CEO scandals hit home again | VailDaily.com
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CEO scandals hit home again

Add another deposed and legally embattled CEO to the list of former Vail Valley residents.County records reveal Bernard Ebbers, the former head of bankrupt WorldCom who was forced out in April, sold his Beaver Creek condo for $1 million on March 21.Ebbers joins former Tyco CEO Dennis Kozlowski and Adelphia Communications chieftains John and Timothy Rigas on a growing list of disgraced top executives offloading posh property in Eagle County as federal investigators close in.While Kozlowski and the Rigases have all been indicted on charges ranging from tax evasion to using corporate funds for personal gain, Ebbers at presstime had yet to be charged with any crime in connection with the biggest bankruptcy in history.But earlier this month his two top former financial officers were led off in handcuffs by the FBI in New York, charged with a $3.8-billion accounting fraud that rendered the telecommunications giant’s stock worthless and erased the life savings of countless investors.Ebbers maintains his innocence and ignorance saying he did not knowingly engage in fraud and promising to repay $408 million in personal loans he still owes the company.His real estate deal in Eagle County, though, won’t go very far toward satisfying that debt. Records reveal he sold his Saddleridge Villas unit for only $50,000 more than he paid for it in 1994. His asking price was $1,250,000, and the three-bedroom, three-bath townhouse was on the market for a total of 494 days.Former Tyco boss Kozlowski is selling a ski-in/ski-out 18-room mansion in ultra-upscale Bachelor Gulch for $11.5 million, a lot on the same road for $4.75 million, and a 3-bedroom, 3.5-bath Beaver Creek condo for $1.47 million. He is being prosecuted by the Manhattan DA’s office for failing to collect state sales tax and tampering with evidence, and an Securities and Exchange Commission investigation into his corporate dealings at the failing electronics and manufacturing behemoth is ongoing.John and Timothy Rigas, founders of cable conglomerate Adelphia were arrested with TV cameras rolling last month. They’ve been charged with bilking investors by using corporate funds for personal gain, including a pair of Beaver Creek condos valued at $4 million and $4.5 million apiece.Officials at the SEC told The Trail they were seeking a judgment that would order the Rigases to account for and “disgorge” all of their allegedly ill-gotten gains, meaning the properties would be auctioned off and the money returned to investors if the two are convicted.High-end market still strongDespite the CEO scandals and a stubborn recession marked by a highly volatile stock market, local Realtors say the sale of high-end homes in the Vail Valley has not been adversely impacted.”There’s a lot of high-end stuff on the market right now,” says Mac Hodge of Prudential Gore Range Properties, listing agent for the Kozlowski properties, adding that that’s not unusual for this supercharged market. “As big as we are now, to have four or five homes over $10 million on the market at any one time is not particularly abnormal.”His company is also listing an $11.5 million home on Holden Road in Beaver Creek, and Hodge says there’s a home on the Vail Golf Course currently listed for $20 million and one in Spraddle Creek for $11 million.”Most of these guys are looking to do something else with their money,” Hodge says. “The Kozlowskis have some different motivating factors, but I’m not going to get into that.”Tyrone Adams, communications director for the Colorado Association of Realtors, says stock market woes are actually boosting real estate sales.”What we’re seeing in Colorado, and nationally as well, a lot more people are putting their money into the real estate market versus the stock market,” says Adams. “In fact, what a lot of economists are saying is that the real estate market has been what has kept the economy afloat since Sept. 11.”Hodge agrees: “I think that has been an ongoing trend in America for the last couple of years since the stock market started dropping,” he says. “Interest rates are very, very favorable right now, so people can afford bigger ticket items, and, of course, people are taking money out of the stock market.”Statistically, the number and dollar value of real estate sales in the Vail Valley are lagging slightly behind last year’s pace so far this year, but are about on pace with 1999 figures, before the economic bubble burst.In fact, Bill Wilto, a broker with RE/MAX Vail, says his office is up 40 percent over last year, but he points out that his firm primarily lists mid-range properties, which in the Vail Valley means $250,000 to $1 million.Fresh from a real estate conference in Denver, he says the word on the Front Range is that sales of high-end homes are starting to slow, and he says his feeling is that the same is starting to be true of the Vail Valley.”It seems as if things have slowed down above a million dollars, but I have no statistical data to back that up,” Wilto says. “It’s certainly not dead above that; there are just fewer buyers. But there have always been fewer buyers, and if the stock market is slowing things down even more, that’s certainly understandable.”


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