New York Magazine

Skip to content, or skip to search.

Skip to content, or skip to search.

Take the Hedge-Fund Money and Run


Angelo offered another explanation, Drenis says: The money was offshore, tied up in something less than legal, hard to extract, just be patient. But Drenis was done. On Thursday afternoon, July 29, he walked into the U.S. Attorney’s Office at St. Andrew’s Plaza on Centre Street, filled out a complaint form, and left his name and number. He was a block away when his cell rang.

“Come back,” said the voice. “We want to talk to you.”

The next morning, Drenis called Angelo at his office and, to his surprise, found that Angelo was interested in meeting with him. They agreed to meet at Angelo’s lawyer’s office on Park Avenue.

Before leaving, Drenis called the man who had called his cell the previous afternoon: investigator Richard Krause from the U.S. Attorney’s Office. Drenis had spent much of the afternoon with Krause and assistant U.S. attorneys, and while he quickly learned that he wasn’t the first person to have come to them about Angelo (that distinction is said to belong to Jim Ziosis), he was the first to furnish Krause with reams of documentation to help them make a case. That morning, he told Krause that if he wanted to arrest Angelo, he knew where he would be inside of an hour. Krause told Drenis he’d wait in Angelo’s lawyer’s lobby until Drenis called him.

An hour later, sitting in a conference room with Angelo and his attorney, John Harris, Drenis quickly learned what was on Angelo’s mind. Harris says he has a dim recollection of this meeting, but Drenis recalls that Angelo said that someone had made a menacing call to his wife, Liz, in Greece, where she and the baby were vacationing.

“Who threatened my wife?” he asked.

Drenis sensed another smoke screen. “I can give you names of a lot of people,” he said. “Forget about it, and give us the money back.”

Then, for the last time, he asked the question he’d been asking for weeks: “Do you have the money?”

Angelo stalled again.

“I will,” Angelo said. “Today.”

Drenis pulled out his cell and dialed Krause.

“Yeah, Dad?” he said. “I’m with Angelo, and he doesn’t have the money.”

Minutes later, Drenis saw them through the conference-room window—Krause and his men, flashing their warrant at the front desk. Angelo’s lawyer was summoned, then he came back for Angelo.

“Come with me, Angelo,” Harris said.

Angelo walked over and heard what Krause had to say. He glanced at the paper in Krause’s hand. Then he looked back over toward Drenis—shaking his head, not saying a word. But his lawyer couldn’t help himself.

“Now,” he said, “you’re never gonna get your money back.”

The SEC and the Justice Department say that Angelo collected roughly $80 million from investors, which Angelo claimed he’d parlayed into the $180 million, at least on paper. Accounts vary, but Angelo is believed to have spent or pocketed between $19 million and $50 million and lost the rest in the market. Chief among the victims was the Drenis family, which invested nearly $8 million and walked away with $732,000. The list of aggrieved parties is peppered with childhood friends like Marvin Base ($1 million), family members (his in-laws lost $2 million; his sister, Evelyn, $1 million), Greek-American connections like Ziosis (about $1 million), and even strangers like the Goktekin family, Turkish immigrants who lost almost $1 million and couldn’t pay their daughter’s medical-school tuition. The most poignant victim is Susan Barnes, whose firefighter husband, Matthew, died on 9/11. She lost $2.35 million—every penny she had invested in Sterling Watters, and most of it straight from the victims-compensation fund. By all accounts, she hadn’t even met Angelo (Michael Capul was her banker at Chase), but Angelo collected the bulk of her investment just a few weeks before his arrest. (It’s a painful truth that the last ones to enter a Ponzi scheme are the ones left with nothing at all.) In Barnes’s only known communication about the case, a letter to the judge, her attorney explained that the trauma of losing the money felt like losing her husband all over again.

The bilked investors descended like a lynch mob at Angelo’s November 9 bail hearing, held before Judge Loretta Swain in the federal courthouse downtown. “Poor Judge Swain,” one lawyer says. “She’s so decorous. She usually says, ‘Thank you all for coming.’ Then she looks over the trial well into the audience and says, ‘Thank you all for coming.’ Then this time, before she knows it, there’s a brawl. This one guy is saying, ‘You killed my father!’ ” On the way out of the courthouse, after another hearing, Angelo’s lawyer discovered the words BURN IN HELL scrawled in lipstick on his Porsche.

Current Issue
Subscribe to New York

Give a Gift