Last Updated: June 7, 2008: 3:14 PM EDT
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Trader, father... (page 3)

By Betsy Morris, senior editor

One of the most problematic charges for Gile was that in at least two specific instances he reversed changes made by a colleague that had inflated the values of the desk's positions. This was presented as evidence that he knew of the pattern of false valuations. Since he took a plea, Gile never had a chance to talk to the prosecutors directly or to answer the allegations directly in court. He told friends: "Late in 2003 it came to my attention that there were some inconsistencies in many of our marks. I went through the marks in question and did my best to correct the situation.... To be honest, I chalked it up to sloppiness and difficulties with our system."

Chauvin believes that some of the best evidence the jury would have against Gile was that he went back to fix the valuations. "Craig never intended to steal anything from anybody," he says, but "if you presume a guy is guilty, he's covering up. If you presume he's innocent, he's fixing it." Even if Gile had the best of intentions, his friend says, "ironically, that was covering up a crime."

Still, Gile was prepared to go to trial, right up until the day that his boss, Becker, accepted a plea deal and said he was prepared to testify against Gile. That tipped the balance. "If I was trying this case, I could probably convict you," Chauvin had to tell his friend. That could well mean a prison sentence of three to five years, as opposed to the likelihood of doing no time at all if he also took a plea deal. "And that was very hard advice to give a very, very good friend who you know didn't believe he'd committed a crime."

The Giles couldn't imagine the kids growing up without their dad. If Craig were to lose the case, oldest son Carter would be nearly off to college before Craig got out of prison. "We felt we were in a corner," says Maureen. Craig was solemn, deflated, serious, sad. But he had to convince her he should take the plea. "It was the biggest risk we couldn't take." So on Oct. 19, 2006, Gile flew to New York and pleaded guilty. It was so hard to get the words out, his lawyer had to nudge him. Afterward, Gile recalls, "we held out hope - maybe it was me keeping my head in the sand - that the judge would come to the conclusion that incarceration wouldn't serve any good purpose."

On May 17, the day of sentencing, the Giles were still hopeful, even though Becker had been sentenced two months earlier to 15 months in prison. But Craig had served in the military, after all; he'd fought in a war. Dozens of friends had written letters to the judge. Still, that morning, at a meeting in Riopelle's office near Carnegie Hall, the attorney told the Giles that - just as a precaution- they needed to think about which prison they'd choose. They had a right to make a request, he told them, handing them a book describing federal prisons. Stunned, the Giles took the book and went to a nearby Starbucks. They thumbed through the book, comparing prison amenities, and chose Pensacola because it was on a Navy base, offering jobs there for inmates and visiting hours that would let Maureen bring all three boys. After that, they walked around New York and stopped at a church to say a prayer.

In court that afternoon, after Riopelle made his argument, prosecutor Streeter spoke in favor of prison time, warning, "The press has followed this.... I think Your Honor can imagine the message to other traders out there ... that one can do this and still get a probationary sentence." Then, as Maureen and Craig sat squeezing each other's hands, Judge Sweet spelled out his sentence, saying, "I find these sentences under these circumstances extremely difficult.... But the issue of what is appropriate for what has been termed 'white-collar crime' I think is a very hard line."

In the next few weeks a letter arrived informing Craig that he would not be going to Pensacola. He would need to report instead to a detention center in downtown Miami, with no ball fields, more hardened criminals, higher security, and restricted visiting hours. It would take a prison consultant (fee: $2,500) to straighten out the mess and help arrange a change to Jesup, Ga. Why couldn't Gile go to Pensacola? He'd been deemed an escape risk, his lawyer told him. Apparently, because of his naval experience, somebody in the bureaucracy had determined there was a chance he'd hijack a plane and flee.

A few days before he was to leave for Jesup, the neighborhood had a big sendoff for him. They called it a "send Craig off to camp party." On Aug. 1, Gile's wife and father drove him to Jesup and left him with the only two belongings he was allowed: his eyeglasses and his wedding ring. For a long time after she returned home, Maureen would find little love notes in odd nooks all over the house.

