We have something a little bit different, today: an excerpt from a biography about corporate intrigue and deception, and the dark side of finance: Robert D. Bailey‘s Pirate Cove. Due to be published by Bancroft Press on November 7th, the lovely people at Kaye Publicity have provided us with an excerpt from early on in the book. First, here’s the synopsis:
When Richard Bailey, a successful yet jobless businessman, receives a call from his old friend Jeff, he’s lured back into the high-stakes world of finance. Jeff, a charismatic corporate veteran, is now the number three guy at Southport Lane, a fledgling private equity firm. His boss invites Richard to inspect a pharmaceutical venture that reeks of mismanagement and financial disaster.
Bailey quickly finds himself navigating a sea of corruption as he attempts to rescue a floundering vineyard, Lieb Cellars, while unraveling a complex web of deceit at the heart of the corporate operations at Southport Lane.
Bailey provides an insider’s chronicle of a white-collar crime whose headline-grabbing elements first appeared on the front pages of The Wall Street Journal. It’s the true, unvarnished, previously untold, and fascinating story of how one honest man helped unravel the massive Southport Lane fraud perpetrated by the author’s former employer, 26-year-old, self-proclaimed financial prodigy Alexander Chatfield Burns.
A friend of the author once asked Burns how he got control of four state-regulated insurance companies. With a Cheshire cat grin, Burns cryptically responded, “Jesus with a telescope on Mars couldn’t figure out how I did this.”
But Bailey eventually did.
Now, read on for the excerpt, about the author’s early encounters with Burns…
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October 29, 2021
I was driving home from Home Depot when my phone rang. It was the FBI special agent who’d led the federal investigation and prosecution of Alexander Chatfield Burns and others for the $350 million fraud they pulled off at Southport Lane, the company Burns had started and run.
The unplanned direct call from the agent struck me as odd. He’d always texted me before phoning. In fact, for years, our communicating had always followed this sequence: I’d get a text from him asking, “Have time for a quick call?” My text response was always “Sure” or “Yep.” Within minutes, my phone would ring.
No text today. Just my phone screen lighting up with my entry for him: “Peter FBI.” The consummate southern gentleman, Peter first asked me how I was doing. His calls spiked my anxiety, and he knew it. As always, I said “fine” and nothing more. I just wanted to get down to business.
He said he wanted to give me a heads up before the news hit the media: “Alex Burns killed himself yesterday.”
My first reaction was characteristically foul-mouthed. “Holy fuck!” I said.
My second, more considered, less profane reaction was: “I’m not surprised. Alex wasn’t tough enough for prison.”
***
A day or so later, The Wall Street Journal ran a big article on Alex’s suicide at the age of thirty-four, and the raft of legal problems that followed him to his grave.
Chapter 1
All I could think of was… what a waste. In a strange way, I kind of liked Alex. He’d been quick-witted and funny—even generous at times.
On second thought, maybe not generous at all. After all, it wasn’t his money he was shoveling around.
When I first met Alex Burns, he was young (26), naïve, and not just insecure but constantly searching for affirmation from others.
He was also smart. No doubt about that. But not nearly as smart as he told everyone he was. He didn’t want people to be impressed with him. He wanted them to be in awe of him. On more than one occasion, he said to me and others, “I’m always the smartest guy in the room.” Just saying that about yourself seemed dumb to me.
Alex Burns was a complicated character. Wildly over his head, he had been surrounded by sycophants, grifters, and others trying to exploit his inexperience, gullibility, and checkbook.
And he was also a stone-cold liar.
I have a son whose name also is Alexander. At the time, Alexander Bailey had just started his freshman year at Yale. When Burns and I first met, the very first words out of his mouth was that he had gone to Yale too.
One night somewhat later, as we were sitting in Smith & Wollensky, a midtown Manhattan steak house popular with the Wall Street set, Alex Burns asked me to get my son Alex Bailey on the phone. So I did.
Burns proceeded to tell my son and me that he was such a rebel that he’d founded an alternative to Yale’s storied secret societies. Instead of Skull & Bones, his was called “Porn & Chicken.” He even asked my son to Google it. Sure enough, my son quickly found an old article on the website Yale Daily News about the university’s new secret society and how it was making a pornographic movie starring none other than… Alex Burns.
There was only one problem. It was a different Alex Burns. The article in question had been published in 2002, when the Alex Burns sitting across the table from me, swilling the second of two very expensive bottles of wine, was all of about fifteen years old. I found out about his bold-faced lie soon after returning to my hotel room that night. My son, Alex, who had done a bit more Internet research, texted me to call bullshit on Burns’ story.
Another time, Burns and I had a conversation about sailing—a longtime passion of mine—in which he told me he raced against a fleet of 60-foot boats off Westport, CT, where he grew up. But a few minutes into the conversation, it became clear he didn’t know the flat end of a boat from the pointy end.
My son being Alex Bailey, and Burns being Alex Burns, they landed next to one another on my cell phone contact list. I joked about that once, and Alex Burns chimed in that he loved receiving texts from me signed, “Love, Dad.” He really liked that story. He told it a lot.
But it never happened.
By the time of that shared steak dinner in the city, I’d already begun to catalogue my various concerns about Burns. A lot of strange things had been said by him and done by both him and others at Southport Lane. It was becoming clear this was not a “normal” private equity firm he was heading.
In November 2018, Alex Burns pled guilty to eight federal fraud charges. From 2018 to 2021, he apparently cooperated with Federal prosecutors as they subsequently indicted and got guilty pleas from other Southport players: Brian Gimelson, Robert McGraw, and ultimately the inheritor of the crumbling Southport empire, Burns’ old partner, Andrew Scherr.
Brian Gimelson pled guilty to tax evasion charges. Seems he forgot to include a $1.2 million commission from Southport as income on his taxes. He was given early prison release during the COVID pandemic.
Rob McGraw pled guilty to misrepresenting $50 million in bogus securities as real and was sentenced to 18 months.
Andrew Scherr pled guilty to two counts of fraud and was sentenced to five years.
Alex Burns was scheduled to be sentenced on December 13, 2021, in the Southern District of New York. His usefulness to prosecutors was apparently over.
But forty-nine days before being sentenced, he killed himself in the Charleston, South Carolina home of his girlfriend.
A really smart friend of mine once asked Burns how he’d managed to gain control of three different insurance companies, and hence their millions of dollars in cash to invest. With a Cheshire cat grin, he cryptically answered, “Jesus with a telescope on Mars couldn’t figure out how I did it.”
Maybe not. But I did.
*
Robert D. Bailey’s Pirate Cove is due to be published by Bancroft Press in North America and in the UK, on November 7th.
Civilian Reader 