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Nice work if you can get it

[ 72 ] June 11, 2013 |

John Sexton’s game is strong:

According to documents unearthed in a month-long search of public records, NYU Law School has created an array of nonprofits to funnel money into lavish perks for its professors. The money has been used by professors to buy multi-million dollar brownstones and condos in Manhattan and Brooklyn with portions of some loans forgiven over time. In some cases, even the interest charged on the loans has been reimbursed . . .

Ten days ago, the Dean of the NYU School of Law, Richard Revesz, who has served in that post since June 1, 2002, stepped down to head up the Marron Institute on Cities and the Urban Environment, a nonprofit made possible by a $40 million gift from Donald Marron, the former Chairman and CEO for two decades of the Wall Street firm, Paine Webber.

Revesz’ mortgage deals with NYU date all the way back to June 24, 1998 when the NYU School of Law Foundation bestowed on he and his partner, Vicki Been (also a law professor at NYU), a 46.5465 percent interest in a brownstone on West 11th Street in the West Village. The home had been purchased by the Foundation on October 16, 1995 at a cost of $1,450,000. With considerable improvements made by the Foundation, the fair value was placed at $2,664,000 on the date Revesz and Been acquired their interests. The Foundation sold the 46.5465 percent interest to the law professors for $1,240,000 and provided their full purchase price in two mortgage notes. On December 19, 2002, a little over six months after Revesz became Dean of the Law School, the Foundation transferred its 53.45 percent interest in the property to Revesz and Been.

According to documents on file with New York City, large amounts of the interest on the Revesz mortgage loans were not being paid but were, instead, allowed to accrue and be added to principal. On March 30, 2012, Revesz and Been entered a mortgage modification directly with NYU, not the Foundation. The document notes that as of March 30, 2012 there was a combined outstanding principal balance in the amount of $2,180,597 (including capitalized interest) and a second outstanding principal balance of $1,197,661. The deal was renegotiated to reduce the amount of interest and extend the maturity date on the larger balance.

According to NYU’s 2010 federal tax filing with the IRS (the most recent one made public), Revesz owed the University at that time a total of $5,683,652
. It is not known what the amount in excess of the mortgage debt represents.

There’s much, much more in the same vein, including Sexton’s own sweetheart deal, which includes a $1.5 million annual salary package, and which pay him a $2.5 milllion “length of service bonus” in two years. If you’re worried about whether Sexton’s social security payments will cover the co-op fees, don’t: he will also be paid $800,000 per year for life after he retires. (It’s perhaps not purely coincidental that the faculty at NYU Law who are getting the big payoffs –Sexton was the law school’s dean for 14 years before becoming university president — are, like Sexton, closely connected to Wall Street’s regulatory structure, such as it is.)

Anyway, read the whole thing; once you’ve finished throwing up you can cleanse the palate with this amusing juxtaposition. I’ll have more to say about The Lawyer Bubble soon, but for the time being it’s worth noting that uber-Libertarian Richard Epstein (among other things he thinks most of the New Deal is unconstitutional) is now apparently triple-dipping in three federally tax-subsidized ponds: the University of Chicago, where he retains a faculty position, NYU Law School, where Revez paid Hayek only knows how much to reel in yet another prestigious hire, and the Hoover Institution, aka the Taj Mahal of well-heeled right-wing think tanks. No wonder he thinks everything’s just fine in Lawyerland.


Comments (72)

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  1. Gregor Sansa says:

    Time to Occupy his house!

  2. howard says:

    it is clearly a sign of my simple-mindedness, but i cannot for the life of me understand how people who get these kinds of deals can live with themselves.

    • Lee Rudolph says:

      That’s what they need the big houses for, to minimize the risk of running into themselves.

    • Immanuel Kant says:

      Perhaps they are sociopaths.

    • wengler says:

      They have plenty of rooms in which to hide a conscience they may have once had.

    • Inside the Actor's Studio says:

      Jay Sherman: But first, we have a special guest: Rainer Wolfcastle, star of the reprehensible McBain movies.

      Rainer Wolfcastle: Jay, my new film is a mixture of action und comedy. It’s called “McBain: Let’s Get Silly.”

      [Cut to clip from movie showing McBain with a microphone in front of a brick wall]

      Rainer Wolfcastle as McBain: Did you ever notice how men always leave the toilet seat up?


