NYT: New York-Connecticut Real Estate (Zuckerman & AIG) and the Lyme Crymes are connected.

[Mort Zuckerman]

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Subject: NYT: New York-Connecticut Real Estate (Zuckerman & AIG) and
the Lyme Crymes are connected.

Date: May 3, 2009 9:11 AM

Many people have said - including myself -
that the reason crooks like the AIG Greenbergs
and Mort Zuckerman were involved in the Lyme scam
was because of the effect the truth about Lyme
would have on prime New England Real estate:
http://www.actionlyme.org/ALDF_BOARD.htm

Lyme and Real Estate:
http://www.ncbi.nlm.nih.gov/sites/entrez?Db=pubmed&Cmd=DetailsSearch&Term=1771965[uid]

"In fact, in some hyperendemic regions of New York and New England,
Lyme disease is now such a threat that it interferes with all sorts of
outdoor activities, and has even led to depreciation of real estate
values."

Obviously, real estate was the first reason I
was curious about *** Mort Zuckerman *** being
involved with the ALDF RICO gang:
http://groups.google.com/group/sci.med.diseases.lyme/browse_thread/thread/94e9d21309f76177/508d7369ce25f5cc?hl=en&lnk=gst&q=evan+greenberg+mortimer+zuckerman+ALDF+sponsors#508d7369ce25f5cc

Too bad the asshole Corrupticut US Attorney Kevin O'Connor
is such a Corrupticut US Attorney asshole:
http://www.actionlyme.org/USDOJ_COMPLAINT_RICO.htm

He could have stopped these bankster clowns in 2003,
like he was ordered to do as our employee and per the
CT Attorney General's office.

2003.

That was before the banksters took their biggest
boodle and then some of them, like the Rothschilds,
bailed (2006).

Again and again it is shown that Corrupticut is the
*Stupidest Location* on Earth.


Kathleen M. Dickson


http://www.nytimes.com/2009/05/03/business/03real.html?hp=&pagewanted=print

The New York Times
May 3, 2009
How Lehman Brothers Got Its Real Estate Fix
By DEVIN LEONARD

BACK when he was a major Wall Street deal maker, Mark A. Walsh, the
former head of the global real estate group at Lehman Brothers, had a
running joke with Carmine Visone, one of his managing directors. Mr.
Visone, 10 years older than his boss, would lecture Mr. Walsh about
the importance of fundamentals: land values, construction cost and
rents.

As Mr. Visone remembers it, Mr. Walsh would wave his hand dismissively
and would argue just as emphatically that the best way to make office
buildings spew cash was through the magic of financial engineering.
Typically, Mr. Visone gave in.

“He was too smart for me,” Mr. Visone recalls.

Many others were equally in awe of Mr. Walsh’s intellect. Until Lehman
Brothers collapsed last September, Mr. Walsh was considered the most
brilliant real estate financier on Wall Street. In the ’90s, he
pioneered the art of lending to office building developers and then
slicing up and repackaging the debt for investors. Less risky pieces
went to institutional investors; the lower-rated chunks to hedge funds
and others hungry for juicier returns. Lehman pocketed a fee every
step of the way, and it often retained a risky piece or two to give
its own earnings a kick.

“That was one of Lehman’s strengths,” says Brad Hintz, a former chief
financial officer at Lehman who is now an analyst at Sanford C.
Bernstein. “In fact, a lot of Wall Street firms tried to duplicate
Lehman’s commercial real estate strategy.”

Mr. Walsh, who wore rumpled Brooks Brothers suits and could be
painfully awkward in front of crowds, was one of Lehman’s biggest
profit producers. Former Lehman executives say Richard S. Fuld Jr.,
the bank’s chief, relied on Mr. Walsh to bankroll the firm’s swanlike
transformation from a second-tier bond trading shop into a full-
service investment bank. Former members of his unit, who requested
anonymity because they were concerned about being swept up in lawsuits
and investigations surrounding Lehman’s collapse, say it generated
more than 20 percent of Lehman’s $4 billion in profits at the peak of
the real estate boom in 2006.

