Money and power often breed a belief that you can have anything you want — including sex that may be illegal (or at the very least immoral and frowned upon by friends, family and society). Money and power also tend to lead many to believe that they won’t get caught. Never mind the many who have been caught before. Since Wall Street is a nexus of money and power, it is little surprise that some of the most spectacular sex scandals somehow involve Wall Street. Here are 10 sex scandals, in no particular order, that prove that it doesn’t matter how rich or powerful you think you are, you can still be exposed and humiliated for behaving badly.
- James McDermott offers insider trading information to an exotic dancer. James McDermott was a Chief Executive at Keefe Buryette & Woods. Instead of just paying Kathryn Gannon (whose stage name was Marilyn Starr) for services, McDermott offered the adult film star and exotic dancer inside information. Gannon managed to rake in tens of thousands of dollars in profits before the whole thing was revealed. Gannon was sentenced to three months in jail for conspiracy to commit insider trading. McDermott was convicted of insider trading. He had to pay a fine and agree never to work in investment management.
- Steve Rattner called out online for sleeping with some guy’s wife. Credit Suisse is one of the big guys on Wall Street (and around the world). So when the head of private equity is accused of sleeping with some guy’s wife, it is a big deal. Indeed, an outraged cuckold spammed all sorts of news Web site comment sections with this tale: “Steve Rattner [sic]…has paid my wife $500,000 to leave me.” Whether or not the claims of large amounts of money changing hands are true (and they haven’t been substantiated), it does appear as though Steve Rattner did have an affair. And the angry husband led an online smear campaign that resulted, ultimately, in Rattner losing his job. Even more humiliating? Gawker points out that the smear campaign was given an air of credibility when the New York Times wrote about it — even though the Times piece was sympathetic toward Rattner.
- Lord John Browne forced out of BP (and Goldman Sachs Group) for lying about his gay lover. Having a gay lover isn’t a big deal these days. However, lying about it in court is another issue altogether. Lord John Browne was the chief executive of BP and enjoyed a directorship at Goldman Sachs Group until he lied about how he met his young male lover, Jeff Chevalier, a Canadian living in Britain. Browne told a court (after the break-up and Chevalier’s allegations that BP funds were used to set him up in business) that he had met Chevalier while jogging. Turns out Browne met Chevalier through an escort service . Once this came out, Browne lost his lofty positions.
- Paul Eustace admits to cheating on his wife with a stripper. Paul Eustace, a Canadian hedge fund manager, admitted that he cheated on his wife with a stripper. But that’s not all: Eustace also used investor money to buy his mistress gifts. One of the items paid for with investor funds: Breast augmentation. Eustace also admitted to stealing $2 million in client cash and losing $208 million for his hedge funds.
- Desdner Kleinwort, strip clubs and prostitutes in the office. Dresdner Kleinwort is the investment banking arm of Allianz. In 2006, six female employees file suit against the company for creating an atmosphere hostile toward women. Among the charges: Male colleagues asked female colleagues to leave while they entertained clients at strip clubs and that some employees brought strippers to the company’s offices. The $1.4 billion lawsuit has been settled — for an undisclosed sum.
- Peter Detwiler: Pimp for clients. Back in the late 1980s, Trinidad & Tobago was considering a tax issue that would prove detrimental to Tesoro Petroleum Corp. Tesoro Chair Robert West wanted to sway the finance minister to his side. In order to do this, he asked Peter Detwiler, the vice chairman of E.F. Hutton & Co., to get a prostitute for the minister. Court testimony ensued — and everyone had a field day.
Political sex scandals
Because Wall Street and politicians work so closely together, it is no surprise that sometimes the line is very thin between Wall Street sex scandals and political sex scandals.
- Eliot Spitzer revealed as Client No. 9. New York governor Eliot Spitzer resigned in shame after it came out that he was on the list of clients of a high-end Washington, D.C. escort service. Eliot Spitzer had busted a number of Wall Street types for illegal and unethical activities, and many of them reveled this display of hypocrisy. (New York was later embarrassed again when it turned out that Spitzer’s legally blind replacement had cheated on his wife.) As details of the Spitzer sex scandal surfaced, the D.C. madam involved said that she was preparing to turn over a client list that included a number of other politicians and Wall Street players.
- Interior Department comes under fire for accepting sex as gifts from energy industry representatives. Late last year, it came out that between 2002 and 2006 Interior Department workers in the Denver office engaged in a number of questionable practices due to “gifts” from energy industry representatives that wanted to influence them. Manufacturing.net reports on the results of last year’s investigation: “The two-year, $5.3 million investigation by Interior’s inspector general found workers at the Minerals Management Service’s royalty collection office in Denver partying, having sex, using drugs and accepting gifts and ski trips and golf outings from energy company representatives with whom they did government business.” Sort of makes you wonder whether other Wall Street companies are providing sexual “gifts” to civil servants.
- Was James Buchanan Gay?. When William Rufus deVane King became vice president in 1853, rumors swirled that he might have been the lover of former president James Buchanan. The two had been roommates for 15 years prior to Buchanan’s presidency. Buchanan never married. Andrew Jackson even called them “Miss Nancy” and “Aunt Fancy.” Sure it happened a long time ago. But it was a Big Deal back then.
- Jack Abramoff and sex trafficking. While not directly involved in human trafficking for sex, disgraced lobbyist Jack Abramoff represented the Northern Mariana Islands for a time. He asked that a Bush Administration official be fired, since the official’s stance on sex trafficking was in opposition to the business needs of the U.S. Protectorate. Yet another indication that sex sells — and that money can sometimes buy you a pass.
Miranda writes for Bankling, a new portal for personal finance information, which publishes a blog, and a resources section that contains tools like the best online CD rates, the best online savings account rates, and online mortgage payment calculator, and more.