60 Minutes - Sunday, August 28, 2016

Episode Date: August 29, 2016

The U.S. has become one of the most popular places for foreigners to hide dirty money. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

When I found out my friend got a great deal on a designer dress from Winners, I started wondering, is every fabulous item I see from Winners? Like that woman over there with the Italian leather handbag, is that from Winners? Ooh, or that beautiful silk skirt, did she pay full price? Or those suede sneakers? Or that luggage? Or that trench? Those jeans, that jacket, those heels, is anyone paying full price for anything? Stop wondering, start winning. Win anyone paying full price for anything? Stop wondering. Start winning.

Winners find fabulous for less. Why do fintechs like Float choose Visa? As a more trusted, more secure payments network, Visa provides scale, expertise, and innovative payment solutions. Learn more at visa.ca slash fintech. The man in the gray coat with a German accent is an undercover investigator posing as the representative of a fictitious African minister who wants to bring millions in questionable funds into the U.S.

If it's not in his name, then he needs what is known as a straw man. It's part of a hidden camera sting operation to see how willing American lawyers might be to offer advice. So we have to scrub it at the beginning if we can, or scrub it at the intermediary location that I mentioned. There's a clear pitch consistently presented in every one of these tapes of what amounts to an incredible

number of red flags that scream corruption. Dirty money. Dirty money. Skylar Baylor seemed to be a young woman who had it all. Outstanding grades, admission to Harvard. For Harvard. And a top spot on their women's swim team. Plane two, Skylar Baylor. Skylar still swims for Harvard, but he's now on the men's team, welcomed by his classmates as an openly transgender athlete. How different are you if I had met you a couple years ago and then saw you today? Physically, you'd say, yeah, you might not recognize me. You look that different. I'd say so, yeah.

I'm Steve Croft. I'm Leslie Stahl. I'm Bill Whitaker. I'm Scott Pelley. Those stories tonight on 60 Minutes. Welcome to Play It, a new podcast network featuring radio and TV personalities talking business, sports, tech, entertainment, and more. Play it at play.it. If you like crime dramas and movies with international intrigue, then you probably have a basic understanding of money laundering.

It's how dictators, drug dealers, corrupt politicians, and other crooks avoid getting caught by transforming their ill-gotten gains into assets that appear to be legitimate. They do it by moving the dirty money through a maze of dummy corporations and offshore bank accounts that conceal their identity and the source of the funds. And most of it would never happen without the help, witting or unwitting, of lawyers, accountants, and incorporators, the people who actually create these anonymous shell companies and help move the money. In fact, the U.S. has become one of the most popular places in the world to do it.

Last January, with the help of hidden camera footage, we showed how easy it seems to be to conceal questionable funds from law enforcement and the public. You need look no further for evidence than the changing skyline of New York City, where much of the priciest residential real estate has been snapped up not by individuals, but by anonymous shell companies with secret owners. There's nothing illegal about it as long as the money's legitimate, but there's no way to tell if you don't know who the real buyers are. It's one of the reasons that Global Witness, a London-based non-profit organization that exposes international

corruption, came to New York City in 2014. It wanted to see how helpful U.S. lawyers would be in concealing questionable funds. This hidden camera footage was shot in law firms across Manhattan without the lawyer's knowledge by the man in the gray coat with the German accent. So it's Ralph. Ralph Kaiser. Ralph Kaiser is not his real name. He's an investigator for Global Witness, posing here as the representative of a government official from a poor West African country who wants to move millions of dollars in suspicious funds into the United States. And he needs the lawyer's help. Can I tell you what country, what ministry this is? I can't tell you. It's one of those mineral-rich countries in West Africa.

There are not so many. Attorney Gerald Ross and the other lawyers were told secrecy was essential because the African minister had amassed his fortune collecting special payments from foreign companies that he'd helped obtain valuable mineral rights. So companies are eager to get hold of rare earths or other minerals. Yes. And so they pay some special money for it. I wouldn't name it bribe. I would say facilitation money.

