Brett S. Messing — First Deputy Mayor Austin Beutner’s right-hand man for making deals and managing city finances — knew what he was talking about when he wrote the book on corporate fraud and how investors are ripped off.
“Forewarned Investor: Don’t Get Fooled Again by Corporate Fraud” it’s called and written by Messing, his hedge fund partner Steven A. Sugarman and TV financial commentator Jim Cramer. It’s now available for less than half price online.
It was published in 2006, the same year Messing was engaged in a kind of corporate fraud of his own, according to a Securities and Exchange Commission complaint that led to him having to pay nearly $2 million in penalties last March 16 even as he was playing a key role in putting together the deal to get BYD, the Chinese green tech giant, to locate its U.S. headquarters in LA.
Using his hedge fund, GPS Partners, Messing engaged in an illegal short-selling stock scheme six times in 2006 and 2007 involving initial public offerings of securities that netted him as little as a penny a share but involved millions of shares.
His profits came from innocent investors who clearly had not read his book about being fooled.
Given the state of City Hall’s well-documented mismanagement of nearly every department and its descent toward bankruptcy, who better to manage its program of subsidies and giveaways to business to buy jobs and take over handling the DWP’s billions as chief financial officer than Brett S. Messing?
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It was the best day, in public relations terms, of Antonio Villaraigosa’s second term in office, April 30, six weeks after Messing agreed to the SEC’s cease and desist order without admitting or denying guilt.
Messing stood in the crowd at a press conference run by his boss Beutner so Gov. Arnold Schwarzenegger, the mayor and other city, county and state officials could announce boastfully the roles they played in helping BYD invade America and sell Chinese-manufactured electric cars to a nation hungry for cheap clean energy products.
With a $300 million investment for 10 percent of the new U.S. operation from Warren Buffett, BYD was setting up its American headquarters in Los Angeles and hiring 100 workers thanks to red tape being cut and a lot subsidies such as tariff reductions and a guarantee that anyone who buys one of BYD’s all-electric cars will have a charging station installed within seven days by the DWP.
To listen to the politicians who have overseen record unemployment and city and state budget deficits, you’d have thought our troubles were over.
Maybe they are. BYD Chairman Wang spoke eloquently, in Chinese, of just how big this deal could be someday as he shared a vision of how his company will grow with its mastery of advanced technology for batteries that can store enormous amounts of electricity, high-efficiency solar panels and the best and cheapest electric cars ever built.
Apart from all the pats on the backs for themselves, the politicians all credited pulling off the deal to the public relations event’s master of ceremonies, First Deputy Mayor Beutner, the dollar-a-year former corporate takeover wizard and graduate of the Goldman Sachs school of financial manipulation, and now interim general manager of the DWP.
Ever humble, Beutner praised his business development team for the deal, especially Messing for working “tirelessly” on it. Now, he wants to name Messing chief financial officer of the DWP, according to insiders, so he can manipulate ratepayer money to achieve the conflicted goals of a utility that has lost all credibility and is mired in confused and contradictory agendas.
“In 2006, GPS and Messing violated the former version of Rule 105 of Regulation M, “Short Selling in Connection with a Public Offering,” in five instances, and in 2007 GPS and Messing violated the current version of Rule 105 in one instance. As a result, GPS obtained profits of more than $1.1 million,” the SEC filing says.
It accuses Messing of having “engaged in transactions prohibited by Rule 105 in connection with purchases of securities in public offerings made by Washington Real Estate Investment Trust (“WRE”), W&T Offshore, Inc. (“WTI”), MCG Capital Corp. (“MCGC”), Luminent Mortgage Capital Inc. (“LUM”), NorthStar Realty Finance Corp. (“NRF”), and Kinder Morgan Energy Partners LP (“KMP”). As portfolio manager, Messing was generally responsible for the trading at GPS, including the trades at issue here.”
With insider access and knowledge, he would short sell shares in the five-day restricted period before public offerings and then on the day the shares were released buy and sell shares for tiny profits, sometimes using complex algorithms to trade hundreds of times a day in small numbers of shares.
“The Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondents’ Offers.
“Accordingly, …it is hereby ORDERED that:
“A. Respondent GPS shall cease and desist from committing or causing any violations and any future violations of Rule 105 of Regulation M under the Exchange Act.
