Alexander Vik Is The Most Interesting Man In The World (As Long As He Doesn't Owe You Money) – Forbes

This story seems within the March 23, 2014 situation of Forbes. Subscribe
THE MOST INTERESTING MAN IN THE WORLD is not a beer pitchman. He is a man who as soon as heli-skied right into a British Columbia avalanche and survived regardless of being buried alive whereas two companions died. He tamed an 11,000-acre wilderness, the place pumas roamed, right into a vineyard that sells dear Bordeaux-style blends from what appears like a futuristic spaceship. He and his spouse personally chosen every chair and commode for his or her ultraluxury artwork lodge in Uruguay.
A Norwegian who was raised in Sweden and schooled within the Canary Islands, Vik attended Harvard, the place he received the Ivy League golf championship–twice. He introduced up his kids in an eight-bedroom Greenwich, Conn. mansion that after belonged to a Rockefeller inheritor, however he claims residence in Monaco. And whereas he doesn’t drink typically, when he does, he prefers Christiania Vodka, produced from a 400-year-old recipe that originated within the court docket of Norway’s King Christian IV. He owns it.
We might go on and on. (His Manhattan artwork gallery sells Twentieth-century Italian furnishings! His pre-retirement pastime has been enjoying ice hockey! He comes from a household of fur retailers!) However for many readers essentially the most attention-grabbing factor about Alexander Vik, 59, is how he constructed a private fortune that FORBES estimates to be at the very least $1 billion, dabbling in nearly each fashionable monetary bubble–from closed-end nation funds to dot-com 1.0 to derivatives–while leaving a small military of traders and enterprise companions fuming in his wake.
It is a story that is by no means totally been informed. The secretive Vik hasn’t granted an interview about his enterprise dealings in additional than seven years and rebuffed a number of makes an attempt to contact him for this story. However his 35-year observe document reveals a fortunate streak that borders on the miraculous. “Alex was an excellent danger taker, and generally these guys can worm out of issues,” says Stephen Greenberg, a former basic counsel at one among Vik’s insurance coverage firms, who later clashed along with his boss in court docket. “Every little thing he did was so difficult with so many firms. Making an attempt to unravel something would get individuals very pissed off.”
With an inclination to function by way of offshore firms, Vik has purchased and offered every little thing from insurance coverage firms to penny shares and even as soon as tried to interrupt up French media large Vivendi. His largest ventures and bets finally failed, but Vik nearly all the time appeared to return out on high, rising unscathed and infrequently richer, at the same time as those that invested alongside him have been burned.
HARVARD ITSELF MAY be one thing of a membership, however present and former athletes there have cleaved off their very own, the Harvard Varsity Membership. Amongst them is Alexander Vik, who got here to America for the primary time as a member of the Class of 1978. There’s a web page dedicated to him on the membership’s web site, that includes a photograph of Vik, able to drive a golf ball, lengthy locks of curly blond hair falling beneath his ears. “In enterprise, ‘model’ may be very a lot in vogue,” Vik notes beneath it, “and Harvard has the best world instructional model and we’ve got to proceed to nurture it.”
Vik’s enterprise model began on Wall Avenue, the place he labored as a dealer at companies like Kidder, Peabody throughout the day and transformed Manhattan leases into condos at evening. His huge break, although, got here courtesy of his rich dad, who purchased a controlling curiosity within the Scandinavia Fund and put Vik in cost, with youthful brother Gustav using alongside as treasurer.
On paper it was a worth play. The Scandinavia Fund traded at a reduction to its internet asset worth throughout a time, the late Eighties, when some closed-end nation funds have been promoting at unjustifiable premiums to their underlying holdings. However in actuality, traders claimed Vik tried to show it right into a piggy financial institution. Beneath Vik Scandinavia Fund went into money simply earlier than equities in nations like Norway soared. The fund additionally tried to purchase actual property loans from a monetary agency that had loaned the Viks cash to purchase shares of France Fund, one other closed-end nation car. Because the closed-end-fund bubble deflated, minority shareholders sued in 1989 for not totally disclosing the connection between Vik and the opposite monetary agency and for breaching fiduciary duties by going into money. Vik denied wrongdoing, and Scandinavia Fund ended up settling the lawsuits, reportedly for lower than $700,000.
Regardless of. Insurance coverage quickly piqued Vik’s curiosity. Hurricane Andrew, which leveled South Florida, had pummeled underwriters, and the Viks purchased up insurance coverage property in a fast collection of acquisitions. They arrange store in Lawrenceville, N.J., and Vik Brothers Insurance coverage was quickly writing $300 million of property and casualty insurance coverage premiums, totally on the East Coast, when Vik offered it in 1997 to Highlands Insurance coverage for $100 million. His timing was good: By 2002 Highlands filed for chapter, although Vik Brothers Insurance coverage was not the trigger. In one other insurance coverage transfer Vik teamed up with two huge insurers from Sweden and Finland and purchased House Insurance coverage Co., primarily based in Manhattan’s monetary district, for $800 million. The insurance coverage firms purchased out Vik’s minority stake quickly after. Once more, good timing. In 1998 House Insurance coverage failed.
