George S. May Business Blog

Former Lehman CEO sells his home for a reported $10

Former Chmn and CEO of Lehman Brothers, Richard S. Fuld Jr., according to county records, has sold his $13 million house to his wife…for ten bucks. The motivation for the move is not yet clear, but we do know that Fuld has been subjected to very intense examination since his former company Lehman declared bankruptcy in September. The couple purchased the home together for $13.75 million in March 2004.

Since being heavily questioned by lawmakers at a Congressional hearing in October, Fuld has been the center-point of an investigation by the Feds as to whether or not he misled investors about the state of the company. Fuld, has stated repeatedly that while he takes some responsibility for the decline of the company, all of his decisions were “prudent and appropriate” to the information that he had at the time. He has also stated that his blame should be shared by regulators and that he did take steps to save the investment bank.

It seems as though Mr. Fuld is doing the obvious, ‘I am in big trouble, so I will put everything in my wife’s name’ maneuver. In reading an article in the NY Times, however, I became aware of a policy that might have benefited Fuld had he not ‘sold’ the home to his wife.

Florida has “particularly generous home laws that protect residents from losing their homes in the case of lawsuits or bankruptcy”, according to the Times. However, now that he has shifted it to his wife’s name, it will be harder for him to prove residency at that specific residence; especially because he primarily lived and did all of his work in the New York area.

What is more, is that by letting go of his house to his wife for such a ridiculously low price, creditors could try to prove to a judge that this was what is called “fraudulent conveyance”. If that is decided to be so, then his Florida house would become fair game for those whom Fuld owes money to.

What must be noted as well, is that the exact amount that Mrs. Fuld paid for the house is unknown. Apparently it is standard for property deeds to contain a placeholder number. The $10 on the deed could simply be a placeholder. In fact, the tax stamp on the deed claims that there were 70 cents in taxes which could mean that the price of the house was closer to $100.

To me it seems obvious, especially from the fact they weren’t available for comment, this act falls into the category of foul play.  One has to wonder however, why a man under such public scrutiny would make a move as obvious as this one. It is really hard to imagine that he thought it would just fly under the radar. Is this a last resort type move for Mr. Fuld, or does he know some sort of loophole that we may not be aware of?

More insight as to why he would sell his home for so inexpensive is absolutely welcomed.

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