The billionaire's business: how U.S. Senate candidate Jeff Greene made his money

Billionaire Senate candidate Jeff Greene is spending millions on TV and campaign mailers casting himself as the "proven job creator," but proving how many jobs he's created isn't so easy.

Greene, 55, is a stunningly successful businessman — worth an estimated $1.3 billion, according to Forbes last year — but little is known about his track record.

The first-time Florida candidate is best known for making hundreds of millions of dollars with arcane and controversial investments where he effectively bet on widespread mortgage foreclosures — not exactly a big job generator. He also has delayed filing a required financial disclosure report, so it's impossible to know his current business interests.

"There are a lot of people that create jobs in this country, and I don't believe Jeff Greene is in the running to be among the top 1,000," said Democratic rival Kendrick Meek, scoffing at ads showing Greene in a hard hat.

"He's mainly doing investments, but he's running commercials with him at these construction sites and all. I don't see an archive picture of him with a hard hat on constructing a major office building," said Meek, 43, whose 16-year political career could be dashed by a mysterious newcomer with a bottomless campaign account. "This is someone who got in the race at the last minute, by design so that Floridians would not have the opportunity to really find out who he is and what he's about."

Darryl Paulson, a retired political scientist from the University of South Florida, said Greene's past, and the fortune he made off credit default swaps, could be a problem with voters. "There's so much junk in the trunk."

When a reporter started questioning the Greene campaign about job creation claims, it wasn't long before an apoplectic candidate was on the phone.

"People telling me I didn't create jobs or build a business, it's beyond insulting," sputtered Greene, who before the subprime mortgage implosion made much of his fortune investing in and managing rental buildings.

Asked about that hard hat commercial and his development record, Greene reeled off addresses, square footage, construction firms and building materials. "I can tell you the address right now — 1102 Santa Monica Blvd.," he said, speaking rapidly, impatiently, of the his first development project in Los Angeles at age 29, a four-story retail-office building.

''It was an old junkie motel, a tear down, the Alpha Motor Hotel. … I bought properties, fixed them up and rehabbed them. I rented a sanding machine, learned how to sand floors myself. … I've probably built between 15 and 20" apartments, condos, custom homes, retail and office developments.

His campaign conceded that the hard hat scene was enacted to illustrate his background and is not vintage footage from his work at a construction site.

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No question Greene has been an extraordinary success. The son of a struggling textile machinery salesman in Worcester, Mass., he recounts making more money than all his peers shoveling snow at age 8. One summer in Palm Beach County, Greene responded to a newspaper ad for circus ticket sales and quickly blew away his peers.

By age 18, Greene was placing ads for sales people to work for him. As a student at Johns Hopkins, he spent summers driving across the country selling tickets and hiring dozens of sales people.

"It was taking ads out in the newspaper, traveling from town to town. It was creating jobs. This wasn't Kendrick Meek being handed a job by his mom," Greene said, referring to former U.S. Rep. Carrie Meek, Kendrick's mother.

By the time he graduated from Johns Hopkins, Greene had $100,000 in the bank to pay for Harvard Business School.

At Harvard, Greene continued with the circus business and also caught the real estate bug after buying a three-decker apartment building. By the end of his second year, he owned 18 buildings.

Greene moved to Los Angeles after graduating from Harvard in 1979 and began acquiring commercial property and thousands of apartment buildings, mostly in California. Other business ventures included investing in a junior sportswear apparel company and starting a company that put on shows around the country.

"I knew how to market shows, and we decided there was a demand in small-town America for family entertainment," said Greene, recounting hiring such oldies acts as the New Christy Minstrels and Gary Lewis and the Playboys and the Amazing Kreskin, the mentalist. "We weren't paying them much, but they were thrilled to get the work. No one else was doing it."

Greene's company, California All-Star Productions, was supposed to share money raised with local charities, such as the Jaycees and Kiwanis clubs. But it ran afoul of some attorneys general who accused California All-Stars of doing little for the charities it invoked to sell tickets.

The Attorney General's Office in Wisconsin fined Greene's company $23,000 for allegedly failing to provide tickets to disabled and needy people as promised. The Maine attorney general filed suit against the company for only giving 4 percent of money collected to charities. They were civil complaints, not criminal violations.

"There were maybe three problems out of probably 2,000 shows in 42 states," said Greene, who closed the business in 1986, saying he was concerned about his ability to control the marketing staff.

But that's hardly the only blemish on his business career.

With up to 8,000 properties and at least 81 different companies linked to Greene, court records are loaded with code violations, liens and lawsuits accusing him of everything from slander to fraud, although records show most were settled quickly.

The Better Business Bureau gave one of Greene's companies, Hollywood Realty, an "F" for failing to respond to customer complaints, and director Ron Howard won a $605,000 judgment against him after renting a luxury home that had flooding and other major problems.

Most of the legal cases were either dismissed or settled, and the Greene campaign says such skirmishes are inevitable for someone with as many properties and businesses as he had.

The economic slowdown and real estate collapse in the 1990s nearly sunk Greene, who found himself with $75 million in debt on properties valued at about $60 million. He weathered that crisis and never forgot it.

By 2005, Greene was estimated to be worth nearly $800 million, but he worried that a looming housing collapse could wipe him out just as it nearly did in the 1990s.

He hunted for ways to protect himself and wound up persuading investment houses to let him invest in complicated products called credit default swaps — essentially insurance against a subprime mortgage implosion. For an investment of about $24 million, Greene made at least $500 million, according to the book The Greatest Trade Ever by Gregory Zuckerman.

Sean Snaith, an economist at the University of Central Florida, was asked by the St. Petersburg Times to review Greene's business issues described in this article. He said he saw no red flags as far as egregious or "exceptional patterns of behavior."

Added Snaith: "Any business, from the corner ice cream store to IBM, has problems that may or may not involve legal disputes or legal action. The bigger and more diverse the business the greater the scale and scope of these problems."

Job creator? You bet, Greene says.

"I've created literally thousands of jobs," said Greene, who currently owns about 3,500 apartment units. "I have a big, complex business. I work very hard, and I'm very proud of my accomplishments."

Times staff writer Alex Leary and researcher Caryn Baird contributed to this report. Adam C. Smith can be reached at asmith@sptimes.com.

The billionaire's business: how U.S. Senate candidate Jeff Greene made his money 07/13/10 [Last modified: Wednesday, July 14, 2010 12:20am]

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