It is unclear how a lot cash Vik and his household produced from their adventures in closed-end funds and insurance coverage, however Vik emerged unscathed, at worst. And he nonetheless managed Scandinavia Fund–his household owned 73%–which he had transformed into an working firm. Because it nonetheless traded on the American Inventory Alternate, he now had a public car for dealmaking. And since he primarily based it within the Cayman Islands, his firm might function with extra opacity at the moment, delaying monetary filings with the Securities & Alternate Fee. At first Vik used the agency to run a resort in his outdated stomping grounds, the Canary Islands. However then got here the Web bubble, and he turned his consideration there.
With Vik as CEO, Scandinavia Co. turned Xcelera.com and in 1999 bought a majority stake in Mirror Picture Web, an Web-caching firm in Woburn, Mass. Scandinavia additionally started scooping up minority stakes in a seize bag of companies–Energetic ISP, deo.com and e-game–that had good tales, even when they’d neither revenues nor paying prospects. Press releases and press appearances floated the inventory. Vik would personally craft the wording late into the evening, sweating the main points of every promotional outburst. “Comparatively talking, there’s little or no competitors. This can be a brand-new area that did not exist a 12 months and a half in the past. Individuals are projecting it to be $14 billion by the 12 months 2003,” Vik stated in a single interview. On CNN’s now defunct monetary channel he answered a query about Xcelera’s “voodoo” by likening it, in idea, to Akamai Applied sciences, a comparability that drove Akamai executives loopy. “What’s irritating is that there are all these press releases they put out,” Akamai’s late founder, Danny Lewin, informed FORBES on the time. “However there isn’t any income, no prospects, no service.”
Whereas Xcelera is essentially forgotten, it could have been the largest dot-com bubble inventory of the period: In April 1999 it was buying and selling at 21 cents a share, in March 2000 at $112.50. The one-year, 54,000% rise, valuing Xcelera at $11.7 billion, made the likes of Pets.com, ?Webvan, and theglobe.com appear to be sturdy blue chips. The inventory collapsed quickly thereafter however not earlier than Vik and his household, by way of an organization they managed, offered $250 million of Xcelera inventory, in accordance with a category motion filed by shareholders in opposition to Vik. He denied the allegations.
For greater than a decade Vik confronted Xcelera-related lawsuits, and for greater than a decade he received. “We spent years on the case, and you do not do this until you suppose you might have one thing,” says Peter Pease, the pissed off plaintiff lawyer who spearheaded a serious class motion. (A federal choose disagreed: She tossed the case on the primary day of trial, citing an absence of proof that inadequate disclosure triggered damages.) Minority shareholders of Mirror Picture sued Vik in Delaware state court docket and likewise misplaced. Vik was unchastened. After Xcelera’s inventory was delisted, Vik launched a profitable tender supply to purchase the remaining shares for 25 cents every with out disclosing any monetary details about the corporate, in accordance with a shareholder class motion that accused Vik of insider buying and selling and market manipulation. He denied the allegations. And once more, Vik prevailed and held on to the remaining property of Xcelera.
Nonetheless, even individuals who felt cheated by Vik discovered his appeal robust to withstand. Visiting Vik’s Greenwich mansion was like coming into a Scandinavian model of the Louvre, full of works by the area’s high artists. Vik additionally retains prized artwork possessions in New York in a two-bedroom condo on the 67th ground of the Time Warner Middle that he purchased for $4 million in 2004 and later transferred to his spouse, Carrie. He travels continually (generally chartering a personal jet) to go to his winery in Chile, properties in France and Monaco and inns in Uruguay. “Up on the Estancia it is like Marlboro nation,” Vik informed Forbes?Life in 2011 about his Uruguayan properties. “Romantic and rustic, with gauchos. However on the seaside it is like Saint-Tropez in the summertime, with events and dancing and exquisite individuals.”
Vik works on a regular basis, say former colleagues, however maintains a Scandinavian reserve, all the time considering his subsequent transfer, by no means getting outwardly indignant. “I’d be able to work with him once more, however it’s good to ensure you do not have issues in writing–you have to have it in your checking account,” says Martin Alsen, a Swede who was Mirror Picture’s first worker. “The optimistic facet of him is he’s all the time on course with a optimistic perspective. However you simply cannot belief him.”
WALKING AWAY FROM the dot-com refuse, Vik spied the subsequent huge fortune-creating development: derivatives buying and selling. He arrange one thing known as Sebastian Holdings, which was integrated in Turks and Caicos however largely operated out of his Connecticut home, which can be owned by his spouse (his official residence stays Monaco). He employed two Wall Avenue merchants, Klaus Stated and Michael Kluger. Collectively they took huge positions in every little thing from transport shares to foreign exchange and futures contracts. Armed with a margin account offered by Deutsche Financial institution, Vik even purchased a large stake in Vivendi and drew headlines in 2006 by making an attempt to drive the French firm to promote property. The operation was clearly a cash machine–in about one 12 months Stated made $45 million in earnings for the operation , in accordance with a court docket opinion filed by a choose in London.
