The fate of the Gulfstream Hotel, the faded crown jewel of Lake Worth's historic downtown, appears at first glance to rest in the hands of the Schlesinger family of Palm Beach and Connecticut. The hoteliers/developers bought the property in 2005 but have fallen on hard times. The hotel is in foreclosure, likewise the family's luxurious Omphoy, on Palm Beach, and Traymore, on South Beach. The Gulfstream's plight is a problem for Lake Worth, whose residents have long dreamed fondly of the day when the hotel, shuttered some years, would reopen and greet fresh streams of visitors to regenerate the town's economy.
But the path to rebirth may prove murkier than a simple restructuring of the Schlesingers' assets. Their mortgage note is held -- Fire Ant has learned -- by an imploding Wall Street hedge fund with roots in the financial black hole of the Cayman Islands. The fund's identity and that of its CEO -- a controversial and combative Wall Street figure -- lies hidden in a maze of property records, court documents, newspaper archives, and regulatory filings.
Less hidden -- though its present ownership interest is unclear -- is the
role of a globe-spanning Mideast investment group whose multiple
billions, like the Wall Street fund's, are also rendered opaque via the
Caymans. The Persian Gulf investors may or may not have washed their
hands of the Gulfstream.
Who are these actors, how are they interrelated, and what do they intend for the Lake Worth hotel? New Times
repeatedly reached out to all involved -- to their offices, their lawyers,
and their media reps. Nobody's talking. So all we know is what we found
along the paper trail. Here's what it shows.
HIDDEN
HAND ONE/JULY 2005: The Schlesingers announce their purchase of the
Gulfstream for $13 million. They promise to renovate the interior,
"transforming the popular Lake Worth landmark into a distinctive
boutique luxury hotel." They have a partner in the deal, Investcorp,
with whom they soon also buy up the Palm Beach Hilton, renaming it the
Omphoy Ocean Resort, and Holiday Isles, in Islamorada.
In the
Schlesingers' announcement and in news reports, Investcorp is described
only as a New York-based "global investment group." Fair enough, but
incomplete.
Bahrain-based Investcorp -- with $12 billion in assets -- is basically Mideast petrodollars flowing back through the Cayman Islands and buying up property throughout the Western world -- everything from
Italian vending machine manufacturers and French auto parts distributors
to Seattle kitchenware retailer Sur La Table and American Banker
magazine. Forbes once called its CEO, Nemir Kirdar (an honorary fellow
at St. Antony's College, Oxford, no less), "Michael Milken in a
burnoose."
Fire Ant finds it unsettling that Bahraini oil wealth depends on a certain amount of stability (AKA crushing pro-democracy protests) in the little island kingdom. But what the heck? Their money's green.
(Investcorp claims to have sold its interest in the Gulfstream in November 2011. But since its arrangement with the Schlesingers is shielded by Delaware corporate registration, we'll just have to take its word for it.)
