Mystery Behind the $100 Florida Mansion
For sale: a three-acre, seaside mansion on Florida's Jupiter Island. Sold: Nov. 10. Price: $100.
No, it's not a bargain-basement price for a foreclosed home or a charity raffle. The home at 265 S. Beach Road belonged to Richard S. Fuld Jr., the former chairman and CEO of the now-bankrupt Lehman Brothers. And the buyer was his wife, Kathleen Fuld.
The Fulds bought the home in March 2004 for $13.75 million, according to Martin County, Fla., property records. Neighbors in the exclusive community include professional golfers Tiger Woods and Greg Norman; Jamee Field, heir to the Marshall Field's fortune; and Richard Hayne, head of Urban Outfitters.
Fuld, 62, is now at the center of a federal probe into whether Lehman misled investors about the firm's declining performance before it went belly-up in October. That's led legal experts to question the November sale of his Florida mansion.
Eric S. Ruff, a Gainesville, Fla., attorney, told The New York Times that Fuld's move was "the oldest trick in the books. It's common when you hear the feet of your creditors approaching to divest yourself."
He cited investor lawsuits or bankruptcy proceedings as a possible contributing factor.
Danaya Wright, a professor at the University of Florida Levin College of Law, told Bloomberg News that the sale could have been a way to shelter the property from creditors under Florida's unusually-strong homestead protection.
Laurie Delong, a customer service representative in the Martin County assessor's office, added that the deal was not a "true sale." "He more than likely quit-claimed this property over to her," Delong said. "That's an instrument used when there's no money involved."
Could the Fulds even claim official residency on Florida's Hobe Sound? Fuld did much of his work in New York and the Fulds live in a sprawling mansion in Greenwich, Conn., the same address listed as the couple's main home on tax filings. The experts are torn on that question.
Fuld collected some $260 million in compensation between 2003 and 2007 but he might not be doing as well as previously thought. For example, he received roughly $34.4 million in 2007 compensation, but much of that was in stock that became worthless when Lehman Brothers went under. At congressional hearings in October, Fuld and fellow executives said he left with no bonus or severance payments.
"Look, I am not proud of the fact that I lost that much money," Fuld told the House Oversight and Government Reform Committee. "But it does show that the system, our compensation system, did work. I left 10 million shares plus a whole number of options. As I said, I'm not proud of that. But when the firm did not do well, I was probably the single largest individual shareholder. I don't expect you to feel sorry for me. I don't mean that. That's not my point. My point, though, is that the system worked."
By Derek Kravitz |
January 27, 2009; 7:30 AM ET
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