring out onto the front lawn. Kang squints looking through the crowd when he spots his man. Noah Freeman carries a leather shoulder bag and wears a corduroy jacket. He used to be a trader with SAC capital. But now he teaches economics at this private school. Kang approaches Freeman. Hi, Mr. Freeman. I'd like to talk with you if you have a moment. Hello. I'm not sure we've met. Is your child in one of my classes? No, Mr. Freeman. I don't have any children at this school. I'm with the FBI. Freeman's face goes pale. Oh, I can't talk right now. I'm sorry. I'm very busy. I've homeworked too great. Well, I do think you should put that on pause. Why don't we find somewhere to talk? I'm sorry. What is this all about? Expert networks. I have some questions I'm hoping you could answer. And you want to talk right now? Well, that would be preferable. My car is parked right here. I only need a few minutes of your time. Freeman hesitates. But finally, he nods. And together, he and Kang walk over to Kang's rental car. The two step inside. And when they're seated, Kang launches into it. Now, Mr. Freeman, in your time working as a securities trader at SAC capital, did you ever use an expert network? From what I understand, these firms operate like a matchmaker of sorts. You pay them and they connect you with people inside companies. Yeah, that's right. I used expert networks. It's common practice. Okay. And how would you describe the quality of the information you'd get? Well, there's, I guess there's a reason they're called experts. Let me ask another way. Let's say these experts offered you meaningful information that wasn't available to the public. Would you rely on that information when making a trade? Well, that kind of trading would be illegal. It would be. So let me play you something. Kang takes out his laptop and clicks over to a sound file. He turns up the volume and hits play. Hey, Winnie, it's Noah. You still free to talk about semi conductors. Kang hits stop and turns back to Freeman. What he just played was the beginning of a taped phone call in which Freeman got inside information from one of his paid experts. It's a potentially incriminating piece of evidence. Agent Kang, am I under arrest? Well, that depends. We'd listen to the tapes and you sounded like a man we might be able to trust. Oh, you're asking me to be an informant. Yeah, help us cooperate with the FBI. You'd avoid dragging your family through the mud. You'd salvage your reputation. And that matters, right? When you teach at an elite private school? Freeman looks down as he considers the options. For Kang, these are some of the most electric moments of the job. A potential source, deciding whether to flip. The investigation hangs in the balance. When Freeman looks back up, he exhales. And then he nods. He'll cooperate. Soon Freeman steps out of the car and Kang shoots off a text message to his partner. Round one was a victory. Now they have to get ready for round two and interview with Freeman that's on the record. It could be a gold mine. Giving them exactly what they need to go after Stephen Cohen. A few days later, FBI agent BJ Kang sits down at a conference table in New York City. Across from him sits Noah Freeman, the former stock trader for SAC Capital and Kang's newest informant. For Kang, this is a positive development. Freeman is following through on his promise. He's offered to speak on the record about his time at Stephen Cohen's hedge fund and he appears ready to speak candidly about the firm's culture and its dependence on insider trading. Kang knows this could be a breakthrough conversation. One the FBI and the Department of Justice badly need. So far, they haven't been able to directly implicate Stephen Cohen for insider trading. The founder of SAC Capital seems to have designed his hedge fund so that he never directly signs off on any criminal behavior. He only encourages insider trading and looks the other way when it takes place. But with Freeman's cooperation, Kang could secure proof that Cohen knowingly engaged in criminal acts and that the problem was pervasive across the hedge fund. Kang turns on a recorder. It looks up at Freeman, ready to dive in. But Freeman is flanked by a pair of attorneys and he may be hesitant at first. So Kang starts with some softball questions. He asks about Freeman's background, the name of his wife, the different analysts he collaborated with over the years. But after the initial round of questioning, Kang can feel the momentum start to shift. He knows he can't delay the hard questions much longer. So he pivots and begins asking about Freeman's own experience with insider trading. Kang is expecting pushback from Freeman and his lawyers, but he's surprised by what happens next. The former trader begins freely discussing how he relied on inside information while executing trades. He describes his sources at companies like Cisco, the technology firm, and Freeman explains that he didn't hoard the