Brokers, Bagmen, & Moles TRANSCRIPTS

[00:00:00] Anjay Nagpal: Previously on Brokers, Bagmen, and Moles.

[00:00:05] Sen. Thomas Eagleton: Crookedness need not be the indispensable grease of America's futures markets.

[00:00:11] Ray Pace: Some of those guys like Leo or you know, they would point the finger at like, these are the bad apples.

[00:00:17] Ceci Rodgers: Congressmen and senators were constantly being wined and dined in Chicago led around the trading floor.

[00:00:24] Michael Bassett: We had four agents, we put 'em in four spots, they all found the same thing.

[00:00:35] Anjay Nagpal: Throughout the first ten episodes of this series, we've answered a lot of questions about this enigmatic FBI investigation. We've learned how the FBI first discovered that Chicago's Brokers were ripping off their customers, and we learned that the cheating was more pervasive than the outcomes of the trial shown.

The reason was the FBI did not understand the inner workings of the floor until they got there, and it likely cost them some bigger convictions, but a few big questions remained. One of those had to do with speculation that this investigation targeted organized crime activity on the floors of the exchanges.

[00:01:21] News: Sources today said organized crime may be tied to what authorities believe is a multimillion-dollar fraud on Chicago's Futures Exchanges. The FBI reportedly is looking into charges that relatives of organized crime figures worked at the Chicago Mercantile Exchange in positions where they could launder illegal money.

[00:01:41] Anjay Nagpal: Lewis Borsellino, whose father was an alleged outfit hitman and who we interviewed in episode six, said a prominent Chicago attorney told him the FBI was watching him closely.

[00:01:54] Lewis Borsellino: Literally, the defense attorney told me that I was the number one target. The reason was I must be laundering money for the mob.

[00:02:02] Anjay Nagpal: But Lewis says he never laundered money or did anything illegal because his goal in life was to be legitimately successful to distance himself from the outfit so that his kids wouldn't lose him the way he lost his dad. He did agree though that if you wanted to launder money on the trading floor, it probably wouldn't be too hard.

[00:02:29] Lewis Borsellino: Look, if you're gonna launder money, you just have to find a way to get into the same market doing buys and sells. And I'm sure there were people who knew who knew how to do that.

[00:02:38] Anjay Nagpal: When we finally got the chance, we asked the FBI if outfit activity or money laundering was on their radar.

[00:02:48] Randy Janett: I said we never found anybody that was laundering money like that down there, if they were, but that would be a concern for any, you know, law enforcement agency.

[00:02:59] Danielle Elliot: Did you look for it?

[00:03:00] Randy Janett: Didn't know how. No.

[00:03:02] Anjay Nagpal: Agent Randy Janett denied it, and agent, Mike Bassett also shrugged off the question, but he did imply that he might not be the right person to ask.

[00:03:13] Dietrich Volk: Peter Vogel, Dieter Volk, um, Dieter came from organized crime work in New York so he was, that was his passion coming to Chicago. So he would've been wired into to all of that.

[00:03:25] Anjay Nagpal: Maybe I was turning all the anecdotes about relatives of mafia members who worked on the floor into something bigger than they were. I just didn't wanna believe that guys like John Ryan and Ray Pace had their lives ruined over trivial charges stemming from a poorly planned operation.

In this episode, we finally talk to the FBI agent who was in the middle of all the action Dietrich Volk.

[00:03:55] Randy Janett: Well, Dieter is a very unique guy. Yeah. I always said about Dieter if the FBI told him to take your head and ram into the Empire State Building until you knock it down. He would do it until he was dead.

He's, he's a hundred percent old school German.

[00:04:19] Anjay Nagpal: My name is Anjay Nagpal, and this is Brokers, Bagmen, and Moles.

[00:04:30] Dietrich Volk: You look up from the center of the floor, and it was virtually an impossible task.

[00:04:36] Dietrich Volk: There were individuals trading who were of interest to the Bureau because of their organized crime affiliations.

[00:04:44] Dietrich Volk: And we'll really expose the scope of what's going on down here. And we were monitoring the headquarters of John Gotti.

[00:04:53] Dietrich Volk: That event would come back to haunt me later on at the Chicago Mercantile Exchange.

[00:05:06] Vincent Provenzano: The one guy on the Swiss he was kind of slow. I don't think he caught on. The guy in the Yen was pretty sharp. Dietrich Volk.

