GREENWICH, Conn… Nov. 16…Greenwich was once considered the wealthiest community in the US. But yesterday morning its residents awoke to a depressingly familiar sight.
Foreclosure auctioneer Edgar Jaeckel was leading a convoy of vans and five tons trucks up the half mile wooded driveway of an abandoned mansion on Hettiefred Road.
An elderly gentleman in a Norfolk jacket with an Irish setter heeling at his side, stroked his salt-and-pepper mustache as ferret-eyed liquidators, antique scouts, rug merchants, used furniture dealers and junk men marched in and out with the leavings of a humbled fortune.
“The looters are entering the temple,” he said. “It’s the sack of Rome, the burning of Atlanta, a giant redwood crashing in the forest, the storming of the Winter Palace…” Bereft of metaphor he burst into tears and jumped aside as a pick up truck loaded with Queen Anne chairs, screeched out of the driveway, its driver hooting with glee.
Located on a fifteen mile swatch of suburban Connecticut known as the “Gold Coast,” Greenwich has been devastated by the financial crisis. There have been 34 foreclosures since January of ’08. Scores of homes are in delinquency as owners sell off family treasures just to make the mortgage. Children have been pulled out of boarding school, domestic help laid off. Gourmet shops and wine merchants are shuttering.
The deposed plutocrats are suddenly afflicted with a firesale mentality. Former Lehman CEO Richard Fuld sold off a a chunk of his art collection for a paltry $13.5 million last week. High end real estate, Old Masters, jewelry, yachts, furs and luxury playthings are going for ten cents on the dollar.
Somebody is buying cheap and holding to sell dear.
“Call them scavengers, parasites, bottom feeders, hustlers, they are participating in the greatest redistribution of wealth this country has ever seen,” says Efraim Durg.
Durg, 24, is CEO of Epicurus a venture capital firm specializing what he calls “The New Economy,” says there are myriad opportunities to profit from the losses of the wealthy.
“We operate on the theory of Conservation of Money,” he says. “The amount of money that was in the system before the crisis is still there. It’s like when a ship sinks the treasure is still on it. We just have to go down and get it.”
He offers the example of Park Avenue, psychologist, Dr. Hyman Kleinkopf.
“Kleinkopf specialized in teenage substance abuse and was losing business because the kids couldn’t afford drugs anymore. Then he discovered a disorder, Sudden Wealth Loss of Libido Syndrome. Suddenly impoverished executives of both sexes were suffering a plunging in self esteem and were suddenly unable to have casual sex over their desks or in dark booths in hotel bars, in airplane bathrooms or massage rooms in five star hotels
“Kleinkopf came to me for marketing advice,” Durg says. “I told him the first priority was to concoct an acronym and he came up with a beauty: SWILLS. Next we developed a series of casual sex support groups in which patients participated anonymously. They couldn’t pay their gardeners, but everybody got the money up for Kleinkopf. Now he’s franchising formerly wealthy enclaves in the US, Europe and Asia, doing really well in Moscow and Abu Dhabi.”
Attorneys for the formerly wealthy were having problems collecting fees.
“After paying civil and criminal penalties their clients were unable to pay their lawyers,” Durg says. “Plus many of them were either incarcerated or on the lam, I mean” –Durg hastily corrects himself–”in flight to avoid imprisonment.”
Durg offered an elegant solution: “Get them before they go broke.”
“We created a program called Preindictment Strategy Session Training or PSST. Clients are encouraged to call their attorney as soon as they embezzle or falsely represent or launder funds for foreign clients so they can get a head start on the FBI. This way they can start planning their defense, stashing money and setting up escape routes. And the lawyers get their money before their clients are convicted and imprisoned.”
“One of my clients had run janitorial services for Lehman and Bear Stearns,” Durg says.” I showed him that there was a larger market for trash than ever. We put out a fax blast with the slogan: IF YOU DREAD WHAT YOU SAID,WE’LL SHRED. We just opened our fourth office in Beijing.”
The credit crunch has given new life to an old business.
“My client Fat Funzi, the shylock, was content to lend to a few busted Bohos in Brooklyn Heights,” Durg says, “but I squeezed him into a pin striped suit and took him around to Merrill and Morgan Stanley. Told them to forget the Fed or the Treasury, Funzi would be the new lender of last resort. And he wouldn’t ask for preferred stock, just the standard six for five, which is better than what you get from Capital One these days.
“Funzi put together a financial group made up of Afghan narcolords, Mexican cartels and kosher meatpackers,” Durg says. “They called it the Funzi effect and are crediting it with staving off a total systemic breakdown. Now he’s applying for $10 billion under the new recapitalization program.”
With a complicit wink, Durg lowers his voice.
“Lucky for us Henry Paulson isn’t good at due diligence.”
