How did Tom Hardin go from insider trading to becoming Tipper X, one of the most prolific informants in securities fraud history? Join us as Tom tells all!
What We Discuss with Tom Hardin:
- The factors that led Tom Hardin toward the temptation of illegal insider trading.
- How the FBI caught Tom — even when he thought he was playing “smart” — and got him to become Tipper X, one of the most prolific informants in securities fraud history.
- The art of wearing a wire, maintaining silence even among family and friends, and other struggles of an FBI informant.
- How Tom’s work helped bring insider trading to the forefront of public attention and led to increased enforcement efforts by the government.
- What the public aftermath of cooperating with the FBI looks like — from risk of retaliation by former colleagues to social isolation, psychological distress, and legal ramifications.
- And much more…
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Picture it, if you can: the dawn of another humdrum workday in the belly of the beast, New York City. The city that never sleeps, they say, but most of us wake early to outpace the grind. Maybe you’ve sweated it out at the gym or dashed through a few errands, all before the clock strikes office hours. Now, put yourself in the midst of this routine, and out of the blue, like shadows on a dimly lit alley, two G-men materialize before you.
They ain’t the friendly sort; no, these are the federales, and they don’t waste time being discreet. Badges glinting in the daylight, they thrust their authority into the open air, casting a noirish hue on your mundane morning. They start prying into your business, like bloodhounds on a fresh scent. Your heart quickens its pace, confusion seeping in like the fog off the East River. What in the hell is going on here?
Then it hits you — those little plays, those seemingly innocent whispers. The clandestine talks that danced between the shadows of your professional life. They weren’t supposed to uncover it, the stakes so low you’d need a microscope to see ’em. How in the devil did the feds unravel the threads? It’s a script that might fit snugly in a celluloid reel, but let me tell you, friend, this ain’t fiction.
This tale, this twisted turn of fate, it happened to a man named Tom Hardin — a moniker that would echo in the corridors of infamy. The dominoes fell, and his life, once routine, now teetered on the precipice of irreversible change. So, here we stand, about to dive into the shadowy depths of Tom Hardin’s world, or as some might know him, Tipper X. Listen, learn, and enjoy!
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Thanks, Tom Hardin!
If you enjoyed this session with Tom Hardin, let him know by clicking on the link below and sending him a quick shout out at Twitter:
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Resources from This Episode:
- Tom Hardin | Website
- Tom Hardin | Facebook
- Tom Hardin | Twitter
- Tom Hardin | LinkedIn
- Tom Hardin | YouTube
- The Plight of “Tipper X”: How Tom Hardin Became The Most Notorious FBI Informant in the Biggest Insider Trading Case in Decades — And The Long Run To Redemption | Rich Roll
- Tipper X: I Broke the Law, I Wore Body Wire for FBI 52 Times, and Then… with Tom Hardin | The James Altucher Show
- Why Good People Do Bad Things with Tom Hardin | Lions Guide Podcast
- He Broke the Law. He Got Caught. Then He Wore a Wire. | Institutional Investor
- Family Ties: Alex P. Keaton Plays Monopoly | CBS
- What Are Hedge Funds? | Investopedia
- What Is Insider Trading and When Is It Legal? | Investopedia
- Frank Abagnale | Scam Me If You Can | Jordan Harbinger
918: Tom Hardin | Tipper X: The Man Behind Wall Street’s Biggest Sting
This transcript is yet untouched by human hands. Please proceed with caution as we sort through what the robots have given us. We appreciate your patience!
[00:00:00] Jordan Harbinger: Special thanks to Nissan for sponsoring this episode of the Jordan Harbinger Show. Coming up next on the Jordan Harbinger Show. I
[00:00:07] Tom Hardin: just started confessing, like, yeah, I did it, like, and then they were writing it down. What else did you do? I didn't say prove it. It's the worst day of your life because the FBI is in your face.
[00:00:15] They said you can only tell your wife, you can't tell anybody about this. You have the opportunity to help us build some cases. Do you know if insider trading is going on Wall Street? I'm like, basically, yeah, who's not doing it?
[00:00:29] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger on the Jordan Harbinger show. We decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. Our mission is to help you become a better informed, more critical thinker through long form conversations with a variety of amazing folks from spies to CEOs, athletes, authors.
[00:00:52] Even the occasional former jihadi investigative journalist, extreme athlete, or music mogul. And if you're new to the show, or you want to tell your friends about the show, I suggest our episode starter packs as a place to begin. These are collections of our favorite episodes on persuasion, negotiation, psychology, geopolitics, disinformation and cyber warfare, crime and cults, and more.
[00:01:10] It'll help new listeners get a taste of everything we do here on the show. Just visit jordanharbinger. com slash start or search for us in your Spotify app to get started. Now today, I actually decided to have my team use chat GPT to write this intro. I'm not sure what I think of it because the format's a little bit different, so if you've been listening to the show for a while, let me know what you think.
[00:01:27] It was easier than writing my own, although I don't, I'm on the fence. So picture, if you will. It is the morning of a normal work day for you in New York City. Many of us are early risers to get a head start. Perhaps we would have gone to the gym or ran some errands before getting to the office. Now, imagine you're going about your routine and completely, unexpectedly, two FBI agents approach you, flash their badges in public view, and begin questioning you about activity at your job.
[00:01:50] You're a trader on Wall Street. The agents begin spitting out details about your personal life. They know where you were last weekend. They know private details about your family. Your heart is racing. Confusion sets. What is happening? Then it becomes clear. Those trades. Those innocent conversations. The snippets of info.
[00:02:06] They were not supposed to find out. The dollar amounts were so small. How could the feds know? This scenario may sound like a scene from a movie, but this exact situation did happen, and it happened to our guest today, Tom Harden. And the series of events that led up to this would change his life forever.
[00:02:21] So here we go with Tom Harden, a. k. a. Tipper X, one of the most prolific FBI informants in the history of financial crime.
[00:02:34] I do have to say it does take courage to sit here and talk to me and the people you speak to regularly about, well, a legal failing and an ethical failing and just wear it on your sleeve all the time. And I want to bring that out first because I think it's really easy to talk to somebody and be like, kind of judgmental about somebody who's admitting to having committed crimes.
[00:02:56] It's not a great, it's probably not a great feeling to do
[00:02:59] Tom Hardin: that. You know, for the past seven years now, pretty much every week I get in front of a group of people, a complete group of strangers and tell them the worst thing I've ever done. And so it's a non traditional path, I think, to speaking a corporate training where sometimes I'll walk into the room, I can kind of feel people are judging me, why did we bring this guy in?
[00:03:18] It's going to glamorize it. And then as I tell the story, which we'll get into, just how I rationalized my decisions, where I was as a young professional, how my boss looked the other way. I think people are sort of shocked and they're empathetic and I think they have gratitude at the end, like, thanks for sharing the story, but it's not the easiest path to be on.
[00:03:35] But for me, it's sort of being totally accountable for what I did and I continue to be. I hold myself accountable by doing this pretty much every week for the past seven years now. Tell me
[00:03:44] Jordan Harbinger: how you, you grew up, because I think a lot of folks are going to wonder, you know, is this scrappy street kid who brought his streets ethics with him to the financial sector?
[00:03:53] How did this, what's the generation
[00:03:55] Tom Hardin: of this? Yeah. So grew up eighties and nineties kid in the suburbs of Atlanta. Father was a Coca Cola man there his whole career. I had two younger brothers. Mother ran a daycare business in our home before there was regulation. So we had 12 or 13 kids everywhere. And yeah.
[00:04:09] Myself and my brothers had to watch over and help her. And so public high school outside of Atlanta and Gwinnett County back in the nineties, the mid nineties, I'm applying to colleges. And back then you just applied to three, your reach, your middle
[00:04:22] Jordan Harbinger: and your safety. Yeah. Like, well, I hope to get into all three of these and then it'll be a tough decision.
[00:04:27] And then when you don't get into any of them, that's when the panic attacks
[00:04:29] Tom Hardin: begin. Yeah. And so I knew I wanted to do business. And so I looked on before there was the internet really. I saw there was the Wharton School of Business, but my guidance counselor told me, uh, high school, that's just an MBA school.
[00:04:41] And my father actually looked it up, went to the public library and said, no, I think they have a, um, undergraduate program too and it'll be a long shot, that's Ivy League. So I figured, what the heck, I'm from Georgia, maybe there's a quota for people from Georgia. And so, applied early, got waitlisted. Which really lowers your chances and then got deferred.
[00:04:57] And so every week I'm sending the admissions officer, here's my latest AP test. And then finally got in.
[00:05:02] Jordan Harbinger: I'm getting, uh, my PTSD is getting triggered because I have the same thing happen. Waitlist. And then you're like, well, that means that some people get in off this, right? And it's like, well, this is the don't hold your breath list.
[00:05:12] That's right. How do I make myself more competitive? Brutal. So were you kind of an Alex P. Keaton Wharton guy where you're like checking your stock portfolio in the morning before class?
[00:05:22] Tom Hardin: Not so much. Like growing up in Georgia, most of my friends, their successful parents were sort of like tax attorneys that I looked up to or CPAs.
[00:05:30] And so I was thinking more of the accounting role major when I got to Wharton. But then after freshman year, I was enamored by people who had been trading the stock market since high school, were always talking about it. So by sophomore year, I kind of looked at how do I get to the hedge funds? How do I get to that role?
[00:05:47] And they usually start in these, uh, sort of investment banking programs where it's the classic hundred hour work week. you know, doing nothing until 5 p. m. that day. And probably know as a former attorney too, where they put it on your desk, get this done by tomorrow. It's like, I wasn't doing anything all day.
[00:06:01] And so after three all nighters, I'm, I didn't even realize that somebody was like, you know, you're crying. I'm like, I'm crying. And so a friend from a hedge fund in Connecticut called me around January, 2000 at the top of the tech stock boom, the first tech stock boom. com. Hey, I'm at this tech stock hedge fund in Connecticut.
[00:06:19] And I was going to serve out my two year sentence at the, uh, investment bank analyst program, but then yeah, that sounds a lot better following the stock market. If I can do it earlier than what I plan, it sounds a lot better than doing these all niners. So I left Southern California there for a bank called DLJ where I was working and went to a tech focused hedge fund in Connecticut.
[00:06:36] Tell us what hedge
[00:06:37] Jordan Harbinger: funds are. I don't think a lot of people really know
[00:06:40] Tom Hardin: what those are. Oh sure. Yeah. So hedge funds are pools of capital. Investors are usually endowments like university endowments or pension funds where. Those larger entities will have maybe 10 percent of their portfolio that they can put in what's called alternative investments.
[00:06:54] And so these are either hedge funds or private equity firms. And hedge funds differ from mutual funds in that hedge funds not only charge a asset fee on the amount of assets that they manage. So it's usually one or 2 percent of the assets they managed to cover overhead. Then the incentive that's great is they have a 20 percent performance fee on the profits.
[00:07:14] So if you are up, you know, whatever, a million dollars that year, you get to keep 20%. So it's very much what I liked about it. It was a meritocracy where I'm 22, 23. If I pick great stocks, I'm going to be compensated for that. I don't have to play politics here as a young professional. Like there was 12 analysts at this firm and it was sort of like an NBA team where you're going to perform.
[00:07:35] Every Friday we had a masseuse come in and work us out because we're performing, picking these stocks, but if we don't perform, we're out. And so we understood that, it was high risk, high reward, but I loved it. If you pick the right stocks, you're gonna get compensated, there's no BS, there's no politics.
[00:07:48] That's, uh,
[00:07:49] Jordan Harbinger: unusual, I think, for any sort of early profession. So, at this point, you're positioned to be kind of a... I hate this phrase, Wall Street player, make a bunch of money, that must have felt pretty good. Did you feel like you had forward
[00:08:02] Tom Hardin: momentum? I definitely felt like I had forward momentum at that age where I was being able to do this for a living.
[00:08:08] It felt great. I mean, it was a lot of pressure, but I also was comfortable with that. And I read in college about the people that made the most money every year in those lists. It was always these hedge fund managers, George Soros at the time, Julian Robertson, these big names made. Millions and millions every year.
[00:08:24] So I thought that's going to be my path in my thirties and my forties. Like that's the kind of money I'm going to be looking at, like life changing situation. And so I'm on the path.
[00:08:33] Jordan Harbinger: So what was the tipping point that pushed you over the line? Were you investing more
[00:08:38] Tom Hardin: long term? Yeah, we were investing more long term.
