Huge Yacht at Board Show in Palm Beach

Secrets of the Super Rich

In Palm Beach, rich and vain makes for a deadly combination

Driving down Palm Beach’s main street, Royal Palm Way, lined with palms, of course—what else?—you are likely to encounter more Bentleys and Rolls Royces than you would anywhere else in America, maybe the world. BMWs and Mercedes are way too commonplace to be noticed, and anything less is downright suspicious. Poor people drive Audis.

On both sides of the road you have, one after the other—all the private banks, wealth advisory firms, and the likes of Bessemer Trust, Northern Trust, Citi, and JP Morgan; all the players are present and doing a brisk business.

The zip codes in Palm Beach County, Florida, especially on the Island and in Jupiter, are among the wealthiest in the land. By wealth I do not mean the millionaire-next-door, garden-variety type. I mean real high net worth. Tens, and likely hundreds, of millions, and even billions in the vault or invested, are all that really count here. Anything less and you are just a “climber.”

It’s funny: Palm Beach, with all its old money also lays claim to more nouveau riche, social climbers, and wannabes than anywhere else on the planet. And then there are all the people and professionals that cater to this ilk, from accountants to estate and trust lawyers to insurance hucksters, zillions of high-end real estate agents, and the ever-present “financial advisors.”

There is no intellectual life to speak of in Palm Beach. It is a gilded, swank place built around the beach and the sun, not the mind. The Four Arts Society makes a pass at an occasional lecture from some has- been, and the fancy, new, and very expensive Kravitz (thank you, Henry) Performing Arts Center brings in a few classical performers for less than well-attended performances, but Palm Beach is not about high culture. Rachel’s strip club is better attended.

Palm Beach is, like its counterpart, the Hamptons, on Long Island, about just one thing—vanity. The very name of the expensive shopping street is Worth Avenue, lined with every pricey store imaginable, from designer this to art galleries to Saks and Ralph Lauren. It is all about names, logos, and being seen. Eavesdropping is an art in Palm Beach, and the local rag has a special so-called “Shinny Sheet,” complete with color photos of the who’s who and what dress they wore at what benefit ball. You wouldn’t believe the jockeying that goes on to get included and thereby become the talk of the town.

“The Season,” when everyone who is anyone arrives, begins after Thanksgiving, heats up in January, and ends in mid-April. For about four months the elite of the elite are to be found in only a few square miles on Florida’s east coast, regaling in a delightful temperature, swayed by cool ocean breezes and rocked by decadent living.

At the center of the scene are the many charitable balls, luncheons, black ties, and polo.

Each year there are well over five hundred fund-raising events held at places such as Donald Trump’s Mar-a-Lago, the Brazilian Court, the Breakers, or the Ritz, in Manalapan, to raise money for mostly “worthy causes.” You name it, they have an event. Heart, Cancer, Red Cross, March of Dimes, every disease, Fashion Week, schools, causes from A to Z and everything in between. It is estimated that annually over $5 billion is raised on the Palm Beach circuit for these needy causes. The balls generally have an honorary (old and very rich patron), chair- persons (slightly lesser), and a bunch of committee members (lesser still) who do much of the work.

The balls are particularly elaborate affairs, with fine cuisine, silent auctions, live auctions, (selling hundreds of thousands of dollars of items, exotic vacations, and puppies, always cute little puppies) to the assembled cast of the rich and richer.

I have done the math, and most every ball or event costs 70 percent or more of what is brought in. So in effect these end up being elegant doings of a social nature, encouraged by the tax code, as they are deductible (or up to a point), so that in the end they give little to the named charity but make for a heckuva good party that allow a lot of rich people to feel and look “special” and generous. The A-list types who can get their friends to come and give or buy (a table, perhaps) are coveted in Palm Beach.

I once was invited to a charity event at the Healys’ mansion on the beach, a newish, $30 million-plus estate of nearly ten acres. The beneficiary was some foundation the host had created, no IRS status— I checked—and it put on a really big show that went on until early breakfast, supposedly to help children, always the children. They had vodka bars, whiskey bars, and even an oxygen bar to get a quick hit. The fact that they made money, paid themselves a bundle, and put on an air of helping others is, well, hypocritical. Most of the attendees were even bigger hypocrites trying to show off and be seen. Wearing skimpy little gowns and dancing on a glass-topped extra-large swimming pool to a live rock band to tunes like “I Wanna Be Somebody” more or less sums it up.

