By Bethany McLean
The anger is always lurking just below the surface for David Ganek. And as the pugnacious money manager begins to recount the events that led him to lose his hedge fund business, his influence as a patron of contemporary art, his status in Manhattan society, and some of his longtime friends, it threatens to boil over.
We’re sitting in a large conference room in Ganek’s office on the 45th floor of a Midtown Manhattan office building, just a few blocks away from where he used to preside over the $4 billion Level Global Investors fund. Ganek took the space a few years ago as a home base for managing his own portfolio and overseeing his charitable work. But it still has a temporary feel, as if he’s just camping out. There isn’t the chic modern art on the walls that one might expect from a noted collector, as Ganek has been for years. And the quiet is almost eerie. Other than the receptionist, there doesn’t appear to be anyone else around. It feels strangely still for a natural-born trader who used to live his work 24/7, monitoring a “constant ticker tape of communication.”
These days Ganek, 53, spends much of his energy plotting his revenge on the federal authorities he accuses of wronging him. And the more we delve into his favorite subject—his legal case—the more agitated he becomes. “If the government’s misconduct didn’t make me furious, I wouldn’t have filed the lawsuit,” he says, his body tensing and his voice rising. “But that’s good news and bad news for me. I filed the lawsuit because it makes me so furious.”
He pauses and adds, “As much hell as I went through, if the system works as I have every reason to believe it does, it will be even more hell for them, given the severity of their misconduct.”
The primary target of Ganek’s ire is Preet Bharara, the powerful U.S. Attorney for the extremely powerful Southern District of New York (SDNY). In early 2015, Ganek filed a lawsuit against Bharara, as well as 14 other current and former FBI agents and prosecutors. Ganek’s chief allegation is that the defendants, including Bharara, used false evidence about him when, in the midst of their crackdown on insider trading, they got a search warrant to raid his fund, Level Global. The raid, which happened in 2010, made headlines around the world. “The Day of Hedge Fund Reckoning,” the New York Observer called it.
Ganek’s suit has set up a potentially explosive confrontation—one that reads like an episode of the Showtime drama Billions—between an unlikely set of characters. And the implications for the chief protagonists on each side could be profound on both personal and professional fronts.
Ganek’s motivations appear elemental: redemption and payback. Until Bharara came along, Ganek was a prototypical master of the universe. Although he was never charged with a crime, the raid, with its connotation of guilt, says Ganek, spooked his investors and left people whispering about his reputation. Now his mission, maybe even his obsession, is taking down the man he thinks wrecked his life.
For Bharara, the lawsuit is a blow to the reputation of a once unimpeachable office—one that has already seen its prestige take some hits. The formidable federal prosecutor led the SDNY to a string of unprecedented victories on insider-trading cases after his appointment in 2009. But in 2014 an appeals court not only reversed two of Bharara’s most prominent convictions—including that of Ganek’s junior partner—but also delivered a broadside to Bharara himself, citing the “doctrinal novelty” of the SDNY’s approach. (The ruling was seen as a damaging precedent that would impair future enforcement of laws against insider trading, but a recent Supreme Court decision in another case has cheered …….