by Mark Seal
I recognized the company name, as most people familiar with the world of finance would. Samantha, a graduate of the Wharton School at the University of Pennsylvania, was a vice president at S. N. Phelps at the time Crowe finagled his way into the respected firm. She directed me to a 1990 Forbes magazine story about its founder, Stan Phelps, entitled “Pay up . . . Or Else”:Meet Stanford N. Phelps, 56, owner of a thriving investment business headquartered modestly in Greenwich, Conn. Phelps is reveling in the junk bond mess like a pig in a mudhole. He has brought bondmail to a fine art. He will go into the market, buy a bunch of the distressed bonds and then tell the issuer: Pay up or I’ll throw you into bankruptcy, and you’ll lose the company. It often works. The folks who control the company give Phelps—and sometimes all the bondholders—a better break. If not, Phelps drags the company into a long and painful bankruptcy. Among the companies that have felt his wrath: MGF Oil Corp., MCorp., SCI Television Inc. and AP Industries Inc. . . .
One of the more colorful characters in the bondmail business, Stan Phelps is also one of the toughest and meanest. His usual tactic is to seek to control strategic blocks of bonds . . . Phelps then says: Change the terms to give my bonds a better deal or I’ll tie you up in the courts. Indefinitely . . .
Phelps is a member of the old Eastern Establishment. Born to a father who was a prominent accountant and a mother whose family owned a shoe manufacturing company in Rochester, N.Y., Phelps was educated at Exeter, Yale and Harvard Business School. After getting his M.B.A. in 1960, Phelps headed for Wall Street, which at the time was dominated by men of his background and breeding.
The story went on to detail how Phelps had established the bond department of the firm that would soon be called Drexel Burnham Lambert, which virtually created the roaring junk bond business of the 1980s:Phelps was fired in mid-1972 . . . Stan Phelps is a man obsessed, not only with making money, but also with getting back at his former Drexel associates. He often speaks of the latter in terms that are offensive to decent people. His personal vendettas are of little interest to the world, but in helping redress the balance in favor of the world’s much abused junk bond holders and against the powerful dealmakers, he is rendering a public service.
The story noted that Phelps had hired a brilliant young man named Michael Milken straight out of Wharton, only to have his young protégé take over.
“So how did the great, brilliant, and powerful Stan Phelps come to hire the absolutely inexperienced Christopher Crowe?” I asked Samantha.
She said she wasn’t sure exactly, but she was certain of how Crowe had found his way to Phelps. It wasn’t through past jobs or Ivy League connections. It was through a woman who worked at S. N. Phelps, a woman named Catherine.
“Catherine met Chris at Indian Harbor,” Samantha continued. “I heard that she introduced him to Phelps and Company with the idea that he was going to be a computer jock.”
“Just like that?” I asked. Someone with no background in finance whatsoever was hired by a major East Coast brokerage firm and allowed entrée into its computer system, where reams of confidential information were stored?
She seemed at a loss for words.
“Yeah . . . but . . . um . . . Stan had flavors of the week. Stan was like Baskin-Robbins. And to tell you the truth, Catherine convinced Stan to hire Christopher. Somebody that’s going to be a techie is maybe one step above an amoeba. Somebody who’s going to be doing technology—who cares?”
But Christopher Crowe was no amoeba. The brilliant swindler could morph into whatever he wanted to be. Having worked his wiles on Catherine, he would speedily go to work on the other affluent young men and women at S. N. Phelps. Catherine just happened to come first.
“He was going to marry some girl in Greenwich,” Chris Bishop told me, “some Wall Street woman. I had met her a bunch of times. Yeah, that was Catherine. I remember at one point he showed up with this diamond—not a ring, just a big diamond.”
That night at the Indian Harbor Yacht Club, I asked Samantha where the S. N. Phelps and Company offices were.
“I can show you,” she said. “It’s right up the street.”
We retrieved her car from valet parking and drove around the corner to a modest little building painted green. Not only was the outside of the building green, Samantha said, the inside was green too—walls, ceiling, even the desks. Everything was the color of money.
