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Divorced, Never Separated

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On August 8, 2008, Patricia went to a city office at 31 Chambers Street to get copies of her divorce papers. She noticed computers that, a clerk explained, house a database of court cases. She punched in her ex’s name and, lo and behold, up popped Cohen v. Lurie, a 1987 lawsuit that she later called “my discovery.”

For Patricia, the documents offered not only a rare glimpse into the near-ruin of the future hedge-fund king but a window into his conniving character. The year was 1986, probably the worst year of Steve’s professional life. He was in a near-panic. The Securities and Exchange Commission was breathing down his neck, suspicious that in December 1985 he’d used inside information when he bet that RCA and GE would merge, ahead of the announcement. In June 1986, the SEC called him to testify, but he refused to answer any questions, invoking his right against self-incrimination. Then, to complicate Steve’s life further, the SEC started nosing around his other investments from the same period, especially those involving Brett K. Lurie.

Lurie was Steve’s “exceptionally good friend,” as Lurie wrote in an affidavit—Uncle Brett to the kids. He was also Steve’s onetime lawyer turned real-estate developer and, later, felon.

Patricia was very interested in the Lurie investments, too. Steve, she discovered, had given Lurie millions of dollars and didn’t at first bother with paperwork. And then she read that he’d tried to disguise his investments by putting Lurie on his payroll. It looked to Patricia like a clumsy scheme to gain a tax deduction (though Steve apparently didn’t go through with it).

By the time of Patricia’s divorce, Lurie was on his way to bankruptcy, and however fishy the transactions, they benefited no one. Steve wrote off his entire investment as worthless, to the tune of $8.75 million. With that one stroke, he’d halved the money he owed Patricia. And yet, as Patricia read the lawsuit, alarm bells went off. Steve had sued to recover only $7.5 million from Lurie. He had ripped her off for over $1 million, it seemed to her.

Steve made it through. The SEC didn’t charge him with insider trading. Eventually he recouped $408,000 from his Lurie investment. He didn’t tell Patricia about at least part of that, but it was less than 5 percent, hardly consequential for someone like Steve. Nor did she know that, as a lawyer’s letter indicates, Steve apparently threw good money after bad—as part of the settlement with Lurie, Steve invested another $1.3 million in the deals, accounting for the discrepancy Patricia finds suspect. But Patricia hasn’t seen that letter, and might not care anyway. For Patricia, it’s not only the specific sums that are telling. She looks at the entire story—suspicions of insider trading and cheating the tax man, and then taking the Fifth and blowing off paperwork—and sees the makings of something big and nefarious: a criminal enterprise, with Steve at its head.

Patricia believes that part of the $25 million with which Steve launched SAC in 1992 came from their profitable real-estate transactions, the seven she’d engineered with her hard work and market savvy. Steve’s view is that this is ludicrous, but for Patricia it’s another element of the deception, and one that cost her dearly.

Patricia’s claims face steep legal hurdles since, among other things, the alleged misdeeds happened so long ago. But Patricia has studied Steve for years, and she feels she’s finally got him where she wants him. “What will he say?” she asked a confidant. “ ‘Yes, I screwed her and my children, but I’m afraid, your honor, that the statute of limitations has run out?’ ”

At lunch with Patricia and her lawyer Kachroo, the food has come and gone. It’s almost evening; outside, the streetlights go on. Patricia says she won’t remarry: “You can’t be that wrong and allow yourself to ever do it again.” Plus, her story with Steve still isn’t over. She looks at me tearfully. “I am the mother of his children. How many people saw your daughter for the first time? It’s not being in love [that’s important] so much as having a history,” she says, as if she almost missed him. Even Steve occasionally seems to remember a more hopeful time. “How did this happen? How did we get here?” he asked a friend.

But sometimes, in a marriage, the past is never gone. For better or for worse. For poorer, or for richer.

Additional research by Sam Dangremond.


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