I first met Israel in 2008, not long after he’d been sentenced to twenty years in prison for the Bayou fraud. After the sentencing, he had faked his own suicide to avoid jail time, leaving the simple note SUICIDE IS PAINLESS in dust on his GMC Envoy on Bear Mountain Bridge in upstate New York—a stunt that earned him two more years in prison. Israel wore an orange jumpsuit and nursed a broken hand from a fight with another inmate. He was heavily drugged, a deluded but disarmingly likable raconteur. And he had an incredible story to tell about his role in a high-stakes confidence game so big that not just the future of Bayou but the solvency of the global economy and the fate of world government would hang on it—or so he had believed.
When he began to tell me that story, he promised to tell the truth—a vow I treated with profound skepticism. Often I found myself doubting not just his story but his sanity. Inevitably, there are twists and turns in Israel’s tale that have to be taken on his word alone—this is the story of a self-confessed con man, after all, and in some cases, for legal reasons, I’ve used pseudonyms in describing unprosecuted crimes. But whenever it was possible for facts to be checked, I was able to confirm his account, if not his interpretation, with sealed legal documents, confidential financial records, and previously classified FBI reports. In the year before his arrest, Israel had been living a kind of fantasy life, at the very center of an impossible-to-believe international conspiracy that mixed elements of dime-novel spy thrillers and an Illuminati-style financial cabal. But it was a fantasy life that had been remarkably well choreographed for him by a master confidence man who wove the story with just enough plausible detail, and staged just enough real-world encounters, that Israel, a con man himself, had come to truly believe it.
The Dorchester Hotel in London was the setting for Israel’s first meeting with Nichols. It was the spring of 2004. The pretext was the investment Israel had made in Debit Direct, which was going to pay Nichols to facilitate access to the CIA’s top-secret biometric technology. As two engineers present began discussing the challenges of the project, Israel leaned over to whisper in Nichols’s ear. “I need to talk to you privately,” he said.
“Aren’t you part of this group?”
“This has nothing to do with them,” Israel said. “I’m here to talk about something different. PROMIS. The computer program.”
“Who are you?” Nichols asked once they’d slipped separately out of the meeting.
“I run a fund called Bayou,” Israel said. “I’m a trader.”
“Do you have $100 million in cash?”
It seemed to Israel that Nichols had tossed out the huge number as a way to brush him off. “I do,” he said.
“Do you have $150 million?” Nichols asked.
“Do you have $200 million?”
“That’s pushing it,” Israel said.
“You should forget PROMIS,” Nichols said. “I know how to put your money to work.”
Nichols told Israel that the most powerful institutions of the modern world—the U.S. government, the U.N., the IMF—were all a front. “There is a secret government operating within the world’s government,” he said. “They run a secret trading program—the high-yield market. Only a few chosen people participate in the program. The returns are staggering. The proceeds are used to fund black operations, fight wars, pay off foreign governments, and conduct good works in the Third World. I don’t know if I can get you into the market. But I know people who can give you a shot.”
Nichols called the secret society the “Upperworld.” The large banks that were designated primary dealers by the Federal Reserve—Goldman Sachs, Deutsche Bank, Union Bank of Switzerland—also operated in the shadow market. The Federal Reserve was a private company, Nichols said, designed to hide the reality that the United States government was bankrupt. If Israel managed to gain entrée to the market, he could double his money in a matter of weeks.
Israel listened carefully, disbelief turning to excitement. Growing up, he had heard how the Israel family had cornered the market for cocoa not once but three times in the fifties and sixties. His family had been friends with the titans of Wall Street—Alan Greenspan, Larry Tisch, Sandy Weill—and he had seen the dealings of financial power brokers up close. But that didn’t make him skeptical of Nichols’s story; it made him credulous. “I knew Bob was right,” Israel told me. “I’d grown up watching how things were manipulated.” It made sense that there was a secret shadow market. He wanted in.