Crowe not only had to get through his personal interview with the shrewd Stan Phelps but also had to pass difficult tests. Everyone who works at a broker-dealer company must get certain accreditations. “We were regulated by the SEC and the North American Securities Administrators Association, so of course I had a file on him,” said Samantha. “You have to fill out what’s called a U4. The U4 form has your name, address, social security number. Then you have to give your history: Where did you work over the last ten years? What are the dates and what was your job there?”
Samantha added, “Often, Stan would have you take a personality test too.”
“Did Crowe take one?” I asked.
“I think he did.”
Samantha continued, “Your job history is on the first page. On the next page you have all the other questions: Have you been arrested? Have you ever been convicted? A whole page of questions, and hopefully you are able to answer no to all of them. That’s just for you to be associated with a broker-dealer; that has to go through the SEC.”
She assured me that he had dutifully filled out all of his forms and that his personnel file was in order—although since she had left the firm it was no longer obtainable. But the forms were just a preamble to the tests, she said, the Series 7 and Series 63 tests, which consist of more than seven hours of questions, and which an applicant must pass before being allowed inside a firm that deals with securities.
The Series 7 test, which has 250 multiple-choice questions, alone takes about six hours to complete; Crowe most likely took his test at One Police Plaza in New York City. “In those days, you took it by hand. Two three-hour parts, with a one-hour break. That’s for your Series 7. Some people take it two or three times, because they don’t pass it the first time. I’ve taken this test. It’s not easy.”
Did she remember how Crowe had done on his Series 7?
“He passed,” she said. “He might have been odd. He might have been arrogant. But he wasn’t stupid. He’s smart.”
After passing the stringent tests, facing his colleagues at S. N. Phelps must have seemed easy. “It was very close quarters,” said Samantha. “Everybody’s friends with everybody else. Some were childhood friends. They went to Brunswick [the exclusive Greenwich Prep School for boys, dating back to 1902] or Country Day [an equally exclusive Greenwich prep school that opened in 1926, in a barn on the property of William A. Rockefeller]. They would go skiing together. It was a club.”
“And Christopher Crowe?” I asked.
“Christopher was odd. It was like the ugly duckling waiting to become the swan, but in his mind he thought he already was the swan.”
He let Samantha and everyone else at S. N. Phelps know that in addition to being a techie he was also the producer of the new Alfred Hitchcock Presents series. “And if you looked at the credits, you would see Christopher Crowe,” said Samantha. “I asked him one time, ‘Christopher, it’s illogical to me. You’re a producer. And you become a techie at a junk bond shop making $24,000 a year?’ He said, ‘I wanted to try something different.’”
He would regale her with stories of his glory years as a Hollywood producer, giving her the inside dirt on his favorite Hitchcock episodes. What Samantha found strange, however, was his behavior in the tech department. “When I walked into his room, he would always hide his screens. Every time I walked in there, he did this. And I thought, ‘He’s doing something that has nothing to do with what he is supposed to be doing.’ Later, when the detectives came and started asking all their questions, the first thought that came into my mind was, he was going into people’s accounts and
skimming off a half cent in volume, and that’s how he was supplementing his income. Because he always had this stuff. Stuff that costs money! It was Burberry this and Brooks Brothers that, and all these tall tales. He told me he lived in rooms above a garage on North Street. So I’m thinking, ‘How?’”
Having seen Crowe’s first palatial abode, on Rock Ridge Avenue, I asked Samantha to describe his subsequent residence on North Street.
Her eyes brightened, and she said, “Oh, it’s beautiful! North Street has all these mansions. North Street parallels Round Hill Road.” Round Hill is the most distinguished district of Greenwich, home to film stars and billionaires, listed on the National Register of Historic Places.
During Crowe’s tenure at S. N. Phelps, which lasted less than a year and ended in the middle of 1987, Samantha recalled, he didn’t have any plans for Christmas 1986.
