The Gadfly of Greenwich Real Estate
As
he drives his white pickup truck past the manors that crowd the hills
and meadows along Round Hill Road in Greenwich, Conn. — a town that has
long signified what it means to be rich in America — Christopher
Fountain snorts.
One
of the gaudy estates is owned by a hedge fund kingpin now residing in
prison; others belong to a real estate investor just coming out of
prison and an investment adviser who steered his clients and their
billions to Bernard L. Madoff. Then, to cap it off, a guy in an
8,000-square-foot mansion is charged with crushing his wife’s skull in
with a baseball bat.
This
is “Rogues Hill Road,” or so Mr. Fountain has called this 3.5-mile
stretch of asphalt. “All these aspirational schnooks came out here
thinking that they had really made it,” said Mr. Fountain, a real estate
broker, blogger and lifelong Greenwich resident. “But then the tide
went out and what you are left with is a bunch of crooks.”
Believe it or not, Mr. Fountain actually makes a living brokering
mega-mansion real estate deals to these so-called schnooks, among
others.
And his blog, For What It’s Worth,
has attracted a cult following among those he lampoons — the financial
titans who can afford to plunk down $5 million or more on a house but
who nonetheless seem to appreciate his scabrous take on Greenwich
residents’ run-ins with the law, debt-fueled implosions or plain old bad
taste.
Indeed, Mr. Fountain would seem to spend as much time selling schadenfreude as houses.
The
essence of his complaint — that decades of easy money and ceaseless
greed have created a glut of unsalable houses that will remain a blight
on his hometown for many years — highlights one of the more curious
anomalies of today’s explosion in asset prices.
Though
the Federal Reserve’s policy of rock-bottom interest rates over the
last few years has revived the value of many of the nation’s
subdivisions and sent stocks soaring to historic highs, it has prompted
only modest interest in the over-the-top Greenwich mansion, a classic
emblem of quick riches.
Mr.
Fountain likes to point to the prominent Greenwich characters in the
public spotlight as part of the problem. Topping Mr. Fountain’s list of
homeowners are Raj Rajaratnam, the hedge fund executive now serving an
11-year prison sentence on charges of insider trading, and Frederic A.
Bourke Jr., co-founder of Dooney & Bourke, the high-end handbag
accessories store, who has just been imprisoned for bribery and whose
house is on the market for $13 million.
He
also likes to skewer Walter Noel, a founder of Fairfield Greenwich, the
investment firm that raised more than $8 billion for Mr. Madoff and
subsequently became the target of investigations. Mr. Noel’s 175 Round
Hill address is just across the road from Mr. Bourke’s home. The estate
of Steven A. Cohen, whose hedge fund pleaded guilty to insider trading
charges in November, is six miles east of Round Hill Road.
Mr.
Fountain includes in his gallery plenty of lesser-known people pushed
into bankruptcy after overreaching, borrowing millions to build
15,000-square-foot houses that no one wanted to buy.
Mr.
Fountain’s contention that the legal and financial troubles bedeviling
Greenwich big shots have contributed to this slump — a view that is
hotly disputed by his more established competitors — is more anecdotal
than scientific. Still, the numbers are stark.
According
to Trulia, the real estate website, the average price per square foot
of a four-bedroom house sold in Greenwich in the last three months was
$442, down 40 percent from a year ago and 11 percent from 2009.
Mr.
Fountain says that more than 43 houses are on the market for at least
$10 million — many of them unsold for more than a year.
What will it take to sell them?
“My rule of thumb now is divide the asking price by two,” he said. “Although the owner’s ego always makes that very hard to do.”
Mr. Fountain began to vent on his blog about two years ago.
“I’m
sure Greenwich attracted some nefarious characters back in the ’50s and
’60s, but the past decade has seen just a parade of sad sack crooks,”
Mr. Fountain wrote in a cri de coeur about how the 100-acre pastures and
graceful mansions of his youth had been replaced by garish castles
squeezed onto four-acre lots.
This
was especially true, he felt, of Round Hill Road. “The road, to me,
represents all that is sordid in our modern business world,
money-grubbing poseurs putting on airs, until the handcuffs are slapped
on.”
It
is tempting to dismiss this as an old-money lament from someone who
missed out on the past decade’s asset boom. While Mr. Fountain’s father
rode the train into Grand Central every morning to a Wall Street job at
White Weld, a white-shoe investment firm that is now defunct, his own
career path has been rockier.
