In a conversation with my friend Mariana van Zeller, I walked through how I ended up in federal prison.
This blog follows that interview, start to finish, in the same order it happened.
This is the written version of that explanation—edited for clarity and relevance for anyone facing a government investigation.
I Didn’t Think Prison Was Part of My Future
I grew up in Encino, California.
Stable home.
Supportive parents.
No financial stress.
No criminal background.
I played baseball at USC. Coaches demanded discipline. If you didn’t show up prepared, you didn’t play. I graduated believing I’d build a conventional professional life.
Nothing in my background suggested prison. That assumption became part of the problem.
Early Success Can Distort Judgment
After college, I became a stockbroker. I worked at multiple firms, including Bear Stearns and UBS. I built a book of business quickly and started making real money in my twenties.
I wasn’t reckless. I saved. I invested conservatively. I didn’t live extravagantly.
What I did develop was confidence—specifically, confidence that I understood risk and could manage it.
That confidence didn’t protect me. It narrowed my field of vision.
The Decision That Started My Bad Decision Making
At Bear Stearns, I entered a partnership with a senior broker. The compensation split was 25% to me, 75% to him. Initially, I accepted it.
Over time, I brought in significant clients. One account alone generated roughly $100,000 per month in commissions. I asked for a better split. He refused.
Shortly after that conversation, I discovered a flaw in the commission system. Trades could be entered under my individual number rather than the joint number.
That meant 100% of the commission came to me.
I used it.
The first time was a few thousand dollars. Then again. Then again. Roughly 15–20 times in total.
I knew it was wrong each time I did it.
I told myself I was correcting an imbalance. I told myself I’d stop. I didn’t tell compliance. I didn’t tell my partner.
This was not a dramatic moment. It didn’t feel criminal. It felt justified.
That’s why it mattered.
Changing Firms Doesn’t Reset Conduct
I left Bear Stearns for UBS with a large bonus tied to transferring my book of business. I told myself I was leaving the problem behind.
I wasn’t.
What followed me wasn’t the firm. It was how I explained my decisions to myself.
The Hedge Fund Client I Should Have Cut Loose
At UBS, I worked with a hedge fund manager I already knew to be aggressive and unreliable.
He transferred approximately $6 million to UBS. Within months, most of it was gone. He then raised additional money. Losses continued.
The commissions were substantial—often exceeding $100,000 per month.
Compliance flagged the account. Meetings were held. Trades were marked “unsolicited.” Management allowed the account to remain open.
No one shut it down.
I didn’t either.
I told myself it wasn’t my role to intervene. I told myself compliance and management had more information than I did. I told myself paperwork protected me.
Those explanations mattered later—just not the way I expected.
The Document That Triggered the Case
The investigation didn’t start because of losses. It started because of a letter.
An investor sent UBS a document on firm letterhead stating that UBS guaranteed the hedge fund’s performance. The letter bore my forged signature.
The hedge fund manager had taken letterhead from my office.
That letter forced scrutiny. Once scrutiny begins, everything before it gets re-examined.
What Not to Do When Agents Show Up
In April 2005, two FBI agents came to my house. They brought binders of emails, records, and internal communications.
I hired a lawyer. I did not tell him everything.
When I spoke to the FBI, I minimized. I denied remembering key documents. I was confronted with emails that directly contradicted what I said.
I lied.
That single decision mattered more than most of the conduct that came before it. It shifted how I was classified in the case.
Silence didn’t protect me. It escalated my exposure.
Cooperation Changes the Math
The hedge fund manager cooperated with the government. He had been doing so for months before I understood what was happening.
I did not cooperate.
In the federal system, cooperation doesn’t excuse conduct—but it does reshape outcomes. That’s not theory. It’s mechanics.
Once that imbalance exists, the case stops being about fairness and becomes about leverage.
Being Fired Isn’t the End—It’s the Beginning
UBS fired me. The stated reason was “inconsistent statements” during internal interviews.
The real consequence wasn’t losing my job. It was losing the ability to control the narrative early.
I pled guilty to conspiracy to commit securities fraud. The Department of Justice issued a press release. My name became permanent.
That’s the part most people don’t prepare for.
Sentencing Is About More Than the Charge
At sentencing, victims spoke. The government asked for 24 months. The judge sentenced me to 18 months in federal prison.
I was allowed to self-surrender.
By that point, the outcome was already shaped by decisions made years earlier—especially the ones that involved silence, delay, and incomplete disclosure.
Wasting Time In Federal Prison
I served my sentence at a minimum-security federal prison camp.
No fences.
No violence.
No chaos.
I exercised. I read. I passed time.
What I wasn’t doing was preparing for release.
That changed when I met Michael Santos.
He had already served decades. He wasn’t focused on prison. He was focused on what comes after it.
He told me to build.
Introspection Is How I Stopped Rationalizing
I began writing daily from prison. Not to explain myself. Not to justify anything. To document decisions without spin.
That writing became Lessons from Prison.
More importantly, it forced clarity. The same clarity I avoided when it mattered most.
What Life Looks Like After Federal Prison
When I was released in 2009, my former career was gone. Licenses were gone.
Rebuilding didn’t happen quickly. It started with the first asset I created in prison.
It happened slowly and steadily.
What I Do Now
Today, I run White Collar Advice and work with Michael Santos through Prison Professors.
We work with people facing investigations, sentencing, and prison.
The work is not advice. It’s preparation:
- documenting facts early
- understanding how decisions compound
- addressing exposure before the government defines it for you
The Relevance If You’re Under Investigation
Most people don’t get in trouble because they set out to break the law.
They get in trouble because they delay, minimize, rationalize, and assume silence is neutral.
It isn’t.
Federal prison wasn’t the defining moment of my case.
The decisions before the indictment were.
Best,
Justin Paperny
Frequently Asked Questions
Why did you go to federal prison?
Because I pled guilty to conspiracy to commit securities fraud.
How long did you serve?
18 months.
Where did you serve?
A minimum-security federal prison camp.
What do you do now?
I work with people facing the criminal justice system.