“Are you going back to Paris to see your mother and sister?” she asked him.
“No.”
“Well, would you like to come to my house for Christmas Eve?”
“Okay.”
“He walks in and says, ‘You know, Samantha, my mother and sister and I looked at the house right next to yours when it was on the market. We could have been neighbors.’”
“The house next door to ours had been on the market for six to eight million,” Samantha told me as we sat outside the green office building. “But Christopher always had a story, and it always concerned wealth. He was better than everybody, more affluent than everybody. It was just arrogance. Although he was shorter than me, he always had the attitude that he was looking down at you. I started thinking to myself I’m really sorry I asked him here to my house.”
Soon this arrogance wore thin with his colleagues, starting with Samantha, who grew tired of his haughty attitude, of his saying to her dismissively, “Well, Samantha,” and then attempting to say something glib or funny. The traders his age in the company were all close friends, and Crowe was never part of their clique. “It’s not that they excluded him, but I don’t think he ever felt included,” said Samantha, adding that finally he began to grate on the man you didn’t dare offend: “Stan didn’t like him anymore. He was annoying, and he got on Stan’s nerves until Stan just didn’t want him around.”
The final straw for Stan Phelps was when Crowe wouldn’t tell him how to access his computer, someone else insisted. For a hands-on business titan who ran a very tight ship, this was blasphemy. Was Crowe trying to make himself invaluable and irreplaceable? Some would later say that was the plan. But Stan Phelps didn’t give him the chance.
Samantha couldn’t remember if she had personally fired Crowe, but she thought she had. She did remember that the aftermath of Christopher Crowe at S. N. Phelps was even stranger than his presence there. That, however, was still several years away. At the time, he merely picked up his personal things, draped his Burberry trench coat over his shoulders, and walked out.
Two years after he left, an interesting item on his job application came to light. In the space provided for his social security number, Crowe had written what would turn out to be a curious number. When it was finally run through the system, it came back as the social security number not of Christopher Chichester Crowe but of a David Berkowitz, the name of the serial killer known as Son of Sam, who had terrorized New York City and murdered at least six people in 1976 and 1977.
CHAPTER 7
Wall Street
In the summer of 1987, Nikko Securities was on the move. One of Japan’s “Big Four” brokerage firms, the company was intent on getting into the booming American securities market and planned to increase its U.S. workforce from 250 people to 500. As part of that expansion, Nikko created a corporate bond department, which was announced in a press release on July 13, 1987. After describing the particulars of the new department, the release stated, “Christopher Crowe, who formerly ran the Battenberg–Crowe–von Wettin Family Foundation, will lead the endeavor as vice president.”
The Christopher Crowe who presented himself to the brass at Nikko Securities was, on the surface, a perfect candidate for the roaring 1980s Wall Street. He seemed smart, educated, connected. He knew the lingo of the long bond and the short sell. He had a résumé with experience at one of the East Coast’s most esteemed securities firms, S. N. Phelps and Company, and boasted of running a family foundation with royal names and seemingly deep pockets. Most important, he dressed the part perfectly, impeccably attired in suits from J. Press and Brooks Brothers. In the blizzard of money that typified the time, Christopher Crowe was like so many others dressed for success and ready to make some serious cash.
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He left his failures at S. N. Phelps behind in Connecticut. Not only did he survive, he landed at a bigger, more prestigious firm, in a much more senior position. He would be running an entire department, responsible for trading extremely high-value financial instruments. As one corporate bond trader told me, “The minimum sale you’re dealing with is a million dollars.” According to his former coworkers, Crowe’s annual salary was probably about $125,000, not including perks and bonuses.
How did he wind up in such a position? As usual, his entrée came through a single impressionable individual, in this case a man named Don Sheahan. Now deceased, Sheahan had worked in the securities business for years, and Nikko’s Japanese executives entrusted him with assembling much of their New York team. “Apparently Crowe met Sheahan at a cocktail party and sold him a bill of goods,” said Richard Barnett, who worked under Crowe at Nikko.
