With investors, Ezra was a showman. He likes a stage, and likes to show off his storehouse of knowledge. He could talk Talmud with rabbis, or politics with a Ph.D.; he sent articles to Ruth Madoff, which Bernie shared and reported. “It made me better read,” Bernie would say.
Ezra could be impatient with slower minds—“uninhibited” in his disregard, says one. But with those he considered equals, and with his clients, he was a pleaser. “He does not like to disappoint,” says one friend. And for all his erudition, he had another winning quality. He didn’t mind poking fun at himself. The key to success is sincerity, he’d confide. If you can fake it, you’ve got everything.
A couple of business associates later complained, as one put it, “He’ll talk about things factually but not necessarily in any relation to facts. For some reason, he makes things up, and not for any advantage to himself, necessarily.” Perhaps rounding the edges made for a more convincing presentation. And most found him convincing. At the UJA-Federation, where he headed the investment committee for ten years, “he would speak conceptually of economic matters,” says one attendee from outside the financial world. “The word you heard after he left the room was ‘dazzling.’ ”
But Ezra’s most potent asset as a financier was his network of connections. Among wealthy Upper East Side Jews, philanthropic, religious, social, family, and business circles overlap. “A shtetl,” says one member, Merryl Tisch of the real-estate family, though not disparagingly. Ezra was born to these circles, and after his father died, Ezra quickly filled his shoes. In 2001, he was elected president of the Fifth Avenue Synagogue, and in the same year he was elected to Yeshiva’s board of trustees, where his father had served for four decades. Ezra followed his father into charity work, too, giving tirelessly of his time. All for three Diet Cokes a year, says one member of the UJA. Usually, Ezra gravitated to the investment committees, a perch from which to help institutions he cared deeply about, as he saw it.
Ezra left Gotham in 1988, partly because Greenblatt was not interested in growing the size of his fund, which wasted Ezra’s chief talent. He took his investors with him and started Gabriel Capital. Ezra’s model, common enough on Wall Street, was to raise money and funnel it to talented managers in exchange for a fee. Later, furious investors said they’d been led to believe that Ezra was managing their money. But those who worked closest with him knew better. Ezra raised the money—“He was the golden goose,” one put it—and then relied on talented money managers, whom he had a knack for spotting. By 1992, Ezra was raising money for Stephen Feinberg, a manager whose private-equity firm Cerberus later bought controlling shares in Chrysler and GMAC. And he’d begun investing with Bernie. But the first of Ezra’s finds was Victor Teicher. Teicher, a colorful, uncontrollable character with a faulty internal censor, was not the confidence-instilling type to put in front of prospective investors. But he had an instinctive gift for financial opportunity. Early on, he concentrated on merger arbitrage, betting on whether one firm would take over another. In this, he had some help. In 1986, he was investigated for insider trading in connection with what was known as the Yuppie Five case, in which young professionals at blue-chip firms passed along inside information about upcoming mergers.
The indictment might have put Teicher out of business, but he had been earning returns as high as 20 percent a year, and so most of his investors stayed. Merkin too was enticed by the returns, and beginning in 1988, the year Teicher was indicted, he started putting a substantial portion of the money he raised for Gabriel Capital with Teicher. Ezra kept 20 percent of the profits for his troubles, and gave Teicher half. Since Ezra was technically raising money for Gabriel and its offshore twin, Ariel, he didn’t need to cloud the waters by mentioning Teicher’s controversial name, a lapse that New York University alleges in a lawsuit. In 1992, the year Teicher was sentenced to eighteen months in prison, he was running about $500 million, perhaps three-quarters of that from Ezra’s investors.
Teicher spent most of 1994 in prison. When he got out expecting to return to work, Ezra decided to separate. The business was running well without Teicher’s day-to-day oversight. And, Ezra told Teicher, his lawyers thought working with a convicted felon wasn’t a great idea. Ezra threatened to yank his money. So Teicher gave in. In January 1995, Ezra took over the staff, put Gabriel Capital’s name on the door, and hired Nathan Leight, now at Terrapin Partners, to manage the money.