[00:08:40] So fast forwarding to the first hedge fund that was at closed down in 2002, that was the first sort of. com crash. And the hedge fund manager who ran the firm was in the thirties and made a bunch of money in the nineties. It's like, I'm just closing it down. So I went. Took a few small analyst jobs around this wall street until I found the place I wanted to be in 2006.
[00:08:58] I was given a junior partnership position at a newly launched tech stocks focused hedge fund. So at 28, I had a percentage of the profits as a partner. And the potential to build a much bigger firm. We were investing over a three to five year horizon. So back in 2006, the trade that I never saw to fruition was after the Google IPO, after Google was public for a few years, you could kind of figure out that the yellow page companies were probably going to go out of business at some point.
[00:09:24] And so I forgot to mention earlier, hedge funds can be long stocks, but then they're going to go up in short stocks, but then they're going to go down. And so the career trade would have been long Google, don't touch it and short these five yellow page stocks, which are probably not going to be around at some point.
[00:09:36] So that's the kind of thing we were looking at. It's not going to happen in 2006 overnight, but it will happen over a few years. So we're investing that way, we're thinking thematically. But I also became aware that other players in the industry were playing very short term. What would happen is there would be other tech stock focused hedge funds that would hire investment analysts from Silicon Valley companies who could call back to their old contacts at the companies.
[00:10:01] And get what's called inside information,
[00:10:04] Jordan Harbinger: go into what that is. Yeah, I think we should start from the perspective of somebody not having a clue what insider trading is, for example, because having inside information almost always sounds like a really good idea. Right. The problem is when you're investing with it, it's literally illegal.
[00:10:20] But I don't even know if most people know that. I think if you're outside the finance industry, you just think like, wow, what a lucky break that you have insider information that you use to trade stocks. What I mean, I mean, it seems like this is
[00:10:32] Tom Hardin: the ticket. Yeah. And up until 2006, 2007, which we'll get into, it really wasn't prosecuted too much at the level of the hedge funds.
[00:10:40] It was usually sort of one off. Um, so insider trading, trading stocks on information that's material. So if it became public, Did it move the stock price? So number two, it's non public. So if I'm walking in my town in New Jersey to Starbucks and I say, Hey, manager, what was your revenue this quarter? And he tells me it's not material even though it's non public because if I know Westwood, New Jersey Starbucks revenue that quarter, I can't place a trade in Starbucks stock.
[00:11:07] But if I fly to Seattle and play golf with Howard Schultz, like Howard, what, what did you do this last quarter in revenue before it became public? And he tells me, then I could place a stock trade because Wall Street analysts have their own expectations of what a company like Starbucks or Google is going to report.
[00:11:22] And four times a year, companies have to disclose this to the public, here's our revenue and here's our earnings. And if you have that information before the public, you can place your long trade or your short trade if they're going to miss or beat the estimates from Wall Street. So if you were to have this information before everybody else.
[00:11:39] Then you can make profitable trades and this can be a little
[00:11:43] Jordan Harbinger: bit it gets dicey, right? Because it can be kind of innocuous and I'm not gonna ask you for a hypothetical here But because I know you're not a lawyer, but it can be pretty almost innocent, right? You're playing golf with Howard Schultz He's in a really bad mood.
[00:11:54] What's your problem today? These idiots they screwed up this and now I have to have an earnings call tomorrow I'm getting my ass chewed out by all of our investors. Well, their earnings calls not gonna go well I should trade on that. Yeah. That is also, even though he didn't say, Oh, our revenues are down and I'm not looking for, you can read between the lines.
[00:12:11] He did tell you, and you both had a reasonable expectation that you might trade on that information. I think that's the key,
[00:12:17] Tom Hardin: right? Yes. It's a reasonable expectation. And it's also quite nuanced. Like you said, it's usually not, Hey, Tom, here's my revenue last quarter. And here's my earnings per share. Here's the spreadsheet.
[00:12:26] Here's the spreadsheet, right? It's usually, and my job as an analyst was kind of the grill, these management teams. And I'd meet with them every quarter at conferences. And then if you're the CFO of a company and I've known you for six or seven years, you know, me, we're sort of like friends now and Hey, how are things going?
[00:12:41] And you're sweating. You're like just looking at me. I can be like, hopefully own the stock, sell it or short the stock because. Every other meeting I've had with you over the years, you're not sweating, you're going on vacation, and your quarter just ended, okay, things are good. It's not insider information, but it's like, that's my job as an analyst to be able to get that information from you and those, not here's the information.
[00:12:59] Jordan Harbinger: But if you're reading someone's mind at that point, how much culpability does that person have? I guess it depends why they sat down with you. If you're just college buddies. And he didn't say anything, but you saw he was in a terrible mood. That's probably one thing.
[00:13:10] Tom Hardin: Yeah, you're okay. In most of these situations today, when I talk and what I do as a guest speaker for compliance training, usually when that comes up, I tell the analyst to go talk to compliance because you're not trying to commit fraud if you go to compliance and say, this is what was happening.
[00:13:24] He's sweating. He said something that wasn't the numbers, but it was enough where I'm not sure what we should do. And that's why you're not. It's going to be in my situation if you're going to compliance. Right.
[00:13:33] Jordan Harbinger: So your situation. Let's get into that. How did you take the first step into the gray? Because if you're investing long term, why the, why do you even need insider information?
[00:13:40] You're just, Google's going to be good. Yellow pages are going to be bad. No offense, not super genius levels of knowledge required to know that the internet is going to displace a giant piece of crap book that nobody uses that's 800 pages long. Right. Yeah. But other stuff, more short term difference.
[00:13:57] Tom Hardin: Right. Okay. So in my second job as the junior partner. Our first quarter of investing, we lost money, but Jordan, it really shouldn't have mattered because we were investing over a three to five year horizon. We only had about half the money even invested. We were waiting to find what's called entry points.
[00:14:11] When the stocks were at levels we'd like, we'd slowly invest. After losing money in the first quarter, my boss came into my office and said, Look, I know we're investing long term. We just lost money in the first quarter. We have to start looking for shorter term opportunities to make money every month or after our first year.
[00:14:27] If we're down our first year, that's not good because our investors are going to take their money out. So the goal went from three to five years to make money every month. So I think one sort of moment here is if any goal, I think really any business goes from longer term to short term, the opportunity to do something bad certainly increases and I'd also say that ambiguous message from the boss to me to do what it takes and now me not asking clarifying questions, do you mean anything goes like these other guys are doing?
[00:14:55] Are we going to have some ethical No, legal guardrails around this. I didn't ask the clarifying
[00:15:00] Jordan Harbinger: question. I would imagine it was not something like, Hey, I've got this idea to do a bunch of illegal shit and make a bunch of money. Yeah.
[00:15:07] Tom Hardin: Like I never really thought I would be in possession of this insider information because I didn't have the context inside of these technology companies who were leaking the information at the time, at the time, 2007, 2006, we're talking.
[00:15:19] 60 percent of companies before they were bought, the stock prices went up well in advance. So that means information is being linked and, you know, all the attorneys, the accountants, the banker working on this transactions that information can leak. I know it's going on. There's now pressure to make money every month.
[00:15:34] Maybe it's anything goes, we used to call it. And then a few months later, I got a 07. Who, she used to work for a guy named Raj Rajaratnam, that's a pretty big name in sort of the insider trading prosecution history, Sri Lankan billionaire and went to prison for nine years, got out a few years ago. She worked for him.
[00:15:53] She's like, you know, everybody's doing this, which we could talk about that rationalization. You made me a lot of money, Tom, over the last few years on these great sort of Google yellow page ideas. Thank you for that. That's going to play out. I have something for you, Tom, but you can't tell anybody. And she said, now there should have been a red flag there.
[00:16:10] What do you? Yeah. Well,
[00:16:11] Jordan Harbinger: this must be totally above board if I can't tell anybody. So
[00:16:15] Tom Hardin: let me listen to this. And she said, a Moody's analyst. So there's not to be too technical, there's two bond rating agencies who write corporate bonds, Moody's and S& P, who has this information, who was roommates with her cousin.
[00:16:27] So we'd have to sort of get the whiteboard here. Yeah. Tie the strings on the photos. I told her that this company Kronos, a tech stock, is going to be acquired in a few weeks. Here's the date, Tom. Here's the price. And here's the private equity firm who's going to buy the stock. Now right there, that sounds like illegal inside information.
[00:16:46] So I continued to hear her out and she gave it to me. And we kind of, you know, went through there, hung up the phone. And now I knew this woman to be sort of what I'd call a rumor monger. There's a lot of rumors in Silicon Valley in the stock market. She calls with these things half the time. It's a rumor.
[00:17:00] It's not true. But the information sounds so specific. On the first day, I didn't make any trades in the stock because to me, at least with my moral compass still intact, this is illegal. Now, I also should have thought. I should probably end this relationship too if this is the way this woman is digging up.
[00:17:15] Yeah, never call me again. Information. Yeah. And so, but I was intrigued. I never had sort of the answers fall into my lap to the test like this. And then later that day, a friend calls me from another firm. He's at what's called a prop trading firm. So you only get paid that month at his firm. If you're up, he's down.
[00:17:31] He's like, dude, are you hearing anything? I could put a short term trade out there. Uh, this woman just called me this morning, Moody's Analyst, Kronos, in a few weeks. Now just right there, so people know I've actually broken the law at least civilly by tipping this information. I haven't even traded yet.
[00:17:45] The SEC who has civil enforcement could come in and actually Sue me for what he makes. I don't trade it. I say, if you want to trade this, I'm not going to do it. I don't do this kind of thing up to that point. He hangs up the phone, apparently blast it to his whole firm. Call options are moving into stock.
[00:18:01] So this is if you're going to make a leverage bet on the stock, I want to make a bunch of money. You buy options. Call options start moving. The stock starts going up. He calls me back a few days later. Dude, are you, we're all in. Did you buy any yet? And as the junior partner at my firm, so when an employee commits fraud, it's usually the fraud triangle.
[00:18:17] There's a need to commit fraud. So I didn't really have any need in my life other than my goals became very short term. Mm-Hmm, . So maybe that's a need. There's a rationalization which we can talk about, and there's an opportunity to commit the fraud. So at my firm, the opportunity was I could buy a stock in our portfolio.
[00:18:34] And not have to talk to the boss as long as it was less than 1 percent of the assets we manage for clients. Like a very small position. Right. So I calculated and felt, I think I was having a little bit of FOMO too, like these guys are making money off this information. Yeah. I'll buy a lot less than them, but I know that they bought the amount of shares he told me that they're buying.
[00:18:51] Like. I'll buy a little bit, take some crumbs off the table, and nobody would know. And if my boss has a problem with this, if his directive to me was like, stay within the law, he'll sell the stock before anything happens. So I bought a 0. 9 percent position and my rationalization was, seems like everybody's doing it.
[00:19:08] Who am I hurting? Right. I'll do it just this once and never do it again. Years later, people say, what were you thinking? It was all a very slow, slippery slope of like, this is how I
[00:19:19] Jordan Harbinger: rationalized it. Sure. No, that actually makes a ton of sense. Okay, you'd play small, you mix it in with a bunch of other stuff, doesn't look too greedy, you kind of assume that you're safe, but the environment around you was what?
[00:19:30] Everybody else is really doing this. It wasn't just something you told yourself, seemingly it was something you actually knew was the
[00:19:37] Tom Hardin: case. It seemed like it was not even being prosecuted. At that time, they were looking more at these boiler room selling granny penny stock scams, but they weren't even focused on hedge funds and insider trading, and these bigger billionaire guys were doing it.
[00:19:48] And so I felt This would be like dropping a rock in the Grand Canyon, like nobody would ever know of my
[00:19:53] Jordan Harbinger: little trade. Wow, man. It's kind of like doping in sports. If you're the only guy on the team doing it, it's a little weird. Right. But if all the other top hitters or whatever in baseball are doing it, pitchers, whatever, then it seems like you have to do that.
[00:20:05] But also, it seems accepted because surely everybody kind of knows and looks the other way. And then it becomes sort of ingrained, I guess, in the culture of what you're doing. Yeah, it's
[00:20:15] Tom Hardin: so much the culture. Like, if you would have told me when I graduated from Penn, you know, a few years later, you're going to be insider trading.
[00:20:21] I would never do that because I'm a good guy. But then when you're desensitized to the culture and everybody's doing it, you can get inside your own head pretty deep and convince yourself. I went home that day after buying that stock, committing securities fraud. And I woke up that morning, had my normal morning, not going into work saying, I'm going to break the law today.
[00:20:38] And it was just a few keystrokes.
