This week’s financial tip: Before you hire a money manager, make sure he or she doesn’t collect teddy bears.
Federal authorities last week charged investment advisers Paul Greenwood, 61, and Stephen Walsh, 64, former owners of hockey’s New York Islanders, with misappropriating as much as $554 million of their clients’ money.
Greenwood allegedly pocketed $293 million of that money for his own purposes.
He supposedly spent lavishly on horses and horse farms, including Old Salem Farm, a Westchester County spread once owned by Paul Newman and his wife, Joanne Woodward. (Greenwood no longer owns the farm.)
In addition, Greenwood and his wife, Robin, spent at least $80,000 on Steiff teddy bears, having collected at least 1,350 by last year.
Walsh is accused of taking $261 million for his own purposes. From that money, he used $3 million to purchase a home for his ex-wife.
Both men were arrested Wednesday on criminal charges of conspiracy and wire and securities fraud. They were released on bail of $7 million each.
The men head several companies including Westridge Capital Management Inc. and WG Trading Company LP.
The Securities and Exchange Commission filed a civil complaint accusing Greenwood and Walsh of using investors’ money as “their personal piggy bank.”
The Commodities Futures Trading Commission also asked for an order restraining the pair from doing business and freezing their assets.
An investigation by the National Futures Association, an industry self-regulatory group, triggered these actions.
Greenwood and Walsh had refused to cooperate with an audit by the group, and on Feb. 12, the association suspended the men’s membership and banned them from seeking new investments.
This action prompted a lawsuit against Westridge Capital Management by two investors, the University of Pittsburgh and Carnegie Mellon University.
Before this, Greenwood and Walsh had established solid reputations for their investment skills and for their contributions to their communities, the Pittsburgh Post-Gazette reported.
In 2007, Greenwood, a Republican, was elected town supervisor in North Salem, a community whose residents include David Letterman. Forgoing a salary, Greenwood pledged that his administration would be bipartisan and fiscally responsible.
“All the money that supports the town comes out of residents’ pockets, and I’m very intent on making sure every dollar is efficient spent,” he said in an April 2008 interview with a newsletter.
Walsh was a prominent fund-raiser for the University of Buffalo, donating $250,000 to help start a drive to raise money for athletics.
In 1979, Greenwood, a Ph.D. in economics, and Walsh, a former options trader at Kidder Peabody & Co., formed the brokerage firm that became Walsh, Greenwood & Co.
According to The Wall Street Journal, they were later unsuccessful in attempts to take over Champion Products, Inc., and Stride Rite Corp. They did gain control of Signal Apparel Co.
From 1991 to 1996, Walsh and Greenwood were minority stakeholders in the Islanders. Walsh served as board co-chairman and Greenwood was the team’s executive vice president.
Their attempt to charge the team’s logo to a cartoon fisherman remains a sore spot with fans.
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4 Comments
#1. Saddler 03.02.2009
I have known Paul since the 90’s, but I have known his wife Robin for much longer. She is one of the most self-centered narcissitic women I have EVER had the unfortunate displeasure of meeting. She grew up a “horse” woman; she came from money and truly believed she could do or say whatever she wanted in order to get whatever she wanted. I don’t think any of this has changed. Paul is no saint either… has the ego thing going as well. If these people have no use for you, then watch out. She - sarcastic and mean. He - a little more subtle, but nonetheless a (obscenity deleted). This is such a tragedy, all the people that have been scammed by this guy. These people are vultures.
#2. pascal behr 03.02.2009
Acquiring 1,350 Steiff Teddy Bears may have been the best investment this couple made. At least you can touch and hold the bears. Steiff Teddies are the best in the world - in terms of Teddy Bears but if they used a client’s money to purchase them - well that’s a problem. But in terms of investments, Steiff Teddies are a good lot. At least you can sleep with them without getting pregnant and their fur is divine. However, if these people are as nasty as portrayed, maybe those bears may do some damage to the Greenwoods when they sleep. That could be interesting.
#3. bruins2 06.23.2009
Yes Steiff teddy bears are the rolls royce of the toy industry and indeed hold good value in dire otherwise unbear able market, maybe wall street could become apprised of these fabulous rarities in a mike vicks kinda way these lil fellas will show real well in the midst of the muck, I think that 100,000 dollar bear has gone up about 100 percent since they bought him,and these people were GREAT AND GIFTED COLLECTORS, They only bought the best of the best and thats no bull… I should know, If all they had invested in was one tenth as viable their return could now please the intended hypothetical investors[ you’d be surprised.]
#4. bruins2 06.23.2009
Just sell those STEIFF TEDDY BEARS and youll recoup it all no problemente.
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