It's a bitch being rich ...
A Lurid Aftermath to a Hedge Fund Manager’s Life
Seth Tobias, a regular guest on “Kudlow & Company” on CNBC, was found
dead in the pool of his home in Florida. His brothers say his wife killed him.
By ANDREW ROSS SORKIN
December 4, 2007
JUPITER, Fla. — A life of private jets and black-tie balls ended with Seth Tobias, a wealthy investment manager and a familiar presence on CNBC, floating face down in the swimming pool of his mansion here.
It was just after midnight on Sept. 4 when Mr. Tobias’s wife, Filomena, frantically called 911. “Please send somebody, please!” Mrs. Tobias screamed. “He’s not breathing!” By the time the police arrived, she had pulled her husband’s body to the edge of the pool, where she cradled his head in her arms, sobbing.
Mr. Tobias, who was 44 years old, had apparently suffered a heart attack, his brother Spence said at the time. The police did not consider his death suspicious.
But now an unfolding drama over Mr. Tobias’s estate is providing a lurid account of fast money and faster living in the volatile world of hedge funds. Mr. Tobias’s four brothers and Mrs. Tobias are locked in a legal battle over the estate, which is worth at least $25 million. And, in a civil complaint, they have gone so far as to accuse her of murder.
The brothers, Samuel, Spence, Scott and Joshua, claim Mrs. Tobias drugged her husband and lured him into the pool. Bill Ash, a former assistant to Mr. Tobias, said he had told the police that Mrs. Tobias confessed to him that she had cajoled her husband into the water while he was on a cocaine binge with a promise of sex with a male go-go dancer known as Tiger.
Mrs. Tobias’s lawyers call the claims outrageous. She has not been accused of any crime.
The mystery deepened when it emerged that Mrs. Tobias spent $9,628 to have the pool drained and resurfaced days after her husband died, according to documents filed in an unrelated case.
The salacious accusations have captivated this wealthy enclave north of West Palm Beach and transfixed the investment world in New York, where Mr. Tobias ran a $300 million hedge fund from an office on Park Avenue. From the Breakers hotel in Palm Beach, a stately symbol of old money, to trading floors on Wall Street, the epicenter of the explosive wealth now reshaping American society, the case is seen as a parable of the modern gilded age.
“I don’t understand why this hasn’t ended up on ‘CSI: Miami’ yet,” said Jim Cramer, the host of CNBC’s stock-picking show “Mad Money” and Mr. Tobias’s former boss on Wall Street.
The questions keep piling up, starting with the big one: How did Mr. Tobias die? The police in Jupiter have not opened a homicide investigation but are awaiting the results of toxicology tests before making a final determination, said Sgt. Scott Pascarella.
At the center of the dispute is Mr. Tobias’s will, which designates his brothers as beneficiaries but does not name Mrs. Tobias. She contends that she is entitled to the estate because the will was signed before the couple married. In court filings, the Tobias brothers invoke Florida’s “slayer statute,” which prohibits inheritance by a person who murders someone from whom they stand to inherit. They claim she “intentionally killed” her husband “by asphyxiation and drowning.”
One lawyer representing Mrs. Tobias, Gary Dunkin, said he was shocked by the accusation. “In my 25 years practicing law, this is the most reckless allegation I have ever seen,” he said in court. Her lawyers, which include her prior husband, Jay J. Jacknin, have asked the court to put off her depositions, citing her “psychiatric condition.” They said she hired contractors to empty the pool because she was distraught over her husband’s death.
However this mystery plays out, it is providing a treasure of details about the lavish lifestyles that hedge funds can afford their founders, and perhaps sheds light on how all that money ultimately influences personal lives.
Mr. Tobias, a native of Philadelphia, entered this secretive, often volatile corner of the financial world after spending less than a decade on Wall Street, including a stint with Mr. Cramer’s former money-management firm. He formed Circle T in 1996, with $4 million, and parlayed that into a $300 million hedge fund and brokerage firm. Circle T is in the process of returning investors’ funds; clients have not lost money.
He counted among his investors Samuel Zell, the billionaire who recently agreed to buy the Tribune Company. Mr. Zell, in an interview, said he rarely interacted with Mr. Tobias. “I knew Seth for 10 or 15 years on a very unconnected basis,” he said. “He was a good, smart guy.”
Along the way, Mr. Tobias collected the trappings of success. He spent days at the Kentucky Derby and nights at Donald Trump’s Mar-a-Lago Club. He frequently shuttled by private jet between New York, where he worked in the Seagram Building in Manhattan, and Florida, where he owned two homes.
Mr. Tobias made — and apparently spent — millions of dollars a year, court documents suggest. Outstanding expenses at the time of his death included $52,532 on his American Express Centurion Black Card and $7,960 on his Bank of America credit card. His mortgage payment for one of his homes was $35,000 a month. He paid $1,367 a month to lease a Land Rover. His monthly cable bill from Comcast was $535.19.