Kaiser said it was all legal. He told attorney James Silkenot and other lawyers that the minister was shopping for a townhouse, a jet, and a yacht. But his name must not be connected to the purchases. If his name now would appear in connection with buying some real estate here and other items, it would look at least very, very embarrassing. Right, because presumably his salary and wherever it is would not cover the kinds of acquisitions he's been doing.

For sure, that's the salary of a teacher here. And so how can we make sure that he is being able to buy property here and to live a nice life, but his name being out? Right. Any guesses as to how much money we're talking about for the brownstone and the other items? I mean, for the brownstone, we're talking about $10 million. For a secondhand guy stream, I could imagine $10, $20 million. A yacht would be at least $200, $300 million.

The fictitious story of the African minister was cooked up in Global Witness's London office based on an actual money laundering case. The investigator phoned 50 New York law firms with experience in private asset protection. It managed to get face-to-face meetings with 16 different lawyers in 13 firms. I'm very frank. It's, I would say, gray money. I think somebody told me, you name it, black money. Global Witness says the pitch was intentionally designed to raise red flags and to give the lawyers good reason to suspect that the minister's millions came from official corruption.

And they all did. It's only that the money is a bit... Tainted. Tainted. Okay, that's a nice word. Okay. Or you gave another expression. Honest graft.

Honest graft. Okay, fine. So I have to be frank. It's honest graft. Honest graft. Okay, fine. So I have to be frank. It's honest graft. How would you name it? Some people call it bribe. How do you name it bribe? It's a business deal.

Okay, bribe. It's actually bribe. You know, the story of the fictitious African minister would probably have raised eyebrows for the average person on the street. Charmian Gooch is the co-founder of Global Witness, a public advocacy group that exposes corruption in the developing world. Previous undercover investigations exposed the global trade in African blood diamonds. This investigation, Gooch says, exposes serious flaws in the U.S. legal system

that have made it a hub for international money laundering. What the lawyers laid out for us in some detail was all the different possibilities and ways in which it could be done. What you're saying is, if you want to get dirty money into the United States, it's not that hard to do. What I'm saying is, there is an open door, and it's pretty shocking and pretty concerning, because that money could be coming from anywhere.

Of the 16 lawyers that Global Witness recorded in these preliminary meetings, only attorney Jeffrey Herman flatly declined to participate and showed Ralph Kaiser the door. I have some real questions about that. Under the Foreign Corrupt Practices Act, under the Foreign Corrupt Practices Act. Right. Under the Foreign Corrupt Practices Act, bribing foreign officials is illegal. By Americans.

By Americans. But Americans are not involved. So it's money from other nationals, not American entities, not American nationals? Pardon me? It's not something. Aside from that one exception, 12 out of the 13 law firms, including 15 out of the 16 lawyers, not only heard Ralph Kaiser out, they suggested ways that the suspicious funds could be moved into the U.S.

without compromising the minister's identity. Attorney James Silkenot was selected by Global Witness because at the time he was president of the American Bar Association. Yet he and his colleague, Hugh Finnegan, provided what former prosecutors told us was a roadmap of how to conceal the source of the funds, using layers of anonymous interconnected shell companies in multiple jurisdictions. Presumably, we would set up a little bit of a series of owners to try and, again, protect privacy as much as anything else. Yeah. So Company A is owned by Company B, which is owned jointly by Company C and D and your party owns,

all of or the majority of the shares are C and D. So we create several companies. Yes. All in New York. I'd say at some point, probably pretty quickly, you go offshore. Attorney John Jankoff and his partner, Lawrence Gabe, recommended variations of the same strategy. A lot of people in Africa use the Isle of Man.

Some of them use Liechtenstein. So he would just take his millions of dollars, put it in Isle of Man. He could put it into a Swiss bank account, the Swiss will have it, and then he comes to us. And then he comes to us and says, I want to buy a townhouse. Attorney Mark Koplick also suggested that the minister could move his money out of West Africa to Europe, where it could be scrubbed in an anonymous corporate entity that his firm would be happy to set up. The money as it sits now, is it in his name?

