918: Tom Hardin | Tipper X: The Man Behind Wall Street's Biggest Sting

21:54Are you going to throw it away? Are you going to take a peek? Yeah, man, that's tough. This starts to grow, right? Because it wasn't just like, wow, this really nice lady is calling me with all this free information that I'm required to do absolutely nothing for in return. How did it escalate from there? Yeah. So she calls me. I place the trade. It was maybe another week. It's a Friday morning. So it's March 23rd, 2007 to be exact. Before the stock markets opens at 930, I'd meet with my boss to go through our portfolios or anything new. Should we buy, sell, whatever? And so it's news on the Bloomberg Newswire.

22:27I see trading in this stock is halted, which means news is coming. Word for word, exactly what she said. So I'd love to tell you here, I had some moral epiphany. Because I was sort of telling myself, maybe it's a rumor. she's full of it no i went in i kind of felt like an adrenaline rush i hate to say now i'm part of this illicit in group who has this information i wanted to say today i'd love to rewrite history and say i was disgusted i did this but like at the time i thought now i'm part of this illicit in group and a few minutes later she calls me and says did you see it happening it's on the tape i said yeah i saw it she's like i hope you load it up i'm like i bought a little bit and she's like oh my entire personal account's in this i remember thinking it's probably not great that you put your entire broker yeah it looks a little nobody's that sure about a stock ever unless they are and then she says you know that moody's analyst i told you that gave me the information i said yeah she said tom i gave him your name and i said tom can you write him a check for ten thousand dollars for this information and you could imagine what i said what a lot of expletives like i rationalized the trade but like i'm not gonna give this guy a check are you kidding me but she said he's gonna to have more like this.

23:36If we want to keep them coming, I have to take care of this guy. And so I said, let me think about this. I called my friend who the entire firm bought it. I said, this is the situation. Can you pass some cash around? I'm not going to write a check. And my scummiest moment, one of a few, I think, is he gets this cash together from his firm. He meets me at Grand Central, slides me a FedEx envelope. I'm going out to meet this Moody's analyst in New York. He's on the sidewalk and he says, are you Tom? I just held up the envelope. I didn't look at him. I kept walking. And I remember thinking, it's a weird thought I had when I'm walking back to the office.

24:09I thought my grandparents would not approve of this right now. Right. Yeah. And that's always a good test, actually. If you're at that slippery slope or that area, what would you ask yourself? If your grandparents read this in the Wall Street Journal tomorrow, would they be happy with what you're doing? So. Yeah. Wow. That's a big jump. Yeah. Right. You go from, all right, I guess I got this tip. Wow. It looks like the tip was legit. and then she's like, by the way, we need an envelope full of cash delivered anonymously to this guy who, by the way, knows your name. I mean, I would imagine at that point, are you not thinking, why did you tell him my name?

24:39Yeah, that's what I was asking her. I was at all these expletive field tirade. I'm usually a calm guy, but at that point, like, why would you give this guy's name? Yeah. And I was so in my head, I'm like, I could have ended it there. What is this guy going to do? Go to the FBI and say, hey, Tom didn't pay me my bribe. But I'm not going to touch the cash. These guys will do it. If they'll take care of this, I'll get this done. I kept saying just this once I'll do it just this one time that kept going on in my head up I'll pay this just this once and it happened three more times she would call I tell the other guys I would buy 0.9 position the boss was looking the other way every time too so that's something where the stocks are up 30 percent in the pre-market before with this news that came out that nobody should have known about I buy these stocks one of them was Hilton hotels and we're tech stock focused hedge fund.

25:26I see. You're suddenly buying a real estate. Although he didn't say, are you right? Did you stay at Hilton? What's going on? I really enjoyed my experience at Hilton, so we're going to throw in$30 million. Exactly. The boss is looking the other way. Again, more of the rationalization. I feel like if he's okay with it and he's the closest thing to a mentor that I had in my 20s, then he would have asked me questions about this. Maybe he's fine with it because they are small positions. And so it happened four trades through 2007, 0.9 % positions. The firm made just over a million for our investors.

25:59And we managed about 100 million, so 1 % for our investors. And we were up 30 % before that, so one more percent. There was no reason to have the 100%. Of the 1 million, 1.2 million, as a junior partner, what I made, and essentially what I threw my career away for, was$46 ,000 at 29 years old. That's the price of professional suicide. It's not millions of dollars that you get arrested for. It's$46 ,000 was it. That is so hard to hear, man. You go from not even actively seeking the information to maybe seeking the information to bribing somebody for the information. It almost seems like, we'll come back to this, but why didn't she pay that guy?

26:42Yeah. Subsequently, on the next ones, I said, I'm never doing this again. I think she was getting a lot more than the four I got. I think it was going on for a long time. Yeah, like maybe the guy was making 100 grand. Yeah, yeah. And he had apparently other hedge fund clients who he was leaking this to. So his little side hustle was getting paid by other people. I just, wow. Okay. Well, there you have it, I suppose. Did you ever have any close calls? I would not want to stand on the corner of a New York, don't care what neighborhood you're in with a FedEx envelope with 15 grand in it. That's just not a good idea.

27:14Yeah. So on the third tip and trade from her, she asked me, so it came from another source of information. There was another trade she knew about. And she said, this other person wants$10 ,000. And so I go call the guys again. And this is another person. They're going to have more information from us. I'm already well into this. It starts with the first trade. And then now I'm doing cash payoffs. It's called the boiling frog, where you put the frog in a pot of water and slowly turn it up and they're burning to death. I'm burning to death here at this point is the frog in this boiling water. And she says, I have to bring it to her out in California.

27:47And so there's$10 ,000 I have to bring to her from LaGuardia Airport to California so she can give it to this person. We're going to meet at some conference. And so I thought at the time, the TSA machines weren't that sophisticated. I put the money all in my body, went through TSA, got through fine, went to the restroom, took it out, put it in these bank envelopes in my carry-on bag. Well, my flight is called the border to San Francisco. It was only a few years after 9-11. So the TSA was actually at several gates that day checking carry-ons. And so I thought, oh my God, they're here for me. They saw exactly what I did through there.

28:20They caught me on the camera. They're just going to wait for me and arrest me. And so I said, let's just play it cool. The cash is in my carry-on. I'm walking into the plane. Sir, did we just search your carry-on? The female agent grabs it, touches the cash, looks at the mail and says, sir, have a nice flight. She looked at the cash and was like, wow, there's a lot of money in here. So I went and sat in the plane and I thought, oh my God, what the hell am I doing? I'm never going to do this again. And so I told the woman I saw her in California, I'm never doing this again. You won't believe what happened.

28:48They touched the money. And then years later, one of my speaking engagements, somebody in the crowd said, you know, it's not illegal domestically to do that. And sort of the compliance officer was like, how do you know that? I read the customs declaration. Exactly. But it's international. So maybe that's why they, oh, this guy's a gambler going to Vegas. 100%. I mean, you can bring, I don't think there's any limit on the amount of cash you can bring domestically. I would say there's probably a policy that if you have a giant metal briefcase full of $100 bills, they might just say, hey, just saying that's a little weird.

29:20Yeah. Maybe ask him why, get something on the record, have the airport police take a statement. But you're right. Yeah. It's when you bring it inside and outside of the country, you need that customs declaration where it's like, have you brought more, any fruits and vegetables? Yeah. More than$10 ,000. But yeah, if you're going to Vegas, I mean, some of those poker guys, I think they bring 50 grand plus in cash. 10 is just a buy-in to the World Series or whatever it is. Yeah, whatever it is. Strangely, you'd think you could get the money in Vegas of all places, but I guess it depends who you're getting your money from.

29:49Yes. Who's staking you. That's true. So I got through that and I told her, I'm never doing this again, this cash payoff situation. And then there was one final tip in trade where there was no cash exchange. When you make these trades, do you seek cover at all? writer, you're like, okay, I saw an article on Yahoo Finance that says Hilton is undervalued and it's written by some guy. When we make our big bet, I can pull that out and go, I just found this piece, this blog post really compelling and I put$13 million of firm money on this thing or whatever. At the time when I made the trades, so the last trade was September of 07, I wasn't thinking about it.

