The Liar's Ball

The Extraordinary Saga of How One Building Broke the World's Toughest Tycoons

Vicky Ward

• Publisher: Wiley
• Year: 2014
• Print ISBN:
  9781118295311
• Edition: 1
• eBook ISBN:
  9781118421512
• Topic: Business
• Subtopic: Real Estate
• Index: Business

Inside the world of the real Great Gatsby of New York real estate

Harry Macklowe is one of the most notorious wheelers and dealers of the real estate world, and Liar's Ball is the story of the gamblers and thieves who populate his world. Watch as Harry makes the gutsy bid for midtown Manhattan's famous GM building and put almost no money down, landing the billion-dollar transaction that made him the poster child for New York's real estate royalty. Listen in on the secret conversations, back-door deals, and blackmail that put Macklowe and his cronies on top—and set them up for an enormous fall.

Vanity Fair contributing editor Vicky Ward skillfully paints the often scandalous picture of the giants who owned the New York skyline until their empires came crumbling down in the 2008 financial crisis. Based on more than 200 interviews with real estate moguls like Donald Trump, William Zeckendorf, Mort Zuckerman, and David Simon, Liar's Ball is the never-before-told story of the egomaniacal elites of New York City. Read about:

• The epic rise and fall of one of the richest American real estate barons
• Outlandish greed and cravings for power, attention, and love
• Relationships built and destroyed by vanity and gossip
• The bursting of the real estate bubble and its aftermath

This is no fiction—this is a real life tale of extravagance, ambition, and power. Harry Macklowe ruthlessly clawed his way to the top with the help of his loyal followers, each grubbing for a piece of the real estate pie. Liar's Ball reveals their secrets and tells the tale of business as usual for this group—lying, backstabbing, and moving in for the kill when things look patchy. From the bestselling author of The Devil's Casino comes an expos??? on the real estate elite that you'll hardly believe.

Chapter 1
Stealing the Spotlight

I think that I've been able to lead and have a high enough profile where people say, “Hmmm, how would Harry Macklowe do this? He's my hero.”

—Harry Macklowe

He spotted his chance the night the letters vanished.

They were there, as usual, one dusky summer's evening in Manhattan, but the next morning they were gone. All of them. Their disappearance immediately spurred frantic, gossipy phone calls between the major real estate offices in New York City. Everyone knew the significance, but very few knew what had happened. There was speculative chatter about a “midnight raid,” even a “robbery.”

Bizarrely, some of the garish letters began to show up on office walls around New York, where they still remain. Their proud owners were coy about how they had acquired their trophies. Was Donald J. Trump, the flame-haired, flamboyant developer, furious? No one dared ask him. All they knew was that the letters’ disappearance marked the end of his most cherished dream.

For Harry Macklowe, it was the beginning of a metamorphosis.

■ ■ ■

June 2003. As the sun rose over Manhattan, passers-by, commuters, tourists, and members of the audience assembled for CBS's morning show noticed that something was dramatically different about the 50-story, white marble edifice soaring above midtown known as the General Motors (GM) Building.

In almost every other detail, the legendary and much-coveted trophy building looked as it had for years: the white, minimalistic tower with the small inset windows that gave tenants spectacular views of Central Park; there was the glass box of FAO Schwarz, the iconic toy store, on the southwest corner of the building's first floor. There was the plaza—that “problematic plaza,” as industry insiders and architects had always called it because no one had found a sensible, or profitable, use for it—stretching out to Fifth Avenue.

But the building's most jarring detail: brass letters, each four feet tall, spelling out TRUMP—the ultimate vanity plate—was gone.

For five years, Donald Trump's name had been bolted onto the base of the otherwise spartan façade designed by the late Edward Durrell Stone. The brass letters ran around the creamy wall like a golden ticker tape, a constant reminder of the building's co-owner and manager. The sunlight had reflected off those letters so brightly that senior executives at CBS, whose morning show was shot in the building's ground-floor studios, successfully negotiated with Trump to tone them down. The glare was “blinding,” they said, and they were not in the business of “advertising Trump.”

When he heard about the negotiations, Ira M. Millstein, a white-haired lawyer who works on the 32nd floor of the GM Building—at Weil Gotshal & Manges, the building's oldest extant tenant—had chuckled gently with his colleague, the well-known bankruptcy lawyer Harvey R. Miller. The two of them had tangled with Trump on other matters. They suspected the issue would irk him.