“B. Respondent Messing shall cease and desist from committing or causing any violations and any future violations of Rule 105 of Regulation M under the Exchange Act.
“C. Respondent GPS is censured.
“D. Respondent Messing is censured.”
Messing and GPS were ordered to surrender the $1,151,271 in illegal profits that were gained, pay interest of $132,900 and penalties of $575,635.
Case closed. Messing already was hard at work for the good of the people of Los Angeles, putting together subsidies and fast-tracking job creating deals to get jobs for the 260,000 unemployed workers in the city, revive the economy and generate revenue to avoid municipal bankruptcy.
Antonio has brought into his Administration crooks and liars, looking forward to their maintaining his lifestyle after he is out of a job. Shame on you Mayor!
If not one city council member says a word about this then we will know for sure they are all corrupt bastards and could careless about the people of LA. Where the hell is Parks, Perry and the rest of the morons who went after or at least showed a phasod of caring going after DWP??? How can hiring this corrupt idiot Messing not catch the attention of anyone? Didn’t the Ethics Commission have to do a background before he was hired or the personnel committee? Hiring this corrupt asshole Messing to work for DWP is like allowing an alcoholic to work in a bar.
You steal billions and you give back a few millions as a fine. That`s the world Beutner and his cronies operate in. You steal a bar of chocolate as a kid and you go to Juvenile Hall for 15yrs. That`s the the world the rest of us live. But, Antonio forgot where he came from. Or is it, he is running away from it?
Some people parade as businessman when they are modern day “thugs and gangsters”. If you are tired of this nonesense, please show up to City Hall and express your sentiment.
BACKGROUND
Mr. Brett Stuart Messing is a Managing Partner of GPS Partners LLC. Prior, he was a Managing Director at Lehman Brothers and its subsidiary, Neuberger Berman. Mr. Messing served on the Investment Committee for the Neuberger Berman Premiere Portfolios.
Prior to its acquisition by Neuberger Berman in 2001, he was a Partner and Portfolio Manager at Oscar Capital Management, an investment firm with approximately $900 million in assets in which MSD Capital (Michael Dell’s private investment firm) owned a strategic stake.
From 2000 to 2001, Mr. Messing served as interim Chief Executive Officer of two portfolio companies, Interpacket Networks; which was successfully sold to American Tower Corporation and STAR Telecommunications.
He began his career at Goldman Sachs, where he worked from 1990 to 1997 in several capacities including Co-Head of Restricted Equities Unit and Vice President. Mr. Messing worked at Merrill Lynch as a Senior Vice President from 1997 to 1999.
He is the co-author of The Forewarned Investor published by Career Press in 2006 and he is a contributor to Fortune magazine and CNBC. Mr. Messing is a graduate of Harvard Law School as J.D. and Brown University in A.B., Magna Cum Laude.
I. With such high praise his mother would say, he is a good boy.
II. He would make a good LADWP CFO no? Besides, with almost a Billion Dollars in the warchest of DWP, the City of LA can ill afford a man of deception as this role, is presently occupied by Eric Garcetti (The Good Boy in a Cameo)
The City of Los Angeles can ill afford a player in Cards and Decks that is totally WHITE CRIMINAL behavior and should therefore be eliminated or terminated from consideration as the CFO of LADWP.
Keep your hands off taxpayer money, please. What else would such selection be for? But for what reason? Is the DEBT so great, its not sustainable?
So rather than declare bankruptcy we have a financial whiz-kid trying to tackle LADWP money and what big money that IS. A bundle of money to this guy and for us, the people, we get shut off by this man under investigation and now decaring: ok you pay this money back and you’ll be ok..
But if a fellow robed a bank without a gun this fellow would do time. I don’t think a whiz-kid with money should be above the law.
Is this guy a felon or not? Even if he isn’t, to let this fox in with us chickens is just beyond words.
Maybe he’ll loot DWP too, and then bankruptcy is ensured.
Thanks Ron for breaking this story.
Boy, just think if his last name was Garcia or Hernandez and he was a Bell councilman, we would be getting all the whiteboys to comment on how “corrupt and third world” of a city we are becoming and how LA has had its day and its time to move before the “Mexicans” take over.
