The $13 Billion Mystery Angels

08/05/2014
For many years, a Los Angeles psychoanalyst to the stars named Milton Wexler led the fight against Huntington’s disease, a rare and fatal congenital illness. His Hereditary Disease Foundation didn’t have much money, so he attracted scientists to his cause by inviting them to parties where they could mingle with his celebrity friends.

In 1997 a single donor began charting a new direction for the research effort into Huntington’s. He poured millions and eventually hundreds of millions of dollars into an aggressive search for a cure. At first he worked with Wexler’s organization, then split off and established his own network of nonprofit foundations. He hired a former banker named Robi Blumenstein to run them. In place of Wexler’s salons, where the talk had flowed freely from chromosomes to the arts, Blumenstein offered conferences with PowerPoint presentations on promising therapies and partnerships with major drugmakers such as Pfizer (PFE). “The word on the street was, wow, this is great. There’s this rich guy who’s creating this virtual biotech that’s tackling H.D.,” says Nathan Goodman, a scientist in Seattle. “My God, our prayers have been answered.”
By 2011 the donor was spending more than $100 million a year on Huntington’s, more than the National Institutes of Health was investing in a cure. Like everyone else, Goodman was grateful for the infusion of money—the disease had killed his father-in-law. He nevertheless found it frustrating that he couldn’t talk to the donor about his spending priorities. He says he grew more curious when he noticed Blumenstein at research conferences accompanied by a middle-aged, bearded man. A few years ago in Palm Springs, Calif., Goodman says, Blumenstein introduced the man to a group of attendees as the “donor’s representative.” He gave the man’s name as “Andrew.”
Story: Billionaires' Wealth Is Skyrocketing. Their Philanthropy Is Not
The unknown man’s donations to the fight against Huntington’s, it turns out, were just a small part of his generosity. A year ago, when I was trying to solve a different mystery, I noticed in an obscure Internal Revenue Service database the existence of two huge charitable funds known as Gabriel Trust and Endurance Funding Trust. They had been established on the same day in 2002. Together, these trusts hold about $9.7 billion. That’s one of the largest pools of philanthropic funding in the U.S., bigger than the Carnegie and Rockefeller foundations combined. Only three private foundations in the country—the Gates, Ford, and Getty foundations—are bigger.
But someone had taken elaborate steps to make sure no one figured out where this money came from, using layers of company subsidiaries to obscure its origins. Gabriel’s and Endurance’s reports to the IRS, on file with the agency in Ogden, Utah, showed the trusts were controlled by companies in Nevada and Wyoming, using the addresses of local law firms. The companies, in turn, proved to be controlled by others in Delaware. I kept digging. Finally in August, a sheaf of papers I’d requested arrived in the mail from the Delaware Office of the Secretary of State. They showed that the man behind the companies that control Gabriel was Andrew Shechtel of Princeton, N.J.
Shechtel had but the slimmest profile on the Internet. A search result suggested he was involved with a hedge fund called TGS Management, about which practically nothing had been written. Over the following months, documents and interviews filled in the rest of the story: He and two other men, all highly gifted in math, had started TGS in 1989 after the firm that had employed them dissolved in scandal. TGS pursued a style known as quantitative, or “black box,” investing, using computers to identify trades. The trio quickly made a fortune. Since they had few outside investors, few heard about their success.
Story: Young Wall Street Bankers Flex Their Philanthropic Muscles
The men took pains to keep a low profile. Nowadays, even among competitors and recruiters in the quantitative-investing field, dropping the name TGS usually draws a blank. What’s more, Shechtel and his partners, David Gelbaum and C. Frederick Taylor, sought to give much of their fortunes away in near-total secrecy, using separate anonymous vehicles including the Utah trusts above to direct more than $13 billion to causes such as human rights, the environment, and disease research. One of the most powerful forces in American philanthropy is a shadow.
Gelbaum, 65, retired more than a decade ago, leaving Taylor and Shechtel, both 54, to run TGS. None was interested in talking to a journalist. Shechtel operates from a nondescript suite in downtown Princeton. Taylor lives in a gated enclave a few miles from the hedge fund’s West Coast office in Irvine, Calif. Before dawn one day in March, I peered through a black metal fence into the compound in Irvine where TGS keeps banks of computers. The place was on a dead-end street between a sandy creek bed and a carwash. A row of pines flanked a cluster of timber and glass buildings. From somewhere inside the compound, machinery whined.
Over the past few decades, the rise in the fortunes of the country’s richest people has created a golden age in philanthropy, comparable to the one that spawned the Carnegie and Rockefeller foundations a century ago. The Bill & Melinda Gates Foundation, the country’s biggest, is spending billions to end polio and to transform the U.S. education system. Alice Walton, an art lover and heiress to the Wal-Mart (WMT) retail fortune, built a world-class museum in small-town Arkansas. Gordon Moore, the Intel (INTC) co-founder, is spending $250 million to construct the world’s largest telescope on a mountain in Hawaii.

Fonte: businessweek.com

LEGGI GLI ALTRI BLOG

• < Prec
• Succ >