One former U.S. prosecutor on the Santoro case acknowledged that von Habsburg’s motives seemed typical of informants. “There are quite a few people who like having contact with the F.B.I.,” the attorney said. “It makes them feel important to turn people in. They like living in this mysterious world. I would put him in that category. And maybe he felt that if he did things wrong they would protect him.”

Grimm said that he worked only sparingly with von Habsburg during Wooden Nickel. “He seemed very animated,” Grimm told me recently. “He dressed boisterously, if you will. He was a bit odd. I think he had an accent.” Grimm said that he doesn’t recall the C.E.O.’s case, and that he was careful to maintain his distance from von Habsburg. “I remember trying to vet out who he was,” Grimm said. “I remember that I didn’t feel like I had enough on this guy to work that closely.”

As Steven Rambam, the private investigator, looked into von Habsburg for the Santoro trial in late 2005 and early 2006, he interviewed von Habsburg’s mother and brother, his estranged father, and dozens of other acquaintances and past fraud victims. The prosecution eventually turned over documents about von Habsburg, including parts of his F.B.I. informant file, his rap sheet, and a letter noting that, in addition to his arrests, he’d committed assault and extortion, sold counterfeit goods, and collected drug debts.

Santoro’s lawyers prepared to use what Rambam had gathered to claim that von Habsburg had entrapped their client on behalf of the F.B.I. According to the defense, an unsupervised informant had goaded an innocent lawyer, desperate and prone to making empty boasts, into the eager arms of Michael Grimm. One audiotaped conversation between Grimm and Tommy—an F.B.I. confidential informant who supposedly dealt steroids and whose money was given to Santoro—recorded the F.B.I. agent saying that he’d “caught” Santoro contradicting himself and making things up about his past.

The U.S. Attorney’s office planned to argue in response that no one had enticed Santoro into breaking the law. He had claimed that he knew how to launder money, and Grimm had merely given him the opportunity to do so. Grimm told me that the tapes put Santoro’s guilt beyond doubt. “He explained how he did his money laundering,” Grimm said.

Still, the prosecution team and the F.B.I. seemed determined to keep von Habsburg as far away from the case as they could. When Litman, Santoro’s lawyer, announced that he planned to subpoena von Habsburg to testify, the prosecutors argued that they couldn’t find him. When Rambam, accompanied by a defense lawyer, rang the bell of von Habsburg’s SoHo apartment to serve papers, the U.S. Attorney’s office sent a letter accusing him of harassment. Rambam created a Web page seeking information on von Habsburg, but the F.B.I. contacted his Web-hosting company, he said, and had the page taken down. The defense discovered court documents showing that Josef von Habsburg had jumped probation in Florida—resulting in an arrest warrant that remained open for nearly twenty-two years—but, after the U.S. Attorney’s office coördinated with a Florida lawyer recently hired by von Habsburg, a judge voided the probation and withdrew the warrant.

In July, 2006, Rambam was preparing to give a talk about privacy and investigative techniques at the Hotel Pennsylvania in New York City when four uniformed F.B.I. agents approached him. He was handcuffed and taken to Brooklyn’s detention center and charged with obstruction of justice. A federal complaint accused Rambam of witness intimidation and falsely identifying himself as working for the F.B.I. during interviews with the parents of von Habsburg’s partner Michelle. A Washington Post headline read, “AGENTS ARREST BACKGROUND SPECIALIST AT HACKERS FORUM.” After forty-eight hours in jail, Rambam, who denied the charges, was released without having to post bail.

“The government has acted in a very unusual manner,” Judge Thomas Griesa told the lawyers in open court in late July. “I’ve never heard of this before. You’ve arrested the defendant’s investigator.” Not long afterward, as the deadline to indict Rambam neared, the U.S. Attorney’s office dropped the charges against him in New York; then the U.S. Attorney’s office in California refiled the charges. Two months after that, those charges were dropped as well.