But the be-all and end-all was reached (climaxed) when the hostess, a former Victoria’s Secret underwear model with an East Ender English accent (and all that that implies), showed me their impressive paneled library. I thought I was gonna “get done.” When I went to take a closer look at the books on the shelves, I discovered that they were all painted on. There were no real books at all. Like so much in Palm Beach, it was faux. Everything is faux! That is the operative word, FAKE.

Faux breasts, faux teeth, faux marbleized painting, and the collection of Botox-specializing dermatologists and plastic surgeons in Palm Beach runs pages and pages in the Yellow Pages.

One of the many dubious financial advisors we encountered in the Palm Beaches, who worked for a series of firms, one after another, as he couldn’t keep a job and lost people’s money, claimed he was a CFA— which he wasn’t. He also said he was a close friend of the former vice president Quayle, who it turned out hardly knew him. Worst of all, he confessed to hating Jews in an anti-Semite diatribe.

We later found out from his first wife, who now lived in the Mid-Atlantic region, that he was himself, Jewish. His second wife was a pretend model from eastern Europe (really, the Midwest) with whom he had an illegitimate child before he finally, after seven years, got the courage or suffered the guilt and asked her to move in and get hitched.

Palm Beach is all about the people—who for the most part want to be reimaged. Lon and Sally were social climbers but it turns out from hillbilly origins. He had lost millions of others people’s money (always OPM) in stock schemes in the health industry, and he just kept coming back for more and sucking any naïve taker from the Palm Beach elite in with him.

The Bradfords were perhaps the classic case, and not atypical for Palm Beach. Buddy was a college dropout many times over who lived off his family trust and golfed moderately well. He looked like Elmer Fudd, balding and hairy, and could barely put a sentence of two cogent thoughts together. I got him invited to private golf clubs in Scotland and he thoroughly embarrassed me asking for “that whiskey with the deer’s head on it” and failing to wear a sport coat as is required at such places as Muirfield, a proper and hono(u)rable gentleman’s club. His vivacious younger wife (who later left him for a Chicago mobster–type), Sonja, was a nymphomaniac and acted like a college slut behind his back. She was in real estate although she was illiterate—seriously, she could not read. Her partner, Ralph, and she had a ten-year affair going on behind dumb Buddy’s back, but it was Palm Beach, where everyone was on the make/fake.

I do owe Sonja, because in the housing bubble she sold a couple of condos I owned, one in a grand total of five minutes (a simultaneous closing) where I made $750,000. Good work if you can get it—until that bubble burst and the housing market stalled and then collapsed, and poor Sonja left dumb Buddy for that much younger stud she always wanted and moved away to Portland. She called us one Christmas unapologetic and said her new name was now Angelina. Total remake.

There is far too much of everything in Palm Beach, but drugs, sex, and money would top the list. Drugs, recreational ones, are rampant, and the police pretty much look the other way.

By far the best story on this front happened right next door to our very own house. Seth Tobias, a minor hedge fund star, was not only doing coke and mixing it with Ambien (countervailing forces?), but he was a flaming gay before his wife allegedly killed him (she got off scot- free). She had supposedly served him a potent cocktail in the form of purple pasta and enticed him into the pool and left him floating in their swimming pool, head down and drowned. (He was heavily involved at Cupids, a gay joint, with a male stripper-prostitute named Tiger. Appropriately named, Tiger had stripes tattooed all over his body.)

It was his wife’s fourth (in this case fake) marriage, and the day after he drowned, she had the pool resurfaced and her personal trainer moved in with her and her kids, each from a different, previous marriage. Philomena, or Phyllis, as she was known formally, was a truck stop whore with a mouth to match. But she was a force to contend with on the Palm Beach social scene, especially after she inherited all of her gay husband’s loot. The story was well documented in a CNBC special titled “For Love of Money: The Death of Seth Tobias.” Watch it and weep.

A few months after the death, we were on our loggia one Saturday night, and at about 9 pm my daughter and wife came running in saying they had heard a bang and then another two loud bangs at the former Tobias house. They believed they were gunshots. We called the Bears Club security force, largely made up of old men without weapons, whom my young daughter referred to as “grandpa cops.” They were so scared they would not go to the house but instead called the real Jupiter police.

Four cars came racing through the private gated community and burst into the neighbor’s house but found no guns. There was just a loud party (no swimming though) going down. They left.

