This content is from: Culture
Crime and Punishment
Here’s your guide to a serpentine stroll in the vicinity of Wall Street.
From the Mar 2018 Issue - Crime and Punishment
To our knowledge, there is no published Baedeker (save for, perhaps, a subtext of Den of Thieves) devoted to introducing residents, visitors, and day laborers to the rich history of Wall Street malfeasance — financial or otherwise. To remedy this, we offer a serpentine stroll from the corner of Broad and Pearl streets up to Wall Street, around a few corners, and ending across from 1 Liberty Plaza. While we admit our crime crawl is somewhat arbitrary and we are totally guilty of omitting numerous boldface firms and scoundrels beyond the immediate vicinity, we present an entertaining way to spend a lunch hour this spring.
1 54 Pearl Street - Fraunces Tavern
Were there a Yelp back in 1774, founding father John Adams would have given Fraunces Tavern five stars. “The most splendid dinner I ever saw,” said Adams, a member of the First Continental Congress who visited the tavern, according to its website. Back in the day, lodging and postal services were also available. In 1798 the Gardie family, late of France, were in residence. At some point in the middle of the night, Monsieur stabbed Madam to death and then himself. Imagine that — a crime of passion, not profit, in the neighborhood of Wall Street.
2 85 Broad Street - Goldman Sachs
The New Yorker’s Adam Gopnik described it as “one of those bland, squint-windowed, stone-fronted 30-story monstrosities.” Goldman Sachs Group lived here from 1983 to 2009. Its golden reputation was besmirched in February 1987 when Robert Freeman, head of arbitrage, was led off the trading floor, the first of a hat trick of arrests orchestrated by the office of U.S. Attorney for the Southern District of New York Rudolph Giuliani. The threesome were part of a tangled web that began to unweave with the 1985 arrest of Dennis Levine, who implicated Ivan Boesky, who dimed out Martin Siegel, who fingered Freeman et al. For Goldman, the bloom was off the rose.
3 60 Broad Street - Drexel Burnham Lambert
While golden-boy employee Michael Milken was on the West Coast pioneering the junk-bond market, there was no paucity of hanky-panky at Drexel Burnham Lambert’s home base. Frederick Joseph led the charge to raise Drexel into the pantheon of top-tier investment banks, succeeding for a while. The firm’s demise began in 1986, thanks to the aforementioned Boesky. In 1989, Drexel Burnham Lambert owned up to six felony counts. Milken was indicted on 98 counts of racketeering and securities fraud. In early 1990 the firm filed for bankruptcy. Still standing tall is its former headquarters building, which today boasts a LensCrafters Optique, an Au Bon Pain, and a Pret a Manger on the ground floor.
4 23 Wall Street - The House of Morgan
The pockmarks on the limestone exterior of the former headquarters of J.P. Morgan & Co. are not due to neglect. They’ve been on this temple to money since September 16, 1920, when a cart bomb exploded just under the enormous windows. The crime was perpetrated by still-unknown parties, perhaps Italian anarchists. More than 30 people were killed, hundreds injured by shrapnel and glass, reported The New York Times. No plaque commemorates the tragedy; no reparations distributed to victims. No Morgan was present. In 2016 the building’s former owner, Africa Israel Investments, and developer Shaya Boymelgreen settled with New York Attorney General Eric Schneiderman over tenant violations tied to properties including 23 Wall Street. The landmark, currently owned and under development by New York–based JTRE, was the site of a Fashion Week event last year showcasing Virgil Abloh designs for Nike, according to Hypebeast.
5 60 Wall Street - Deutsche Bank
Today just one major investment banking office occupies Wall Street: Deutsche Bank. The German firm has many times caught the attention of regulators. Last year the U.S. Department of Justice announced that Deutsche had agreed to pay $7.2 billion to settle civil claims that it misled investors in the sale of residential mortgage-backed securities between 2006 and 2007. “Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis,” then-Attorney General Loretta Lynch said in the announcement. Under the settlement the bank paid a $3.1 billion penalty and provided $4.1 billion in relief to “underwater homeowners, distressed borrowers, and affected communities.” In 2015 the DOJ said a Deutsche unit in London had pleaded guilty to wire fraud for its role in manipulating the London interbank offered rate. New York’s Department of Financial Services announced the same day that Deutsche was ordered to pay a $2.5 billion fine for its role in rigging Libor and other benchmark interest rates, saying the bank’s employees had manipulated them for financial gain.
6 76 Beaver Street - S.B. Lewis & Co.
In a building with the distinction of three addresses (7 Hanover Square, 11 Hanover Square, and 76 Beaver Street) were the offices of S.B. Lewis & Co. The firm was founded in 1980 by block trader, investment banker, consultant, and arbitrageur Salim (Sandy) Lewis. In 1986, Lewis arranged to artificially inflate the stock price of the Fireman’s Fund Corp. the day before American Express Co.’s public sale of 41 percent of the insurer. Lewis maintained he never benefited from this personally, yet he was indicted on 22 counts of stock manipulation, conspiracy, and related violations. He pleaded guilty to three. In early 2001 he was pardoned by President Bill Clinton; in 2006 the SEC overturned his Wall Street ban. He did not return to old haunts; instead he rabble-rouses on the state of New York agriculture (as well as finance and the economy) from the Lewis Family Farm in Essex, New York, where he raises USDA-certified grass-fed beef.
7 33 Liberty Street - Federal Reserve Bank of New York
The mother of all Federal Reserve regional banks has called 33 Liberty Street home since 1924. The building was designed to evoke an Italian Renaissance palazzo, perhaps in homage to the great Banco dei Medici. Never mind that bank failed in 1494. While no crimes of interest (so to speak) have been hatched within its confines, this is where financial firms and their employees get sent to detention via civil enforcement actions, monetary penalties, and banishment from the world of finance. For example, in May 2015 the Fed’s enforcement actions against Barclays for unsafe and unsound practices related to compliance and control in its foreign-exchange practices cost the bank $342 million in penalties. According to the Fed’s database, in the past 28 years some 224 individuals have been permanently barred from banking. The Salomon Brothers Treasury scandal in 1991 led the Federal Reserve Board to send a warning letter to the New York–based investment bank, forcing it to admit it had known that one of its traders had violated rules surrounding U.S. government debt, The Washington Post reported at the time. The New York Fed is one of 12 regional Fed banks and says it’s the largest based on assets and volume of activity. All major discussions during the 2008 financial crisis took place here. The 14-story building has five underground floors where one quarter of the world’s gold bullion rests.
8 22 Cortlandt Street -The Wall Street Journal
The former home of The Wall Street Journal was where “Heard on the Street” columnist R. Foster Winans labored from 1982 to 1984 — working overtime as he passed off tips on yet-to-be-published information to Kidder, Peabody & Co. broker Peter Brant, amply demonstrating you don’t have to actually work for a financial services firm to make a run at cleaning up. Winans’ take: $31,000. His sentence: 18 months. Today the building houses discount department store Century 21 — a good place to find a deal that won’t get you in trouble with the authorities.