years ago, David Novak cast his lot with this generation’s
crop of robber barons, tax cheats, market manipulators and
a host of other briefcase bandits. Novak holds their hands
as they traverse the federal justice system, doing whatever
he can to finagle the best deals possible. These days, though,
the sentencing guidelines are so tight that the most he can
usually muster for a client is a 15-percent sentence reduction
for good behavior, a few months off for substance-abuse treatment,
or a preferred prison, close to loved ones. But upon request,
he’ll go so far as to drop his clients off at the prison gates.
he launched into his now-booming line of work, Novak has found
that the white-collar breed of criminal, by and large, doesn’t
set out to pilfer any and everything not bolted down, as some
would like to think. Instead, theirs is an insidious progression
that starts out with cutting an innocent corner somewhere.
Of the thousand or so clients he’s served to date, there was
one exception a few years back who proved that rule.
was no cutting of corners,” Novak says, because “it was never
a square to begin with. They lived circular lives.”
were a hundreds-strong pack of young and brash Wall Street
wannabes under indictment for running a “boiler room,” the
pump-and-dump stock scam made somewhat famous by the Hollywood
film of the same name. Novak’s client, whom he likens to the
film’s Ben Affleck character, was the ringleader.
guy was probably as close to sociopathic as I’ve ever seen,”
The scam starts off with a falsified initial public offering.
Then, slick-talking brokers drum up action on the worthless
stock by cold-calling and cajoling unsuspecting investors
across the country. By the time Grandma Mildred realizes she’s
bought into a lame duck, the “brokerage house” has dumped
the inflated shares and made off with the loot.
Novak’s client was held personally responsible for $296 million
in losses. And to the bitter end, when he was sentenced to
eight years, he didn’t think there was anything wrong with
what he’d done.
People who bought Krispy Kreme lost a lot of money too, he
rationalized to Novak.
After one exceptionally long day, leaving the lawyer’s office,
Novak took Affleck’s alter ego to task. “If this was such
a good deal, why didn’t you get your parents into it?” he
Keeping seedy company: David Novak, white-collar-criminal
consultant. Photo by: Chris Jameson
client, who was quite close with his parents, didn’t appreciate
Novak’s repartee. In fact, “I thought he was going to punch
me,” Novak remembers.
But even scarier to Novak was that he saw a bit of himself
in this client.
be real honest with you, it’s a very negatively seductive
group of people to be around,” he says. And, so as not to
tempt fate, Novak had to permanently scratch “the boiler room”
contingent from his Rolodex.
See, what makes Novak so well-suited for the job is, as one
current client puts it, he’s “been there, done that.” But
unlike the soda-pop commercials, he crashed and burned.
Whitey goes to prison, he usually “fishes in” harboring
one of two misguided notions: He’ll be taken as a sex slave
by some hulking, ethnic man, or he’ll coast through the stretch
playing golf at a weekend resort for wayward paper pushers.
A significant part of Novak’s time is spent dispelling such
myths for white-collar offenders queasy at the imminent prospect
of federal prison. His clientele, mostly made up of high-stakes
hucksters, may or may not include the likes of ImClone insider
Sam Waksal, his domestic-diva crime partner Martha Stewart,
and the blue-blooded plunderers at WorldCom, Tyco, Adelphia,
Dynegy, Arthur Anderson, Global Crossing, Enron, and the list
goes on. Confidentiality constraints prevent Novak from disclosing
exactly who has commissioned his services, but he assures
us he’s been called in on several high-profile cases. For
his famous-cum-notorious clients, that confidentiality is
a comforting reprieve from the scorn and scrutiny of outraged
stockholders, pensioners and working stiffs.
For Novak, there was no manual on how to become a white-collar
criminal consultant—he learned the trade firsthand. And in
so doing, he was able to write the book, so to speak, on the
U.S. government’s thriving “hospitality” industry. Downtime:
A Guide to Federal Incarceration is Novak’s 169-page “how
to” on doing time, drawn from his own experiences while serving
a year-and-a-day sentence for mail fraud.
Before showing up to prison—wearing jeans and an Oxford shirt,
no less—Novak had no idea what he was in for. His attorney
was even more clueless, and exhorted Novak to write him a
letter chronicling life on the inside so he could share it
with future clients.
