On a Friday morning a few weeks ago, the man who’s trying to put Martha Stewart in jail was leaning back in his brown leather chair in his office downtown in the Federal Courthouse Building at 1 St. Andrews Plaza. Since his appointment by George W. Bush as United States Attorney for the Southern District of New York in January 2002, James Comey has racked up a record that would make even the coolest white collar break out in sweat. Last June, his office prosecuted ImClone’s high-flying chief executive, Sam Waksal, who was sentenced this week to seven years in prison. The following month, Mr. Comey’s office busted Adelphia founder John Rigas and his sons, Timothy and Michael, former executives of the company; they were indicted in September. In August, he arrested Scott Sullivan, the ex–chief financial officer of WorldCom. Before long, Mr. Comey was referring to summer 2002 as “the Summer of White Collar.”
The pace has not let up. This April, Mr. Comey’s office arrested Frank Quattrone, an investment banker at Credit Suisse First Boston, for obstruction of justice, tampering with witnesses and destroying evidence. And as the world now knows, on June 4 Mr. Comey handed down an indictment of Martha Stewart on charges of conspiracy, obstruction of justice and securities fraud. Ms. Stewart has said she is innocent of the charges. Speaking of Ms. Stewart and her broker, Mr. Comey told reporters: “It would be a different world if Martha Stewart and Peter Bacanovic had simply done what their folks had taught them: tell the truth.”
As he sat in his office, Mr. Comey’s navy suit stood out against the room’s bare ecru walls-the office once occupied by a prosecutor named Rudolph Giuliani. He may not resemble Mr. Giuliani physically-he stands a towering 6-foot-8, with a thick head of hair and an easy, affable smile-but the 42-year-old Mr. Comey reminds more than a few people of the days when Mr. Giuliani went after bankers and mobsters with jut-jawed determination.
And like Mr. Giuliani, Mr. Comey sees publicity as one of his tools. Unlike ordinary criminals, he said, white-collar crooks “read the paper, and they’re smart enough to think about it. And they have, in their view, an enormous amount to lose: families, alumni associations, country-club memberships. It doesn’t break my heart that there’s a picture of a white-collar defendant in handcuffs. I’m sure people would love to see … not to compare these corporate crooks to Osama bin Laden, but I’m sure people would love to see a picture of Osama in an orange jumpsuit with chains on.”
While Ms. Stewart was spared the indignity of handcuffs, Mr. Comey used plain English to make sure the public grasped the nature of her alleged crime. “This criminal case is about lying-lying to the F.B.I., lying to the S.E.C. and lying to investors,” he said at the June 4 press conference. “That is conduct that will not be tolerated.”
While Mr. Giuliani’s occupancy of the U.S. Attorney’s office may have been more outwardly confrontational, several lawyers see Mr. Comey’s era as more aggressive than Rudy’s and that of Mary Jo White, who held the job from 1993 to 2001.
“They’re taking a more rigid role with regard to negotiation, which is different than it was in the last administration,” said Bobbi Sternheim, a partner at Rochman, Platzer, Fallick, Sternheim, Luca & Pearl. “There have been distinct policy changes.” She said that negotiating plea bargains has never been more difficult.
As recently as last spring, some criminal-defense lawyers were complaining that the office was easing up on white-collar crime, according to Fordham Law professor Dan Richman. Mr. Comey quickly obliterated that notion.
“There started to be rumbling that maybe the office had lost its focus on this critical area,” said Mr. Richman. “Then you saw indictments coming down.”
James Comey grew up in a middle-class family in Yonkers and Bergen County, N.J. His father worked in corporate real estate; his mother was a homemaker and computer consultant. He attended the College of William & Mary and got his law degree at the University of Chicago. While clerking for U.S. District Judge John Walker, he was mesmerized watching two young New York federal prosecutors, Mark Hellerer and Alan Cohen, argue a case involving Anthony (Fat Tony) Salerno.
“I was overwhelmed by how good they were, how young they were, and how much I now wanted to do that with my life,” he said.
Mr. Comey came to the U.S. Attorney’s Office for the Southern District of New York in 1987, and rose to deputy chief of the Criminal Division. It was a time when Rudy Giuliani had the Mafia on the run, and Mr. Comey went up against the flamboyant Bruce Cutler in a prosecution involving the Gambino crime family. “He’s smooth as silk,” said Mr. Cutler. But the mob cases were just part of the action.
“In the 80’s, when I was first here, we had a lot of insider trading,” said Mr. Comey. “Ivan Boesky, a lot of scandals involving insider trading, and related shenanigans with Drexel Burnham, Michael Milken-huge scandals, although nothing on the order, in terms of the public attention, of what we did in the Summer of White Collar.” In 1996, he went to work as an assistant U.S. Attorney in the Eastern District of Virginia, where in 2001 he prosecuted the Khobar Towers terrorist bombing case, involving the attack on a U.S. military facility in Saudi Arabia, in which 19 American soldiers were killed. He obtained indictments of 14 suspected terrorists.