It's in different names. Okay. So it will come as those different names? Including his name, yes. So we have to scrub it at the beginning if we can, or scrub it at the intermediary location that I mentioned. So how

to do this intermediary? That means a bank in Liechtenstein or Luxembourg? Luxembourg. We will set up an appropriate entity, call it clientoverseas.com or whatever, and then that will send money into the United States. If that was a banker talking instead of a lawyer, he could be in serious trouble. That's because under U.S. law, bankers are required to report suspicious financial activity to the authorities. Lawyers are under no such legal obligation. Banks in America are required to know their customer, are required to be very cognizant of risk and to report on it if

there is an issue there around money laundering. And yet, absolutely, bizarrely, American lawyers aren't. This is clearly an issue. and I think our investigation has shown the potential for what can happen because of that lack of regulation. Global Witness says that anomaly is just one of the flaws in the U.S. legal system that helps facilitate money laundering. We're going to call it here, anonymous ink. Another is the ease with which anonymous shell companies can be set up here to conceal ownership of money and assets.

Last year, two million new corporations were set up in the United States, many with no offices, products or employees, just an address and perhaps a bank account. In many states across America, you need less identification to set up and open up an anonymous company than you do to get a library card. Gooch says anonymous shell companies are like getaway cars for crooks, designed to put them as far away as possible from the scene of their crime. According to a World Bank study, the U.S. was the favorite place for corrupt officials to set up anonymous shell companies. There was a very good academic study, and America came up as the easiest place to set up an anonymous company after Kenya,

out of 180 countries. After Kenya? After Kenya. So did that study have anything to do with your decision to go ahead and do these undercover investigations? It inspired us. I mean, we almost thought, it can't be this bad, can it? And unfortunately, what we found is it is.

All of the attorneys expressed some concerns, like this one from Gerald Ross. I've got to be very careful myself. This one looks like I'm laundering money. Sure. And that could cost me my license. But later, he suggested that the questionable money could be wired directly into his client escrow account, bypassing scrutiny from the banks. Now, when I get money from my other clients, it always comes in with some strange name on it. I don't even ask. Nobody asks.

It doesn't come from Minister Joe Jones. It comes from the XYZ account. John Jankoff said they would need to get a legal opinion that the money was clean, then suggested that the minister use front men to open up overseas bank accounts. If it's not in his name, then he needs what is known as a straw man. Practically speaking, if the money leaves the country, his name should not be attached to the wire. It should be other people's names. And we know this happens. We know this happens. This is how money laundering occurs all over the world. But that does not mitigate the power of seeing it up close. We showed the tapes to Chip Pononce, a former top official at the Treasury Department, whose job was to stop financial crime, terrorist financing and money laundering. He says there's

nothing wrong with lawyers setting up anonymous shell companies to protect the client's privacy. But if it's done to conceal criminal activity, that's when it becomes a problem. There's a clear pitch consistently presented in every one of these tapes of what amounts to an incredible number of red flags that scream corruption. Dirty money. Dirty money. Bad actors. Bad actors. They don't want to be found, and they have a need.

They've got to move their money from a point where they've received corrupt proceeds, in this case, to a point where they can enjoy those proceeds. And to get this money from point A to point B, they need help in laundering it effectively. Ponce says he was dismayed with the ease and the comfort with which attorneys seemed to be willing to turn a blind eye and discuss a matter that was likely to be illegal. What's essential to recognize is that this is after it's been revealed that the potential client is representing an African minister with hundreds of millions of dollars of funds received through effectively bribes. This is more than legal advice. This is legal advice on how to evade controls or at a minimum very clear global standards on financial transparency to allow our countries to go after proceeds of crime.