Throughout the monetary storm of 2008, nonetheless, the extremely leveraged foreign money and derivatives bets placed on by Vik and Stated went in opposition to them–big-time. At one low level Vik’s spouse took him to the emergency room of Greenwich Hospital, the place he was given nervousness medicine. Deutsche Financial institution and Morgan Stanley issued margin calls on Sebastian Holdings. Court docket paperwork present that Vik was capable of meet $500 million value from Deutsche Financial institution, however the money in Sebastian’s Deutsche Financial institution accounts have been drained with $244 million nonetheless owed to DB.
Sebastian, which Vik wholly owns, had different funds obtainable, however Vik had higher locations for that cash to go. In October 2008 Vik transferred about $1 billion out of Sebastian to offshore entities and trusts managed by him and his household, in accordance with a court docket doc filed by Deutsche Financial institution and an opinion filed by a choose in London, the place DB sued Sebastian to get its a reimbursement. “Realizing that [Sebastian Holdings] had incurred lots of of thousands and thousands of {dollars} in losses and confronted imminent margin calls from its prime dealer Deutsche Financial institution, Vik exercised his management over [Sebastian Holdings] to strip it of its property,” Deutsche Financial institution claims in a latest authorized submitting. Vik countersued for $8 billion, claiming inappropriate margin calls pushed the buying and selling car out of positions that later rebounded.
The trial, in spring 2013, didn’t go effectively for Vik. Choose Jeremy Cooke of the Excessive Court docket of Justice in London present in November that Vik had lied in his testimony and fabricated proof: “I’ve concluded that in some respects [Vik] was merely dishonest.” For the primary time in his life Vik had misplaced a serious case; the choose ordered Sebastian Holdings to pay Deutsche Financial institution about $300 million.
ANDREW JACKSON, UPON listening to of a Supreme Court docket choice that went in opposition to him, famously replied: “John Marshall has made his choice; now let him implement it.” Once you’re a Norwegian-Swede who lives in Connecticut, incorporates firms within the Cayman Islands and apparently pays taxes (or not) in Monaco, that may additionally apply to the choice of a London court docket. “I am right here. If I’ve accomplished one thing fallacious, I pays no matter judgment my Lord decides,” Vik stated throughout his London trial. “I am unable to keep away from something. If I did one thing fallacious, I’m accountable.” But Vik nonetheless refuses to pay and has indicated he plans to attraction the London ruling. In latest weeks Deutsche Financial institution has filed swimsuit in opposition to him in New York and Connecticut, making an attempt to gather on the $300 million right here in America. The financial institution has been eyeing a number of property Vik owns, together with Confirmit, a market-research software program firm with places of work in Manhattan and Oslo, Norway. Deutsche Financial institution declined to remark.
It is not the one battle Vik is combating. Certainly one of Vik’s Greenwich neighbors, Sheldon Gordon, a well known mall developer who constructed the Discussion board Outlets at Caesars Palace, claims his firm was bilked out of greater than $30 million in a pump-and-dump scheme cooked up by Vik and his different dealer at Sebastian, Michael “Jack” Kugler, who had additionally been Vik’s longtime enterprise affiliate from the Xcelera days. Gordon’s Gordon Group Investments claims in a lawsuit that it invested $40 million with Kugler years in the past, however that as a substitute of placing the cash in bonds, as he was presupposed to, Kugler secretly purchased shares of a thinly traded German media firm wherein Kugler and Vik had additionally constructed a stake by way of entities they managed, serving to to spice up the inventory.
Kugler and Vik offered some shares earlier than the inventory collapsed however left Gordon Group with greater than $30 million in losses, the criticism says. Each Vik and Kugler denied wrongdoing, and a New York state choose dismissed the case, citing statute-of-limitations deadlines. In January a New York state court docket heard Gordon Group’s attraction. On the identical time Vik’s Sebastian buying and selling operation has sued Kugler, claiming that Kug?ler additionally improperly invested Sebastian funds within the German media firm.
Even the Xcelera debacle will not go away. In January a federal appeals court docket in New York revived the insider-trading claims introduced in opposition to Vik over his tender supply for the minority shares of Xcelera, saying the decrease court docket had improperly dismissed them.
Vik, in the meantime, is definitely inured to those sorts of assaults by now. Essentially the most attention-grabbing man within the monetary world was just lately selling his high-end lodge retreat in Uruguay–Estancia Vik–and residing the lifetime of a prototypical billionaire, albeit one whose fortune seemingly got here from exploiting capitalism reasonably than honoring it. “We determined to do a few of the issues that we like–nature and artwork, structure and design–and mix that in Uruguay,” Vik stated in a promotional video. “I’m hoping the individuals of Uruguay will adore it and be happy with it and inform the entire world about it.”
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