They Aren't All Angels
Bits and Pieces 2013-11-28
Summary:
I have done enough bragging on this blog lately, about my students and about Harvard. Time to highlight Harvard's role, and my own, in turning out charlatans.
Well, I did call out Noah Freeman recently. But today's subject is Buddy Fletcher, that is, Alphonse W. Fletcher, Jr. Harvard AB 1987 in Applied Mathematics. My student. My advisee. Once the toast of Harvard, when he donated a University Professorship in his own name in 1996: "We are extremely grateful to Buddy Fletcher for his wonderful generosity to Harvard and for his powerful statement of confidence in the University and its programs," Rudenstine said. "His support is magnificent testimony from an alumnus who only recently celebrated his thirtieth birthday, and who is still a year away from his tenth reunion. Buddy has a deep dedication to Harvard and a strong commitment to the importance of education.
"Those qualities are reflected in the intention and spirit of the new professorship that will bear his name," Rudenstine added. "He has expressed his preference that the chair be held, whenever possible, by a faculty member from one of the professional schools who is devoted to teaching and research about contemporary moral, religious, and social values, and whose interests include undergraduate education. The intention is to give special attention to our nation's tradition of pluralism, including the ways that differences in cultural, ethnic, and regional values may be reconciled and drawn upon to strengthen our democracy."That chair was held first by Cornel West and now by Henry Louis Gates Jr. Buddy has had a strange history. After years of reporting dizzying hedge fund profits, he now seems to be broke. A story published yesterday, the Wall Street Journal reports his latest woes.
In a prospectus to investors, hedge-fund manager Alphonse Fletcher Jr. said he planned to achieve returns by doing deals "immediately, quantifiably worth more to the buyer than the seller."
But a court-appointed bankruptcy trustee said in a report this week that the values Mr. Fletcher placed on investments were inflated through fraud, and that his firm's funds were likely insolvent as far back as December 2008.
In the report, the trustee, Richard J. Davis, said that a network of related Fletcher hedge funds had not made a profitable investment after August 2007. Instead, working with a consultant, Mr. Fletcher, chairman and owner ofFletcher Asset Management, created "wildly inflated valuations" to generate more than $30 million in fraudulent fees and attract new investors, the report said.
Mr. Davis's report said that the Fletcher firm also generated "cashless notes" between its own funds that led to extra fees and improperly increased calculations of assets under management, just before funds were evaluated by a key hedge-fund industry index.
"In many ways, the fraud here has many of the characteristics of a Ponzi scheme where, absent new investor money coming in, the overall structure would collapse," Mr. Davis said in a nearly 300 page report.What investors fell for this? The Firefighters' Retirement System of Louisiana. The Municipal Employees' Retirement System. The New Orleans Firefighters' Pension and Relief Fund. And the Massachusetts Bay Transportation Authority Retirement Fund. Pensioners are bearing the costs of Buddy's alleged schemes, and his $8 million investment in a movie project of his brother. I wonder what sort of due diligence they did. Not due enough, obviously. I hope they did not think that Buddy has a University Professorship named after him at Harvard, so he must be on the level. I don't mind having my salary paid by the gift to Harvard of a generous cad. I like to think that universities cleanse the money they take from such folks and society comes out better the exchange, as long as the do