information. He and another trader, Donald Longjool, shared inside information that each of them had acquired. It was a way to help out a fellow trader at SAC Capital. Kang is shocked by the admission. Freeman and Longjool were close friends. Longjool was even the best man at Freeman's wedding. If this had been a case involving the mafia, a source like Freeman would never have ratted out his best friend. It would have been a breach of loyalty. But the more he learns, the more Kang realizes that Wall Street criminals have an entirely different code of conduct. Kang presses forward and bolden and asks more specifically about Stephen Cohen and what he expected from his traders. Again, Freeman doesn't hesitate. He explains that it all came down to a simple idea. You were expected to provide your best trading ideas to Cohen. And as Freeman understood it, that meant giving Cohen inside information. Kang feverishly jots down a series of notes. This conversation couldn't be going any better. Because whether or not Cohen explicitly asked for inside information, it's clear that he expected it. And that insider trading is a pillar of SAC Capital. Still, to build the case, Kang knows he needs more than just one man's interpretation of the events. So he asks Freeman whether other traders at SAC Capital saw things the same way. Freeman grows adamant. He says he wasn't the only one he never was. Traders at SAC know the score. Steve Cohen wanted to edge. He wanted the best information. He might not ask where the traders got it, but traders knew that if you wanted to impress Steve and if you wanted to hit your numbers, you had to play dirty. It was that simple. Kang finishes John and Downless Notes. And for what seems like the first time in weeks, he feels optimistic. He now has a former trader from SAC Capital pointing his finger at Stephen Cohen, arguing that Cohen encourages illegal trading. It's a damaging portrait of both the hedge fund and its founder. And Kang knows that while there's no smoking gun evidence here, it's enough to keep the investigation moving forward while keeping Steve Cohen in his crosshairs. It's early summer 2011. BJ Kang walks into the offices of the Securities and Exchange Commission in New York City. The SEC is the primary federal agency responsible for policing Wall Street. And as Kang steps into a meeting with several colleagues, he knows that the government now has a major case on its hands. Kang has spearheaded a wide reaching investigation, gathering evidence from former employees of SAC Capital as well as other insiders on Wall Street. And the takeaway is clear, SAC Capital appears to be engaging in widespread insider trading. At this point, Kang has no doubt that the government should go after SAC and its founder, Steve Cohen. But there is still a hitch. No one has been able to find direct evidence proving without a doubt that Cohen explicitly ordered his employees to commit crimes. And without that, Cohen could deny responsibility. So as Kang takes a seat at the table, he glances at his colleagues from across the federal government. They include prosecutors from the US Attorney's Office, representatives from the SEC. And Kang is hoping that with all of their collaboration so far, somewhere, someone has found that silver bullet, something proving that Cohen is culpable. A young SEC lawyer named Charles Riley begins the conversation. He asks Kang if he remembers something that came through one of his wiretaps, a pharmaceutical trade that seemed too good to be true. Kang nods, of course, he remembers. SAC made a huge profit a few years back, trading stock for a couple pharmaceutical companies. Apparently, a lot of employees at SAC Capital were buzzing about the trades. But there was still a lot Kang didn't know about what had happened. But SAC lawyer Riley has learned a few things. He begins laying out the chain of events. It seems that in the summer of 2008, SAC Capital sold off enormous holdings in two companies, Wyeth and Alon. Two days later, the stock prices for both companies plummeted. By selling off their shares right in the nick of time, the hedge fund protected itself from a major loss. Kang nods, so far it does smell like something rotten. The SAC might have had some kind of warning in advance, but it's circumstantial so far. Riley says he agrees, but Kang needs to know a key piece of information. At the time, the two companies were developing a new Alzheimer's drug. A doctor named Sid Gilman was one of the chief researchers leading that trial. In record show, the Gilman had extensive contact with a trader at SAC, and was paid handsomely to be a consultant for the hedge fund. Kang starts to smirk, adding up. The doctor had access to the results of the drug trial. He must have then tipped off a trader, telling him that the Alzheimer's drug wasn't a success. The hedge fund then pulled out right at the last minute, saving itself a huge loss. It's a clear case of insider trading. The SAC lawyer