Therefore, with nothing but prison melodramas like Escape
From Alcatraz and The Shawshank Redemption to go
on, Novak fished into Eglin Federal Prison Camp in 1996. The
minimum-security pen on the Florida Panhandle was once aptly
coined “Club Fed” for its country-club-like ambiance. But
that was the ’80s, Novak says. And it’s his aim to dash any
persisting rumors that prisoners of privilege are shipped
off to cushy sleepaway camps, only to emerge rested, tanned
myth is that because they’re not in a place with razor wire
and gun towers, they’re playing bocce ball all day,” says
Novak. “Minimum security, low security, medium security: Every
federal prison is run by the exact same policies and procedures.
The difference is whether or not there is perimeter security,
because the people inside either do or do not pose a risk
to the public.”
Make no mistake, corporate kingpins are in store for a series
of rude awakenings once they land in the clink, says Novak.
Before arriving at Eglin, he figured he’d be doing time with
a more refined criminal element. That is to say, white-guy
yuppies like him. But go figure. Novak’s “bunky” was a 34-year-old
African-American crack dealer who’d spent half his life in
a maximum-security penitentiary in Atlanta before earning
his way into the prison camp.
expected to be surrounded by Caucasians, doctors, lawyers,
Congresspeople,” Novak confesses. To his surprise, “Eighty
percent of people in federal minimum security facilities,
‘Club Fed’ type facilities, are there as a result of the War
And, he notes, most of them are nonwhite, with only about
1 percent of federal inmates serving time for white-collar
Any lingering doubts Novak had about Eglin’s authenticity
were quashed when another convict was refused a furlough to
attend his son’s funeral. That display of powerlessness cemented
for him the fact that he’d been ostracized, found unworthy
to walk the streets.
Novak tells his clients to find socially redemptive uses for
themselves to ease the tension, and to kill time, while locked
up. For him, it was tutoring younger inmates for their high-school
equivalency exams. But anything more significant than that
is hard to come by because, within the Federal Bureau of Prisons,
advanced educational opportunities are virtually nil, which
Novak feels is a shame. Novak thinks his clients’ talents
could be put to better use rather than letting them languish.
somebody like Sam Waksal, who is obviously a brilliant physician
and researcher. . . . As opposed to have him mow the lawn
or work in the laundry during the day, why don’t you have
him indentured to the National Institutes of Health for 87
Under the looming threat of transfer to more restrictive digs,
minimum-security inmates are fairly well deterred from random
acts of violence. However, Novak reminds his charges: “If
you break certain rules of etiquette within the four corners
of inmate society, you’re going to get beat up.”
Those rules of etiquette form the cornerstone of Downtime.
In short: Don’t rat, don’t cut in line, don’t reach at chow
time lest you get stabbed with a fork, don’t ask what your
buddy’s in for, don’t touch his stuff, don’t whine about how
rough you have it because invariably he’s got it worse, pay
your debts, and mind your business.
And the handbook has served Novak’s clients well. To date,
not one has reported being assaulted while incarcerated.
And while no time is easy time, Novak says some fears are
overblown. He learned as much his first day. After an hours-long
intake process—some paperwork and a strip search—guards led
Novak to a deserted 60-man dormitory, roughly the dimensions
of the posh downtown loft he now calls home. It was a Friday
afternoon, and most of the other convicts were out working
their menial jobs at Eglin Air Force Base, the camp’s host
and namesake. One straggler, a giant oak of a white man, affably
introduced himself as Jim, then ran it down:
not going to be able to get to the commissary until next week,
so here’s a pair of shower shoes, a toothbrush, some deodorant,
soap and toothpaste. You just pay me back.”
Novak was thinking to himself, “‘Oh god, he wants me to be
As it turned out, Jim wasn’t hankering for a pretty-boy cuddlebunny
at all; he was just being kind. And since his 1997 release,
Novak has been paying the favor forward—at a $165-an-hour
premium, of course.
becoming an unwitting expert on the finer points of prison
life, federal sentencing guidelines and the criminal mind,
Novak was busy carving out an upper-middle-class niche for
himself in the Pacific Northwest.
Six weeks shy of graduating, he dropped out of a prestigious
Catholic high school in Connecticut, hooked up with a telecommunications
firm and moved out West. Then, it was a yearlong jaunt around
the globe before landing a position with Seattle-based Boeing
Defense and Space. For five years there, Novak managed contracts
with international governments and various branches of the
U.S. military. One perk to be had at the world’s largest aircraft
manufacturer was free flying lessons.
got bit bad by that bug and went out on my own,” Novak says.
By 1996, he was supplementing a semi-successful aviation company
by assisting Microsoft’s development of flight simulation
technology. For all outward appearances, things were looking
was at that point and time that I staged the aircraft accident
and ended up going to prison,” Novak says, not mincing a word.
