Nothing we haven’t pointed out here before, but burned investors in Noel’s Fairfield Greenwich Group’s Sentry Fund are beginning to ask some hard questions about what, exactly, Noel did to earn his fees. Nothing at all, it turns out.
In a “due diligence questionnaire” made available to potential investors in Sentry, Fairfield promised that it calculated the value of Sentry’s assets weekly and monthly. It also said Citco Fund Services, an independent hedge fund administrator based in the Netherlands, separately calculated the value of Sentry’s assets each month.
Further, Fairfield promised that both it and Citco double-checked the monthly statements from Mr. Madoff’s firm it received against records of the assets held in the fund. To prevent unauthorized stock trades or the unauthorized removal of cash from Sentry’s accounts, “the movement of cash among the Fund’s accounts requires two signatures,” Sentry said.
Mr. Mulligan did not respond to questions about whether Mr. Madoff could have moved money or securities out of Fairfield Sentry’s accounts without its approval.
But what was bad for its investors certainly worked out well for the Noel clan.
According to the document, Fairfield generated $250 million in revenue and $200 million in profit for the year that ended Sep. 30, 2007. Nearly 65 percent of that money came from fees on Sentry, and nearly all the profits were distributed among the firm’s 21 partners. Fairfield’s employees were also lavishly compensated, with at least four receiving more than $5 million in pay.
It was, of course, all about Bernie Madoff, but who was he? Don’t ask, don’t tell:
In early 2008, several private equity and investment firms were approached by Fairfield about purchasing a share of the company. A partner of one that considered buying a stake that he estimated was between one-third and one-half of Fairfield — the firm was valuing itself somewhere between $1 billion and $1.5 billion — said that he was scared off about 20 minutes into his initial meeting with a team of Fairfield managers.
“They were just incredibly squishy and vague even during the warm-up,” said the prospective buyer, who spoke on condition of anonymity because of a non-disclosure agreement with Fairfield. “I asked them to tell me about the manager of the fund Sentry feeds into, and I was told, ‘We don’t really talk about him.’ ”
But while investors eat a thin gruel this Christmas they will no doubt be partially mollified by the thought of the Noels relaxing on Mustique, or elsewhere:
Like Mr. Madoff’s firm, Fairfield was at least in part a family business. Four of Mr. Noel’s sons-in-law worked at Fairfield. But unlike Mr. Madoff, Fairfield’s partners, led by Mr. Noel, were not shy about spending their money and taking a high profile in wealthy New York society circles.
“The last few years, they really made a play to be a part of that New York-Southampton social axis,” David Patrick Columbia, the editor of NewYorkSocialDiary.com, said of Mr. Noel and his family. “It happened so fast that you really noticed them.”
Mr. Noel, whose primary residence and office remain in Greenwich, has at least five luxury homes. Along with his Greenwich house, whose value has been estimated at $4.2 million, he has homes in Southampton and Palm Beach. And since 2000, the Noels have also maintained a pied-à-terre at 812 Park Avenue. The combined value of those homes is more than $20 million.
Update: the New York Social Diary mentioned in the Time’s article has lots of good Noel/Madoff stuff including that whistle blower’s futile attempt to interest the SEC in the Madoff fraud (his letter names all the players who, three years later, will go down in flames, including (especially) Fairfield Greenwich, and some photos of the Noels with their friends, including Greenwich’s own, John J. McCloy and his interior designer wife. Were they burned by their pal or did they just have the misfortune to share a photo frame with the blundering financial moke? Who knows – if you see a certain house n Stanwich Road go up for sale, perhaps that will be a clue.