After
practicing law in Bangor, Me., Mr. Fountain returned to Greenwich,
where he spent most of his time defending small investors suing big Wall
Street banks over dubious investment advice. He quit his job in 2000
after publishing his first book, “The New Millionaire’s Handbook:
A Guide to Contemporary Social Climbing.” But his writing career
stalled, and in 2001 he beat a retreat to selling houses. At the age of
60, Mr. Fountain has had three careers over the last decade and now
rents a modest farmhouse in North Stamford, Conn., about 10 miles from
Round Hill Road.
Nevertheless,
his outbursts over new-money excesses in Greenwich have struck a vein,
attracting readers who, Mr. Fountain says, include not just bankers and
local real estate mavens but also followers in Europe and Asia. Cliff
Asness, the billionaire hedge fund manager, has commented on the blog,
and Mr. Fountain’s taste for Greenwich gossip makes him all the more
appealing.
“Fountain
is great,” said a defense lawyer for a legally encumbered Greenwich
resident who has come in for punishment on the blog. “He is really
catnip for all of us.”
One investment banker who recently used Mr. Fountain to sell and buy a house appreciates his forthrightness.
“If
he thinks the house you are trying to sell is worth $1 million and not
$5 million he will tell you,” said the banker, who spoke on condition of
anonymity because his firm did not permit him to speak to the press.
“Plus, his blog is hilarious.”
Much
of it consists of his rightward-leaning libertarian and politically
incorrect rants in which he mercilessly sends up — in equal measure —
what he sees as the big-government vanities of the Obama administration
and the arrogance of those who think they have arrived just because they
could secure a $10 million mortgage.
With
his raspy growl of a voice, his pickup truck and his trusty bow and
arrow, which he deploys when deer-hunting season rolls around, Mr.
Fountain might be as close as Greenwich comes to a redneck. And even if
it is all a bit of an act, the shtick — selling real estate requires
self-promotion of one kind or another — has been great for his business.
“The
hedgies love me — it’s amazing how successful you can be if you tell
the truth,” he said. “Last year was great, but it really kicked off when
I started going on about Walter Noel and Rogues Hill Road.”
Still,
in the competitive Greenwich market, where 1,000 people out of a
population of 61,000 are licensed to sell houses, there are those who
wonder if Mr. Fountain’s footprint is as big as he contends. While the
$20 million in sales that he and his business partner generated in 2012
put him in the top tier of the local broker pool — 2013 was a harder
slog, he says — some rival agents say his presence was hardly felt in
previous years.
They also reject his assertion that the market for big-ticket houses is in terminal decline.
“It
really bothers me when he talks about the market like this because it
is just not true,” said David Ogilvy, the longstanding dean of the
mansion market in Greenwich, who also has suffered his share of pokes on the blog.
To prove his point, Mr. Ogilvy ticks off his firm’s sales in recent months: $13.4 million, $14.5 million, $24 million.
But other real estate agents say large houses often sell for far less than the asking price these days.
“This
is still a buyer’s market,” said W. Harry Pool, a longtime investment
banker turned real estate broker at Halstead Property in Greenwich. “If
you want to sell your $10 million house, you really have to have the
best $10 million house out there.”
When
he is not hunched over a laptop or in pursuit of deer, Mr. Fountain
spends most of his days cruising around town in his pickup.
“I
mean this is insanity — it’s just a garish pile of bricks,” he growled
in the fall, as he drove past yet another 10,000-square-foot, slightly
worse for wear and quite empty house. Like so many of its ilk, the house
had been slapped together in a few months by a highly leveraged
speculator; unable to pull in the $9 million needed to clear his debts,
he had to surrender it to the bank.
And who signed off on the mortgage? “Patriot Bank, of course,” Mr. Fountain said, spitting the words.
Of
the many that have suffered a whipping from Mr. Fountain over the
years, few have been subjected to as much sustained abuse as Patriot
National Bank, the small regional lender that is based nearby, in
Stamford, and bankrolled some of Greenwich’s most egregious mortgage
disasters.
