Rigged

RIGGED

RIGGED

THE TRUE STORY OF A WALL STREET

NOVICE WHO WENT TO DUBAI AND

CHANGED THE WORLD OF OIL

FOREVER

BEN MEZRICH

Contents

Author’s Note

Prologue

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

Chapter 11

Chapter 12

Chapter 13

Chapter 14

Chapter 15

Chapter 16

Chapter 17

Chapter 18

Chapter 19

Chapter 20

Chapter 21

Chapter 22

Chapter 23

Chapter 24

Chapter 25

Chapter 26

Chapter 27

Chapter 28

Chapter 29

Chapter 30

Chapter 31

Chapter 32

Chapter 33

Chapter 34

Chapter 35

Chapter 36

Chapter 37

Chapter 38

Chapter 39

Chapter 40

Chapter 41

Chapter 42

Epilogue

Afterword

Acknowledgments

By the Same Author

Author’s Note

I never set out to write a book about oil.

The truth is, I’ve never really seen myself as that kind of writer. My stories—the stories that turn me on enough to get me to dedicate a year of my life to their telling—usually involve brilliant young kids pulling off incredible schemes: wads of cash strapped to backs, Ferraris, and long-legged models and locales so exotic I need the Internet to help me find them on a map.

I usually leave the big geopolitical issues to the kind of writers you normally see published in the New Yorker and the Atlantic Monthly.

With Rigged, I actually stumbled into oil. The story I set out to write was as wild a ride as I’d ever embarked on—involving a brilliant young Ivy League kid with balls of steel who had embarked on an adventure that involved all the elements a method writer like myself lives to chronicle. But the more I researched this Ivy League kid’s tale, and the deeper I went into the world he described, the more I realized that there was a much bigger, much more important story to tell.

In real life, the kid’s name is John D’Agostino. When I first met D’Agostino, he was a second-year student at Harvard Business School. His girlfriend introduced me to him, and I was immediately struck by his intensity; in a way, there was something almost frightening about him. He was young, matinee-idol handsome, and polished. He had a grin that was friendly and engaging, but there was also a palpable edge behind his eyes. Maybe it was just me, but I caught a hint of American Psycho in him, beneath the polish. Not the part that involved chopping up prostitutes in his bathroom after work, but the smoldering fierceness of a young man powered by pure ambition. Everything about D’Agostino screamed purpose, from his perfect hair, combed so severely that you could see each strand, to the perfect suit, pressed so ruthlessly that you could cut bread with the creases. I knew immediately that D’Agostino was the kind of guy I wrote stories about—but it wasn’t until six years later that I found out how right I was. D’Agostino—still with the same girlfriend—had called me out of the blue to invite me to ring the bell at the Mercantile Exchange in Lower Manhattan, where he was already a vice president at the unbelievably young age of twenty-five.

I didn’t know anything about the Merc, other than the fact that it was the trading floor that had been featured in the Eddie Murphy movie Trading Places. In fact, I didn’t even know that it was the place where oil was traded until D’Agostino gave me a tour of the facilities on my way to the bell-ringing ceremony. And it wasn’t until I was standing up on a platform in the center of the trading floor, staring out at this crazed mob of Brooklyn-born Italians and Jews, that my mind began to whir and I had that familiar feeling that I was witnessing something that might be worth writing about. Because the Merc wasn’t like anything I had ever seen before. And this was where the price of oil came from?This was part of how that black juice got into my car?

After ringing the bell, I cornered D’Agostino at the bar on the top floor of the exchange and immediately made my pitch. I wanted to write a story about the Merc, about the crazy young men who made fortunes on that trading floor, then spent those fortunes on fast cars and even faster girls. Etc., etc., etc. But D’Agostino laughed, telling me that the Merc was only the tip of the iceberg. Then his conversation shifted to Dubai—and suddenly I found myself uncovering a whole new story, one that truly blew my mind.

Right then and there, I knew I had the makings of my next book.

The problem was, John D’Agostino didn’t want me to write Rigged. It wasn’t just that the subject matter was controversial, involving the secret workings of a world most people had never even heard of; it was deeper than that, an intensely personal reluctance that had to do with D’Agostino’s Italian Brooklyn background and the respect he had for the people who had helped him along the way. D’Agostino was on the inside—and in D’Agostino’s world, people on the inside didn’t talk to outsiders, especially writers.