[00:20:40] Jordan Harbinger: And it's not that you went and stole the answers from the teacher. Someone called you and said, Hey, I got the answers. Do you want them? Yeah. And you just
[00:20:48] Tom Hardin: didn't say no. So when I speak at university today, I say, imagine it's coming up and you've got the multiple choice and it falls right there in your lap.
[00:20:53] Are you going to throw it away? You're going to take a peek. I mean, yeah,
[00:20:56] Jordan Harbinger: man, that's tough. This starts to grow, right? Because it wasn't just like Wow, this really nice lady's calling me with all this free information that I'm required to do absolutely nothing for in return. How did it escalate
[00:21:07] Tom Hardin: from there?
[00:21:08] Yeah, so she calls me, I place the trade, it was maybe another week, it's a Friday morning, so it's March 23rd, 2007 to be exact. Before the stock markets opens at 930, I'd meet with my boss to go through our portfolios or anything new. Should we buy, sell, whatever. And so it's news on the Bloomberg Newswire.
[00:21:26] I see trading in this stock is halted, which means news is coming word for word, exactly what she said. So I'd love to tell you here, I had some moral epiphany like. Cause I was sort of telling myself, maybe it's a rumor. She's full of it. No, I went in. I kind of felt like an adrenaline rush, I haste to say.
[00:21:43] Now I'm part of this illicit in group who has this information. I wanted to say today, I'd love to rewrite history and say, I was disgusted I did this. But like at the time I thought, now I'm part of this illicit in group. And a few minutes later she calls me and says, did you see it happening? It's on the tape.
[00:21:59] I said, yeah, I saw it. She's like, I hope you load it up. I'm like, I bought a little bit and she's like, Oh, my entire personal accounts in this. I remember thinking that it's probably not great that you put your entire broker.
[00:22:08] Jordan Harbinger: Yeah, it looks a little, nobody's that sure about a stock ever unless
[00:22:12] Tom Hardin: they are.
[00:22:13] And then she says, you know, that Moody's analyst I told you that gave me the information. I said, yeah. She said, Tom, I gave him your name and I said, Tom, can you write him a check for 10, 000 for this information? And you could imagine what I said, a lot of expletives, like I rationalized the trade, but like, I'm not going to give this guy a check.
[00:22:31] Are you kidding me? But she said, he's going to have more like this. If we want to keep them coming, I have to take care of this guy. And so I said, let me think about this. I called my friend who the entire firm bought it. I said, this is the situation. Can you pass some cash around? I'm not going to write a check.
[00:22:46] And my scummiest moment, one of a few, I think, is he gets this cash together from his firm. He meets me at Grand Central, slides me a FedEx envelope. I'm going out to meet this Moody's analyst in New York, he's on the sidewalk and he says, Are you Tom? And I just held up the envelope. I didn't look at him. I kept walking.
[00:23:03] And I remember thinking, it's a weird thought I had, when I'm walking back to the office, I thought my grandparents would not approve of this right now. Right, yeah. And that's always a good test, actually. If you're at that slippery slope or that area, what would you ask yourself? If your grandparents read this in the Wall Street Journal tomorrow, would they be happy with what you're doing?
[00:23:18] Jordan Harbinger: Yeah. Wow. That's a big jump, right? You go from, all right, I guess I got this tip, wow, it looks like the tip was legit. And then she's like, by the way, we need an envelope full of cash delivered anonymously to this guy who, by the way, knows your name. I mean, I would imagine at that point, are you not thinking, why did you tell him my name?
[00:23:38] Yeah, that's
[00:23:39] Tom Hardin: what I was asking her. I was, I'd always expo to feel tirade. I'm usually a calm guy, but that point, like, why would you give this guy's name? And I was so in my head, I'm like, I could have ended it there. What is this guy going to do? Go to the FBI and say, Hey, Tom didn't pay me my bribe, but like, I'm not going to touch the cash.
[00:23:53] These guys will do it. If they'll take care of this, I'll get this done. I kept saying just this once, I'll do it just this one time that kept going on in my head. I'll pay this just this once. And it happened three more times. She would call. I tell the other guys I would buy 0. 9 percent position. The boss was looking the other way every time too.
[00:24:12] So that's something where the stocks are up 30 percent and the pre market before with this news that came out that nobody should have known about, I buy these stocks. One of them was Hilton Hotels and we're tech stock focused hedge fund. I see. And
[00:24:26] Jordan Harbinger: so you're buying you're suddenly buying a real estate
[00:24:28] Tom Hardin: Well, he didn't say like are you right?
[00:24:30] Did you stay at a Hilton or what's going on? Yeah, like I
[00:24:32] Jordan Harbinger: really enjoyed my experience. Yeah, so we're gonna throw in 30 million dollars, right?
[00:24:36] Tom Hardin: Exactly And so the boss is looking the other way. So again more the rationalization I kind of feel like if he's okay with it and he's the closest thing to a mentor that I had my 20s Then he would have asked me questions about this and maybe he's fine with it because they are small positions and so what happened for trades through 2007, 0.
[00:24:54] 9 percent positions. The firm made just over a million for our investors and we managed about a hundred million, so 1 percent for our investors and we were up 30 percent before that. So one more percent. There was no reason to have the 100% Of the 1 million, 1. 2 million, as a junior partner, what I made, and essentially what I threw my career away for, was 46, 000.
[00:25:15] Oh, man. At 29 years old, like, that's the price of professional suicide. Yeah. It's not millions of dollars that you get arrested for, it's 46, 000 was it?
[00:25:24] Jordan Harbinger: Oh, that is so hard to hear, man. You go from not even actively seeking information to maybe seeking the information to bribing somebody for the information.
[00:25:37] It almost seems like we'll come back to this, but why didn't she pay that guy?
[00:25:41] Tom Hardin: Yeah. Subsequently on the next ones, I said, I'm never doing this again. I think she, I think she was getting a lot more than before I got, I think it was going
[00:25:49] Jordan Harbinger: on for a long time. Yeah. Like maybe the guy was making a hundred grand.
[00:25:52] Yeah. Yeah.
[00:25:53] Tom Hardin: And he had apparently other hedge fund clients who he was leaking this to. So here's a little side hustle. was getting paid by other people, but
[00:26:00] Jordan Harbinger: I just, wow. Okay. Well, there you have it. I suppose, did you ever have any close calls? I would not want to stand on the corner of a New York. Don't care what neighborhood you're in with a FedEx envelope with.
[00:26:10] Yeah. 15 grand in it. That's just not a good
[00:26:13] Tom Hardin: idea. Yeah. So, on the third tip and trade from her, she asked me, so it came from another source of information. Uh huh. There was another trade she knew about and she said, this other person wants 10, 000. And so, I go call the guys again. And this is another person, they're going to have more information from us.
[00:26:31] I'm already well into this, like it starts with the first trade and then now I'm doing cash payoffs. It's like, call it the boiling frog, where you put the frog in the pot of water and slowly turn it up and they're burning to death. I'm burning to death here at this point as the frog. Yeah. In this boiling water.
[00:26:44] And she says, I have to bring it to her out in California. And so there's 10, 000 I have to bring to her from LaGuardia airport to California so she can give it to this person. We're going to meet at some conference. And so I thought, at the time, the TSA machines weren't that sophisticated, I put the money all in my body, went through TSA, got through fine, went to the restroom, took it out, put it in these bank envelopes in my carry on bag.
[00:27:08] When my flight is called aboard to San Francisco, it was only a few years after 9 11, so the TSA was actually at several gates that day checking carry ons. And so I thought, Oh my God, they're here for me. They saw exactly what I did through there. They caught me on the camera. They're just going to wait for me and arrest me.
[00:27:22] And so I said, let's just play it cool. The cash is in my carry on. I'm walking to the plane. Sir, can we just search your carry on? The female agent grabs it, touches the cash, looks at the mail and says, sir, have a nice
[00:27:35] Jordan Harbinger: flight. She looked at the cash and was like, wow, there's a lot of money
[00:27:38] Tom Hardin: in here. So I went and sat in the plane and I thought, Oh my God.
[00:27:41] What the hell am I doing? Yeah. I'm never going to do this again. And so I told the woman I saw in California, I'm never doing this again, you won't believe what happened. They touched the money. And then years later, one of my speaking engagements, somebody in the crowd said, you know, it's not illegal domestically to do that.
[00:27:53] Yeah. And sort of. The compliance officer was like, how do you know that? But I read the customs, but it's international. So maybe that's why they, Oh, this guy's a gambler going to Vegas.
[00:28:04] Jordan Harbinger: A hundred percent. I mean, you can bring, I don't think there's any limit on the amount of cash you can bring domestically.
[00:28:10] I would say there's probably a policy that if you have a giant metal briefcase full of hundred dollar bills, they might just say, Hey, just saying that's a little weird. Maybe ask him why get something on the record. Have the airport police take a statement, but you're right. Yeah. It's when you bring it inside and outside of the country.
[00:28:27] You need that customs declaration where it's like, have you brought more, any fruits and vegetables? Yeah. More than 10, 000. But yeah, if you're going to Vegas, I mean some of those poker guys. Oh, yeah. I think they bring, yeah, 50 grand. Yeah. Plus in cash. 10 is just a buy into
[00:28:39] Tom Hardin: the World Series or whatever.
[00:28:40] Jordan Harbinger: whatever it is. Yeah. Strangely, you'd think you could get the money in Vegas of all places, but. Right. I guess depends who you're getting your money from. Yes. Who's
[00:28:49] Tom Hardin: staking you. That's true. So I got through that and I told her. I'm never doing this again, this cash payoff situation. And then there was one final tip in trade where there was no, no cash exchange to answer.
[00:28:58] Jordan Harbinger: When you make these trades, do you seek cover at all, right? Are you like, okay, I saw an article on Yahoo finance that says Hilton is It's undervalued and it's written by some guy. When we make our big bet, I can pull that out and go, I just found this piece, this blog post really compelling. And I put 13 million of firm money on this thing or whatever.
[00:29:22] Tom Hardin: the time when I made the trades, so the last trade was September of 07, I wasn't thinking about it. And she called me in December of 07 and said, Tom, The SEC had contacted her about one of the trades, Hilton, and she said, I'm going to tell them I bought Hilton because Paris Hilton's in the news. That sounds like a terrible idea.
[00:29:39] Jordan Harbinger: a pretty weak. Pretty weak. I don't think they're going to buy that. You know she doesn't run the hotel
[00:29:43] Tom Hardin: trades, right? Yeah. Yeah. And so I, then I thought I better have something written up for why I bought these stocks, but it's already, the trades have already happened months ago and I'm going to write this thing up now.
[00:29:52] And so. I started looking up at that time what was there and there was actually something where a Wall Street firm said hotels are ripe for private equity and so hey that's why I bought Hilton or there was a reason for each of these stocks that I was putting in. Yeah. And so I was trying to cover my bases because people had told me that had been called by the SEC.
[00:30:11] It's very common for the SEC to call about all time trades and just say, what was your reasoning? And then I was told, just tell them something. There was a Yahoo finance. Yeah. They'll hang up. Their government regulators overworked, underpaid. They don't want to, you know, they just want to move on to the next one.
[00:30:23] Yeah. And so I'm like, let me prepare for the SEC if they're calling her. And then January, February, March of 08. Nothing happens, insider trading is rampantly going on, and I think, like, I'm in the clear on those four trades. And we make thousands of trades, so the four trades, kind of in the clear until July 8th
[00:30:40] Jordan Harbinger: of 2008.
[00:30:41] Oof, okay. You mentioned the SEC called, her name's Rumi, right? Rumi, right. If the SEC suspects you're doing something sketchy, they call you and ask you about
[00:30:51] Tom Hardin: it? They'll call or they'll want to talk to your general counselor, chief compliance officer. Okay. They do examinations every couple years. I'm trading around two events in the market, earnings announcements, which are planned four times a year, but merger and acquisition announcements are not planned to the public.
[00:31:05] If you have well timed trades about around those, you're going to get a phone call. Just explain your reasons for why, make sure you've documented your reasons why you bought the stock. Hopefully you're not doing anything wrong. It happened to be just like coincidental for most people today. Hopefully that's the case.
[00:31:19] But to your point, if you're legitimately buying the stock and you haven't documented your reasons, you can open an entire investigation at your firm because you forgot to document it. Your reasons for legitimately buying a stock that just happened to be taken over So it's a real risk for firms to go through the cost of an investigation if you haven't documented your reasons why
[00:31:36] Jordan Harbinger: okay?