But the boyish Mr. Tobias never ran with the titans of Wall Street. He was a small player in an industry where successful managers command billions or even tens of billions of dollars. Nonetheless, Mr. Tobias managed to make a name for himself on financial-news television, appearing on “Squawk Box” and “Kudlow & Company” on CNBC.
Now, the hints emerging about his private life have captivated Wall Street. Mrs. Tobias told the police that her husband may have been using cocaine on the night he died, according to police reports. Some of Mr. Tobias’s former associates say he used drugs regularly and often disappeared from his office for days or weeks at a time.
Mr. Tobias’s life was apparently as volatile as his investment returns. After Circle T lost 5.3 percent in 2005, his marriage began to fray. In March 2006, the police were called to the Tobiases’ home because of a domestic disturbance. A few days later. Mr. Tobias filed for divorce. It was one week before the couple’s first anniversary.
The Tobiases later reconciled. But the divorce filings included a laundry list of accusations. Mrs. Tobias stated that she caught him having an “adulterous affair” and that he “gambled away tens of thousands of dollars and used other funds on illicit habits.” She asked the court to award her $46,000 a month for living expenses. He argued that she was constantly spending too much money.
Even after the couple reconciled, they fought constantly, mostly over money, according to several friends, who asked not to be identified for fear of being subpoenaed in connection with the case or because they were worried that their professional reputations would be harmed by being associated with the case. At one point, Mrs. Tobias bought a Porsche on her credit card and then cried when Mr. Tobias told her to return it, one friend recounted.
They also secretly frequented a gay bar called Cupids in West Palm Beach, in a strip mall along a main thoroughfare. It was there, according to Mr. Ash, that Mr. Tobias first met Tiger.
“Seth used to come in here back when it was crazy,” said Adiel Hemingway, the longtime manager of Cupids. As a flat-screen television blared hard-core gay pornography, he said that Mr. Tobias often came to the club with his wife. Mr. Hemingway took out a picture of Tiger in his office. Tiger is blond and covered with tattoos that look like stripes.
“I know exactly who he is, but I’m not telling you,” Mr. Hemingway said. The Tobias brothers have subpoenaed Tiger, using the address of Cupids, but have been unable to learn his true name.
The day Mr. Tobias died, he spent the afternoon at the Breakers with his wife and several friends, drinking and possibly using cocaine, according to Mrs. Tobias’s statement to the police. From there, Mr. Tobias went with one of the friends to E. R. Bradley’s Saloon, a boisterous open-air bar in Palm Beach that looks over the Intracoastal Waterway.
What happened next is unclear, except that Mr. Tobias was dead in the pool, with abrasions on his nose, forehead and back. When the police arrived, Mrs. Tobias, on the advice of a friend who is a lawyer, refused to let them enter the house, which is perched on the edge of the sixth hole of a Jack Nicklaus-designed golf course in a gated community. After returning with a warrant, the police found a Ziploc bag with a white powdery substance and a small baggie and a straw, as well as two empty plastic prescription bottles. Mr. Tobias’s eyeglasses and a drinking glass were discovered on the bottom of the pool.
According to the brothers’ lawsuit, Mrs. Tobias caused her husband “to ingest one or more controlled substances that induced loss of consciousness and capacity to breathe.” They further claimed that she caused him “to enter the swimming pool at their residence after his ingestion of controlled substances and in his stuporous and helpless condition he was asphyxiated and died.” Mr. Tobias’s best friend, Patrick Bransome, said in a statement to police that he had not seen him go in a pool or swim in years. Mr. Bransome declined to comment.
A few weeks later, Mr. Ash called the police and told them that Mrs. Tobias had confessed to him and that he had a tape recording to prove it. Mr. Ash has a past: he has been arrested at least 11 times on charges ranging from larceny to prostitution; He has been called Mr. Madam because of a past connection he says he had to Heidi Fleiss, the Hollywood Madam. Investigators flew to Mr. Ash’s home in San Diego and spent a day interviewing him.
“She confessed to me on tape,” Mr. Ash, said in an interview. “I believe she absolutely did it.” He would not provide the tape, but expressed outrage that the case was not moving more quickly. “I’m the only one standing up for him. Who else in this whole crazy thing is looking out for him?”
The police in Jupiter appeared unimpressed with Mr. Ash’s allegations. “You can take it for what it is worth,” Sergeant Pascarella said.
Through her lawyers, Mrs. Tobias refused to comment for this article. In a recent interview with The Palm Beach Post, she said, “I’m broken. I haven’t gone out in six weeks. I’ve been in and out of the hospital. I just pray all day and wonder why people could be so evil.”
She said of Mr. Ash: “All those rumors are disgusting. He’s a very sick man who should be institutionalized.”
Jessica Seubert and Jenny Anderson contributed reporting.