Serpent on the Rock (72 page)

BOOK: Serpent on the Rock

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453:
Simmons's statement that he wasn't lying when he told the public that $330 million would be enough to pay defrauded investors from Siconolfi, “Prudential Securities Escapes an Indictment, but Firm Is Still Shaky,”
Wall Street Journal
, October 12, 1994.

454â55:
Details of Jack Graner's death from the report by the Los Angeles medical examiner of January 28, 1994, and police reports of January 27, 1994. The medical examiner at first ruled the death an accidental overdose, apparently overlooking the fact that police had found the suicide note. When contacted by the author about the apparent discrepancy, an official from the medical examiner's department said that the original finding had been in error and that Graner had indeed committed suicide.

455:
Some details of Sherman's life after Pru-Bache from his testimony in the Trice arbitration, cited above.

457:
The amount of money obtained by Darr in recent years from his residual participations is described in his sworn testimony in
Griffin
v.
Prudential Securities
, cited above.

AFTERWORD

458:
The statement from Linda Myers from a report by Steve Young for the July 20, 1995, broadcast of
Moneyline
on the Cable News Network.

458:
The quote from Charles Perkins on Darr's contract from “Book Says Prudential Continues to Pay a Former Executive,”
New York Times
, July 21, 1995.

459:
Details of Betty Allen's case from “Prudential Told to Pay Broker in Fraud Case,”
New York
Times
, August 8, 1995.

459â60:
Details of the last Prudential partnership class action settlement from “Prudential Pact: $110 Million to Settle Suit,”
New York Times
, December 11, 1995.

461:
Details of the Prudential Insurance reorganization from “Prudential to Shift 1,110 Jobs to Newark,”
Bloomberg Business News
, February 29, 1996.

461â62:
Details of the Prudential Insurance settlement with state insurance regulators from “Prudential to Pay $35 Million Fine, Make Restitution,”
Bloomberg Business News
, July 9, 1996.

462:
The decision of New York Life Insurance Company to repay its partnership investors was described in “New York Life in Partnership Liquidations,”
New York Times
, April 2, 1996.

462:
The Paine Webber settlement was described in “Paine Webber Is Settling Fraud Counts,”
New
York Times
, January 19, 1996.

ACKNOWLEDGMENTS

ALL BOOKS are collaborative efforts, and this one is no exception. I am grateful to many people who offered me an extraordinary amount of guidance and support in this project, particularly my colleagues at the
New York
Times
.

I am indebted to William Stockton, who, as business editor of the
Times
in 1992, recognized the significance of the slowly unfolding scandal at Prudential Securities before I did. After I wrote a few articles on the topic, it was he who suggested I be given the rein to delve into the story full-time. He was unflagging in his support, particularly when I needed it most. Glenn Kramon and Sallie Hofmeister were my primary editors on the Prudential articles for the
Times
, and their commitment and skill were an inspiration. Glenn and another colleague, Douglas Frantz, also offered generous amounts of their time to review parts of the manuscript. Their advice on structure and narrative were invaluable.

I would also like to thank the senior editors at the
Times
, particularly Joseph Lelyveld and Soma Golden Behr, who were generous in allowing me to have the time to do this book. John Geddes, who became business editor while I was on leave, offered his support from almost his first day on the job. For that I am extremely grateful.

Other colleagues, including Dean Baquet, Chris Bockelmann, Robert Pear, Floyd Norris, Adam Liptak, Jonathan Fuerbringer, Adam Bryant, Alison Leigh Cowan, James Sterngold, Bob Candela, and Joan Motyka, offered help at important junctures. Donna Anderson cheerfully helped me dig up news articles. Karen Cetinkaya provided photo research, and Anne Cronin and Patrick Lyons handled graphics.

Every author builds off the journalism of others, and I was fortunate to be standing on the shoulders of giants. The award-winning articles on the Prudential scandal by Scot Paltrow of the
Los Angeles Times
are a must-read for anyone interested in the topic. And of course, the groundbreaking work of Chuck Hawkins brought James Darr to the public eye for the first time and, I believe, is largely responsible for helping many investors get back their money. Both journalists were gracious enough to allow me to pick their brains for suggestions. They are real pros.

In addition, I received important advice on taking my first steps into publishing from Bryan Burrough of
Vanity Fair
and James B. Stewart of
The New Yorker
. Their help made me much more surefooted, and for that I am grateful.

I received help from talented researchersâLisa Granatstein, Brian Steinberg, and Debra Piehl. And I owe a debt to Diane O'Bara, a hard-working assistant who was always cheerfully ready to help. She saved me from disaster more times than I can count.

I also owe thanks to Zofia Kresa, Lynne and Donell Moor, Carl Moor, Anne Carlson, Errington Thompson, Franz Paasche, and Charles Cleaver. They should all know the reasons why.

My agent, Freya Manston, encouraged me to do this book and was an enthusiastic supporter from the start. She was there for me every step of the way. Thanks are also due to my lawyer, David Glasser, for all his time and energy.

At HarperCollins, I am immensely grateful to Jack McKeown, who acquired this book by dint of his infectious excitement. Adrian Zackheim was tireless in his encouragement. My editor, Suzanne Oaks, never lost her keen eye no matter how late into the night we worked. The talent at HarperCollins ran deep; I am also particularly grateful to Lisa Berkowitz, Marilyn Mazur, Deirdre Walsh, Maureen O'Neill, and Joe McKeown.

Finally, I am thankful to my family and friends, who put up with my endless absences with patience and good cheer. My parents, Heinz and Elva Eichenwald, were always ready with support and suggestions. And when my wife and I had a new baby before the book was finished, my mother stayed with us for weeks to shoulder some of the work and keep me on schedule. While she was here, she gladly reviewed the manuscript and made it better with each suggestion.

Above all, I want to thank my wife, Theresa Eichenwald. Her love and patience were an endless resource for me. When she delivered faster than I did, she assumed extra burdens to allow me to finish. She helped me through many difficult days and many more difficult chapters. She was my keenest adviser, my first editor, and my best friend. Her wisdom and support are reflected on every page.

APPENDIX

In this book, I used a small group of the seven hundred partnerships sold by Prudential-Bache to demonstrate the wanton, reckless nature of the Direct Investment Group. I did that to keep the narrative focused. Readers should not assume that partnerships that were not discussed were properly sold. I have reviewed the marketing material and performance for more than one hundred of the partnerships and, almost without exception, the story is the same. The marketing material stressed safety and targeted retirees, who usually invest in CDs, money markets, municipal bonds, and utility stocks. Then the partnerships collapsed in value. It made no difference whether the partnerships were sold before or after tax reform, or whether they invested in horses, cable television, energy, real estate, airplanes, or high technology. Almost everything the Direct Investment Group touched turned to dross. The following table includes many of the largest partnerships that have not been examined in this book. Their performance speaks volumes.