      Rainer Wolfcastle as McBain: That’s the joke.

      Man in audience: You suck, McBain!

      [McBain pulls a machine gun and fires into the audience]

      Rainer Wolfcastle as McBain: Now, my Woody Allen impression: I’m a neurotic nerd who likes to sleep with little girls.

      Man in audience: Hey, that really sucked!

      [McBain pulls the pin on a grenade and tosses it at him]

      Rainer Wolfcastle: [Cut back to Rainer and Jay] The film is just me in front of a brick wall for an hour and a half. It cost $80 million.

      Jay Sherman: [contemptuous] How do you sleep at night?

      Rainer Wolfcastle: On top of a pile of money with many beautiful ladies.

      Jay Sherman: Just asking. Yeesh!

    • Sherm says:

      In their styes with all their backing
      They don’t care what goes on around
      In their eyes there’s something lacking
      What they need’s a damn good whacking

    • Cody says:

      It’s the Capitalist mindset.

      Making money is your existence. Making the most money possible makes you the best version of yourself as possible. No matter how you get that money, the Invisible Hand will appropriate it correctly. If it’s stolen, that is because the people you stole it from didn’t work hard enough to keep it.

      The Invisible Hand sees all and will provide fr you. If you are poor, you simply did not pray enough.

      • sparks says:

        It’s all good as long as the Invisible Hand jerks you off.

      • Painini says:

        Making the most money possible makes you the best version of yourself

        Yep. If you believe in meritocracy, and you want to feel like you have merit, taking everything you can get is a necessary part of maintaining your self-image.

        • howard says:

          i guess it’s just a further example of the simple-mindedness i mentioned above, but while i believe in meritocracy (at least as opposed to aristocracy!) and while i’m pretty well compensated for a guy who sits in a home office most of the time, i have never considered it a manifestation of “merit” that i extract the maximum pennies from my clients to the point where it might lead to someone else being under-compensated as a result.

          i guess, per joe from lowell, my self-image just isn’t socialized enough!

    • joe from Lowell says:

      They’re socialized into it.

      • Kurzleg says:

        Exactly right. They have no problem sleeping at night because never has it been offered that there might be anything remotely wrong with this sort of behavior.

      • Sockie the Sock Puppet says:

        It used to be (or at least seem) that the sharks didn’t get into the non-profits, since there wasn’t any, you know, profit. But in the last half-generation I think there’s a sense that non-profits not only are ripe for good bust-out scams, but that they positively have it coming, being not patr of the free market and all. It’s not just colleges — just about every orchestra and museum and membership society is being run into the ground by folks giving themselves enormous bonuses.

        So the answer to the question of “how do they sleep at night?” is that they think they are doing what’s right, and that the victims have it coming. And at the end of this slow-motion riot, the institutions that took a couple centuries to build up are going to be left in smoking ruin.

        • Malaclypse says:

          It used to be (or at least seem) that the sharks didn’t get into the non-profits, since there wasn’t any, you know, profit.

          Never forget that “non-profit” is a tax status that has nothing whatsoever to do with whether or not an entity has profit.

          • DocAmazing says:

            As someone who workd in health care. let me second this. It’s revolting how many very profitable hospitals and healthcare institutions are nonprofits.

        • ChrisTS says:

          And those who enable them – the Boards – are now all stacked with wealthy schemers.

        • BigHank53 says:

          Where have you been? Do you know how much the chairman of Minnesota Public Radio–owner of Prairie Home Companion–earns? There was a mini-scandal about a decade ago over the inflated salaries at the United Way, and I recall a couple eyebrows being raised at the Red Cross, too, and not just because they told the Dixie Chicks to keep their money.

        • cpinva says:

          And at the end of this slow-motion riot, the institutions that took a couple centuries to build up are going to be left in smoking ruin.

          so what, they’ll just move on to the next one. like the president, they want to look forward, not backward.

    • Anonymous says:

      Simple – they believe they DESERVE it.

    • DOC says:

      It’s simple – they believe they deserve it.

  3. Monday Night Frotteur says:

    G_d, what a grift.

    It feels like the only honest millionaires these days are entertainers. Everybody else is likely part of some grift somewhere, be it anti-competitive agreements, exploiting non-profit tax preference, anti-competitive patent trolling, or etc. I know there are exceptions but geez there are a shitload of rent-seekers with swollen pockets.