By mid-2006, Michael Grimm had left the F.B.I. But he was still a key witness in Santoro’s trial, and the defense team began looking into his background, too. They were particularly interested in following up on a tip that another lawyer had given to Litman. Several years earlier, the lawyer said, Grimm had been involved in an altercation at a popular West Indian-themed night club in Queens called Caribbean Tropics, during which he was accused of misusing his F.B.I. authority. Litman sent Steven Rambam to look into the matter.

Just as Rambam began gathering facts on the incident, however, prosecutors ratcheted up the pressure on Santoro to settle. For months, F.B.I. agents had been tailing him while he was out on bail and contacting his clients. Santoro said that one prosecutor threatened to bring his ailing parents into the case.

Nearly ninety per cent of federal indictments result in a guilty plea, and so, in the end, did Santoro’s. He pleaded to “operating an unlicensed money-transmitting business.” “The amount of time that he was facing if he went to trial and lost was monumental compared with what he ended up pleading guilty to,” Todd Terry, Litman’s co-counsel, said. (Litman died last year.) “Even if we did win this case, they were taking it very personally, given that they’d arrested Steven on obviously bogus charges. There was a risk they would keep coming after him and tear his life apart forever.” The judge sentenced Santoro to eighteen months in federal prison.

Santoro’s conviction was one of fifty-six associated with Michael Grimm’s undercover work in Operation Wooden Nickel, which brought in more than a hundred million dollars in fines.

The scrutiny that accompanied von Habsburg’s role in Wooden Nickel seemed to unhinge him. By the end of the case, his friends said, he was besieged by paranoia, and had wired his apartment with a bank of cameras. One morning in January, 2009, the von Habsburgs got into a drunken argument that prompted Michelle to call 911. Von Habsburg shouted at the police that he had connections to the F.B.I. and to Mayor Michael Bloomberg. The couple were arrested for child endangerment, but they soon entered counselling and the case was sealed. In March, 2009, the Oakland County, Michigan, prosecutor’s office, after years of Marianne’s petitioning to obtain child support from von Habsburg, issued a warrant for his arrest. That summer, the von Habsburgs were evicted from the SoHo apartment, owing thirty-five thousand dollars. They left no forwarding address. In early 2010, a Detroit News article broke the story that von Habsburg, a.k.a. Josef Meyers, was both an F.B.I. informant and among Michigan’s biggest deadbeat dads. After receiving no response from the F.B.I., the Oakland County sheriff’s office approached the U.S. Marshals to help bring him in.

Shortly afterward, I met Rambam in a restaurant across from von Habsburg’s old apartment. He was working pro bono on behalf of law-enforcement authorities in Michigan to find von Habsburg. He had promised Marianne that he would help her get child-support money from her estranged husband—and he also wanted to get back at the F.B.I. for, he believed, trying to intimidate him during the Santoro case.

“My first stop is always the last known address,” Rambam told me. He went across the street and rang the doorbell, where the current tenant reported that U.S. Marshals had already visited. Rambam then began crisscrossing SoHo, showing von Habsburg’s photograph to clerks and waiters. Eventually, he stopped by a local eyeglass store. The manager recognized von Habsburg and said that he came in often to have his glasses repaired.

Within a week, U.S. Marshals, acting on information gathered by Rambam, had found von Habsburg hiding in a closet in a one-bedroom apartment in Battery Park City, and he was extradited to Detroit. When I reached him by phone in custody, he at first seemed eager to discuss what he called his “agency relationships.” But, in a video chat at the jail the following day, he instead asked me to submit questions in writing. When I did, he never replied.

Rambam believed that von Habsburg would still somehow avoid prison. He enumerated all the instances in which von Habsburg had been aided by his association with the F.B.I.: from the time he dodged prosecution for cocaine dealing to the slap on the wrist he got for forging a hundred-thousand-dollar check to the withdrawn warrant in Florida.

