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The Fall of the House of Steinberg

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As his business unraveled, Steinberg was left with a high-class predicament. Suddenly he was stock-rich but cash-poor, a situation that prompted him to start shedding pricey totems at a dizzying speed. First to go was the apartment at 740 Park; in February, Steinberg sold it to financier Stephen Schwarzman for $37 million, the highest price ever paid for an apartment in New York City history. In April, Steinberg put 61 Old Masters, valued at more than $50 million, up for sale through his good friend Richard Feigen, the dealer who had sold most of them to him over the last two decades. Finally, three weeks ago, 293 lots of the Steinberg's furniture and decorative effects rounded up an additional $12.5 million at Sotheby's.

The Steinbergs' friends insist this wholesale dumping of assets is not the act of a couple desperate to raise some cash but rather that of empty nesters cleaning house. "Their family is now essentially three people, because of grown-up children," explains Duane Hampton. "Who needs whatever number of rooms they had for three people?" Another close friend speaks of Gayfryd's desire to "scale back" in the wake of her sons' departure for college. "Who wants to live in a museum?" she insists. "They've done that."

Situated on two floors of a glassy Park Avenue office tower, Reliance Group Holdings' headquarters is more Hamptons chic than corporate America. The reception area features a double-height ceiling, gargantuan windows, and lots of cherry paneling and sand-colored couches. On one wall hangs a tattered antique American flag with only thirteen stars. But for all its open beach-house-like aura, Reliance resembles something more like a fortress when it comes to dealing with the outside world. When Steinberg had his stroke in 1995, the company didn't even bother to inform the public; it wasn't until word of his illness leaked out on CNBC six weeks later that Reliance decided to address the matter. A company spokesman insisted that Saul was never seriously incapacitated.

But those who know him say that that was not true. "Saul before and Saul now -- it's two different people," says Laura Steinberg. "The first few days, his doctors didn't know whether he would die. It took him three days to stabilize." Says a Steinberg acquaintance: "Saul Steinberg's massive stroke was the most underplayed bit of news in the world. Nobody really wanted anybody to know how ill he was. It would be bad for business." As the architect Charles Gwathmey, who designed Reliance's headquarters and is a friend of the Steinberg family, describes it, the stroke "severely limited both Saul's physical and mental capacity when it first happened."

In the wake of the stroke, Saul and Gayfryd all but vanished from the social circuit. "When you can't use your arm, your life changes," explains one of their closest friends. "Saul was a very intense, hyper, triple-A-personality type of guy. He was this incredible dynamo. But after you have a massive stroke, you can't function like you did before. It's not possible."

Even his most innocuous activities presented inordinate challenges. With a weakened left arm and leg, exercise became excruciatingly difficult, and Steinberg, not thin to begin with, put on weight. Even after his recovery, his movement remains severely impeded. He walks shuffling and lurching, dragging one leg behind the other, but unassisted, without a cane. His left arm looks frozen in place, bent at the elbow. For a man known for his vitality, the changes were particularly painful.

Once upon a time, Saul Steinberg was a dogged seeker of the limelight. The eldest son of a successful Lawrence, Long Island, rubber manufacturer, he didn't take long to hit on his first big idea: independent, long-term computer leasing. Conceived while Steinberg was a senior at Wharton, the plan featured what would later become two of his hallmarks: amassing debt and hiring family members as employees -- his younger brother, Bobby, would become his company's secretary; his father and uncle became his partners. By 1965, his company, which he gave the clunky name Leasco Data Processing Equipment Corporation, had revenues of $8 million; a year later, its assets had jumped to $21 million.

As business boomed, Steinberg parlayed his Leasco stock into something more substantial; in 1968, he took over the then-151-year-old Philadelphia-based Reliance Insurance Company. The deal earned the 29-year-old mogul millions. According to Forbes, Saul's $50 million increase in net worth was unprecedented. As a result of the deal, reported the magazine, he made more money on his own than any other U.S. citizen under 30.

But Steinberg, by then the owner of a 29-room mansion in the Five Towns, had little interest in being an insurance executive. "You watch!" he would boast to Dan Dorfman. "Like the Rockefellers, I'll own the world. I could even be the first Jewish president!" Steinberg's boldest attempt at joining the elite he so admired came in the form of a hostile bid to take over Chemical Bank. Though Chemical successfully fought him off, the Steinberg threat was taken very seriously: The bank assembled a cadre of powerful East Coast bankers, lawyers, and politicians to fight it. At one point, even Governor Nelson Rockefeller joined the fray. The battle against Steinberg was so fierce that some, including Saul, couldn't help but wonder whether anti-Semitism had played a role in his defeat.

If a decade could be designed to fit the needs, talents, and proclivities of a particular individual, then the eighties were tailor-made for Saul Steinberg. Michael Milken's junk bonds were an ideal product for a man in love with leverage, and Steinberg, who became part of Milken's inner circle, didn't flinch from availing himself of them frequently. He used junk bonds as well as traditional financing to purchase companies in a variety of industries, as well as various companies within an industry; at one point, he owned both Days Inn and the Grand Hotel in Cap-Ferrat.

In 1984, Steinberg attempted his second high-profile takeover. This time, the target was Disney. Although it didn't work, Steinberg walked away nearly $40 million richer, having "greenmailed" the company into paying him a premium for selling it his stake.

While Steinberg was out rattling his corporate saber, his home life was no less tumultuous. He married young, to his high-school sweetheart, Barbara, and became a father in his early twenties. But by his thirties, he was feeling restless. In 1974, while on business in Beverly Hills, he fell in love with a beautiful Italian public-relations consultant named Laura Sconocchia Fisher. Although she rebuffed him at first, his relentless attention eventually paid off, and they began an affair. The relationship culminated in Saul's divorce from Barbara, with whom he had three children: Laura Tisch, a mother of two; Jonathan "Jono" Steinberg, who is CEO of the embattled Individual Investor and husband of CNBC "Money Honey" Maria Bartiromo; and Nicholas Steinberg, who owns comic-book stores in Philadelphia. (Barbara died of pneumonia last October, at the age of 58.)

At Saul's insistence, Laura Steinberg converted to Judaism. She also set about redecorating the apartment recently vacated by the preceding Mrs. Steinberg. But the marriage turned out to be fleeting and tempestuous. After bearing Steinberg a third son, Julian (now a Brown University senior), she divorced Saul in what quickly devolved into the Perelman-Duff battle of its day. During the trial, Laura, who was represented by an ever-changing roster that included Raoul Felder and Roy Cohn, accused Saul of misappropriating $190,000 in Reliance funds for his "cocaine habit."


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