Thankfully, I can be pretty persuasive. Eventually I did manage to convince D’Agostino to let me write the book; to appease his fears, I renamed the main character David Russo. Other than obvious public figures, I have not used any real names in telling this story. For the sake of narrative, and to protect the privacy of the individuals in this story, I compressed certain time periods and altered the identity and background of certain individuals so that they would not be recognizable. Characters such as Gallo and Khaled are composites and are not meant to portray particular people.

In the end, after reading the story, D’Agostino agreed to allow his real name in this author’s note and in the afterword, which he wrote himself. I know that such an arrangement is unique in a work of nonfiction—but this is indeed a unique book.

Unique for me, as a writer, and hopefully just as unique for you, as a reader.

Ben Mezrich, Boston

Prologue

Oil.

On the Arab street, they have another name for it: the Black Blood of Allah. A gift, handed down directly from God, endowing the Muslim world with everlasting power over the West.

In the West, oil is no less influential; it is inarguably the most important tradable commodity on earth. Oil is the source of wealth and power, the currency that drives the world economy. Some believe it is also the cause of most wars and acts of terrorism.

In truth, there’s a reason men fight wars over oil: at its essence, oil is energy. It powers everything. It is, in itself, power, but power with a price—historically, oil has always divided the world into two opposing forces: those who have, and those who need.

Very soon that historical fact may change. Because very soon oil may also end up bringing the world together in a way that politics, diplomacy, and war never could. . . .

Chapter 1

Three-thirty in the morning, maybe closer to four.

A packed club in the Flatiron District of Manhattan, a place called Gypsy Tea. Trendy as hell, the velvet rope outside lorded over by a doorman with a shaved head and a name nobody could pronounce, and a girl in a leather skirt so short she could have worn it as a wristband. Two couch-strewn floors teeming with pretty people in designer clothes, their New York hip-factor ratified by the fact that it was past three in the morning on a Tuesday and that they’d somehow made it past the door-bitches and their mysterious and uniquely New York vetting practices. The music was dangerously loud, bouncing off the walls in ear-shattering waves, and the champagne was flowing freely, splashing down the sides of crystal flutes and splattering all over the thick faux-leather carpeting.

The VIP area took up most of the back corner of the first floor, separated from the rest of the club by another velvet rope. The bouncers at this rope were wearing headsets and holding clipboards, but the clipboards were really just for show. If you were going to get into the VIP, the bouncers wouldn’t need to find your name on a list. The crowd beyond the rope was young—twenties and thirties—and obviously well-heeled. Bankers in tailored Brooks Brothers mingled with hip-hop execs in Armani and Sean John. Prime Time celebs swirled about like errant weather patterns, trailing wakes of PR flunkies, oversized bodyguards, and harried assistants. And of course, there were girls—there were always girls, models from Ford and Elite and Next, too tall and too thin and too angled, more giraffes than gazelles.

David Russo watched the circus from the safety of a corner banquette, his shoulders tense beneath the thin material of his charcoal-colored Zegna suit. The banquette was lodged behind a black marble table, which struggled beneath a glass metropolis of champagne and vodka bottles, ensconced by overflowing buckets of ice. David had a drink in his hand—something with vodka, he assumed—but he hadn’t even taken a sip. Although he was not a stranger to places like this, he was definitely an outsider. At twenty-six, he had never made a hobby of decadence, and at this hour he was usually holed up in his office, preparing for the market’s next opening, or home in bed with Serena, his girlfriend of two years. But tonight he hadn’t had much of a choice. In less than a week, David’s entire life was going to change—and he had to tread carefully. He had to keep up appearances, act as though nothing was out of the ordinary, no matter how far from ordinary things were about to become.

Fucking awesome, isn’t it?

Michael Vitzioli winked at him from a thickly cushioned couch to his right, then high-fived the two young men sitting across the table from them. Joey Brunetti and Jim Rosa shouted something back, but their voices were lost in the noise of the club. David smiled and nodded, stifling his nervous energy as best he could. He had been watching the three traders decimate bottle after bottle of alcohol for the past few hours, and he was beginning to believe that the night would never end. For the hundredth time, he regretted accepting the invite from Vitzi and his trading partners— but really, David couldn’t have turned them down. Over the last six months he had worked hard to win the trust of the traders—no small task, considering how different his background and theirs seemed to be. Even the way the three young men were dressed—Vitzi in a leather jacket and ripped jeans, Brunetti in a denim ensemble that would have given Serena a heart attack, and Rosa in what looked to be an overpriced sweat suit—betrayed the different paths they’d traveled to this chaotic, late-night moment. Even so, the three men had finally grown to accept David as one of their own. And if what David had planned was going to work, he needed to remain in their good graces. He needed to continue to play the part.

