House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address

by Gross, Michael

  By spring 2011, Loeb’s political change of heart had made it into the mainstream media when the Wall Street Journal revealed that, despite his record of support for Democrats (and continuing support for gay marriage and progressive eleemosynary causes), Loeb had switched allegiance to the Republicans, donating nearly half a million dollars to the party since Obama took office. In 2011 and 2012, Loeb’s largesse (more than $500,000) was directed exclusively to Republicans. In those two years, Margaret Loeb demonstrated her political independence with donations to a number of Democrats as well as Planned Parenthood, Women Vote!, and Emily’s List.

  That fall, Loeb threw his weight behind Mitt Romney’s run against Obama, attending a Romney fund-raiser at the 740 Park Avenue home of Steve Schwarzman, cofounder of the private equity group Blackstone, who was forced to apologize after comparing Obama’s attempt to close the carried-interest loophole to the Nazi invasion of Poland. After Obama’s State of the Union Address the next January, Loeb described it as “class warfare” and said he was “sick and tired” of being criticized for being a capitalist.

  “There are some people who think it is fashionable to denigrate success, while others try to stir up class warfare,” he said in May 2012, accepting an award for distinguished professional achievement from Columbia. “It is even more upsetting when our leaders tell us that it is their role to make amends for [the poor distribution of wealth] via increased and capricious regulation, excessive entitlements, ill-conceived subsidies, and punitive prosecutions.” Loeb’s hopes were high on election eve 2012, when he joined his fellow hedgies Paul Singer and Steven A. Cohen, the head of SAC Capital, for a steak dinner overlooking Boston Harbor before heading, or so they assumed, to a Romney victory celebration. “You win some, you lose some,” Loeb told the New York Times the next day.

  Presumably, Loeb says something similar to the neighbors he’s had issues with at Fifteen Central Park West. One is Jerry Yang, a cofounder of Yahoo! in 1994. Yang bought apartment 11A in the house for just over $20 million. Gregg Ireland, a fund manager at Capital Research and Management, the largest shareholder in the pioneering Internet search firm, would close on apartment 15C within minutes of Yang’s closing. Eight months later, Yang, then forty and CEO of Yahoo!, announced he would leave the company. Yang had refused to sell it to Microsoft for $33 a share, and when his company’s stock went into a nosedive, was blamed and replaced, but remained as a board member while a new CEO attempted to right the ship. She failed and in fall 2011 was fired.

  Two days later, Loeb disclosed in an SEC filing that Third Point had bought more than 5 percent of the company, making it the third-largest investor. That caused a spike in Yahoo!’s share price. In January 2012, Scott Thompson, who’d run PayPal, was named the company’s latest CEO. A few days later, Yang left Yahoo!, and soon four longtime board members said they would leave, too. Loeb was having his desired effect.

  Yahoo! announced replacements and prepared for a proxy fight against Loeb while Thompson looked ahead, announcing plans to shrink and reorganize the company. But in May (just a few days after Loeb’s father died following a years-long struggle with Alzheimer’s disease), Loeb dropped another bombshell: Thompson had lied about his educational credentials, claiming to have a computer-science degree when he’d really studied accounting. Five days later, the board member who’d led the search that found Thompson quit, and then the new CEO did, too. Soon enough, Loeb and two allies joined the Yahoo! board and recruited Marissa Mayer, a highly regarded director of Google, which had long since outflanked Yahoo! and become synonymous with Internet search, to take over as Yahoo!’s CEO.

  The Wall Street Journal described the three-month-long coup as Loeb’s “biggest victory as an activist investor.” To Newsweek, the Yahoo! “assault” confirmed Loeb’s place in the “pantheon of bad-ass investors,” where Carl Icahn had reigned supreme. Fortunately, Loeb lives in 15CPW’s tower and Yang and Ireland in the house, so the odds of a claustrophobic elevator encounter aren’t as high as they might have been.II

  Loeb has brought his pugnacity to 15CPW, however. In 2009, he was sued for nonpayment by a rigging company he’d hired to hoist some of his larger belongings through his thirty-ninth-floor windows after rushing his renovations so he could move in by the end of 2008. During the job, a cable got tangled, delaying the process by three hours, and the Loebs used that and charges for warehousing, storage, and transportation to challenge the bill. Margaret Loeb and several lawyers appeared in court to make their case that their LLC owned the apartment, not them, only to be admonished by the judge and told to resolve the matter. The rigger’s claim for almost $99,000 was promptly settled for $82,500.

