Fortunately for the family, my uncles and brothers had liquidated most of their holdings in the firm by the time of its collapse in September 2008. Nevertheless, whether out of nostalgia or pure forgetfulness, or perhaps just in order to keep getting annual reports and the like, a few of us kept some odd lots and attended shareholder meetings once in a while. And I maintained friendships with old friends, including the source of some scuttlebutt that I am now legally entitled to share.
One villain in the tale is the little known Peter Rubella, who headed the firm's missing documents department. The department comprised debentures, affidavits, flight manifests, stock certificates, and bills of lading, each one a surprising source of revenue for financial outfits wary of IPOs and LBOs but acutely conscious of the millions that go unclaimed each year in the form of lost lottery tickets, savings accounts of the deceased, uncanceled autopay, insurance reimbursements sent to defunct addresses, payments to remittance men, dead letters, the contents of grandma's safe deposit box, and the like. The department proved that working for an investment company is not just being a glorified broker or accountant but has elements of detection as in the dime novels you devour, though it has been decades since any book cost a dime. James M. Cain, author of Double Indemnity, would have been considered a classic if he had only taken the precaution of being born in France. But for the analogy to hold, you need an Edward G. Robinson in the driver’s seat -- not an unctuous snot like Rubella.
According to spokesperson Dana Goodrear of the YWC, an NGO whose turf is serious white-shoe wingtip investment-banker crime, Rubella engineered a complicated Ponzi scheme that cost an estimated 1.2 million investors upwards of $225 billion dollars. He put together a consortium of Indian companies that was thought to be running so-called "chit funds" in Delhi, Mumbai, Calcutta, and Eastern India. A partial list of the celebrities he defrauded includes Phyllis Dietrickson, Lucky Garnet, Julie Jordan, Ilse Lundt, Joel Cairo, Garance, Sam Malone, Fred Derry, Norma Desmond, Peter Joshua, Alicia Huberman, Noah Cullen, Melanie Wilkes, Pepe Le Moko, Schuyler Green, Privates Finch and Moss, Sergeant J. J. Sefton, Commander Shears, Mark Dixon, Waldo Lydecker, Carmen Sternwood, Khartoum, Roger Thornhill, Terry Malloy, Popeye Doyle, Sally Draper, Barbara Doll, Bunter, Sollozzo, Alice Kramden, Dianna Scott, Madelene Elster, Robert E. Lee Prewitt, Frankie Five Angels, and Addison DeWitt. The scheme had become so vast that it threatened to sink the whole company.
How did Rubella elude the scrutiny of investigators for so long? And how, even after the crisis of September 2008 broke and he duly went to jail, did he avoid the unfavorable publicity that lesser thieves, cheats, con artists, and other felons received?
While operating the scheme, the son of a bitch went unsuspected largely because he bribed the right officials and purported to be an advocate of liberal causes. He gave it out that he had put his family's German Measles fortune to philanthropic use. This was a fiction. He also enjoyed a reputation as a photographer who unknowingly witnesses a murder in Hyde Park, a tennis pro who plays a slow baseline game but turns on the motors because he needs to get to a certain merry-go-round a train ride away, an entry-level bachelor who lets senior execs use his pad for assignations, a producer of a rigged game show sponsored by Lever Brothers, and a fortune-hunter who courts a plain but principled heiress in Washington Square. He was generous with other people's money. His drug-free policy -- every employee under his supervision was guaranteed a free month's supply of percoset or cialis -- was good for office yucks and morale.
When finally confronted with his misdeeds -- by special investigator Bruno Anthony in December 2008 -- Rubella smirked unpleasantly and claimed that he had the approval of the firm's CEO as played by Jeremy Irons in the movie. The suspicious deaths of the three individuals who had filed harassment complaints had long constituted an effective deterrent to disclosure. Rubella's white marriage to socialite Miriam Hanes also lent him protection until her dead body was discovered at a missionary church an hour's ride from San Francisco. Rubella, an expert at misdirecting the public, released a statement asserting that "Obama uses your tax dollars to rebuild Muslim mosques around the world."
"It's painful to discover you've been a chump," said Hanes's brother, Guy, who released a statement to the press on the day Rubella was sentenced to share a cell in hell with the worst boss you ever had. Guy tried putting a good face on things, joking gamely: "What else is April first for?" His shares had lost eighty percent of their value, but he was determined to keep his cool. This endeared him to the press corps. Unfortunately his watch had picked this time to stop, or possibly he had simply forgotten to consult it. Fifteen days were about to go by unnoticed. Death and taxes wait for no man.
-- from "What Really Happened When Lehman Brothers Fell" by David Lehman. Reprinted with permission.