Hell of a party, he shouted back to Vitzi. You’re gonna break a record tonight. That waitress nearly fainted when you ordered that twelfth bottle of Cristal.

Vitzi grinned. The excess of the evening was a point of pride to him, especially because he knew that word of the night’s spending spree would move across the trading floor faster than he’d been spreading drinks around the VIP room. Vitzi certainly didn’t care about the money; he had made five hundred thousand dollars’ profit that morning. Half a million wasn’t a record for the Merc Exchange, but it was a pretty damn impressive take. Especially considering that just two weeks earlier Vitzi had turned twenty-four.

Can you fucking believe the girls in here? Vitzi responded. Then he pointed at Rosa across the table. Hey, maybe you can bring one of ’em to work with you tomorrow. Even the worst one here would be better than the shit you pulled yesterday.

Rosa’s cheeks reddened as David and the others had a laugh at his expense. In truth, David knew that Rosa wasn’t really embarrassed by the crack; his escapade of the day before was already fast becoming legend.

Yesterday morning, Rosa’s clerk had called in sick just hours before the opening bell. The young trader had needed to find a replacement clerk, anyone at all—he had just needed a body on the floor. So he had brought along the woman who had happened to be in bed with him at the time—a prostitute he’d hired the night before. All morning the nineteen-year-old hooker had strolled up and down the trading floor in transparent, high-heeled shoes, her hair sprayed up to the ceiling.

And nobody batted a fucking eye, David said out loud, shaking his head. Vitzi and Rosa high-fived again.

A hooker strolling around the trading floor, and nobody had even raised an eyebrow. David had been sequestered in his upstairs office during the entire episode, but he hadn’t been surprised when he first heard the story. The New York Mercantile Exchange wasn’t Wall Street, and the eight hundred or so traders who worked the Merc floor certainly weren’t the regular Wall Street set. They didn’t live in houses in the Hamptons or brownstones on Park Avenue. The Merc traders—guys like Vitzi, Rosa, and Brunetti—were mostly young men without college educations, from Italian and Jewish blue-collar backgrounds. Sons of garbagemen and street cleaners, plumbers and electricians. When they got rich on the Merc—Vitzi’s half a million in an afternoon— they were the first in their families to ever have had access to that kind of wealth, and often they spent it as fast and furiously as they had made it.

If Wall Street was the financial equivalent of Vegas, the Merc was Atlantic City—on crack. At the same time, the Merc was one of the most important financial institutions that had ever been built. Because, unlike Wall Street, the Merc wasn’t about stocks or bonds. The Merc was about something much more important. Much more valuable.

David felt the nervous energy inside him multiply as he watched Vitzi pour them all another drink, and he quickly took the opportunity to excuse himself. He started off toward the bathrooms, but as soon as he was out of sight of the three traders, he took a sharp right, pushing his way out of the crowded VIP room. A minute later, he had worked his way onto Twenty-first Street.

He moved beyond the velvet rope, strolling as calmly as he could down the sidewalk until he was fairly sure he was out of earshot of the bouncer and the woman in the napkin-sized skirt. Then he took his cell phone out of his pocket.

A brisk breeze pulled at his sleeve as he clicked the phone open. It was the middle of February, and David had left his overcoat back at his office when he joined the three traders for their first drink—fourteen hours ago. Still, the cold didn’t bother him. His mind was already someplace else—a place that was always unbearably warm.

He dialed carefully, from memory. If anyone had been close enough to see, they would have been surprised by the number of digits he pressed into the phone. Although the destination of David’s call was halfway around the world, that didn’t explain all of the numbers he pressed. The first six were part of a code he had been given one week ago by a sixteen-year-old kid who had approached him in a Starbucks near his apartment in Midtown. Encryption, the kid had explained, in an accent David hadn’t been able to place.