[00:31:36] So how does it all start to unravel you mentioned
[00:31:39] Tom Hardin: 2008 a few months after she says the SEC? Contacted her the SEC hasn't contacted me. I think I'm in the clear So Tuesday morning, we're recording in a July summer here in New York City, July 8 to 2008. I'm leaving my apartment in Midtown, 6. 30 to drop off some dry cleaning before getting a taxi to the office, 6.
[00:31:58] 30 in the morning, step on the sidewalk, and I hear this guy behind me say, Hey, are you Tom? I thought that's weird, 6. 30 in the morning on New York City street. Turn around. Yeah. And then there was two FBI agents showed me their wallets, kind of just like any TV show people have seen. The FBI literally is like that.
[00:32:14] Come sit down with us. There's a Wendy's at 55th and 8th. It's still there. We sat down at and he's like, look, man, we know about your four trades. We know that you were just down in Atlanta last weekend, Tom, visiting your baby nephew when he said his name for his baptism last weekend. And my first thought was, I know why they're here, and oh my God, my dad's gonna kill me.
[00:32:37] You know, what's he gonna say? I thought, oh my God, my wife's gonna divorce me. I mean, we just got married and she didn't know about these trades. Sure. And then I thought, holy crap, this might impact my career. Oh my God, I might go into prison. So I went from dad to prison, and he's like, we know about your four trades.
[00:32:52] I immediately started making implicating statements. So if the lawyers are listening, you know, why did you just not take their card and right?
[00:32:57] Jordan Harbinger: Yeah. I'll call you. I need to contact my attorney. No, let me go into a Wendy's and like confess over a baked
[00:33:04] Tom Hardin: potato. I confess everything to them. That's right. It was still the breakfast menu.
[00:33:07] But, uh. We weren't, we weren't eating it. So I started confessing everything. Yes, there was four trades. In fact, there was these cash payoffs. He's like, Oh, that's interesting. Didn't know that. The pen comes out.
[00:33:17] Jordan Harbinger: Go on,
[00:33:18] Tom Hardin: go on. What else? What else? And I just converted to Catholicism. So for me, this was like my second confession.
[00:33:24] Right. Not to a priest. And that was later talking to the FBI. I think they were taking it back because usually the initial reaction is, those are rumors. I have my reasons now for why I bought these stocks, I'll show them to you. And let me take your card, let me go talk to a white collar defense attorney.
[00:33:38] I just started confessing. Yeah, I did it. Like, I did it. I kept saying I did it. And then they were writing it down. What else did you do? I didn't say prove it. It's the worst day of your life because the FBI is in your face. Actually after a while, they said you can only tell your wife, you can't tell anybody about this.
[00:33:53] You have the opportunity to help us. Build some cases. Do you know what insider trading is going on in Wall Street? I'm like, basically, yeah, who's not doing it? Okay, at that point you're
[00:34:01] Jordan Harbinger: like crap. I just told these guys everything and they asked me if insider
[00:34:05] Tom Hardin: Exactly didn't know anything and so but they had a big web of names they pulled out so there was two big targets at the top and if you could picture it like I'm at the bottom like a minnow in this vast ocean of insider trading and so I assume one of those big guys is probably this guy Raj Rajaratnam, who I suspected was doing it, who Rumi worked for.
[00:34:23] They pull it up and they said, Tom, you have an opportunity to help us with these cases. It's going to help you out. I took his card and I said, should I talk to an attorney? No, I thought after I confessed, I should talk to an attorney. And they're like, we'll let you know when you can do that.
[00:34:36] Jordan Harbinger: Definitely not how that works, but
[00:34:38] Tom Hardin: okay.
[00:34:38] No, and I wasn't under arrest. I was always, it's always like you're free to walk out that door, but implied in that is a week from now we'll be in the windbreakers at 6am with the cameras arresting you. I had seen enough law and order where that, it happens. But the female agent, it was good cop, bad cop.
[00:34:52] The female put her hand on my hand. She saw I was startled. She's like, the FBI is here for you when you're ready to turn your life around.
[00:34:58] Jordan Harbinger: So talk about some psychological games.
[00:35:03] You're listening to the Jordan Harbinger Show with our guest Tipper X. We'll be right back. This episode is sponsored in part by 8sleep. I'm huge on sleep optimization. I mean, it doesn't really work because I have kids, but sleep optimization itself is really a thing that has changed my life. If you've listened to episode 126 with Matthew Walker, you'll know that the shorter you sleep, the shorter your life.
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[00:37:42] You can find the course at jordanharbinger. com slash course. Now back to Tom Harden. I'm so curious how good it feels to go up to, and sorry, this is at your expense. It got to go up to somebody, you know, committed a crime and flip open that badge because you've been thinking about doing that since you were six years old.
[00:38:00] It probably never gets old and you're like, FBI, we just want to talk with you for a few minutes and then you go and. Just sit someone down and they're like, I did it. And you're like, Oh, this feels so good. It's got to feel so good.
[00:38:13] Tom Hardin: I think they gauged if I was flippable, they call it. So they probably tapped my phone, looked at my emails, track my daily patterns of going.
[00:38:20] To work when I got home and then I guess did enough research on me sort of at the start of social media So you couldn't look at everybody's profiles like you can today, but profile me enough They probably felt it's 6 30 in the morning. We're gonna scare this guy. He'll probably flip He only made a small amount of money.
[00:38:34] He's probably trying not to get caught Yeah, so they profiled me very well where I guess I was very flippable it wasn't like guys, let me call my defense attorney on speed dial wasn't like the mafia where I don't have a defense attorney on speed dial because they even said I went home to my wife after work We were talking about earlier.
[00:38:50] I didn't have any other things on this side. So I seem like a normal a normal guy Yeah, Wow,
[00:38:54] Jordan Harbinger: just sitting at Wendy's sweating absolute bullets. Yes
[00:38:59] Tom Hardin: Oh, it was uh, it was like those old Charlie Brown cartoons where the teachers will want one. Yeah I'm not hearing it and I come to And I think my dad's going to kill me.
[00:39:09] Yeah. How long was the meeting? So it felt forever. I think it was about an hour. I was late. The market opens at 930. I got to the office at 920. My boss is like, where have you been? July of 2008. So we're not doing well. Worst market in 75 years. So there's the stress of that. And I'm like, ah, I just had a late start today.
[00:39:25] I take it you didn't tell your boss what happened. No, my face was white, but it was 2008. So my face was white like all the
[00:39:31] Jordan Harbinger: time. Right. Oh, man. I don't know if I would have been able to go to, I probably would have sat at Wendy's and just like, stared at the
[00:39:36] Tom Hardin: wall. They walked me out because they said, this is the worst day of your life, and we're actually afraid you might step on the street, and not try to kill yourself, but you might just be hit by a car because you're so distracted.
[00:39:46] So they actually, this is the first time I remember this, they actually waved down the cab for me, the FBI waved down the cab that I could get to the office. And they probably
[00:39:52] Jordan Harbinger: didn't want to give you any ideas either. Yeah. You're in shock and you're not thinking clearly. Right. You're thinking you're going to go to prison when really we're just trying to scare you.
[00:40:01] Yeah. Into
[00:40:01] Tom Hardin: compliance. And maybe a future asset for them, which is risky. Right. Yeah.
[00:40:05] Jordan Harbinger: Oh, man. I just can't even imagine how that feels.
[00:40:08] Tom Hardin: So I got to the office. that afternoon, I thought it would be a great time to like talk to somebody. As I mentioned, I just converted to Catholicism. My wife's devout Catholic.
[00:40:17] It was important to her two years before we got married. That was my last confession during what's called the RCIA process. I thought, great time to talk to a priest again. St. Patrick's walk there, really long line for a Tuesday afternoon. And I remember thinking like, how many people in line were tapped by the FBI?
[00:40:30] Like, do I recognize any other hedge fund guys? Yeah. Anybody else from Wendy? Exactly. Anybody else on this path today? Got it with the priest. Forgive me, father. I went through my whole life story and then I waited till the end and said, and by the way, this morning, yeah, he's probably like, bro, get
[00:40:45] Jordan Harbinger: to the
[00:40:47] Tom Hardin: point.
[00:40:47] Or he was like, I just FBI story. So got to it. And he's like, okay, it sounds like what you're telling me 99 percent of your life. You've been on the right path. 1 percent of your life. You've made those trades. You really screwed up. But I said, I'm suicidal. And he's like, look, you can't let this 1 percent of your life decide.
[00:41:03] what you're thinking about yourself, and God's here for you, and if they're giving you the chance, he was sort of like legal advice, but from a priest, if they're giving you the chance to clean up the industry, you should probably do it. And so I walked out. I was thankful I talked to him just to be able to talk to somebody, because I had to tell my wife.
[00:41:18] That was the only person I could tell, according to the FBI, I couldn't tell my parents. But it was easier to talk to a priest at least first to get it off my shoulders and get like that as my penance. Like, okay, I should go cooperate with the FBI, I guess, but I gotta talk to my wife
[00:41:30] Jordan Harbinger: first. Sure. Yeah, no kidding.
[00:41:32] What did they want you to do, and I assume later on they were like, here's the plan. Yeah,
[00:41:36] Tom Hardin: yeah, yeah. How did that happen? So I waited to tell my wife Friday after work, um, young couple in New York City. How was your week? Yeah, you could wait. I couldn't wait. No, I was having panic attacks, bed sweats, like I think, I dunno if I was suicidal, but I always thought about.
[00:41:48] Going up to this I even hate thinking about going up to the top floor of our apartment looking over and just thinking about like Why do I want to bring this to her a newly married couple? We're talking about starting a family soon Why do I bring this one to her? She's going to leave me. So, I said, Friday after work, I have to talk.
[00:42:00] She was working at Lehman Brothers in 2008, so she had all the stories up to this point. Friday, how was your week? She would just go on for a while, you know. I said, all right, let me go first. I have something to happen this week, and so, I said, you got to sit down for this. And I always try to keep it, make her laugh, and so, it's a Tuesday morning, exactly what happened, FBI.
[00:42:15] And she paused and said, it felt like forever. She said, wait, say that again? That's not what I was expecting. She was probably thinking infidelity or something because I was so serious. And not that she was saying, Oh, just some
[00:42:25] Jordan Harbinger: insider trading,
[00:42:29] I said it
[00:42:29] Tom Hardin: again, she processed it. She's like, well, you didn't do anything to hurt me. So she was worried about that. But I would say she's collateral damage. She's no longer married to the future hedge fund manager. She's married to the future FBI informant. And she also said if they're giving you a chance to clean up the industry, I always told her the industry is so corrupt.
[00:42:44] Yeah. She's like, you should do it. Start making, doing things the right way. And so I said, okay, Monday morning I'll call the FBI. So I don't know where the stat is. I found it several years ago and I can't find it again. 85 percent of marriages end right there when the spouse confesses they're going to be a felon or having convicted.
[00:42:59] Really? Committed a felony during the marriage. Cause she didn't marry Tipper Axe, the future FBI
[00:43:04] Jordan Harbinger: felon. She married Tom Harden, what she thought
[00:43:07] Tom Hardin: was a good guy. And I've never met anybody in my situation who's actually been beholden to their marriage. And so I'm very lucky that like she stayed with me, it wasn't easy, but to have her on my side Friday, that was a big thing that if she had kicked me out, which most wives would have been in for the hedge fund, millions, not for FBI
[00:43:23] Jordan Harbinger: wearing a wire.
[00:43:24] So I said, I'll call the FBI
[00:43:25] Tom Hardin: Monday. I called them, met them outside to go through kind of a confession of all the crimes I've ever done, if they're going to work with me. It's called sort of like a proper session like you're supposed to confess all your crimes your
[00:43:36] Jordan Harbinger: whole life if the FBI is going to work with you I said it was just those four
[00:43:39] Tom Hardin: trades really even unrelated crime even unrelated because if they're going to put me on as a cooperating witness later and right across examination they can be like did you know when he was 17.
[00:43:49] He's, I told him like I was speeding. They're like, all right, not speeding when you're 17. But like, I was like Napster. I was just throwing everything out there. That's okay. That's not how much Metallica music. We all did Napster. We all rationalize that. And I was even like online gambling, um, before it was legal in 2003.
[00:44:03] They're like, that's fine. So I'm like, all right, so those are all my crimes. They're okay. And
[00:44:06] Jordan Harbinger: they're like, God, what if you screwed up, man? We, we expected a couple. Yeah. Cause they deal with maybe not the financial guys, but well, actually even the financial, I mean, just some of the. You know people who commit a lot of crimes.