30:28And she called me in December of 07 and said, Tom, the SEC had contacted her about one of the trades, Hilton. And she said, I'm going to tell them I bought Hilton because Paris Hilton's in the news. That sounds like a terrible idea. That's a pretty weak... Pretty, pretty... I don't think they're going to buy that. You know, she doesn't run the hotel trades, right? Yeah. And so then I thought, I better have something written up for why I bought these stocks. But it's already... The trades have already happened months ago, and I'm going to write this thing up now. And so I started looking up at that time what was there.

30:56And there was actually something where a Wall Street firm said hotels are ripe for private equity. And so, hey, that's why I bought Hilton. Or there was a reason for each of these stocks that I was putting in after the fact. And so I was trying to cover my bases because people had told me that had been called by the SEC. It's very common for the SEC to call it on one-time trades and just say, what was your reasoning? And then I was told, just tell them something. There was a Yahoo finance and they'll hang up. Their government regulators overworked, underpaid. They just when I move on to the next one.

31:24And so I'm like, let me prepare for the SEC if they're calling her. And then January, February, March of 08, nothing happens. Insider trading is rampantly going on. And I think like I'm in the clear on this four trades. And we make thousands of trades. So the four trades kind of in the clear until July 8th of 2008. Oof, okay. You mentioned the SEC called, her name's Rumi, right? Rumi, right. If the SEC suspects you of doing something sketchy, they call you and ask you about it? They'll call or they'll want to talk to your general counsel or chief compliance officer. They do examinations every couple of years on trading around two events in the market, earnings announcements, which are planned four times a year, but merger and acquisition announcements are not planned to the public.

32:06If you have well-timed trades around those, you're going to get a phone call. Just explain your reasons for why. Make sure you've documented your reasons why you bought the stock. Hopefully, you're not doing anything wrong. It happened to be just coincidental for most people today. Hopefully, that's the case. But to your point, if you're legitimately buying a stock and you haven't documented your reasons, you can open an entire investigation at your firm because you forgot to document your reasons for legitimately buying a stock that just happened to be taken over. So it's a real risk for firms to go through the cost of an investigation if you haven't documented your reasons why.

32:37Okay. So how does it all start to unravel? You mentioned 2008. A few months after she says the SEC contacted her, the SEC hasn't contacted me. I think I'm in the clear. So Tuesday morning, we're recording in the July summer here in New York City, July 8th of 2008. I'm leaving my apartment in Midtown, 6.30 to drop off some dry cleaning before getting a taxi to the office. 6.30 in the morning, step on the sidewalk. And I hear this guy behind me say, hey, are you Tom? I thought that's weird, 6.30 in the morning on New York City Street. Turn around, yeah. And then there was two FBI agents showed me their wallets, kind of just like any TV show people have seen.

33:14the FBI. It literally is like that. Come sit down with us. There's a Wendy's at 55th and 8th. It's still there. We sat down at, and he's like, look, man, we know about your four trades. We know that you were just down in Atlanta last weekend, Tom, visiting your baby nephew when he said his name for his baptism last weekend. And my first thought was, I know why they're here. And oh my God, my dad's going to kill me. What's he going to say? I thought, oh my God, my wife's going to divorce me. I mean, we just got married and she didn't know about these trades. And then I thought, holy crap, this might impact my career.

33:48I'm only a guy that might go into prison. So it went from dad to prison. And he's like, we know about your four trades. I immediately started making implicating statements. So if the lawyers are listening, what did you just not take their card? Right. Yeah. I'll call you. I need to contact my attorney. No, let me go into a Wendy's and confess everything over a baked potato. I confessed everything to them. That's right. It was still the breakfast menu, but we weren't eating. So I started confessing everything. Yes, there was four trades. In fact, there was these cash payoffs. He's like, oh, that's interesting.

34:16Didn't know that. The pen comes out. Go on, go on. What else? What else? And I just converted to Catholicism. So for me, this was like my second confession. Right. Oh, man. So not to a priest. That was later. And I was talking to the FBI. I think they were taken aback because usually the initial reaction is those are rumors. I have my reasons now for why I bought these stocks. I'll show them to you. and let me take your card. Let me go talk a white collar defense attorney. I just started confessing. I'm like, yeah, I did it. I did it. I kept saying I did it. And then they were writing it down.

34:44What else did you do? I didn't say prove it. It's the worst day of your life because the FBI is in your face. Actually, after a while, they said you can only tell your wife. You can't tell anybody about this. You have the opportunity to help us build some cases. Do you know what insider trading is going on in Wall Street? I'm like, basically, yeah, who's not doing it? At that point, you're like, crap, I just told these guys everything and they asked me if insider trading was going on. Exactly. They didn't know anything. They didn't know anything. But they had a big web of names they pulled out.

35:12There was two big targets at the top. And if you could picture it, like I'm at the bottom, like a minnow in this vast ocean of insider trading. Yeah. I assume one of those big guys is probably this guy Raj Rajaratnam, who I suspected was doing it, who Rumi worked for. They pulled it up and they said, Tom, you have an opportunity to help us with these cases. It's going to help you out. I took his card and I said, should I talk to an attorney? No, I thought after I confessed, I should talk to an attorney. and they're like, we'll let you know when you can do that. Definitely not how that works, but okay.

35:39No, and I wasn't under arrest. It's always like you're free to walk out that door, but implied in that is a week from now we'll be in the windbreakers at 6 a.m. with the cameras arresting you. I had seen enough law and order where that happens. But the female agent, it was good cop, bad cop. The female put her hand on my hand. She saw it was startled. She's like, the FBI is here for you when you're ready to turn your life around. So talk about some psychological games.

36:04You're listening to The Jordan Harbinger Show with our guest, Tipper X. We'll be right back. This episode is sponsored in part by 1-800-CONTACTS. You know that last pair of contacts panic? My wife, Jen, knows it way too well. She's had these mornings where she's out of contacts and stuck wearing these old glasses she's got to keep wiping clean with her sleeve. But now, she makes sure to load up ahead of time because her next set is always on the way from 1-800-CONTACTS. They're the only major retailer that lets you renew your prescription online, so Jen gets her same doctor-prescribed contacts fast with free shipping without leaving the house.

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37:00Getting contacts doesn't have to be a hassle. Let 1-800-CONTACTS get you the lenses you need right now. Order online at 1-800-CONTACTS.com or download the free 1-800-CONTACTS app today. This episode is sponsored in part by Dell. It's time for Cyber Monday, Dell Technologies' biggest sale of the year. Enjoy the lowest prices of the year on select PCs like the Dell 16 Plus featuring Intel Core Ultra processors, and with built-in advanced features, it's the PC that helps you do more faster. Plus, earn Dell rewards and enjoy many other benefits like free shipping, price match guarantee, and expert support.

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37:42This episode is sponsored in part by the GIST podcast. If you're looking for a news podcast that is smart, unfiltered, and doesn't just echo whatever side you already agree with, check out the GIST with my friend Mike Peska. Mike's been doing this longer than just about anyone. It's actually the longest-running daily news podcast. It's earned that spot on Apple's top charts for a reason. And each episode is around 30 minutes, so it's perfect for your commute or while you're making breakfast. It's always packed with sharp, thought-provoking takes. What I love about the gist is that it's not stuck in a partisan box.

38:07Mike, he's a really smart dude. He digs into real questions, the kind that most shows avoid because they don't fit neatly into a political lane. He'll challenge the right. He keeps the left honest. He dives into stuff like the New York City mayoral race, that whole cluster, and the chaos of sports betting, or even whether talking to your plants actually does anything. He's an award-winning journalist. He's not some schmo like me who's totally unqualified. You've probably seen his work in The Atlantic, The Free Press, The Washington Post. He's got that rare mix of wit, skepticism, and depth that makes even heavy topics fun to listen to.

38:36And he's a great dinner guest, just saying. So if you want your daily news with more brains and less noise, check out The Gist with Mike Peska every weekday on YouTube or wherever you get your podcasts. Right back. If you're wondering how I managed to book all these amazing folks for the show, it is about the circle of people that I know, like, and trust. Somebody always introduces me to these people. I'm teaching you how to build the same thing for yourself, whether you might need a new job, get into a different industry, who knows? The course is free over at jordanharbinger.com slash course.

39:03You'll build relationships, you'll maintain relationships, and you'll do it in a way that doesn't make you look like a jag-off. That's the promise of the course, and many of the guests on the show already subscribe and contribute to the course, so come join us. You'll be in smart company where you belong. You can find the course at jordanharbinger.com slash course. Now, back to Tom Harden. I'm so curious how good it feels to go up to, and sorry, this is at your expense, to go up to somebody you know committed a crime and flip open that badge, because you've been thinking about doing that since you were six years old.