After he finished dialing, David pressed the phone against his ear. There was no ringing, just a series of clicks and a five-second pause. Then a familiar voice.

It’s almost time.

David smiled, despite his nerves. There was something about his friend’s voice that always made him feel calm. It had a lilting quality, a mixture of accents that somehow mingled together into a tranquil whole. David immediately imagined his friend’s face: the dark caramel skin, the jet black eyes, the ever-present half-smile. Roughly the same age as David, the friend on the other end of the line was more than just his counterpart on the project—he had become almost a brother.

I’m standing in the middle of it, the friend’s voice continued. Right where it’s going to happen.

David closed his eyes and tried to picture it. First the brightness. Then the heat—mind-numbing, stifling, utterly debilitating. And then the sand—everywhere, always, shifting and turning like a living creature.

Bulldozers, David said aloud, imagining them as he said the words. Cranes. As far as the eye can see.

The future, David.

It’s really going to be something, isn’t it? David asked. He could feel the nervous energy turning into excitement. He could not believe they were so close to completing what they had been working on for nearly a year. So close to doing what nobody else had ever done.

Our children’s children will thank us for it.

David opened his eyes and felt a chill rise through him that had nothing to do with the February breeze. He wasn’t going to pretend that he really knew how much what he and his counterpart were about to do would affect the future. He didn’t know if his children’s children would thank him, or if he’d even ever have children who’d live to see what he’d done.

What David did know was that the thing he and his friend two continents away were planning was going to change the world. He also knew that there were people—powerful people—who would do almost anything to see them fail.

I guess I’ll see for myself in a few days, David said quietly.

Allah willing, the young man responded. Then the line went dead.

Allah willing. Though the voice had remained lilting and calm, the words themselves were like a belt snapping tight. Allah willing. My God, David thought to himself, do I really know what I’ve gotten myself into?

He paused for a moment, staring at the phone in his hand.

Two hundred yards away and thirty feet up, a figure crouched low against the roof of a three-story warehouse. The figure was dressed entirely in black, nearly invisible against the backdrop of the predawn sky.

The figure watched through a high-powered telescopic lens as David Russo slid his cell phone into his pocket, took a deep breath, and slipped back into the throbbing club.

Chapter 2

SIX MONTHS EARLIER, SEPTEMBER 3, 2002

David Russo would always remember the moment when clarity first hit him, mainly because clarity had chosen such an unfortunate, clichéd instance to finally find its way into his life.

David had spent nearly half of his twenty-five years on earth running away from the clichés of his background. Barely one foot out of the thickest Italian ghettos of Brooklyn and Staten Island, he had clawed and kicked his way to become the first kid in the history of his family to attend an elite college. From Williams, he had managed to get a partial-ride scholarship to Oxford; then on to Harvard Business School, where he had graduated near the top of his class. And yet as much as he’d always had an idea of what he was running from, he’d never had any clear vision of where he was trying to go. That was, until thirty seconds ago, when his destiny finally smacked him full in the face—ironically enough, as he was reaching toward a tray of hand-rolled cannolis.

At least the cannolis were being carried past David’s table by a waiter in a tuxedo, each twist of sweet-cheese-filled pastry glistening in the soft light of the Waldorf-Astoria main ballroom’s massive crystal chandelier. But they were indeed cannolis, and David was, at that moment, surrounded by more Italian Americans than he’d ever seen in one room in his entire life.

Just one, David. Not the whole tray.

David blinked at the sound of his girlfriend’s voice, realizing suddenly that he had frozen in place, halfway out of his chair, both hands above the waiter’s tray. He had no idea how long he had been standing like that; he had momentarily left his body as his attention was captured by something all the way on the other side of the massive, ornate banquet hall. He smiled sheepishly at the waiter, took one of the pastries, and lowered himself back into his chair as his gaze remained pinpointed on the far side of the hall. Even though the enormous room was filled with people, congregating in groups around the three dozen or so tables that pockmarked the lush carpeting, David had a clear line of sight all the way to the edge of the long wooden stage that framed the far side of the hall. There, seated at a table set off from the rest, surrounded on either side by the most recognizable faces of the Italian American community . . .

That’s him, David said simply. And suddenly everything seemed so clear to him. Why he was there—not just at the National Italian American Heritage Institute dinner, but there, in New York, after all those years of running away . . .