[00:44:18] They're generally
[00:44:19] Tom Hardin: pretty awful. Yeah, they're just like, confess something to us, but if it's just Napster and illegal music and like speeding,
[00:44:23] Jordan Harbinger: you're fine. You know, they just went back and went like, this freaking moron did this. He was fine.
[00:44:29] Tom Hardin: He was fine. They might have even felt a little bad that they had to get me.
[00:44:33] This is like a regular guy. There's nothing and they've obviously done their work on me. Yeah. And so they said you're gonna need to wear this for us and they held up his fingers like this little device. And I'm so naive. I'm like, is that like a BlackBerry battery? Because at the time we had iPhones weren't allowed in banks or law firms until it was cleared.
[00:44:50] And so the two devices and. Yeah. And they're like, this is a recording device. I'm like, is that like a wire? They're like, yeah, it's a wire. You're going to have to wear this for us and get people of interest who you think are the worst actors doing this in the conversations. And so. It's a weird thing because usually as a cooperator with the FBI, you have to give up an insider trading.
[00:45:08] Probably your friends, like my friend that I took these trades on, that's a very terrible situation to be in. Do I take a friend down? Yeah. For what I did. But instead they're like, who are the worst actors? And I'm like, do you know so and so in Silicon Valley, I'm pretty sure this is their business model insider trading.
[00:45:22] They didn't tell me enough, but they sort of nodded their heads. They're like, can you build a relationship? I'm like, well, this is like a 48 year old hedge fund manager. This is reputation. I'm a 29 year old analyst, but I guess we talked about a cover story for me to get people in conversations, me wearing the wire where it's 2008.
[00:45:37] I'm looking for an analyst job. Can we meet when I'm in California next to see if you're hiring? And then back in the day we communicated on AOL IM. Yeah. So everybody was on my IM that I had messed once. You just ping them and like, I'm going to be in San Francisco. And so the FBI said, okay, this is your first target.
[00:45:55] This hedge fund manager in San Francisco who the FBI I think knows is doing it, but doesn't have the actual fact pattern to actually go after this guy. And so I said, yeah, I can get a meeting, pinged him on AOL, I am flew out to Silicon Valley. I was going to a conference. So that was my reason for traveling.
[00:46:09] And then the FBI agent, one of them flew out with me to Silicon Valley, to San Jose. To set up this meeting, uh, with this hedge fund manager who was a big target of the investigation.
[00:46:18] Jordan Harbinger: Man, did they train you at all for these conversations, or are they like, yeah, just go chit chat and then guide them in the direction of, seems like they should train
[00:46:26] Tom Hardin: you.
[00:46:26] There should have been more training because I was kind of thrown to the wolves, like, it was sort of, they said, create some rapport. Hey, I had the four trades last year, I'm a young analyst. I kind of know that you do it too, but if you're accusing somebody of committing a crime for the first or second time you meet them in a Starbucks, It might be a little bit off putting, but I think, psychologically, one of your previous guests talked about, like, raising your eyebrows and showing, like, your carotid artery as, like, trustworthy.
[00:46:53] Yeah, yeah, yeah. I was actually doing that, and I know that that's a sign that you might be, like, a psycho. I don't think I, like, sort of, like, I was naturally, I guess, able to talk to people this way. But it was weird because it was so off putting. I said, I had these four trades. How do you do it? I'm looking for a job.
[00:47:07] You know, I could probably get more information. And then the guy that was the target, the Silicon Valley guy sort of stood up and said, all right, let's stay in touch. He was, I felt he was onto me. I felt that the wire at this point, he must've seen it.
[00:47:18] Jordan Harbinger: Yeah. I was going to say, does it feel like it's blinking and huge and you're like, So, pal, like, living with your collar, and like, how about that insider trading we've been doing, making lots of money, illegal money.
[00:47:31] Right, right. It just seems like everything.
[00:47:33] Tom Hardin: And there was no training. It wasn't like, I went to the FBI academy for a week or two to get some training before this. Ah. And so I had this really cold thing on my nipple, in my front pocket. I just want to get this over with. Yeah. I want to jump to the chase, not bait them, not like, small talk.
[00:47:47] And then put it in there and then cut back to small talk. I wanted to get right to it as I started doing this and the FBI agents were sitting at another table in Starbucks. So that was more pressure that they were there. I met them. This guy's going to be there at three o'clock. He shows up and I think they wanted to make sure I wouldn't be sliding like a note to you if you're a target, like I'm wearing a wire.
[00:48:05] I'm going to ask you some questions. Oh, I think that happens.
[00:48:08] Jordan Harbinger: Maybe because I'm thinking, why do they care? Why do they need to watch you? Yeah. And so they're not listening in
[00:48:13] Tom Hardin: real time. Right. So that's also important. I think today they might listen in real time, but at that time it was after the fact. So it's recording it, but they want to make sure I'm not sliding a note.
[00:48:22] And so I do this, the guy leaves. They're like, how'd it go? I don't know. It was my first time. They said, we'll listen to it and we'll be back in New York two days later. I go back to New York and then I meet them and we're always meeting in a black town car. So the windows are shaded right outside my office.
[00:48:36] And so I'm looking, nobody saw me getting into it. Yeah. That seems really, yeah, it's sort of clunky. Yeah. And so I get in the black town car and they'd always say, look around, is there anybody here that, you know, I thought, well, if it's too late, I already got in the black town car. People might. So there was, I guess nobody there.
[00:48:52] And they're like, we listened to it the first recording and we got nothing. And I kind of snapped it. I was just sort of tired. I was just at home thinking to go. Well, I'm like, Hey guys, it's my first time doing this. I've never done this before. Actually. I was comfortable enough to push back a little bit.
[00:49:05] Like, Hey, I knew I was doing something for them now. It's for me to hopefully not go to prison, but like, Oh gosh, eventually I got good at it. Yeah. The hardest thing for me. And I think this might be like a negotiating tactic too, is like, be comfortable with the silence. So if I'm asking you the questions, I had these four trades.
[00:49:20] Like, I think I can do some of that too, like, I think I'm going to have more sources, just trying to see like how, as a young mentee of you as my mentor, bad mentor, how do you do it? I'm trying to get my more sources. And then you'll pause a while and then think, and I had to get through that without me feeling the silence.
[00:49:37] And then once the person started talking, they'd usually give enough where it was enough for the FBI to say, that's enough. Thank you so much. Yeah. On to the next one. And I guess they'd approach that guy dropping off a strike, you know, whatever that person did and dealt these cases. Wow.
[00:49:50] Jordan Harbinger: Okay. So you got pretty good at this.
[00:49:52] I know. How many conversations do you think you had?
[00:49:55] Tom Hardin: So I think it was 48 before I hired an attorney. So I didn't hire an attorney for a year. So I was running. Just taking the FBI's orders. I kind of felt like in the end, it would be best if I just took their orders and pretended like I was working for them.
[00:50:09] And I know we've talked before, uh, the episode about Frank Abagnale and I kind of felt like I had seen the movie and like maybe I'll be like working for the FBI like he was in the movie. at the end of his journey. And maybe that'll be me as like the next Frank Gabbing now. And so this is, the FBI even told me this was, I was doing this for my country.
[00:50:25] So there was some like patriotic part to this. The country needs you. The country needs you until they don't, until we're done with you. And then you're going to prison. And I talked to an attorney. And he's like, again, I was Googling, all I knew about insider trading was Martha Stewart at that time. So I called her attorney and he's like, you're not going to trial.
[00:50:39] I'll call somebody else. So there's less of a legal bill. Oh, right.
[00:50:43] Jordan Harbinger: Yeah. Call me when you have 13 million. Yeah, yeah, yeah, yeah.
[00:50:46] Tom Hardin: So pleading guilty as a cooperator. Yeah. I called the guy, he's like. Tom, you're supposed to take their card, not talk, and again, I'm like, so naive, I'm like, hey, it's my first time doing this, that was sort of a, a refrain, first time, naive, and he's like, how many times you wear a wire, 48, he's like, did you make millions, I'm like, no, the punchline was the 46, 000, he's like, they got a lot of flesh
[00:51:04] Jordan Harbinger: out of you for
[00:51:04] Tom Hardin: 46, 000 dollars, but.
[00:51:06] I guess I saved a year of legal fees, you know, I don't know. Yeah, you probably
[00:51:10] Jordan Harbinger: did. Yeah. You saved a year of legal fees. That's the way you should look at it. But also you should have hired an attorney earlier, I suppose. Yes. Were you still working at the firm? I guess you must have been if you're having all these conversations.
[00:51:19] Tom Hardin: So in 2008, 2009 was my cooperation. I was still working at the firm in 2008, the whole time. So financial crisis, having the double life, again, telling myself I was able to play mind games where it's sort of like cloak and dagger, like I'm at work by day and then wearing a wire. Night. I didn't know I was Tipper X until later, but I have this mysterious life now.
[00:51:41] It's sort of like I was trying to find anything that would just keep me positive from going back to those suicidal dark thoughts. They weren't saying I was good at it, but I felt I was getting pretty good at it because then once I had enough, they'd end that conversation and go to the next one. So I just kept bringing them, building these relationships, bringing the people.
[00:51:56] I rationalized it. How did I wear a wire on these people? I felt if I'm going down for this and this is their business model, making millions, like the patriotic thing to do would be to help clean up the industry. I mean, that's not. Sometimes people say I'm a whistleblower. Like, no, that's not whistleblowing.
[00:52:10] It's like, I'm not going to go do this unless they confronted me about what I did. Sure. It's
[00:52:13] Jordan Harbinger: like, yeah, no, that makes a lot of sense. How was your performance at work though? Coming in and probably slept like crap. I don't know if you're really, your heart's into it at that point. It wasn't into it. It
[00:52:25] Tom Hardin: was terrible.
[00:52:26] I was losing money early 2009. I left and I don't think my boss
[00:52:29] Jordan Harbinger: was really missing me at that point. Sort of like a,
[00:52:33] Tom Hardin: it was a terrible, terrible year 2008. Yeah. I'm not focused on my job because I'm just focused on this other side hustle. Yeah, you're happy
[00:52:40] Jordan Harbinger: of wearing the wire. Wearing the wire, yeah. After you left the firm, were you still taking meetings with people?
[00:52:46] How did you get them to talk
[00:52:47] Tom Hardin: if you were already? Yeah, so now it's 2008. I did terrible last year. Like some of the best stock pickers, it was the worst year of the curve. So that was an easy thing. I'm looking around. I'm going to take my time. We call it finding a seat. So I'm looking for a seat. AOL. I am looking for a seat to a target hedge fund manager.
[00:53:02] Can we go meet if they're in New York? It was always Starbucks meetings. And so we did the Starbucks, you know, I'm looking for a seat. I'm going to take my time. This episode
[00:53:09] Jordan Harbinger: is sponsored by Starbucks where tons of white
[00:53:11] Tom Hardin: collar crime. We started with the golf game in Seattle. Yeah. Yeah. And so, uh, meet there.
[00:53:16] And then it was an easy cover. Like I'm just looking for a job. I knew about the four trades. I'm developing those sources. How do you do it? That pause would seem like forever. I was getting used to, they'd size me up. And then they'd start talking off, you know, give me a little bit more of that, or we'd have follow up conversations where the FBI was sort of clunky.
[00:53:33] They'd have me dial a number for recording it and then dial the person. Half the time the person would answer and you'd hear click, click, click. And then one guy was like, would you hear that? But at the time. I just switched to iPhone without the BlackBerry because I left my firm. I said, I just got this iPhone 2.
[00:53:47] I think it was the iPhone 2. Yeah. I think it's a new thing.
[00:53:50] Jordan Harbinger: Yeah. So it's so cringe, like, Oh, Hey, maybe when we're secretly recording conversations with criminals, we could make it not like beep or click in and out like a 1995 call. Yeah.
[00:54:03] Tom Hardin: There was a lot of trips with the FBI to Radio Shack to get new equipment.
[00:54:06] And at that time Radio Shack was going bankrupt, I remember thinking the FBI might be the only people keeping Radio Shack. And also,
[00:54:12] Jordan Harbinger: why is the FBI buying equipment from Radio Shack? That's a little disconcerting. Government budget.
[00:54:17] Tom Hardin: Come on. I don't know. But we'd go in, there was one in Times Square near my apartment, we'd go in for a new recording device and they'd pick it off the shelf and we were the only ones in there.