39:33It probably never gets old. And you're like, FBI, we just want to talk with you for a few minutes. And then you go and just sit someone down and they're like, I did it. And you're like, oh, this feels so good. It's got to feel so good. I think they gauged if I was flippable, they call it. So they probably tapped my phone, looked at my emails, tracked my daily patterns of going to work when I got home. And then I guess did enough research on me sort of at the start of social media. So you couldn't look at his profiles like you can today. But profiled me enough. They probably felt it's 6.30 in the morning.

40:04We're going to scare this guy. He'll probably flip. He only made a small amount of money. He's probably trying not to get caught. So they profiled me very well where I guess I was very flippable. It wasn't like, guys, let me call my defense attorney on speed dial. It wasn't like the mafia where I don't have a defense attorney on speed dial because they even said, I went home to my wife after work. We were talking about earlier. I didn't have any other things on the side. So I seem like a normal guy. Oh, wow. Just sitting at Wendy's sweating absolute bullets. Yes. It was like those old Charlie Brown cartoons where the teachers will want, want, want.

40:38Yeah. And I'm not hearing it. And I come to, and I think my dad's going to kill me. Yeah. How long was the meeting? So it felt forever. I think it was about an hour. I was late. The market opens at 930. I got to the office at 920. and my boss is like, where have you been? July of 2008, so we're not doing well. Worst market in 75 years. So there's the stress of that. Damn, my God, I just had a late start today. I take it you didn't tell your boss what happened. No, my face was white, but it was 2008, so my face was white all the time. Oh, man. I don't know if I would have been able to go to... I probably would have sat at Wendy's and just stared at the wall for a while.

41:10They walked me out because they said, this is the worst day of your life. We're actually afraid you might step on the street and not try to kill yourself, but you might just be hit by a car because you're so distracted. So they actually, this is the first time I remember this, they actually waved down the cab for me. The FBI waved down the cab that I could get to the office. And they probably didn't want to give you any ideas either. Yeah. You're in shock and you're not thinking clearly. Right. You're thinking you're going to go to prison when really we're just trying to scare you into compliance.

41:35It may be a future asset for them, which I don't know. Right. Right. Yeah. Oh, man. I just can't even imagine how that feels. So I got to the office that afternoon. I thought it would be a great time to talk to somebody as I mentioned I just converted Catholicism my wife's devout Catholic it was important to her two years before we got married that was my last confession during what's called the RCIA process it's a great time to talk to a priest again St. Patrick's walked there really long line for a Tuesday afternoon I remember thinking like how many people in line were tapped by the FBI like do I recognize hey any other hedge fund guys yeah anybody else from Wendy's exactly anybody else on this this path today gotten with the priest forgive me father I went there my whole life story.

42:14And then I waited till the end and said, and by the way, this morning. Yeah. He's probably like, bro, get to the point. Do you see the line outside? Exactly. Come on, man. Or he was like, I just heard that guy's FBI story. So got to it. And he's like, okay, it sounds like what you're telling me, 99 % of your life, you've been on the right path. 1 % of your life, you've made those trades, you really screwed up. But I said I'm suicidal. And he's like, look, you can't let this 1 % of your life decide what you're thinking about yourself and God's here for you. And if they're giving you the chance, he was sort of like legal advice, but from a priest, if they're giving you the chance to clean up the industry, you should probably do it.

42:46And so I walked out. I was thankful I talked to him just to be able to talk to somebody because I had to tell my wife. That was the only person I could tell according to the FBI. I couldn't tell my parents. But it was easier to talk to a priest at least first to get it off my shoulders and get like, that is my penance. Like, okay, I should go cooperate with the FBI, I guess. But I got to talk to my wife first. Sure. Yeah. No kidding. What do they want you to do? And I assume later on they were like, here's the plan. Yeah. Yeah. Yeah. So how did that go down? I waited to tell my wife Friday after work, young couple in New York City, how was your week?

43:15You could wait. I couldn't wait. No, I was having panic attacks, bed sweats. I don't know if I was suicidal, but I always thought about going up to this. I even hate thinking about going up to the top floor of our apartment, looking over and just thinking about why do I want to bring this to her, a newly married couple? We're talking about starting a family soon. Why do I bring this on to her? She's going to leave me. So I said, Friday after work, I have to talk. She was working at Lehman Brothers in 2008. So she had all the stories up to this point. Friday, how was your week? She would just go on for a while, you know, I said, all right, let me go first.

43:41I have something that happened this week. And so I said, I got to sit down for this. And I always try to keep it, make her laugh. And so it's a Tuesday morning, exactly what happened to FBI. And she paused and said, it felt like forever. She said, wait, say that again. That's not what I was expecting. She was probably thinking infidelity or something because I was so serious. And not that she was saying, oh, just some insider trading. Merely a visit from the FBI on casual Tuesday. I said it again. She processed it. She's like, well, you didn't do anything to hurt me. So she was worried about that.

44:07But I would say she's collateral damage. She's no longer married to the future hedge fund manager. She's married to the future FBI informant. And she also said, if they're giving you a chance to clean up the industry, I always told her the industry is so corrupt. She's like, you should do it. Start doing things the right way. And so I said, okay, Monday morning, I'll call the FBI. So I don't know where the stat is. I found it several years ago and I can't find it again. 85 % of marriages end right there when a spouse confesses they're going to be a felon or having convicted, committed a felony during the marriage because she didn't marry Tipper X, the future FBI and felony felon.

44:38She married Tom Harden, what she thought was a good guy. And I've never met anybody in my situation who's actually been beholden to their marriage. And so I'm very lucky that she stayed with me. It wasn't easy. But to have her on my side Friday, that was a big thing that if she had kicked me out, which most wives would have been in for the hedge fund, millions, not for FBI wearing a wire. So I said, I'll call the FBI Monday. I called them, met them outside to go through kind of a confession of all the crimes I've ever done if they're going to work with me. It's called sort of like a proper session.

45:08Like you're supposed to confess all your crimes your whole life if the FBI is going to work with you. I said it was just those four trades. Really? Even unrelated crimes? Even unrelated. Jeez, man. If they're going to put me out as a cooperating witness later on a cross-examination, they can be like, did you know when he was 17, I told them I was speeding. They're like, all right, not speeding when you're 17. But I was like, Napster? I was just throwing everything out there. Napster? They're like, that's okay. that's not how much Metallica music we all did Napster we all rationalize that and I was even like online gambling before it was legal in 2003 they're like that's fine so I'm like all right so those are all my crimes they're okay and they're like god what you screwed up man we expected a couple yeah because they deal with maybe not the financial guys but well actually even the financial I mean just some of the you know people who commit a lot of crimes they're generally pretty awful yeah they're just like confess something to us but if it's just Napster and illegal music and like speeding, you're fine.

45:57You know, they just went back and went like, this freaking moron did this. He was fine. He was fine. They might have even felt a little bad. I think they probably did. This is like a regular guy. There's nothing. And they've obviously done their work on me. Yeah. And so they said, you're going to need to wear this for us. And they held up his fingers like this little device. And I'm so naive. I'm like, is that like a BlackBerry battery? Yeah. Because at the time we had BlackBerrys and iPhones. iPhones weren't allowed in banks or law firms until it was cleared. And so the two devices. Yeah. And they're like, this is a recording device.

46:27I'm like, is that like a wire? They're like, yeah, it's a wire. You're going to have to wear this for us and get people of interest who you think are the worst actors doing this in the conversations. And so it's a weird thing because usually as a cooperator with the FBI, you have to give up an insider trading. Probably your friends, like my friend that I tip these trades on. That's a very terrible situation to be in. Do I take a friend down for what I did? But instead they're like, who are the worst actors? And I'm like, do you know so-and-so in Silicon Valley? I'm pretty sure this is their business model insider trading.

46:55they didn't tell me enough, but they sort of nodded their heads. They're like, can you build a relationship? I'm like, well, this is like a 48-year-old hedge fund manager. This is his reputation. I'm a 29-year-old analyst, but I guess we talked about a cover story for me to get people in conversations, me wearing the wire where it's 2008. I'm looking for an analyst job. Can we meet when I'm in California next to see if you're hiring? And then back in the day, we communicated on AOLIM. So everybody was on my IM that I had missed once. You just ping them and like I'm going to be in San Francisco.