smiles saying it got worse. SAC capital didn't only protect itself against a loss, it used the information to make a big profit. Stephen Cohen didn't just sell off the stock they owned. They shorted the company's stocks, placing a bet that their share prices would go down. In the end, he made a profit of more than a quarter of a billion dollars. Kang is nearly speechless. This is what they've been looking for, proof of insider trading, directly connected to Stephen Cohen. If Cohen shorted stocks based on illegal information, he likely committed a crime himself, one he could be prosecuted for. Kang rises from his seat and gathers his papers. The meeting has been incredibly helpful, but now he knows what he has to do and he has to move fast. Kang has to hop on a plane and travel to Ann Arbor, Michigan. That's where this doctor, Sid Gilman, works as a researcher and professor. Kang is going to have to confront him in person before any of this leaks. He'll lay on some thick pressure and reveal that the doctor engaged in a criminal act. Kang knows that Gilman gave. He's a professor, not a hard criminal. And when he does finally crack, Kang assured that the FBI will have their smoking gun, irrefutable proof that SAC capital and Steve Cohen have broken the law. The best weddings are always filled with unforgettable moments and personal thoughtful touches. Like my friend Cecilie's wedding where the groom tossed the bouquet. For any kind of wedding you want, there's one place to start. Zola has everything you need, all in one place. They've thought of everything. Venues, invites, registry, and more, and they'll be with you every step of your wedding planning journey. Whatever your style or budget, Zola has you covered with venues, photographers, florists, and more to make your wedding happen. Once you've set the date, you can send your save the dates and invitations right on Zola too. There's so many great designs to choose from, and you can get a matching wedding website for free. Wedding planning shouldn't take over your life, and Zola has thought of everything. So you can plan the celebration that's right for the two of you. Start planning the wedding you want at Zola.com. That's Zola.com. The new season of this is actually happening. It's available at free only with Wondry Plus. And if this new season isn't enough, you can listen to more than 120 exclusive episodes available only to Wondry Plus subscribers. Join Wondry Plus on Apple Podcasts or on the Wondry app. It's a cool morning in September of 2011. FBI agent BJ Kang and his partner are waiting in a car on a residential street near the University of Michigan and Arbor. They're part and staking out the home of a doctor and researcher named Sid Gilman. Any minute now, the neurologist should walk out his front door and begin making his way to work. As the two FBI agents wait for Gilman to step out, Kang reviews the game plan for today. He and his partner are going to confront Gilman. They're going to accuse him of participating in insider trading while consulting for SAC Capital. And if all goes to plan, they'll convince Gilman to give up the truth, providing incriminating details about the hedge fund. And soon enough, an older man with white hair steps out of the house and closes the front door. Kang knows that it's Gilman, a professor at the University and one of the head researchers working on a clinical trial for an Alzheimer's drug. Gilman walks down the front steps and then gets in his car and pulls out of the driveway. Kang turns on the ignition of his own car. Then he pulls out into the road and begins following Gilman, turning through leafy and quiet residential streets. A few minutes later, Gilman takes another turn, pulls into the parking lot for the University of Michigan Hospital. Kang pulls up the side of him, parks. And when Gilman steps out, Kang and his partner make the approach. Excuse me, Dr. Gilman? Yes, can I help you? My name's B.J. Kang. I'm an agent with the FBI. The FBI? That's right. My partner and I focus on financial crimes and we'd like to speak with you. Gilman's eyes start left and right. Dr. Gilman, we need to speak with you about your involvement with the Alzheimer's drug, Baphanusa Bab. Specifically, any conversations you might have had about the drug with a portfolio manager at the SAC Capital, Matthew Martoma. I'm sorry, I'm afraid I can't be of much help. Why is that? Well, truthfully, I don't remember much from that time. Dr. Gilman, we're here because we believe insider trading laws have been broken. We believe Martoma made investment decisions based on confidential information that you supplied. Well, again, I don't know what you're talking about. I never gave Matthew any confidential information. Kang knows that Gilman is lying. So he doesn't feel wrong bluffing and telling a small lie himself. Dr. Gilman, we have taped conversations. You taped us? We have you on tape giving Martoma inside information. No, no, you're