Another Wall Street veteran who worked with Sheahan and Crowe at Nikko told me of Sheahan, “He wasn’t some kid, wet behind the ears. Don was a former Air Force pilot, he’d been with Goldman Sachs—he was not a dope.” So how did he get taken in by a charlatan? “This guy, Crowe, had a fantastic gift about him,” said the Wall Street veteran. “He was like that character Tony Curtis played in The Great Impostor, passing himself off as an airplane pilot, a doctor, and everything else. I think the reason Don fell for it was because Don seemed to be impressed by anybody that was either extremely wealthy or had some type of family background. A name like Mountbatten would have caught his attention immediately.” (Although Gerhartsreiter had left his San Marino identity behind, he hadn’t abandoned the names he had invented for himself; according to my sheaf of documents, the birth certificate he presented to Nikko identified him as Christopher Chichester Crowe Mountbatten, born in Los Angeles.)
“Don Sheahan was taken by people who seemed to be blue-blooded,” said Bob Brusca, who worked for the New York Federal Reserve before becoming chief economist at Nikko during Sheahan’s tenure. “He wasn’t the type of guy who would necessarily check references. Someone may have told him that Christopher was a good person, and that would have been enough for him.”
But, I asked, would Sheahan’s hunch have been enough for Nikko? Didn’t his Japanese bosses have any say in the hiring of this rank amateur? “The Japanese have this thing called shadow management, where for just about every position in the firm where there was an American, there was a Japanese who looked over his shoulder,” said Brusca. “Don Sheahan was allowed to run the operation subject to the oversight of the Japanese. That meant Akira Tokutomi [an executive vice president at Nikko] shadowed Sheahan, and he would have had to have said yes to the hire of Christopher Crowe.”
His appointment was the subject of an article in the Bond Buyer, a trade periodical, under the headline NIKKO SECURITIES INTERNATIONAL ENTERS CORPORATE ARENA WITH INDUSTRIAL FOCUS:Christopher Crowe, who will head the new corporate bond department as vice president, said the department is currently testing the syndicate waters, participating in a $250 million Chevron Capital USA deal that came to market yesterday, as well as a $150 million Colgate-Palmolive Co. offering that was scheduled for pricing last evening. Further down the road, he said, he hopes to lead the department into corporate underwriting.
He said the department will work most heavily in the long-term industrial sector and will s
tructure its portfolio more or less according to the following mix: 65% industrials, 25% utilities, and the rest a mixture of banks and finance and transportation. “Customers like industrials,” he said, adding that “they’ve been oversaturated with banks and finance.”
To date, the department’s staff numbers just five, including Mr. Crowe, who formerly ran the Battenberg–Crowe–von Wettin Family Foundation. . . . By the end of the year, Mr. Crowe said, the department should total 15 staff members.
Not yet out of his twenties and with little experience or knowledge, Crowe was in charge of staffing Nikko’s new department, and he sought out seasoned finance professionals. Richard Barnett, who had just left a research analyst job at the respected brokerage firm E. F. Hutton, was one of Crowe’s first hires. “The head of research at Merrill Lynch gave my name to Christopher Crowe,” Barnett told me, and soon he met the well-dressed young supervisor, whom he described as “erudite” with “an aristocratic air.” “We met in the lobby of the Grand Hyatt on Forty-second Street. He told me, ‘The Japanese are assembling a corporate bond operation. They’ve asked me to put together an operation rather quickly.’ The interview lasted twenty minutes, and I was hired on the spot. He said there was the potential for a lot of money, and he told me what the plans were: to create a full trading operation in corporate bonds and also research. He told me I’d be hiring a number of analysts.”
They worked in a trading room in Nikko’s offices in the World Financial Center, adjacent to the World Trade Center in downtown Manhattan. As at S. N. Phelps, the quarters were tight, and everyone knew nearly everything about everyone else—except their boss, who usually sat alone, often staring into space, in his sizable office.
