If you follow the link to the Dealbook blog , you’ll see the spread sheet detailing FGG payments to its partners. Walter made $18 million in 2008, hardly chump change, but kept $37 million in 2007, a better year. Understand that this was for doing absolutely nothing. I did absolutely nothing last year and no one paid me anything close to $18 million. I should have gone to Harvard, damn it.
And here’s a nice story from Business Insider – the day after Bernie was busted, when the boys at FGG knew they’d lost all their clients’ money, Walt arranged for $1.5 million to be wired to another partner. Hey, Christmas was coming on, the poor guy must have needed some pocket money to see him through.
There’s this, from ABC News:
Fairfield Greenwich Group released a statement saying: “The allegations in the complaint brought against FGG by the Massachusetts Securities Division are false and misleading. Contrary to the allegations, FGG conducted vigorous and robust monitoring on an ongoing basis of the Madoff investments. This monitoring was consistent with the representations made to investors in the Sentry funds. FGG has fully and completely cooperated with the Massachusetts Securities Division investigation.”
Fairfield had earned about $100 million per year in fees based on the money it placed in Madoff’s hands, according to the complaint citing testimony from Fairfield executives.
“How did you determine that they had hundreds of clients?”
“That’s what the partner said on the phone to me,” Dan Lipton, Fairfield’s Chief Financial Officer, replied.
Someone is going to have a blast cross examining these turkeys and I’m so sorry it won’t be me.
While I was out, readers sent along tons of links on Walter Noel stories. Here’s a good one from the NYT Dealbook.com
Shortly before Bernard L. Madoff confessed to a Ponzi scheme that burned through tens of billions of dollars, partners of Fairfield Greenwich Group, one of Mr. Madoff’s biggest feeder funds, were on track to collect a combined $117 million in pay for 2008.
The estimated compensation figures were disclosed in an exhibit to a lawsuit filed Wednesday by Massachusetts securities regulators, who contend that Fairfield’s inadequate due diligence on Mr. Madoff’s operations amounted to a fraud on its investors.
The exhibit consists of spreadsheets attached to an e-mail that Daniel Lipton, Fairfield’s chief financial officer, apparently e-mailed to himself on Dec. 11, 2008 — the same dayMr. Madoff was arrested by authorities in connection with running a vast investment scheme.
Fairfield’s $7 billion Sentry funds were more than 95 percent invested with Mr. Madoff, but Fairfield also managed billions of dollars in other funds, all of which performed poorly last year. Even before Mr. Madoff’s arrest, the firm had already conducted two rounds of layoffs.
Nevertheless, Jeffrey Tucker and Walter Noel, Fairfield’s co-founders, were each expected to earn about $19 million in 2008, the document shows. In 2007, before the markets went south, both men made over $30 million. Andrés Piedrahita, the managing partner of Fairfield Greenwich and Mr. Noel’s son-in-law, was to make over $28 million for 2008. In 2007, Mr. Piedrahita took home over $45 million.
I started covering the Noel story December 12, when Bernie’s arrest was announced. By December 15th, one of Walt’s loyal friends wrote in to express her dismay – I wonder what she thinks now?
How singularly unpleasant and vindictive you are to prey on the misfortunes of a local family. Let us hope that such misery does not descend upon you and your family out of the blue at the instigation of others. I would hate someone to defame your character and talk about you as if you were so much “meat” to be hacked apart. Not that I expect you will allow this comment to be shown on your site – goodness knows we don’t want any balance to the whole thing, or heaven forbid, you may not be able to make a buck or two out of this unhappy mess.
This is a nice house off of Pemberwick on 10 Greenway Rd, . Built in 2005, listed for $1.995 million, sold for $2.0225 million in May 2006. Now it’s back for sale. The owners listed it just below $2 million originally and today dropped it to $1.869. The market has changed from the bidding wars of ’06.
Congress has demanded that the Accounting Standards Board get rid of the “mark to market” rule and, probably as early as today, banks will now be able to value their toxic assets at whatever they say they’re worth.
This is the same philosophy that drives so many of my fine colleagues in this town when dealing with real estate: if you don’t like what the market says your client’s house is worth, just come up with a value they do like. When it doesn’t sell, look around for someone to blame.
If he hasn’t retired by then, look for Chris Dodd to be in front of the cameras three years from now, face red, finger jabbing, demanding to know why bankers lied to the American public. In this case, since it is the bankers who have asked to discard the rule, they’ll deserve everything that slimy blowhard sends their way.
UPDATE: The NYT’s Floyd Norris is on the story:
Under intense political pressure, the board that sets accounting rules in the United States will meet on Thursday to complete changes in accounting rules that are aimed at reducing the losses banks have been forced to report as the values of their mortgage-backed securities have crumbled.
The changes, proposed two weeks ago after a Congressional hearing in which Robert H. Herz, the chairman of the Financial Accounting Standards Board, was essentially ordered to change the rules or face Congressional action, are generally supported by banks, although some want the board to go even further.
