Gilded Lily

by Isabel Vincent

  By most accounts, his health continued to deteriorate and he became increasingly isolated from his family in Brazil. In better days, Edmond used to speak to Joseph or Moise or both on a daily basis. But in the spring of 1999, the intercontinental telephone calls ceased. Sem Almaleh, a bank manager who worked with Edmond for four decades, said that Edmond “called his brothers several times a day, but there was a problem and they had had a rift” just before Edmond died. During the last months of his life in Monaco, Edmond spoke only to a few trusted employees, his nurses, and, of course, Lily, who now wielded tremendous control over every aspect of his life.

  Family friend Albert Nasser attributes Edmond’s split with his brothers to a family spat over undisclosed financial matters. Perhaps the Safra brothers could not understand why Edmond had decided to sell his Republic holdings to HSBC, especially after the press announcement of the previous year which clearly stated that Edmond, despite his illness, would be working closely with his younger brothers to oversee his banks.

  “It was my understanding that Edmond wouldn’t speak to his brothers for a year before he died,” recalled Nasser.

  Joseph seemed to confirm this years later when he told a Monaco court that he had not seen Edmond for a year before his death, and that indeed there had been “a few problems,” although he was confident that they would see each other again. A month before Edmond died, he had even spoken to him on the phone, recalled Joseph.

  “He was a brother—a real brother—and also a father,” said Joseph. “He was the head of the family. I adored him, and I still adore him.”

  Still, it seemed strange to Nasser and other friends that such a deep split had occurred between Edmond and his brothers. He also couldn’t understand why Lily abruptly changed Edmond’s most trusted physician. Edmund H. Sonnenblick, a pioneering New York cardiologist, had been one of Edmond’s physicians for thirty years, said Nasser, who was also a patient of Sonnenblick until the cardiologist’s death in 2007. The Sonnenblicks were so close to the Safra clan that Annie Sonnenblick, the cardiologist’s daughter, had worked as an assistant treasurer at Republic National Bank in New York before her death from septicemia in 1984.

  “Lily cut him off after thirty years and started parachuting other doctors into Monte Carlo to take care of Edmond,” said Nasser. “The doctor [Sonnenblick] was the same person who took care of the Safra brothers in São Paulo. Joseph had him flown to São Paulo when he was not well.”

  According to those closest to Edmond at the time, Lily was so concerned about Edmond that she kept consulting new doctors. In the spring of 1999 he was so overmedicated with the drugs that each new physician recommended to control his Parkinson’s that he started to be seized by violent hallucinations. Edmond was hospitalized in New York for the condition, but when his team of lawyers and accountants informed him that the hospitalization was going to cause tax problems because he would be overstaying his six-month residency limit in the United States, Lily made the decision to go across the border to Canada for medical treatment. The Safras moved with their entourage of aides into Toronto’s Four Seasons hotel for a few weeks while Edmond recuperated from the violent seizures and his deep depression.

  Whether his depression was brought on by the medications he was taking—a daily drug chart shows he took drugs to control his cholesterol and Parkinson’s—or the estrangement from his brothers and the imminent sale of his bank, or all of these, is difficult to say. But by the time he returned to his apartment in Monaco in the fall, Edmond was taking a potent cocktail of antidepressants that included daily dosages of Xanax, Samyr, Clozaril, and Depakote. While most of these drugs are administered to Parkinson’s patients to keep the anxiety associated with the disease at bay, physicians who regularly treat Parkinson’s disease were puzzled as to why Edmond was taking Depakote. The drug, which is used to treat bipolar disorder, has been known to cause tremors, and could have canceled out the effects of the other drugs that Edmond was taking. It could have also led to severe depression.

  Similarly, before he died in 1969, Alfredo Monteverde was also taking a potent mix of antipsychotic medications that included lithium carbonate, which was used to treat schizophrenia, and Tryptizol and Nardil, both powerful antidepressants that interfered with his cognitive function.