mistaken. This is a mix up. Now, please, excuse me. Dr. Gilman, let me be perfectly clear. We know you told Matthew Martoma about the drug trial. No, that's not true. You gave confidential information to a trader at a hedge fund. And I'm telling you, I never did. Now, please, excuse me, I need to get to work. Gilman begins to walk away. So Kang decides to take another angle. Dr. Gilman, I want you to think about what you could be given up. You have a reputation. You're an expert in your field, a respected professor. You don't have to end your career. You don't have to self destruct like this. But in order to protect yourself, you have to tell the truth. Gilman pauses his head lowered and rubs his eyes. He looks tired, like a man who's lost many nights of sleep grappling with the weight of his own decisions. Finally, he looks back at Kang. If you really believe that I shared confidential information and you have tapes of my calls, then it's likely I did. But I didn't mean to. Now, I don't remember what I told him exactly. It was three years ago. Dr. Gilman, thank you, I understand your position. Now, when you're ready to talk a little more, I want you to be aware of something. In all of this, you're only a grain of sand. And so is Mortoma, the person we're really after is Steven Cohen. Gilman nods, understanding the implication. The FBI doesn't want to go after him. He's not the target. And if he cooperates, his life wouldn't be ruined. After taking it all in, Gilman says he needs some time. He has to think. And as he walks away, Kang and his partner exchange a glance. The interrogation wasn't a slam dunk by any means. But the first contact almost never is. It does take time and patience to develop a source. And if what the professor admitted is any indication, he may become a valuable informant. But that could take a while. And in the meantime, Kang needs to keep pressing forward. So for now, that means going to Florida, where Kang now has the ammunition to confront Matthew Martoma, the traitor who groomed the doctor, and managed to secure valuable inside information from him. Two months later, BJ Kang stands under the moonlight of Boca Raton, the air in Southeast Florida is humid and sticky. And for Kang, it feels like time has come to a stop. In front of him is a Spanish style mansion, the kind of house made possible by Wall Street money and insider trading, which was what brought Kang to Florida. He's been building a case against the hedge fund SAC capital. Now, Kang has come to Florida to interrogate Matthew Martoma, the former trader at SAC, who acquired inside information about an Alzheimer's drug, and then passed that information to the head of SAC, Stephen Cohen. It was information that Cohen then used to make a fortune. But as he stands in the muggy nighttime air, Kang sears blankly for a moment. The events unfolding in front of him are completely disorienting. A minute ago, he confronted Martoma on his front doorstep and accused him of insider trading. Martoma's eyes then became glassy, and he faded and collapsed. Martoma is still lying on the ground, his eyes closed. Kang is about to snap into action and do something when there's a scream as Martoma's wife comes running toward them. Alert once again, Kang turns, asking Martoma's wife if she'd like to call an ambulance. She shakes her head and says, no, because she's a doctor. She can take care of this. So for several minutes, Martoma's wife tends to her husband as Kang and his partner look on with concern. Kang hopes it wasn't some kind of stroke. But soon, Martoma's eyes flood her open. He pushes himself slowly off the ground. And with his body unsteadied, Martoma takes a deep breath and tells Kang that he can keep talking. He's not going to try and worm his way out of a conversation with the FBI. Kang nods. It's an unusual set of circumstances. But he's come too far to walk away. So he repeats the accusation he made just moments ago. He knows about Martoma's insider trading. He knows what happened with the pharmaceutical companies in 2008. Martoma holds himself against the wall, grimacing, and then exchanges a look with his wife. No one has to say a word. It's clear that everyone knows the story. How Martoma got inside information and how he fed it to his boss, Stephen Cohen. But for a moment, Martoma remains silent. Kang has seen this a million times before. A man confronted with the facts of his crime, that moment of hesitation, before he's willing to tell the truth. Kang also knows how to reel people in, flip them so they become cooperators. So he reminds Martoma of the consequences of his crime. He could go to prison. His life could be over. He could do permanent damage to his children. Or Kang says, Martoma could cooperate. At the mention of cooperation, Martoma looks again at his wife. She's shaking and obviously rattled by the situation. Kang decides to level with Martoma. He admits that Martoma's not the target. They're mainly going after his