  Loeb has also tangled with his neighbors at Fifteen, or rather, just beneath it. A swimmer, he likes the water cold in the 15CPW pool. Other swimmers, particularly the many mothers with kids in the building, like it warm. Conflict followed and a questionnaire was sent to all the owners, polling them on a number of gym-related issues, including the pool temperature. Again, it seems, Daniel Loeb lost a battle. Shortly after the questionnaires were returned, Loeb quit the building’s gym committee.

  Loeb is hardly the only bare-knuckle hedgie at Fifteen. It is indicative of the approach of another early buyer, Barry Rosenstein, that one of his funds is called Piranha; he once bragged to the Wall Street Journal about making a corporate opponent retch in a meeting. A big man with a receding hairline who alternates between jeans and striped shirts (in the office) and handmade Italian suits (for meetings when, in Gordon Gekko fashion, he seeks to intimidate), Rosenstein is the middle child of a tax accountant from West Orange, New Jersey. He was suspended from high school for spray-painting the basketball coach’s garage.

  After studying accounting at Lehigh University, Rosenstein got an MBA at Wharton and went to work for Merrill Lynch, where he’s said his Armani suits won him another rebuke, so he decided to find a less institutional job. He lacked “the pedigree and patina of those Waspy guys” at Merrill, he’s said, so he cold-called Asher Edelman, one of the superstars of eighties finance and talked his way into a job at his firm, which mixed hedging, arbitrage, investment banking, and activism, and became an Edelman protégé. Rosenstein told Bloomberg that he’d asked for $1 million in salary and Edelman agreed. Edelman recalls the lunch, but takes issue with Rosenstein’s account of it. “He asked for a hundred thousand dollars,” Edelman says, “and I said, ‘We can’t go that far.’ Think about it! He was twenty-four years old and he was hired to crunch numbers, nothing else.”

  Chutzpah is not a negative in finance, though. In 2001, Rosenstein launched JANA Partners—an acronym from the names of his four children—hoping to take advantage of the dot-com stock collapse and the growing skepticism about corporate management after the fall of such companies as Enron, Tyco, and WorldCom. His first big target was Herbalife, the distributor of weight-loss and nutritional supplements that had been (and is still) accused of being a pyramid scheme. Rosenstein doubled his money after forcing Herbalife’s sale, then merged JANA with Marathon Advisors, another hedge fund, to increase his war chest. It was run by Gary Claar, a former corporate lawyer, who joined JANA as a co-owner. Claar (who describes himself as U2’s the Edge to Rosenstein’s Bono) would sign a contract to buy an $8.75 million D-line apartment on the thirtieth floor of the 15CPW tower a week after Rosenstein bought his.

  In the interim, JANA had taken part in dozens of activist campaigns, and they’d brought Rosenstein and Claar multiples of the sort of wealth the former had hoped for from Asher Edelman. They also made him controversial. In 2004, when JANA’s assets hit $2 billion, the head of a data-processing company accused it of spreading lies about the firm. The next year, Kerr-McGee, an Oklahoma oil company, sued Rosenstein as well as Carl Icahn, who’d joined JANA in a proxy fight. Kerr-McGee accused them of violating a federal law requiring disclosure of an investment. But Rosenstein’s pugnacious strategy bore fruit. Between 2003 and 2006, JANA earned annual returns of more than 30 percent.r />
  Rosenstein spent some of his take on his 15CPW apartment. He either refused or ripped out all of Robert A. M. Stern’s moldings, baseboards, flooring, and trim, as well as some walls and the legally required rudimentary staircase. His design team opened up the public rooms, dispensing with curtains and doors, aside from the five sets of French doors to the ten-foot-wide, L-shaped terrace. Solar shades that are invisible when retracted are the only window treatments. The walls are covered with limestone-colored Venetian plaster and Japanese tamo paneling and custom-crafted zebrawood floors were added. A heated wood floor went into a yoga studio. LED lighting that mimicked natural light was installed on the ceiling of the switchback staircase to the seventeenth floor. Rosenstein filled the beige, pale gray, and white apartment with modern art including two Warhols, a John Chamberlain car-crash sculpture, a small, early Roy Lichtenstein painting, and a large Gerhard Richter canvas over the ebony-and-rosewood table and leopard-print chairs in the dining room. Above the table hangs a delicate alabaster-and-bronze chandelier. Elsewhere, interior decorator Orlando Diaz-Azcuy placed an Axel Salto vase, Chinese bronze vessels, a Hiroshi Sugimoto photograph, a grand piano, and a mix of midcentury modern antiques and spare modern furniture. The Rosensteins’ desire for comfortable, informal furniture and fabrics led their decorator to nickname them Mr. and Mrs. Chenille. Money can buy you more than just stuff: it all took only eight months to complete.