That’s who? Serena interrupted, and David finally broke his gaze and turned to look at her. Even confused, she was beautiful. Cascading brown curls framing her angled, vaguely exotic face. Dark, almond-shaped eyes that hinted at her South American heritage. A black, strapless dress that showed off her porcelain shoulders and the soft glade of skin beneath her long, flawless neck. David had no idea how he’d found a girl like her in Boston, during his final year at HBS, or how he’d convinced her to move to New York with him just five months after they’d met. But however it had worked out, he was glad she was with him at this moment, glad she had accompanied him to the dinner, which at first had seemed like such a chore.

Anthony Giovanni, David finally responded.

Serena reached for the brochure that had been placed next to the salad plate on the table in front of her. She skimmed past the long-winded title that filled most of the front page—National Italian American Heritage Institute Dinner to Honor the Italian American Man of the Year—and skipped straight to the bios. Of course Giovanni’s came first, as he was the focus of the evening. Italian American Man of the Year, the reason that the most expensive ballroom in New York had been rented and invites had gone out to every rich or important Italian American in the tristate area—which pretty much meant every powerful Italian American in the country.

David knew that somewhere near the bottom of that same brochure, his own bio was laid out—in small type, two or three sentences jammed right up against the binding, a pair of staples crucifying half the letters of his last name. Along with his bio was some small mention of the scholarship the Heritage Institute had given him to pay for HBS—the reason he had been forced to piece together a tuxedo, dredge up one of his crimson Harvard ties from the back of his closet, and take Serena shopping for the dress neither one of them could really afford. But now it all seemed worthwhile.

Right, Anthony Giovanni, Serena repeated, obviously not getting the bigger picture. I guess he’s the one getting the award tonight. Do you know him?

David stared at her. She didn’t understand. He turned back toward Giovanni. Now David had to crane his neck to catch a glimpse of the man, as he had almost vanished in a swirl of fawning sycophants. David recognized many of the faces bobbing in and out of his line of sight: Rudy Giuliani, of course. The police commissioner as well. A few heads of banks, a few CEOs—all fawning over Giovanni like he was royalty. And in truth, the man cut a royal figure. Midfifties, more than six feet tall, slick dark hair just barely graying at the edges, chiseled features— hell, he looked like a movie star. And he moved through the crowd around him like a rock star—shaking hands, kissing cheeks, sending ripples of admiration outward in concentric wavelets all the way across the hall.

"I don’t know him, David said. I want to be him."

David had never been more certain of anything in his life. In twenty years, he wanted to be sitting at that head table, right up against the stage. He wanted to be the man at the center of those waves. He had no idea how he was going to get there—but now at least he had a real flesh-and-blood goal. Before, he had read about Giovanni, even written a paper about him back at Oxford. But now, seeing the man real and alive for the fist time, David was having an epiphany.

An epiphany with a side of cannoli, that is. He took a bite of the pastry, making sure the mascarpone didn’t run down the lapels of his tux or ruin his tie. Though Serena wouldn’t have minded if the entire pastry had ended up on the crimson strip of material; she had only tolerated it because he had bribed her with the dress she was wearing.

So go over and talk to him, Serena said.

David rolled his eyes at her, exasperated. Seeing the man in the flesh was one thing. You didn’t just go up and talk to Anthony Giovanni. The guy had more money than God. He was one of the richest Italian Americans in the country. He had made a fortune on Wall Street, then gone on to create a real estate empire. He owned restaurants, golf courses, movie theaters, whole fucking neighborhoods in Brooklyn and Staten Island. Currently, he was chairman of something called the New York Mercantile Exchange, some sort of stock market for energy futures that David had read about in business school. David wasn’t exactly sure what the Mercantile Exchange was all about, but if Anthony Giovanni was involved, it had to be something important.

Yeah, right. David glanced across the table at the other four couples relegated to the Siberia-like seating as far away from the stage as was geographically possible. Rented tuxes, a fair amount of hair spray, economical shoes and purses that reminded David of his aunts and cousins in Staten Island. It seemed like the Waldorf-Astoria ballroom had boroughs just like the city outside.

Seriously, David. I’m sure he’d be happy to offer you some advice. Just start off by asking him what he thought of your speech.

David shook his head grimly. He had given a short speech to a small crowd gathered in one of the tearooms of the hotel during the cocktail hour, well before the real dinner had begun, and he certainly would have