[00:05:12] Ray Pace: Volk. I think his name was Peter Vogel, that he went by on the floor.

[00:05:16] Lewis Borsellino: I think it was Peter Vogel and another guy. They literally were standing in front of me.

[00:05:20] T-Bun: The other guy was more polished. Pete Vogel in the Japanese Yen pit.

[00:05:26] Michael Bassett: I have no idea. You'll have to ask Dieter.

[00:05:28] Randy Janett: The expert on him is is Dieter the other agent. Yeah.

[00:05:31] Michael Bassett: Dieter's real serious, but incredibly, um, very, really good FBI agent. He's just a little different than us.

[00:05:41] Anjay Nagpal: From interviewing traders and his fellow FBI agents, I'd heard a lot about Dietrich Volk, who was known as Peter Vogel on the floor.

He seemed to have a more aggressive approach that led him to indicting more traders than any other agent, but as we'll learn, his approach would come with unintended repercussions.

[00:06:05] Dietrich Volk: My name's Dietrich Volk and I'm a retired FBI agent. And, uh, I was one of the undercover agents that participated in that operation, uh, Hedge Clipper and Sour Mash.

I had lived in Chicago before as a child and, and, uh, I thought I was a great city. I had a, a couple of brothers actually living there, during this time period, uh, my older brother, uh, started his professional career there and for a while traded at the Chicago Board of Trade.

[00:06:38] Anjay Nagpal: His older brother was a trader in Chicago, and Volk himself was a former accountant. This case seemed tailormade for him.

[00:06:47] Dietrich Volk: When I reported to Chicago the case agent Jeff Frank, he had assembled, uh, a lot of evidence that revealed that there was a system in place in which, uh, brokers and floor traders called locals would, uh, conspire to cheat customers who were trading from off the floor. And we knew that that was going on, but additionally, it was, it was far more extensive than we recognized from Jeff Frank's brief.

[00:07:23] Anjay Nagpal: If the cheating was far more extensive than they initially thought, the case should have been a slam dunk for the government. But when Dieter and Randy got to the S&P 500 pit for their first day of trading, they had a change of perspective.

[00:07:40] Dietrich Volk: The S&P pit was originally our, our preferred target because it represented an expansion of futures trading that was unprecedented.

[00:07:51] Anjay Nagpal: To refresh, he's talking about the expansion orchestrated by Leo Melamed, who was largely responsible for evolving the Merck from a market that traded primarily futures on agricultural commodities to futures on financial instruments.

[00:08:08] Dietrich Volk: And in the case of the S&P 500, many of the participants were large pension funds, 401ks, which represented in many cases retirement savings for average American citizens.

[00:08:21] Anjay Nagpal: Unlike the soybean and the cattle futures, the S&P 500 futures were a common staple in many Americans retirement accounts.

[00:08:31] Dietrich Volk: But this move into the financial futures, you know, that caused there to be a more sympathetic victim.

That was brought to the fore, which was the average American saving for retirement. And so that's why I think we really wanted to initially concentrate on the S&P pit.

[00:08:50] Anjay Nagpal: That rationale made sense, but, within days of stepping into the pit, Volk started to understand just how big of a challenge he was facing.

[00:09:03] Dietrich Volk: I would say there were two to three hundred traders there in the S&Ps at the open every day. And, uh, a pit is configured like a football stadium with concentric rings of, uh, floor levels. That the traders occupy and there's no assignment of your position in the pit. Officially, brokers, uh, tend to be on the top step of the pit because they generally have clerks standing behind them, feeding them orders.

You look up from the center of the floor at how many steps you're gonna have to climb to even trade with a broker, and it was virtually an impossible task.

[00:09:44] Anjay Nagpal: A minute ago, Volk said the theft on the floor was far more extensive than he originally thought. But once he got into the pits, he realized how hard it would be to get close to powerful brokers.

But Volk was determined to get his job done and he traded with anyone he could, no matter how big or small.

[00:10:05] Dietrich Volk: You wanted to have skin in the game and you wanted to, uh, trade as much as possible with brokers and fit in, and eventually I did have out trades, legitimate out trades with brokers and they cured them the way they cured them with all their bagmen.

[00:10:23] Anjay Nagpal: Dieter started to make progress, but the work was hard.

