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tv   Options Action  CNBC  November 14, 2015 6:00am-6:31am EST

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>> narrator: in this episode of "american greed"... an investment manager takes on the toughest clients -- retired investment greed, an investment manager takes on the toughest clients. money. $150 million vanishes before the fbi moves in. >> we found that they only had about $200,000 under management. >> narrator: but when he's tackled for a loss, will his game go into sudden death? >> the investors, particularly the nfl investors, were so mad at him that he was afraid for his own personal safety.
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>> narrator: atlanta -- a southern boomtown where people know how to enjoy the finer things in life. but even here, the lavish wedding party thrown by hedge-fund superstar kirk wright was a bit over-the-top. >> there were, you know, bars carved out of ice, three of them, where you could have champagne and lobster and sushi and everything else in the world. >> narrator: the reception goes on even as wright's hedge fund is on the brink of collapse. >> only a sociopathic personality can conduct themself in that manner. >> narrator: the wedding party is kirk wright's last tango. when wright exits the stage, he leads the fbi on a national manhunt. kirk wright grows up in the bronx, new york. >> it was clear that he was sort of an individual who had pulled
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himself up by the bootstraps. he wasn't born into affluence or anything like that. >> he came into a little bit of money because, unfortunately, he had a bad car wreck, and there was a settlement from that. and he initially started investing that money when he was, you know, 19 and 20. >> narrator: the settlement from the car wreck also helps put him through graduate school. he gets a master's degree from harvard in 1995. a year later, wright forms international management associates, or i.m.a., to operate hedge funds. calvin paris, the father of one of wright's harvard classmates, invests $100,000 with wright in november 1999. >> that got into his investments for the month of december, and when i got my monthly market value for december, i had $145,000. >> narrator: an unbelievable increase in one month.
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the market is hot, but wright's return is astronomical. wright's financial prowess does not go unnoticed. >> he got introduced through mutual friends and investors to these two guys in atlanta who were anesthesiologists who had an entrepreneurial bent and were looking for a place where they could branch out a little bit more from the business of being doctors. >> narrator: within a year, the two anesthesiologists are not only invested, they persuade wright to relocate to atlanta. >> the city had grown by a third in population from 1990 to 2000. there was a lot of business opportunity, but there was a very high cultural comfort level for people who were black and young professionals. >> narrator: as it turns out, the 30-year-old is in the right place at the right time. >> there was a lot of money to invest. there were relatively few hedge funds and very, very few that were run by african-americans. so in some ways, there was a
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need that was just waiting to be met here by somebody like kirk wright. >> narrator: the two doctors use their contacts to tap professionals like themselves -- people with ample wealth and little time or expertise to manage it. >> so when people like mr. wright are able to come to them and use terms -- you know, margin costs and short sells and options trading -- and throw out the big words, the person's heard that word before, they might not completely understand it, but they think, "well, he's using the right terms." >> narrator: but even savvy investors get hooked, as well. in 2001, los angeles-based real-estate developer roger o'neal agrees to meet with wright. >> he seemed like a very knowledgeable, articulate guy, and he told me a little bit about his background, that he was from harvard. by the end of year 2002, i had pretty much liquidated most of my portfolio with my investment group and transferred it over to
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international management associates. >> narrator: eventually, o'neal has $13 million in i.m.a. accounts. little do he and other clients know, a portion of their money is being drained off. >> an enormous amount of money, over $10 million, was basically the defendant's own personal checkbook. that's what the defendant was living out of -- this so-called expense account. >> narrator: but wright appears to deliver the goods. statements from his taurus fund trumpet annual returns as high as 20%. returns that high attract plenty of attention, and wright continues to work his game. >> mr. wright was able to get two nfl football players, who were retired, to come and work for him, and this led to them going out and getting some of their friends that were in the nfl to also invest. >> narrator: one of wright's new hires is former denver bronco defensive star steve atwater.
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he convinces other players to buy in, and wright does the rest. none of the nfl players involved would talk to "american greed." the experience with i.m.a. is an embarrassment they want to put behind them. up next... what happens when football players get ripped off? kirk wright is about to get blitzed. for more about the nfl players' battle with kirk wright, go to "american greed" will return in "american greed" will return in a moment.
