by
Melinda Pillsbury-Foster
In
October of 1993 a nattily dressed attorney, fresh from his judicial
clerkship for Kenneth L. Ryskamp, U. S. District Judge, Southern
District of Florida, started work at Cadwalader, Wickersham &
Taft (CWT).
Hired
on for litigation as an associate, Charles Lincoln, III had planned,
coordinated, and framed the jury questions for a very large
securities fraud trial in Palm Beach against Alan B. Levan’s
Florida-based BankAtlantic Bancorp and Subsidiary Bank Atlantic
Financial Company (BAFCO), which were heavily involved in Florida
Real Estate from 1952-2011.
CWT
had no litigation ongoing at the time. Celebrating its bicentennial,
CWT was busy with a registration project for the very first IPO for
securitized derivatives for Excel Mortgage, supported by the Bank of
New York (BNY). All 350 attorneys, and hundreds of secretaries and
paralegals were working like beavers piling up their billable hours
for the project.
Lincoln
logged 393 hours the first month, delighting the partners. But along
with his assigned work Lincoln, with a J. D. from the University of
Chicago, School of Law, PH.D. in History and Anthropology from
Harvard, was researching discrepancies in how these investments were
to work and for whom.
After
six weeks he suspected it was a Ponzi Scheme. After another six
weeks, he was sure. A touch naïve, it took a year for him to accept
this was not a mistake or misunderstanding. After producing
thousands of pages of proof, no doubt was possible.
The
atmosphere cooled and turned threatening.
Working
late into the night Charles often saw Bernard Madoff, who founded the
NASDAQ when he was 33. Madoff was a prominent client of CWT, often
there, walking the floors.
Talk
of derivatives, their hot new investment product, was rising as
preparations for presenting the registration to the SEC feverishly
continued.
Not
long before Lincoln resigned two other attorneys at the firm
clarified what was planned. The economy of the Western World would
be transformed, and partnerships at CWT obtained. In nearly the same
words each man said, “
We do it because we get to charge everybody. This is how the whole
world will be managed by 2020. We have a plan.”
They were nearly panting with excitement.
So,
debt became equity. Careful registeration of ownership became
history. Unsecuritized individual debt would no longer exist.
And,
in time, all of Lincoln's predictions as to what would happen became
painfully real. You heard it here first.
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