In the fall of 2009, Michael Kimelmans life was
unraveling. His start-up trading firm, Incremental Capital, had
just lost a major backer, and he and his business partner,
Zvi Goffer, were clashing as
they scrambled to find replacement capital. And the financial
Armageddon of 2008 was still wreaking havoc on global
Then things got drastically worse. On a quiet November morning,
as Kimelman dozed in bed with his wife and the youngest of his
three children, federal agents banged on the door of his
suburban home in tony Larchmont, New York; cuffed him; and
marched him to a patrol car in full view of his stunned
neighbors. Kimelman was arrested for insider trading, swept up
in the vast government probe that ensnared Galleon Group
founder Raj Rajaratnam who is still serving an 11-year
prison sentence and resulted in a number of other
high-profile convictions. But Kimelman, a bit player in the
saga, whose gains from the alleged illegal trades amounted to
peanuts compared with the windfalls reaped by Rajaratnam and
others, fiercely maintained his innocence, refusing a plea deal
and ultimately serving 15 months at the U.S. penitentiary in
Lewisburg, Pennsylvania. (He served a further six months in a
Most people accused of insider trading say they didnt do
it. Still, Kimelman presents compelling evidence to back up his
argument that he is not guilty of anything more than bad
judgment primarily, his decision to overlook his early
misgivings and hitch his wagon to Galleon trader Goffer, who
ultimately received a ten-year sentence for insider trading
and that he was simply collateral damage in the
governments ploy to reel in bigger fish. Unfortunately
for Kimelman, his life was destroyed in the process:
Incremental went out of business, and his wife filed for
divorce while he was in prison. Today Kimelman lives in an
apartment in Mamaroneck, New York, a short drive from his
children, whom he sees regularly. He has been developing and
writing TV projects, and has started a real estate investment
venture. But its a long way from Wall Street. In his
forthcoming memoir, Confessions of a Wall Street Insider,
excerpted here, Kimelman offers a gripping account of what
its like to take on the almighty feds and
Before dawn, November 2009, I was shaken from a deep sleep
by a deafening bang with no discernable source. I sat bolt
upright in bed, heart in my throat. My first thought was that
it must be some sort of mechanical explosion. Maybe that
rebellious boiler in our basement had finally had too much.
Within seconds, it came again. And then a third time. It became
BANG! . . . BANG, BANG, BANG!!!
I jumped out of bed.
Our front door was being beaten on. Or in. Given the
intensity of the blows, it was hard for me to believe the
hinges were still holding. I looked over and saw that my wife,
Lisa, was also out of bed, white with fear and cradling our
terrified toddler, Phineas. Still in the dazed throes of Ambien
and red wine, I half-wondered if this wasnt some sort of
bizarre nightmare the product of stress, drugs, and an
overactive subconscious. An hour earlier, I had been floating
in a warm nothingness, thanks largely to the sleep meds and
several glasses of a midpriced California Cab.
But now this. Whatever this was.
Oh my God, Michael! Lisa shouted, instinctively
squeezing Phinnie a bit tighter than he was accustomed to. He
squirmed uncomfortably. Lisa ran to the window and pulled back
the curtain. There, we both saw half a dozen FBI agents in blue
and yellow windbreakers fanning out across our front lawn. Each
had a holstered firearm. One of them had a K-9 police dog,
straining on its leash. I had been attacked by a German
shepherd as a kid and knew precisely what they were capable
An avid viewer of shows like Law & Order and
CSI: NY, Lisa initially figured that the feds were
there to hunt down a violent criminal that might be fleeing
through our neighborhood. That the FBI agents were there to
somehow help us. But this wasnt TV Land; it
was Larchmont Village, New York, as quaint and safe a spot as
you can find inside 20 minutes of the Big Apple. Escaped
convicts didnt haunt these mansions and manicured lawns.
I was no expert, but it looked like the FBI agents were
watching for movement in the windows and doors to our home.