“Patriot was in a pretty bad place when we took over,” concurred Michael A. Carrazza, whose investment firm, Solaia Capital Advisors,
rescued the bank in 2010 and restored it to good health. About
one-third of the bank’s loan portfolio, he said, consisted of
nonperforming loans belonging to those owning high-end houses in and
around Greenwich. Many of the loans went to highflying Wall Street
titans, but a surprising number were directed to other borrowers, like
Jianhua Tsoi, an acupuncturist and aspiring artist, who borrowed $40
million to build at least five houses in and around Greenwich, few of
which he was able to sell.
Another
Patriot borrower was Dominick DeVito, a builder and renovator of big
homes who, when he took up residence on Round Hill Road in 2005, had
already served a term in prison for real estate fraud.
After
a profitable run, he became overextended, borrowing $6 million from
Patriot in 2006 to build and flip his most spectacular house yet.
When
the market collapsed, Mr. DeVito’s bankers got cold feet, shut down his
credit line and took possession of his nearly completed house. In 2009,
he was sent to prison again on mortgage charges related to his earlier
real estate activities in New York.
That
Mr. DeVito — an Italian-American kid from the rougher side of
Eastchester, N.Y., and with no college education — would end up on
Greenwich’s most prestigious thoroughfare is in itself a bit of a
curiosity.
“I
mean I was a paint contractor,” said Mr. DeVito in an interview last
year, as he took in the swimming pool, the rolling green hills and the
white picket fence from the front porch of his house. “Now I am on Round
Hill Road?”
Since
his release from prison in early 2013, Mr. DeVito has jumped back into
the real estate game with a vengeance — plying the back roads of
Greenwich in search of unloved mansions that he might snap up, tear down
and sell for a profit.
“I
am done with the banks, though,” he said. Instead, he is looking to
rich people in Greenwich to put up the cash, with profits to be split
down the middle.
“I mean,” he said with one of his signature, flashing white grins, “it’s not rocket science, is it?”
For the Wall Street types, however, headline-grabbing failure is harder to brush off.
Consider
Joseph F. Skowron III, known as Chip, whose $8 million house is on 16
Doubling Road, just a few miles east of Round Hill Road. A hedge fund
investor, he was caught in 2011 doling out envelopes of cash in return
for nonpublic stock tips and was sent to prison for five years. Once
worth around $20 million, he left behind a wife, four small children and
a garage once full of high-end sports cars.
Having
already paid $7.7 million in fines to the United States government, Mr.
Skowron was ordered last month to pay $24 million in past wages —
beyond the $10 million he has already paid to his former employer,
Morgan Stanley.
When
a guy named Chip, with a dimple in his chin and a luxurious home on the
edge of the local country club, commits and then admits to an egregious
financial crime, the knives come out quickly.
“How
warped can a guy get just to accumulate a 10-car collection of
speedsters and a big Greenwich house,” wrote Mr. Fountain on his blog
late last year, no doubt exaggerating the number of cars Mr. Skowron
owns. “He now has plenty of time to ponder that question. Chump.”
Peter
Tesei, the town’s first selectman, is quick to point out that a vast
majority of Greenwich’s 61,000 residents are citizens in good standing.
But even some of those have their pasts. And perhaps no one is better
qualified to add a bit of heft to Mr. Fountain’s thesis than David A.
Stockman, who was the budget whiz kid of the Reagan administration.
In his 712-page book, “The Great Deformation,”
Mr. Stockman argues that the relentless money-printing of the Federal
Reserve has created a pernicious cycle of greed and excess.
“This
is just not sustainable — the bubbles are getting bigger and the busts
are becoming more traumatic,” Mr. Stockman said. “And with each
subsequent reflation the wealth and income is flowing into a smaller set
of hands at the very tippy-top of the economic ladder.”
Mr. Stockman speaks from experience.
In the 1990s, he was a top executive at the private equity shop Blackstone and erected a 15,000-square-foot estate in the gated Greenwich community of Conyers Farm.
When the debt bubble burst in 2007, Mr. Stockman’s
final private equity play — a car parts supplier — failed
spectacularly. Federal prosecutors charged him with fraud but withdrew
the case two years later.
In 2012, Mr. Stockman put his trophy home — with its 11 bathrooms, swimming pool and tennis court — on the market, asking $19.75 million.
Weak as the market was, the listing was removed — and Mr. Fountain is not surprised.
“For
$9 million, it’s a nice little house,” he said. “But these types of
houses don’t age well. There is just too much horse crap out there on
the polo fields.”
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