The Fall of Former Reddit CEO Ellen Pao and Her Hedge Fund Husband Manager Buddy Fletcher.
The walls are closing in on hedge fund manager Buddy Fletcher and wife Ellen Pao — who was forced from her chief executive job at Reddit on Friday.
The Ivy League-educated couple, a picture of the classic American success story just six years ago — she a Chinese-American rising star in Silicon Valley’s venture-capital world and he an African-American successful hedge fund founder — have taken a series of hits in the last two weeks.
On June 30, three years after Fletcher was forced to put his hedge fund into Chapter 11, he was socked with a $50 million judgment to repay investors.
On June 29, lawyers for the Dakota, the iconic Manhattan apartment building overlooking Central Park at 72nd Street, asked a judge to dismiss Fletcher’s 2010 discrimination suit. He claimed he was denied the opportunity to buy a fifth unit in the building because of his race.
On Friday, Pao was forced from her $175,000-a-year interim chief executive job at Reddit, leaving both her and Fletcher unemployed and, perhaps, unemployable in the near term.
For Fletcher, the fall has been slow but steady.
His hedge fund firm, Fletcher Asset Management, has been labeled a Ponzi scheme by the bankruptcy trustee amid allegations Fletcher transferred millions to himself and to friends.
While Fletcher over the last three years appeared immune from getting nicked for his actions, the $50 million judgment entered by a Manhattan judge is the closest he has come to paying for the alleged fraud against his investors, which included Louisiana firefighter and cop pensions. He has appealed the decision.
Meanwhile, his dragged-out racial discrimination case against the Dakota, one of New York’s most prestigious apartment buildings, could get tossed any day.
Lawyers for the 131-year-old building said in court papers that it wasn’t racial discrimination that led the board to refuse to allow Fletcher to buy a fifth apartment, but the investor’s deteriorating finances.
“He was looting his own company and defrauding his investors,” Dakota lawyer Christine Chung pointed out in court papers, referencing the Chapter 11. The SEC and the FBI are investigating, sources said.
In 2010, as he applied to purchase his fifth apartment in the 94-unit building, Fletcher had $8 million in assets, including $50,000 in cash — but $20 million in liabilities, court documents show.
He needed $5.7 million in cash to buy the apartment.
“When you looked at the financials, he was broke,” Dakota board member Richard Robb said in a deposition.
As Fletcher’s finances dwindled on the East Coast, out West, Pao was filing a discrimination lawsuit seeking $16 million from her former employer, Kleiner Perkins.
Earlier this year, Pao lost the lawsuit. Then on Friday, a revolt by 200,000 members of Reddit, where Pao was hired as interim chief after leaving Kleiner, forced her to resign.
Meanwhile, the Fletchers have quit paying their mortgage on their four Dakota apartments, according to individuals close to the situation. The banks are making the payments, the sources said.
Fletcher has been trying to raise cash since 2013 when he put his 1,100-acre Cornwall, Conn., estate — complete with a storybook castle — on the market for $8.5 million. So far, there have been no takers.