  As the renovations were under way in 2008, JANA, by then reportedly an $8 billion fund, set its sights on CNET Networks. Bought after its CEO branded Rosenstein an opportunist, the maneuver reportedly earned JANA about $100 million. This likely came in handy as JANA had also acquired a large stake in a derivatives-trading service, MF Global, which lost 80 percent of its value in the first six months of that year.III In a letter to shareholders, that investment was described as “an utter disaster” likely to win a place in “the JANA hall of shame.” Rosenstein had made the Forbes list of billionaires in 2007 and 2008 with an estimated net worth of $1.3 billion, but then fell from that pantheon of plutocrats. Nonetheless, in 2012, JANA was said to have about $3.5 billion under management.

  Loeb, Och, and Rosenstein were the first of a herd of hedgies and alternative-investment managers at Fifteen Central Park West. Many bought the more expensive and significant apartments in the building, but one of the wealthiest hedgies in the world, Alan Howard, co-manager of the London-based hedge giant Brevan Howard, and his wife, Sabine, bought the comparatively small apartment 10C in October 2005 for $11.5 million. Though he has an MBA in chemical engineering, Howard began his career as a trader at Salomon Brothers in his hometown, London, and eventually found his way to Credit Suisse First Boston. There, at age thirty-seven, he was considered one of the best traders in the world and earned a bonus estimated at £10 million in 2002, tying with the head of Barclays Capital, Bob Diamond, for the best-paid banker in London’s City financial district. Howard and five colleagues promptly quit to cofound their own hedge fund, which floated a public listing on the London Stock Exchange five years later. A supporter of England’s Conservative Party, he left the country in 2010, establishing residence in Geneva, where he’d long enjoyed skiing holidays with his French wife (they have four children). He also has a home in Israel.

  In 2011, with $32 billion under management, Brevan Howard tied for fourth place with Paulson & Co., the New York fund that famously bet against subprime mortgages, on Bloomberg Markets’ list of the world’s largest hedge funds. Howard can easily afford multiple residences; in 2012, when Brevan Howard’s coffers held $39 billion, he topped the Sunday Times of London’s list of the richest local hedgies with a fortune of £1.4 billion. Like Dan Loeb and Dan Och, he counts his favored causes as Judaism and Israel.

  The hedgies just kept on coming. Shortly before Christmas 2005, Anthony Yoseloff, another Ivy League standout with degrees from Princeton and Columbia’s law and business schools, bought unit 34D for almost $10.7 million. A managing director of Davidson Kempner Capital Management, he underwrote a dormitory at Princeton that was named for him. His boss, Thomas Kempner, is the son of the late East Side socialite Nan Kempner and is a former Goldman Sachs bond trader.

  A few days later, Arnold Snider and his wife, Katherine, bought 12D for just under $16.3 million. Snyder started his career as an analyst at Kidder, Peabody & Co. and joined the famous hedge fund Tiger Management before launching his own, Deerfield Management, which focused on investments in health care. He has since retired. Richard O. Rieger, a portfolio manager at Kingdon Capital Management, apparently bought apartment 31A the following February through an LLC called Mayflower Redux, but insists, “It’s not me,” even though Mayflower shares an address in Bedford, New York, with his home there and his name appears on public filings concerning the apartment. Rieger “spends most of his time there,” says someone who worked with him at Kingdon, adding that he found the place through a friend at Goldman Sachs. Then, perhaps to excuse him, the source goes on, “He never answers a question directly. He’s a master of obfuscation.” But not a master of using an LLC to hide his real estate purchases.