[00:54:25] Jordan Harbinger: So, yeah, so if anybody has that recording pen from Radio Shack, it's like, what has this guy been up to? Why did you, why do you have that? The only people who have seen that with our, our FBI agents. Right. That's something. Did anybody suspect you? Was anybody like, hey man, you're asking me a lot of questions about crime and I met you five minutes ago over
[00:54:42] Tom Hardin: lattes.
[00:54:43] There was one guy, I think he was probably pretty high up the FBI's list, who I got in 15 conversations over 2008, early 2009. He'd always change the subject. So, we would pause. I'm not filling in the pause. I'm doing my job, not changing the subject. He changed the subject. I'm like, it's just not going well.
[00:54:59] And the FBI is like, yeah, this guy's a tough nut to crack. Sunday afternoon, he gives me a call and he's like, we need to have dinner tonight. We need to talk. And he lives in Greenwich, Connecticut, a suburb of New York city. I live in Manhattan on a Sunday night. We need to talk. It's not going to get excited.
[00:55:15] This guy is going to confess all these meetings. I call the FBI. They get excited. They're like, he said he's going to talk. I'm like, yeah, let's meet at Grand Central, the train station. Give me the wire. I'll take the train out to Greenwich. This guy will pick me up at the train station and we'll see what this is about on a Sunday.
[00:55:30] Get to Greenwich. He picks me up at the train station. He said, Tom, good to see you. I brought these swim trunks for you. We're going to go swimming in my mother's house and the Sopranos was popper that summer. All these ideas were going through my head, but I was so used to wearing the wire. My heart rate was up a little bit, but I'm like, all right, but it's not taped to your body.
[00:55:50] No, right. So it's in my front pocket. So clearly this is a game and he must've talked to an attorney and see this guy's wearing a
[00:55:55] Jordan Harbinger: wire or he literally just watches too many mafia movies. It's like, how do I do this? How do I get this?
[00:56:00] Tom Hardin: How do I expose this guy? So let's go swimming. So we go to this old mansion in Greenwich.
[00:56:05] He's like, let's go into this room. He starts disrupting this room. I'm like, all right, dude, this is awkward. I don't even know him that well. I'm going to go in the restroom and change. I take the wire out, put it in my jeans, put it in these swim trunks, put the jeans on the bed. So it's the two of us walking out to this pool.
[00:56:19] It's so quiet. I saw a shovel against the house, a hole in the ground. Holy shit, is this guy going to kill me or something? I mean, I saw there was plants. I'm like, all right, landscaping. So I get in the swimming pool. He grabs a tennis ball. And we start playing this awkward game of catch. That's so weird.
[00:56:35] He is pouring it on psychologically, and after a few minutes of freaking me out, I'm dropping the ball, literally. Why catch? Well, I don't know. He's, we're playing this awkward game of catch. Let's get warmed up or something. And he said, Tom, I've been acting kind of weird for a while. Tom, I spoke to an attorney, here it comes.
[00:56:52] I have to ask you a question. And I was going to give up my cover. I was so scared. Like, the FBI will understand this situation, I feel my life's in danger, I'm going to give it up. I'm like, what do you want to know? And he said, okay. Has the SEC approached you and he got his acronym wrong, so the SEC. And I forgot exactly what he said, but he's like, all right, sorry, I just had to make sure you weren't wearing a wire.
[00:57:14] And then he starts making implicating statements about all the illicit trades I had asked him about, but it wasn't recorded. And for whatever reason, the FBI pitches these cases to the prosecutors and they have to decide to bring the case. The prosecutor would never brought the case against this guy who was one of the worst actors.
[00:57:30] And up until a few years ago, he was still managing money for endowments and pensions. Like, he was still in the game.
[00:57:38] Jordan Harbinger: How much money do you think that guy made?
[00:57:39] Tom Hardin: Millions and millions of dollars. It was probably a 200 million hedge fund, which actually today is small, but like, it was him and one analyst, so I'm sure he kept most of the profits.
[00:57:47] Oh my goodness. And every quarter, three or four stocks, he would trade perfectly with the information. Yeah. And I'm just so befuddled. Like, The years would go on when I was charged, and I kind of got like, why was it me and not him? Like, I kind of got in that headspace later. Like, it's not fair, but my wife slapped me around.
[00:58:03] She's like, hey, they got you. They didn't get him. Let's man up and get to figure out your life. Wow. Yeah.
[00:58:11] Jordan Harbinger: This is the Jordan Harbinger Show with our guest Tom Harden. We'll be right back. This episode is sponsored in part by Nissan. These days, too many people have to settle for the next best thing, especially when it comes to choosing a car, but at Nissan, there's a vehicle type for everyone, for every driver who wants more.
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[01:00:17] com slash deals. You can also search for any sponsor using the AI chat box on the website. You could even email me. I'll dig it up for you. That's how important it is for you to use those little codes. Thank you for supporting those who support us. Now, for the rest of my conversation with Tom Hardin. For me, I don't know what the statute of limitations is on this stuff.
[01:00:35] Do you?
[01:00:36] Tom Hardin: I'm not sure. I think for that, for what I was asking about 15 years ago, I think it's passed. I want to say 10, maybe it was five.
[01:00:42] Jordan Harbinger: I wonder if the civil penalties wear off from the
[01:00:44] Tom Hardin: SEC. They may not, but I'm not. Actually, that's a good question. Everything I've learned
[01:00:47] Jordan Harbinger: with all my training the last few years, I don't know.
[01:00:49] Yeah, because basically my, my point is. He may not be out of the woods when they get AI to go comb over that and they go, ah, okay, so there's a, you're better chance of getting struck by lightning three times in a week than making all these trades perfectly. That's enough to go after you civilly, maybe not criminally, and you have to give back the money and he goes, oops, I have three boats, two houses, three wives.
[01:01:13] I can't afford that. And then he's broke for the rest of his life. Like that's, maybe he's not out of the woods. I don't know. Yeah. What's I thinking?
[01:01:18] Tom Hardin: Perhaps maybe. I met, I actually met his, um, chief compliance officer years later when I started doing the corporate training. Mm-Hmm. . And she obviously doesn't know about this.
[01:01:25] I'm like, I don't think I should go in there. Yeah. , it would be awkward.
[01:01:28] Jordan Harbinger: Interesting that he even has a Chief Compliance officer. Right, right. Maybe why bother checking the box? Maybe the pool thing is so we
[01:01:35] Tom Hardin: weird and scary. Yeah. It was right out. It was right out of a movie or a, as I said, the Sopranos was a big show that summer.
[01:01:41] Yeah. I knew he was onto me. He's doing this. And so,
[01:01:45] Jordan Harbinger: and like he was definitely onto it. Yeah. Like there's no getting around that he knew. He just didn't say FBI. So if he had said to the f FBI I approach you, you would've cracked. I would've cracked right there. Yeah. Right. The wire's in, in your
[01:01:56] Tom Hardin: bathroom. I even tried to give him a head.
[01:01:57] I, I said, no, not the SEC. Like didn't pick it up. Right. He was like, okay, I just saw, he is like, sorry for that. And it was weird. Like I just had to make sure you weren't wearing a wire. Ugh. But also thinking the wire is in the jeans in your guestroom bed. Once you have somebody like your kid. Go through my genes or something and look for
[01:02:12] Jordan Harbinger: it.
[01:02:12] But he didn't. Yeah. Well, he's not definitely not an experienced, organized criminal.
[01:02:17] Tom Hardin: No, most of these people weren't. Yeah.
[01:02:20] Jordan Harbinger: Did you ever think I'm bringing down these people because of mistakes I made? Or were you thinking, you know, these are all bad actors too. I'm just the agent of
[01:02:28] Tom Hardin: their destruction. Yeah.
[01:02:29] The way I rationalized it, like, Because I could have the first day told the FBI or come back to them and said, you know what? Okay, you're telling me I have to wear the wire that first meeting. I'm not going to bring people down for what I did. Yeah. And so I didn't mention friends names, but I, they gave me this opening where who do you think Tom were the worst actors?
[01:02:45] And so I could come back to them and say, okay, these are the worst actors. So again, that I also don't like. Exactly. Like it's sort of like the patriotic noble thing to do for the country now. Right. You know, making lemonade out of my lemons would be to take down who I think are the worst actors. And again, try to get in my mind, I'm doing the right thing now.
[01:03:01] Yeah. And luckily it wasn't like, go wear a wire on your best friend or something. That would have been something where I don't think, and eventually it got to a point where they kept asking me for names. I have an attorney. And they're like, Tom, what about your two friends that you tipped? And I drew the line there.
[01:03:15] And my attorney's like, you're risking it. You know, they could see you didn't do enough. And then they were done with me. So January 2010, Tipper X is Tom Harden was what all over, like the front of the Wall Street Journal when printed papers were still popular circulation. So when my name came out, like anybody that knew me cut ties, you know, I'm sure their compliance officers were like, if you know anybody in these cases.
[01:03:35] Cut ties. Cut ties. So in terms of like my name becoming public, only my wife knew, I had to tell my parents, I had to tell my in laws. Cause they weren't really following these cases and the headline was Tipper X Revealed. So if you're not following the cases, I'm not reading that article. So a lot of people didn't really see it the first day.
[01:03:49] Do you have a Google alert
[01:03:50] Jordan Harbinger: set up for your name though? I did. Yeah. That must have been
[01:03:52] Tom Hardin: a tough morning. Yeah, yeah. So it came the night before. So the night before that printed paper. Oof. It's like 7 30. And so I went to my in laws and told them, because my father in law used to work at J. P. Morgan, so he's going to probably fall on this.
[01:04:03] I want to tell them first. And so I couldn't tell you before then. And of all things, like they were understanding actually. So that was, that was very lucky. Yeah. But my name came out, you kind of figure out who your true friends are. Like I lost 40 something Facebook friends, LinkedIn connections, but then Four people reached out for me from Penn that were like, Hey man, I just saw this.
[01:04:20] I know it's not news for you. It's news for me. If you ever need to get a drink or coffee to talk about it, I know who you are. And it's not a recommendation to figure out who your true friends are this way, but it actually is how things worked out. So 12, 13 years later, those are some of my closest friends who
[01:04:31] Jordan Harbinger: were.
[01:04:32] who were there that day. Yeah. So
[01:04:34] Tom Hardin: that's how I figured out, like, it blows up your whole network because people feel like, wait, Tipper X is Tom Harden, Raj Rajaratnam, Rumi Khan, Tom Harden. Like, what? Ashmo? Yeah, exactly. That guy who's a regular life. Nice,
[01:04:47] Jordan Harbinger: man. And then, okay, after you get all these guys, you're wearing the wire, your name comes out.
[01:04:53] Is that like the worst day of your life, would you say? That was
[01:04:55] Tom Hardin: the second worst day, I'd say, because I'm a stay at home dad. Kind of feel like as a man, I can't provide for my family. I'm emasculated. Like, my first daughter, Molly, was a few months old then. Stayed home with her. Reporters are calling constantly.
[01:05:06] It's a 24 hour story, but at the time, it feels like they're going to talk about this forever. Forever, yeah. They're calling, they're calling, they're calling. Somebody comes to the door. My wife, thank God, is still working, so at least we could just pay the basics of the mortgage. We just bought a house on double income right before, right around the time the FBI approached me.
[01:05:20] And so, she's at least holding down the fort. Jeez, that's so awful. And so she's going to work. She doesn't want to be away. Like, I should be the one going to work. She should be at home with her, her daughter. Sure. The maternal bond. So I'm the stay at home dad. I feel like a piece of shit. This is happening.
[01:05:33] She gets home. She's holding my daughter and just crying, the reporters are calling and talking about feeling like the worst I've ever felt as a husband, as a father, as a person, and I can't change what happened, right? I can't change, I can only try to like manage this as best as I can, but feeling the lowest of the low.
[01:05:47] Yeah. Was probably right there, like the wife's holding the baby, crying, and it's everything I did to bring onto my family, into the marriage, and she's staying with me and 85 percent of marriages that don't end this way, and it's not clear it's going to continue to hold together, but it's just for now.
[01:06:00] Yeah. And the reporters are calling. The New York Times reporter put her name in an article back in the day we had this family blog just sharing news with my family in the south. The New York Times reporter went to the family blog and said, Tom's wife keeps a family blog talking about this and that because they're trying to get a reaction from me.
[01:06:16] My attorney said, don't talk to any newspapers when they reach out to you, you know, and so, but he's trying to get a reaction with that low, but so I was But like, it's all, everything I did, it was all self inflicted. I did this all to my family and myself. Gosh.
[01:06:30] Jordan Harbinger: Is the FBI giving you assurances like, hey, though, you're off the hook because of your health
[01:06:34] Tom Hardin: or not?
