Larry Gurwin on His New Book The Insiders

Larry Gurwin spent most of his adult life as a financial journalist and corporate crime investigator.

In the 1990s, he penned a young adult novel about a high school student, Zach Richards, who takes it upon himself to crack an insider trading case. He put the draft aside for a couple of decades and then recently teamed up with co-author Holly Hughes to put the final touches on the novel. It’s out this month as The Insiders by Hogan Chandler.

Hogan Chandler?

“Holly and I decided to have a single name on the cover as a pen name,” Gurwin told Corporate Crime Reporter in an interview last month. “The Ellery Queen novels were written by a team. We had to come up with a name. And we chose Chandler as the last name because we’re both big fans of Raymond Chandler. For the first name, we picked Hogan, because he’s the mutual friend who introduced me to Holly – Bill Hogan.”

Why did you write this book?

“I wanted to capture the fun and the thrill of investigating, the thrill of the chase or the hunt. I thought that was an important thing. I also wanted it to be a vehicle for teaching, so that the young readers would learn something about the basics of how the stock market works, how the criminal justice system and regulatory system works.” 

“So I thought – let’s try to find a vehicle where I can accomplish those things. Our main character is a teenager. He’s a high school student. And I wanted at the very beginning of the book to convey something about the victims of white collar crime. Because that was one of my frustrations when I was a journalist.” 

“It’s often hard to get people concerned about white collar crime or corporate crime the way they’re concerned about violent crime or street crime. Sometimes money laundering or insider trading seems abstract.” 

“I started off the book with the young student sitting in the classroom, and he’s watching the clock. He’s desperate to know the outcome of a case that he had worked on with his uncle. The victims were victims of an investment fraud. And his uncle sued the fraudster on behalf of the victims. I put in a little bit about how the uncle bonded with these victims and how he cared about them and how this fraud had ruined their lives.” 

“It was my way of reminding people of the serious consequences of fraud. Even though it’s not a violent crime, it can have a devastating effect on people.” 

` “Then I had to have a vehicle for the student to get involved and do an investigation. I thought – why not have his uncle give him some shares of stock in a company to make it more interesting? Make it stock in a gaming company that makes games and he’s already a customer of. The uncle and his mother, who happens to be a stockbroker, tell him some basics about the market.”  

“Our hero, the student Zach, who happens to be quite bright and precocious, asks his mother and uncle – what makes stock prices go up and down? And they give him the very basic explanation. If the company reports good news or if people are optimistic about the company, the stock would tend to go up. And if they’re pessimistic or bad news comes out, it goes down. He takes this to heart and then he notices that the stock price of the shares he now owns is going up and no good news has come out. So he immediately suspects there could be insider trading. And that’s what launches the story.” 

“Grownups who do this for a living, who investigate financial crime as prosecutors, federal agents, SEC enforcement lawyers, investigative journalists, whatever – many of them have children and their children have no idea what they do for a living. 

“And I imagine a teenage son or daughter of an SEC enforcement lawyer or an FBI agent who investigates financial crime, may have no idea at all what their parent does for a living. And this could be a way for them to say look, you may think it’s boring and nerdy that I’m not cuffing people or kicking down doors, but actually it’s kind of cool investigating this kind of crime.”

Did you come across any other young adult fiction, where they address the question of white collar or corporate crime?

“Many people told Holly and I – if you want to find an agent to represent you, try to find an agent who has represented the author of a similar book. So I did a lot of searching and I was not able to find anything like this.” 

“There could be something out there and I’d be grateful if somebody told me about it. But the closest I could find was one young adult novel. It got very positive reviews. It was about a teenage girl whose father was prosecuted for a white collar crime. The story is mainly about the shame and disgrace of a family and the trauma of having your father arrested and prosecuted for a crime. But it’s not about the investigation of the crime.”

Why haven’t young people been exposed to these kinds of corporate crime stories?

“People in society react much more strongly to violent crime. People have a visceral reaction to violent crime. If you hear about the victims of Bernie Madoff, you don’t have that same sort of visceral reaction. And then you have things that are kind of second level crimes like money laundering.” 

“It’s harder to get people as angry at white-collar crime.”

“Many years ago when I was working for an investigator, I was contacted by a lawyer for a major law firm. He was a former U.S. Attorney. And he asked me – would it be possible to find out if there’s an outstanding Interpol warrant for one of my clients? The client wants to know if it’s safe for him to travel to various places. And this was not a public record warrant.”

