On one of those gray winter mornings that make New Jersey seem even more unfairly like New Jersey, I landed at Newark Airport, where I was met by a lawyer named Kevin Marino. Marino was on his way out the door of his Newark office on April 5, 2000, when Jonathan Lebed walked in with his father. Marino had agreed to see the Lebeds as a favor to a mutual friend, but he didn't have much interest in their bizarre case, or in any case. He'd been working too hard and hadn't seen enough of his wife and two sons and so had decided to take a long vacation out West. But before he did that, to placate his old friend, he spent an hour with Jonathan and Greg Lebed of Cedar Grove, New Jersey.
In that hour a couple of things became clear. The first was that Greg Lebed, though outraged that the government was demanding that his son hand over $800,000, still didn't fully understand what his son had done to accumulate it. The other was that Jonathan Lebed, who didn't appear to much care what became of his money, knew more than he was saying. "Greg didn't understand what Jonathan was up to and Jonathan wasn't saying what Jonathan was up to," says Marino. "I had a sense he wasn't buying what anyone was telling him, but he wouldn't say anything. So I ask him: 'What's it like to be dragged in and cross-examined by the government? What were they like?' And he made this face like he didn't want to say that they didn't have a clue, but that's what he's thinking. So I asked him: 'What did you think of their questions?' And he thinks about that for a minute and then says, deadpan, 'Some of them were good.'"
Fifteen years of defending people accused of white-collar crimes had left Marino essentially incapable of being shocked by human behavior. But when he comes to speak of the case at hand—how Jonathan Lebed came to be a poster boy for Internet stock fraud—his voice admits wonder. "I had a very clear sense right away that there was something dramatic and unusual about him. For a kid his age he had huge nerve."
Cedar Grove, New Jersey, was one of those Essex County suburbs defined by the fact that it was not Newark. The real estate prices appeared to rise with the hills. The houses at the bottom of each hill were barely middle class; the houses at the top might fairly be described as opulent; but in some strange way they were all the same house. Even million-dollar homes built on streets with names like Tiffany Court were less upper-class mansions than some middle-class person's idea of upper-class mansions. Indistinguishable from the homes on either side of them—same manicured lawn, same grandiose entryway, same more-crystal-than-crystal chandeliers—they were, in essence, giant tract houses. In Cedar Grove rich just means having more of exactly what you had when you weren't rich.
About a third of the way up the first hill, Marino stopped and turned left. For most of the ride down from Newark he'd been describing his seriocomic negotiations with the SEC, which had ended with a phone call from an SEC lawyer who said he was "surprised and disappointed" that the media had discovered the $550,000 Jonathan Lebed had kept. Marino had just wanted to keep as much money as possible for his client; the SEC was more concerned with maintaining the illusion that crime didn't pay. When news broke that the kid was still sitting on more than half a million dollars, the illusion broke with it. Now Marino slowed the car and said, "You are about to see the Sticking Point." Before I had time to ask what he meant we had turned into a driveway and I was able to see what he meant: parked in front of a distinctly modest home, hood ornament out, was a bright green Mercedes SUV.
Just before the SEC called him, Jonathan Lebed had taken $41,000 of his profits and bought a car. He was still too young to drive the car himself but he enjoyed being driven around in it. "That was the sticking point in my negotiations with our government," says Marino. "The SEC couldn't get past the Mercedes. It still ticks them off."
The first person to the door that day was Greg Lebed. Jonathan's father cut a figure. Black hair sprouted in many directions from the top of his head and joined together deep in the middle of his back. The "Ape Drape." The curl of his lip seemed designed to shout abuse from a bleacher seat. Dress him up as an Eskimo and drop him into the Arctic Circle and he'd remain, unmistakably, Essex County. Anyway, that was the first impression he made, of a man perfectly untamed, a creature at home only in the New Jersey wild. He'd furthered this impression in his brief encounters with the mass media. As he'd tossed fifty or so journalists off his front lawn, he'd declared, "I'm proud of my son." That hit the newspapers and elicited no end of moral indignation from the SEC.
Poked and prodded about the comment by an interviewer from 60 Minutes, he'd gone on to say, "It's not like he was out stealin' the hubcaps off cars or peddlin' drugs to the neighbors."
But when he wasn't busy being outraged or indignant, Greg was unfailingly polite, almost meek. He apologized to me for taking so long to answer the door. He was down in his basement, he said, fiddling with his trains. That's mainly what he did when he was home: played with his model train set in the basement. You'd be upstairs fixing a cup of tea, enjoying the tranquillity of Cedar Grove, when Greg would take his vintage B&O Railroad engine out for a spin around the basement tracks and all of a sudden there was a shriek and a whistle that made the house feel like it was built on top of Penn Station. But I didn't learn that until later. On that winter afternoon Greg led us to the family dining room and, without the slightest help from me, worked himself into a fury. "Youse want to see something!" he hollered. "Let me just shows youse something!"