Attorney Mark Koplik told the Global Witness investigator that he preferred using money managers and investment firms to move funds. He thought it was less risky than using banks. I would suggest three or four. Some are bigger, some are smaller. The smaller ones are often more flexible and understanding and less concerned about their reputation because they fly to a greater extent below the radar screen. Sometimes the advice took the form of suggesting banks in countries that might be less

vigilant about money laundering. We would have to look into how far specific banks looked into, you know, the know your customer laws and how far they would dig. In many ways, you'd probably be better off with a smaller bank. That would be a possibility. Because the bigger banks are much more serious about looking into that stuff. It's a reputation. Right, yes. And there may be other banking systems that are less rigorous on this than the U.S. What would it be?

The usual banking havens, I think, would be ones you would want to consider. The list of countries where the banking systems require less detail on ownership or source of funds. While James Silkenot, the former president of the American Bar Association, and his partner, Hugh Finnegan, listened to the pitch and suggested ways in which they might be able to help, they were also the most suspicious of Ralph Kaiser and his African minister, beginning just five minutes into the meeting. We need to talk about the risks,

or just concerns about where he got the money and how to explain that. There are issues there. The transactions in which he would be involved here wouldn't be part of facilitating payments, but if that's really where the money came from and if there were, you know, quote unquote crimes committed someplace else, that starts to be an issue. They were also the most cautious about moving forward. Towards the end of the meeting, Hugh Finnegan, who is off camera here, said the firm would feel obligated to report anything it believed to be illegal. Bearing in mind what you said, no American law was violated, no local law was violated, but if we're aware that a crime is being committed, we have an obligation to report that.

Mr. Sokolow says we need to talk about the risks or just concerns about where he got the money and how to explain that. And that's a welcome. I mean, he's already been told where the money came from and how he got the money. Correct. So it's a healthy recognition that there is an issue here. If you could ask him anything about this meeting, what would it be? What's going through your head? Why are you continuing this conversation? Why not just say no? Is the business that important?

When we first aired this story, neither Silkenot nor Finnegan would agree to an on-camera interview. But they sent us a statement saying they only discussed generic information that could be found on the internet, and that their conduct was entirely appropriate. Had the camera followed us after the meeting they wrote, it would have shown us agreeing Kaiser was disreputable and that we would not deal with him again. The other lawyers also declined on-camera interviews. When we come back, we'll take a look at the legal and ethical implications of what you've just seen. Welcome to Play It, a new podcast network featuring radio and TV personalities talking business, sports, tech, entertainment, and more. Play it at play.it.

When a nonprofit organization called Global Witness began an investigation into money laundering a little over two years ago, it sent an investigator to New York to secretly record hidden camera interviews with 16 Manhattan lawyers. As we first reported in January, its investigator was posing as the representative of an African government minister trying to move millions of dollars in suspicious funds into the U.S. Global Witness, which specializes in exposing international corruption, wanted to see how much help the lawyers would provide in setting up anonymous shell companies and offshore bank accounts to move the suspicious funds. Good to see you. Good to see you.

The undercover investigator, who called himself Ralph Kaiser, told the lawyers that the minister had used his official position to collect tens of millions of dollars in special payments from foreign companies to help them obtain valuable mineral rights. He wanted to move the money to the United States to buy a house, a jet, and a yacht. So therefore he wants to bring in the money into the U.S. So starting with the brownstone and then probably buying Gulfstream jet, he wants to commission the building of a yacht and buy probably more property.

The story was intentionally devised to raise red flags and lead the lawyers to believe that the minister's money was dirty. During the meetings, only one of the 16 lawyers, Jeffrey Herman, told him no. They're saying for me. My standards are higher. The rest expressed varying degrees of interest, with most of them offering advice on how it could be done. We do everything. Soup to nuts. So there's no limitation.

We don't say, oh, we don't do windows, or we don't deal with the financial money manager, whatever. No, we orchestrate and organize the entire thing. We're happy to take that responsibility. What's important to point out, and it cannot be overstated, is that none of the lawyers we've shown you broke any laws, in part because the African minister didn't really exist, there were no hundreds of millions of dollars,

and global witnesses Charmian Gooch said no money ever changed hands. So this is sort of a morality test. It wasn't. It was a test on the system. You know, people could make the argument, look, all these guys did really was just listen to this person that came into their office. They didn't make a deal, they didn't sign up, they said we need to do some more research.