47:25And so the FBI said, okay, this is your first target. This hedge fund manager in San Francisco, who the FBI I think knows is doing it, but doesn't have the actual fact pattern to actually go after this guy. And so I said, yeah, I can get a meeting, pinged him on AOLM, flew out to Silicon Valley. I was going to a conference, so that was my reason for traveling. And then the FBI agent, one of them flew out with me to Silicon Valley, to San Jose, to set up this meeting with this hedge fund manager who was a big target of the investigation. Man, did they train you at all for these conversations? Or are they like, yeah, just go chit-chat and then guide them in the direction of...

47:58It seems like they should train you. There should have been more training because I was kind of thrown to the wolves. Yeah. It was sort of, they said, create some rapport. Hey, I had the four trades last year. I'm a young analyst. I kind of know that you do it too. But if you're accusing somebody of committing a crime for the first or second time you meet them at a Starbucks, it might be a little bit off-putting. but I think psychologically one of your previous guests talked about like raising your eyebrows and showing like your carotid artery is like trustworthy I was actually doing that and I know that that's a sign that you might be like a psycho I don't think I yeah I don't know I was naturally actually just able to talk to people this way but it was weird because it was so off-putting I said I had these four trades how do you do it I'm looking for a job you know I could probably get more information and then the guy that was the target the Silicon Valley guy sort of stood up and said, all right, let's stay in touch.

48:48I felt he was onto me. I felt that the wire at this point, he must have seen it. Yeah, I was going to say, does it feel like it's blinking and huge? And you're like, so pal, like leaning with your collar and like, how about that insider trading we've been doing, making lots of money, illegal money. Right, right. It just seems like everything. And there was no training. It wasn't like I went to the FBI Academy for a week or two to get some training before this. And so I had this really cold thing on my nipple in my front pocket. I just want to get this over with. Yeah. I want to jump to the chase, not bait them, not like small talk, and then put it in there and then cut back to small talk.

49:22I wanted to get right to it as I started doing this. And the FBI agents were sitting at another table in Starbucks. So that was more pressure that they were there. I met them. This guy's going to be there at three o 'clock. He shows up. And I think they wanted to make sure I wouldn't be sliding like a note to you if you're a target, like I'm wearing a wire. I'm going to ask you some questions. So I think that happens. Maybe because I'm thinking, why do they care? Why do they need to watch you do this? Yeah. Because they're not listening in real time. Right. It's literally just a digital record.

49:48That's also important. I think today they might listen in real time, but at that time, it was after the fact. So it's recording it, but they want to make sure I'm not sliding a note. And so I do this. The guy leaves. They're like, how'd it go? I don't know. It was my first time. And then they said, we'll listen to it. We'll be back in New York two days later. I go back to New York and then I meet them. We're always meeting a black town car. So the windows are shaded right outside my office. And so I'm looking. Nobody saw me getting into it. Yeah. That seems really clunky. Yeah. And so I'd get in the Blacktown car and they'd always say, look around.

50:18Is there anybody here that you know? I thought, well, if it's too late, I already got in the Blacktown car. People might. So there was, I guess, nobody there. And they're like, we listened to it, the first recording, and we got nothing. And I kind of snapped in. I was just sort of tired. I was just at home thinking, did it go well? I'm like, hey, guys, it's my first time doing this. I've never done this before, actually. I was comfortable enough to push back a little bit. Like, hey, I knew I was doing something for them now. It's for me, too, hopefully not go to prison. Oh, gosh. So eventually I got good at it.

50:45The hardest thing for me, and I think this might be like a negotiating tactic too, is like be comfortable with the silence. So if I'm asking you the questions, I had these four trades, like I think you do some of that too. Like I think I'm going to have more sources. Just trying to see like how as a young mentee of you as my mentor, bad mentor, how do you do it? I'm trying to get my more sources. And then you'll pause a while and then think. And I had to get through that without me feeling the silence. And then once the person started talking, they'd usually give enough where it was enough for the FBI to say, that's enough.

51:16Thank you so much. I'll do the next one. And I guess they'd approach that guy dropping off a strike. You know, whatever that person did and felt these cases. Wow. Okay. So you got pretty good at this. I know. How many conversations do you think you had? So I think it was 48 before I hired an attorney. So I didn't hire an attorney for a year. Oh my God. So I was running, just taking the FBI's orders. I kind of felt like in the end, it would be best if I just took their orders and pretended like I was working for them. and I know we've talked before the episode about frank abing now and I kind of felt like I had seen the movie like maybe I'll be like working for the fbi like he was in the movie at the end of his journey and maybe that'll be me as like the next frank abing now and so this is the fbi even told me this was I was doing this for my country so there was some like patriotic yeah part of this country needs you the country needs you until they don't until we're done with you and then you're going to prison and I talked to an attorney and he's like again I was googling All I knew about insider trading was Martha Stewart at that time.

52:11So I called her attorney and he's like, you're not going to trial. I'll call somebody else. There's less of a legal bill. Oh, right. Yeah. Call me when you have$13 million to pay my friend. So pleading guilty as a cooperator. Yeah. I called the guy. He's like, Tom, you're supposed to take their card and not talk. And again, I'm like, so naive. I'm like, hey, it's my first time doing this. That was sort of a refrain. Yeah. First time naive. And he's like, how many times you wear a wire? 48. He's like, did you make millions? I'm like, no, the punchline was the 46 ,000. And he's like, they got a lot of flesh out of you for$46 ,000, but I guess I saved a year of legal fees.

52:41I don't know. Yeah, you probably did. Yeah, you saved a year of legal fees. That's the way you should look at it. But also, you should have hired an attorney earlier, I suppose. Yes. Were you still working at the firm? I guess you must have been if you're having all these conversations. So in 2008, 2009 was my cooperation. I was still working at the firm in 2008 the whole time. So financial crisis, having the double life. Again, telling myself, I was able to play mind games where it's sort of like cloak and dagger. I'm at work by day and then wearing a wire. I didn't know I was Tipper X until later, but I have this mysterious life now.

53:14I was trying to find anything that would just keep me positive from going back to those suicidal dark thoughts. They weren't saying I was good at it, but I felt I was getting pretty good at it because then once I had enough, they'd end that conversation, go to the next one. I just kept bringing them, building these relationships, bringing them people. I rationalized it. How did I wear a wire on these people? I felt if I'm going down for this and this is their business model making millions, like the patriotic thing to do would be to help clean up the industry. I mean, that's not, sometimes people say I'm a whistleblower.

53:42Like, no, that's not whistleblowing. It's like, I'm not going to go do this unless they confronted me about what I did. Sure. Yeah, no, that makes a lot of sense. How was your performance at work though? Coming in, probably slept like crap. I don't know if you're really, your heart's into it at that point. It wasn't into it. It was terrible. I was losing money. Early 2009, I left and I don't think my boss was really missing me. that point sort of like uh it was a terrible terrible year 2008 i'm not focused on my job because i'm just focused on this other side hustle yeah you're happy of uh wearing the wire wearing the wire yeah after you left the firm were you still taking meetings with people how did you get them to talk if you were already yeah so now it's 2008 i did terrible last year like some of the best stock pickers it was the worst year of the career so that was an easy thing i'm looking around i'm going to take my time we call it finding a seat so i'm looking for a seat you know well, I am looking for a seat to a target hedge fund manager.

54:35Can we go meet if they're in New York? It was always Starbucks meetings. And so meet at the Starbucks. I'm looking for a seat. I'm going to take my time. This episode sponsored by Starbucks where tons of white collar crime. We started with the golf game in Seattle. And so meet there. And then it was an easy cover. Like I'm just looking for a job. I knew about the four trades. I'm developing those sources. How do you do it? That pause, which seemed like forever, I was getting used to. They'd size me up. And then they'd start talking and off. give me a little bit more of that. Or we'd have follow-up conversations where the FBI was sort of clunky.

55:06They'd have me dial a number for recording it and then dial the person. Half the time, the person would answer and you'd hear click. Click, click. And then one guy was like, did you hear that? But at the time, I just switched to iPhone without the Blackberry because I left my firm. I said, I just got this iPhone 2. I think it was the iPhone 2. I think it's a new thing. It's so cringe. Like, oh, hey, maybe when we're secretly recording conversations with criminals, we could make it not beep or click in and out like a 1995 call waiting. There was a lot of trips with the FBI to Radio Shack to get new equipment.