    • howard says:

      monday night frotteur, you’ve pretty much said it all: a mutually reinforcing rigged system built on rent-seeking produces these outcomes.

    • Murc says:

      It feels like the only honest millionaires these days are entertainers.

      A million dollars ain’t what it used to be.

      My father is a doctor, and is friends with other upper-class types (other doctors, lawyers, etc.) Being lower-upper-class, they generally work for their livings, and many of them, if they were to completely liquidate, would probably have assets above a million dollars.

      This is in no way meant as a defense of the rentier class, just something to think about.

      • Hanspeter says:

        There’s a difference between having $1m in assets vs earning $1m/yr. These bozos are of the latter group and (I think) MNF’s characterization was that the only likely subset of decent people in the $1m/yr set are entertainers.

        • Warren Terra says:

          It’s funny how when I was a kid in the Reagan era a “millionaire” was someone who had a million bucks, and nowadays it seems to mean someone who earns a million bucks (or at least receives it, annually). I can’t remember any transition between the two definitions, it just naturally happened.

          • Sherm says:

            That’s probably attributable to the asset inflation which started in the 80’s and made “millionaires” out of middle class people who had bought and held valuable stocks and who had purchased homes on the cheap in desirable areas, but still had to work for a living.

          • howard says:

            i still believe in a distinction between high net-worth individuals and high-income individuals: while they overlap, they are not 100% congruent groups.

          • Murc says:

            It’s funny how when I was a kid in the Reagan era a “millionaire” was someone who had a million bucks, and nowadays it seems to mean someone who earns a million bucks

            Warren, as is his wont, has expressed the point I was trying to make far more clearly than I did.

            I suspect it’s because millionaire is a convenient shorthand for rich dude, but because just having a million bucks doesn’t necessarily mean you’re set for life these days the way it would have a hundred years ago, the definition shifted a bit.

    • R. Porrofatto says:

      It’s going to take a whole lotta student loans to pay the kind of rents they seek and find, too.

    • Jay B. says:

      It feels like the only honest millionaires these days are entertainers

      Don’t forget lottery winners!

    • liberal says:

      Everybody else is likely part of some grift somewhere…

      Biggest grift is land.

  4. wengler says:

    I managed to finally watch Inside Job a week ago, and while most of what it contained wasn’t revelatory for someone paying attention, I think it did a very good job at showing how compromised academics anywhere close to Wall Street and the financial sector have become.

    They only thing they produce is bullshit under the veneer of expertise that even a grad student can disprove in an afternoon. Their jobs are not to produce anything of value, but to grease the wheels of Washington so the big theft can continue. In Law School it’s the stealing of billions of dollars to confer degrees of diminishing value. In finance it is the theft of all productive value.

  5. TR Donoghue says:

    According to the NYU School of Law’s website Professor Been’s areas of research include affordable housing, predatory lending, exaction and takings.

    Her research is no doubt benefited by her enormous personal experience with the travails of property ownership and property rights.

  6. joe from Lowell says:

    I read about this stuff, and then I think about the people doing God’s work for peanuts at community colleges, and I get all stabby.

  7. Jonestown says:

    What else is a law school supposed to do with the zillions they’re raking in? You can only build so many classrooms.

    I didn’t follow the goings on at the Univ of Texas law school, but wasn’t it similar? — where the dean resigned after giving himself a forgivable loan (or loans)….

    Surely this stuff is happening at a lot of law schools. Who better to figure out the best scams?

  8. 501(c)(3) grifting... says:

    NYU has been for years a patronage machine operating with the veneer of social purpose. There is no better way to induce smart people into the dark side than dangling a safe, secure spot in Manhattan for them and their family. Hurricane Sandy made the island redoubt somewhat less secure, but hey, where do you want to be when the 99% finally figure things out?

    • BigHank53 says:

      Not on a $#%^&ing island with only a three-day supply of food, let me tell you.

      • 501(c)(3) grifting... says:

        Haven’t you seen any recent disaster films?

        You only have to huddle on the island for like 24 hours or so before the helicopters pick you up and take you to a secure aircraft carrier offshore.

        Of course, Sexton et al underestimate the ability of the little people to fight their way to the rooftops a la the Saigon Embassy…

        • BigHank53 says:

          Do you know what it costs to keep an aircraft carrier running and staffed? Not even the MOTU could keep it up for very long–you absolutely need the resources of a nation-state to pull off shit like that. Our 1% has been coasting on borrowed infrastructure for decades, and they. have. no. clue.

