For now, anyway. In February, Moody’s downgraded Patriarch’s CLOs Zohar I, II, and III, which hold roughly $2.4 billion in debt, classifying the lowest tranches as “speculative” or “junk” because of the rising default rates of the companies and Patriarch’s lack of transparency about their finances. Tilton says they were downgraded because the ratings agencies have changed their methodology since the financial crisis, and because—hello—“I buy distressed companies out of foreclosure. They’re rating them like they’re Revlon.” She points out that a number of her companies languished before eventually turning around. The more cynical view, however, is that Patriarch’s backing of hopeless companies is self-serving and potentially catastrophic for investors, whose investments are at risk should the loans within the CLO default. Even if the CLO itself defaults, of course, Patriarch will still have managed to extract millions in fees.
Tilton is also finding her personal wealth coming under increasing scrutiny. Though the CLOs net her at least $25 million annually, some in the industry scoff at her claims of being a billionaire. “Not even close,” says someone whose membership in that club has never been challenged. When I repeat this to Tilton, she presents a simple, unaudited spreadsheet listing the values of her cash and gold, homes, planes, and jewelry, which total around a half a billion dollars; and a list of her most profitable companies, of which she is sole owner. “Randy likes the billionaire tag because it makes me so unusual,” she complains. “But I don’t like this onus it puts on me to prove it to the press.”
She was harsher to Forbes, which pressed for documentation for its billionaires list. “She threw the reporter out,” Randy Jones told me in early March. “She doesn’t want to be defined by her wealth.” When the magazine published last week a series of confrontational blog posts challenging Tilton’s billionaire credentials and suggesting Patriarch’s dealings smelled bad, Tilton told me she was convinced that she was the subject of a “witch hunt.”
Patriarch prides itself on its familylike atmosphere. “I tell people when they come in here that they’re coming into our home,” says Carly Tilton at the firm’s Tribeca office, a comfy space dominated by an enormous glamour shot of her mother. Carly makes it clear that she is speaking only under pressure from her mother and Jones.
Tilton pokes her head into the room. “Are you being nice?” she asks.
Carly makes a face.
“Carly, let me talk to you outside for a second.”
Families, of course, can be dysfunctional. “I am the mother, I am teacher, I am inspiration,” Tilton had explained to the students at Yale. “But I am also going to inflict discipline on those who can’t buy into the journey.” Discipline at Patriarch appears to fall into two categories. If the problem is merely that someone doesn’t have the skills to do their job properly, “I stop talking to them,” Tilton says. That’s their cue to quit. If she believes that someone has the skills and is just being lazy, weak, or uncommitted, the discipline can be more severe. A wrongful-termination complaint filed by Andrzej Wrobel, Rand McNally’s former CEO, accuses Tilton of “repeatedly, in business meetings … throwing things at people, hitting and striking them, and calling them a flood of insulting names.” Once, in front of a roomful of people at another company, she grabbed an overweight executive by his collar and dragged him over to a mirror. “What do you see?” she demanded. Because I see a lazy, fat fuck.”
“I’ve worked on Wall Street a long time, I’ve heard a lot,” says one former employee. “It’s okay to be tough, but this is a different level. It’s beyond the man-woman thing. She has the worst mouth in the world.”
“It’s a form of control and humiliation,” says another employee, adding that the experience of working for Tilton was so emasculating that it took him months after leaving the firm to have sex again. This employee also says that Tilton perceives all of her male employees as being in love with her. Which is perhaps the reason that, holding court in a conference room during her 50th-birthday party, Tilton offered her male employees a choice: They could take a Jell-O shot off her stomach or lick whipped cream off her breasts. “The crazy part was, she saw it as morale building,” says one person present. “People were hiding in the bathroom.”
The men I spoke to who felt wronged by Tilton tend to talk about her the way people talk about people with whom they’ve been in bad relationships. “Go look up narcissist in the dictionary,” says one. Another cites what could be called the David Gest effect: “If you really explain to people what it’s like to work there, they think you’re crazy and lose respect for you.”