55:39And at that time, Radio Shack was going bankrupt. I remember thinking the FBI might be the only people keeping Radio Shack. And also, why is the FBI buying equipment from Radio Shack? That's a little disconcerting as well. Government budget, I guess. I don't know. But we go in. There was one in Times Square near my apartment. We'd go in for a new recording device, and they'd pick it off the shelf. We were the only ones in there. Jeez. So if anybody has that recording pen from Radio Shack, it's like, what has this guy been up to? Why do you have that? The only people have seen that with our FBI agents.

56:08That's something. Did anybody suspect you? Was anybody like, hey, man, you're asking me a lot of questions about crime, and I met you five minutes ago over lattes. There was one guy. I think he was probably pretty high up the FBI's list who I got in 15 conversations over 2008, early 2009. He'd always change the subject. So we would pause. I'm not filling in the pause. I'm doing my job, not changing the subject. He changed the subject. I'm like, it's just not going well. And the FBI is like, yeah, this guy's a tough nut to crack. Sunday afternoon, he gives me a call and he's like, we need to have dinner tonight.

56:39We need to talk. And he lives in Greenwich, Connecticut, a suburb of New York City. I live in Manhattan. On a Sunday night, we need to talk. So I couldn't get excited. This guy is going to confess all these meetings. I call the FBI. They get excited. They're like, he said he's going to talk. I'm Give me the wire. I'll take the train out to Greenwich. This guy will pick me up at the train station, and we'll see what this is about on a Sunday. Get to Greenwich. He picks me up at the train station. He said, Tom, good to see you. I brought these swim trunks for you. We're going to go swimming at my mother's house.

57:14That's weird, man. And the Sopranos was popper that summer. All these ideas were going through my head. Right. But I was so used to wearing the wire, my heart rate was up a little bit, but I'm like, all right. But it's not taped to your body. No, right. So it's in my front pocket. So clearly this is a game and he must have talked to an attorney and see if this guy's wearing a wire. Or he literally just watches too many mafia movies. He's like, how do I do this? How do I get this? How do I expose this guy? Yeah. So let's go swimming. So we go to this old mansion in Greenwich. He's like, let's go into this room.

57:39He starts disrupting this room. I'm like, all right, dude, this is awkward. I don't even know him that well. I'm going to go in the restroom and change. Yeah. I take the wire out, put it in my jeans, put it in these swim trunks, put the jeans on the bed. So it's the two of us walking out to this pool. It's so quiet. I saw a shovel against the house, a hole in the ground. I said, holy shit, is this guy going to kill me or something? I saw there was plants. I'm like, all right, landscaping. So I get in the swimming pool. He grabs a tennis ball and we start playing this awkward game of catch. That's so weird.

58:09So he's whoring it on psychologically. And after a few minutes of freaking me out, I'm dropping the ball, literally. Why catch? Well, I don't know. We're playing this awkward game of catch. Let's get warmed up or something. and he said, Tom, I've been acting kind of weird for a while. Tom, I spoke to an attorney. Here it comes. I have to ask you a question. And I was going to give up my cover. I was so scared. Like the FBI will understand the situation. I feel my life's in danger. I'm going to give it up. I'm like, what do you want to know? And he said, okay, has the SEC approached you? And he got his acronym wrong.

58:40And so I can say, no, not the SEC. And I forgot exactly what he said. He's like, all right, sorry, I just had to make sure you weren't wearing a wire. And then he starts making implicating statements about all the illicit trades I'd asked him about, but it wasn't recorded. And for whatever reason, the FBI pitches these cases to the prosecutors and they have to decide to bring the case. The prosecutor would never brought the case against this guy who was one of the worst actors. And up until a few years ago, he was still managing money for endowments and pensions. He was still in the game. How much money do you think that guy made?

59:13Millions and millions of dollars. It was probably a$200 million hedge fund, which actually today is small, but like it was him and one analyst. So I'm sure he kept most of the profits. Oh my goodness. And every quarter, three or four stocks, he would trade perfectly with the information. Yeah. And I'm just so befuddled. Like the years would go on when I was charged and I kind of got like, why was it me and not him? Like I kind of got in that headspace later. Like it's not fair, but my wife slapped me around. She's like, Hey, they got you. They didn't get him. Let's man up and get to figure out your life.

59:41Wow. Yeah. this is the jordan harbinger show with our guest tom harden we'll be right back hey if you like this episode of the show i invite you to do what other smart and considerate and probably good looking listeners do which is take a moment and support our amazing sponsors all the deals discount codes and ways to support the show are all in one place jordanharbinger.com slash deals you can also search for any sponsor using the ai chat box on the website you could even email me I'll dig it up for you. That's how important it is for you to use those little codes. Thank you for supporting those who support us.

1:00:13Now for the rest of my conversation with Tom Harden. For me, I don't know what the statute of limitations is on this stuff. Do you happen to? I'm not sure. I think for that, for what I was asking about 15 years ago, I think it's passed. I want to say 10, maybe it was five. I wonder if the civil penalties wear off from the SEC. They may not, but I'm not, actually that's a good question. Everything I've learned with all my training last few is I don't know. Yeah, because basically my point is he may not be out of the woods when they get ai to go comb over that and they go ah okay so there's a your better chance of getting struck by lightning three times in a week than making all these trades perfectly that's enough to go after you civilly maybe not criminally yeah and you have to give back the money and he goes oops i have three boats two houses right three wives i can't afford that and then he's broke for the rest of his life like that's maybe he's not out of the woods i don't know yeah thinking perhaps maybe i met i actually met his um chief compliance officer years later when I started doing the corporate training.

1:01:09And she obviously doesn't know about this. I'm like, I don't think I should go in there. Yeah. That would be awkward. Interesting that he even has a chief compliance officer. Right, right. Why bother? Checking the box maybe. The pool thing is so weird and scary. Yeah. It was right out of a movie or, as I said, The Sopranos was a big show that summer. Yeah. And I knew he was on to me. He's doing this. And so. And like he was definitely on to it. Yeah. There's no getting around that. He knew. He just didn't say FBI. So if he had said to the FBI approach you, you would have cracked. I would have cracked right there.

1:01:39Yeah. Right. The wires in your bathroom. I even tried to give him a hint. I said, no, not the SEC. Like, didn't pick it up. Right. He was like, okay. He's like, sorry for that. I know it was weird. Like, I just had to make sure you weren't wearing a wire. But most of the thinking, the wires and the jeans in your guest room bed, why don't you have somebody, like your kid, go through my jeans or something and look for it? But he didn't. Yeah. Well, he's definitely not an experienced organized criminal. No. Most of these people weren't. Yeah. Oh, God. Did you ever think I'm bringing down these people because of mistakes I made?

1:02:10Or were you thinking, you know, these are all bad actors too. I'm just the agent of their destruction. Yeah. The way I rationalized it, like, because I could have the first day told the FBI or come back to them and said, you know what? Okay. You're telling me I have to wear the wire that first meeting. I'm not going to bring people down for what I did. Yeah. And so I didn't mention friends' names, but they gave me this opening where who do you think, Tom, are the worst actors? And so I could come back to them and say, okay, these are the worst actors. So again. That I also don't like. I don't write exactly.

1:02:36It's sort of like the patriotic, noble thing to do for the country now. Making lemonade on my lemons would be to take down who I think are the worst actors. And again, try to get in my mind, I'm doing the right thing now. And luckily it wasn't like, go wear a wire on your best friend or something. That would have been something where I don't think. And eventually it got to a point where they kept asking me for names. I have an attorney and they're like, Tom, what about your two friends that you tipped? And I drew the line there. And my attorney's like, you're risking it. They could see you didn't do enough.

1:03:03And then they were done with me. So So January 2010, Tipper X is Tom Harden was all over the front of the Wall Street Journal when printed papers were still popular in circulation. So when my name came out, anybody that knew me cut ties. I'm sure their compliance officers were like, if you know anybody in these cases, cut ties. Cut ties. So in terms of my name becoming public, only my wife knew. I had to tell my parents, I had to tell my in-laws. Because they weren't really following these cases. And the headline was Tipper X revealed. So if you're not following the cases, I'm not reading that article.

1:03:33So a lot of people didn't really see it the first day. Do you have a Google alert set up for your name? I did. That must have been a tough morning. Yeah, yeah. So it came the night before. So the night before that printed paper. Oof. It's like 7 to 30. And so I went to my in-laws and told them, because my father-in-law used to work at J.P. Morgan, so he's going to probably fall on this. I want to tell them first. And so they couldn't tell you before then. And of all things, like they were understanding actually. So that was helpful. Very lucky. Yeah. When my name came out, you kind of figure out who your true friends are.