Many factors, of course, contributed to Lehman’s demise last fall.
Near the end, it carried $25 billion in toxic residential mortgages.
It was wildly overleveraged. And the federal government made the
fateful decision not to rescue Lehman from its mistakes. But when real
estate overheated in the years before Lehman’s implosion, Mr. Walsh
made billions of dollars in loans and equity investments that also
ultimately helped bring down the bank.

Lehman’s bankruptcy hasn’t quelled the controversy about Mr. Walsh’s
activities. Last fall, the United States attorney’s office in
Manhattan subpoenaed him and other former Lehman executives as part of
an investigation into whether the firm improperly valued its
commercial real estate holdings, among other things. In March in a
civil complaint, Anne Milgram, the New Jersey attorney general,
accused Mr. Walsh and 17 other former Lehman officials of defrauding
the state’s pension funds by misrepresenting Lehman’s real estate
exposure.

Mr. Walsh, 49, declined to be interviewed for this article.

His former co-workers and clients remain staunchly loyal. “I have the
greatest respect for him personally and professionally,” says Richard
S. Ziman, the former C.E.O. of Arden Realty, a company based in Los
Angeles that Mr. Walsh helped take public in 1996 and sell in 2006.
“I’d testify in court if that was necessary.”

But even among Mr. Walsh’s supporters, a nagging question remains: How
could a real estate wizard who built a thriving business by creating
new ways of managing risk by sweeping loans off Lehman’s balance sheet
end up doing deals that contradicted everything he seemed to stand for
— and contribute to the collapse of one of Wall Street’s most
venerable firms?

MR. WALSH grew up in Yonkers, the son of a lawyer who once served as
chairman of the New York City Housing Authority. He attended Iona
Preparatory School in New Rochelle; the College of the Holy Cross,
where he majored in economics; and, finally, the Fordham University
School of Law.

After receiving his law degree in 1984, he worked as a real estate
lawyer in Miami and handled a lot of foreclosures. That came in handy
when he took a job at Lehman in 1988, at the end of an earlier real
estate boom that left banks and insurers saddled with mountains of bad
loans.

Mr. Walsh bought and sold loans on properties that were often in
foreclosure. There were bargains galore. He generated hundreds of
millions of profits for the firm and won the confidence of Mr. Fuld,
who gave him the authority to make huge loans. Then, along with Ethan
Penner of Nomura Securities and Andrew D. Stone of Credit Suisse First
Boston, Mr. Walsh discovered securitization. This created an entirely
new market for commercial real estate debt. No longer would lenders
have to shoulder all the risk from real estate lending. Wall Street
could make the same loans and sell them off. The challenge then became
lassoing the right kind of developers to back.

The three men marketed their services very differently. Mr. Penner
hired Bob Dylan, Stevie Nicks and the Eagles to serenade clients,
while Mr. Stone jetted around the country with the likes of Donald
Trump. The publicity-shy Mr. Walsh was more understated. Mr. Ziman
says Mr. Walsh went fly-fishing with clients in Colorado and Montana.

Developers also loved the fact that Mr. Walsh was willing to lend them
enormous sums. In 1997, Barry Sternlicht, then the chief executive of
Starwood Hotels and Resorts, needed $7 billion to buy ITT.

“I called up Mark and Goldman Sachs and said, ‘Would you be
interested?’ ” he recalls. “Goldman said they were. They came to see
us. But we needed to get it done really quickly. Mark said, ‘Yeah,
we’ll do it.’ I said, ‘Really? You are going to do it yourselves?’ He
said, ‘Yup.’ ”

Mr. Sternlicht says Mr. Walsh brought Mr. Fuld himself to a meeting at
the hotelier’s home to assure him that Lehman would back his
acquisition. “Dick Fuld sat there in my living room and said: ‘You
have our word. We’ll get this done,’ ” Mr. Sternlicht recalls. “We
paid a $20 million fee. I was never so happy paying a fee.” Mr. Fuld
declined to be interviewed for this article.

During the late ’90s, Mr. Walsh forged close ties with many of the
most prominent developers in New York. He bankrolled Tishman Speyer in
its purchase of the Chrysler Building in 1997. He backed Steven C.
Witkoff in his purchase of the Woolworth Building in 1998. And he
financed the acquisitions by the German real estate developers Aby
Rosen and Michael Fuchs of the landmark Lever House and Seagram
Building.

