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

Page 28

by Gross, Michael


  Einhorn was right. A few weeks later, Callan announced Lehman’s first quarterly loss since its spin-off from American Express—almost $3 billion—and a $6 billion share sale to bolster its bottom line. Heads had to roll. “I was the public face of the firm and we had to show the world we were making changes,” she would soon tell Fortune. In only three more days, Callan was demoted (her corporate mentor, the bank’s chief operating officer, was as well). But instead of her getting a new job, “they ignored me,” Callan said, so a month later she quit to join Credit Suisse as head of its hedge fund business, the same job she’d excelled at before. Credit Suisse even bought her Lehman stock from her. “I was lucky to get out, but I was so sad,” she said.

  Callan’s ritual sacrifice didn’t help Lehman. It filed for Chapter 11 bankruptcy protection on September 15, setting off shock waves in markets around the world that would still be recovering five years on. Callan’s troubles weren’t over, either, though her tenure as a 15CPW owner would end two weeks later, when she sold her never-occupied unit for $11.8 million to a neuropsychologist who’d founded ComPsych, which provides mental health programs for employees of corporations and governments, and union members. Two weeks later, CNBC revealed Callan was one of a dozen Lehman executives subpoenaed by federal prosecutors investigating Lehman’s collapse.

  “I think I was personally naïve,” she admitted at that time. “Any kind of positive exposure runs the risk of negative exposure. It becomes celebrity, and you get a persona. Not only does it get away from you personally, it gets away from the firm, and they can’t control it.” But Callan did find a way to control it—one that had the added benefit of confounding most of those who’d been riveted by her rise and fall. In February 2009, she quit Credit Suisse, though the move was described as a leave of absence until a year later, when she officially retired on the last day of 2009. CNBC then revealed that she’d left Manhattan behind, too, moving to a home in East Hampton she’d bought with her ex-husband in 2005 for $3.93 million. He’d transferred it to her two weeks before her closing at 15CPW, likely as part of their divorce settlement. She was living there with a New York fireman she’d known since grade school. He’d called after seeing her on CNBC and they’d started dating.

  Callan was still not free and clear of the Lehman mess. Lawsuits for misleading investors followed her for years and were the likely reason for her departure from Credit Suisse, and for the sporadic listing and unlisting of the East Hampton house. Finally, though, late in 2011, she married her fireman and the couple bought a second home on the west coast of Florida. The New York Times hit the right note when it dubbed her Wall Street’s Greta Garbo. By staying silent and avoiding the limelight, Callan, like the film star, ensured her status as a fascinating enigma.

  Callan’s story also reveals the astonishing rise in the value of a Fifteen Central Park West apartment in the two and a half years between her contract and her sale. For the truth is, Callan’s apartment wasn’t, isn’t, that special. Yet it was immediately clear as the building opened and closings began in November 2007 that the appreciation of its apartments was unusual, even unprecedented.

  The Zeckendorfs had orchestrated something extraordinary. Whether Fifteen units are worth the prices paid for them then and since is and will likely remain a matter of argument. Many people believe it is the best and best-situated apartment house to be built in Manhattan since the Depression. Some, especially those paying huge sums to buy there subsequently, clearly believe the units are the best in New York, worth more per square foot than any others. Another school of thought, however, casts 15CPW as the naked emperor of buildings—more about image than realty reality. Regardless, the rise in prices there—as real estate just about everywhere else sank in value—boggled the mind.

  Behind the fireworks of those big prices, something else just as fascinating was going on. While Callan, the brainy blonde who created the means of her own destruction, had to check out of Manhattan and sell her place at Fifteen to find some privacy, other less visible, but no less wealthy and powerful, types were hiding in plain sight there. Three were employees of Morgan Stanley, another too-big-to-fail bank. Emil Costa, recently named a managing director, bought 25A for $6 million. Guy Metcalfe, just appointed cohead of the real estate banking division, bought 2C with his wife for $9.5 million, though he immediately listed it and flipped it for $11 million. (“He was nervous,” says a Morgan Stanley colleague at 15CPW. “His whole net worth was in Morgan Stanley stock. In my mind, this was a safer place for my money than the financial markets.”)