And you know what? They'd be absolutely right to say that, but they need to say something else too, which is that those lawyers laid out, in often considerable detail, a myriad of different ways to bring money into America. None of the lawyers agreed to take on the African minister as a client, nor were they asked to. It was a preliminary meeting that ended with most of the attorneys expressing interest in continuing the dialogue and some enthusiastic about landing the business.

I'm happy to chat whenever it's possible to move the ball forward on this. Fantastic. Great. Good. Thanks for coming in. Mark Coplick and Albert Grant foresaw no problem as long as the money was clean and gave no indication they planned to do any checking themselves. They went so far as to discuss legal fees. Legal fees will be substantial. Albert currently from $150,000 to $100,000.

Koplick also suggested conducting a test in which a portion of the suspicious funds would be sent into the United States. A million dollars. A million dollars, so it's a test. Yeah. Because I said probably we would start with around 50 million probably. I couldn't mention. I would say a million dollars.

A million dollars. If anything goes wrong, it will be painful, but it won't be life threatening. Right, exactly. John Jankoff and his partner Lawrence Gabe, who is off camera here, also seemed willing to go forward. We would orchestrate it. One legal fee, cover everything. However, Gabe did express some concerns about the transactions. Who can set up this structure? Could you do it? Yeah, your brother-in-law does it all the time.

Well, OK, I don't think he does it with money that may be questionable, and that we have to find out about. At the end of that meeting, they look forward to the next conversation on the telephone, not on email. Okay, give me a phone number where we can reach you. I'm putting this in emails. Sending an email with Justin Alderman would be fine as well. I don't like emails. You don't like emails? That's how you catch people. The hidden camera tapes raise all sorts of ethical questions, not just about the behavior of the lawyers, but about the methods used by Global Witness in making them. We showed the footage to Bill Simon, a law professor at Columbia University, who is one of the country's top legal ethicists. I think it draws attention to the fact that lawyers may be playing an

important role in money laundering that requires more scrutiny. Have you ever seen anything like this before? No. Never? Never. What's your overall impression of it? Any lawyer is going to be uncomfortable about the fact that this was a sting in which somebody lied his way into a lawyer's office and secretly recorded statements a lawyer thought he was making to a client. That's kind of unprecedented, and it's kind of inconsistent with the bar's norms about confidentiality. So I'm a little uneasy about that. On the other hand, I think that the tapes expose conduct of great public consequence. You think it's valuable that the public sees it? Yeah, I think it's very valuable.

You know, confidentiality is for the benefit of the client, not the lawyer. But the lawyers benefit from it because conduct that goes on under the protection of confidentiality is never scrutinized by the public, and lawyers are never accountable for it. So the sting actually brings some accountability to conduct that ought to be accountable. In its own report, Global Witness includes an opinion from two legal ethicists, including Bill Simon of Columbia. It says that if attorneys Mark Koplik, John Jankoff, and Gerald Ross had been responding to a real request,

their conduct would not comply with the professional responsibilities of lawyers. It said the attorneys displayed a cynical, invasive attitude toward law. The ethicist also noted that the rules are vague and we do not expect that all lawyers will agree with us. Simon put then-ABA President James Silkenot and his partner, Hugh Finnegan, in a different category, even though they provided advice on how to move questionable funds into the U.S. What makes Silkenot different from the other lawyers? Silkenot was quite clear that he would not assist illegal conduct, and he even indicated at one point that he would report the client if he found the client engaged in illegal conduct.

And then also, Silkenot was fairly clear that he would need more information before he agreed to represent the client. On the other hand, he clearly seems interested in this. He clearly seems interested and even a little enthusiastic about it. Anything wrong with that? I find it regrettable, but I'm not sure as a professional responsibility authority I could say it was inconsistent with his duties under the rules. Simon says the only lawyer who truly fulfilled the ideals of the legal profession

was Jeffrey Herman, who listened to the pitch, decided it probably involved illegal activity, and ended the meeting. This ain't for me. My standards are higher. I'm not interested. Do you know anybody who would behave like that? I don't think so, and I wouldn't recommend it either. Yeah, yeah.