[00:10:28] Dietrich Volk: Usually needed to leave the house on a typical workday by 5:30 because the yen pit would open at 7:30 for example. Uh, you know, you needed to get down there to the office by 6:30, you know, and that would involve parking at Presidential Towers and walking across the river.

Get up to the office, check your batteries, wire up, and get down there to, to go through out trades to make sure all your trades cleared, and you'd start trading at 7:30. Typically, after the markets calmed down, you'd leave the pit and I'd go and see how much money I'd lost, or in some cases made.

[00:11:09] Anjay Nagpal: Unlike Mike or Randy, the agents we heard from in previous episodes, Dietrich Volk not only cared how he did as a trader, he kept a scorecard. Here's our producer, Danielle.

[00:11:23] Danielle Elliot: What were the losses?

[00:11:25] Dietrich Volk: Well, it was about a dollar contract I think over the two years was like $130,000, somewhere in there. But at the end of the day, I wasn't down there to make money.

[00:11:34] Dietrich Volk: I was down there to gather evidence of criminal activity.

[00:11:39] Anjay Nagpal: Remember, it was kind of their job to lose money to brokers, so that number isn't crazy. Dieter went on to describe his trading activity, and I could tell he was keenly aware of what was going on around him in the pit.

[00:11:55] Dietrich Volk: As I gradually became acer, uh, assimilated would be the good word, into the trading community.

I realized that, uh, some of the best sources of information I had were bagmen because we would get together and have breakfast together after the market slowed down. And inevitably the conversations would turn towards which broker is screwing which bagmen or vice versa. And there was always this animosity between the bagmen that had to take the losers and, and not getting paid back adequately by the brokers.

That led to, you know, undoubtedly some of the most pro, you know, productive conversations I had. Then conversely, uh, with some brokers, if I would encounter them, say at the Merc Club.

[00:12:48] Anjay Nagpal: Dieter's assertion that most of the good intelligence that he gathered came at breakfast meetings or having drinks at the Merc Club clearly shows how hard it was to gather evidence while he was in the pit. Getting information while socializing off the floor. It was a smart move.

[00:13:09] Dietrich Volk: We'd start talking about conditions in the pit, and in one case I asked what the proper protocol was to pay a bagmen back? How do you make it up to a guy that takes a loser? You know, you wouldn't say it in terminology that was pejorative, like that you would say it in, in terms that they were comfortable with.

[00:13:29] Anjay Nagpal: So Dieter had a lot of meals and drinks with his fellow locals.

[00:13:35] Dietrich Volk: I might go to the Chicago Merck Club and have drinks with some of the traders. Uh, I might go and work out. In any event, I probably wouldn't get to the office where I had to do all the administrative work and listen to the tapes until 5:30, 6:00.

And, you know, as a result, I never saw my kids.

[00:13:59] Anjay Nagpal: Man, it must have been tough to work that hard while watching corrupt traders rake in the cash and still make it to happy hour.

[00:14:09] Dietrich Volk: But even though on the weekends, I mean, I was one point I was betting into a bookie and you know, on Saturdays I was putting down bets on football games and you know, I would go up and hide in the closet in the master bedroom to do that.

I didn't want my children overhearing that. And then very often, uh, weekends were time to get caught up for the week. I always took work home on the weekends and I always had to go sit in the room, uh, listen to tapes.

[00:14:38] Anjay Nagpal: Despite the grueling schedule, Dieter found solace in the fact that his hard work was starting to pay off.

[00:14:46] Dietrich Volk: I did that and I was starting to gain a reputation of being a competent trader, you know, but I just sort of, you know, was accepted over time.

[00:14:57] Anjay Nagpal: After Dieter made the switch from the S&P pit to the yen pit, one of the traders who trusted and accepted him was Ray Pace, the former Boxer and Cicero kid who worked for the notorious ABS partners and who we met in episode three.

[00:15:16] Dietrich Volk: The one fellow that got in a fight in the Swiss franc pit, he was new to the pit too. We just struck up an acquaintance and conversation one day after, I think it was in March, he asked me to come with him to the trader's lounge and he says, I need you to do me a favor. And basically he just, he had me card up a trade where I bought and sold 50 from him or got in the middle and he made, it was like 2,500 bucks.

[00:15:44] Dietrich Volk: Uh, later I met him and I gave him the money in cash and so that, that I think got me some credibility in the pit.

