Renter of Jerome under scrutiny for Wall Street deals

by Carolyn Sackariason, Aspen Daily News Staff Writer

The part-time Aspen resident and Wall Street executive who has rented the entire Hotel Jerome this weekend is named in a lawsuit against former Bear Stearns & Co. that claims the company allegedly took millions of dollars from clients in the name of profits and bonuses, according to media reports.

Jeffrey Verschleiser’s party plans for his daughter’s bat mitzvah also include festivities at the Aspen Recreation Center tonight. The city-owned facility will close today at 4 p.m., instead of the normal 9 p.m., according to city officials.

Verschleiser, who now reportedly heads Goldman Sachs’ mortgage division, rented the Hotel Jerome, including the popular J-Bar, for more than $500,000, and up to as much as $1 million, according to sources. The hotel and its bar are closed to the public from Thursday until noon on Monday.

His alleged business dealings that allowed such extravagance are under intense scrutiny outside of Aspen. Rolling Stone writer Matt Taibbi, who has extensively covered the financial corruption that shattered the national economy, in his blog Friday wrote that Verschleiser’s actions in Aspen “crystallized the moral dementia of modern Wall Street in one little vignette.”

Verschleiser’s role as a manager of the Bear Stearns mortgage trading team was brought to light in multiple civil lawsuits filed against the company and its new owner JP Morgan last year, according to journalist Teri Buhl, who broke the story for The Atlantic (www.theatlantic.com/business/archive/2011/01/e-mails-suggest-bear-stearns-cheated-clients-out-of-billions/70128/).

The Federal Housing Finance Authority, a government regulator, has named Verschleiser individually in its multibillion-dollar mortgage fraud suit against Bear/JPM.


 Chris Council/Aspen Daily News
Two women return to the Hotel Jerome after shopping on Friday afternoon. The hotel is closed from Jan. 12-16, having been rented out by a family for their daughter’s bat mitzvah.

Buhl first broke news about emails showing that Bear traders were telling executives that mortgage securities they were selling to investors were a “sack of sh*t.” Verschleiser allegedly was aware of the state of those securities, writing in an email to a colleague that Bear should not waste money doing due diligence on the financial products.

At least two investors have sued Bear Stearns or J.P. Morgan in U.S. District Court in New York, and Buhl also has reported that the New York Attorney General is investigating Verschleiser’s team for potential criminal acts.

The civil fraud suits involving Verschleiser’s alleged actions are expected to go to trial this year. Whistleblowers continue to come forward, detailing how the Bear Stearns mortgage trades had a mantra of “Bear Don’t Care,” according to an article on Buhl’s website (www.teribuhl.com/2011/11/21/lawsuit-shows-more-fraud-and-coverup-from-bears-mortgage-team).

The lawsuit by Assured Guaranty, a bond insurer, against J.P. Morgan alleges Assured was defrauded in a $337 million mortgage-backed securities deal.

“‘Bear don’t care.’ That phrase — used by underwriters Bear Stearns retained to review mortgage loans for its mortgage-backed securitizations, including the transaction at issue in this manner — succinctly captures the callous disregard that led to the current dispute, Bear Stearns’ ultimate demise and, in good part, the financial crisis that still plagues the world’s economies,” the lawsuit says.

In front of the Jerome on Thursday night, dozens of rented skis from Gorsuch were lined up outside the 94-room hotel as guests began to arrive. Visible from the street were video screens hung in the lobby that flashed photos of the family and the daughter who’s celebrating coming of age in the Jewish tradition.

The J-Bar, which typically would be full of locals and guests, was nearly empty at 6 p.m. on Thursday, except for a few children sitting at the bar not drinking alcohol. The bar reportedly shut down at 11 p.m. on Thursday, according to sources.

On behalf of the family, EKS Events, a Basalt-based event planning and management firm, also rented out the Aspen Recreation Center tonight. The family paid $7,000 to rent out the public facility, sources said. The party is to last until midnight.


sack@aspendailynews.com, chad@aspendailynews.com