Because those persons would be insulted. Charmian Gooch says the point of Global Witness's hidden camera investigation was not to target or entrap lawyers for bad behaviour. The problem, she says, are lax laws and toothless regulations that make it ridiculously easy for criminals to launder $300 billion a year in the United States. This is real public interest information.

How are you going to get that out to them if you can't show them what's happening behind closed doors? You couldn't have done this any other way. I think unless the public and policymakers can really see for themselves what gets said across the desk, across the table, in a meeting like this, it's kind of hard to really believe and take on board. Gooch says there's a simple solution, but it's been politically impossible to achieve in the United States. Just ask Carl Levin, the longtime chairman of the Senate's Permanent Subcommittee on Investigation. Until he retired last year, he spent years trying to pass a law that would require the states to collect one additional piece of information from people forming corporations.

One line, who's the real owner? Not who's the agent forming it, not who's the lawyer representing the owner. Who is the beneficial owner, the real owner? And it's not at all complicated. But the bills never made it out of committee, in part because of strong opposition from the American Bar Association. What's the American Bar Association's objection to this? The lawyers are helping form corporations, and they're afraid, I guess, that if you put a damper on the formation of corporations, that you're putting some damper on legal business. The irony is that the White

House, the Justice Department, and the U.S. Treasury have been among the world's strongest proponents for cracking down on money laundering. Yet the US is one of the easiest places in the world to set up the anonymous companies that facilitate it. It's a heck of a paradox, isn't it? And, you know, I think that the American Bar Association needs to get behind the need for regulation in the way that European lawyers have had to do exactly the same. And I think that, you know, it's I think the American government needs to answer that question. Global Witness may have inadvertently gotten a sassy answer to that question from attorney Mark Coplick in its hidden camera video. Coplick

explained to the representative of the phony African minister why he never worried about government subpoenas. They don't send the lawyers to jail because we run the country. Do you run the country? Still do. I love it. Still do. I should say some lawyers run the country. So you are some of them, two of them?

Yeah, a small amount. We're still members of a privileged class in this country. So what does it mean you run the country? It means you... We make the laws, and when we do so, we make them in a way that is advantageous to the lawyers. Three days after our story aired last January, several members of Congress introduced bipartisan legislation

requiring attorneys and anyone else creating anonymous shell companies here in the U.S. to disclose the real owners behind those companies. The Obama administration followed several months later with new rules aimed at preventing money laundering. Welcome to Play It, a new podcast network featuring radio and TV personalities talking business, sports, tech, entertainment, and more. Play it at play.it.

Just two and a half years ago, Skylar Baylor was one of the fastest high school swimmers in the country, a champion breaststroker with a stellar academic record who had women's swim coaches from around the Ivy League coming to call. Skylar's first choice was Harvard, and as luck would have it, the Harvard women's swim team was in need of a breaststroker. Schuyler was offered a spot, and a seemingly perfect match was made. But when Harvard swimmers hit the pool deck last fall, Schuyler had switched teams. Schuyler now swims with the men. As we first reported in April, the story of how Harvard came to be the first men's Division I athletic team in the nation to include an openly transgender young man is also the story of a bigger transformation in attitudes, acceptance, and the larger conversation about what it means to be transgender.

How different are you? and the larger conversation about what it means to be transgender. How different are you if I had met you a couple years ago and then saw you today? Physically, you'd say, yeah, you might not recognize me. You look that different. I'd say so, yeah. We'd say so, too. This is what Skylar Baylor looked like in high school. From the outside, Skylar back then appeared to be a young woman who had it all. Outstanding grades in school, plus all-American times in the pool.

An attractive combination to swim coaches from top-notch colleges. She was a very strong breaststroker, and those times were fast. Harvard women's coach Stephanie Mirosky traveled to D.C. to recruit Schuyler. First impressions? She was engaging, energetic, and she was somebody that I really thought would do well at Harvard.