The airplane was insured for $80,000 and needed a $20,000
engine replaced. Novak just did the math. At first blink,
he explains the impulse to cheat the insurance company as
a “flight of stupidity,” motivated by greed. But, like many
of his clients, Novak’s fall from grace was more nuanced than
Growing up the son of a career Marine Corps officer, Novak
attended 13 different schools before opting for the workaday
life. His tendency of trying to stack up to his peers at each
new post, and the shame of dropping out of high school, left
a pang in his gut to succeed at any cost.
I moved around as much as I did . . . and chose to leave school
and never went back and got credentialed, I think I always
had a sense of inadequacy,” he explains. “So I was always
attempting to outpace my peers. I simply could not allow myself
to fail at anything. That was really my shortcoming, not being
able to admit that this business isn’t working . . . and walk
Today, Novak recognizes the trait in some of his clients.
put themselves under such pressure to perform that they often
win Pyrrhic victories,” he says. “They might keep the company
going, but in order to have done that they lied on an SEC
quarterly report. Two years later, the company folds, everybody’s
out of work, and they go to prison.”
In about a third of the cases he’s worked, including his own,
Novak’s clients stand to lose much more than their dignity
and freedom. They can also lose those closest to them.
Novak’s crime so disgraced his parents that they essentially
brought tremendous shame to my parents,” he says, elaborating
cautiously, “I broke their hearts, and they thought they taught
Chasing after the lost relationship caused Novak no small
amount of anguish. And for that reason, as difficult as it
can be to pull back, he advises his clients against pressing
the issue with estranged friends and loved ones. “It’s up
to the person who they hurt . . . to decide whether or not
to open back up.”
paper, it’s Novak’s astute understanding of federal sentencing
guidelines, which most defense attorneys haven’t the time
to keep abreast of, and his institutional knowledge of the
Federal Bureau of Prisons that have won him his niche market.
But his true knack is in relating to his clients.
Carolyn Ryberg, a corporate headhunter and interior designer
living in the upper Midwest, hired Novak in February when
the civil litigation that she and her husband were embroiled
in started heading in a criminal direction. Ryberg is not
at liberty to disclose the nature of the offenses, but the
35-year-old mother of two teenage daughters is growing more
certain that she and her husband will soon be off to prison.
Since he came on board with the defense, Novak has been a
godsend, Ryberg says.
offenses are what I like to call ‘affluenza,’ ” she says.
“It’s an insidious disease that has struck right at the core,
right at the heartland of America. It’s a dark road to walk,
and David brings some light to it.
very candid. He does not pull punches. He does not suffer
fools gladly. And he makes one really take ownership and responsibility
of one’s actions.”
Ryberg credits Novak with helping her come to terms with a
misguided value system, and she praises him for being the
example she’ll need to endure prison if it comes to that.
“I can really say I’ve had the honor and privilege of meeting
a true genius with the passion of Gandhi.”
One of Novak’s biggest challenges—not so much with Ryberg—is
to disabuse his clients of their hubris, making them realize
by the time they go to prison that they are, in fact, criminals.
At times, it’s been a hard sell.
Novak recalls being called on for one particularly high-profile
case, which he bowed out of when it became clear the client
wouldn’t benefit from his advice.
found myself in a conference room surrounded by people best
described as sycophants,” he says. “Everybody in this room
was telling the potential defendant what they wanted to hear.”
Namely, the defense team insisted to the client that a jury
would never convict. “And my comment was, ‘People hate you.’
a very peculiar thing in American society: We like people
who achieve a certain level of success. But there’s this invisible
line, and if you cross that line, à la Bill Gates, we love
ripping you apart. And I just knew that this person had crossed
Novak was adamant that the person dive at a plea agreement
offered by the prosecution, which would have guaranteed probation,
a fine and no jail time. But in the end, the case went to
trial, the jury did convict, and the defendant now awaits
In response to the latest scourge of corporate crime, in 2002
Congress passed, and President George W. Bush signed into
law, harsher guidelines that double and quadruple sentences
for some white-collar offenses. With so much more at stake,
and given federal prosecutors’ indomitable penchant for winning,
Novak advises his clients to avoid trial like the plague.
The federal government wins more than 97 percent of the criminal
jury trials it participates in, which is “statistically impossible
in a fair system,” Novak points out.
If a client is still unconvinced, and insists on committing
legal suicide, Novak drills them on what he calls the trial
you have the audacity to go to trial with the federal government,
and you are found guilty, and statistically you will be, you’ll
receive a sentence 300 percent longer than if you had accepted
the plea that was offered.”