Some of the GM tenants felt that Trump's initials marred not just the aesthetics but the spirit of their tower. The building wasn't just another ho-hum high-rise. No, this was the GM Building, a symbol of America at its finest.

She had been commissioned in 1964 by General Motors, then the biggest company in the United States—and, therefore, in the world. GM had occupied 26 floors of the building, which took up an entire city block between Fifth and Madison Avenues and 58th and 59th Streets. Her location—where Central Park meets the heart of both commercial and residential New York—was, like her name, unbeatable. Unsurprisingly, the world's alpha dogs rented office space there. The blue-chip brands included Estée Lauder, Carl Icahn, the hedge fund Perry Capital, the talent-management firm IMG, and the Wall Street legend Sanford “Sandy” I. Weill.

Trump didn't usually buy office buildings—but he viewed the GM Building as an exception; she was the fitting monument to his ambition. In 1998 he had finally found a way to buy her by partnering with the Indianapolis-based insurance giant Conseco, run by a friend of his, Stephen “Steve” C. Hilbert.

Conseco put up most of the money, but Trump became the face of the building. He took out an ad in the New York Times that read “$700,000,000 . . . THE GM BUILDING . . . A 50-story 2 million square foot office building . . . Developer Donald J. Trump.” The ad ran two days in a row because initially someone forgot to insert Trump's middle initial, J., a detail he is most particular about.

He instantly set to work “Trumpifying” the tower. The building's white lobby interior was replaced with a deep green marble. There were plaques on the wall that read “The General Motors Building at Trump International Plaza.” He tried to evict Houlihan's, the chain restaurant in the basement, because, it was said, he hated the smell of greasy food. He raised the sunken plaza to street level, and made it pristine and pleasant to sit in for the first time in 40 years.

But he got stopped just as he was accelerating. In 2000, Hilbert left Conseco; he had made a disastrous bet on Green Tree Financial, which provided financing for low-income housing. Conseco went bankrupt. Trump negotiated to buy the building from his partner, but in the fall of 2001 those talks stalled; the partnership grew distinctly less friendly, and Trump entered into two years of intense legal battles. In the summer of 2003, Conseco won the building. An Illinois bankruptcy court awarded the insurance firm the right to retain a broker, Eastdil Realty, to sell her on the open market. To make the best deal possible, Conseco knew it was imperative that the world would know Trump was out. His name had to come off the building.

The man tasked with making this happen was Charles “Chuck” H. Cremens, a plainspoken Bostonian.

Cremens told Trump directly that the letters he'd put up now belonged to Conseco, and that as a courtesy, Trump could remove them himself, or Cremens would do it for him. The negotiations were described by a lawyer for Conseco, Reed S. Oslan, from the Chicago firm of Kirkland & Ellis, as resembling a “tennis match.” “Chuck's one of the best negotiators ever. So [Trump's side] made some offer. Chuck would say no. [This went on] for about four or five hours.”

Cremens would later admit he underestimated the significance of those letters for Trump. Before the two sides reached a formal agreement, Trump had sent a team out into the darkness to remove them. “I wanted them to come off in a dignified way,” Trump said in an interview. “It was the right thing to do. I no longer owned the building.”

Trump's team put up “big sheets” to obscure the dismantling—and then the letters were given to Cremens, who dispersed them; and it was this that, people speculated, must have angered him—though Trump says not so. “I was sad to lose the building, but not angry about the letters.”

Over at Eastdil, Wayne Maggin, the executive in charge of the sales process, has the “M.” Reed Oslan has an “R.” Mary Anne Tighe, the CEO of CBRE, Inc., has the “T.”

Cremens was baffled as to why it had been so easy to get the letters removed—why “we had accomplished so much.”

A month later, that mystery was solved. Something new had come into Trump's life that he loved as much as—or even more than—the GM Building. He was shooting the first season of NBC's The Apprentice, the reality show in which contestants vie for a position in Trump's organization. The show would set Trump up as an international figurehead businessman who repeatedly got to say, “You're fired.”

And just like that, Donald Trump was extricated, and the GM Building was once again on the auction block. Eastdil prepared to send out its offering book. They all felt this was going to be the priciest commercial real estate bidding war ever. Cremens noted that someone would undoubtedly pay an extraordinary price for something he called the ultimate bauble of “ego gratification.”