[01:06:35] Not so much. They said they would, back when I was wearing the wire on people before my name was public, they said they did threat assessments on every target. But the swimming pool incident, I didn't know until years later. So my first speaking engagement was at the FBI. And they said, actually, we thought that was a weird request.
[01:06:50] And the black town car drove up, followed the Metro North train. Up to, uh, Greenwich and was right across the street from that guy's house, but, like, there was a hole in the ground, there was a gun or something, like, what was the upside of it? Yeah, great, so they
[01:07:01] Jordan Harbinger: find your body quickly is the upside for
[01:07:03] Tom Hardin: that, basically.
[01:07:03] Yeah, yeah, yeah, yeah, and so they said they were there, they felt bad about it, but, guys, like...
[01:07:08] Jordan Harbinger: We'll feel really bad if this guy gets killed by this guy. Yeah, but you did a threat assessment, right? Uh, yeah, I mean, he hasn't killed anyone before, that's, uh, we looked up his criminal record, doesn't really have one.
[01:07:19] Like, okay. I mean, what does that even mean? Threat assessment. Yeah, I know. They didn't go to his house. They didn't look at his emails,
[01:07:25] Tom Hardin: probably. Nothing. M. I. L. R. said they're using me until they couldn't use me anymore. Yeah. And once they finally got counsel, and he said they've got a lot of flesh out of you for 46, 000, and you could probably stop here.
[01:07:35] And they also told me... Tom, you're doing such a great job. Like I thought maybe they would hire me again going back to our previous mention on Frank Abagnale. Like, yeah, maybe this will be my second career working with the FBI. And the punchline is no, it's just a cooperating
[01:07:48] Jordan Harbinger: witness that wore a wire until they used you.
[01:07:50] It's like a weird semi, maybe not abusive relationship, but one where like, it sounds like a lot of relationships I would imagine out there like, oh, yeah, this is my girlfriend or boyfriend. And it's like, well, for now, yeah, it's very temporary. One person. Has all the cards. The other person has none. Yeah. So they eventually arrest
[01:08:09] Tom Hardin: you.
[01:08:10] I would assume eventually. So January, my name became public December. I pled guilty and that's very much a formality. So I had to self surrender downtown at the FBI, but that's like the formality of like they even apologize. They're like, it's procedure. We have to handcuff you and walk you in. The agent was like, my boss is behind me.
[01:08:26] And you know, this is like, we have to do so walk into FBI's office, downtown New York city handcuffed. And then I go get processed. And then I'm taken to the U. S. Marshal's office, where I'm processed further, and there's like a small holding cell until they go give the judge my guilty plea, and like, I'm the only person in this holding cell wearing a suit, there's like, guys in there who know the people here at this office, they're in there all the time, and one guy with tats up his neck looking at me, he's like, Hey, what are you in here for?
[01:08:51] Uh, insider trading. I'm like, yeah, you know, everybody knows.
[01:08:56] Jordan Harbinger: Tipper X. Like, wow, that guy reads the Wall
[01:08:58] Tom Hardin: Street Journal. It was really a sweet comment. What did he do? Right, exactly. So he, he knew all the people in the U. S. Marshall's office, so I'm sure it's a repeat drug thing or whatever. So I didn't realize they even handle that stuff.
[01:09:10] Yeah, yeah, yeah. I guess maybe like the federal crime. So before you give your guilty plea, U. S. Marshals come in and do their own thing. He was like, but I won't see you here again. I'm thinking like, hopefully not. Yeah, I hope not. And then I go see my guilty plea and the judge like, how do you plead? And it says United States of America versus Thomas Harden.
[01:09:26] Scary. Another humbling day. Like the FBI said I was like working for them. Like, I'm kind of like an agent. Where's my badge? Yeah, I'm on your side guys. I'm doing it and it's like good, wait for my country, but it says your country against you. Yeah. And so I realized, all right, this is all in my head is self delusion.
[01:09:40] And then the assistant prosecutor is there. And in financial crime cases, the standard procedure is the judge says, are the, are the victims present? The young prosecutor says there's no victims. Talk about rationalization. Exhale. Yeah. Like what? No victims. Now the company's information stolen insider trading.
[01:09:55] It's not fair. You know, doping, but like the prosecutor just said there's no victims and wow, like that was a
[01:10:01] Jordan Harbinger: statement. Like, can I get that etched on a piece of paper? I want to show my parents who are really pissed right now. Did you tell your parents that you had to at some
[01:10:07] Tom Hardin: point? Yeah, at some point they were flying up to visit my daughter and that was a tough conversation because they, they feel like they know me as their son and like, it took a while.
[01:10:15] Just telling people was the worst because it's like, I did it and I can't change what I did in the past and I had to tell them about this and it was. It was rough telling my brother's family slowly over time and some people know, some people don't for years, you know, yeah, I would assume now. Yeah. Now I'm out there talking about it now.
[01:10:31] Now you're telling everybody who lives here. Because for years I was a stay at home dad and then I went to be a professional speaker and then the mom groups were like, you have to have a story and like, is it the one minute, like I'm an ethics trainer, you know, Wall Street, they need their ethics training.
[01:10:44] Oh, why did you get into that? You have to have
[01:10:46] Jordan Harbinger: an hour. Yeah, well, here's the thing. Yeah, yeah, exactly. But I guess it's, hey, if you're going to be, this is
[01:10:51] Tom Hardin: a felony, so. So I pled guilty to securities fraud there. Okay. And conspiracy to commit securities fraud. The sentencing guidelines is based on the money my firm made, just over a million.
[01:10:58] So I was looking at three years in prison, had I not cooperated. It depends on the judge you get, and you can check judge ratings online to see if they're pro defense or pro prosecution. She is pretty neutral. And so we felt pretty good that hopefully I wouldn't get prison, but Judges sometimes, especially with like, Occupy Wall Street was big, like, let's make an example of these people.
[01:11:17] Like, I'm sorry, but you're still going to have to do six months or something just because I have to make a statement to these people in Zuccotti Park that are like, burning it down. Right. That you're not going to get off. And so, they prosecuted all these insider trading cases, but famously never went after the mortgage fraud and all that, because those are harder cases to explain to a judge.
[01:11:32] Insider trading, this guy called this guy a scapegoat. Okay,
[01:11:34] Jordan Harbinger: that's easy. Right, the jury can wrap their head around it. As opposed to like, yeah, what happened was, here's 16 different parties that were all kind of complicit. Yeah. And you're explaining that to somebody. Like
[01:11:43] Tom Hardin: the big short soliloquy when you're trying to explain that to the jury, like.
[01:11:46] Jordan Harbinger: good luck. Did you have to testify in
[01:11:48] Tom Hardin: court against any of the prosecutors? I never did. I was called in and prepped a few times to testify, but these people eventually, I think most of them, Most of them actually became cooperators themselves. The few that went to trial, we prepped for that. But they were eventually, I think, pretty much all found guilty.
[01:12:01] Like 85 people were found guilty. And then there was 32 cooperators like me of the 85. So
[01:12:07] Jordan Harbinger: quite a few people wore the wire, but I got
[01:12:10] Tom Hardin: credit with building 85 cases. So I was one off or two off from the major individuals, but because they got them because of me, so you get credit. And to the FBI's credit, they wrote me a very nice, what's called a 5k letter at my sentencing.
[01:12:23] This is the bad stuff he did, but this is the good stuff to have some balance on this, going into sentencing. Sentencing didn't happen until, like, almost seven years after the FBI approached
[01:12:32] Jordan Harbinger: me. It took a long time. Oh hor I want to highlight that, because... Seven years, let's say six, seven years. So the whole time during that time, you know that you're in trouble, but you don't know whether you're going to prison at all, whether it's going to be three years, whether it's going to be probation.
[01:12:47] You just have no idea. And you spend the better part of a decade just losing sleep over
[01:12:53] Tom Hardin: that. Just waiting. So 2010, Tipper X is Tom Hardin. So forget applying for a job because you have to check the box. Yes, I have a felony. I'd fill the whole thing out. Please explain. I was Tipper X. I was doing the noble thing, the patriotic thing.
[01:13:06] And they're like, but you still have a felony conviction. Nope. Non starter. I might need some
[01:13:09] Jordan Harbinger: time off after I start. Why? Oh, I may be going to federal prison for one to three
[01:13:14] Tom Hardin: years. But just hire me. It'll look great. Mr. and Mrs. Employee, if you hire me and that's in the newspaper that you hired me, that'll look great for you.
[01:13:20] Right. So HR always got in the way. My lawyers like start your own company. So before Amazon FBA was a thing, I got into like, Oh, Alibaba, you could buy these placements there and sell them on Amazon for a lot more. And so it started like I was sort of one of the pioneers that I didn't stay with it with the FBA phenomenon that people are familiar with on Amazon.
[01:13:37] Yeah. And then my Alibaba supplier started hijacking my listings. And then a week later, so this is years later in 2015, the FBI 2016, actually the FBI invited me to speak. I was sentenced in 2015 to no prison. It's called time served because of my cooperation and the judge is basically, it's been almost seven years.
[01:13:57] What's the point of six months in prison?
[01:14:00] Jordan Harbinger: Plus, I would have liked to think they went, Oh, we've already tortured this guy psychologically. Yeah. The entire investigation, the entire period waiting for sentencing. If he's going to do it again, he would have done it already, and he's not in a position to do it again anyway.
[01:14:13] Tom Hardin: And I didn't look healthy. I was an emaciated ultra marathon runner. I'm sure. They're like, this
[01:14:16] Jordan Harbinger: guy's going to freaking croak in prison. We don't need that. This guy's running a
[01:14:19] Tom Hardin: hundred miles a week. There's something wrong with him.
[01:14:21] Jordan Harbinger: Yeah. So the employments of the job search. It seems really almost
[01:14:26] Tom Hardin: impossible, of course.
[01:14:27] It's really impossible. It's almost like the white collar fellow not to draw pity. It's almost like worse. Like, I had this incredible upbringing. I should have known what I was doing was wrong versus a violent criminal born into a terrible life situation with one parent or no parents, kill someone. You can almost forget the 15 year old that did that and 20 years later they're out of prison and restoring their life.
[01:14:46] And there's many programs that re acclimate people like this into society that build businesses. And so. But the white collar guy, Wharton, like, like he should have known better. So it's almost like the stigma. I don't want to say it's worse, but it's, you should have known better. I think so. Yeah.
[01:14:59] Jordan Harbinger: I know. I get what you mean.
[01:15:00] Are you allowed to trade at all? Can you buy and trade stocks on your own or not at all?
[01:15:06] Tom Hardin: Yeah. So I can't have any personal brokerage account in my name. Oh, okay. And the only thing that I can trade is actually crypto. I did not totally legit above board market, no crimes happening there. And so I don't even touch it because I know if the sec is not focusing on that, they're going to look at, if I was trading crypto, they'd probably look at, Oh yeah, I can, through my speaking business, I can have an ETF only account.
[01:15:27] In my wife's name at Vanguard, so you just think about owning the S& P 500. Right. Mutual funds. Can't pick stocks. Yeah, exactly. Cannot pick single stocks. And so I think I'd be too nervous to ever be back at that when it comes to all time trade.
[01:15:39] Jordan Harbinger: Yeah, that's, the crypto thing makes sense, right? You don't want the SEC going.
[01:15:43] Aha, well, we're gonna go back and make an example out of, oh, we have a guy who already got in trouble for this. And then the judge goes, let me get this straight. You did this, and now you're doing this? Like, you just talk about federal prison.
[01:15:55] Tom Hardin: Yeah, yeah, yeah. No, that's, uh, recidivism. Yeah. Yes,
[01:15:57] Jordan Harbinger: super, super scary.
[01:15:59] I assume there were other people that you knew were insider trading, never got caught. I mean, you kind of mentioned earlier in the show, there was that one guy who made millions of dollars doing that. How many of those guys do you think you know,
[01:16:10] Tom Hardin: if you had to just ballpark guess? Right, um, so I think there was 85 people, give or take, charged.
[01:16:16] In my mind, the three worst people were never charged. Oh, wow. One of the three is the swimming pool guy. I think what happened is they were managing smaller hedge funds, and so the dollar amounts on the trades did not correspond to the federal sentencing guidelines. So the more money you make, the longer in prison you go.
[01:16:33] And so in terms of the FBI and the maximum impact, I guess, on prison sentences. And that's if you're managing a 5 billion hedge fund like this guy Raj Rajaratnam, he made a lot more than a few million, made hundreds of millions. And so that's a longer prison sentence versus these smaller players who had more well timed trades I feel like than anybody just because it was dollar amounts that were smaller than some of the bigger fish.