  It was during their time in Toronto that the Safras met Bruce Sutton, a local psychiatrist who helped Edmond through his crisis. Sutton would become such an important figure in the Safra universe that Lily would fly him and his family for a vacation at La Leopolda, where he helped Edmond deal with his depression.

  The Brazilian branch of the Safra family has provided few details about the rift since Edmond’s death. It is also unclear if Edmond ordered the removal of the family photographs from his home, or if they were removed without his knowledge. Did he make the conscious decision to stop speaking to his brothers, or was that decision simply made for him when they called and were told he was indisposed? Was his judgment so clouded by the medications he was taking that he had become paranoid about his family in São Paulo? What was their real intention in helping him to oversee his banks? Were they being honest with him? Perhaps these were now questions that were going through Edmond’s own mind. Yet it’s hard to believe that the Safra brothers had anything but Edmond’s best interests at heart. This was their beloved elder brother who had been instrumental in building the Safra banking empire on three continents. Their relationship had always been one of complete trust.

  Whatever the reason for the family split, it became irreversible when Edmond, frail and in ill health, began to negotiate the biggest deal of his financial career—to sell Republic New York Corporation to HSBC, a venture valued at over $10.3 billion when it was first announced in May 1999.

  “The acquisitions we have announced today will bring together two complementary private banking franchises,” said Sir John Bond, HSBC chairman. “At the stroke of a pen, it doubles the size of our consumer-banking operations in the United States, and it doubles the size of our private-banking business around the world.”

  But while the sale would prove a huge boon to HSBC, it effectively ended Edmond’s banking career. As the New York Times noted in a front page article, the deal would “mark the end of independence for a banking business founded more than three decades ago by Edmond Safra, a Lebanese-born Jewish businessman who is regarded as an enduring figure in the banking world.”

  If Joseph and Moise saw traces of Edmond’s ill-fated gamble with American Express in the HSBC deal, they were unable to make their protests heard. They had lost the battle when they couldn’t even reach him by phone or visit him at his home. The negotiations for the sale of Republic took place without the wise counsel of his brothers. Bond and Republic executive Jeffrey Keil, who had first encouraged Edmond to make his ill-fated deal with American Express years before, conducted the negotiations. Keil was very close to Lily, and in the absence of Edmond’s brothers, Keil effectively became one of the ailing banker’s closest confidants.

  Still, weeks before it was to be signed, the deal hit a snag as accountants from the HSBC Group conducted a financial review of Republic. Ultimately, Martin Armstrong, a major client of Republic’s futures brokerage and chairman of Prince ton Economics International, a hedge fund, was indicted on charges of defrauding Japanese investors of nearly $1 billion. Armstrong, who has vigorously denied the charges, allegedly sold assets known as Princeton notes, promising his investors that the notes were backed by Republic. At first, Republic was not named in the investigation into Armstrong’s alleged fraud scheme. However, Republic did launch its own inquiry into the scandal, which delayed shareholder voting on the HSBC deal.

  Later, New York authorities revealed the collusion between some Republic employees and Armstrong, who began by opening thirty-six brokerage accounts and depositing $350 million in the bank in 1995. By the time HSBC began to analyze the bank in the fall of 1999, Armstrong had deposited more than $3 billion in 450 accounts. According to court papers, A
rmstrong’s investors received assurances that he had invested their money in U.S. government securities. But in fact, Armstrong used the investments to speculate in commodities markets, losing millions of dollars in the process. The Ponzi scheme developed as he began losing money in the speculation and allegedly used proceeds from the sale of new Prince ton investment notes to pay off old Prince ton investors as their accounts came due. When two Republic executives discovered the scheme, they agreed to help Armstrong by issuing fake account statements.

  The incident nearly scuttled the HSBC deal until Edmond agreed to take a personal loss of $450 million and cut the price for the sale of Republic from $10.3 billion to $9.85 billion. “I am taking this action because I believe that a swift completion of the transaction will be to the benefit of Republic’s clients, shareholders and employees to whom my life’s work has been devoted,” said Edmond in a statement in November.

  Even before the deal was sealed, Edmond unwittingly began the grim preparations for death.