  The last Morgan man among the initial buyers was Sonny Kalsi, the real estate specialist who bought the A-line apartment next door to Goldman’s Justin Metz. Born in London, the son of a nuclear physicist of Indian descent, he was raised in Tennessee and joined Morgan Stanley in 1991. By 2006, Kalsi was global head of the firm’s real estate, running a division rather like Goldman’s Whitehall funds, and bought his apartment when he moved back to New York from a stint overseas. A real estate banker who knows Kalsi well says he bought at Fifteen after being turned down when he tried to buy a co-op from an ailing, elderly man. “The notion that a board of knuckleheads could keep a guy in a nursing home from selling his apartment?” the banker says. “I’d go postal.”

  A number of other so-called too-big-to-fail institutions—among them JPMorgan Chase and the insurance giant AIG—are also represented at Fifteen. After three decades in the insurance business, Rodney O. “Rod” Martin was the COO of AIG’s worldwide life insurance business and chairman and CEO of its American Life Insurance Co. unit in 2006 when he and his wife bought apartment 3B for just over $8 million. American International Group sold billions of dollars of credit default swaps, another form of collateralized debt obligation, which allowed investor-gamblers to bet on the probability that borrowers might default. They brought the insurer to its knees just days after the collapse of Lehman Brothers, leading to a $182 billion government bailout of AIG. Just before the US government arranged for AIG to pay $13 billion in taxpayer money to Goldman Sachs to settle derivative contracts at the height of the mortgage mess, Martin and his wife got a $4 million loan from Goldman, with interest-only payments due for the first decade, at two percentage points below the prevailing mortgage rate, the blog Gawker revealed. It noted that “as evidence of how important Martin was to Goldman’s business, the mortgage was executed by William Yarbenet, the firm’s chief credit officer, himself.” A Goldman spokesman subsequently identified Martin as a private client of the banks. Martin was clearly a good credit risk: he earned more than $10 million in 2009. After the government limited compensation at companies taking its bailouts and Martin’s 2010 take-home was cut from $7.26 million to $3.6 million, he left AIG; he is now CEO of ING Insurance.

  The last big banker at 15CPW owns two apartments there. Jeffrey C. Walker retired as chairman and CEO of CCMP Capital, the $12 billion successor to JPMorgan Chase’s global private equity fund, ten months after signing his contracts at Fifteen. Walker, who was also a vice chairman of both JPMorgan Chase and of the JPMorgan Foundation, uses 2B, which has three rooms and an open kitchen and cost $3.7 million, as an office and lives upstairs in 14D with his wife, a former fashion designer, and their children. It set him back another $21 million–plus.

  A graduate of the University of Virginia with an MBA from Harvard, Walker began his career as an accountant before moving into investment banking at Chemical Bank, where he ended up running a venture-capital and leveraged-buyout subsidiary and founded its private equity fund. In 1996, when Chemical acquired Chase Manhattan Bank in a merger (and took the name Chase), Walker kept his job, and in the last quarter of 1999, his group accounted for a fifth of the bank’s $6.27 billion in revenues—and he became a public figure, his investments in tech and telecommunications watched and sometimes copied.

  A year later, when the bank changed its name again after merging with J. P. Morgan & Co., Walker joined a new executive committee while also keeping his job ru
nning their combined private equity businesses. Perhaps in celebration, he gave $1 million to the Thomas Jefferson Foundation, which operates the former president’s home in Monticello, and another $500,000 to his alma mater, the University of Virginia, to upgrade its library’s technology. Walker would continue to spread his wealth widely in an active philanthropic sideline.

  “When the Limelight Turns Harsh” was the New York Times headline on a story in summer 2001 tracking a change in Walker’s fortunes when his unit’s assets were written down by $1 billion and the larger bank suffered a 63 percent drop in quarterly profits. But in an interview with the paper, Walker expressed confidence despite the pain caused by the bursting of the dot-com bubble—and time would prove him right.

  Late in 2006, Walker and his wife decided to return to New York after raising their children in his hometown of Wilton, Connecticut. “I was definitely tired of nineteen years of commuting,” Walker says, adding that 15CPW “was the only place we looked at when we decided to make the move. Once we saw it, we fell in love with it.”

