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  Despite the difficulties at home, Darr excelled academically at West Boylston High School, where he was named a member of the National Honor Society. The ninety-three other students in Darr’s class reflected the town’s population—working-class whites and mostly second-generation Irish Catholics. Darr was known as a cheerful fellow with an infectious smile and an endless appetite for jokes.

  After high school, Darr fit right in at nearby Holy Cross, an all-male college run by the Catholic Jesuits. Most of his classmates were like the blue-collar kids from West Boylston. The student rebellions budding across the country in the late 1960s were still distant static for the students there; many remained committed to military service. The school held an annual military ball, and Darr, who received a scholarship from the Air Force Reserve Officer Training Corps, helped organize the event.

  After graduating in 1968, Darr was commissioned a second lieutenant in the air force and within two months was posted as a logistics officer at the Hill Air Force Base in Utah, where parts and maintenance were provided for F-4 jet fighters and other sophisticated weaponry.

  In July 1972, Darr was released from active duty. With his education and military service completed, he took his first tentative steps toward a career in business. He accepted a job in Boston as a headhunter for Management Recruiters. Each day, he sat in a close-quarters bull pen, soliciting companies in the hopes of placing midlevel executives in jobs. It was high pressure—Darr was paid mostly on commission, making money only if he was successful. But Darr was good at the job.

  Living in Boston, Darr frequently took the short drive to visit his parents. He remained closest with his mother, Dottie, a feisty woman who doted on her only son. Since her divorce, Dottie had made her living as a champion bowler, giving lessons down at West Boylston Bowl. She wrote a column on ten-pin bowling for the Worcester Telegram & Gazette. Most Sunday nights, she traveled to Worcester to play in a league at the Lincoln Lanes.

  There she met Richard Bailey Sr., a widower and factory worker with New England High Carbon Wire. The two began to bowl together, and after a whirlwind courtship, they married. Richard had three children, and the two youngest, Ginny and Tommy, still lived at home. If Darr approved of the new members of his family, he didn’t show it. Although he clearly loved his mother, Darr treated her blue-collar bowling crowd with a haughty contempt. Often for his visits home, he wore a sharp suit and tie; his mother’s neighbors could feel the disdain for their blue jeans and work shirts.

  At the same time, Darr was developing his own social life outside of West Boylston. He dated Diane Casey, a teacher in the Quincy public schools, and in July 1974, they married. By then, through contacts he developed in business, Darr had grown fascinated with real estate as a great means of making a quick buck. He began pushing investment ideas on his family.

  In August 1975, Darr persuaded his new stepfather, a man of Yankee caution who feared financial risk, to invest in a parcel of raw land in Texas. Darr promised his stepfather that the investment would bring huge profits. He said he had a hot tip that the adjoining property was scheduled for development. That, he said, should make the value of the neighboring land skyrocket. If Richard and Dottie bought the land, Darr told them, they would be able to flip it quickly at an inflated price.

  Delighted with Darr’s hot tip, Richard and Dottie borrowed money to invest in parcel 37 of a property called Deerwood North in Texas. Darr was so confident in the investment that he persuaded them to use the expected profits to buy more land in Wolfeboro, New Hampshire, by taking out more loans. Richard felt uncomfortable—he had never had that much debt in his life. But he figured his stepson knew what he was doing.

  Disaster hit almost immediately. Richard’s union went on strike; five months later, the wire company shut the factory for good. The development in Texas—the one Darr had promised would bring huge profits— didn’t work out. The money needed to pay for the New Hampshire property never materialized.

  Richard, dismayed by the mounting financial troubles, clung to the hope that the wire company would reopen. Finally he suffered a nervous breakdown, and his eldest son, Richard Jr., admitted him to the psychiatric ward of St. Vincent’s Hospital. Dottie walked out on her new husband that day. On returning from the hospital, Richard Jr. ran into his stepmother heading out the door. She had an armful of her husband’s belongings, including his first wife’s silver and china sets and a wedding present from his children. Richard Jr. thrust his hands in his pockets out of fear that he would strike Dottie and ordered her to put back everything that was not hers. He watched her until she walked out of the front door for the last time.

  Dottie soon divorced Richard. In the settlement, they split ownership of the land investments Darr had recommended. Richard senior soon recovered from his breakdown and returned home. He continued to pay off his debt on the land, a small bit at a time, for much of the rest of his life.

  In the mid-1970s, Wall Street was a place of turmoil and fear. After an incredible run of huge profits and wild speculation during the 1960s, the securities industry was paying a heavy price. Scores of investment houses that expanded too rapidly in good times simply went bust or merged. The Arab oil embargo in 1973, followed by the deregulation of commission rates two years later, created the harshest business environment for the industry since the Great Depression. The heady confidence and easy money created by rising markets were gone. Many of the young people hoping to make their fortunes on Wall Street were simply a few years too late.

  That was the environment in which Darr arrived on Wall Street in June 1976. He got his start by grabbing the industry’s lowest professional rung, as a stockbroker trainee with Merrill Lynch & Company. The firm hired him to work in Boston but immediately shipped him to Merrill’s New York headquarters for two months of training.