          And why fight your way to the rooftop? The presence of armed guards in the lobby just indicates that it’s another building to put on the burn list. Jump, you fuckers.

          • Malaclypse says:

            Do you know what it costs to keep an aircraft carrier running and staffed? Not even the MOTU could keep it up for very long

            Are you saying Snow Crash lacked realism? Uncle Enzo’s gonna want a word with you…

    • R. Porrofatto says:

      when the 99% finally figure things out

      i.e., maybe after the Rapture happens, or as likely to.

    • mch says:

      You got it. On NYU’s depredations, see Jeremiah Moss.

  9. 501(c)(3) grifting... says:

    The beast is just a big circle-jerk…

  10. GWT says:

    And NYU students underwrite this atrocity with borrowed money which they slave for years to pay back. It’s one thing to pay for your own education. It’s quite another to pay for an anointed professor’s brownstone.

  11. HDL says:

    Sexton essentially recruited NYU into the top five of law schools.

  12. Harold says:

    “From “Wall Street on Parade”: “On the same day that the NYU School of Law Recruitment Assistance Corporation registered a $3,000,000 buyback of a 49 percent interest by Pildes in the West 10 Street brownstone, valuing the full property at over $6,000,000, it flipped the property in an outright sale to a D’Andrea Benedetto, who is associated with RPM Music in Manhattan according to the public record, for $4.7 million. Citimortgage financed that deal, providing Benedetto with a 5-year fixed rate of 4.25 percent, adjustable thereafter. It is not known if Benedetto is related to anyone at NYU. Further clarification on the deal was not forthcoming from queries to three different members of the media relations team at NYU.
    Don’t know if it is the same person but According to wikipedia, D’Andrea Benedetto is the given name of singer Tony Bennett’s son and manager, who also works at Sony.

  13. cpinva says:

    what a scam. but why not? they know nothing will ever happen to them, other than, at worst, losing their comfy job at NYU. they’ll just scam onto another one, at some other school, or other non-profit, with a hefty endowment, and their buds on the board. they’ll never face any kind of sanctions, because that would be “looking backwards, not forwards”. this article will cause a brief ripple in “the force”, and then…………..nothing.

  14. dybbuk says:

    Forgivable loans at Texas, and forgivable mortgages at NYU. I’ve got to admit to a grudging appreciation for the success of law school deans in finding super-rich suckers to fund these phony-baloney educational foundations. Or, at least, their success in taking control of the foundations without any clear objection from the donors.

    How about a slush fund to reward, say, public defenders with free pastrami sandwiches every week? Forgivable lunch.

  15. AT says:

    This is par for the course for NYU – it is their entire business model. No other school in Manhattan can afford to pay professors enough to keep them here. A professor’s salary is worth just so much more outside of the city.

    So NYU has managed to overcome this by taking over as much real estate downtown as possible back when the real estate market was really weak (think 20-30 years ago) and then giving them free housing, or apparently even giving the housing away. If you walk around washington square park, you’ll see all those beautiful townhouses have placards, that’s because they’re attached to professorships.

    I’ve lived in NYC my whole life and this is just established knowledge – everyone in NYC knows NYU does this.

  16. HDL says:

    Lots of schools provide, or have provided, subsidized faculty housing and mortgage assistance to faculty members, through foundations and other means. See, e.g., New York  is one of the most expensive cities in the world. Assisting  people there will take lots of money. Take a look at the real estate section of The NY Times and see how much a three bedroom apartment would cost.  The great thing is if they get someone they want, the faculty member will be less inclined to leave if they have bought a home and established themselves there.

    Columbia built a whole school in order to attract faculty members. People were turning them down because of fear about the quality of public schools and the  cost of private schools–at the time kindergarten was about 25k per year. It is much higher now. These strategies have worked, as both schools are ranked in the top five law schools and their graduates do well.

  17. Jon Margolis says:

    It should be “bestowed on HIM and his partner,” fer cry eye.

  18. […] unmerited reputation, and relatedly, his compensation, which among other things now features a lifetime annuity of $800,000 per year once he chooses to retire. All of this, of course, is heavily subsidized by […]

  19. […] has written before about John Sexton, the president of NYU and master of looting student/taxpayer money for the […]

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