old boss, Stephen Cohen. But if Martoma wants to protect himself, he has to talk. Taking one last glance at his wife, Martoma says he does want to help. But he's going to have to speak to a lawyer first. Kang nods. Once again, he made incremental progress with potential informant. They almost never flip after the first conversation. But for now, he'll take this as a sign that Martoma will eventually cooperate. And using his testimony, Kang will finally be able to take on the founder of SAC Capital, Stephen Cohen. It's late March 2012 in Los Angeles. In a luxury hotel, Stephen Cohen stands by a tall window watching the sun setting over downtown. The day is coming to a close, and Cohen should get back to what he does best, researching the markets, charting the course for his hedge fund. But Cohen's mind is far from the world of finance. He came to Los Angeles with a single mission. He's planning to buy the Dodgers, the city's baseball team. Cohen has always loved the sport, and owning a major league team has been a lifelong goal. And now that Cohen is worth billions, he can afford the hefty price tag of a major sports franchise. Still, buying the Dodgers isn't just some vanity project. For Cohen, it's a way to prove to himself that he's still in control, that he can lead the life he wants, even as larger, more powerful forces have begun to mobilize against him. Cohen turns from the window and pours himself a drink. It's been a hard few months. The federal government has continued its bruising investigation into hedge funds. Several employees of SAC Capital have been charged with insider trading, and one of Cohen's current employees was arrested by the FBI just two months ago. On top of all that, Cohen himself was recently subpoenaed by the Securities and Exchange Commission. He's now legally obligated to answer questions about his business with a clear implication that the government is considering charges. With so many clouds hanging over his head, Cohen is hungry for a big and clear win. Nothing would be sweeter than owning a major league baseball team. Cohen's cell phone rings. It's one of his associates, who might have news about Cohen's bid for the Dodgers, so he picks up. The associate announces that the decision is in. Cohen put in a serious bid, $1.6 billion, but there's bad news. The league decided to go with another buyer. Cohen slumps into a chair, defeated. He had his heart set on this. What happened? The associate explains that the league went with the group teamed up with Magic Johnson. Johnson's a legendary basketball player and former Los Angeles Laker. He's beloved in the city, and on top of that, his investment team put in a higher bid. It's that simple. Cohen shakes his head. He knows it isn't simple. He could have been asked to counter, offer more money, but this was never about dollars. There's about objects. Cohen runs a hedge fund that's facing legal scrutiny and accusations of insider trading. Major league baseball never would have wanted Cohen as an owner of the team. So Cohen hangs up and pours himself another drink. As he looks out over the dark skyline, he realizes it's time to get back to the East Coast. That's where he belongs, and that's where he needs to start fighting back. Because by now, Cohen has taken too many punches from the government. They've tarnished his reputation, turned him into a pariah. The Dodgers should have been his, but this smear campaign won't go on forever. As soon as he gets home, Cohen's going to take action. He's gonna find a way to strike back and make sure that this government investigation comes to an end. If you're into true crime, the Generation Y podcast is essential listening. We started this podcast over 10 years ago to dissect some of the craziest and most notable murders, crimes, and conspiracy theories together, and we'd love for you to join us. Generation Y is one of the longest running true crime podcasts out there, and we are still at it, unraveling a new case every week. We break down infamous cases like the Evil Genius Bank robbery, and lesser known cases like the case of Kimberly Rico. Did she actually kill her husband after they took part in a murder mystery game? We cover every angle, breaking down theories, diving deep into forensic evidence, and interviewing those close to the case. And with over 450 episodes, there's a little something for every true crime listener. Follow the Generation Y podcast on Amazon Music, or every listen to podcasts, or you can listen ad free by joining Wondry Plus in the Wondry app. The Wondry Plus is a very popular and popular world. It's April 2012, and a federal building in Manhattan. Steven Cohen walks into the offices of the Security and Exchange Commission, the agency that polices Wall Street. He takes a seat at a wide conference table, and adjusting his tailored suit, Cohen quickly sizes up the room. Across the table is a group of attorneys from the SEC, a couple of them look young, and Cohen can't