  Darr breezed through most of the topics easily by dint of his natural intellect. Although the class had its share of studious trainees, he gravitated toward a group who also caught on quickly. They were the ones itching to head out to a branch and start selling. Evenings among these trainees centered on bar-hopping and occasional marijuana parties. Many in the group struck up long-term friendships, and Darr was no exception.

  At one Merrill-sponsored cocktail party, Darr met Wally Allen, a native of Enterprise, Alabama, who had joined the training program after a short career in the real estate mortgage business. The two stayed at the same hotel on Manhattan’s East Side and became fast friends.

  One night, the two gathered in Allen’s room before another evening’s carousing and started swapping stories about their backgrounds. Allen mentioned that he served with the army in the Seventh Psychological Operations Group, an intelligence unit based in Okinawa, Japan. The work he did as an analyst was classified, but Allen did not think it was very impressive. His biggest responsibility was acting as custodian of classified documents. But the biggest advantage of the detail, Allen said, was that it kept him out of Vietnam.

  Well, Darr said, he had served in Vietnam. And like Allen, he worked in the intelligence business. In fact, the entire time he was in Southeast Asia, he always dressed as a civilian. Allen got the picture: Darr worked with some high-level intelligence group, perhaps the Central Intelligence Agency. Allen was surprised someone in that line of work was so open about it but figured Darr was trying to impress him.

  It would be several years before Allen realized that everything Darr said that night was a lie. He had never been in Vietnam. He had never even worked with an intelligence division. There weren’t many spies handling maintenance detail in Utah. It would prove to be just the first layer in Darr’s self-created mythology.

  In 1977, after a few months as a broker, Darr tried for the big time. He saw that tax shelters were taking off as a business, and Merrill had one of the biggest departments on Wall Street. That, Darr decided, was the place to be.

  After lobbying Jack Loughlin, the head of the department, Darr was hired as a product manager. In that job, he mark
eted specific types of partnerships.

  Product managers never sold investments directly to the public. Instead, they traveled throughout the Merrill retail system, talking up the shelters in the hopes of persuading the brokers to sell them. For Darr, the job was remarkably like his father’s. Both traveled around the country representing particular products to retail salesmen. But instead of trying to persuade salesmen to offer Naturalizer shoes, Darr was trying to convince them to sell tax shelters.

  Darr proved to be a master at sales. He was not the type to spend much time exploring the deep mechanics of how a particular tax shelter worked, but he always knew enough to persuade brokers to sell a deal. He also was one of the few marketers willing to stand up to arrogant investment bankers. If bankers made a shelter too complicated, he would tell them that they would confuse the brokers.

  Darr’s style was effective; he worked hard, but never bored his colleagues by poring over the dry details of some business deal. Instead, Darr cracked them up with the latest bawdy joke or his dead-on impersonation of Humphrey Bogart as Captain Queeg. It was a glorious time for Darr. For the first time, big success seemed within his reach.

  A few months after joining Merrill’s tax shelter department, Darr met Barry Trupin, a prominent and flashy shelter promoter. Trupin left some Wall Street professionals uneasy—his style was a bit too garish, his wealth too prominent. Here was a man who could purchase the old Henry du Pont estate in the wealthy enclave of Southampton, New York, and then undertake a multimillion-dollar effort to transform the Georgian Chestertown house into a French Gothic castle—complete with turrets, towers, and an indoor saltwater pool with its own twenty-foot waterfall.

  Trupin loved to give people the impression that he was a financier of high pedigree—he named his company Rothchild Reserve International, making more than a few investors think that it was tied somehow to the Rothschild family, the famous European banking dynasty. Trupin made sure he spelled the name just differently enough—leaving out one s—that the real Rothschilds would never bring suit. Even his deals pushed the outer edge of the envelope. The values he ascribed to the assets in his tax shelters always seemed enormous, which, in turn, gave investors even greater tax deductions. But it also would likely attract the attention of the Internal Revenue Service, which could disallow any deductions if the agency found the numbers had been puffed up.1

  Trupin fascinated Darr. He was one of the wealthiest men Darr ever knew. They met as competitors over a big computer-lease tax shelter deal that both wanted to sell. In the end, Darr was the victor, but Trupin felt no ill will. He knew that someday he might want to use the fellow who just beat him for another deal.

  That day came in mid-1977. Trupin had learned that Mattel, the toy-making company, wanted to lease a large IBM mainframe computer. Trupin asked Darr if Merrill could help him find the equipment for the deal.

  Darr agreed, but on two conditions: first, that Trupin pay $50,000 to Darr personally for finding the equipment, and second, that Merrill be told nothing about the payment. The $50,000 would be a small fraction of what Trupin stood to gain in fees if the deal went through. He readily agreed to both conditions.

  For Darr, the chance was slim that anyone at Merrill would ever find out about the money—he had been interviewing for a new job at Josephthal and had an offer in his back pocket. By the time Trupin cut the check, Darr would be out the door. The deal was done in June, and for its work, Merrill Lynch received a 2 percent finder’s fee: $11,322—less than a quarter of the cash paid under the table to one of its midlevel employees.