But when its a Jewish Harvard grad with white skin doing all the stealing, NO ONE GIVES A SHIT.
Therefore, the only solution, is to appoint only cholos, because then the white people will be up and arms and become alarmed and actually start paying attention to corruption no matter what the skin color or surname might be.
2:40, you make a valid point. Unless people understand that corrupt people belong to every race and ethnicity just as good people do, we’ll make little progress in cleaning this city.
I agree. You all know that if this guy and even Beutner the little man sydrome bastard were Latino all hell would be breaking loose right now. If people really knew how many WHITE guys are working for the Mayor making over $100,000 they would go ballistic since he’s suppose to be all about Latinos. Guess what? There’s crooks in every shade. The banks on Wall Street have been screwing the people for years until they got caught. Where is the DA’s Public Integrity Unit on this guy? A lot of reporters and others read this blog. They better do something and not just sit on their asses giving him a free pass to raid our money.
One thing that has always bothered me is the coverage given by the newspapers. Anything of credit to any race or ethnicty is never disclosed, but be there a crime, they will make sure that everyone knows everything, including the country they came from. We have a long way to go in getting rid of hatred and bigotry in this city.
2:40pm you are right. If he were a councilman from of a city with a population of 30,000, the La Slimes would be all over his ass. But Beutner is Riordan`s buddy. Need say more?
This is appalling. Steve Cooley sits on his hands and does nothing.
And Riordan is the keynote speaker at Clean Sweep LA. Don’t know what to make of this.
Are you kidding? How can Riordan even associated with the Clean Sweep LA when he’s a politician. Its hypocrisy at the highest level because Clean Sweep LA is suppose to be about grass roots people wanting to make a change. NO politicians should be invited or for that matter asked to speak. it throws the whole purpose of what Clean Sweep is about by aligning itself with an old time politician. You have to ask yourself what is Riordan getting out of this?
I am floored by the inactive stance by the rest of council and our DA Cooley. Messing has no place in our government with his short selling chicanery. In this tough economy Wall Street crooks have a home at the DWP while qualified average Joes stand in the unemployment line. I am incensed.
Why are we bringing in Chinese firms to Los Angeles? I thought one of the reasons for “Measure B” was green jobs for the City of Los Angeles. Why aren’t we using American firms to build electric cars and solar instead of Chinese firms?
I agree – Messing should not be “messing” with the LADWP.
Can the peple start some type of campaign against him? An online petition of no support, emails. Does this crook need to be vetted or confirmed by city council? There is silence at city hall and you know they read this blog. Why aren’t any of the morons on council saying anything about Messing?
One thing I am learning painfully is, people are greedy. Birds of a feather flock together. What good is it to have another criminal as Mayor of LA? Dick Riordan, CIM, and AIG are beneficiaries of tax subsidaries; which is a hidden tax on the public.
“10″ points for Harvard University–Thank you for producing another criminal. They should kill these bastards. The SEC just settled a big case against Goldman Sachs yesterday, Messings former employer. Its systemic.. SACHS took investment money then used that money against the investor. By the way, so did Messing. Riordan Bruetner and Messing are in place to promote Corporate Politics. If Ron is part of this He shall be kicked to the Curb in due time
Dear Chairman of BYD and so many others, thank you for coming to American. Shi~Shi
I am proud to have you here, especially in our humble city of Los Angeles. We have many Chinese Communities especially in Monterey Park and China Town, located near California State University and Downtown LA, respectively.
Five score years ago, a great American, in whose symbolic shadow we stand today, signed the Emancipation Proclamation. Years later Martin Luther King said, “I have a dream” and today we are saying, “Build your dreams”.
We would never think that in America a Chinese Car Manufacturer would open its doors to a dream. Build Your Dream and build your future. As we face our challenges, we do so together to ensure your dream comes true.
forget about politics, I love the Chinese message. LA Politics and Chinese Car Manuafacturing don’t mix. Villariagos and too much Politics with this company will fail. Unions will not do what they did with City of LA if they stick to their desire for an affordable unit.
“Why aren’t we using American firms to build electric cars and solar instead of Chinese firms?”
Probably because according to the rules of government procurement, the lowest bid on this contract was not from an American firm but BYD.
The department awarding the contract is legally required to go with the lowest offer, not the country of preference.