He pulled out a photocopy of the front page of the New York Daily News. One side displayed a snapshot of Bill and Hillary Clinton beside the headline "Clintons Cleared: Insufficient evidence on Whitewater says report"; the other side had a picture of Jonathan Lebed beside the headline "Teen Stock Whiz Nailed." Over it all, in Greg's furious hand, was scrawled: "U.S. Justice at Work."
"Look at that!" Greg shouted. "This is what goes on in this country!"
Then, as suddenly as he'd erupted, he went dormant. "Don't bother with me," he said, "I get upset." He offered seats at his dining room table. From that moment his anger ceased to be frightening, and became something else.
Connie Lebed now entered. Jonathan's mother had a look on her face that as much as said, "I assume Greg has already started yelling about something. Don't mind him, I certainly don't." When her husband yelled, she was as good as deaf.
"It was that goddamn computer what was the problem," said Greg, testily.
"My problem with the SEC," said Connie, ignoring her husband, "was that they never called. One day we get this package from Federal Express with the whaddyacallit, the subpoenas inside. . . . If only they had called me first." She would say this six times before the end of the day, with one of those marvelous northern New Jersey harmonica-like wails that conveys a sense of grievance maybe better than any noise on the planet. If only theyda caaaawwwwlled me.
"The wife brought that goddamn computer into this house in the first place," Greg said, hurling a thumb at Connie. "Ever since that computer came into the house this family was ruined."
Connie absorbed the full frontal attack with an uncomprehending blink, and then, as if her husband had never spoken, said to me, "My husband has a lot of anger. He gets worked up easily. He's already had one heart attack." She neither expected nor received the faintest reply from him. They obeyed the conventions of the stage: whenever one of them stepped forward into the spotlight to narrate, the other receded, and froze like a statue. The U.S. government had made a point of asking Greg how he got on with what he invariably called "the wife," so I didn't need to.
SEC:How would you describe your relationship with your wife, just generally?
GREG: So, so. There have been a lot of problems lately, such as this.
SEC: I mean do you communicate and talk?
GREG: Oh, yes, yes.
SEC: You discuss things?
GREG: Yes.
SEC: But this whole thing that we are investigating has created some tensions?
GREG: Yes.
SEC: Anything abnormal?
GREG: Just a lousy period. In other words, it ain't a happy thing, you know.
SEC: Well, who was angry about it, you or her or both?
GREG: Well, it upset me.
SEC: Right.
GREG: And, of course, it upset her.
SEC: Did you have any sit-downs with Jonathan, the three of you?
GREG: Yes.
SEC: Prior to [your] contact with the SEC, was your relationship with your wife better?
GREG: Yes.
SEC: And you communicated more?
GREG: Yes.
Ten minutes into that first conversation at the Lebed dining room table Jonathan slouched in. But even that verb does not capture the mixture of sullenness and truculence with which he entered the room. He was long and thin and dressed in the prison costume of the American suburban teenager—pants too big, sneakers gaping, a pirate hoop dangling from one ear. He looked away when he shook my hand, and said "Nice to meet you" in a way that made it clear he couldn't be less pleased, then sat down and said nothing while his parents returned to their split-screen narration. At a glance, it was impossible to link Jonathan in the flesh to Jonathan on the Web. I had a fat file of the collected Internet postings of Jonathan Lebed and they were marvelously bombastic.
For instance, just two days before the FedEx package arrived on the Lebeds' front doorstep bearing the SEC's subpoenas, Jonathan had logged onto the Internet and posted two hundred separate times the following plug for a company called Firetector (ticker symbol FTEC):
DATE: 2/03/00 3:43pm Pacific Standard Time
FROM: LebedTG1
FTEC is starting to break out! Next week, this thing will EXPLODE . . .
Currently FTEC is trading for just $21/2. I am expecting to see FTEC at $20 VERYSOON . . .
Let me explain why . . .
Revenues for the year should very conservatively be around $20 million. The average company in the industry trades with a price/sales ratio of 3.45. With 1.57 million shares outstanding, this will value FTEC at . . . $44.
It is very possible that FTEC will see $44, but since I would like to remain very conservative . . . my short term price target on FTEC is still $20!
The FTEC offices are extremely busy . . . I am hearing that a number of HUGE deals are being worked on. Once we get some news from FTEC and the word gets out about the company . . . it will take-off to MUCH HIGHER LEVELS!
