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DealBook: Millionaires Clash Over Socialite’s Child Support Claims

Kim Kyung-Hoon/Reuters, Toru Yamanaka/Agence France-Presse — Getty Images and Don Hogan Charles/The New York TimesWarren Lichtenstein, left, a hedge fund titan, says Andrew Cader, an ex-Goldman executive, inflated child support payments for Annabelle Bond.

As an accomplished mountaineer who has scaled many of the world’s highest peaks, including Mount Everest, Annabelle Bond has found herself in some dicey situations.

Now she finds herself in a very different sort of predicament — a nasty legal fight between a former lover and her current one.

Her boyfriend, Andrew Cader, a former Goldman Sachs executive and part owner of the Tampa Bay Rays baseball franchise, is accused of conspiring with Ms. Bond to hide her true financial condition so that she could secure more than $50,000 a month in child support payments last December from the Wall Street financier Warren G. Lichtenstein, who has a 5-year-old daughter with the British socialite.

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Ms. Bond deviously obtained the outsize child support from a Hong Kong court to “improve upon her already extraordinary life of luxury, privilege and modest fame,” contends the lawsuit, which was filed by Mr. Lichtenstein in Federal District Court in Manhattan.

That Ms. Bond lives an extraordinary life of luxury and privilege is not in dispute. The daughter of Sir John R. H. Bond, the former chairman of the global banking giant HSBC, Ms. Bond, 43, has traveled the world as a mountain climber and extreme athlete. (The lawsuit derisively calls her a “self-described ‘activist and adventurer.’ ”) Her family has homes in London, Hong Kong, Florida and Aspen, Colo.

Mr. Lichtenstein said that in order to help Ms. Bond conceal her actual economic condition and obtain inflated child support payments, Mr. Cader disguised as loans millions of dollars in cash gifts he had given her.

Mr. Cader also characterized the disbursements as loans to avoid paying gift tax in the United States, according to the complaint.

“The case was brought to prevent an injustice and reflects Warren’s deep concern for the welfare of his child,” said Stanley Arkin, the lawyer for Mr. Lichtenstein.

Mr. Cader and Ms. Bond did not respond to multiple requests for comment.

Though Mr. Lichtenstein’s lawsuit was filed in New York and raises questions about a Hong Kong court ruling, the origins of the case trace to Aspen, the ski-resort town and favorite second or third home for the Wall Street elite.

Mr. Lichtenstein, Mr. Cader and Ms. Bond all have homes in Aspen, which is where Ms. Bond met Mr. Lichtenstein, who has one child from a previous marriage. The two were once engaged but never married; their relationship ended amicably in 2007, just months before their daughter’s birth.

“He is an amazing guy, but I think that sometimes it’s better to have one happy parent than two unhappy ones,” Ms. Bond told The Evening Standard newspaper in London at the time.

Mr. Lichtenstein, 47, made his fortune through his New York-based hedge fund, Steel Partners, which he started in 1992 and last year became a publicly traded company. Known in financial circles as combative and litigious, Mr. Lichtenstein buys large stakes in underperforming companies and agitates for change. Among his holdings are WebBank, a Utah-based financial company, and the industrial business Handy Harman.

This is the second time this year that Mr. Lichtenstein, a native of Great Neck, N.Y., on Long Island, has appeared in the press because of his personal life. The gossip papers were recently filled with rumors that he was dating the reality television personality and entrepreneur Bethenny Frankel, who is in the middle of a messy public divorce. The two are old friends and not romantically involved, a person briefed on with the matter said.

Mr. Lichtenstein’s courtroom adversary, Mr. Cader, 54, started his career as a floor broker on the New York Stock Exchange for Spear, Leeds Kellogg. In 1997, he took over as co-chief executive of the firm and earned hundreds of millions of dollars when Goldman Sachs acquired Spear Leeds for about $6.5 billion in 2000.

(A skilled musician, Mr. Cader moonlighted as a percussionist while trading, and has a credit for playing rub-board on the 1985 Talking Heads album, “Little Creatures.”)

