DAVID GANEK AND LEVEL GLOBAL 

It is important for you to know the story of David Ganek and his hedge fund firm, Level Global. David was the co-founder and principal partner for Level Global, a successful hedge fund in New York with 60 employees and $4 billion in client investments. Following the 2008 Financial Crisis, Bernie Madoff, and the deserved backlash against many investment companies, the Government approached a disgruntled Level Global ex-employee in Central Park. FBI Agents Hinkle and Makol confronted Sam Adondakis with information possibly implicating him for insider trading, but they let Sam know that they would rather implicate David Ganek and others up the food chain. The District Court for the Southern District of New York states that "Adondakis agreed to cooperate with the FBI." 
Even though Adondakis was unable to come up with any actual evidence against David Ganek, and even explicitly denied that Ganek was ever informed that information came from corporate insiders, United States Attorney Preet Bharara decided they would raid Ganek's office in a strong show of force. Bharara knew that in this post-crisis environment that even a whisper of Government trouble would be fatal for an investment company and would erase any ability for them to defend against Government allegations. 
The agents presented an Affidavit to the Magistrate Judge which falsely stated, "ADONDAKIS informed GANEK...regarding the sources of the Inside Information," in order to obtain a warrant to strike the knockout first blow against Level Global. [S. Dist.]. 
To ensure the destruction, USA Bharara alerted the press three days before the raid. "On November 19, 2010...the Wall Street Journal reported that federal insider-trading charges against financial professionals were imminent." [S. Dist.]. Then on November 22, 2010, "Prior to executing the warrant, the Government alerted the 'Wall Street Journal' that it would be raiding Level Global's offices. Because the 'Wall Street Journal' was 'tipped off,' it was able to publish photographs of FBI agents carrying boxes of documents from Level Global's office...two dozen agents searched Level Global's offices." [S. Dist.]. A month later when Level Global representatives met with Zabel, the Chief of the Criminal Division, and Asst. US Attorney Leibowitz to try and save the company, the employees' jobs, the shareholders equity, and the client's assets, "Zabel and Leibowitz informed Level Global that the likely commercial consequences of the raid 'had been carefully considered at the highest levels' before it was initiated." [S. Dist.]. Level Global was shut down on February 11, 2011. 
Following all of this destruction, David Ganek was not only not convicted, but was not even indicted. Only one portfolio manager in the firm, Chiasson, was indicted. He chose to defend himself at trial, was convicted, and then after multiple efforts the courts finally declared that he was actually innocent and overturned his conviction. 
Eventually, Ganek filed suit against the Government to clear his name, even though everything was already destroyed. He claimed that the Fourth Amendment of the United States Constitution demanded "reasonableness in the manner and scope of searches and seizures" [Lauro v. Charles], and that it was unreasonable to use a "raid rather than subpoenas" and "for the Government to tip off the Wall street Journal in advance of the raid." Also, "the Fourth Amendment forbids the police from making a suspect perform a staged 'perp walk' for the press if the walk serves no other law enforcement purposes." [Lauro]. 
The New York District Court granted his lawsuit to proceed against these agents and attorneys, and ordered the Discovery Process to begin in order to shine a light of transparency on the Government actions. But then Second Circuit Judge Raggi intervened to claim that all of these agents and attorneys were protected under Government immunity. The Court stopped the Discovery Process which would have shined the light on how USA Bharara's office knowingly and willingly destroyed Mr. Ganek's company, shareholder's equity, bond and lender value, and any proprietary investments. 
In an interesting collateral issue, the indemnification funds claimed that, based on the Government's possible charges against Ganek and others in Level Global, these monies were not to be spent on their individual defenses. [XL v. Level Global]. Ganek had lost his company income, and now they tried to claim that even the indemnification policies put in place for this very issue were not allowed to pay for legal counsel or experts. Fortunately for these defendants, the Courts followed the contract law stating, "[the funds] are required to make contemporaneous interim advances of defense expenses...and be obligated to fund the criminal defense. XL was ordered to resume the advancement of defense costs." [XL]. Without this ruling, the defendants would have been forced to face the unlimited resources of the U.S. Government with their own income extinguished, their assets likely frozen, and without the very insurance contracts put in place before they had agreed to assume this vulnerable management position. 
In another interesting turn of events, the "Wall Street Journal", the accomplice to Level Global's destruction in 2011, eventually became one of Ganek's greatest defenders. In subsequent articles the Journal stated, "Federal appeals Judge Alex Kozinski has noted that abusive behavior by prosecutors is reaching 'epidemic proportions.' That epidemic will get worse after Tuesday's ruling by the Second Circuit Court of Appeals absolving prosecutors for using false information to put David Ganek's hedge fund out of business...Judge Raggi's ruling means in practice that there is no mechanism for an innocent person like Mr. Ganek to seek redress if a claim is a lie, and no legal remedy." The Journal continued, "Long after her office had decided not to charge Mr. Ganek...the smearing continued even during the oral arguments at the Second Circuit. Sarah Normand, an assistant U.S. Attorney, accused Mr. Ganek of participating in 'a scheme with regard to many, many, pieces of inside information from many public companies." The Wall Street Journal concluded with, "(I)mmunity should not be impunity...but Justice is an insider's club." 

"Best not to render ultimate judgment on a man's story until you have seen the end of it." 
- Solon to Croesus, King of Lydia, 600 BC 

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