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>> narrator: atlanta hedge-fund manager kirk wright is building a financial empire. he claims to have a secret recipe for stock-market success, but he's not telling his investors what it is. >> and that's the classic conundrum of hedge funds. how much transparency do you have to have for your investors
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versus giving away your secrets? >> narrator: international management associates grows to $84 million, all under kirk wright's personal management. he lavishes attention on investors and potential clients. >> he was spending a ton of money on travel and entertainment-type expenses -- flying people out for football games here at the georgia dome, showing them that he was a successful businessman. >> narrator: he is spending on himself, too. there is a new house for his wife and sons. >> when they purchased it, the front looked about like it does now. however, the entire back 20 feet or something did not exist. and they spent 5 1/2 years adding on to the house, building the pool, and a great deal of work. they added marble floors, gold fixtures. >> narrator: his garage is filled with luxury cars -- a
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bentley, a jaguar, an aston martin, a bmw, and a lamborghini. it's an almost cartoonish version of modern success. but his homelife is not picture-perfect. in 2003, his wife files for divorce and leaves with the boys. she says that kirk has changed, and she doesn't want to be a part of this new life. on the business side, some clients are wary of wright, as well. calvin paris asks a lawyer to evaluate him. >> he came into the office with kirk, and he walked out feeling that everything was okay. i came away with a reassurance of any doubts that i had. >> narrator: but wright is covering market losses with cash from new investors. to keep i.m.a.'s statements looking solid, he resorts to something beyond creative accounting. >> he just made them up.
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he just took a template off of the internet that the brokerage companies provided to the investors so that you could track your own investments. he filled it out, sent those in, and passed them off as actual statements. >> narrator: according to the government, wright's employees aren't running the scam. they talk him into letting them form a more transparent division of the company. during its creation, an accountant uncovers something shocking -- while wright was reporting more than a 3% gain in two of his funds, the company had actually lost value to the tune of 24%. the staff demands answers. >> the core group of anesthesiologists and football players asked for this confrontation, asked for this sit-down meeting, where kirk wright just, you know, wouldn't disclose any details. and things became very acrimonious very fast after that point. >> narrator: wright tries to calm them with a $155 million
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account statement. but he won't let any of them examine the document. atwater and other insiders start planning exit strategies. >> it's never been completely disclosed who leaked what to whom when. but it was very soon after that a tip came into the s.e.c. that something was awry at i.m.a. >> narrator: but wright clearly thinks the best thing to do is pretend nothing's wrong. on october 22, 2005, he and his second wife throw that over-the-top wedding. >> he had to know that spending $500,000 on a wedding -- he had to know, on some level, that that was not a smart move. >> narrator: the honeymoon is soon over. in december, wright starts to give investors the runaround. >> payments had been missed, checks had been bounced, and investors had started to become
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very concerned that the money just was not there. >> and that was the point where atwater said he just felt physically sick. he knew that something was desperately wrong, and he had brought many of his friends in on this, and it was getting ready to break very bad. >> narrator: in an interview with "bloomberg news," atwater states, "in my wildest dreams, i never thought he was stealing the money." 2006 arrives in a downward spiral. investors get no further than the receptionist when they call. >> i asked her, "what's going on?" and she said, "oh, everything's fine. just a little shake-up in the company, but everything's fine. don't worry about your money, mr. paris. your money's safe." >> narrator: by february 2006, kirk wright will flee atlanta. when "american greed" returns, with the feds on his trail, will wright take the money and run, or will he take a permanent vacation? >> he was calling us from a
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cellphone that was non-traceable, throwaway-able, but still saying, "well, i'm not on the run. i don't have anything to hide. i'm just being careful of my i don't have anything to hide. i'm just being careful of my movements.
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>> narrator: in january 2006, international management associates of atlanta still looks like a good investment. its manager, kirk wright, claims the company has more than $150 million under management. that month, retired businessman allan ehrlich follows up on a tip to check i.m.a. out. >> i read all the paperwork, i called people for references, and everything checked. >> narrator: unfortunately, his million is the last money invested with i.m.a. in atlanta, everything is about to go down the drain.
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investors who want payments are getting the runaround. >> throughout the month of january, unfortunately, kirk gave me excuse after excuse of his business -- that it was year-end, they were putting together all their tax information, that the operations had a lot of ongoing activity. >> narrator: a key group of investors -- retired and current nfl players -- band together to demand their money. kirk wright stonewalls them. >> mr. wright told the players, "you'll get your money next month. oh, i've had a problem with the banks, it'll be the next month." and then finally in february, they realized they probably weren't gonna get their money. >> narrator: on february 17th, the players go to court. a judge quickly freezes i.m.a.'s assets. 10 days later, the securities and exchange commission files charges they've been working on, as well. when the fbi raids i.m.a.'s office, wright's computer is missing.