  Darr bundled his overcoat tightly around himself as he walked down Broadway. It was January 30, 1978, a bitterly cold Monday in what was already an extremely frigid New York winter. About a block ahead, he could see Trinity Church, which had stood since colonial times like a sentry at the mouth of the downtown financial district. Darr turned onto Wall Street. It was about 3:00 P.M. In an hour, the markets would close and the street would be packed as brokers and traders headed home.

  He walked past the thick, gray walls of the New York Stock Exchange and the columns of Federal Hall, where George Washington had once taken the presidential oath of office. He continued for two blocks until he arrived at 45 Wall Street, the offices of the United States Trust Company.

  Darr waited for a teller. Finally, at 3:16 P.M., he passed two deposit slips through the teller’s window, along with a check he had just received for $50,000. It was the personal payment he had demanded from Trupin for helping him on the Mattel deal. Trupin had successfully sold out the partnership in December, as wealthy investors scooped up shelter deals to help cut their tax liability for the year. True to his word, Trupin wrote Darr the check within weeks.

  The teller took the documents from Darr and placed them in an electronic time stamper. Following Darr’s written instructions, $45,000 was deposited into checking account number 2551. The remaining $5,000 was deposited in his savings account. In just one transaction, Darr more than doubled the $30,000 he had in the bank.

  Darr had been in his job as head of Josephthal’s tax shelter department for just over six months. His new firm was no Merrill Lynch—instead of hundreds of offices around the country, it had only about twenty along the East Coast. Until it hired Darr, Josephthal did not even have a tax shelter department. Even his pay was meager by Wall Street standards: about $65,000 a year, plus bonus. But at Josephthal, he was the person in control. He could decide which deals were sold and how much the firm would be paid. Promoters who wanted to sell their shelters through Josephthal had to make sure that Darr was happy.

  About a week before receiving his payment from Trupin, Darr took steps that would protect him in case anyone ever heard of the check. At a lunch with Michael DeMarco, the president of Josephthal, Darr tiptoed around the topic of money he expected to be receiving. He had outside business interests, Darr told DeMarco, and would soon be getting income from them. But DeMarco need not worry, he said, because none of those activities conflicted with the interests or businesses of the firm. But in fact, the opposite was true—he was receiving cash from the very types of people whose deals he was supposed to rule on objectively.

  The flow of money to Darr soon sped up. Matthew Antell from First Eastern was the next client to pass some cash to Darr. Josephthal sold a limited partnership for First Eastern called King’s Court Associates, and three days before the deal was filed with securities regulators, Darr sent Antell a bill for $30,000. The bill did not indicate it was from Josephthal and simply said that First Eastern owed the money for “specialized program structuring and consultation.”

  A few days later, on March 6, Antell sat down at his desk in Cohasset, Massachusetts, to write a series of $30,000 checks from First Eastern Corporation. After funneling one check through another company he controlled, he wrote a second check, to Rothchild Reserve, the company controlled by Barry Trupin. Antell had never met Trupin.

  The check was mailed to Trupin, who deposited it in his account at Citibank. On March 22, after Antell’s check cleared, Trupin wrote the fourth $30,000 check in the series, this time to the true recipient, Jim Darr.

  Darr was ready to use the money. After starting in New York in a modest apartment in a middle-class neighborhood, Darr had his eye on a $181,500 house in the wealthy suburb of Stamford, Connecticut. Four weeks after receiving his latest check, Darr handed over a down payment of $35,000 in cash for the house. Without the money from clients, he never could have afforded it.

  Darr’s newfound power and healthy financial shape showed in his strut. He became looser and more arrogant, at times embarrassing some of his professional staff by mistreating potential clients. Stuart Ober, who handled oil and gas deals, bitterly complained to colleagues after he brought one potential shelter promoter into the office to see Darr. Ober liked the promoter and wanted to make a good impression. But Darr treated the client with open contempt. Sitting behind his desk, Darr put his feet up on the table in front of the prospective client�
��s face, lit up a cigar, and leaned back in his chair.

  “Tell me about your deal,” he said. “I’ll decide whether it’s good or bad.”

  The client was clearly offended. Within minutes, Darr cut him off and ushered him out. Ober had never seen a performance like that in his life. The client took his business elsewhere.

  Darr’s antics also made some of his bosses uncomfortable. He was simply too out of step with the collegial atmosphere of a small, old-line firm. He created a huge, separate office for himself, while the heads of most other departments worked in the same room as their staff. Though his department had only four people, Darr hired his own personal secretary. His colleagues could not believe his pomposity—never before had any of them known of a Josephthal executive who would have his secretary call clients, only to put them on hold until her boss picked up the phone.

  Still, he showed talent in the job. In negotiations over a deal, no one was tougher. Darr always insisted on the highest fees and the best terms for Josephthal. He even haggled over the commissions that would be paid to the firm’s brokers, demanding that each promoter pay as much as was permissible under the securities rules. His colleagues smirked each time they heard Darr push the demand—they knew his bonus was based in part on the amount of commissions his department generated.