Online Extra: Using Truth to Corner a Scamster

Just how does the FBI get an outlaw to cooperate? Not with heavy-handed browbeatings á la Hollywood or The Sopranos

Over the years I've encountered many sources who've lied. It's one of the occupational hazards all reporters face, which is why the general rule in journalism is that no story can be based on a single source unless it's backed up by substantial documentation. That rule -- a survival credo, really -- posed inevitable challenges when I began work on my book Born to Steal: When the Mafia Hit Wall Street. The primary source for this book, rogue broker Louis Pasciuto, was a thief of Olympian proportions and a confident, experienced liar.

Why should I believe a single word this liar had to say to me? That's the dilemma, a variation on the proverbial Liar's Paradox, that I faced. But as I researched the book during 2000 and 2001, I found the problem to be less daunting than I expected.

To begin with, the broad outlines of Pasciuto's career were confirmed by the criminal complaint that was filed against him in December, 1999. I could also substantiate his story in crucial respects with various sources and the U.S. government -- in a string of indictments of the dozens of gangsters and brokers against whom Pasciuto supplied information. The vast majority of these indictments led to guilty pleas.


  Even so, I still had to judge his credibility by old-fashioned methods: demeanor, inconsistencies, and by checking his accounts against a mass of other details combed from additional public records.

During all this time I was never able to answer a question that had intrigued me. How did the FBI approach Pasciuto? What did its agents do to "turn" him into a cooperating witness? And how did they deal with the same Liar's Paradox that I had to confront? I had an account of his arrest and "turning" from Pasciuto himself. But the FBI agents involved were still very much on active duty when I wrote the book and were thus inaccessible.

All that changed only a few weeks ago, when I had the pleasure to meet one of the two agents who had tracked and arrested Pasciuto. His name is Kevin Barrows, and he left the FBI in early 2003 to become a vice-president at Stroz Friedberg LLC, a computer-crime investigative and consulting firm in New York City. (His former FBI partner John Brosnan is still with the agency.)


  According to Barrows, the process of "turning" a potential cooperating witness is a far cry from the comic-book poses and menacing attitudes shown in cop movies and on TV shows like The Sopranos. Threats, for example, are strictly the stuff of fiction. No FBI agent or federal prosecutor would use the heavy-handed browbeating that was used to turn the fictional Adriana La Cerva into an informant against her fictional fiancée, Christopher Moltisanti, in the terrific but very fictional Sopranos. A real-life gangster girlfriend would doubtless react to threats by telling the feds to go to hell.

Instead, Barrows would use the club that the real-life FBI uses to bludgeon real-life hoods and sleazy brokers. It's a dread six-letter word: "truth."

In the case of Pasciuto, Barrows and Brosnan began by learning everything they could about him -- a process that started long before he was even taken into custody. They knew all about him and his methods nearly a year before he was arrested in October, 1999. Since Pasciuto very often didn't use his own name in pushing stocks, determining the actual identity of this shadowy but uncannily skillful stock-scamster was no easy task.


  In effect, they became experts on the subject of Louis Pasciuto. And after he was arrested, they let him know what they had found out about him. They had to be correct in every detail. Says Barrows: "We realized that we had to know everything. We had to establish deep credibility throughout our dealings with him." And, he says, "We couldn't waiver."

That's crucial in dealing with rogue brokers and gangsters. Street thugs, who live by their wits, have a sixth sense when they are being conned. One slipup, one lie, and the FBI's credibility would be shot. The agents would be bluffing, and the hood would say to himself, "This guy doesn't know a thing about me. He can't do me any harm."

By overwhelming Pasciuto with information about himself, they were able to persuade him that the party was over. And they had to convince him that the government knew him well enough to incarcerate him until he was old and gray. If he cooperated? No promises. All that cooperating witnesses are offered is a letter informing the sentencing judge of their cooperation.


  Confronted with the truth of his crimes, Pasciuto had little choice but to cooperate. And when he began telling his story, Barrows was faced with my dilemma, that Liar's Paradox, which he resolved as I did, by exhaustive research. Pasciuto passed a crucial test, which was to tell the truth --and not waiver. And that was essential. "If we caught him in a lie of any significance, we would end the relationship with him," says Barrows.

Truth given in return for truth received. No blackjacks, no threats, no bluffing, no histrionics. "Truthfulness breeds truthfulness," notes Barrows. For wiseguys, corporate crooks, and sleazy brokers, who have lied and stolen without any consequences, being forced to tell the absolute truth is the ultimate retribution.

By Gary Weiss in New York. Weiss is a senior writer for BusinessWeek. His book is scheduled to be released May 14

    Before it's here, it's on the Bloomberg Terminal.