Fraud Case May Hinge on Muffled Audiotapes : Commodities: Prosecutors say recordings are proof of illegal trading, but the din on the floor makes it hard to hear what was said.
Now that everyone has to wait at least until next fall to find out who killed Laura Palmer on “Twin Peaks,” here’s a real-life mystery to ponder: What’s on those tapes they are playing in the first big trial in Chicago’s highly-publicized commodities fraud case?
The 130 audiotapes, recorded in 1988 by undercover FBI agent Randall Jannett while he was posing as a crooked trader in the Swiss franc pit of the Chicago Mercantile Exchange, are at the heart of the government’s fraud case against three Swiss franc currency traders and brokers, the first group of traders to be brought to trial in the federal government’s wide-ranging probe of fraud and corruption on Chicago’s two big commodities exchanges, the Mercantile Exchange and the Chicago Board of Trade.
Jannett, the prosecution’s star witness against currency broker Robert Mosky and traders Danny Scheck and David Zatz, has testified at length during the first two weeks of the trial that the secret recordings he made show Mosky, Scheck, Zatz and others in the pit conspiring to bilk their distant customers by skimming profits off of trades.
In highly complex and detailed testimony, Jannett, an agent with an accounting background who worked undercover in the Swiss franc pit for 10 months in 1988, has attempted to catalogue instances in which Mosky and his allies made quiet deals in private conversations while they stood in the middle of the trading pit, conversations which they hoped would be masked by the chaotic noise from the hectic trading activity going on around them.
They were right; their conversations were masked, even from Jannett’s tape recorder. In fact, it has become increasingly clear as the trial has progressed and the government has played the first of Jannett’s nearly inaudible tapes, that the content of those recorded conversations will be the central issue in the case.
On each tape played so far, it has been almost impossible for the untrained ear to pick out what Mosky and his allies are saying underneath the roar of the trading activity. So far, the only way for the jury to understand the tapes has been to read along on transcripts of the conversations while they listen.
Now, attorneys for Mosky and the others say, they plan to center their defense on the assertion that Jannett misunderstood what the traders were saying among themselves in the special shorthand of the commodities markets. When the defense opens its cross-examination of Jannett, which will probably come next week, it will argue that the traders were talking quietly among themselves merely to double-check earlier trades made through the exchange’s normal open outcry system. Rather than cutting secret deals, they were simply catching up with earlier work in the frenzied, and still non-computerized, trading pit. “They were just checking, checking each other’s work,” said Harvey Silets, an attorney for Scheck.
Silets opened his counter-attack on Jannett’s testimony this week, when he submitted a transcript of one of Jannett’s tapes that conflicted significantly with the government’s version. U.S. District Judge Ann Williams allowed the jury to listen to the taped conversation twice, once while reading along with the government’s transcript, and a second time with the defense version.
Silets provided a far more detailed transcript, one which identified more voices in the background, and which provided much greater context for the conversations. In one key tape from March 17, 1988, Silets’ version is six pages long, compared to just two for the government’s transcript. The defense version also attributes some critical comments to different people than in the government version.
At one point, the government transcript shows Mosky forcing another trader to accept a non-competitive, secret deal; the understanding being that the opposite trader will make up his losses on another secret deal later. But in the defense version, the conversation shows a deal that is much less one-sided, with both traders appearing to amicably agree on the terms of their trade.
With the tapes virtually impossible to understand without a transcript, the defense may score important points if it can persuade the jury that appearances can be deceiving.
A TALE OF TWO TRANSCRIPTS
Below are partial transcripts of a tape recording from trading activity in the Swiss franc pit at the Chicago Mercantile Exchange on March 17, 1988.
The beginning of the conversation shows what the government contends is a secret, non-competitive trade, with Robert Mosky dictating unfavorable terms to Mark Fuhrman (nicknamed “Furball”).
But the defense version has Fuhrman responding directly to Mosky (“A hundred away”) and seeming to cooperate in a more mutually beneficial deal.
Government’s Version:
Robert Mosky: Hey, take this sh . . . hey Furball, take this. It’s a hundred away. I sold you two at sixty.
Danny Scheck: Right now?
(75 offer)
(Trading Activity)
Mosky: I’ll sell you thirteen lots.
Unknown Person: What?
Scheck: Where?
Mark Fuhrman: Eighty offer. I just wanted to let you know where it was.
Mosky: At a half.
Fuhrman: Filled in the gap.
Scheck: The gap. That’s a trend line.
Defense Version of Same Conversation:
Robert Mosky: Take this sh . . . Hey furball, take this.
Mark Fuhrman: A hundred away.
Unknown: 10 at 80
Unknown: 20 at 80.
Mike Ansani: Hey, the low was a half.
Mosky: I sold you 2 at 60.
Danny Scheck: Right now?
Ansani: The low was a half.
Unknown: 2 at 75.
Unknown: The low is 48.
Ansani: No, I was a 51 on 50.
Unknown: 2 at 75, 2 at 75.
Ansani: I was a one bid.
Gary Kost: Make the half the low.
Unknown: 2 at 75.
Ansani: I was a one bid.
Kost: Half bid.
Unknown: 2 at 70.
Larry Wright: 10 at 70.
Unknown: 60 on 10.
(Noise)
Unknown: 75 on 10.
Mark Spector: 75
Unknown: 2 at 80.
Mosky: I sold you 13 cars.
Spector: What?
Scheck: Where?
Unknown: A hundred at 80.
Fuhrman: 80 offer.
Unknown: 2 at 80.
Unknown: A hundred at 80.
Mosky: At a half.
Fuhrman: Filled in the gap.
Scheck: The gap. That’s a trend line right there.