Novak was having a difficult time illustrating this point
to a client in Houston. So, as they were walking back to the
federal courthouse after lunch one day, he nodded toward the
building and asked, “Can you write a check for this building,
the client shot back, swaggering.
there are 93 more just like this in this country. Can you
write a check for all of them, right now?”
no. That’s ridiculous.”
the resource you’re up against. And that’s why at the top
of every document in this case, it will be United States versus
Two recently publicized cases show the Justice Department
as the strong arm of federal government Novak is so wary of.
Jamie Olis, a midlevel financial executive at the Houston
energy firm Dynegy, was sentenced to 24 years for fudging
cash-flow numbers that benefited him personally to the tune
of zilch, and arguably cost Dynegy stockholders in the hundreds
of millions. Andrew Fastow, dubbed the “mastermind” of the
Enron meltdown by the Justice Department, pleaded to two attempted
conspiracy charges, got a recommended 10-year sentence and
agreed to forfeit $29 million in personal, ill-gotten gains.
To say nothing of the gobs of cash pilfered from employee
pension accounts and stockholders’ share value, the bill for
Enron’s bankruptcy proceedings alone is expected to top $1
billion. The x-factor, as it were, is that Fastow agreed to
roll over on his cronies. Olis, who still maintains his innocence,
When Novak sat down with us in mid-May, it appeared that Enron
CEO Kenneth Lay had escaped the fate of his underlings. The
major news outlets had all but forgotten the man behind the
curtain. But it’s when they’re not talking about you that
you can be assured the feds are building a case, Novak chuckled.
my words, any time you see a high-profile person plead, and
Andy Fastow [did] and accepted 120 months . . . that sentence
is predicated on full and complete cooperation with the federal
Lay? He’ll be the last in line,” Novak predicted.
Sure enough, the Justice Department announced in late June
that it would unveil its indictment against Lay in a matter
Novak has had only one client he knew to be innocent. At least,
somewhat innocent. The guy was a “mad-scientist” engineer
type. He founded a technology startup that he was priming
to take public, but realized he had no business sense whatsoever.
So he brought in a management team, a member of which “cut
some corners,” as they say. Technically, by signing the incriminating
documents he was presented, the entrepreneur had violated
the law. But Novak, the prosecutor and the judge knew there
was no criminal intent.
The prosecution offered a year’s probation for a felony plea,
to which Novak’s entrepreneur, a gritty World War II veteran,
scoffed. “I fought for this country, I didn’t do anything
wrong and I believe in our justice system,” was the gist of
on him,” says Novak. “Although I respected his belief in the
judicial process, I thought he was foolish to go to trial.”
And so he was. The would-be entrepreneur is currently serving
87 months at a prison camp. To this day, though, he tells
Novak that he wouldn’t change a thing if he had it to do over.
Novak doesn’t carry a particularly bright torch for any of
the corporate criminals he represents. In fact, he says he’s
disgusted by them, “because I see myself seven years ago.
for one, don’t see any difference between white-collar criminals
and drug dealers. They’re just operating in a different business
And while he doesn’t condone either type of crime, neither
does he believe the current “podium-pounding” crackdown on
corporate desperadoes will be any more effective than the
War on Drugs, which he couches as an “absolute failure.”
For one, “a lot of these companies and a lot of these individuals,
as opposed to evaluating their fundamental value systems,
are instead simply getting slicker,” Novak says.
Sure, the biggest rip-off artists in recent memory were flying
below the system’s radar for too long, and the time had come
to right that imbalance, but Novak fears that in the rush
to punish, an underlying yet pervasive lapse in ethics stands
to go unchallenged.
Despite the crackdown, he says, “In a strange way, there’s
no accountability. Look at the number of companies that have
gone bankrupt. Look at the number of companies that have laid
off thousands and thousands. There’s no drive for companies
to be socially redemptive or socially responsible anymore.”
Shifting the entire social paradigm is too tall an order for
any individual, and Novak is content going about it one warped
value system at a time.
goal with anyone I work with is to get them where I am now,”
he says. “I will never, ever be proud of the fact that I went
to prison. But I will always be proud of the changes that
came about as a result of that contemplative time.”
Above all, Novak counts himself very fortunate—fortunate that
he took that fateful “flight of stupidity” before the crackdown.
sentence was long enough to punish me, but it was short enough
not to wreck my life.”
Johnson is a staff writer for Salt Lake City Weekly,
where this story first appeared.