Harvard was Schuyler's first choice, but this fairy tale had a little wrinkle, one that may have started before Schuyler even learned to swim. When you were a little girl, were you a typical little girl? Definitely not. Even three, four, five? My parents dressed me in pink dresses and bow ties and I had a doll, but I don't think I was typical even then because I would like to rip them off and I didn't want to wear the dresses. I'm not wearing a dress. Gregor and Terry Baylor are Skylar's parents. Did people think Skylar was a boy? All the dresses. I'm not wearing a dress. Gregor and Terry Baylor are Schuyler's parents. Did people

think Schuyler was a boy? All the time. Terry and Gregor just assumed Schuyler was a tomboy who preferred short hair and hanging out with the guys. That their daughter might be transgender never occurred to them, though there were clues. In middle school, Schuyler's class had to make self-portraits in the present and the future. She came home with this. It made no sense at the time why the future meant becoming an old man with a mustache, and the confusion only worsened when puberty hit, and things like breasts began to appear. I was like, that's not something I want and I don't really know why, but I just know I don't want that. Even though it felt wrong, Schuyler saw no choice but to try and make it work as a girl with long hair and dresses.

But it backfired. She developed major eating disorders. Bulimia, anorexia. Both. Both. It was serious. We feared for his life. Yeah. They postponed Skyler's going to Harvard and got her help at an eating disorders program. When she went to hear some transgender men speak at a local church, wham, everything started to make sense. I was like, holy crap, this is me. Like, this is 100% everything that they're saying, that's me. And I just melted down. I just started crying and sobbing. And my dad was picking up because he was coming to visit me. That very day?

Yeah. And I walked out to him and I said, and I was sobbing. And he just hugged me. He came out, you know, in tears. And eventually he said, like, what's wrong, Skylar? And I said, Dad, I think I'm transgender. So how did you handle it? I hugged him. And he cried and cried.

It just made me realize, like, I wanted that so badly, but I knew how hard it was going to be. And I was like, what about swimming? What about my body? What about surgery? What about the money? What about people? What are people going to say?

What about my grandparents? What about my brother? Like, everything at once. I was like, but I want this, and I know I want this. Skyler's mental health improved quickly, but there was still the matter of telling Coach Moroski that her new women's swimmer would now be coming to college as a man. So what was your reaction? I was surprised, but really the big question Schuyler had was,

can I still swim on your team? What did you think? Did you think someone who identified as a man could swim on the women's team? I thought logistically we might have some issues that we'd have to work out. Like NCAA rules, turns out the NCAA has a policy that allows for athletes who identify as male but were born female to compete on a women's team as long as they don't take male hormones. So Stephanie Mirosky said yes, and Schuyler started making plans to live something of a double life, to be a man on Harvard's campus the next fall, but a woman on Harvard's swim team.

Meanwhile, Schuyler came out as transgender on Facebook and posted on Instagram that he had so-called top surgery, a double mastectomy to remove the breasts he hadn't wanted. The whole situation started to worry Coach Morosky. I think Stephanie was the first to realize that Schuyler's plan of being a woman in the water but a man outside was going to be totally detrimental to her psyche. When you enroll in college, it's an opportunity to start over again. You can reinvent yourself. You can reinvent yourself. And I was struggling watching Skylar because he wanted to reinvent himself as Skylar as a male, but was being held back by the athletic piece of it. She discussed her concerns with her friend and colleague, Harvard men's swim coach Kevin Terrell.

Kevin just kind of looked at me and said, I agree with you. I don't think that you can have a dual identity. Why doesn't he just swim for my team? Just like that? Just like that. I mean, it made sense, right? If you're happy being a male and that's what you want to identify as, then it makes sense to be on the men's swimming team.

That would be allowed under NCAA rules, and he'd be permitted to take testosterone. But before giving Schuyler the option of joining the team, Terrell called a meeting of his swimmers to discuss what he thought would be a very sensitive issue. What were the reactions? They didn't see it as a big deal. They didn't? I had worked up all of these questions in my mind to ask them. And I asked them and they were like, that sounds fine. When they didn't even express concern about the locker room, Terrell wasn't sure he believed them.