1:03:58Like I lost 40 something Facebook friends. Sure. LinkedIn connections. But then four people reached out for me from Penn that were like, hey, man, And I just saw this. I know it's not news for you. It's news for me. If you ever need to get a drink or coffee to talk about it, I know who you are. And it's not a recommendation to figure out who your true friends are this way, but it actually is how things worked out. So 12, 13 years later, those are some of my closest friends who were there that day. Yeah. So that's how I figured out. It blows up your whole network because people feel like, wait, Tiporex is Tom Harden, Raj Rajaratnam, Rumi Khan, Tom Harden.

1:04:28Like, what? Ashmo? Yeah, exactly. That guy who's a regular life. Yikes, man. And then, okay, after you get all these guys, you're wearing the wire, your name comes out. Is that like the worst day of your life, would you say? That was the second worst day, I think, because I'm a stay-at-home dad. Kind of feel like as a man, I can't provide for my family, emasculated. My first daughter, Molly, was a few months old then, stayed home with her. Reporters are calling constantly. It's a 24-hour story, but at the time, it feels like they're going to talk about this forever. Forever, yeah. They're calling, they're calling, they're calling.

1:04:58Somebody comes to the door. My wife, thank God, is still working, so at least we could just pay the basics of the mortgage. because we just bought a house in double income right before, right around the time the FBI approached me. And so she's at least holding down the fort. Jeez, that's so awful. And so she's going to work. She doesn't want to be awake. Like, I should be the one going to work. She should be at home with her daughter, the maternal bond. So I'm the stay-at-home dad. I feel like a piece of shit. This is happening. She gets home. She's holding my daughter and just crying. The reporters are calling and talking about feeling like the worst I've ever felt as a husband, as a father, as a person.

1:05:27And I can't change what happened, right? I can't change it. I can only try to, like, manage this as best as I can. but feeling the lowest of the low. Yeah. It was probably right there. Like the wife's holding the baby, crying. And it's everything I did to bring onto my family into the marriage. And she's staying with me in 85 % of the marriages that don't end this way. And it's not clear it's going to continue to hold together, but it's just for now. Yeah. And the reporters are calling. The New York Times reporter put her name in an article. Back in the day, we had this family blog just sharing news with my family in the South.

1:05:54The New York Times reporter went to the family blog and said, Tom's wife keeps a family blog talking about this and that because they're trying to get a reaction from me. my attorney said, don't talk to any newspapers when they reach out to you. But he's trying to get a reaction with that low, put her name in the article. So I was pissed. But it's all everything I did. It was all self-inflicted. I did this all to my family and myself. Gosh. Is the FBI giving you assurances like, hey, though, you're off the hook because of your help or not? Not so much. They said they would, back when I was wearing the wire on people, before my name is public, they said they did threat assessments on every target.

1:06:27But the swimming pool incident, I did notes here years later. So my first speaking engagement was at the FBI. And they said, actually, we thought that was a weird request. And the black town car drove up, followed the Metro North train up to Greenwich and was right across the street from that guy's house. But there was a hole in the ground. There was a gun or something. Yeah, great. So they find your body quickly is the upside for that. Yeah, yeah, yeah, yeah. And so they said they were there. They felt bad about it. But there you go. We'll feel really bad if this guy gets killed by this guy. Yeah, but you did a threat assessment, right?

1:06:59Yeah. I mean, he hasn't killed anyone before. We looked up his criminal record. He doesn't really have one. Like, okay. I mean, what does that even mean? Threat assessment. They didn't go to his house. They didn't look at his emails. Probably nothing. And my alarm said, they're using me until they couldn't use me anymore. And once I finally got counsel, and he said, they've got a lot of flesh out of you for$46 ,000. And you could probably stop here. And they also told me, Tom, you're doing such a great job. I thought maybe they would hire me again, going back to our previous mention on Frank gabbing they're like yeah maybe this will be my second career working with the fbi and the punch line is no just a cooperating witness that yeah or a wire until they were used you it's like a weird semi maybe not abusive relationship but one where like it sounds like a lot of relationships i would imagine out there like oh yeah this is my girlfriend and her boyfriend and it's like well for now yeah yeah it's very temporary one person has all the cards the other person has none yeah So they eventually arrest you, I would assume?

1:07:56So I'm eventually, so January, my name became public. December, I pled guilty. And that's very much a formality. So I had to self-surrender downtown at the FBI. But that's like the formality of like, they even apologize. They're like, it's procedure. We have to handcuff you and walk you in. The agent was like, my boss is behind me. And this is like, we have to do so. Walk into FBI's office downtown New York City, handcuffed. And then I go get processed. And then I'm taken to the US Marshal's office where I'm processed further. And there's like a small holding cell until I go give the judge my guilty plea.

1:08:27And like, I'm the only person in this holding cell wearing a suit. There's like guys in there who know the people here at this office. They're in there all the time. And one guy with tats up his neck looking at me, he's like, hey, what are you in here for? Insider trading? I'm like, yeah, you know. Everybody knows. Yeah. I'm Tipper X. Like, wow, that guy reads the Wall Street Journal? It was really a sick comment. What did he do? Right, exactly. So he knew all the people in the U.S. Marshal's office. So I'm sure it's a repeat drug thing or whatever. I didn't realize they even handled that stuff.

1:08:55Yeah, yeah, yeah. I guess maybe like the federal crime. So before you give your guilty plea, U.S. Marshals come in and do their own thing. He was like, but I won't see you here again. I'm thinking like, hopefully not. Yeah, I hope not. And I go see my guilty plea and the judge like, how do you plead? And it says United States of America versus Thomas Harden. Scary. Another humbling day. Like the FBI said I was like working for them. Like I'm kind of like an agent. Where's my badness? Yeah, I'm on your side, guys. I'm doing it. And it's like, wait, for my country, but it says your country against you.

1:09:23And so I realized, all right, this is all in my head is self-delusion. And then the assistant prosecutor is there. And in financial crime cases, the standard procedure is the judge says, are the victims present? The young prosecutor says, there's no victims. Talk about rationalization. Exhale. Yeah. Like, what? No victims. Now, the company's information is stolen inside our trading. It's not fair, you know, doping. But like, the prosecutor just said, there's no victims. And wow, like, that was a statement. Can I get that edged on a piece of paper? I want to show my parents who are really pissed right now.

1:09:51Did you tell your parents that you had to at some point? Yeah, at some point they were flying up to visit my daughter and that was a tough conversation because they feel like they know me as their son and it took a while. Just telling people was the worst because it's like I did it and I can't change what I did in the past and I had to tell them about this. And it was rough telling my brother's family slowly over time. And some people know, some people don't for years. Yeah, I would assume now. Yeah, now I'm out there talking about it. Now you're telling everybody who listens. There we go. I've got the listeners here.

1:10:20Because for years, I was a stay-at-home dad, and I went to be a professional speaker. And then the mom groups were like, you have to have a story. And is it the one minute? I'm an ethics trainer. You know Wall Street. They need their ethics training. Oh, why did you get that? You have to have an hour. Here's the thing. Yeah, exactly. But I guess, hey, if you're going to be, this is a felony. So I pled guilty to securities fraud there. Okay. I'm experienced to commit securities fraud. The sentencing guidelines is based on the money my firm made, just over a million. So I was looking at three years in prison.

1:10:46had I not cooperated. It depends on the judge you get. And you can check judge ratings online to see if they're pro-defense or pro-prosecution. She is pretty neutral. And so we felt pretty good that hopefully I wouldn't get prison. But judges sometimes, especially with Occupy Wall Street was big, let's make an example of these people. I'm sorry, but you're still going to have to do six months or something just because I have to make a statement to these people in Zuccotti Park that are burning it down that you're not going to get off. And so they prosecuted all these insider trading cases, but famously never went after the mortgage fraud and all that, because those are harder cases to explain to a jury.

1:11:18Insider trading, this guy called this guy, this guy traded. Okay, that's easy. Right. The jury can wrap their head around it as opposed to like, yeah, what happened was here's 16 different parties that were all kind of complicit. And you're explaining that to somebody who's like - Like the big short sloloquy when you're trying to explain that to the jury. Yeah, good luck. Did you have to testify in court against any of the proceedings? I never did. I was called in and prepped few times to testify, but these people eventually, I think most of them actually became cooperators themselves. The few that went to trial, we prepped for that.