He and several of his former Spear Leeds colleagues bought the Rays in 2004. Though some of them play an active role in the team’s management, Mr. Cader has a small, passive stake. Mr. Cader, who has a child from a previous marriage, owns a jet, a Dassault Falcon 50, which he uses to travel among homes in Hong Kong, Aspen and Mount Kisco, N.Y. He, too, knows Ms. Bond from Aspen.

Around the time they met, Ms. Bond became locked in a legal dispute with Mr. Lichtenstein over the support of their daughter. The dispute took an ugly turn, according to the lawsuit, when Ms. Bond moved with their daughter to Hong Kong — “a jurisdiction that was half a world away,” according to the complaint.

Mr. Lichtenstein says he then learned that Ms. Bond and their daughter had moved into a home in Hong Kong’s upscale Strawberry Hill neighborhood. Mr. Cader was renting the home for $26,000 a month and structured it as a loan to Ms. Bond, she told Mr. Lichtenstein — and more than $3.5 million in cash was also described as a loan, according to the complaint.

“These representations are false,” the complaint says. “The cash gifts and lease payments from Mr. Cader — who on information and belief has a net worth of hundreds of millions of dollars — were gifts to his longtime paramour, Ms. Bond.”

Mr. Lichtenstein argues that the Hong Kong court relied on Ms. Bond’s lies in awarding her $41,800 a month in child support, plus school, tutoring, medical, travel and other substantial expenses. That amount, Mr. Lichtenstein claims, “is one of the largest — if not the largest — child support ever issued by a Hong Kong court.”

He did not name Ms. Bond, a resident of Hong Kong, as a defendant, but took aim at her dating history. “Ms. Bond has gone from one millionaire lover to another,” the complaint says, “spending millions of dollars of their money to support her lavish lifestyle, and has then moved on to her next wealthy lover or lovers to support her and finance her litigation efforts.”

According to her Web site, in 2005 Ms. Bond became the fastest woman and the fourth-fastest person ever to reach all “seven summits,” the highest peaks on each continent, having accomplished the feat in less than a year.

She has given talks at numerous Wall Street firms about her climbing exploits, including Morgan Stanley, Blackstone Group and Credit Suisse. On her Twitter feed on Thursday, she made no mention of the lawsuit, but posted a photo of herself at the top of Mount Everest.

“Nearly my summit of Everest anniversary,” she wrote. “My respects to the mother goddess.”

Article source: http://dealbook.nytimes.com/2013/04/25/millionaires-clash-over-socialites-child-support-claims/?partner=rss&emc=rss

DealBook: A.I.G. Unit at Center of Financial Crisis Is Wound Down

Andrew Douglas Sullivan for The New York TimesProtesters outside the offices of A.I.G.’s Financial Products unit in Wilton, Conn., in March 2009.

More than two years ago, fury over the financial crisis appeared to find a single target: an unassuming red-brick building in a suburban Connecticut office park.

There sat the headquarters of the American International Group’s Financial Products unit, largely unknown until its imploding derivatives contracts portfolio threatened to sink the global banking system. And for many on Wall Street and in Washington, Wilton, Conn., was shorthand for the excesses of the credit bubble.

But this week, A.I.G. announced with little fanfare that it had finished its “active wind-down”of the unit, having slimmed down the portfolio to just over $198 billion from a peak of $2.7 trillion. A.I.G. executives say that even more importantly, the unwinding operation — which was initially projected to cost at least $10 billion — has instead yielded a $4 billion operating profit.

“There was no real benefit to getting it right,” Robert H. Benmosche, A.I.G.’s chief executive, said in an interview on Friday from the insurer’s harbor-side offices in Jersey City. “But there would have been a lot of pain in getting it wrong.”

Daniel Acker/Bloomberg NewsGerry Pasciucco, who was in charge of winding down A.I.G.’s Financial Products unit.

Friday marked the final official working day of Gerry Pasciucco, the chief operating officer of Financial Products, known informally as F.P. A former Morgan Stanley vice chairman, he was hired in 2008 by A.I.G.’s then-chief executive, Edward Liddy, with a mandate to dismantle F.P. within a year. (Read his resignation letter.)

