The Devil's Casino_ Friendship, Betrayal - Vicky Ward [7]
the day of the wedding party, Nancy Dorn had gone to a movie by herself. The June
earnings were due in two days. As the new 41 -year-old CFO, Erin Callan, worked on
them (she did not attend the party), her colleagues knew they'd be announcing Lehman's
first losses since spinning off from American Express--$2.8 billion. They were deeply
concerned.
"Everyone was stressed that night--we felt badly for George," Goldfarb said. "We were
more tired than downbeat. No one at that time had any inkling that we would go down.
We just knew we had a lot of work to do." Despite the tumult, nearly all the core senior
management team of Lehman came to the party. Longtime chairman and CEO Dick Fuld
was there with his wife of nearly thirty years, Kathy, 56, then the vice chair of the
Museum of Modern Art. Sticking close to them were Joe Gregory, Lehman's president,
and his second wife, Niki, a beautiful Greek-born brunette. Then there was the urbane,
silver-haired Tom Russo, Lehman's chief legal officer. Famous for his charm and
eloquence, he was nicknamed "the Mayor of Davos" because, as one colleague put it, "he
arrives first and leaves last" at the annual financial powerhouse conference in
Switzerland. Beneath his twinkling eyes is a steel core--after Lehman Brothers collapsed,
in late September, Russo would offer his consolation to Lehman Europe by way of a terse
telephone call, in which he told them: "You' re on your own."
"Never be fooled by Tom's charm," a colleague said. "He's as tough as anyone when he
wants to be."
The last member of Fuld's inner circle in attendance that night was Scott Freidheim,
whom Fuld looked upon almost as a son. Freidheim, then 41, is the son of former Booz
Allen & Hamilton vice chairman and former CEO of Chiquita Brands International,
Cyrus Freidheim. Scott was yanked out of Lehman's investment banking unit in 1996 and
appointed managing director, office of the chairman. He quickly rose to the top echelons
of the organization, which earned him as many enemies as friends.
Most of the executive committee was there: Hugh "Skip" McGee (the head of investment
banking), Herbert "Bart" McDade III (head of equities), and Ted Janulis (mortgages).
Also present were Steven Berkenfeld (chairman of the investment banking committee)
and John Cecil, the small, earnest former McKinsey director who had risen to become the
CFO of Lehman in the late 1990s and who, though he had left Lehman in 2000, was still
being paid as a consultant. Also gathered were a large number of senior executives of
NeubergerBerman, Lehman's asset management division, commonly referred to as its
"crown jewel."
Months earlier Joe Gregory had taken Walker aside. "You know, you didn't have to invite
all these people," he said. "Remember: These are just the people you work with. They are
not your friends."
Gregory was the only person at Lehman who had been at the firm longer than Fuld. Their
careers began in the early 1970s when Lehman was one of the leading advisory mergers
and acquisitions (M&A) houses on Wall Street, before it became a bond and mortgage
shop.
Fuld and Gregory had fought in what became known as "the Great War" of 1983 and
1984, an epic battle for control of Lehman between their professional mentor, the bond
trader Lewis "Lew" Glucksman, and Peter G. "Pete" Peterson, the former commerce
secretary. A preening sophisticate who dominated luncheons with his prattle, Peterson
was widely disliked by the relatively blue-collar traders for his patrician demeanor.
Glucksman and his traders won the Great War and ousted Peterson, chiefly because by
the mid-1980s the traders were making more money than the advisory bankers aligned
with Peterson. But the fight cost the firm dearly. Top banking talent fled and revenues
plummeted, making it vulnerable for a takeover by the newly merged entity of American
Express Shearson in April 1984. Peterson hadn't left without implanting a lethal sting. It
was greatly in his financial interests to get Lehman sold. In fact, it was