But they have produced a strong reaction from some investors, with one investor group complaining that the changes would “effectively gut the transparent application of fair value measurement.” The group also says changes would delay the recovery of the banking system.
UPDATE II: Lest we forget, three years from now, Barney, “There’s nothing wrong with Fannie Mae!” , Frank is also behind this rule change.
Chris Dodd, already in trouble with his sweetheart mortgage deals, his Irish castle and his attempt to protect the AIG bonuses, is encountering serious difficulty raising money for his upcoming reelection campaign. I heard yesterday from a reader that her father, a great guy who actually took a chance hiring a 23-year-old philosophy major as a Colombian drug runner – where do you think I met Andres?) is pretty connected to the local political scene and reports that Dodd will not run. I would be cheered by that news were it not for the name of his replacement: Dick Blumenthal. In this state, Blumenthal is a shoo-in (the only kind of campaign Blumenthal will risk), and that’s a shame. I doubt he’s as crooked as Dodd – who could be? – but his overweening egotism and opportunism will hardly be an addition to the Capital. Ugh.
31 N. Porchuck
I wrote about this house just a month ago when it came up for sale. The owners bought it new for $7.850 million in August, 2007, added a pool and, when their plans changed and they decided to sell it this year, priced it at $6.995 million. It is a fabulous house – absolutely beautiful, with great views, a pond, that pool (and, of course, it’s right across the street from my own listing at 34 N. Porchuck – buy it now! cheap!) and really everything a house this size should have. I wondered if, in this market, a million dollar reduction with a pool thrown in would be enough to move it but it’s reported as under contract today, so I guess it was.
Losing a million bucks on Greenwich real estate is a new phenomenon but I still find it encouraging that there are buyers out there who can appreciate value and pay for it. I think someone is getting a good buy here – and there’s almost certainly no truth to the rumor that Andy Madoff’s moving in to hide from his creditors.
I was considering mentioning a house that’s dropped its price today but decided that, despite some money spent on improvements, it was still priced where it was bought in 2006. That’s not news, or noteworthy. But in reviewing its history I noticed that all of its interior shots were taken by the original seller’s broker, four years, two owners and three brokers ago. Digital cameras are everywhere and can be easily borrowed and the shots themselves are free. If you’re trying to get $3 million for a house, do the owner a favor and take a few pictures.
18 Sandy Lane
Four acres, pool tennis court (no wonder I skinned my nose!) big house. There’s a Merritt Parkway issue – it’s waiting for you at the end of those four acres – but from an original price of $2.995 back in 2007, it’s down today to $1.495. Sandy Lane’s off Porchuck and just off Round Hill Road. Nice, dead end street and good yard – the Merritt is a presence but not, in my opinion, a deal -killer. For this price, treat yourself to a pair of $300 Bose earmuffs or, better yet, make the seller toss them in as part of the deal.
175 Round Hill Rd (Boston Herold)
Hello my friend and God Bless you and am hoping this fines you in most ekscellent health! My name is Nikombo Green, and my father -in-law is a most important poersonage in Greenwoch, Connecticut, USA, perhaps yuo no of this place, eh? My revered inlaw has a moste beatifool house in thsi fine town but at the instant cannot access it in a proper manner do to the korrupt and eveil machinations of his enemies. He wood like to sell this property to you, but kan he trust you (plese excuse his mistrust – his faith in the goodness of man has been most badly damaged by a horrible person in New York City). U kan bye this property for only 10,000,000 Zimbawean dollars but first U must satisfy my poor father in law tyhat indeed you are the person two place his trust into. If you will send to him your full banking information inclusing any passwords that you may wish to share, he will investigate and get back to you. Togather, you and he will embark on a most wondrous and profitable adventure!
Go with God’s blessings in your ear,
Washington state spawns a population of phosphate smugglers.
Many people were shocked to find that products like Seventh Generation, Ecover and Trader Joe’s left their dishes encrusted with food, smeared with grease and too gross to use without rewashing them by hand. The culprit was hard water, which is mineral-rich and resistant to soap.
Washington State has turned its residents into a group of drug runners — crossing state lines to buy dish washer detergent with phosphate.
At what point do the people tell the politicians to go to hell? At what point do they get off the couch, march down to their state legislator’s house, pull him outside, and beat him to a bloody pulp for being an idiot?
At some point soon, it will happen. It’ll be over an innocuous issue. But the rage is building. It’s not a partisan issue. There is bipartisan angst at out of control government made worse by dumb bans like this and unintended consequences like AIG’s bonus problems.
If the GOP plays its cards right, it will have a winning issue in 2010. But it is going to have to get back to “leave me the hell alone” style federalism where the national government recedes and the people themselves will have to fight to take their states back from special interests out of touch with body politic as a whole.
I’ve been predicting that the rage will erupt when incandescent lightbulbs disappear but I certainly agree with the author – if the Republicans want to take advantage of the coming rage, they should start distancing themselves from this crap, now.
Or so says PMI Insurer. Sounds reasonable to me.