■ ■ ■

When Harry Macklowe heard that Donald Trump was out of the GM Building, he pounced. If this small, soft-spoken, slightly shambolic-looking, moon-faced man permanently attached to a Starbucks cup was ever going to vault himself out of the shallows of the New York real estate pool and into the spotlight, now was the time. He had waited 40 years for this moment. “I thought [the GM Building] was the best building in the world,” he'd say later. “I knew exactly what to do with it.”

On June 6, 2003, he tried to muscle his way to the front of the line. He phoned Cremens and asked him what it would take to “pre-empt” the bidding on the building. Cremens brusquely shot him down; he told Macklowe that “we don't do pre-empt.” Eastdil would be running a sealed bid process. Macklowe would have to play by the same rules as everyone else.

Macklowe had anticipated this. He had also anticipated that no one considered him a serious candidate to buy the most expensive and prestigious office building in the world. A deal for over $1 billion would require an enormous amount of leverage. Macklowe didn't have much money (in real estate terms), and, to make matters worse, he had limited options with most real estate lenders. Maggin knew there were “certain bankers, including Lehman Brothers, who were not prepared to do business with Harry.”

Ben Lambert, Eastdil's tall founder and chairman, liked Macklowe but saw through his charm and affectations. Each time Macklowe pulled out his little black sketchbook filled with his riffs on architectural drawings, Lambert studied it politely, but remained skeptical. “I've often thought that there must be another book in which [Harry] wrote down what he really thought,” Lambert says. He would not be gulled into selling the building to anyone who couldn't come up with the right money and terms.

■ ■ ■

Macklowe knew his reputation, but he also knew that some people—quite a few even—thought his charm and taste redeemed him. “He can be elegantly articulate in the way he draws out his vision on a napkin or talks about a building,” says Douglas “Doug” Harmon, Eastdil's most prolific broker.

Macklowe has always deployed his charisma as skillfully as a wartime general deploying his artillery, treating laughter, tears, gentility, vulnerability, and jokes as different parts of his arsenal. “He is quite capable of bursting into tears if he thinks that will help him get what he wants,” says Harmon, smiling.

An afternoon with Harry Macklowe is like spending time with the personification of Vanity Fair magazine: at one moment highbrow, the next low, always, always intriguing. Among the numerous topics he talks about: He'd love to buy the American rights to the Smart car. He imported a few for six months and lobbied hard, but Mercedes stopped him, “and then I thought I should get back to my day job.” He'd like to own a hotel. He did once—Hotel Macklowe in Times Square on West 44th Street. He liked getting to know the staff, and hearing them say, “Good morning, Mr. Macklowe, how are you?” “How could I not like it?” asks Macklowe. “It was a show every day.”

He loves to tell stories—about buildings, about himself, about his friends. He enjoys being with writers, artists, and performers. He collects them much in the way Andy Warhol assembled his Factory crew.

He gets lost in reveries on Mies van der Rohe; the precision of a Henri Matisse drawing (“his lines . . . the pencil seems to never leave the page”); the modernist influence of Hungarian-born architect Marcel Breuer; the details of Paris's Place Vendôme and Place de La Concorde. In moments of tension or if he wants to change the subject, he breaks into songs—funny, nostalgic show tunes, often by Cole Porter. He talks about art; he and his wife Linda (whom he describes as “very clever”) have accumulated a “massive” contemporary art collect...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Preface
• Cast of Characters
• Introduction
• Chapter 1: Stealing the Spotlight
• Chapter 2: Alpha Males
• Chapter 3: The Rigged Bid
• Chapter 4: Harry's Hero
• Chapter 5: The Odd Couple: The English Lord and the Housewife Tycoon
• Chapter 6: The Age of the Wolf
• Chapter 7: Donald Trump's Bag Man
• Chapter 8: The Money Hunters and the Salesman from Indianapolis
• Chapter 9: Donald's “Force Majeure”
• Chapter 10: Paradise, Briefly
• Chapter 11: Mr. Toad's Wild Ride
• Chapter 12: Tick Tock—A Year on the Clock
• Chapter 13: The Fall That Wasn't
• Chapter 14: Aftermath
• Note about the Sources
• Acknowledgments
• Notes
• Bibliography
• About the Author
• Index
• Supplemental-Images
• End User License Agreement