Mr. Rosen recalls that he and Mr. Walsh closed the $375 million
Seagram Building deal in four weeks. “He was fast,” says Mr. Rosen.
“He doesn’t try to kill you or retrade. To be honest, there are very
few people in the industry you can say that about.”

Mr. Walsh was also skilled at making all that debt vanish from
Lehman’s balance sheet before the firm choked on it. On the eve of the
financial crisis brought by the near collapse of Long Term Capital
Management in 1998, Lehman flushed $3.6 billion in commercial real
estate loans through its securitization machine, avoiding some of the
losses that crippled other firms, including Nomura and Credit Suisse.

Mr. Walsh was rewarded with more responsibility, and in 2000 was named
co-head of a new private equity group dedicated to real estate
investments. After raising $1.6 billion from pension funds and
university endowments and delivering an internal rate of return of
more than 30 percent, the equity franchise easily raised $2.4 billion
for a second fund, which closed in 2005. While the market was heating
up and low-priced deals were harder to find, the second fund still
generated a 15 percent return.

But the funds’ structure created perverse incentives within Mr.
Walsh’s group, according to two former members of his team who
requested anonymity because of confidentiality agreements they had
signed with Lehman.

Lehman owned 20 percent of the funds. Institutions and wealthy
investors controlled the rest. Mr. Walsh, in order to raise money,
promised to give the outsiders a first peek at deals.

If institutional investors and others passed, Mr. Walsh’s bankers were
free to make the same investments with the firm’s money — which was
just fine with his troops: they received bigger bonuses on the riskier
deals because Lehman didn’t have to share the profits.

But it also meant that more deals that could go wrong ended up on
Lehman’s balance sheet. And this is exactly what happened with a set
of deals known as “bridge equity” financings.

As real estate went into overdrive in 2003, Mr. Walsh, in order to
help clients pump up their offers in heated bidding wars, started
frequently putting Lehman’s own cash into deals — alongside the debt
they raised. With its cash on the line, Lehman would be dangerously
exposed in any downturn, so, once a deal closed, the firm would try to
sell its equity stake as quickly as possible.

Lehman made ripe 4 percent fees for its equity investments — twice the
going rate for loan securitization. As long as the market was rising,
Mr. Walsh’s group was fine. But if the bank couldn’t sell the bridge
equity and if real estate prices fell, it could end up with nothing.

“It was a classic assumption that values are going to be higher a year
from now,” says Mike Kirby, chairman of Green Street Advisors, a
research firm. “That was the mentality at the time.”

Bridge equity quickly became one of Lehman’s signature products, and
Mr. Walsh’s group deployed it in dozens of deals, including Tishman
Speyer’s $1.7 billion purchase of the MetLife Building on Park Avenue
in 2005 and Beacon Capital Partners’ acquisition of the News
Corporation’s headquarters on the Avenue of the Americas for more than
$1.5 billion in 2006.

“Guys like Tishman Speyer wanted as much of this product as they could
get,” says a former real estate banker at a competing Wall Street
firm, who requested anonymity because of confidentially agreements he
had signed with the bank. “For them, it was a no-brainer. It was like,
‘Bring as much of this on as possible.’ ”

By all accounts, Mr. Walsh made piles of money. He had perks like a
corner office over Park Avenue with a private conference room. Yet his
ego never matched the size of his deals. Friends say Mr. Walsh lived
in a modest home in Rye, N.Y., with his wife, Lisa, and their three
boys. His main interest outside of work and family was fishing.

“At the end of the day, he is content to throw a line in the water and
fish by himself,” says his friend Dan McNulty, co-chairman of DTZ
Rockwood, a real estate investment bank in New York. “He’s a very
reflective guy.”

IF Lehman and Mr. Walsh were convinced about the virtues of bridge
equity, outside investors weren’t. “It was a gray area,” says a former
Lehman executive who asked not to be identified because of his
confidentiality agreements with the firm. “It wasn’t the kind of risk
that the investors had signed up for. The funds never participated in
those deals.”