At Jesup, Gile pretended he was back in the Navy aboard a ship, which helped him put up with the miserable routines. The biggest problem at first was how to kill time. He had to beg to wash windows instead of dishes or toilets. He spent his very long evenings mostly writing letters or reading. He read seven books the first month. He could have visitors on weekends, and at first Maureen tried to visit every couple of weeks. But there was nothing for the boys to do except see him in a dreary visitors' room or, on nice days, in an outdoor pavilion. They weren't allowed to have a ball - or anything else, for that matter, besides a deck of cards. So the family played a lot of spades and blitz and blackjack. After a while "they'd get kind of antsy," Maureen says. The family visits dropped to about once a month, but neighbors took up the slack.

Gile tried to make the best of it, getting to know the other prisoners, many of them serving decades-long terms under harsh sentencing rules for first-time drug possession. He formed a "nacho group" and a "pizza group," buying those snacks at the commissary, to meet on nights that the prison served the dreaded liver and bologna soup. He called it "our own little happy hour." Since he was getting letters from 130 people - too many to respond to - each month or so he would write one and send it to Maureen, who would type it into an e-mail. He became a big fan of the white-collar-crime cartoons in The New Yorker and the Wall Street Journal, and routinely made them into greeting cards that he sent to his friends - like the one of two men behind bars captioned, "I just consider myself as living in a gated community."

But he was also having a harder time than his letters would suggest. In September he injured his back while running. He could no longer exercise, and at times he could barely walk, but the strongest medicine the prison would give him was ibuprofen. (An MRI after his release indicated he had a ruptured disc that needed surgery.) He was cheerful for visitors, but he missed his family terribly, especially playing catch with the kids and going to their ball games, he told Fortune: "I miss those moments more than anything." He worried incessantly about how the experience might change him. "I'm doing my best to stay as unaffected by this place as possible," he wrote to Maureen in November. "I refuse to succumb to being a prisoner." In February he wrote to her, "I'll probably be less trusting, a little paranoid, and more careful in everything I do. Hopefully I'll be more considerate and understanding of people. I'll have a lot less faith in the justice system. Hopefully I'll be more tidy."

Now, after having given it months of thought, he says, "I take full responsibility for my role in the situation. It was never my intention to willfully mismark the portfolio, and it was never in my mind to deceive the bank. I've always been a man of integrity. And doing something like that is completely against everything I stand for." If he could do it all over, he would tell the bank's financial controllers that some of their requested numbers were not available in the market and that getting a concrete valuation of some of the trades was unrealistic. He'd ask more questions, he says. He would be more proactive.

Gile's term ended May 14 (he was released three months early), but his saga didn't. His sentence included a month in a halfway house in an Orlando industrial park to help him transition back into society (he will also be on parole for two years). Although the place has better food, in some ways it's equally frustrating. He was supposed to get a job, so he did - as an administrative assistant at Paradies Gifts, thanks to a friend. He makes minimum wage, 25% of which goes back to the halfway house. He could drive the nearly three miles to work, but there's a waiting list for parking at the halfway house, so he decided to walk. The first day, he got so lost that he had to climb a fence and scale an embankment to find his way home. It took more than two hours plus a lot of stress, since he's supposed to check in frequently via a landline. "Right now, wandering aimlessly around Orlando would not be a good career move for me," he told Fortune after he got back.

Still, it's good to finally be making some plans. As soon as he's out, in mid-June, he'll tend to the family business. But it will take more than that to offset all the lost time and income. His net worth, which was $2.5 million at the end of 2006, is now "a fair amount less," he says. He would like to start another business, maybe even a hedge fund. Some friends have said they would back him. "I'm going to look into it," he said recently. He's done a lot of reading in prison, and "as far as I know, there's nothing from a regulatory standpoint to deter me." But he really isn't sure, because with a felony conviction and starting from scratch, Craig Gile is in uncharted territory. When the subject came up during an interview in prison, it was as if a dark cloud passed over him momentarily. "I always hear that it's a nation of second chances," he said, looking off toward the window. "I'm hoping it's not just a nation of second chances for substance-abusing teenagers." Because it's clear that what he'd really like to do is get back to trading, get back to Wall Street, just get back.

Reporter associate Patricia A. Neering contributed to this article. To top of page

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