  Ruvim Breydo is a master of mathematics. A managing partner at D. E. Shaw, one of the computer-driven trading and investment firms known for its quants, the quantitative analysts who drive their businesses, Breydo was a student at Math School #239 in Leningrad before the collapse of the Soviet Union but, by 1991, had emigrated to New York. At Harvard, he was elected to Phi Beta Kappa in the class of 1995. He started at Shaw as a trader and programmer and lived a few blocks from the Long Island Expressway in Queens, but by 2004 was able to buy his first trophy apartment, a $2.9 million three-bedroom condo in Trump Place on the Hudson River. Breydo and his wife, Olga, coauthor of a self-published book on parenting, upgraded to apartment 6A at 15CPW for $14.56 million in April 2006 and sold their Trump apartment three years later after dropping its price from $5 million to $3 million. Sometimes, the math just doesn’t work out—even for a genius.

  In October 2012, angry Occupy Wall Street protesters marched on 15CPW, and a few weeks later, an offshoot calling itself Occupy Goldman Sachs set up a ragtag vigil across the street in the shadow of Trump International. The focus of their protest was Lloyd Blankfein. “What a natural location to occupy, considering how Goldman Sachs engaged in some of the worst financial fraud the world has ever seen in the lead up to the 2008 financial crisis,” the group wrote on its blog. “But despite such blatant lawlessness not a single official of Goldman Sachs has been prosecuted. Rather the corporation was rewarded, receiving more taxpayer funded bailouts than any other investment bank. Indeed this is a reminder that, as we close in to the 2012 elections, All Roads Lead to Wall Street. Heads they win, tails we lose.”

  Had Occupy gathered the press clippings and looked past the LLCs and other shingles that owned 15CPW apartments, it would have found many more targets for its rage. Goldman Sachs wasn’t the only bank at Fifteen with connections to the financial crisis. Not by a long shot. Some were associated with multiple apartments there as well.

  Take, for instance, the banker for whom Robert A. M. Stern’s office prepared those special plans for the twentieth-floor penthouse. It’s hardly a stretch to say that Sanford I. Weill, the eighty-year-old founder of Citigroup, was the father of the Great Recession. He’s taken credit for tearing down the Depression-era walls between consumer and investment banks, insurance companies and other financial institutions, and celebrated that accomplishment with a plaque in his office that called him the “Shatterer of Glass-Steagall.” When he bought his apartment, he’d recently relinquished his post as Citi’s CEO and sold more than $250 million of its shares back to the bank, a huge pile of money just aching to be spent. Rumors that Weill was about to exit as the bank’s chairman had begun circulating in summer 2005, and the Wall Street Journal reported that negotiations over his retirement only faltered due to his demands for unusual retirement benefits such as the use of a corporate jet and a Citigroup-paid security detail.IV Fina
lly, Weill announced that he would step down in spring 2006 and, on April 18, handed over the reins of the company to his successor at its annual meeting at Carnegie Hall (where a recital hall had recently been named for him).

  Weill’s rise from scrappy Wall Street trader to the man who invented the too-big-to-fail bank had long since made him a living legend. The son of Polish Jewish immigrants, he was raised in Bensonhurst, Brooklyn, graduated from Cornell, and started his career on Wall Street in 1955 earning $35 a week at Bear Stearns. In 1960, he and three friends started a brokerage firm that they would build through acquisitions of other companies—Weill’s forte—into the second biggest in America. In 1981, American Express paid $930 million to acquire what was by then called Shearson Loeb Rhodes and made Weill its president as well as chairman and CEO of an insurance subsidiary.

  But American Express was a “white shoe” operation with deep roots in the patrician traditions of Wall Street, and Weill, who had triumphed in the alternate universe of the more recent rough-edged Jewish iteration of finance, never fit in. So in 1985, he quit in frustration over his inability to really run the company and went looking to start again. He got back in the game in 1986 when he took a small Baltimore lending company public and again began acquiring other companies, most notably after the 1987 stock market crash, when he took over Primerica Corp., which owned mutual funds, an insurance company, and the Smith Barney brokerage. In 1993, it acquired Travelers, another insurance company, and took its name. Then in 1997, Travelers bought Salomon, a leading brokerage and merged it with Smith Barney. A year later, after failing to combine with J. P. Morgan, it instead agreed to merge with Citicorp in a $70 billion deal often described as audacious because it could not have survived government review unless the Glass-Steagall Act was repealed.