Housing prices are falling around the country, but this one sounds hard to believe: A seaside mansion on Jupiter Island in Florida, bought for more than $13 million five years ago, was just sold for $10.
That’s right, 10 bucks. But in this case, the transaction is likely to raise eyebrows for reasons other than the price.
The seller, according to county records, was Richard S. Fuld Jr., the former chairman and chief executive of Lehman Brothers. The buyer was his wife, Kathleen.
The motivation is unclear, but Mr. Fuld has been under intense scrutiny since Lehman declared bankruptcy in September.
The longtime leader of the brokerage firm is at the center of a federal investigation into whether Lehman executives misled investors about the state of the company. And he was grilled by lawmakers at a Congressional hearing in October.
Mr. Fuld said in sworn testimony before a Congressional panel last year that while he took full responsibility for the debacle, he believed that all his decisions “were both prudent and appropriate” given the information he had at the time. (See the testimony in the video below).
The couple jointly bought the home in Hobe Sound, Fla., for $13.75 million in March 2004, and
the sale to Mrs. Fuld on Nov. 10 was first reported by Cityfile.com.
It is possible that he is now transferring properties because of his fears of investor lawsuits or a possible bankruptcy, lawyers in Florida said.
“This is the oldest trick in the books” said Eric S. Ruff, a lawyer with Ruff & Cohen in Gainesville, Fla. “It’s common when you hear the feet of your creditors approaching to divest yourself.”
Mr. Fuld has been accused by some of doing too little too late to save the firm. However, he has said publicly that the blame should be shared by regulators and that he took steps to try to save—or sell—the investment bank.
Florida has particularly generous home protection laws that protect residents from losing their homes in the case of lawsuits or bankruptcy. But Mr. Fuld may not see much benefit by shifting the house to his wife’s name because the Fulds may not be able to prove residency there.
Mr. Ruff, the lawyer in Florida, said that it might be difficult for him to claim residence in Florida, because he primarily lived and worked in the New York area. That could mute any bankruptcy benefit.
And, Mr. Ruff said, the transfer to his wife could be deemed fraudulent conveyance if she did not pay enough for the house. That would make the house fair game for creditors who come after Mr. Fuld.
It is also unclear how much Mrs. Fuld paid for the house. It is standard for property deeds to contain a placeholder number. The $10 on the deed in Martin County could simply be a placeholder, and Mrs. Fuld might have paid more, lawyers said.
The tax stamp on the deed says there were 70 cents of taxes, which would suggest that she may have paid as much as $100 for the house.
“All that you can say is that he transferred it. We don’t know his motivation,” said Jordan E. Bublick, a bankruptcy lawyer in Miami. “But he’s one of the rogue’s gallery. A lot of people when they’re in trouble say, ‘Oh, we’re going to put everything in my wife’s name.’ ”
Mr. Fuld has owned his house in Florida since 2004, according to records in Martin County, Fla. He also owns a sprawling property in Greenwich, Conn., the leafy suburb of New York. The Fulds could not be reached for comment at either residence.
Mr. Fuld received about $34.4 million in 2007, though much of that was in stock that later became worthless. Mr. Fuld left as chief executive at the end of 2008, with no bonus or severance payments, the firm has said.
The Fulds have taken steps to cut back, like selling some of their multimillion-dollar art collection. Still, they are thought to be worth tens of millions. When Mrs. Fuld went shopping at Hermès over the holidays, she requested white bags—rather than the brand’s signature orange ones—to try to disguise her purchases.
Mrs. Fuld is well known among art collectors in the New York area. When the Museum of Modern Art honored Mr. Fuld for their giving a few years earlier, he said in a speech, according to people who were there, “My wife loves art, and I love my wife.”