Coming out for Jeff Greene

The Bev Hills real estate investor gets the up close and personal treatment in a P1 WSJ profile in which we learn that's he’s made more than half a billion dollars by betting on a subprime implosion. The bet was based on a complex real estate derivative strategy that actually had been hatched by a hedge-fund manager named John Paulson, who according to the Journal (in a separate P1 story) made $3 billion to $4 billion last year on other people's troubles. (Greene apparently appropriated the idea.) The name might be familiar to LAO readers - he's the guy who married NY real-estate executive Mei Sze Chan last September in one of those outrageous, oversized Bev Hills weddings. We're talking about a guest list that included Hugh Hefner, Owen Wilson, Heidi Fleiss, Oliver Stone, Michael Bay, Russell Simmons and Tara Reid. Mike Tyson was the best man (as Jack Paar would say, I kid you not). Here’s a snippet from Kevin Roderick’s post:

The wedding supposedly cost $1 million to put on. The 280 guests included lawyer Robert Shapiro, Clippers' owner Donald Sterling, Tao owner Mark Packer and the Earl of Dartmouth, who flew in from London. So who are the happy couple? Greene is 52, Chan is 32. They reportedly met last year while Greene was in New York for Tyson's 40th birthday. Publicity shy in the past, Greene appears to be coming out a bit. The New York Times, Wall Street Journal and L.A. Times all had a presence at the nuptials and may have stories in the works, I'm told.

The Journal reports that Paulson had been seeking investors for his new fund and gave Greene a sneak-peek. Greene, who had made a bundle on real estate and then lost it 15 years ago, mimicked Paulson's mortgage-market trade strategy. "He never told me: 'Don't do it,'" Greene says. A piece of work? You haven't heard the half of it.

"Jeff lives on the edge. He made a fortune, lost a fortune and made it back," says Fred Sands, a Los Angeles real-estate developer who got to know him through late-night parties Mr. Greene threw at his Malibu and Hollywood Hills homes. The latter pad is known for its pillow-lined penthouse den, the Moroccan room. His soirees attracted an eclectic crowd, from Paris Hilton to Mr. Tyson. For the artwork in Mr. Greene's new Beverly Hills mansion, money is one motif. A dark metal rendering of a dollar bill hangs over the bar. Eroticism is another. In the east wing are two huge erotic paintings that Mr. Greene waited to hang until after his September wedding there.


Mr. Greene dived into the riskiest type of the trade by betting on derivatives backed by a single pool of subprime mortgages. He says he analyzed lots of mortgage bundles before placing his bets. But, belying the financial sophistication he aims to project, he adds: "A lot of this stuff is anyone's guess." Mr. Greene says his positions rose only a little until the spring of 2007, when troubles at a lender rattled the market. In recent months, he has cashed out some positions, locking in $72 million in profit, according to financial records. As of early this month, his positions at Merrill Lynch and J.P. Morgan were up about $466 million combined. Because the market for the riskiest derivatives is thin, Mr. Greene says, he is waiting for better pricing before he sells more.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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