  Edmond, who deeply loved his wife of twenty-three years, and had become estranged from his extended family in São Paulo during his final days, signed the bulk of his fortune over to her.

  In São Paulo, Edmond’s brothers and sisters were unprepared for such a slap in the face. They were even less prepared for his untimely death.

  EIGHT

  “Not Our Fault”

  THEODORE MAURICE MAHER entered the rarefied universe of the Safras one day in the summer of 1999 as he prepared to begin his shift at New York Presbyterian Hospital, where he worked as a nurse. Dressed in surgical scrubs and sneakers, the New England–born Maher made his way through the wide hallways of the hospital towards the neonatal nurses’ station, balancing his clipboard and a steaming Styrofoam cup of coffee. Ted, as he was known to his family and colleagues at the hospital, had just driven the seventy-two miles from his home in Stormville, New York—a quaint hamlet in Dutchess County that was about twenty miles from the West Point military academy.

  The school’s historic cemetery is the final resting place of great American heroes like Major General George Custer, who famously made his last stand against the Indians in the battle of Little Bighorn. The cemetery also contains the remains of General Lucius Clay, who defied Soviet aggression when he repeatedly pierced through the Communist blockade of Berlin to deliver supplies to the city’s entrapped population.

  The tall, lanky nurse with auburn hair and a steady gaze was also a hero, or at least that was what Ted told himself everyday. Ever since he enlisted in the army in the mid-1970s, Ted had considered himself a misunderstood hero. Ultimately, it was this hubris that would ruin his life.

  It’s true he had heroic qualities. He was loyal to his wife, Heidi, a fellow nurse he had met in nursing class at Dutchess Community College in 1988 and married five years later. He was a good father to his three children, for whom he happily endured the long commute from Manhattan to Stormville after finishing a grueling twelve-hour shift. He had also gone through a costly and protracted legal battle to gain custody of his eldest son, Christopher, whom he had taken away from his first wife while the boy was still an infant.

  He was dedicated to his tiny patients, most of whom were born premature and jaundiced or with other serious problems that threatened their lives. Fellow nurses would marvel at his patience and ability to soothe the screaming babies under his care.

  On that breezy morning in the summer of 1999, Ted casually sipped his coffee as he traded notes with Cathy, the night nurse, who briefed him on the condition of the premature infants on the ward. It was after she left that he noticed the camera, next to a set of keys and Cathy’s plastic-coated nametag, at the neonatal nursing station. Ted made some inquiries, but nobody on the ward seemed to know who owned it. Which is why Ted put the camera in the pocket of his scrubs and decided to find out for himself. When he returned home to Stormville, he had the film developed at the local WalMart in order to track down the owner through the photographs. There were about five photographs on the camera, and, ever practical so as not to waste the remaining film, Maher took photos of his own children before dropping it off to be developed.

  Ted immediately recognized the woman in the photographs—her fraternal twins had been recent patients of the ward—and obtained her address from the hospital’s finance department. Ted wrote a note to the new mother and returned the camera to her Manhattan address. Laura and Harry Slatkin, the new parents of twins Alexandra and David, were deeply touched by Maher’s gesture. Harry, a New York society figure and designer of bath products and perfumed candles, was completely surprised that Ted would return a camera that was worth well over $400. Shortly after receiving it, he called Ted to offer him a reward. In testimony at his trial in Monaco, Ted says he refused any compensation. “I said it’s the right thing to do.” If Harry really wanted to show his gratitude, he could make a donation to the hospital, Ted told him.

  But Harry Slatkin seems to have had an even better idea, and during that first telephone conversation he made Ted an offer that the neonatal nurse would find hard to refuse. The Slatkins were good friends of Adriana Elia, Edmond Safra’s stepdaughter, and knew that Edmond needed to find a responsible nurse to join his team in Monaco. Harry asked Ted if he had ever heard of the Republic National Bank (he hadn’t) and whether he would consider working for one of its senior executives who lived in Europe and was suffering from Parkinson’s disease. The job paid extremely well and would give Ted the opportunity to live in Europe for a while, said Harry, although he did not offer any specifics. He did offer to set up a job interview for him right away.