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While awaiting sentencing for failing to pay child support, von Habsburg requested that the probation officer writing his pre-sentence investigation report contact Judge Sullivan. There is no evidence that the officer ever made the call, and neither Sullivan nor anyone from the F.B.I. showed up for von Habsburg’s mid-August sentencing. But both P.I.s did, along with Marianne and the three children from von Habsburg’s first family. A sheriff’s deputy brought von Habsburg into the courtroom in hand- and leg-cuffs and the standard-issue navy jumpsuit. He looked paler and thinner than when I’d first seen him, at his extradition hearing in New York. His two Michigan daughters, aged twenty-one and nineteen, testified. “You are nothing to me,” the nineteen-year-old said, turning to him from across the courtroom. “You are a filthy excuse for a father.”

The judge declared von Habsburg to be “not a good candidate for probation” and sentenced him to three and a half years in prison. “Good luck to the family,” she said.

Michael Grimm found himself on a more auspicious path. He is now featured regularly on cable news, and he was recently chosen to chair the House Republican Policy Committee’s Task Force on Foreign Policy. When I spoke to Grimm’s former F.B.I. colleagues, some applauded his undercover work, which also included public-corruption investigations in New Jersey and Florida. “I wouldn’t question his integrity,” Lawrence Ferazani, an agent who worked closely with him, said. “And he never, ever challenged the rules.” Others were taken aback that he had used his career as an agent to help him gain higher office. “He was not thought of very highly,” one former agent told me. Another agent called Grimm “a very good undercover” with “a big ego.” “He was an F.B.I. agent whom I would classify as a maverick,” he said. “Mavericks bring you big cases, and they can bring you big trouble.”

During Grimm’s congressional campaign, an F.B.I. spokesperson publicly chastised him for using Bureau imagery in his political ads. Recently, James Margolin said that Grimm’s contention to Van Susteren—which he repeated to me—that he was the first successful undercover agent on Wall Street was false. “Maybe he just doesn’t know the history,” Margolin said.

Not long ago, I finally found information about the night-club altercation that Santoro’s lawyers had been looking for when he pleaded guilty. It involved a lawsuit filed in the summer of 2000 against Grimm by a Guyanese-American former N.Y.P.D. officer named Gordon Williams. This winter, I spoke with Williams about the incident. “It was one of those days that I will never forget,” he said. “You lose a loved one and you remember the day. It was like that.” When I spoke with Grimm later, however, he declared that Williams’s account is a fabrication, that he had acted with professional probity, and that he had been cleared of any wrongdoing.

On July 10, 1999, Williams said, he was working off duty at Caribbean Tropics. Shortly after midnight, Michael Grimm walked in with a woman of Caribbean descent. The woman’s estranged husband, who is also of Caribbean descent, was at the club and confronted Grimm. The two men began to argue. Williams escorted Grimm away. Williams recalled, “He said to me, ‘Thanks a lot man, he don’t know who he’s fucking with.’ Then he said something frightening. ‘I’ll fuckin’ make him disappear where nobody will find him.’ ” (Grimm calls this allegation “insane.”) After that, Williams said, Grimm and the woman left, as did the husband.

Around 2:30 A.M., there was a commotion on the dance floor. According to Williams, somebody was shouting, “He’s got a gun!” Following a crowd into the club’s garage, Williams discovered that Grimm and the husband had returned, and Grimm was holding a weapon. Grimm was “carrying on like a madman,” Williams said. “He’s screaming, ‘I’m gonna fuckin’ kill him.’ So I said to him, ‘Who are you?’ He put the gun back in his waist and said, ‘I’m a fucking F.B.I. agent, ain’t nobody gonna threaten me.’ ” (Grimm said he only moved his gun from an ankle holster to his waistband.) The bouncer at the front door told Williams that, when he patted Grimm down and found his gun, Grimm had showed his F.B.I. identification. The bouncer then let him pass through the club’s metal detector.

Grimm left the club, but at 4 A.M., just before the club closed, he returned again, according to Williams, this time with another F.B.I. agent and a group of N.Y.P.D. officers. Grimm had told the police that he had been assaulted by the estranged husband and his friends. Williams said that Grimm took command of the scene, and refused to let the remaining patrons and employees leave. “Everybody get up against the fucking wall,” Williams recalled him saying. “The F.B.I. is in control.” Then Grimm, who apparently wanted to find the man with whom he’d had the original altercation, said something that Williams said he’ll never forget: “All the white people get out of here.”