[00:15:53] Anjay Nagpal: Volk is describing Ray clearly cheating, but we're not sure why Ray did it. It could have been that he made a mistake on some orders and needed help getting his customers filled at the right price.

Or maybe Ray just fell prey to temptation and blatantly took money from Volk's pocket. And that was a big problem with this investigation. Sometimes it was hard to prove if traders were bending the rules to enrich themselves or to actually help out their customers. Either way, that moment of weakness would haunt Ray for the rest of his life.

[00:16:38] Anjay Nagpal: As for Dieter, his patience and hard work led to more credibility with other traders on the floor. And he used that to his advantage.

[00:16:49] Dietrich Volk: Uh, my legend was that I would, was a real estate accountant. And basically I, I told, I put the word out that I had some clients from New York who were, I had syndicated some real estate partnerships with who had passive tax losses they couldn't use, they, in other words, they didn't have gains to offset it. And I, I say, listen, I've got these clients. They've got passive losses they can't use. If you want to card up some trades into their account, I'll give you 90% back cash.

[00:17:22] Anjay Nagpal: We've heard about this tax scheme in previous episodes. The FBI approached T-Bun Ray and Joey Borsellino with it.

Dieter, it turns out, is the guy who first came up with this tactic. It was a clever move, almost too clever.

[00:17:40] Dietrich Volk: I remember, uh, pitching it to one trader who obviously didn't understand it, and I just backed away from it and didn't go, go there again. After him I, I never approached anybody about it that I didn't think was sophisticated enough, as long as it's, it's something that they're obviously willing to do, they understand it, they've probably done it before, and if they come to me, by word of mouth, then we've beaten the entrapment issue.

[00:18:09] Anjay Nagpal: But why do this? Wasn't he supposed to be catching traders, stealing from customers in the pit?

[00:18:17] Dietrich Volk: And the whole reason for it was at the time was if this thing catches on, I'll have people coming from other pits to me and we'll really expose the scope of what's going on down here. I don't have to be physically in every pit.

[00:18:32] Anjay Nagpal: Dieter was frustrated that they only had four agents on the floor, so to show that corruption was widespread, he used the tax evasion deal to lure in traders from other pits. But it didn't reel in any big fish, and that was okay because Dieter always had another trick up his sleeve.

One of the reasons I was excited to talk to Dieter was that his background was in organized crime. He spent some time in St. Louis of all places, busting up a surprisingly violent mob war that involved multiple Italian and Lebanese factions who fought for control over the labor unions and construction trade.

Then he got called up to the big leagues, the Organized Crime Unit in New York.

[00:19:28] Dietrich Volk: There were five families in New York, was responsible for investigating the Colombo organized crime family. The first two weeks after I reported to New York, I had to get up in the morning and report to a listening post out on Long Island, and we were monitoring the headquarters of John Gotti.

I also led the arrest team with Gennaro Langella, who was the street boss of, uh, the Colombo organized crime family and within that context, uh, we had reliable informant information that he was residing in an apartment in Brooklyn with a girlfriend.

He was in hiding at the time. Uh, he had been indicted and, uh, we had an arrest team of eight agents. Typically you want to do it early in the morning, uh, or very, very late at night when you're more likely to catch the individual, uh, in a position where, physical resistance might not be as likely. You need to surround the location.

Uh, in Mr. Langella's case, uh, I knocked on the door and I announced, uh, my identity and authority.

He answered the door claiming to be Jerry Lang, that was his street name. When he came to the door I didn't think he was Jerry Lang his appearance had changed so much he'd lost weight and grown a beard, and I thrust him aside into the arms of another agent and ran into the apartment thinking that the real Jerry Lang was there. Well, it turned out he was the guy, so I almost threw back the biggest fish of the day.

Drove him back to 26 Federal Plaza, fingerprint him, booked him, and he was being a assembled, along with, I believe it was eight other members of the Colombo family, capos and soldiers, and they were all marched over to one at St. Andrew's Plaza for arraignment at the same time. Which attracted a lot of media attention as you can imagine.

That event would come back to haunt me later on at the Chicago Mercantile Exchange.

[00:21:54] Anjay Nagpal: Dietrich Volk was an enigma, a humble accountant by trade. He'd been in some real danger. And seemed to handle it with ease. Shortly after escorting big time, New York City, mobster Gennaro Langella into his arraignment, Dieter, packed up and drove west to Chicago, and he quickly figured out why he was assigned to this case.