The next morning Phyllis called while I was still in the shower, before 8 am. I took her call, and she went on an expletive-laced rant about us calling the police. I told her we did call the club’s security, alarmed by the loud bangs, and knowing what had happened there only months before—we were compelled to do so. I said in a calm and diplomatic, measured voice, “Never, ever dial our phone number again,” and I hung up the phone.

When the big crash of 2008 came, it hit Palm Beach hard, very hard, and not just shopping on Worth Avenue—in all the fancy Rolex brand outlets, and not just in the deflated and large over inventory of mega real estate. It hit the net worth—the wallets, trust funds, and stock portfolios—of the rich and dumb. It hit them hard. It devastated many. Many lost more than half of all they had accumulated. When you have a lot and take large risks and get all leveraged up, you fall hard.

One hedge fund mogul lost $2 billion in a weekend and lost it all when the banks squeezed him to fold. Another big real estate player got stuck in the game of musical financial chairs and was “long” in the Miami condo market and went bankrupt when it turned south. A developer we knew was so leveraged in land deals that he went bust after being a highflier; and his sidekick, an ex-football player, got so beat up in the market he almost disappeared altogether.

All the real estate agents lost their incomes, and the financial services market players imploded with massive firings; and “puff” Lehman Brothers was gone in just days, an old institution left without a bailout.

Dick Fuld, their CEO, exited with more than $300 million personally, but the government wants his head and he doesn’t play golf much more in this part of Florida. Many of his folks lost their considerable net worth in a week, as they had so much of their own wealth tied up in Lehman paper.

My favorite capper was a billionaire Minnesotan, Tom Petters who claimed he owned about sixty companies, including regional airlines, Ubid, Fingerhut, and Polaroid. It turns out he had created one of the largest Ponzi schemes in history, totaling some $10 billion over fifteen years, based on selling fraudulent receivables. He took down a number of hedge funds that had stupidly but (un)knowingly invested in his fraud, and the FBI discovered, then outed him. It seems one of his employees who executed the scheme wore a wire exposing his doings, and now he has gone away to the big house for the rest of his life.

We knew him because my youngest son dated his only daughter for a while—until the government clawed back all the gifts Tom gave our son.

Rich and dumb makes for a curious and at times, deadly combination. Brain-dead can be life shortening, and great wealth can only compound it. When all you have to worry about is who has what, lives where, is doing whom, and is seen with whom at the Everglades Club, the B&T, or the Beach Club, life becomes, well, consumptive.

Even I was sucked in by a so-called premium insurance slickster who took my loot and left me holding the bag. All I have to show for it is a bunch of costly lawsuits and a $20 million charitable gift to my wife’s alma mater in Ohio.

My final story relates to the expensive, private Benjamin School, where our daughter attended, swam, and did well academically, despite having a drunken teacher one year and kids experimentally doing drugs at age ten, another. The girls were particularly cruel—mean is the word! I think they made a movie about them! They formed what they called “crews” (really, gangs) based on exclusivity—race, religion, class, and ethnic origin—that were as hateful as any inner-city gang. They were abusive and spiteful and hurt individuals with and without discrimination. It was what the social psychologists refer to as “odd girl out” syndrome.

One day my young daughter, whom we tried to keep above it all and her head screwed on, came home in tears. It wasn’t that she had played with an African-American or Indian Muslim girl; or that she had befriended an overweight girl; or that she didn’t take advantage and taunt a weaker child; or her lack of the right “designer” clothes. The crime this time was over what cars the parents used to pick up their kids from school. God forbid. We had a Mercedes SUV G-Wagon (as well as a few other cars), and they are somewhat rare (but actually quite expensive), and the other girls made fun of her for driving a truck.

Well, “truck you,” I said. It was past time to be rid of the petulance and the social maneuvering and to reenter a saner, less faux world. The real estate crowd says: location, location, location. This was no longer a tolerable location.

The lesson of this sordid life is, don’t be superficial. Reality is complex but very deep and variegated. Try to find a noble purpose in living. Get real.

This article is adapted from the wonderful memoir, Davos, Aspen, and Yale by Theodore R. Malloch, published 2016 by WND Books, All rights strictly reserved by WND Books.

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Theodore Roosevelt Malloch is a professor at Oxford University. His memoir is: DAVOS, ASPEN & YALE: My Life Behind the Elite Curtain as...
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