Banker's costly pillow talk with porn queen

IT is a modern take on an age-old tale. Prominent boutique banker James McDermott has managed to set Wall Street and the burgeoning United States pornography industry ablaze with his fall from grace late last week. McDermott, 48, apparently let his head be ruled by other parts of his anatomy as he fell into an affair with Kathryn Gannon - hardly an unusual failing in modern American public life. But unlike other high-profile adulterers, this married father-of-two faces a possible 15 years in prison and US$1.25 million (about HK$9.6 million) in fines for a little 'pillow talk' that federal prosecutors are alleging amounts to fraud. McDermott allegedly passed a string of tips to Gannon, better known as porn actress and Internet sex queen Marylin Star, detailing upcoming mergers being handled by his firm. Gannon, 30, moved swiftly into the market, making US$88,000 in profits before passing the information on to another boyfriend, New Jersey businessman Anthony Pomponio, who was able to rack-up profits of more than US$86,000 in deals made before the mergers were announced. Prosecutors claim the act falls neatly into regulations outlawing insider trading and hauled McDermott and Pomponio before New York magistrates. Gannon, already a fugitive from justice in her native Canada, has already fled the US, several reports claim. McDermott was released on US$1 million bail and Pomponio US$50,000. McDermott's lawyers said he was 'shocked by the government's actions'. His former colleagues and the Securities and Exchange Commission, meanwhile, expressed surprise instead at his goings-on. Both McDermott and Gannon were near the top of their respective fields. Until June, McDermott had been chairman and chief executive of Keefe, Bruyette and Woods, a firm which specialises in advising banks on mergers and acquisitions. Known for shrewd but cautious market judgments, he had built an unblemished record in a 25-year career. He lived in a mansion in the swank Briarcliff Manor suburb of New York and had an outwardly happy marriage and two teenage daughters. His market wisdom had seen him develop a second role as a leading television pundit and in June he left the firm to consider a move to another well-known Wall Street bank, Allen and Co. The two had reportedly settled on terms and were finalising paperwork when he surrendered to the FBI on Tuesday. Gannon, meanwhile, was living the high life in Miami after a career that had seen her go from stripper to porn video actress to Web site operator. She marketed her own range of sexual aids and charged fans at least US$600 to appear in one of her movies in a trade that put her in touch with rock stars as well as Wall Street. Often bragging of her connections in the financial world, her affair with McDermott ran from June 1997 to September 1998, according to investigators. They allege he transferred US$37,000 to her during that time, including some from a joint cheque account he held with his wife. 'Marylin is a loving, trusting person,' said Marc Medoff, president of the Manhattan-based Adult Press Service, 'but her PhD is in pornography, not high finance.' If Los Angeles' highways are the capital of 'road rage' then its shopping centres have been the first to log a new phenomenon: 'Santa anger'. The Christmas rush all became a bit much on Friday for one unidentified Santa Claus at the suburban Westfield Shoppingtown Promenade Mall when confronted with yet another bawling toddler. Kelly Fornatoro, 33, suggested the Santa put his arm around her 19-month-old son to stop him crying, the Associated Press reported. Ms Fornatoro said when she went to pick up the youngster, he asked whether it was 'worth it'. 'Was it worth it for you to torture your child for a picture? You must be an evil person.' When she warned she would file a complaint over his attitude, he continued: 'You can complain about me if you want, but I am Santa Claus. I am the best person in the world. I am good.' With that, Ms Fornatoro suggested he really should not have a job around children, and Santa apparently finally lost his temper. 'He started to rip off his clothes. He took off his beard, his wig, his coat and his belt,' she said. Other parents and children stood in line in stunned silence. Some parents covered the eyes of their children as Santa was subdued by security guards and quietly led away for another to take his place immediately.