[00:22:21] Dietrich Volk: There were individuals trading in, uh, the S&P pit that. Were of interest to the Bureau because of their, uh, organized crime affiliations. I first heard the name Borsellino within the context of the briefings I got from Jeff Frank.

[00:22:40] Anjay Nagpal: The initial briefings, meaning agent Jeff Frank, was very well aware of the Borsellino's and the presence of the Chicago outfit on the trading floor when he designed this investigation.

[00:22:55] Dietrich Volk: The ABS group of brokers had kind of a notorious history, and Lewis Borsellino and Joey Borsellino were there.

[00:23:04] Anjay Nagpal: And it wasn't just the Borsellinos. Volk specifically says that they were made aware of ABS Partners as well. A fact that his fellow agent at the Merck, Randy Janett denied. Now, it might be that Dieter received organized crime intelligence that the rest of the agents did not because of his background. I don't know for sure, but what I do know, is that this was getting very interesting.

[00:23:33] Dietrich Volk: There were all sorts of kind of unsavory people. I'd heard of ABS, I'd heard of Maury Kravitz and the gold pit and Jack Sander and the cattle pit. And there were, there was rumors of organized crime involvement in ABS.

Maybe they're there doing something beyond just trading and taking advantage of the abuses. Maybe they're moving money.

[00:24:02] Anjay Nagpal: As in money laundering for the mafia. At the time, a trader could deposit cash into their trading accounts. That cash could include dirty money obtained from mafia activity. These traders were good at moving money around to each other, so one has to imagine that they could use the exchange like a washing machine, and have the mafia's dirty money turn up clean in the brokerage accounts of outfit members.

[00:24:35] Dietrich Volk: I could see why they'd be attracted to it. Most, most mob guys like to gamble a little bit. There's an element of that.

[00:24:42] Anjay Nagpal: It was all in the briefing before Dieter Randy or Mike joined the investigation. The FBI had an eye on the relatives of organized crime members on the floor, and as Dieter put it, intelligence gathering around money laundering was a part of his mission and I was dying to find out how Dieter went about investigating his leads.

[00:25:09] Dietrich Volk: I did start, uh, make a, make a friendship with two guys that I lifted weights with in the off time that were both S&P traders and they were both of Italian descent and they both stood near the ABS group.

They were up at the top. In the afternoon after the markets closed, I would work out at the presidential towers. That's where I met these two individuals. You know, they were interested in lifting weights and, and so was I at the time. And we just developed the relationship. And I think in many ways the idea that we might be undercover agents when they saw me get dressed and undressed in the locker room, I think that gave them a level of comfort that I was not an FBI agent and they knew I lived there.

[00:26:01] Anjay Nagpal: Dieter thinks that when the two Italian traders saw him getting changed and not wearing a wire, that he was in the clear.

[00:26:09] Dietrich Volk: I had no reason to, to believe, or I never had any illegal dealings with them, but I view them as a potential channel of communication and, uh, so I, you know, I nurtured that relationship.

[00:26:23] Anjay Nagpal: As I was listening to Dieter, I imagined him talking to these two large Italian traders about last week's Bears Game, or who in town has the best stuffed pizza, hoping to get a clue as to whether or not they're connected to an outfit, money laundering scheme.

[00:26:40] Dietrich Volk: We were still trying to, to, uh, work up the, the ability to get closer to stand at least two or three steps below a broker, you know, and in that context, sometimes I found myself standing next to the two fellows I lifted weights with.

[00:26:59] Anjay Nagpal: Later, when Agent Volk left the S&P pit because of the stock market crash, he basically lost that connection, but it wasn't the last time he saw them.

Remember what Dieter said about his arrest of Gennaro Langella in New York?

[00:27:15] Dietrich Volk: That event would come back to haunt me later on at the Chicago Mercantile Exchange.

During that period of time, the Chicago US Attorney's Office announced the formation of a, an organized crime joint strike force. And, uh, that was on the news. And the next day I was sitting in the traders lounge adjacent to the S&P pit, and my two weightlifting buddies approached me from the floor and, uh, they wanted to talk to me about something and I was sitting at a desk or a table in the, in the break room and as they approached, uh, one of 'em asked, uh, Hey Pete, you gotta tell us what you used to do in New York again, cuz we saw an FBI agent on TV last night that was a spitting image of you.