  Ironically, Walker ended up commuting again immediately after retiring from JPMorgan Chase, when he accepted a position as a lecturer at Harvard’s Kennedy School in 2008 and as an executivein-residence at Harvard Business School, his other alma mater, from 2009 to 2010. Since then, he’s devoted himself mostly to good works. But he is also an unpaid advocate for Fifteen Central Park West and has served as head of its condominium board ever since control of it passed to its resident owners. His one brief comment on the building demonstrates that his determination to make it different from its models mirrors that of the Zeckendorfs and Bob Stern.

  The real-property embodiment of Hegel’s dialectic, 15CPW grafted the thesis of the impenetrable limestone-clad Park Avenue co-op with the antithesis of the amenity-rich glass-tower condo to forge a synthesis, a new kind of club for the newly enriched and those who aspire to join them. The cost of entry aside, Fifteen’s location, where the West Side meets Midtown, symbolizes its aspiration to be an open club, one that anyone might be able to join. It’s a limestone, steel, and concrete embodiment of the persistence of the American Dream. “We’ve designed the culture here so it’s open, friendly, efficient, and family-like,” Walker says. “My fourteen-year-old comes in and everyone high fives. That’s not what I’d call an East Side building.”

  * * *

  I Yang could not be reached. A lawyer, responding to questions for Loeb, says there is no animus between them and they’ve never run into each other. In mid-2013, Loeb left Yahoo!’s board and Third Point sold its shares back to the company. That year, Loeb also picked a fight with Sony, and alongside Carl Icahn, bought stock in Herbalife, a nutritional supplement company often accused—by one of his 15CPW neighbors, among others—of functioning as a pyramid scheme. Those purchases helped support the company against its detractors.

  II It would later be taken over by Jon Corzine, the former head of Goldman Sachs, and would subsequently collapse.

  III To this day, the caller ID signature for his personal office reads “Citigroup.” A writer who has been there says the large suite in the General Motors Building is paid for by the bank. Weill declined to be interviewed.

  IV “That notion makes no sense,” counters Hoover. “ECI has nothing to do with financial interests.” In an odd twist, Hoover is married to John Avlon, a writer for the Daily Beast and the son of the man who assembled the 15CPW block.

  Part Eight

  * * *

  SEEKING ALPHA

  I worked and I saved

  and I was sharper than all Adam

  and here I sit, by golly, by golly!

  —F. SCOTT FITZGERALD, THE BEAUTIFUL AND DAMNED

  Anathema. That’s the only word to describe how traditional Manhattan luxury co-ops look on celebrities. It’s how they view the leading tribes in the taxonomy at Fifteen Central Park West, too: hedgies, foreigners of all sorts, proud Jews. So it stands to reason that more of the famous would soon join Jeff Gordon in the celebrity cohort at 15CPW, attracted to the same thing the too-big-to-fail bankers want: comfort, escape, privacy, security, and status. From its website to its hushed salesroom, 15CPW used understatement to attract the overstated and the overexposed.

  Understatement only goes so far, though. So alongside the restrained promotional campaign—“trying to set a quiet tone,” as PR man Richard Rubenstein puts it—he and the Zeckendorfs kept up a steady drumbeat of unsubtle publicity. “It snowballs and there’s a shift,” says Rubenstein, who noticed and carefully nurtured the growing frenzy. “People want to be associated with the building. It was running on its own.”

  The second member of the celebrity-fashion-infotainment nexus to arrive at Fifteen never actually lived there. The press would say Joseph Betesh, the Syrian-born founder of the Dr. Jay’s fashion label, which began as a surplus store in the South Bronx in 1975 and grew into a fashion empire with the neighborhood’s hip-hop scene, agreed to buy apartment 28B for $5.7 million late in September 2005 and closed on it in April 2008. In fact, it was the founder’s son, also a Joseph, and a condo investor. He co-owned a sixty-sixth-floor apartment at Time Warner, and broker Joanna Cutler, who co-owned another, had convinced him they should buy at 15CPW together, “to rent out and one day sell,” she says.