1:11:44But they were eventually, I think, pretty much all found guilty. Like 85 people were found guilty. And then there was 32 cooperators like me of the 85. So quite a few people wore the wire. But I got credit with building 20 of the 85 cases. So I was one off or two off from the major individuals. But because they got them because of me, so you get credit. And to the FBI's credit, they wrote me a very nice, what's called a 5K letter at my sentencing. And this is the bad stuff he did, but this is the good stuff to have some balance on this going into sentencing. Sentencing didn't happen until like almost seven years after the FBI approached me.

1:12:18It took a long time. That's horrible. I want to highlight that because seven years, let's say six, seven years. So the whole time during that time, you know that you're in trouble, but you don't know whether you're going to prison at all, whether it's going to be three years, whether it's going to be probation. You just have no idea. And you spend the better part of a decade just losing sleep over that. Just waiting. So 2010, Tipper X is Tom Harden. So forget applying for a job because you have to check the box. Yes, I have a felony. I'd fill the whole thing out. Please explain. I was Tipper X.

1:12:48I was doing the noble thing, the patriotic thing. And they're like, but you still have a felony conviction. Nope. Non-starter. I might need some time off after I start. Why? Oh, I may be going to federal prison for one to three years. But just hire me. It'll look great, Mr. and Mrs. Employee, if you hire me and that's in the newspaper that you hired me, that'll look great for you. So HR has gotten away. My lawyer was like, start your own company. So before Amazon FBA was a thing, I got into like, oh, Alibaba, you could buy these placemats there and sell them on Amazon for a lot more. So I was sort of one of the pioneers that I didn't stay with it with the FBA phenomenon that people are familiar with on Amazon.

1:13:23And then my Alibaba suppliers started hijacking my listings. And then a week later, so this is years later in 2015, the FBI, 2016, actually, the FBI invited me to speak. I was sentenced in 2015 to no prison. It's called time served because of my cooperation. And the judge is basically, it's been almost seven years. What's the point of six months in prison? Plus, I would have liked to think they went, oh, we've already tortured this guy psychologically for the entire investigation, the entire period waiting for sentencing. If he's going to do it again, it would have done it already. And he's not in a position to do it again anyways.

1:13:58Yeah. And I didn't look healthy. I was an emaciated ultramarathon runner. I'm sure. They're like, this guy's going to freaking croak in prison. We don't need that. This guy's running 100 miles a week. Is something wrong with that? Yeah. So the employment stuff, the job search seems really almost impossible, of course. It's really impossible. It's almost like the white collar fellow not to draw a pity. It's almost like worse. Like I had this incredible upbringing. I should have known what I was doing was wrong versus a violent criminal born into a terrible life situation with one parent or no parents, kill someone.

1:14:27You can almost forget the 15-year-old that did that and 20 years later, they're out of prison and they're starting their life and there's many programs that reacclimate people like this into society that build businesses and so but the white collar guy Wharton like inside like he should have known better so it's almost like the stigma I don't want to say it's worse but it's should have known better I think so yeah I know I get what you mean are you allowed to trade at all can you buy in trade stocks on your own or not at all yeah so I can't have any personal brokerage account in my name okay and the only thing that I can trade is actually crypto.

1:14:58I did not - A totally legit above board market. No crimes happening there. And so I don't even touch it because I know if the SEC is now focusing on that, they're going to look at if I was trading crypto, they'd probably look at me. Oh, yeah. I can, through my speaking business, I can have an ETF only account in my wife's name at Vanguard. So you just think about owning just the S &P 500. Right, mutual funds. Can't pick stocks. Yeah, exactly. Cannot pick single stocks. And so I think I'd be too nervous too to ever be back at that. If it was a all-time trade or something. Yeah, the crypto thing makes sense, right?

1:15:27You don't want the SEC going, aha, well, we're going to go back and make an example out of, oh, we have a guy who already got in trouble for this. And then the judge goes, let me get this straight. You did this, and now you're doing this? You just talk about federal prison. Yeah, yeah, yeah. No, that's recidivism. Yes, super, super scary. I assume there were other people that you knew were insider trading, never got caught. I mean, you kind of mentioned earlier in the show, there was that one guy who made millions of dollars doing that. How many of those guys do you think you know if you had to just ballpark guess?

1:15:57Right. So I think there was 85 people, give or take, charged. In my mind, the three worst people were never charged. Oh, wow. One of the three is the swimming pool guy. I think what happened is they were managing smaller hedge funds. And so the dollar amounts on the trades did not correspond to the federal sentencing guidelines. So the more money you make, the longer in prison you go. And so in terms of the FBI and the SEC building cases, they want to have the maximum impact, I guess, on prison sentences. And that's if you're managing a$5 billion hedge fund like this guy Raj Rajaratnam, he made a lot more than a few million, made hundreds of millions.

1:16:32And so that's a longer prison sentence versus these smaller players who had more well-timed trades, I feel like, than anybody just because it was dollar amounts that were smaller than some of the bigger fish. Or they got nobody to cooperate on them. So I feel like even though they got 85 people, like the three worst. I kept checking for their names years later. Where is it? And a lot of it was like, I went through the why me for$46 ,000 and why not the swimming pool guy. And again, my wife, unbelievable, like tough love. Hey, is that getting anywhere? Hey, did you find a job? Are you looking for these?

1:17:02You crying about that guy? Oh gosh. That is tough. Yeah. The one decision I made that was good was who I married. Yeah. It sounds like it. Yeah. I think you got pretty lucky there big time. She might've also really wanted to divorce you, but is Catholic and was like, fine. I won't. Yeah, yeah. Now she probably is glad that you guys are married. You seem like a nice enough guy. Yeah, yeah. We try to be 18 years now, so we try. Yeah, yeah. Do you feel bad at all about what you had to do? I mean, it's probably kind of a dumb question, but you know what I mean. Yeah, yeah, I know what you mean. I think I struggled over the years, even when I started speaking.

1:17:37So just since 2015, to no prison, I was a vegan ultramarathon runner and a mutual friend of ours, Rich Roll, the producer reached out, and said, this would be a great episode. The first time I ever bared my soul was about a week after I was sentencing on Rich's podcast. Yeah, you sounded different on that show. I listened to it recently because I was talking to Rich about it. I said, hey, I'm meeting Tipper X in New York, and I listened to your show. You sounded like a really scared child. Yes. Yeah, it was. I felt bad for you. I don't want to be too polished today. And I think I, to your point.

1:18:07No, don't worry. You're not polished at all. This is pretty terrible. Yeah, yeah, yeah. So that was like eight years ago, 2015. the FBI agent who was the boss of the guys I work with heard that episode because he was also a fan of the podcast. Months later, I guess he listened to it 2016. They call and I see it's a restricted number. I'm like, this cannot be them again. This cannot be when the FBI calls you, it's sort of like, it doesn't say the FBI. No caller ID or something like that. So I'm like, it can't be. And I'm making coffee. My wife's in the kitchen, stayed with me. And I call him like, hello?

1:18:39Like, hey, it's so-and-so from the FBI. And my wife can see my expression like it's them. And she's probably thinking, what the hell did you do now? Yeah, what did you do now? How were you even in a position to screw this up? I was at the Napster. Told you not to download those movies on BitTorrent. Exactly, exactly. And so he's like, I heard you on Rich Wall, a great interview. You know, Tom, you were the youngest guy we charged back in those 85 cases. And the 46 ,000 was the lowest. I was thinking, are you calling to rub it in? I wasn't good. I was trying not to get caught. And we're like, well, that's the whole thing.

1:19:09It was a very human story. Could you come talk to our rookie agents who were building some new cases again around insider trading in 2016? Just about what was it like when they approached people on the street dropping off their dry cleaning? So the first thing I said, well, you shouldn't tell them not to hire an attorney. Oh, sorry. We said that. So, okay. But they're playing a game. They're just trying to build cases. Oh, we didn't say that. I don't remember that. I would never do that. That seems unethical. So the FBI invites me to speak. So I figured I have nothing to lose. I have nothing to lose professionally going.