After a moment, an agent saw Lisa peeking out from behind the
curtain and pointed at her face. Scared and confused, Lisa
dropped the curtain and turned back to me.
Go check on the kids! she yelled, gripped by a
shrill, pure panic.
I sprinted down the hallway and opened Cams door. Our
three-year-old had just moved into his own bed. He was still
scared of thunder, and my heart sank as I wondered how he would
handle this sledgehammer-like crashing on the front of his
home. He was wide awake and crying by the time I burst in.
Its okay, sweetie. Mommy will be here in a
second. You are safe.
I quickly kissed him on his forehead. Five-year-old Sylvie
was in the room adjacent. I checked on her next. She was
starting to stir, but not yet upset. Only curious.
Its okay, Syl. Dont worry about the noise.
Try to go back to sleep.
Lisa arrived in Sylvies room.
Theyre fine, honey, I said.
Then an absurdity. I thought to myself: Someone is knocking
on my door. What do you do when someone knocks on your door?
You go answer it.
Im going to answer the door, I said to my
wife, as calmly as if I anticipated a delivery from Amazon or
neighborhood kids selling Girl Scout cookies.
I began to walk downstairs. Through the windows of the
house, I noticed several more FBI agents moving furtively
across our backyard. The trees had lost enough foliage to leave
the agents mostly exposed, but they were still trying their
best to conceal themselves.
I reached the door and called out, Okay, Im
I swallowed hard and prepared myself for an overzealous
agent ramming the door into my face and shattering my nose, or
maybe anxiously discharging a chambered round into my
It wasnt until my hands were fiddling with the brass
deadbolt that I remembered I was standing in only my Hanes
boxer briefs and a dingy V-neck undershirt. I had a quick
flashback to the TV lounge in college, watching Cops
with my buddies and asking, Why do these white trash
criminals always get arrested in their undershirts and
Now, perhaps, it was no longer such a mystery.
Heart racing, ears ringing, I undid the last latch, twisted
the handle, and opened the door.
Mr. Kimelman? Mr. Michael Kimelman?
The agents were right out of Central Casting. Tall.
Bulletproof vests. No-bullshit expressions. One was a
middle-aged white guy, wearing the traditional navy blue
windbreaker with yellow FBI lettering. He was in good shape,
and kept his hair meticulously short.
His young black partner was handsome and likewise athletic,
and appeared to relish sternly shining his flashlight directly
into my eyes.
Squinting, trying reflexively to block the blinding beam
with my hand, I said that that was indeed my name.
I have a warrant here for your arrest, one of
I just stood there, blinking and squinting. In the movies,
this is when the accused angrily demands to see the warrant,
and then snatches it from the agents hands when its
produced. But thats the movies. In real life, your brain
is like a car that wont start. No matter how hard you
pump the accelerator and twist the key in the ignition,
theres nothing. Three years of law school and several
more at a fabled law firm, and all I could think of to say was:
Uh, for what?
Securities fraud. This warrant gives us permission to
search your house. Please step aside, sir.
My legs nearly buckled. So this was it. This was how it
happened. This was what it looked like, what it sounded like,
what it smelled like.
This was how you became one of those guys. A bankster. The
people that good folks in the Midwest somewhere who
didnt know a thing about banking beyond their checking
accounts knew they should hate. This was how you became
a bad guy, I thought.
It was too much to begin thinking about what decisions, or
what people, had brought me here. But something in me knew. One
word resounded in my brain. One word. Zvi. (It rhymed with
me or flea.) One word over and over
Zvi. Zvi. Zvi.
So this was how you became one of the bad guys. Zvi.
After regaining a semblance of composure, my first thought
was that this was an incredible and outrageous invasion of my
space. What about securities fraud could possibly give the FBI
agents and a police attack dog the need to search my house full
of children in the middle of the night? What the hell were they
searching for, the fraudulent securities?