Much of the work involved negotiating early terminations of contracts known as credit default swaps, derivatives that had been linked to subprime mortgages that had largely soured amid the housing downturn. Rising foreclosures had eventually led to A.I.G.’s needing to post some $15 billion in collateral, prompting an unprecedented government bailout.

But according to F.P.’s calculations, a quick dismantling of the unit could have cost A.I.G. $10 billion to $20 billion, Mr. Pasciucco said in an interview.

An especially dangerous part of the portfolio was the unit’s regulatory capital book, which held derivatives that helped European banks lower the amount of capital reserves required under international accords by about $400 billion.

“This was the largest unwinding of a derivatives portfolio ever attempted, with a lot of potential second- and third-order effects,” he said.

But from the onset of A.I.G.’s bailout in September 2008, F.P. drew political fire. Among the biggest targets were about $165 million in bonuses that it was set to pay out to its employees. By March of 2009, even the White House and New York’s attorney general had attacked the payouts as untenable, as protesters trekked to the homes of F.P. executives to express their scorn.

The fight left the division’s employees demoralized and angry, according to Mr. Pasciucco, threatening F.P.’s attempts to unwind the contracts with minimal losses. He spent much of the early part of his tenure persuading staffers to stay, despite most of them facing inevitable layoffs within a year’s time.

“Gerry did a masterful job working with those people,” Mr. Benmosche said.

Ultimately, the Obama administration’s special master for compensation at bailed-out financial firms pressured A.I.G. to recover some $45 million from the division’s executives. (A.I.G. recouped only a portion of those payouts.)

At the time, the justification in paying out the bonuses was that A.I.G. was legally obligated to pay out the contracts, which critics seized upon as weak reasoning. But Mr. Benmosche said on Friday that he would have simply argued that the employees, who drew the bulk of their compensation from the bonuses, deserved them.

He added that the employees ultimately received less than what they were owed, since much of the bonuses had been deposited into deferred accounts that were later wiped out.

Many of the workers had not been involved in creating the contracts in the first place, he added.

Beyond the payouts, however, Mr. Pasciucco said unit still had a limited amount of time to handle a big undertaking. When Mr. Benmosche visited F.P. on his first official day as chief executive on Aug. 10, 2009, Mr. Pasciucco told him two things. One was that his new boss was the first A.I.G. chief executive to visit the division since Maurice R. Greenberg, who resigned from the insurer in 2005.

The other was that his current mandate left him little room to avoid losses. “Some of the bids we received were literally, ‘Give me some money to take the contract off your hands,’” Mr. Pasciucco said.

Within hours, Mr. Benmosche had changed F.P.’s mission and offered to give the team as much time as it needed to unwind the contracts with minimal losses.

That decision ran into opposition from multiple parties, notably the Federal Reserve Bank of New York, a senior lender to A.I.G. as part of the insurer’s bailout. The New York Fed’s main concern was being paid back as soon as possible, and the regulator maintained pressure as recently as the fourth quarter of last year, Mr. Benmosche said.

Jack Gutt, a spokesman for the New York Fed, declined to comment.

Mr. Benmosche and other top A.I.G. executives met with New York Fed officials every Wednesday morning to update them on F.P.’s progress.

By the end of the second quarter, however, F.P.’s portfolio consisted of about 2,200 derivative trade positions. Most of the division’s employees will either be shown the door or folded into other A.I.G. units, primarily its capital markets division.

F.P.’s office space in London has been taken over by the insurer’s asset management decision. And that red-brick office has become just another A.I.G. outpost.

As for his next step, Mr. Pasciucco said he hadn’t decided what to do, and would take a short break first.

“Know of any companies in need of fixing?” he asked with a laugh.

Resignation of A.I.G. Financial Products’ Leader

Article source: http://feeds.nytimes.com/click.phdo?i=ba9e30d53db056d1bfdc3e34466c241f

DealBook: Millionaires Clash Over Socialite’s Child Support Claims

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DealBook: A.I.G. Unit at Center of Financial Crisis Is Wound Down

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