Back in 2012, I recommended a "must-read" article by WSJ reporters Susan Pulliam, Michael Rothfeld and Jenny Strasburg about FBI agent David Makol. The article provided some fascinating insight into the tactics that Makol, then the FBI's go-to guy for "flipping" suspects in insider trading investigations, used so successfully in persuading witnesses to wear a wire or otherwise help the FBI gather evidence against others.
The NY Times reported last week that Makol, who was a "low-level examiner" with the SEC earlier in his career, recently rejoined the SEC in its Boston office as a forensic accountant in the Enforcement Division's market abuse unit. The hiring of new forensic accountants at the SEC is rarely accompanied by a statement by the agency's Director of Enforcement, but Makol's case proved to be an exception. In a statement, Enforcement Director Andrew J. Ceresney noted Makol "outstanding career with the F.B.I., working in parallel with us on pathbreaking insider-trading cases” and that the agency was "delighted that he has decided to rejoin us.”
Among other cases, Makol was involved in the SDNY's investigation into Galleon Group, and he is credited with flipping a Galleon trader named David Slaine. The NYT reports that Slaine ultimately "provided critical evidence that enabled federal authorities to place wiretaps on phones used by the Galleon co-founder Raj Rajaratnam." These wiretaps helped lead to Rajaratnam's conviction for insider trading, for which he is now serving an 11-year sentence.
One of Makol's notable tactics was to surprise potential cooperators with the extent of the information the government already knew about them. For example, the WSJ reported that Makol would follow subjects and carefully observe their daily routines. He would then approach his subjects for the first time and demonstrate that he knew their "wife's name, or how many packs of sugar he takes in his coffee." Similarly, one of Makol's supervisors at the FBI told the NYT that Makol would "watch [subjects] from the minute they’d put their kids on the school bus. He’d follow them on the train on their way to work. He was relentless at understanding these people, probably better than they understood themselves.”