  They rented it almost immediately to another celebrity of sorts: Robert Stephan Cohen, one of New York’s leading divorce lawyers. He’d been living at J. E. R. Carpenter’s 920 Fifth with his wife, Stephanie Stiefel, a managing director at the money-management firm Neuberger Berman, when they got a call out of the blue offering to buy their apartment. They decided to buy a new one on Beekman Place, in a co-op where renovation rules were quite strict, and work could only be performed in summer. So Stiefel suggested trying to rent at 15CPW. Cohen, who hadn’t lived on the West Side since the mid-1960s, was dubious. “It will be an adventure,” Stiefel promised him.

  “Our apartment was perfectly nice, but a lot smaller than we were used to,” he says. He was also used to a different ambience. “We were always in prewars where it was quiet, we knew everybody, they knew us. This was like a glitzy hotel with lots going on, people from all over the world we never got to know, little kids running around. I couldn’t wait to get back to a small, quiet building.” After two years as renters, Cohen and Stiefel left for Beekman Place and the apartment was sold to Gina Lin Chu, the estranged, philanthropist wife of another fashion label founder, Nautica’s David Chu. She already owned 6N, a large two-bedroom in the base of the tower, which they’d picked up for just under $3 million. Their second purchase gave them more space and Betesh and Cutler a $5.5 million profit. Cutler would later broker the sales of several more apartments in the building, including two to Russian buyers, and would rent apartments to Keith Barish, the financier-turned-producer, and Todd Cohen, a real estate heir, and his wife, a Cosmopolitan editor.

  The penthouse that shared the forty-first floor with Will Zeckendorf’s went to the first member of the media to join the 15CPW flock, but he’d come out of the finance world and his wife remains in it, so they fit right in. Marvin Shanken, the publisher of Wine Spectator and Cigar Aficionado magazines, is fond of recalling that he finished last in his class at the University of Miami in the midsixties. The son of a New Haven jeweler, he had to go to night school to qualify for an MBA program. In 1969, he went to Wall Street, eventually making partner at an investment firm, and fell for the wine business while doing deals to finance vineyards. He bought a small newsletter covering the international “drinks,” or liquor, market and, after two years, decided to turn his new business into a full-fledged publishing company. He began publishing research reports on the wine, liquor, and beer businesses, trends in drinking, and even wine coolers, and organized seminars and tastings for his subscribers out of a $330-a-month, one-bedroom Manhattan apartment. In 1979, he added the biweekly Wine Spectator to his stable.

  By the end of the eighties, Shanken had accumulated an East Side apartment, a home at th
e beach in Quogue, and a San Francisco condo and built a new office with a steam bath, a humidor room for his cigars, and a nine-thousand-bottle wine cellar. By then, he was married to his second wife, Hazel, a vice president with Drexel Burnham Lambert, now a senior vice president at Morgan Stanley.

  In 1992, Shanken launched Cigar Aficionado. “The same nut who loves wine, that same emotional interest and passion exists with cigar smokers,” he told USA Today. “We are a beleaguered group of men who have been treated in the last ten years as lepers.” A year later, the Washington Times pegged the cost of his personal cigar consumption at $10,000-plus a year. His wife wouldn’t let him smoke at home, so he turned his office humidor into a walk-in with an exhaust system so he could smoke with impunity.

  A noisy advocate for his expensive habits, he conducted his magazine’s 1994 interview with Fidel Castro himself, praising the dictator for creating the world’s best cigar. Round and fuzzy, with a thick mustache, Shanken favored clear nail polish and eye-catching ties and suspenders. But in his politics, he was conservative. In the 2012 election cycle, he and his wife gave generously to Republicans. In 2005, Shanken also bundled about $25,000 from cigar manufacturers for a New York mayoral candidate running against the incumbent, Michael Bloomberg, who’d banned smoking indoors in public places in New York City.

  That wasn’t enough to drive Shanken from New York, though. Early in October 2005, he paid $19.754 million for his half-floor penthouse at 15CPW, which represented a small discount from the $19.9 million asking price. As an earlier buyer, he may have saved money by rejecting finishes.

 

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