help but wonder if this is the first time they've seen any action. It's all a good sign. Because in just a few minutes, Cohen is going to begin a deposition, giving legal testimony under oath about his hedge fund SEC capital. It's all part of a federal investigation, one that's produced a lot of bad press for Cohen. And with that press, Cohen has had to feel panic phone calls from investors who've been watching the news like everyone else. But Cohen isn't too concerned. It's not just that he's got one of the best legal teams in the country. Corporate attorneys who are much more experienced than these government lawyers sitting in front of him. But Cohen also has a winning strategy. He agreed to cooperate with the SEC, and that gives the appearance that he has nothing to hide that his investors have no need to panic. At the same time, in this deposition, Cohen is going to employ the same trick he learned years ago back when he had his first showdown with the SEC. He's going to Stonewall and methodically shut down their questioning. In the conference room, the prosecutor Charles Riley opens a thick binder, begins paging through notes. Okay. And now we're on the record here. So this is the deposition of Stephen Cohen. Before we begin, Mr. Cohen, do you understand that you're under oath? I do, but before we get going, I've got a question myself. Okay, go ahead. How long is this going to take? Here's the thing. I've got seats to a next game tonight, and I don't want to miss it. I'm sorry. The next basketball New York. Riley pauses looking bewildered and Cohen represses his smile. That was intentional. He wanted to throw off the other side right from the start and assert himself as the one leading the conversation. Don't worry about it. Not everyone's a basketball fan, right? So what are we talking about? Mr. Cohen, I'd like to discuss Matthew Martola, your former employee. Matthew, yeah, he used to work for me. And how would you rate his performance back when he was at SEC Capital? Honestly, I can't remember. Well, let's go back to the start. Do you remember hiring him? I'm drawing a blank. I'm sorry. And you don't remember what he was like as a trader. Again, it's all pretty hazy. I mean, you have to understand. I've got a big workforce. Riley blinks as he glances at his paperwork. Cohen represses another smile. So far so good. Okay, Mr. Cohen. Well, let's talk about Elon and Wyeth. The two companies developing a new Alzheimer's drug. SEC Capital is a very, very important company is developing a new Alzheimer's drug. SEC Capital took a sizeable position in the companies. What led you to take such a large gamble? Well, if I remember right, Matthew was confident in the investment. And why was he so confident? Specifically? Yes, please. Give us specifics. Sorry, but I don't recall exactly. Mr. Cohen, we're talking something like a billion dollars of your firm's money. And you don't remember why you gave that order a green light? Believe me, guys. I wish I could. But probably a good lesson for the future, right? Okay. Let's flash forward to July of 2008. You gave an order to sell all of the shares of the two companies. And you did so after this. Riley places a printout of an email on the table. Martoma emailed you with this message. Is there a good time to catch up with you this morning? It's important. Did the two of you talk? And if so, what did you discuss? Well, I remember him saying that he was getting uncomfortable with the position. Did he explain why? If you might have, I'm sorry. I just don't remember. For the next few hours, Cohen continues to dodge question after question, offering blank stairs and the excuse of faulty memory. And with each evasion, he sees the SEC attorneys grow more and more agitated and more impatient. Finally, at six o clock, the deposition comes to an end. Cohen and his legal team rise from the table. And they begin making their way out of the SEC's offices. When they're back in the cool night air, Cohen and his lawyers exchange a look of victory. By coming in to testify, Cohen signaled to his investors that he had nothing to hide. And by stonewalling the prosecution, Cohen helped protect himself in SEC capital. So when, when? And for Cohen, a sign that all of his problems will soon be a thing of the past. About a year later, and the offices of SEC capital, Stephen Cohen sits down with his attorney, Martin Klotz. Pail went to lie to streaming through the windows. And as the two lean back on a pair of couches, Cohen begins to digest what could be a difficult suggestion. Although Cohen thought his deposition with the SEC had been a success, his legal problems haven't gone away. The government has continued to mount a campaign against Cohen's hedge fund, both in the press and in courtrooms. Federal prosecutors even filed criminal charges against Matthew Martoma. They have accused him of insider trading in a case involving Martin Thomas investments in two pharmaceutical companies developing