Hedgefunders in the Hoosegow
By Stephen Bornstein
Absolute Return magazine just published an interview with a Christian minister by the name of Jeff Grant who runs a not-for-profit program called the Progressive Prison Project in Greenwich, Connecticut.
Since 2008, Grant has been counseling hedge fund managers accused of insider trading on how to cope with life in a federal penitentiary. A corporate lawyer by training, Grant himself served 14 months in federal prison 7 years ago for defrauding the Small Business Administration into granting him a $247,000 loan to compensate for lost business at a fictitious Wall Street law office in the aftermath of 9/11.
Last year, Grant, 48, earned a Master of Divinity degree from New York’s Union Theological Seminary where he is now formulating a Theology of Imprisonment1.
Facing imprisonment, hedge fund felons first need to come to terms with their shame, remorse and isolation from their communities, where they may previously have occupied lofty positions. Think of Raj Rajaratnam and Rajat Gupta. Some have to give up alcohol or drugs to which they have become used, and married inmates have to grapple with the survival of their marriages and support of their families during their incarceration.
Aside from the profoundly life-changing event itself, there are practical problems with incarceration of which the soon-to-be-incarceree should be aware. Once he realizes he is no longer a free man, a hedge funder’s senses may fail him so completely, according to Grant, that he forgets his own address and phone number. In addition, the new inmate should make certain that his visitors know not to wear clothing (such as underwired bras) that may set off metal detectors.
Grant says that survival at minimum security institutions is easier if you’re older than the average inmate and therefore have less need to brag about your achievements. It’s also advantageous to have a skill (such as law) which is in demand among the inmates. The most important survival skill, however, is for the hedge fund convict to earn the respect of the other prisoners by respecting each and every one of them. He gives an example from his own experience of reflexively screaming at a bunch of quarreling prisoners who were keeping him awake one night and who ignored his outcry, at which point his cellmate suggested he would have been more successful if he had politely asked them to find someplace else to conduct their conversation.
Wall Street executives will quickly learn that nobody inside the prison walls cares about what they have to say about anything.
To Grant, gaining respect in prison is mostly a matter of learning what not to say. High-powered hedge funders had better immediately relinquish the wealth, power and sense of entitlement that have been their calling cards in favor of humor and vulnerability. Wall Street executives will quickly learn that nobody inside the prison walls cares about what they have to say about anything. All the intellectual skills that enabled them to become successful money-makers, according to Grant, “are useless if not counterproductive.”
Prison is an egalitarian place, so hedge fund inmates in particular should “slow down, be quiet observers and listen five times more than they speak.”
Drawing on his personal conversion from white-collar crime to prison ministry, Grant’s mission is to help inside traders use their time in captivity to transform themselves spiritually into people committed to helping others. “Most white-collar criminals can’t go back to their old lives and careers, so why not embrace completely new lives, with new options and opportunities?”