Dispatch: Reversal of Fortune
The news of Madoff’s alleged Ponzi scheme broke almost a year to the day after the grand Brigham and Women’s fundraiser at Club Colette. I got the word of the vaporized $50 billion from a Palm Beach Country Club member I know, who called my cell phone as I was on my way to Echo, an Asian fusion restaurant on the island, for a dinner hosted by my friend Herb Gray. In Boston, Herb lives at the Heritage on the Garden. He is worth about $20 million. Until I moved to Palm Beach in 1994, I thought that was great wealth. But when I had mentioned him to the other guests at Club Colette the previous year, none of them knew who he was: He wasn’t rich enough and he didn’t belong to the right clubs.
At dinner, I mentioned the Madoff news. "My God!" Herb exclaimed. "I’ve got to call Bob Lappin." When Herb got off the phone, his face was ashen. "He’s going back to Boston to walk through the wreckage," he reported. In Palm Beach, people didn’t have to wait for the papers to reveal who’d been hardest hit. The scoops came from dining companions and were delivered between courses.
Every day now, I hear more stories of devastation. A home put up for sale for $6.5 million, only to have the asking price slashed by half overnight. A CEO cleaning out his locker at the Trump International Golf Club, never to return. In my oceanfront building, two owners have shuttered their apartments and headed north. A friend from the building across the street told me he had suffered just a "nicking"—but in Palm Beach, a "nicking" could be $5 million to $10 million.
The other evening I had dinner at Trevini, a popular Italian eatery on Worth Avenue. Many Palm Beach restaurants have been half-empty, but the place had a good crowd. In deference to the times, I chose the $35.95 three-course special, an offering that until this year would have been available only during the slow weeks of August. As I was nibbling at my tiramisu, I looked across the room and spotted Howard Kessler, the Boston businessman who invented affinity credit cards and owns one of the island’s greatest estates. Even from a distance, his mood appeared so dark that it cast a pall on half the room, and I thought I knew the reason why: I’d heard that he had invested with Madoff and taken a big hit. I had tried to contact him several times, with no luck.
As Kessler and his family passed my table on their way out, I got up to say hello. I introduced myself and said I would call him again in the morning. This time he took my call, but said he had never given an interview and was not about to start now. Later, a source familiar with Kessler’s situation relayed that his foundation (listed in its last tax filing as having $40.7 million in assets) had lost money with Madoff, but insisted I had misread Kessler’s mood, that he was bearing up fine, despite it all.
According to this source, Kessler has added a new, personal arm to his philanthropic efforts. He has begun playing the white knight to friends and acquaintances who’ve been left nearly destitute, and now face living with their children or eking out a semblance of their former lives on Social Security checks. This act of generosity won’t be celebrated in the society column of the Palm Beach Daily News, as I suspect Kessler would prefer.