a drug for Alzheimer's. Cohen had hoped his legal troubles would be gone by now, but it's clear that this was wishful thinking. So today, he and his lawyer need to figure out a new course of action. Klotz, the attorney, takes a sip of coffee and launches into it. Matthew Martoma's arrest and criminal charges have put Cohen in a difficult place. And with so much negative spotlight on the hedge fund, Cohen could be looking at some very real and very long term damage. It's time to make a move. Cohen nods. It's true that with the arrest of Matthew Martoma, Cohen and his hedge fund have taken a reputational hit. And if Martoma flips, things could get worse. So Cohen asks his lawyer what he has in mind. Klotz takes another sip of coffee. Then speaking carefully, he tells Cohen that he believes it's time to settle. Cohen stares at his attorney and disbelief. He doesn't understand what is there to settle. Klotz reminds Cohen of everything he's up against. The SEC is still investigating his hedge fund. If they keep digging, they may find something that could destroy Cohen and his firm. But if Cohen agrees to a settlement now and admits some fault, he could head off any future problems. Cohen shakes his head. It's a bitter proposition. Any settlement would be an admission of guilt. But Klotz reminds Cohen that he shouldn't think in terms of guilt and innocence. It's just strategy and self interest. And right now, Cohen's self interest lies in the settlement. He'll agree that SEC Capital made some illegal trades. He'll pay a fine. And then the problem will go away. Cohen rubs his hands over his face, weighing the decision. After a moment, he asks what exactly it would cost to get the government off his back. Klotz says it won't be cheap. Half a billion dollars. At the mention of such an enormous sum of money, Cohen breaks out and laughter. It's unthinkable. He could fight the charges. And even with an army of expensive lawyers, he'd still come out ahead. But Klotz pleads with Cohen to listen to reason. Half a billion dollars is nothing to affirm like SEC. And if that makes the problems go away, he'll recoup the money in no time. Cohen stares at Klotz, thinking back to his failed bid for the LA Dodgers. Settling feels like losing. And Cohen hates losing. But he also hates everyone thinking he's a criminal. All the public speculation, the laughter behind his back at parties and social gatherings. That's a terrible feeling. And the more he thinks about it, the more Cohen likes the idea of writing a check and putting an end to the whole thing. Cohen stands and tells his lawyer that he's right. If half a billion is what it's going to take, then Klotz should get those wheels spinning. Cohen doesn't want to spend another afternoon, half of the dodge questions from government attorneys. He's better than that. And Klotz is right. Half a billion dollars is a chump change for SEC capital. He'll make it back in no time at all. So that's the plan. Cohen is going to settle. He'll write a check and get back to work. And as long as he continues to do what he does best, Cohen will keep building SAC capital into the most dominant hedge fund on Wall Street. From wondering, this is episode three of the FBI versus the hedge fund from American Scandal. In our next episode, the SAC and the Justice Department put the finishing touches on their case against Stephen Cohen. And former SAC capital employees have to decide whether to take the stand against their old laws. If you like our show, please give us a five star rating and leave a review and be sure to tell your friends. I also have two other podcasts you might like, American History Tellers and Business Movers. Follow on Apple Podcasts, Amazon Music, or wherever you're listening right now. Or you can listen to new episodes early and add free by subscribing to OneGree Plus in Apple Podcasts or in the OneGree app. You'll also find some links and offers from our sponsors in the episode notes. Supporting them helps us keep offering our shows for free. Another way you can support this show is by filling out a small survey at OneGree.com slash survey to tell us what topics we might come or next. You can also find us and me on Twitter. Follow me at Lindsay A. Graham, Lindsay with an A, Middle and Initially. And thank you. If you'd like to learn more about Stephen Cohen and SAC capital, we recommend the book Black Edge by Sheila Colhatcar. This episode contains reenactments and dramatized details. And while in most cases we can't know exactly what was said, all our dramatizations are based on historical research. American Scandal has hosted, edited, and executed produced by me Lindsay Graham for airship, Hollywood editing by Molly Bach, Sound Design by Derek Barons, Music by Lindsay Graham. This episode is written by George Ducker, edited by Christina Mallsberger. Our senior producer is Gabe Riven. Our executive producers are Stephanie Jenns, Jenny Lauer Beckman, and Marshall Louis for Wondering.