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so is he. >> well, it's not exactly road rage, but there was living room rage, you know, when we heard that. >> narrator: the fbi and the s.e.c. move in to recover what they can of i.m.a.'s assets, but there is less than $200,000 left. >> even by the standards of forensic accountants who had seen ponzi schemes before, they found surprisingly little. they found the physical office desks, chairs, you know, valuables at the office -- you know, file cabinets. they didn't find much, much more at all. >> narrator: in the meantime, the fbi is hunting the man responsible. for three months, they chase every lead and check every possible hideout. but this is a fugitive case with a twist. while in hiding, kirk wright is giving interviews to "the wall street journal." >> he was calling us from a cellphone that was
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non-traceable, throwaway-able, but still saying, "well, i'm not on the run. i don't have anything to hide. i'm just being careful of my movements." >> mr. wright's explanation for that was that the investors, particularly the nfl investors, were so mad at him that he was afraid for his own personal safety. >> it was highly unusual to be reading about conversations in the paper that a fugitive is having with a reporter claiming not to be a fugitive when, at the same time, we are doing everything we can to locate him. >> narrator: even on the run, white-collar criminals typically maintain the lifestyle to which they have become accustomed. that is certainly true of kirk wright. when "american greed" returns, the fbi catches up with him, lounging in the lap of luxury. >> and at the time of his arrest, he was laying by the pool at the ritz-carlton on south beach in miami. >> narrator: feeling greey? want more than your share of
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>> narrator: the 35-year-old is checked in to different accommodations. in may 2008, kirk wright goes on trial for 47 counts of fraud and money laundering. former partners testify against him. >> his basic defense is that his losses were basically legitimate trading losses. we always had a dispute with everyone -- the government, the s.e.c., the bankruptcy trustee -- as to what the total amount of the loss was. >> this was a defendant who made his living by convincing people to part with their money, basically be a salesman. and that's what we argued to the jury that he was trying to do -- basically to them was sell them a story. >> narrator: the government wins the argument. on may 21, 2008, kirk wright is convicted on all counts. the man, who so recently was on
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top of the world, seems to take the verdict with composure. >> we met with him 15 or 20 minutes after that, and he seemed pretty upbeat, at that point, for someone who had just lost a long and a grueling trial. >> narrator: he'll have to wait three months for sentencing, but he knows it could run into hundreds of years. >> on one level, this is a very proud and confident person that it's hard to imagine spending the rest of their life in jail with no possibility of ever getting out and no quality of life that resembles the affluence and riches that they had. >> narrator: at the jail, he is placed on a heightened watch, as all recently convicted inmates are. but guards don't watch him 24 hours a day. three days after his conviction, wright ties one end of a bedsheet around his neck and the other around the top bunk in his cell. by the time the guards make
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their next check, wright has made his final exit. he is dead, and so are his clients' last hopes of recovering much money from the fraud. >> we figured that the only other leverage we would have is for him to basically get a reduced sentence based upon the cooperation of letting the authorities know who else was involved and where the money went. i would say that, you know, kirk -- he ruined lives. i mean, there's 500 investors. >> narrator: a few assets -- wright's house, cars, and office equipment -- can be liquidated. >> that all takes a long time, so i don't know that there's a final answer to that question right now as to how much folks are getting back or can expect to get back, except that, i think, as everyone knows, it's likely not to be anything close to 100 cents on the dollar. >> narrator: his second wife is allowed to retrieve only her personal possessions before the
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house is auctioned off. investors are simply out of luck. 71-year-old allan ehrlich's plans for retirement had to be scaled back. his wife had to return to work, and now he lives in a rented condo. >> this was money that, you know, you plan on for the rest of your life, and you're gonna earn a certain return and then you can live, and that changed, obviously. >> narrator: other investors think wright's suicide was his final selfish act -- a case of justice denied. >> i'm not angry. not angry. disappointed. i wanted to visit him. i wanted to visit him in prison. and i would have. i would have been at the sentencing. so i got robbed. i got robbed figuratively and literally. [ chuckles ]
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