Friday, November 10, 2017

The Billionaire Boys Club just lost a member

There was a joke during the inflationary years of the Carter Administration that went something like this:

A fellow with $10,000 to his name falls into some type of Rip Van Winkle sleep. When he awakes 20 years later, he learns that his $10,000 has turned into a cool million. He finds a pay phone and goes to call a friend to tell him the good news. He deposits his dime, and the operator comes on and tells him that it’ll be $35,000 to complete his call.

This joke is quaint for a couple of reasons. One, of course, is the existence of a pay phone that you could drop a dime into, and the voice of an operator who comes on to tell you what you owe. Do pay phones even exist anymore? Do operators?

The other, of course, is that, in modern memory, there was a time when having a million dollars made you rich.

That was then and this is now, and a million bucks just ain’t what it used to be. Even multi-millions – multi-hundreds-of-millions – is, in some circles, sneered at.

And even being a uni-billionaire isn’t enough to get you onto the Forbes list of the wealthiest 400 Americans. To make it onto that list, you have to have at least $2 billion. Last year, the cut off was $1.7 billion.

One of those who fell off the list was Secretary of Commerce Wilbur Ross, Jr.

Actually,Ross didn’t so much fall off the list as get kicked off of it.

It seems that, for years, he has been BS-ing about his wealth, letting slide an initial error that attributed the money invested in funds he managed to personal assets. And, once on the billionaire glide based on that error, Ross just kept upping the ante and, each year, claimed to have mo’ better money than he had the year before.

Then Ross had something of a senior moment and decided to join the Trump Cabinet. Which meant disclosing his financials. Which revealed that he had less than $700 million.

Now most of us would be happy with $700 million. Or $70 million. Or even a relatively paltry $7 million.

But not, apparently, if you’re a wannabe play-ah.

Anyway, when Forbes let Ross know that he was falling off the list, he pushed back:

…citing trusts for his family that he said he did not have to disclose in federal filings. "You're apparently not counting those, which are more than $2 billion," he said. When asked for documentation, the 79-year-old demurred, citing "privacy issues." Told that Forbes nonetheless planned to remove him from the list for the first time in 13 years, he responded: "As long as you explain that the reason is that assets were put into trust, I'm fine with that." And when did he make the transfer that allowed him to not disclose over $2 billion? "Between the election and the nomination." (Source: Forbes)

Now, if Ross wants to gift his offspring and their offspring with $2 billion worth of largesse, that’s his business. But you do need to question how this would make sense, given that such a transfer would be taxable at that point in time, but untaxable in the longer run if Congress decides to do away with the inheritance tax. It seems dumb for any old anybody to fork over $800 million in taxes that might be going away, let alone the purported financial genius/fiscal shrewdy who heads up the Department of Commerce.

Despite the seeming stupidity of Ross taking this moment to play Big Daddy Bigbucks, nevertheless, he persisted in pushing back on Forbes.

So began the mystery of Wilbur Ross' missing $2 billion. And after one month of digging, Forbes is confident it has found the answer: That money never existed. It seems clear that Ross lied to us, the latest in an apparent sequence of fibs, exaggerations, omissions, fabrications and whoppers that have been going on with Forbes since 2004. In addition to just padding his ego, Ross' machinations helped bolster his standing in a way that translated into business opportunities. And based on our interviews with ten former employees at Ross' private equity firm, WL Ross & Co., who all confirmed parts of the same story line, his penchant for misleading extended to colleagues and investors, resulting in millions of dollars in fines, tens of millions refunded to backers and numerous lawsuits. Additionally, according to six U.S. senators, Ross failed to initially mention 19 suits in response to a questionnaire during his confirmation process.

Wilbur, Wilbur, Wilbur. Tsk, tsk, tsk.

And this from a graduate of my friend Sean’s alma mater, Xavier High School in Manhattan, a Jesuit high school heretofore best known for having the late Supreme Court Judge Antonin Scalia among its illustrious alumni ranks.

Not, apparently, a surprise to those who knew him best:

"Wilbur doesn't have an issue with bending the truth," says David Wax, who worked alongside Ross for 25 years and served as the No. 3 person in his firm. Another former colleague, who requested anonymity, was less circumspect: "He's lied to a lot of people."

It may be his that his undisclosed dealings with Putin cronies is what topples him from his post at Commerce, but the fall from the grace of a slot on the Forbes 400 list may prove the greater embarrassment. In addition to being an ego blow, there may be the matter of his third wife, who apparently set her cap for Ross because she wanted to be married to someone on the Forbes 400. (Ha, I say, ha ha.) Wouldn’t you like to be in on that pillow talk?


The Department of Commerce issued a statement saying the $2 billion gift never happened. "Contrary to the report in Forbes, there was no major asset transfer to a trust in the period between the election and Secretary Ross's confirmation."

All well and good but, as Forbes pointed out, they didn’t pull that “$2 billion gift” canard out of thin air. They heard it directly from Ross himself.

I sometimes debate with myself over just how bad schadenfreude is for the soul. But it sure is fun. And it would be even shadenfreud-ier if, come next year, another certain New York someone – his financials now fully disclosed – were also to fall, ignominiously, off the Forbes list.

Come on down!

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