  At first, Ted didn’t know what to think. The legal battle with his first wife over the custody of his eldest son had left him extremely short of cash. There were also rumors of a looming strike at New York Presbyterian, and Ted was worried about providing for his family since both he and Heidi worked there as nurses. It took Ted a week to decide to make the call to set up a meeting with one of Edmond’s most trusted aides.

  The interview took place at the Fifth Avenue offices of the Republic National Bank. Ted brought along Heidi, who spoke about moving the entire Maher clan to Monaco if Ted was successful. She also wanted to be considered for a nursing position.

  On the surface, Ted seemed ideal. Here was a nurse with military training—a former Green Beret who had worked for four years with U.S. Army Special Forces on classified missions. He was also a highly respected and dedicated nurse. George Morelli, who knew Ted in New York, recalled that when an ambulance arrived with a sick infant, Ted was often the first to rush over to the child. “He was a great nurse,” said Morelli.

  But the great appeal of Ted Maher to someone as security-conscious as Edmond Safra was that he knew how to use a weapon and could easily double as a bodyguard. Ted had a sterling record in the military, graduating third in his class in Special Forces.

  For anyone reading his impressive resumé, Ted Maher seemed the kind of man Edmond could respect. His diligence and honesty had already been established when he went out of his way to return the Slatkins’ camera. But Edmond’s team had serious doubts about the tall, lanky stranger with the piercing blue eyes. Did he seem too eager, too aggressive? Why did he speak so loudly? In the end, Edmond’s team was not impressed. Shortly after the interview, one of Edmond’s secretaries called Lily to inform her of his decision.

  Ted Maher was a man with skeletons in his closet. Did Edmond’s team know about the history of schizophrenia in Ted’s family? That his biological father had been institutionalized for the disorder when his son was barely two years old, and spent his life in the hospital? Or how about Ted’s conviction in Nevada in June 1985? A year earlier, Ted had been arrested for burglary when he removed objects from a home he had helped build in Nevada after the builder refused to pay him. Ted was eventually sentenced to seventy-five hours of community service for what amounted to a misdemeanor offence. Could this man really be trusted with one of the wealthiest bankers in the world?

/>   Edmond’s team rejected Ted, yet they were overruled. Ted was interviewed by Bruce Sutton, the psychiatrist who had helped Edmond through his bout with severe depression. After a forty-five minute conversation with Ted, Sutton seems to have pronounced the nurse the perfect candidate for the job, and on August 13, 1999, Ted began a short trial run at La Leopolda, where Sutton had also been invited to spend a holiday.

  Lily, who was so careful about everything and everyone who entered her homes, probably assumed that Maher had been thoroughly vetted. After the four-day trial period at La Leopolda, Lily informed the staff that she wanted Ted to start immediately.

  The deal with Ted was struck while Edmond’s personal secretaries were on vacation, and by the time they returned, it was a fait accompli. In New York, Ted was given his new responsibilities: His salary would be $600 a day, and he would be required to work only four days a week. Ted balked, and negotiated for six days a week, which was initially refused, although eventually a deal was made that he would be paid for six days and work only five so as not to upset the other nurses, who had different arrangements. Like the other nurses employed by the Safras, Ted would be hired by a corporation—Spotless & Brite Inc.—whose address was the same as the Republic National Bank at 452 Fifth Avenue. The arrangement allowed the nurses to enter Monaco as tourists on vacation, not as professionals, to avoid the strict labor laws in the principality. In addition, Ted would have to sign a confidentiality and “nondisparagement” agreement, promising that he would not “engage in any conduct that is injurious to any Safras [sic] reputation and interest (including, without limitation), publicly disparaging or inducing others to disparage any Safra.”

  Under these conditions, and with the promise of medical coverage for himself and his family, Ted began work in Monaco on October 28. Every week, he faxed his hours to a Safra family aide, and within forty-eight hours Heidi received a wire transfer of his salary in Stormville.