[01:16:56] Mm hmm. Or they got nobody to cooperate on them. So I feel like even though they got 85 people, like the three worst, I kept checking for their names years later. Where is it? And a lot of it was like, I went through the why me for 46, 000 and why not the swimming pool guy. And again, my wife, unbelievable, like tough love.
[01:17:13] Hey, is that getting you anywhere? Hey, did you find a job? Are you looking for these, uh, you're crying about that guy. Oh God. That is tough. Yeah. The one decision I made. It was good, was, we got married,
[01:17:22] Jordan Harbinger: so. Yeah, it sounds like it. Yeah, I think you're, you got pretty lucky there, uh, big time. She might have also really wanted to divorce you, but is Catholic and was like, fine, I won't.
[01:17:34] Yeah, yeah, now she probably is glad that you guys are married. You seem like a
[01:17:37] Tom Hardin: nice enough guy. Yeah, yeah, we try, we try to be 18 years now, so we
[01:17:40] Jordan Harbinger: try. Yeah, yeah. Do you feel bad at all about what you had to do? I mean, it's probably kind of a dumb question, but I, you know what I mean? Yeah,
[01:17:47] Tom Hardin: yeah, no, I know what you mean.
[01:17:47] I. I think I struggled over the years, even when I started speaking. So just since the 2015 to no prison, I was a vegan ultramarathon runner and a mutual friend of ours, Rich Roll, the producer reached out and said, this would be a great episode. The first time I ever bared my soul was about a week after I was sentencing on Rich's podcast.
[01:18:04] Yeah, you could, you sounded
[01:18:06] Jordan Harbinger: different on that show. I listened to it recently because I was talking to Rich about it. I said, Hey, I'm meeting Tipper Axe in New York. And I listen to your show. You sounded like a really scared child.
[01:18:16] Tom Hardin: Yes. Yeah. It was, like, I don't want to be too polished today. And I think I, to your point, no, don't worry.
[01:18:24] This is pretty terrible. Yeah. Yeah. Yeah. So, so, um, so that was like eight years ago, 2015, the FBI agent who was the boss of the guys I work with heard that episode because he was also a fan of the podcast. Months later, I guess he listened to it, 2016, they call, and I see it's a restricted number. I'm like, this cannot be them again.
[01:18:42] This cannot be, when the FBI calls you, it's sort of like, it doesn't say the FBI. And no caller ID. Something like that. So I'm like, it can't be. And I'm making coffee, my wife's in the kitchen, stayed with me, and I call him, like, uh, hello? Like, hey, it's, uh, so and so from the FBI. And my wife can see my expression, like, it's them, and she's probably thinking, what the hell did you do now?
[01:19:01] Yeah, what'd you do
[01:19:01] Jordan Harbinger: now? How did, were you even in a position to screw this up? Was it
[01:19:04] Tom Hardin: the Napster? So. Told you not
[01:19:06] Jordan Harbinger: to download those movies on
[01:19:08] Tom Hardin: BitTorrent. Exactly, exactly. And so he's like, I heard you on Ritual, great interview. You know, Tom, you were the youngest guy we charged back in those 85 cases, and the 46, 000 was the lowest.
[01:19:19] I was thinking, are you calling to rub it in? Like, I wasn't good at it. I was trying not to get caught. And they're like, that's the whole thing. It was a very human story. Could you come talk to our rookie agents? We're building some new cases again around insider trading in 2016, just about what was it like when they approached people on the street dropping off their dry cleaning?
[01:19:34] So the first thing I said, well, you shouldn't tell them not to hire an attorney. Oh, sorry, we said that. So, okay. But they're playing a game. They're just trying to build cases. Oh, we didn't say that.
[01:19:41] Jordan Harbinger: I don't, I don't remember that. I would never do that. That seems
[01:19:44] Tom Hardin: unethical. So the FBI invites me to speak. So I figure I have nothing to lose.
[01:19:48] I have nothing else professionally going. Alibaba is hijacking my Amazon FBI business. Like, all right, I got nothing. When
[01:19:53] Jordan Harbinger: you say Alibaba, is that? Okay, you're buying widgets on Alibaba and you're flipping them on Amazon for a markup, and then the seller goes, Oh, I'll take that
[01:20:01] Tom Hardin: myself. I'll take the buy box for a dollar or less or whatever.
[01:20:03] Yeah. Yeah, yeah, yeah. So it's not coming to me. Yeah. Copy your sales copy. Exactly. And so the FBI might speak. So to your long answers, uh, so I speak very dark presentation, like still felt like a piece of shit, like awful. And they're like, go make lemonade lemons is a great story. So I start speaking for free for months at like libraries, like chambers of commerce, where it's like, Four eighty five year olds give me a clap or whatever.
[01:20:24] Yeah. Just to get practice. Cause it's like the worst thing I've ever done. Telling people every week now. I felt a lot of shame and guilt. And so like shame, just to think about this, I didn't think about the difference. Shame's I'm a terrible person. Guilt is, I did a bad thing. And my penance. Maybe it's some of my Catholicism is to go talk about it every week.
[01:20:42] And I didn't realize the difference until someday, maybe a year into speaking, they were like, that was really dark. Are you okay? And the event planner at a conference is like, it was great. It got great reviews, but as an event planner, I always want to make sure the speaker's okay. Like you never want the audience to feel like.
[01:20:56] Bro. Yeah. You still have to work some things out. Yeah. Yikes.
[01:21:00] Jordan Harbinger: Make sure that guy, give him a gift card for some therapy after the, uh,
[01:21:03] Tom Hardin: after the And I never talked to a doctor or anything about this. Just my wife. And a priest, right? And a priest. Yeah. Yeah. And a lawyer. And so I was dealing with the shame and the guilt.
[01:21:11] I still have guilt for what I did because I think, like, at this point Not that I've cleaned up my reputation, but I do have a new reputation as a speaker, and I've had to have some professional opportunities to go, Hey, could you come be head of training for our consultancy? Because yeah, you have your story, but you're such a good trainer and hit people.
[01:21:26] Like, I've actually have opportunities now to do something professionally. So checking the box, the felony is not so much there. But the guilt for me holding myself accountable every week now for seven years. It's important to me and it's not so much, I don't think like, I think I'm happy doing it, but happiness is probably the wrong word.
[01:21:40] I just feel like I wanted to go to the grave and think about like, what are people going to say in the end? Like, is it going to be the four stock tickers? Right. Or hopefully I'm 45, hopefully I'm 60 or something and still telling a version of this story and doing it. It's like the second career. So that keeps me going.
[01:21:54] But the guilt always keeps me going. It's like a flickering flame about, I just don't want somebody when I speak to especially universities, they're never going to forget it. And I want them to feel like. If you're at that crossroads of going left or right, or the proverbial Rumi Khan calls you in your career, this is, I remember this guy's story, and, oh, I'm saying everybody's doing this, whatever, oh yeah, he talked about that, it's not worth it.
[01:22:16] Jordan Harbinger: wow, interesting. If you could go back... And not do it and then just stay a stock picker working a hedge fund. Would you
[01:22:22] Tom Hardin: take that chance? I miss the intellectual stimulation of that career. There was nothing like talking about the markets. What happened overnight in Asia, Europe, how it was going to impact the portfolio.
[01:22:31] The people that you're surrounded with there are like some of the smartest people in the world. So I miss that intellectual stimulation. So I do. Missed that line of career because it's really hard to transfer the skills without felonies or not stock picker going to do something else. Amazon FBA, like, isn't it really transferable, right?
[01:22:48] Like analyzing businesses and that. So, but I kind of look at it now, like it was terrible to go through, but I'm happy. I think I'm happy it happened. Like they stopped me after four trades. What if it was five years and four trades a year, 20 trades, more than 46, 000. They stopped me when they did. They knew they could probably flip me.
[01:23:04] And then they called me years later and said, come talk about it. And so I think, I don't want to be cliche. Everything happens for a reason, but I think there's a reason they stopped me to, to put me on this path. It had to
[01:23:14] Jordan Harbinger: be kind of a process to realize that your whole life is not defined by this one choice, like the
[01:23:17] Tom Hardin: priest told you.
[01:23:17] Yes, it took years. I couldn't have. 2010 Tipper X was revealed. I couldn't have said, okay, let me start doing the, uh, corporate training circuit a few months after that. Now my name is out because I felt terrible going through the shame. Those were tough years. Yeah. I wasn't ready to go talk about it or I didn't understand why I did what I did until I spoke at the FBI.
[01:23:37] And they're like, go read this Daniel Kahneman, he, he got a Nobel Prize about this stuff, sort of system one and system two, thinking how you can react or how you don't, don't react, or go read Daniel Ariely, why do good people do bad things? Like, that's one of his TED talks, whatever, Dan's got fantastic YouTube talks about why do good people do bad things.
[01:23:53] And like, the two Dan's, at least going through their first two books, I'm like, Not that I felt better, but I'm like, I'm not the only one that rationalizes in the effort. Like you're certainly not. No. And if I'm willing to do the work to understand the psychology behind it, that's where the presentation, the training really comes in.
[01:24:07] Because the story is not going to get younger, but it's the decision making that never changes really.
[01:24:13] Jordan Harbinger: I'm on the fence on saying this on the show, and I don't know if you know the answer, but okay, let's say you know back then a bunch of people who are insider trading. Couldn't you just copy their trades?
[01:24:22] Is that then insider trading? If you suspect they're doing something shady, but you don't have the information, you just copy their trades, and your fund is you copying trades from people who you suspect have insider information, is that enough to get you in
[01:24:35] Tom Hardin: trouble? Technically it's legal. Yeah. If you're trading contemporaneously at the same time, if you're mirroring, shadowing these trades.
[01:24:42] You're going to get that phone call, at least from the sec. And if they say, why are you doing it? Oh, I just copied these other funds. So I know those
[01:24:49] Jordan Harbinger: guys all do well. Yeah. I wouldn't say I suspect they're inside, but those guys always do well. I
[01:24:57] Tom Hardin: just these. You're putting yourself in the position to open yourself to investigation at your firm.
[01:25:01] So your general counsel will come in and say, Oh, we've got millions of legal fees because, uh, What were you doing if you're a
[01:25:06] Jordan Harbinger: But what are my returns like? Yeah, exactly, exactly. That's the problem, right? This is not legal advice, kids. This is the ROI, yeah. I'm just thinking out loud, okay. Yeah. Well, thank you very much, man.
[01:25:15] I really appreciate you coming in and baring your soul a little bit here on a podcast in front of a lot of people that Say not very nice things to you on Twitter as a result or email. I think most people would appreciate this kind of
[01:25:27] Tom Hardin: thing No, thanks for having me on Jordan. Anybody wants to reach out?
[01:25:30] I totally own my story now It's tipper X comm and I'm on all the socials. I am tipper X. Sometimes people call and they're just saying I'm going through this at work Something's going down. I'm happy to chat. I've heard a lot of
[01:25:40] Jordan Harbinger: stories. So I bet. So now you train ethics. Yeah. You want to plug that?
[01:25:44] Tom Hardin: Tip rex.
[01:25:45] com is the website has all my information there. Usually what will happen is in a regulated industry, the chief compliance officer will have this annual training every year, which I'm sure people listening have been through check the box training or watch super video. Yeah. It's so boring just to show the regulator what an industry does.
[01:26:00] We have this training, we have to do it. And so I come in, share the story that you heard today, but customize it for the client. If it's a financial services firm or healthcare, there's a lot of rules and laws you can't cross the line. How do you rationalize it? And I go in and share the story. Um, and it's usually like an hour or more than that.
[01:26:17] Sit down, fireside chat, sometimes really customize it. So do that. And I'm also a conference speaker, usually the right before drinks with the interesting life story, just to. So as I saw that swimming pool story at the conference and it's uh, yeah, that's
[01:26:29] Jordan Harbinger: a good visual, right? You awkwardly playing catch with a tennis ball, a wet tennis ball in some empty house in the middle of
[01:26:36] Tom Hardin: upstate New York.
[01:26:37] Yeah. Yeah. I have some slides in my PowerPoint to have the picture, not the actual pool, but. Yikes.
[01:26:43] Jordan Harbinger: Yikes. Well, thank you very much, man. Really, really appreciate
[01:26:45] Tom Hardin: you. Appreciate it.
[01:26:48] Jordan Harbinger: All things Tom Harden will be in the show notes at jordanharbinger. com, or you can ask the AI chat bot on the website.
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