Immediately recognized cuz I'd seen the news coverage, oh, they must have shown that footage. It was me and I hadn't altered my appearance at all.

[00:28:32] Anjay Nagpal: When the US Attorney's office announced a new strike force, they ran footage of Gennaro Langella's arrest, which included Volk's face.

[00:28:43] Dietrich Volk: Uh, my response was that, uh, well, you know, it's, it's just amazing how many people were down here are so paranoid about the possibility of a government spook or a mole.

And the other fella said, well, you would be too if you've done some of the things they've done. And then I asked, well, what do you mean what are you talking about? Everything we do down here, we have to do so, yeah. And basically mirrored their rationalization. Now, I don't know if that satisfied them.

Somewhere in my gut, I think maybe it didn't, but I think maybe they were basically honest guys and they didn't want to obstruct anything.

[00:29:24] Anjay Nagpal: I thought Dieter handled that situation really well, but Dieter thought the opposite. He knew immediately that he made a mistake.

[00:29:34] Dietrich Volk: Well, yeah, I think they were just, let's poke him and see what he does. Let's see what he says. So I did everything, uh, that I could think of to seem unconcerned, but you know, it is. I teach a methodology for detecting deception, now. I made five or six deceptive behaviors.

[00:29:55] Anjay Nagpal: If you wanna be a good bullshit detector, listen up.

[00:29:58] Dietrich Volk: First of all, I did not answer the question, the pending question was, are you an FBI agent?

I didn't answer that. You know, there were certain body movements that I made to, because of the anxiety I was under that would've been, uh, revealing. And then, uh, what I did do is make a unrelated statement about the rationale that is prevalent, you know, on the floor. Anybody with, with good, training and deception would've recognized they would've pursued.

Well, Pete, that may be so, but is that you? Are you an FBI agent? And then, then that probably would've been it if they would've persisted to ask. I, you know, you know, I was, it's recorded. They would've pulled me off the floor. Well, we, yeah, we were expected to be scrutinized. You know, it was in the aftermath of the Greylord investigation by the FBI, which was a, an undercover operation into a corrupt judicial system in Chicago.

[00:31:02] Anjay Nagpal: They expected to be scrutinized, sure. But this seemed less like scrutiny to me and more like flat out danger. Dieter, however, was cool as a cucumber.

[00:31:15] Dietrich Volk: Most of the time I didn't feel like I was any physical jeopardy down there. I mean, I might get into a fight with somebody, but I'm, it's pretty common. I could hold my own, you know, I, I felt it was pretty safe. It would be hard to get a gun onto the floor. I think.

[00:31:30] Anjay Nagpal: Dieter shrugged off the possibility of getting gunned down on the trading floor by the outfit. But that wasn't the only close call he had with Chicago's Mafia. In fact, The danger only escalated.

[00:31:52] Dietrich Volk: One of the traders that was indicted had a relative who approached a mob source, and in a state of anger uh, wanted to investigate the possibility of hitting one of our witnesses. Who was cooperating.

[00:32:18] Anjay Nagpal: Hit, as in assassinate.

[00:32:22] Dietrich Volk: That possibility prompted me to do, to go and alert, uh, my daughter's teachers that nobody was ever come and get my daughter unless it was my wife. Because the relative was actually this guy's mother, and she went to a made mob member in Chicago.

[00:32:46] Anjay Nagpal: This death threat. It was real. And since Agent Volk was also a witness, he was concerned for the safety of his own family.

[00:32:58] Dietrich Volk: It was the mother who also happened to have a seat on the exchange. Her son had been indicted, and one of the witnesses that was gonna testify against him was this trader that she, she made some inquiries about whether or not it would be possible to hit him, and it was to a made member of the Chica Chicago outfit.

[00:33:23] Anjay Nagpal: A made member of the mob was called to assassinate a traitor who was going to be a government witness against this woman's son. What happened next? It's unbelievable.

[00:33:38] Dietrich Volk: It was an informant, a top echelon informant that an agent happened to have in the Chicago office, and she went to him and asked about hitting one of our witnesses.

The reason we knew is that he reported it to us and he was able to talk her out of it. When I saw what lengths that, that they might go to. I mean, I was a witness against her son too, obviously.