One partnership pursued by Mr. Walsh exemplified his newfound appetite
for ever riskier deals: transactions with the SunCal Companies of
Irvine, Calif., an operation with an intriguing business model. It
bought land, primarily in its home state, and sought government
approval for residential development. If it got the green light, it
sold the land to builders for an enormous profit. Mr. Walsh lent
SunCal more than $2 billion and formed a close relationship with its
founder, Boris Elieff. Mr. Elieff did not return calls seeking
comment.

“We had other Goldman Sachs and other people who were clamoring to do
business with us,” says Louis Miller, a lawyer for SunCal. “Lehman
said, ‘No, we want to you to be exclusive with us.’ They loved
SunCal.”

But because the cash flow from the SunCal deals was hard to predict,
Lehman’s loans to the company were nearly impossible to syndicate.
After all, how do you estimate income from raw land that may or may
not be approved for development?

After putting about $140 million from the funds into SunCal deals, Mr.
Walsh discovered that the investors wanted out. In 2006, he cashed
them out with a tidy profit in exchange for effectively transferring
their ownership stake onto Lehman’s balance sheet. That left Lehman
with even more SunCal exposure, just before the emergence of the
subprime crisis that would pummel the Southern California real estate
market.

Others were already sensing danger, and some of Mr. Walsh’s longtime
clients started to pull back. Mr. Ziman of Arden Realty sold his
company to GE Capital in 2006. He said the real estate market — and,
indeed, the entire financial system behind it — was becoming
increasingly bizarre.

“Every Monday, I’d get these e-mails from all the investment banks
about the deals of the week,” Mr. Ziman recalls. “I kept saying,
‘Where is all this money coming from?’ ”

Lehman wasn’t the only bank throwing bridge equity into real estate.
In October 2006, Wachovia and Merrill Lynch pledged $1.5 billion for
Tishman Speyer’s $5.4 billion acquisition of Stuyvesant Town, the huge
apartment complex in Manhattan. In February, Goldman Sachs, Morgan
Stanley and Bear Stearns put up $3.5 billion into the Blackstone
Group’s $32 billion deal to buy Equity Office Properties Trust.

Missing out on the Stuyvesant Town deal stung Lehman, said one of the
firm’s bankers who declined to be identified because he wasn’t
authorized to speak publicly about his time at Lehman. It wasn’t just
the lost fees. Mr. Walsh considered Tishman Speyer a core client.
What’s more, Tishman Speyer’s chairman, Jerry Speyer, had a close
relationship with Mr. Fuld. They were both board members of the
Federal Reserve Bank of New York; Mr. Speyer and Mr. Fuld’s wife,
Kathleen, were trustees of the Museum of Modern Art.

And it wasn’t long before Mr. Walsh found a way to do an even bigger
deal with Mr. Speyer’s company. In May 2007, Lehman and Tishman Speyer
offered to buy Archstone-Smith Trust, a $22 billion deal struck at the
peak of an already dangerously frothy market. Tishman Speyer put up a
mere $250 million of its own equity. Lehman, in a 50-50 partnership
with Bank of America, put up $17.1 billion of debt and $4.6 billion in
bridge equity financing.

As the credit crisis began to set in during the following summer, the
financing for the Archstone deal appeared imperiled. With the markets
spiraling downward, rumors were rife that Lehman was having problems
and that it might walk away from the Archstone transaction.

Mr. Speyer, who declined to comment for this article, phoned Mr. Fuld
to make sure that he still had Lehman’s backing. “When I placed that
call, I knew it was preposterous,” Mr. Speyer recalled in an interview
with The New York Times in 2007. “I placed it because I had to. But I
knew when I was dialing how the conversation would come out.”

Lehman stuck by Mr. Speyer, and the deal was completed in October
2007. Had Lehman walked away, the partners would have absorbed a $1.5
billion breakup fee. In hindsight, it would have been smart to swallow
that loss. But several people involved in the deal say the parties
thought that the subprime mortgage crisis would actually help
Archstone because people who could no longer afford houses would rent
the company’s apartments.

And for his part, Mr. Walsh was reluctant to jeopardize an important
client relationship.

