Alberto Vilar left Manhattan’s federal courthouse on a sunny morning in June and walked slowly toward Foley Square, alone except for news photographers, a business suit hanging from his shrunken frame.
Vilar, 64, co-founder of New York-based Amerindo Investment Advisors Inc. and a well-known arts philanthropist from the East Coast all the way to Denver and Vail, was accused of stealing $5 million from Lily Cates, a friend and longtime client.
It was a familiar scene: an icon of the late-1990s stock boom facing criminal charges, surrounded by a scrum of press.
Former Tyco chief executive Dennis Kozlowski, former WorldCom CEO Bernard Ebbers and Credit Suisse First Boston’s Frank Quat trone were tried and convicted in the courthouses around Foley Square, the center of New York’s legal world.
Vilar’s case stands out. Freed from the nearby Metropolitan Correctional Center just two days earlier, Vilar walked out into the world without the usual protective throng of family, friends and lawyers. Instead of a black sport utility vehicle or luxury sedan with tinted windows and a driver, Vilar stepped into a yellow cab for the $10.50 ride to his 20-room, two-story luxury apartment near the United Nations.
Vilar, who prosecutors said had once amassed a $950 million fortune, was released to home confinement after sitting in jail for 3 1/2 weeks, unable to put together $4 million to secure his bail.
Vilar faced a suit by the Securities and Exchange Commission, the claims of former friends and investors who say he stole their money, and court judgments won by business creditors and former employees.
Many of the opera companies and other charities to which Vilar had pledged more than $200 million faced the reality that he wouldn’t pay them anytime soon, if ever.
As early as next year, a jury may consider whether Vilar and his partner, Gary Tanaka, 62, stole the $5 million from Cates, as prosecutors claim.
What is clear is that in 2002, when they allege the crime took place, Vilar was in a desperate spot, personally and financially.
By mid-2002, Vilar and Amerindo were out of cash as a result of a steep drop in the value of their holdings in technology stocks. Vilar complained of back and leg pain that he said kept him out of the office for months at a time.
The drugs he was taking for the pain, he later said, left him mentally incapacitated.
“I was fighting for my financial survival,” Vilar testified in a 2003 deposition.
Whether or not the events of 2002 drove Vilar to crime, they put him and his firm in a hole too deep to climb out of.
And they provide a cautionary tale for investors and regulators who didn’t see the signs until it was too late.
Vilar and Tanaka are charged with conspiracy, securities fraud, investment adviser fraud, mail fraud, wire fraud and money laundering. Additional charges are possible.
They face as many as 10 years in prison if convicted.
Vilar and Tanaka have pleaded not guilty. Both declined to be interviewed.
Vilar was born Albert William Vilar Jr. in Newark, N.J., in 1940. Vilar’s father was a wealthy Cuban sugar-company executive; his mother disappeared from Vilar’s life soon after a divorce.
After graduating from Washington and Jefferson College in Washington, Penn., with a bachelor’s degree in economics in 1962, Vilar spent two years in the Army.
In 1964, he got a job in New York with the international division of Citigroup Inc., then called First National City Bank.
Vilar also developed a passion for opera, an art form that, for several years, would count Vilar as its greatest private patron.
In 1980, Vilar founded Amerindo with Tanaka, a fund manager at Crocker Investment Management Corp. who was born in a Japanese-American internment camp during World War II.
Amerindo began as an offshore hedge fund for wealthy individuals and family trusts that was incorporated, in succession, in Hong Kong, the Cayman Islands and, finally, Panama, according to testimony by Vilar.
By the late 1990s, the firm’s clients included the pension plans of FedEx Corp., Johnson & Johnson and Whirlpool Corp. Yet Amerindo’s narrow focus meant that when technology stocks did well, Amerindo clients did very well. When they faltered, clients had big losses.
As Amerindo’s financial position deteriorated, so did Vilar’s health.
In July 2000, a few months into the slide, Vilar developed pain in his left calf, according to doctors’ records he released in a lawsuit in 2004.
In February, Vilar told his doctors the pain in his leg had become “excruciating,” according to the medical records. He couldn’t walk or sit for more than an hour without pain. He couldn’t sleep through the night. Several surgeries followed.
The bout with peritonitis and the drugs Vilar had taken to control his pain, without success, had caused him to drop from 175 pounds to 140.
By 2002, Chicago’s Lyric Opera, the Washington Opera and other charities to which Vilar had pledged tens of millions began to confirm that he was missing payments.
The bad publicity was embarrassing to Vilar, says a former Amerindo employee who spoke on condition of anonymity. And people at Amerindo worried that the news would cause investors to lose confidence and pull their money, worsening the situation for the firm, the person says.
In 2001, Denver’s National Jewish Hospital, where Vilar had been treated for a sinus condition, announced his promise to give $25 million for a new medical research center, the biggest gift in its 102-year history.
“We didn’t get any money,” says National Jewish spokesman William Allstetter. “We’ve essentially written it off.”
Meanwhile, Vilar and Amerindo were running out of cash.
Vilar’s investments in privately owned technology companies could not be recovered as long as the market for initial public offerings of stock remained stalled, he said in letters and testimony.