Here’s another cheery thought: I was thinking last night of the poor homeowner who paid one price for his new house eighteen months ago and saw the identical house next door brand new, sell for 25% less. Assuming the world still works the way it used to, the first owner just witnessed his house’s value fall to, at best, that of the newer house next door.
My first thought was that, heck, he’d still done better than if he’d left his money in the stock market, which has fallen 50%, but upon reflection, I realized that that 25% loss was actually more than 100% of what he’d probably invested – the rest would have been margin or, if you will, mortgage money. He’ll probably make out okay if he can hang on for ten years but for now, he’s paying off a loan on something he has no equity in. That must hurt, and if he had planned on a home equity loan in the future well, you need equity if you want to borrow against it. That hurts, too.
Thornburg Mortgage, specializing in jumbo mortgages (read, “Greenwich”) has filed for bankruptcy. I don’t know whether they were a player in Greenwich but the loss of this type of lender can’t help those buyers looking for large mortgages, wherever they are.
The Noels prepare to travel (Photo GuestofaGuest.com)
Massachusetts regulators charge Fairfield Greenwich Group with fraud. This is a civil complaint by the Securities Division and not the sort of thing that will directly cause certain principals to join Bernie in Ossining, but the hell just continues, and where civil authorities smell fraud, can criminal charges be far behind? I’d ask where our own stalwart Greenwich AG Blumenthal is but, as always, he’s lurking on the sidelines, ready to dash out and snatch the baton once his work is done for him. Besides, he’s a friend and neighbor of Walt’s and probably doesn’t want to return his campaign contributions.
April 1 (Bloomberg) — Massachusetts Secretary of the Commonwealth William F. Galvin accused Fairfield Greenwich Group of fraud in misrepresenting to Massachusetts investors its lack of knowledge of the operation of Bernard L. Madoff Investment Securities.
The administrative complaint filed by Galvin in Boston seeks restitution to Massachusetts investors for losses and reimbursement for performance fees paid to Fairfield by those investors. It also seeks an administrative fine.
“Investment advisers have a fiduciary responsibility to their clients under law,” Galvin said in the statement. “The allegations against Fairfield in this complaint outline a total disregard for such responsibility, which helped the Madoff scheme stay afloat for so long.”
Fairfield founder Walter Noel admitted in testimony to the securities division that Fairfield was not involved in anything “but turning money over to” Madoff, according to Galvin’s statement.
Galvin said Madoff coached Fairfield executives on how to respond to questions from the U.S. Securities and Exchange Commission who were looking into concerns of fraud by Harry Markopolos, a former money manager, who has told Congress he tried to persuade the agency for nine years that Madoff was a fraud.
Fairfield executives “were blinded by the fees they were earning, did not engage in meaningful due diligence and turned a blind eye to any fact that would have burst their lucrative bubble,” according to Galvin’s complaint.
Earlier this week a Connecticut judge froze the assets of Fairfield Greenwich Group and other so-called feeder funds that steered investors to Madoff, along with those of Madoff’s family members, a lawyer said.
We’re in the process of finding out down on Langhorne Lane. A builder bought five acres here for $1.9 million in 2006 and, having pretty much abandoned his plans to build a large mansion, has been trying to resell the land for $2.9. I’ve never understood why he thinks the land increased a million dollars from 2006 to 2008 and the marketplace seems to have the same difficulty because it’s still for sale. Today it’s been marked down to $2.7, but I still don’t get it.
A couple of readers have wondered how two building lots on Meadowbank Road in Old Greenwich could have such wildly divergent prices, one asking $1.699 and the other $2.5 million. The answer is FAR. The first lot, on 0.19 acre of land, will allow a house of just 2,184 feet to be built (my calculations show an additional 500, but I’m going with the listing because, presumably, there’s some impedance to gaining that extra space). The second lot is on 0.4 of an acre and its FAR is 5,488 sq. ft. The applicable zoning is R-12, so one lot is undersized and gets penalized severely, the other is oversized and receives a bonus.
Will either sell for its asking price? Who knows, but the relative values will remain because, even in today’s downsizing market, that first lot won’t allow much more than a cottage while the second will allow a real house to be built on it. Remember that, homeowner, the next time you push for still stricter FAR regs. besides not accomplishing their goal very well, there are real costs imposed by FAR, and the amount of that cost can be seen and calculated here.
Donate eyeglasses here
This gorgeous new house at 62 Ridge Street overlooks the Honda dealership and is within earshot of I-95. Those features seem to have dissuaded buyers from paying the Lindsay Drive builder’s asking price of $7.450 million so today he’s dropped it a tad to $6.975. For his sake, I hope that does the trick but I was thinking that, with 10,000 square feet of space, elevators, roof deck and on-site parking, this would be an ideal clubhouse for an organization or charity. Any takers?
The Plywood Circus
Greenwich’s Broadway Partners, backed by loans from Greenwich Capital, bought the John Hancock building in Boston three years ago for $1.3 billion. Yesterday, after Broadway had defaulted on its short term loans, the place resold for $661 million. That 50% drop is probably not much worse than has happened to Greenwich residential prices, but the numbers do add up to a painful sum.