Wall Street’s top cop is choking in front of me. His eyes water and, for several frantic seconds, he gasps for breath, until one final heave dislodges the piece of potato stuck in his throat.
Quickly recovering his customary composure and wit, Preet Bharara, US attorney for the Southern District of New York, says: “Usually I don’t talk so much during lunch.” He then starts composing an imaginary FT obituary for himself: “ ‘Bharara, after choking and falling to the floor at Trinity Place, was surrounded by traders on Wall Street who chose not to intervene in any way ...’ ”
Bharara has certainly made plenty of enemies in banking since his appointment as one of the federal government’s chief law enforcement officers three years ago. This June, his office secured its latest high-profile conviction, former Goldman Sachs director Rajat Gupta, on four counts of insider trading (Gupta will be sentenced later this month). This followed the prosecution of Raj Rajaratnam, the head of Galleon Group, a $7bn hedge fund, who last year was given an 11-year jail term for insider trading. Since 2009, Bharara’s office has filed charges of insider trading against 72 hedge fund portfolio managers, consultants, lawyers and company officials, in the most wide-ranging investigation into Wall Street fraud since the “greed is good” era of the late 1980s.
At the FT office, a few hours before our lunch, I’ve yet to hear from Bharara which restaurant he has chosen. I’m beginning to worry he might stand me up, when I receive an email directing me to Trinity Place Bar & Restaurant, a spot tucked within an old bank vault in the financial district, near the footprint of the World Trade Center. The entrance is guarded by a 35-tonne vault door dating from 1904.
As I begin to look over the menu, Bharara appears, wearing the prosecutor’s uniform of dark suit, blue shirt and red striped tie. He kisses me on the cheek and takes a seat next to me, explaining, in his quickened manner, that he chose this place because it has symbolic meaning. When he was waiting for the Senate to confirm him in his post, he met a trusted friend here to think about how he would approach his task.
As we study the menu, he says: “This is going to ruin me for the day. I eat almost no lunch. I have a big dinner but I don’t have a big lunch.” He adds: “I don’t eat green things, no vegetables.” He asks whether I’d like to split a plate of tuna and salmon tartare as an appetiser. “I’m a big fan of meat,” he says. Sensing my obvious hesitation, he observes: “I don’t think you want the tartare.” Instead, he orders a plate of “citrus and olive oil cured salmon” with shaved fennel to start and a hamburger with cheddar cheese and fries for his main course. As I mull over a Cobb salad or lobster BLT for my main course. Bharara says: “Get the lobster BLT so I can see what it looks like, so I can get it next time.” I agree, and order a Caesar salad to start. We both order a Diet Coke.
“I don’t like coffee but I need caffeine,” Bharara explains, adding that he has already consumed several Diet Cokes today. His office refrigerator is stocked with cans; he says they “retain the fizz” better than the bottles.
Earlier this year, Bharara, who has just turned 44, appeared on the cover of Time magazine under the headline, “This Man is Busting Wall Street”. As well as the convictions, his office has been praised for its use of techniques, such as wiretaps or secretly recorded phone conversations, previously reserved almost exclusively for investigations into organised crime rings. Other law enforcement agencies have grumbled about the accolades Bharara has received. Even his own boss joked, during a recent speech, that Bharara was on hand to autograph copies of Time.
Today Bharara is keen to point out that his office does more than tackle financial fraud. “We have 230 lawyers who work on every conceivable type of criminal activity from gang activity to cybercrime to political corruption to terrorism, which is always our first responsibility, and not one of those things gets the attention as a single insider trading case against a billionaire,” he says. “Insider trading is important,” he continues. “But they are not the most important cases that we do.” He notes, with some frustration, that he has held more press conferences announcing criminal charges against gang members and corrupt politicians than he has made insider trading arrests. His office has filed charges against Faisal Shahzad, the man behind the attempted bombing of Times Square in 2010; members affiliated with the Anonymous hacker group; and Carl Kruger, a New York state senator, for alleged bribery. Last weekend it obtained the extradition from Britain of radical cleric Abu Hamza al-Masri, who has been charged with several acts of US terrorism.
“I’ve got people solving murders that happen to unknown children in the Bronx, Manhattan and Newburgh, which are more important than some of the financial fraud cases because lives are at stake,” says Bharara, before speculating on the media prominence given to Wall Street cases. “Maybe it’s the only kind of journalism that can thrive in an otherwise contracting market.”
Nonetheless, he concedes that the financial cases send an important message “to people on Wall Street and the corporate world that corruption won’t be tolerated and there’s not a separate set of rules for people that are privileged.”
Many have questioned why so few bank executives have been charged in connection with the financial crisis. In a speech last year, Bharara said the lack of cases was not for lack of effort, rather “a matter of the law, the facts, and the painstaking nature of these investigations”.
“The bottom line is this,” he said. “We, too, want to hold accountable anyone who deserves to be punished for complicity in the worst economic crisis since the Great Depression. Any case we make, however, will be because it is appropriate and deserved, not because there is overwhelming public pressure to do so.”