I see little risk when purchasing FTEC at these DIRT-CHEAP PRICES. FTEC is making TREMENDOUS PROFITS and is trading UNDER BOOK VALUE!!!
This is the #1 INDUSTRY you can POSSIBLY be in RIGHT NOW.
There are thousands of schools nationwide who need FTEC to install security systems . . . You can't find a better positioned company than FTEC!
These prices are GROUND-FLOOR! My prediction is that this will be the #1 performing stock on the NASDAQ in 2000. I am loading up with all of the shares of FTEC I possibly can before it makes a run to $20.
Be sure to take the time to do your research on FTEC! You will probably never come across an opportunity this HUGE ever again in your entire life.
The author of that and dozens more like it now sat dully at the end of the family's dining room table and watched his parents take potshots at each other and their government. There was not an exclamation point in him. Clearly just trying to get his client interested in the conversation for the benefit of an outside observer, his lawyer, who had been watching in silence what was to him a familiar scene, recalled the day the SEC handed over Jonathan's name and address to the press. He called to tell the Lebeds that they should stay inside and not have anything to do with journalists, and certainly not answer any questions. On cue, journalists from just about every place on the planet overran the Lebeds' front yard. News trucks. Fat guys with huge cameras. Screeching women in sneakers. Connie called Greg and told him she wanted to move away from Cedar Grove, to a place where no one knew them.
Their eleven-year-old daughter, Dana, burst into tears and ran out the back door with the promise that she was going to live the rest of her life at a friend's house. Greg hollered expletives into the phone and hopped on a high-speed train to Triple Bypass. Jonathan was the only one who remained calm. While Connie spoke to the family lawyer—whose card was now glued to the wall over the phone—Jonathan walked out the front door and presented himself to the mob.
"Jonathan," Connie wailed. "Kevin said not to go out there. Wheyougoin'?"
"What's going on there?" Marino shouted.
"Jonathan's outside holding a press conference!!!"
That's just what he had done. He had strolled out the front door and told the reporters that he would talk to them on condition that they mention the name of his new web site in their newspapers.
Connie now said, "I'm inside yellin', 'JON-A-THAN! Come in! Come in! Kevin says come in!' And he's not comin' in. So I take the phone out to the front and make him talk to Kevin. Kevin yelled at him to get in the house."
"It was so fun that day," Jonathan said, then ducked back inside his shell.
It took another twenty minutes for their attorney to drag the family together into the general discussion of Jonathan Lebed's life and works, and another few weeks of me pestering them to get a general answer to the question: How on earth did Jonathan Lebed happen? The story finally came out in full over dinner one night. In its short version, it ran roughly as follows:
Not long after his eleventh birthday, Jonathan opened an account with America Online. He went onto the Internet, at least at first, to meet other pro wrestling fans. He built a web site dedicated to the greater glory of "Stone Cold" Steve Austin. But at about the same time, by watching his father, he became interested in the stock market. In his thirty-three years working for Amtrak, Greg Lebed had worked his way up from a simple laborer to middle manager. Along the way he'd accumulated maybe twelve thousand dollars of blue-chip stocks. Like half of America, he'd come to watch the market's daily upward leaps and jerks with keen interest. Jonathan saved him the trouble. When he'd come home from school, he'd turn on CNBC and watch the stock market ticker stream across the bottom of the screen, searching it for the symbols inside his father's portfolio.
"Jonathan would sit there for hours staring at them," said Connie, as if Jonathan were miles away.
"I just liked to watch the numbers go across the screen," Jonathan said.
"Why?"
"I don't know," he said. "I just wondered, like, what they meant."
At first the numbers meant a chance to talk to his father. He'd call whenever he saw one of his father's stocks cross the bottom of the television screen. This went on for about six months before Jonathan declared his own interest in owning stocks. On September 29, 1996, Jonathan's twelfth birthday, a savings bond his parents had given him at birth came due. He took the $8,000 and persuaded his father to invest it on his behalf in the stock market. The first stock he bought was America Online, at $25 a share—in spite of a lot of adverse commentary about the company on CNBC. "He said that it was a stupid company and that it would go to 2 cents," Jonathan said, pointing at his father, who obeyed what I came to understand as the family rule, and sat frozen at the back of some mental stage. AOL rose five points in a couple of weeks, and Jonathan sold it.
From this he learned (a) you could make money quickly in the stock market, (b) his dad didn't know what he was talking about, and (c) it paid him to exercise his own judgment on these matters. All three lessons were reinforced dramatically by what happened next.
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