[00:34:04] Anjay Nagpal: The made member of the outfit was an FBI informant, and he took swift action to prevent this woman from having a witness killed. As far as I know, that story had never been heard before. I was stunned and I asked Dieter if the investigation was more dangerous than he thought it would be.

[00:34:32] Dietrich Volk: Yeah, crazy. Irrational is more like it.

[00:34:50] Anjay Nagpal: Dietrich Volk did his best to overcome the major challenges of this investigation. Once he learned that getting close to the biggest brokers and therefore the biggest crimes was mission impossible, he thought of other ways to gather the evidence of corruption going on all around him. He went to breakfast or the bar with fellow local traders, and he would record them as they griped about crooked brokers in their pit, who constantly stuck them with costly out trades.

He lifted weights with the two Italian traders in the S&P pit to see if they were outfit guys, and he created a scheme to lure traders into committing tax evasion. The challenges he faced in this case. While they were unique to the exchanges, they also reminded Dieter of other seemingly impenetrable organizations.

You know, whether it's the Chicago Mercantile Exchange or the Colombo organized crime family, uh, you don't start at the top. You unfortunately, you have to start at the bottom of their organization because they've spent years of building layers of insulation between themselves and the dirty work that goes on, whether it's on the streets of New York or the pits of Chicago.

And so you have to work your way up, but it takes time. It takes years in most cases to get that, get those kinds of breaks.

[00:36:29] Anjay Nagpal: Dieter started at the bottom. And he targeted the lower level Brokers of ABS partners.

[00:36:37] Dietrich Volk: We were gonna go with the racketeering statute, we would, we would define the ABS broker group in the Yen as an ongoing enterprise involved in a pattern of racketeering activity.

[00:36:47] Anjay Nagpal: One of those ABS brokers was Ray Pace.

[00:36:52] Dietrich Volk: There were 21 indicted. Six cooperated. Started out either 14, I think it was 14 defendants. Two of them were segregated. Uh, Ray Pace and Sam Calli, they were the ABS brokers.

[00:37:07] Anjay Nagpal: Back in episode nine I mentioned that Ray Pace and Sam Calli were severed from the main trials in the Yen Pit.

They would get their own trial, and that was because Ray and Sam's attorneys presented a defense strategy that clashed with the other defendants.

[00:37:27] Dietrich Volk: And Tom Durkin, Ray Pace's attorney in opening arguments argued that these practices were so systemic. That his client, Sam Calli, was forced to make a price change for Leo Melamed. Leo Melamed was the chairman of the exchange.

[00:37:45] Anjay Nagpal: The head of the exchange was being accused of cheating.

[00:37:49] Dietrich Volk: And Tom Durkin was basically gonna argue, not only is it happening, everybody does it and everybody knows it.

[00:37:56] Anjay Nagpal: Volk had his sights set on Merck Chairman Leo Melamed. He was the godfather of financial futures and built the Merck into a world's financial juggernaut. He was the biggest fish there was, and Volk wasn't alone in his thinking.

[00:38:19] Tom Durkin: It just didn't seem right to me that there were some things that just went on, clearly went on that nobody thought was a crime.

[00:38:30] Anjay Nagpal: That's Tom Durkin, Sam Calli's attorney that Volk just mentioned. After two years of trying, he finally agreed to talk to us.

[00:38:42] Tom Durkin: It goes in part to my theory that what was really wrong with the government's theory of its case is that it didn't include any of the higher ups, and it had to include the higher ups if what they were saying was true.

Why should Sam Calli suffer if Leo Melamed did not suffer?

[00:39:03] Anjay Nagpal: That's next week on the final episode of Brokers, Bagmen, and Moles.

Before you go. If you or someone you know might have a hot tip or just a funny story related to our show, we have a hotline for you. Call us at (646) 820-1452.

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I'm your host, Anjay Nagpal. Our showrunner and senior producer is Danielle Elliot.

Our producer is Jenn Swan.

Our executive producers are Tim Hendricks, Kevin "Stretch" Huff, and Dennis Stratton. Original music, sound design, and editing by Gerard Bauer.

Music clearances by Deborah Mannis-Gardner from DMG Clearances.

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Fact checking by Delilah Friedler.

Show art by Rebecca Hendin.

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And I wanna send a very special thanks to Laurie Morse and David Griesing.