A former Lehman executive, who declined to be identified because he
wasn’t authorized to speak publicly about his time at the firm, said:
“We were very loyal to our clients and had a culture of standing by
our clients, even when the road got bumpy. We did not back away from
commitments. We could not have built such a dominant franchise with
any other approach. That culture, of course, has its risks and
downside, including losing money on some transactions.”

Mr. Walsh tried to limit Lehman’s risk. He sold $8.9 billion of the
Archstone debt to Fannie Mae and Freddie Mac and persuaded Bank of
America and Barclays to buy $2.4 billion of the bridge equity. Even
so, Lehman ended up with nearly 25 percent of a hugely overpriced deal
just as real estate was imploding. This time, Lehman couldn’t sell its
immense hunk of bridge equity, and it was stuck with a $2.2 billion
ownership stake that nobody wanted.

Still, there were no hard feelings between the partners. “Mark is an
extremely talented investor and a great partner,” Mr. Speyer says. “We
look forward to working with him in the future.” Of course, the most
that Tishman Speyer could lose on Archstone was $250 million — a
pittance next to Lehman’s total $5.4 billion exposure.

Lehman soon had much bigger worries. In March 2008, Bear Stearns
nearly collapsed and was sold to JPMorgan Chase in a government-
supported deal. Wall Street wondered which bank might be next to fall.
Short-sellers thought they knew: Lehman Brothers.

Mr. Walsh and his crew rushed to sell their inventory. Between
November 2007 and February 2008, Lehman shed $2.8 billion of its
commercial real estate exposure. But that still left $36 billion of
hard-to-value leftovers, including debt and equity from Archstone and
SunCal.

Last spring, the hedge fund investor David Einhorn, who was shorting
Lehman’s stock, suggested that the bank’s positions in Archstone and
SunCal might be worthless. Mr. Einhorn said share prices of
Archstone’s competitors had tumbled as much as 30 percent since the
acquisition was announced. As for SunCal, he pointed out that publicly
traded home builders had written down their Southern California land
holdings to “pennies on the dollar.”

Mr. Einhorn called for Lehman to take a multibillion-dollar write-down
on its Archstone holdings. Lehman said it was valuing its commercial
real estate fairly, based on the prices that Mr. Walsh’s group had
been getting on the open market as it struggled to free up the bank’s
balance sheet.

Lehman ended up with $29 billion in commercial mortgage exposure on
its books in the second quarter of 2008 — 30 percent more than
Deutsche Bank and Morgan Stanley and 70 percent more than Goldman
Sachs.

In early September, Lehman announced that it would stuff its toxic
commercial mortgages into a new public company to be spun off to
shareholders. The idea went nowhere. “They couldn’t get that
commercial real estate off their books to save their lives,” says Mr.
Hintz at Sanford C. Bernstein.

In short order, Lehman collapsed.

SOON after Lehman’s bankruptcy, a former executive who declined to be
identified because he wasn’t authorized to speak publicly about his
time at the firm went to Mr. Walsh’s office to talk. But they sat in
silence. After two minutes, the executive left. “It became clear that
neither one of us was going to say something that the other didn’t
already know, or that we were going to actually have a new idea or
bring greater clarity to the situation,” he recalls.

Ultimately, Barclays scooped up part of Lehman’s operations. But it
dismissed Mr. Walsh and most of his team. Now the United States
attorney’s office and the New Jersey attorney general are trying to
determine whether Mr. Walsh did anything wrong.

But according to former Lehman executives who requested anonymity
because of confidentially agreements, the values of commercial real
estate holdings were determined by an independent committee outside
his division.

Mr. Walsh has hired Patrick J. Smith, a former federal prosecutor who
is now a partner at DLA Piper, to defend him in these investigations.
Mr. Smith declined to comment for this article.

In the meantime, Mr. Walsh is staying busy. He is helping the estate
of his former employer dispose of its private equity holdings. His
friends say they believe that Mr. Walsh will eventually emerge from
the rubble of Lehman’s collapse and return to deal-making.

“Guys like this are very rare,” says Mr. Rosen, the developer. “He’ll
be back. He picked up the phone and people listen. Nobody can take
that away from him.”

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