So I concluded, well, guys, you know, let's come into my office, and if you want to talk to me one-on-one, please do. You thought some might be holding back. Right, just because of group thinking. And then so no one came into the office. And it surprised you? It did surprise me. You know, I swam in college over 20 years ago,

and I think it would have been a different process for me. But choosing between the women's and men's teams was agonizing for Schuyler, who was used to winning as a woman. On the men's team, he'd be at the back of the pack. Schuyler had to do a lot of thinking about what mattered most. Was it breaking records or was it really being happy? You put that to him. I did.

That was last spring. For Harvard, in lane two, Skyler Baylar. This fall, at Harvard's meet against Ivy League rival Columbia, we watched as Skyler got ready, scars visible across his chest, to step up onto the starting block to swim with the men as a man. My goal to myself, because it's not realistic for me to win anything right now at all,

is to try to beat at least one person in every race. And have you met that goal so far? Almost. Yesterday I did get last in my second event, but that's the only one. I've done eight races, so seven out of eight of them have gotten not last. I'm really surprised. I'm really happy about it. And he's happy about living as a man in all facets of his life. He takes the NCAA-approved dosage of testosterone, which has been lowering his voice, broadening his shoulders, and bringing

him closer to that future he had envisioned back in middle school. Do you have a little mustache? Yes, I have a little mustache, a little peach fuzz. Are you shaving? Yes, and I shaved because I wanted to look nice for the interview. Skyler has been remarkably open about all this, chronicling the whole process of his transition on social media, complete with before and after images. And he's invited people to ask when they have questions. You are almost passionate about answering questions.

Yes. You don't run away from this. People are ignorant, period, because it's not taught in school. Like, you don't know a lot of trans people. How are you supposed to know the answers to the questions about people who are transgender? What kind of questions do you get? Do you still have a vagina? Like, people like to ask that one, and a lot of people get really uncomfortable like a lot of trans people hate that question you don't hate that question i don't like it but i try to see it from their perspective and i'm like okay if like if i were in their like their position i'd probably be wondering the same thing well what's the answer to the question yes i mean that's the answer to

the question it's a simple question he says being transgender has nothing to do with whether or not someone gets bottom surgery. And it also has nothing to do with sexual orientation. Skylar has always been attracted to girls. In high school, as a young woman, Skylar had come out as gay. Now, as a man, he's straight. But there is one small matter we discovered where he's leaving his options open. You will never get pregnant. I don't know about that. That's a long story. Really?

There are trans men that get pregnant because they want to have biological children. So this is in your head that one day you might give birth? Might is in bold and underlined and italic. But yes, yeah. I don't know. I'm 19. 19 and healthy. Back at that Harvard-Columbia meet we went to, Skyler achieved his goal of beating one swimmer. And he beat his own previous best time

by more than a second. But we did notice Skyler during the women's competition cheering on his would-have-been teammates in his old event. And we were pretty sure he noticed that his old times would have won first place. Have you ever in the whole time second-guessed what you did? I think I'd be lying if I said no. Oh, you have. I know I made the right decision, but I think sometimes I like, I'm like, oh, I really wish I could, I could compete as a girl because I want to win that race. It's a, it's fun to win. And it's something that I worked really hard for. And, you know, I worked the same amount, but, but now I'm working the same amount for

16th place, you know. And that's okay. And that's okay. It's the way it is. And it's also a lot of fun. It has other kinds of glory in it. Different kind of glory. that's okay. It's the way it is. And it's also a lot of fun. It has other kinds of glory in it. Different kind of glory. Definitely a different kind. It's a glory that fills me inside. Compared to one year ago, how are you feeling? Proud. In one word, proud. In the months since our story aired,

Skyler has continued to improve, shaving several seconds off his best times. He is now training for his sophomore season with the team. I'm Steve Croft. We'll be back next week with another edition of 60 Minutes.