Confidence Game - Christine Richard [16]
And there was the time Donald Trump called. “Goldman Sachs is trying to steal Rockefeller Center, Bill. We’ve got to do something about it,” announced Trump, who had never spoken with Ackman before. When Trump suggested a meeting at Ackman’s office, the young man quickly offered to make the trip to Trump Tower. “I didn’t want him to see that we worked out of shared office space,” Ackman says.
In July 1996, a group led by Goldman Sachs and David Rockefeller, the philanthropist and grandson of the founder of Standard Oil, took control of the complex for $1.2 billion in cash and assumed debt. Gotham didn’t walk away with Rockefeller Center nor did it team up with Trump, but the fund made a fortune for its investors, selling its stake to Goldman at a large profit. The fund was up 50 percent that year. Confirming that he had arrived at an early age, Crain’s New York Business included Ackman on its “Forty Under 40” list in 1999 for his work on Rockefeller Center.
Ackman also caught the attention of executives at Leucadia National Corporation, a publicly traded investment holding company whose secretive owners, Joseph Steinberg and Ian Cumming, regularly make Forbes’s list of the wealthiest Americans. Leucadia would co-invest with Ackman in multiple deals over the years.
Ackman had a way of leaving an impression. Laurel Touby, the founder of mediabistro.com, a networking site for journalists, met Ackman in 2000 when she was seeking to raise money for her company. Ackman, who eventually invested $750,000, could be charming but also manically critical. “He had a way of bludgeoning with his intelligence,” Touby remembers. During one Media Bistro board meeting, Ackman’s barrage of questions about Touby’s business plan left Touby in tears. “That many questions just makes you feel inadequate,” she says.
Yet Touby also remembers Ackman out of the blue asking her during a meeting if she was single. When she told him she was, Ackman remarked that not only was he going to invest in her company but he would help her find a husband. “He just personalizes things in a way you don’t expect,” Touby says.
By the start of 2002, Ackman had experienced a long run of good fortune: He was happily married to the former Karen Herskovitz, a landscape architect he’d met when they were both graduate students at Harvard; he had two young daughters, a close circle of family and friends, his own firm, and an apartment in the Majestic Building, overlooking Central Park.
But these were unsettling times. Trust in corporate America and in Wall Street were at all-time lows. Stocks had been dropping since the spring, with the Dow Jones Industrial Average sinking back below levels not seen since the wake of the September 11 terrorist attacks. WorldCom had just settled an SEC investigation into a $9 billion restatement. Federal regulators had accused Enron Corporation of using bogus orders to run up the cost of power in California before the company imploded in an accounting scandal. The head of the Securities and Exchange Commission, Harvey Pitt, had resigned after criticism that he was subverting enforcement efforts. And New York Attorney General Eliot Spitzer had turned Institutional Investor’s annual All-American Research Team awards dinner into a dressing-down session, telling the evening’s award winners that their top rankings served to confuse small investors about their stock-picking abilities, which were verifiably lackluster.
In November 2002, the month that brought his unsettling confrontation with the CEO of MBIA, the ground for Ackman was shakier, too. Ackman and Berkowitz had received a number of requests from investors to redeem money. Some were spooked by Gotham’s concentration of holdings in illiquid assets, such as Gotham Golf, a private company that owned a string of golf courses. The Ziff family, one of Gotham’s largest investors, planned to pull its money out at year’s end.
Ackman expected to bring a new investor into the fund, which would allow Gotham to avoid selling