He won’t comment on any specific criminal investigations related to the financial crisis but, along with other prosecutors, has said it can be hard to find evidence of intentional wrongdoing, a measure necessary to win a conviction. He is proud of deciding, early in his tenure, to dedicate a squad within his civil fraud unit to look into possible wrongdoing from the mortgage crisis. The squad “started from scratch looking at financial institutions and their fraud and reckless-lending practices,” he says. Those investigations have led to settlements with Deutsche Bank and Citigroup and a pending lawsuit against American Home Mortgage. “We have more cases like that coming.”
His salmon is gone but the greens are left untouched. I eat half of my salad but am struggling with its long leaves. When the waiter comes to clear our plates, Bharara becomes momentarily lost in his BlackBerry.
Preet Bharara’s climb to one of the most prestigious jobs in US law enforcement has been steep. He was born in Ferozepur, India, to a Sikh father and a Hindu mother, who emigrated to America in 1970, when he was still a baby. They settled in New Jersey, where his father, a doctor, set up a practice in Asbury Park, Bruce Springsteen country. (Bharara says he is a huge fan and has seen the Boss in concert more than 20 times). His mother stayed home in nearby Eatontown, to raise Preet and younger brother Vinit. He says his mother has framed the Time cover but jokingly grumbles that he has to share the attention with Vinit, who last year sold his internet nappy sales business, Diapers.com, to Amazon for half a billion dollars.
After his parents were naturalised in 1980, Preet, too, became a US citizen. “I didn’t have to take a test, because I was 12, but I think I would have done fine,” he jokes. He went on to attend Harvard College and Columbia Law School, from which he graduated in 1993. In 2000, after a short period in private practice, he joined the US attorney’s office as a prosecutor, where he focused on gangs and organised crime cases. He left in 2005 to work in Washington as chief counsel to New York senator Charles Schumer, a Democrat. It was around this time that I first encountered Bharara. He was quietly making a name for himself as part of the Senate Judiciary Committee’s investigation into the firing of eight US attorneys during the Bush administration.
His hamburger and fries come with salad greens, which he eyes suspiciously. As we dig in, our conversation turns to cybercrime, which Bharara says is a threat few companies take seriously. Surveys place the global cost of cybercrime at $400bn a year and the threat is rising, with hackers increasingly targeting companies and law firms. “Companies are still waiting too long to disclose [intrusions] to law enforcement,” he argues. “When the intrusion happens through the internet from a little east European country, they delay or don’t report it at all.”
A bank would never think twice about reporting an armed robbery, he points out. “The fact that you don’t have senior management and its board heavily focused on something that can be a company-ending threat is an abdication of responsibility, without question.”
I ask if he’s ever been hacked. “I was hacked by a piece of potato,” he says deadpan, alluding to his choking episode, deftly avoiding the question.
Although the heads of US law enforcement and intelligence agencies have warned about cybercrime, banks are among the businesses that have been criticised for playing down the threat of hacking.
When I ask if this may be because the threat seems somehow intangible, he says, solemnly: “There are people in the United States government who think there are organisations, entities and perhaps – perhaps – [foreign] state actors who are robbing corporate America blind. There are people who think that.”
Do you think that? I ask. “There are people who think that,” he says with a pause, and another sidestep.
Leon Panetta, US defence secretary, has warned that the next “Pearl Harbor” could be a cyber-attack. So, I ask, how do you stop it? “The same way you tell people in bad neighbourhoods they should lock their doors. You tell individual users they should have good passwords and safe practices like firewalls and encrypted networks all the way up to the boardroom, where directors are vetting the cyber-policy; have a cyber-committee of the board, and [have] directors [who] are sounding the alarm.”
He orders a second Diet Coke and finishes his burger, leaving the remains of the offending potato fries and an untouched pile of greens. With the presidential election just round the corner, I ask what he hopes to do next – if Mitt Romney wins, Bharara will probably be replaced by a Republican appointment. “I hope to do this job as long as I possibly can,” he says.
There are rumours, however, that if Barack Obama is re-elected, Bharara could be asked to serve as attorney-general, the US’s top law enforcement post. Would he like to return to DC? Washington, he says, is “not quite my cup of tea. When you go to a little league game in Washington, everyone is a lobbyist or works on the [Capitol] Hill or is at Main Justice [home to the US Department of Justice] or reports on those things. It’s a lovely place but I like New York better.”
He describes how, when he moved to Washington to take up his job at the Senate in early 2005, he met his predecessor to discuss the job over dinner. “We go into an Irish pub to have burgers and drinks and, as soon as the State of the Union address began – [though] I’m sure there were games on – every TV in the place was turned to the State of the Union, with the volume up. You might actually be bludgeoned to death if you tried that in New York.”
Bharara mulls over the dessert options before deciding, “I don’t need dessert. I didn’t need the salmon.” Calling for the bill, he says government ethics rules forbid the FT from paying for his lunch so we agree to split. He asks what I’m leaving as a tip and I eye his receipt as he signs his name. “Did you think I was going to leave $8 after you left $7?” he laughs.
I snap a picture of him on my BlackBerry, so I can remember the colour of his tie. In mock-horror, he protests: “I would have worn a different tie! This is not a very hard-charging tie. I’m always in American colours.”
Kara Scannell is the FT’s US regulatory correspondent
Trinity Place Bar & Restaurant
115 Broadway New York 10006
Diet Coke x 3 $6.00
Cured salmon $12.00
Caesar salad $10.00
Kobe burger $15.00
Lobster BLT $20.00
Total (inc tax and service) $82.59