1:19:36Alibaba's hijacking my Amazon FBI business. Like, all right, I got nothing. When you say Alibaba, is that, okay, you're buying widgets on Alibaba and you're flipping them on Amazon for a markup and then the seller goes, oh, I'll take that myself. I'll take the buy box for a dollar less or whatever. Yeah, yeah, yeah. So it's not coming to me. Yeah. Copy your sales copy. Exactly. And so the FBI might speak. So to your long answer, so I speak very dark presentation, like still felt like a piece of shit, like awful. And they're like, go make lemonade or lemons. This is a great story. So I start speaking for free for months at public libraries, at chambers of commerce, where it's like four 85-year-olds give me a clap or whatever, just to get practice.

1:20:11Because it's the worst thing I've ever done, telling people every week now. I felt a lot of shame and guilt. And so shame, just to think about this, I didn't think about the difference. Shame is I'm a terrible person. Guilt is a bad thing. And my penance, maybe it's some of my Catholicism, is to go talk about it every week. And I didn't realize the difference until someday, maybe a year into speaking, and they were like, that was really dark. Are you okay? And the event planner at a conference is like, it was great. It got great reviews. But as an event planner, I always want to make sure the speaker's okay.

1:20:40Like you never want the audience to feel like, bro, like you still have to work some things out. Yikes. Make sure that guy, give him a gift card for some therapy after the event. And I never talked to a doctor or anything about this, just my wife. And a priest, right? And a priest. Yeah. Yeah, and a lawyer. And so I was dealing with the shame and the guilt. I still have guilt for what I did because I think like at this point, not that I've cleaned up my reputation, but I do have a new reputation as a speaker and I've had to have some professional opportunities to go, hey, could you come be head of training for our consultancy?

1:21:08Because yeah, you have your story, but you're such a good trainer and hit people. I actually have opportunities now to do something professionally. So checking the box of the felony is not so much there. But the guilt for me holding myself accountable every week now for seven years, it's important to me. And it's not so much, I don't think like, I think I'm happy doing it, but happiness is probably the wrong word. I just feel like I wanted to go to the grave and think about like, what are people going to say in the end? Like, is it going to be the four stock tickers? Or hopefully I'm 45, hopefully I'm 60 or something and still telling a version of this story and doing it.

1:21:37It's like the second career. So that keeps me going. But the guilt always keeps me going. It's like a flickering flame about, I just don't want somebody, when I speak to, especially universities, they're never going to forget it. And I want them to feel like if you're at that crossroads of going left to right, or the proverbial Rumi Khan calls you in your career, this is, I remember this guy's story and oh, I'm saying everybody's doing this, whatever. Oh yeah, he talked about that. It's not worth it. Yeah. Wow. Interesting. If you could go back and not do it and then just stay a stock picker, work at a hedge fund, would you take that chance?

1:22:09I miss the intellectual stimulation of that career. There was nothing like talking about the markets, what happened overnight in Asia, Europe, how it was going to impact the portfolio. The people that you're surrounded with there are some of the smartest people in the world. So I miss that intellectual stimulation. So I do miss that line of career because it's really hard to transfer the scales without felonies or not. Stock picker going to do something else, Amazon FBA, like it's not really transferable. Right. Like analyzing businesses and that. So, but I kind of look at it now, like it was terrible to go through, but I'm happy.

1:22:39I think I'm happy it happened. Like they stopped me after four trades. What if it was five years and four trades a year, 20 trades, more than 46 ,000. They stopped me when they did. They knew they could probably flip me. and then they called me years later and said, come talk about it. And so I think, I don't want to be cliche, everything happens for a reason, but I think there's a reason they stopped me to put me on this path. It had to be kind of a process to realize that your whole life is not defined by this one choice, like the priest told you. Yes, it took years. I couldn't have, 2010 Tipper X is revealed, I couldn't have said, okay, let me start doing the corporate training circuit a few months after that.

1:23:13Now my name is out because I felt terrible going through the shame. Those were tough years. Yeah, I wasn't ready to go talk about it. Or I didn't understand why I did what I did until I spoke at the FBI. And they're like, go read this Daniel Kahneman. He got a Nobel Prize about this stuff, sort of system one and system two, thinking how you can react or how you don't react. Or go read Danny Ariely, Why Do Good People Do Bad Things? Like that's one of his TED Talks or whatever. Dan's got fantastic YouTube talks about why do good people do bad things? And like the two Dans, at least going through their first two books, I'm like, not that I felt better, but I'm like, I'm not the only one that rationalizes.

1:23:45And the FB is like, you're certainly not. And if I'm willing to do the work to understand the psychology behind it, that's where the presentation, the churning really comes in. Because the story is not going to get younger, but it's the decision making that never changes really. I'm on the fence on saying this on the show, and I don't know if you know the answer. But okay, let's say you know back then a bunch of people who are insider trading. Couldn't you just copy their trades? Is that then insider trading? If you suspect they're doing something shady, but you don't have the information, you just copy their trades.

1:24:15and your fund is you copying trades from people who you suspect have insider information, is that enough to get you in trouble? Technically, it's legal. Yeah. But if you're trading contemporaneously at the same time, if you're mirroring, shadowing these trades, you're going to get that phone call, at least from the SEC. And if they say, why are you doing it? Oh, I just copied these other funds. I know those guys all do well. You wouldn't say, I suspect they're insider trading. But those guys always do well. It's like copying the smart kid's homework. Right, right. Teacher doesn't love it. At least you're putting yourself in a position to open yourself to an investigation at your firms.

1:24:47Your general counsel will come in and say, oh, we've got millions in legal fees because what were you doing if you're a... But what are my returns like? Exactly. Exactly. That's the problem, right? This is not legal advice. This is the ROI, yeah. I'm just thinking out loud. Okay. Yeah. Well, thank you very much, man. I really appreciate you coming in and baring your soul a little bit here on a podcast in front of a lot of people that could say not very nice things to you on Twitter as a result or email you. I think most people would appreciate this kind of thing. No, thanks for having me on, Jordan.

1:25:15Anybody that wants to reach out, I totally own my story now. It's tipperx.com and I'm on all the socials, I am tipperx. Sometimes people call and they're just saying, I'm going through this at work or something's going down. I'm happy to chat. I've heard a lot of stories. I bet. So now you train ethics, yeah? You want to plug that? tipperx.com is the website. It has all my information there. Usually what will happen is in a regulated industry, the chief compliance officer will have this annual training every year, which I'm sure people listening have been through check the box training or watch super boring.

1:25:42Yeah. It's so boring just to show the regulator whatever industry does. We have this training, we have to do it. And so I come in, share the story that you heard today, but customize it for the client. If it's a financial services firm or healthcare, there's a lot of rules and laws. You can't cross the line. How do you rationalize it? And I go in and share the story. And it's usually like an hour or more than that. Sit down, fireside chat sometimes, really customize it. So do that. And I'm also a conference speaker, usually the right before drinks with the interesting life story. Just as long as I spell that swimming pool story at the conference and it's their money.

1:26:15That's a good visual, right? You awkwardly playing catch with a tennis ball, a wet tennis ball in some empty house in the middle of upstate New York. Yeah, yeah. I have some slides in my PowerPoint to have the picture, not the actual pool, but pictures that went to life. Yikes. Well, thank you very much, man. Really, really appreciate you. Appreciate it. All Things Tom Harden will be in the show notes at jordanharbinger.com or you can ask the AI chat bot on the website. Transcripts in the show notes, advertisers, deals, discount codes, ways to support the show, all at jordanharbinger.com slash deals.

1:26:47Please consider supporting those who support the show. Also our newsletter, every week, the team and I dig into an older episode of the show. We dissect the lessons from it. So if you're a fan of the show, which I hope you are, and you want a recap of important highlights and takeaways, or you just want to know what to listen to next, the newsletter's a great place to do that. jordanharbinger.com slash news is where you can find it. I'm going to be doing some giveaways there and stuff like that. We've got a lot of fun stuff planned. I'm at Jordan Harbinger on Twitter and Instagram. Don't forget about Six Minute Networking as well over on the website.

1:27:15This show is created in association with Podcast One. My team is Jen Harbinger, Jace Sanderson, Robert Fogarty, Millie Ocampo, Ian Baird, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for this show is you share it with friends when you find something useful or interesting. The greatest compliment you can give us is to share the show with those you care about. If you know somebody who is thinking about committing financial fraud, I don't know, share this episode with them. Or, you know, most likely somebody who would be interested in the story. Share this episode with them. In the meantime, I hope you apply what you hear on the show, maybe the part about, you know, being honest, so you can live what you learn.

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