Soon after, the White House called and offered him his current job.
“It was just a total bolt from the blue. I never thought about it, never applied, I wasn’t even paying attention,” he said. His wife Patrice came home, put her head in her hands and, despite the fact that she hated New York, said: “You can’t say no.”
“I never considered saying no,” said Mr. Comey, “both because of the nature of the job and because-I know it sounds corny, but I consider myself a patriot, and so if the President’s asking me to do this, I’m going to do it.”
The figure of Rudolph Giuliani still looms large in the office.
“What I admired about Rudy was that the troops always felt that he was behind you,” he said. “Rudy had this positive energy which made it really fun. That’s something I’ve tried to copy shamelessly.”
By all accounts, morale is high. A former colleague, Richard Appel, who went on to work as a writer on The Simpsons , noted Mr. Comey’s one-liners in court. “He’s easily as funny as the writers I worked alongside with at The Simpsons ,” said Mr. Appel. “And humor in a courtroom, when used properly, is an amazingly powerful tool.”
Mr. Appel said he remembered a time in the courtroom when Mr. Comey was an assistant prosecuting a Mafia trial. The defendant had been caught on tape. “There were so many wire taps with him saying, ‘Hey, Jimmy, do you have the stuff ? Quiet, quiet -we can’t talk about the stuff. I’ll call you from the pay phone.’ This guy was just dead in the water, but he took the stand. Managed to [address] not one, but … every single incriminating statement. I remember Jim said, ‘You can round to the nearest 10 if you need to, but how many hours did it take you to concoct that story?’ The jurors were howling.”
Not everyone is laughing. Ask Tony Perkins, former editor of the defunct Red Herring magazine and a friend of Frank Quattrone, the Credit Suisse banker whose arrest in April made headlines.
“You’re in a situation where these poor people have been quote-unquote robbed of money, and it’s incumbent on these lawyers to go out and find the culprit. ‘Who can we blame the evaporation of wealth on?'” said Mr. Perkins. “The natural culprit is the investment bankers who take these companies public, but is it the investment bankers’ fault?… Frank Quattrone was, by orders of magnitude, the most dominant high-tech banker for the past 15 years. When these lawyers were out there trying to find their poster child for the Internet bubble, the most obvious choice was Frank Quattrone.”
“We’re still locking up crooks because, I’m sorry to say, there’s always crooks in the white collar area,” said Mr. Comey. He compared the high-tech bubble burst in 2000 to “the tide going out. And when a tide goes out quickly like that, it exposes everybody who’s naked.”
He said that currently, accounting fraud is big-from art galleries to major Wall Street banks.
“People are screwing with the books,” said Mr. Comey. “When a business is not working out, there are only two options for an executive. One is tell people about it-in which case you may get fired, your stock price goes down, and all the stock options you have become worthless and you might lose your fourth or fifth house. Or, mess with the books. Most people tell the truth …. Our mission here is catch those people who screwed with the books, to hit them hard enough that the next time someone’s faced with that decision, the morally challenged executive who might be tempted to go the wrong way will think: ‘I don’t want to go to the pokey.'”
White-collar crime, Mr. Comey said, is harder to prosecute than other crimes “because the mission in a white-collar case is proving what’s in somebody’s head. At the end of the day, no matter how complicated the transaction, we’re going to understand it. And the issue is not ‘Who is involved in the transaction?’ or ‘What happened?’-the issue is what were they thinking when they did it. Drug cases, for example, are the exact opposite. If somebody burst into a hotel room that you were in and there was a kilo of heroin on the table, you’re in huge trouble and you’re not able to say, ‘My accountant thought that I could.’ It’s the reverse in the corporate-fraud world, because we will know who was there and who did what, but the defense will be: ‘I thought it was O.K. My lawyer told me it was O.K. and my accountant told me it was O.K.”
He said he uses similar tactics that parents use on children. “You’d still be looking at your shoes when you were supposed to be looking at your mother, you ran away, you hid stuff-anything like that indicates that you knew that you were doing wrong. In the grown-up world,” Mr. Comey continued, “we look at things like shredding documents, fleeing and lying. And as I have said a number of times, e-mail was the 20th century’s greatest gift to law enforcement, because it never goes away, despite what people think.” Mr. Comey said that he’s read e-mails which include lines like: I just hope the S.E.C. doesn’t find out what we’re doing here.
“When you see stuff like that, that helps you understand what goes on inside somebody’s head,” Mr. Comey said. “They also tend to have very good lawyers who are paid a lot of money.”