Daily Archives: December 19, 2008

Bernie Madoff covered by The Times

The Times demonstrates it can still do great reporting when it wants to. The most definitive coverage of the Bernie and Walt show, so far.

Here’s just a small part of that article, involving Greenwich’s own, Walter Noel and Fairfield Greenwich Group:

Walter M. Noel was the courtly public face of the Fairfield Greenwich Group, the investment firm he started in 1983. A native of Tennessee, Mr. Noel had spent time at larger firms, notably at Chemical Bank, where he started its international private banking practice, before setting out on his own.

From the beginning, the Noel family was built on access to prestigious social circles. Mr. Noel’s wife, Monica, was part of the prominent Haegler family of Rio de Janeiro and Zurich, and their daughters would marry into international families that provided additional connections for the firm.

In 1989, Mr. Noel merged his business with a small brokerage firm whose general partner was Jeffrey Tucker, a longtime New Yorker who had a law degree from Brooklyn Law School and a résumé that included eight years with the enforcement division of the Securities and Exchange Commission.

Again and again, this pedigreed experience was emphasized by Fairfield as it built itself into a fund of funds, investing in other hedge funds. It boasted to its prospects that its investigation of investment options was “deeper and broader” than those of most firms because of Mr. Tucker’s experience in the regulatory ranks.

Though he is not nearly as prominent as the Noels, who move in the forefront of Connecticut society, Mr. Tucker benefited just as much from Fairfield’s success. Indeed, last year he led a coalition of thoroughbred racing interests that sought to bid for New York State’s horse-racing franchise.

But it was Mr. Tucker who introduced Fairfield to Mr. Madoff. In the early 1990s, Fairfield began placing money with him, according to George L. Ball, the former president of E. F. Hutton and Prudential-Bache chief executive who knows Mr. Noel socially.

That began a long partnership that helped the Fairfield firm earn enviably steady returns, even in down markets — and that lifted Mr. Madoff into a global orbit, one that soon extended his reach into some of the most fabled banking centers of Europe.

If the wealthy Jewish world he occupied was his launch pad, the wealthy promoters he cultivated at Fairfield Greenwich were his booster rocket.

The Fairfield Sentry fund was one of several so-called feeder funds that became portals through which money from wealthy foreign investors would could capitalize on Mr. Madoff’s investment prowess — collecting those exclusive, steady returns that had made him the toast of Palm Beach and the North Shore so many years ago.

The Sentry fund quickly became Fairfield’s signature product, and it boasted of stellar returns. In marketing materials, Fairfield trumpeted Sentry’s 11 percent annual return over the last 15 years, with only 13 losing months. It was a track record that grew increasingly attractive as markets grew more volatile in recent years.

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Snow plowers

A reader asks for recommendations. It depends on the neighborhood because most of the guys I know don’t like to travel far. And they seem to come and go – we had a great young man doing our street here in Riverside for a number of years, then he got ambitious and bought a new truck and plow so of course it didn’t snow for two years and he went broke. Any recommendations? I’ll post them here.

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What are they going to do with this inventory?

Driving around in the snow today (my theory about mounting snows on my car keeping storms away let me down, this time) I was struck by the number of new houses still under construction, many of which are spec projects (as an aside, my guide to all things real estate related, Frank Farricker, tells me that those two new houses on the Merritt, one on North Street the other on Riversville, are both owner built. How odd.). I understand that, once you’ve started construction you can’t just stop because market conditions have changed but the last thing we need right now are more new houses on more bad lots and most of these are on bad lots.

So what happens to all these houses no one wants? Some are bound to be bought, eventually, by lucky homeowners who will get something originally priced at $5 million for $1.5 million and live there happily. Others will be tied up in litigation for years as lenders, builders and limited partners duke it out and fight over who should take the loss and some will, I think, never sell. Would you pay $1 million for a house if, as an article I read recently suggested, it was going to cost you $500,000 to heat it and maintain the landscaping? I think not, if you have a $1 million house type of income. And those few remaining rich individuals who are undaunted by that size of bill will insist on, and will be able to get, a house on better land. I think a number of these houses are going down, eventually.

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Second thoughts on 11 Lindsay Drive

When I mentioned this house yesterday I didn’t remember seeing it and so I was – reserved – in my opinion of value. A commentator who obviously had seen the place took me to task for my mild tone so today I drove by and sure enough, I realized that I had taken did a tour of the house when it first came on. I agree with my reader.

It’s not an awful house by any means, and Lindsay Drive is a good address so this house has some value. I don’t think it’s going to sell for anything close to $13 million, though, and that’s why I didn’t remember it – when confronted with a wildly optimistically priced house I tend to dismiss it and assume I’ll give it fresh attention when the seller gets real. So what should this go for? I don’t know, but I might start at $5 million and see what happens (I’d put that offer in long distance, just in case the builder has a violent reaction). Remember, the seller has another project on Davis Avenue Ridge Street that is “locationally challenged” (the best idea I’ve heard for it’s ultimate disposal? Chop it into four separate units, because it’s already in the R-6 zone) and that financial millstone should, eventually, affect Lindsay Drive’s price too. 

Or not – God looks after drunks, fools and builders with solid fiances, so perhaps He’ll send someone out from the city who perceives a higher value here than I do.

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“Bridgeport Property Values Soar” ??!!

That’s what the headline in the Connecticut Post says. That certainly caught my eye, but imagine my disappointment to learn that he accompanying article tells a different story. Most of any increase is attributable to corrections made to old assessments that, presumably for political reasons, hadn’t been adjusted in twenty years. As for the balance:

“To show how the recent collapse in the housing market affected home values and spared residential

homeowners from even higher property value increases this year, city officials pointed out that the average Bridgeport home in 2003 was valued at $174,900.

By 2005-06, at the height of the housing boom, the value of that same house rose to around $250,000. But by 2008, because of the market downturn, the house is now worth about $205,500.

Vision Appraisal, the firm hired by the city to conduct the revaluation, said those figures illustrate how some price increases from the earlier boom over the last five years continue to have an impact on current property values.

“It is important to note that although the current economic downturn has negatively affected

property values, in most cases, those values have not yet declined to levels established in 2003,” Vision Appraisal said in a statement on the city’s Web site.”

The operative word in that statement is “yet”.

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I know, let’s put on a show!

andy-hardy A reader informs me that the builder of 45 Upland Drive hosted an antique show/wine party there the other night, hoping, one supposes, to draw potential buyers. A house on Cognewaugh tried the same thing last Sunday. These events draw people, but are those people buyers? It’s possible, I suppose, and it certainly enables the listing agent to show that he’s doing something to move the damn thing but my personal advice is, if you can’t sell your property in two years, lower the price.

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Things are tough all over, dept. of

Jackson Hole hits a trough. No one wants a $5 million second home in the Wind Rivers right now. It may be some consolation to frustrated homeowners that the same mountains are accessible by foot: a tent, a pair of boots and some decent camping gear might set you back $1,000 but it lasts for decades, and the fishing is free.

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