Nirmilla Jitta, a retired N.Y.P.D. officer who was at Caribbean Tropics that night, confirmed that Grimm “left and then he came back.” Grimm, she said, “forced everyone to stay in the club, saying that he was an F.B.I. agent. He was using his authority when he shouldn’t have been.” An employee of the club who was working that night remembers Grimm telling the white people to leave. Grimm “was really aggressive and really violent. You know, you put on a badge and you really think you are above everybody else,” the employee, who is white and who was allowed to depart, said.

No one was arrested, but later that morning Williams was informed that he was being investigated for “interfering with an F.B.I. investigation.” Grimm had told the N.Y.P.D. that Williams refused to help him. After Williams provided his account, the D.A.’s office declined to press charges. But Williams was suspended for moonlighting without department approval. Grimm “should have been arrested,” Williams told me. “People that night were petrified.” He’d filed the lawsuit against Grimm for slander because, “when the N.Y.P.D. and the F.B.I. have a fight, the N.Y.P.D. loses.” The U.S. Attorney’s office successfully filed a motion to shift the case to federal court, claiming that Grimm had been “acting within the scope of his employment.” It then moved to dismiss the suit. Williams chose not to reply, and the suit was dismissed. In 2003, he retired from the N.Y.P.D.

Recently, in his Washington office, Grimm told me that he’d been jumped by his date’s husband and four other men that night. He said that he approached Williams, who had refused to call 911. Grimm said that he then went outside, found a patrol car, and reëntered with the police. Although weapons were not permitted in the club, Grimm said that he’d been carrying his gun the whole night, and had flashed it only when pulling out his badge. As for threatening to kill people, he said, “That’s not my personality. I don’t need to speak that way. A guy with a gun who knows how to use it doesn’t need to say anything.” He denied that he had forced everyone to stay or declared an F.B.I. operation, saying that the N.Y.P.D. had been in charge. He suggested that witnesses may have confused him with the other F.B.I. agent. The police report, he said, would show that he was assaulted and acted with “incredible restraint.” Later, he sent an e-mail adding that the Department of Justice Office of Professional Responsibility had cleared him in an investigation. (I repeatedly asked the N.Y.P.D. about the incident, and attempted to obtain the police report under New York’s freedom-of-information laws, but by mid-April the N.Y.P.D. had turned over no files about the incident; this winter, the Justice Department denied a freedom-of-information request for files concerning Grimm.) “I was a hundred per cent by the book and fully exonerated,” Grimm said.

Albert Santoro served his prison sentence and was released in 2008. The following year, Judge Griesa terminated his supervised release early, so that he could return to work. Santoro moved to Miami, where he got a job as the interim C.E.O. at a helicopter-sales company, and then started his own marketing-consulting firm. He also spent hours with the Consequences Foundation, a group run by Lea Black, the wife of the prominent Miami attorney Roy Black, which steers juvenile delinquents away from jail. Lea Black told me, “He’s a guy that always wants to help people. I think he has learned his lesson that way, and he is committed to keeping other people from having that experience.”

I met with Santoro last year at the Pink Pony, a restaurant on the Lower East Side of Manhattan. Now thirty-eight years old, with shoulder-length blond hair parted down the middle, he said he hoped eventually to reclaim his New York reputation and his law license. He seemed chastened by the experience. “I was guilty of lacking sensible judgment,” he said. But he added that his chance encounter with von Habsburg and then Grimm had cost him years of his life. “This would never have happened, any of it, if I wasn’t in the wrong place at the wrong time and met this scumbag Josef Meyers,” he told me.

“They had this guy out there,” he said. “They didn’t monitor him, they created a crime that didn’t exist.” He had been “broke and stupid, and paid for it,” he said. “But the government is not supposed to be a moral pressure point. They’re not supposed to push you to see how far you will go.” ♦