“I said – it might be possible, but I don’t know if it would be appropriate to do that.” 

“He was trying to mollify me and he said – well, you know, this is the white collar crime. And I just about blew up at him, which is pretty stupid considering he could have been a big client. And I said, you know, Dalkon Shield was white collar and other horrific crimes are classified as white collar crimes. People downplay the importance because they’re called white collar crimes.”

A key figure in the book is Uncle Ted. I resonated with Uncle Ted. He’s Zach’s uncle. He’s a former US attorney, currently in private practice. Zach goes to visit his uncle when he starts his investigation of insider trading. 

And Uncle Ted has a corporate crime library. And you write – “the largest number of Ted’s crime books related to white-collar crime – nonviolent offenses committed by business people, corporations, banks.”

But you admit during our interview that corporate crime can be violent crime.

“I confess right away that I made a mistake. I should not have. You’re absolutely right. There are many of these corporate crimes that have caused death and serious injuries such as the birth defects from Thalidomide.”

“It’s simply a mental habit. When you hear the word crime, there’s a tendency to think of  a man grabbing somebody in a dark alley and pulling a gun on them. When we think of crime, we think of street crime – murder and robbery.” 

“But take the Madoff case for example, where there is no physical violence involved. But if you ruin a person’s life, you drive them into poverty, maybe drive them to suicide, you could say well, technically there was no physical violence involved, these people handed their money over to the Ponzi scheme guy, they lost the money, and now they’re in the poorhouse. There was no violence involved whatsoever, but it’s a horrific outcome for everybody.”

The book is about this high school student, Zach, who is hot on the trail of an insider trading case. He conducts his own investigation and goes to the government and reveals information from his investigation that leads to the arrest of the traders. 

“The Securities and Exchange Commission (SEC) is a major player in the story. I wanted to make sure that the story was technically accurate. And I sent it to some people to read. I send it to a friend who’s a retired enforcement lawyer from the SEC and to another friend who’s a former Assistant United States Attorney who also worked for FINRA, the so-called self regulatory agency.”  

“I sent it to a retired FBI agent and I sent it to a former senior SEC official. And they all gave me positive feedback, but they also caught a few mistakes.”

“I had mentioned Martha Stewart as an example of an insider trading case. And my friend who’s the retired SEC enforcement lawyer reminded me that Martha Stewart wasn’t prosecuted for insider trading. She was prosecuted for lying to the government about insider trading. So I’m glad he caught that blooper.”

“I asked – did the book capture the feel of what it’s like inside the Commission? And she worked there during the 1980s and she said we did a good job of capturing the atmosphere inside the Commission.”

“One thing that I tried to convey was the process of carrying out an investigation, how it’s actually done. I’ve been both an investigative journalist and a private investigator. I’ve used a range of techniques. I’d never been a criminal investigator in law enforcement. So, there are many things that I don’t know, but I do know how to conduct interviews.” 

“I have done interrogations. I know how to do public records research. I’ve managed surveillance enough to know how those are done. I know something about how the regulators work and how criminal justice works.” 

“The book is meant to be entertaining above all, but it is also a way to convey to people this is how investigations are done. There is a genre of detective novels known as the police procedural. So you could call this the corporate investigator procedural. It talks about things like doing a chronology, about open source research, about doing interviews, about link charts.” 

“Good investigation is all about making inferences and pattern recognition. These are the things that people love about Sherlock Holmes stories, apart from the atmosphere of London 120 years ago.” 

“Sherlock Holmes could see these small moves about the way a person is dressed or their demeanor and then make these inferences. Oh, you must have been in Afghanistan.” 

“I show how Zach has the skill of being able to spot anomalies. He notices for example, that the CEO of the company he’s investigating has what they call in Washington an ego wall. His office wall is just covered with pictures of him with famous people, with plaques and awards. But he doesn’t have any diplomas. Like Sherlock Holmes, Zach notices what is on the wall, but he also notices what should be there but isn’t.” 

“I tried to bring young people into this world – this is how investigations are done. I had a lot of fun with the book and I hope it’s fun to read.”

[For the complete Interview with Larry Gurwin, see 36 Corporate Crime Reporter 33(12), September 5, 2022, print editon only.]

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