Former Drexel Burnham exec sells Palm Beach estate to hedge funder

Seller Frederick W. McCarthy previously pleaded guilty for a role in bribing Connecticut's treasurer to win business

May.May 07, 2019 12:30 PM
1519 North Ocean Way in Palm Beach

1519 North Ocean Way in Palm Beach

Nearly 20 years after being indicted for bribing Connecticut’s state treasurer to win business for his investment firm, Frederick W. McCarthy just sold his Palm Beach waterfront estate for $15 million.

He sold the house at 1519 North Ocean Way for $1,642 per square foot to two Delaware companies that are tied to a Greenwich, Connecticut address, records show. The address is the same as a property tied to Edward and Marian Mule. Edward Mule is the CEO of Greenwich-based Silver Point Capital, a hedge fund with more than $10 billion in assets

McCarthy began his storied career in corporate finance in the 1980s, overseeing the Boston office of Drexel Burnham Lambert, an investment banking firm that went bankrupt in 1990 after it was charged by federal prosecutors with insider trading and manipulating the junk bond market.

The Harvard graduate then started a new investment firm called Triumph Capital. Triumph invested $744 million in 52 companies, earning gross returns of 44 percent on its investments, according to the Hartford Courant.

But trouble began in the late 1990s when the company and McCarthy were charged over $200 million in contracts from Connecticut treasurer Paul Silvester that put state money into Triumph’s investment funds. According to the indictment, Triumph paid bribes to Silvester secretly disguised as consulting fees and campaign contributions to gain the contracts. McCarthy pleaded guilty and was sentenced to over a year in prison.

Yet, McCarthy was able to keep his tony Palm Beach estate. The 9,136-square-foot house, built in 1936, has four bedrooms and 11-and a-half bathrooms and sits on 0.44 acres.

McCarthy purchased the home in 1991 for $4.3 million, just a year after the Drexel Burnham declared bankruptcy. He now oversees his charitable trust, the McCarthy Family Foundation, which donates to charities throughout the world.

Palm Beach is home to a number of wealthy celebrities and buyers, including some with checkered pasts. Robert Matthews, the developer of the embattled EB-5 project the Palm House Hotel, owned a mansion at 101 Casa Bendita that was recently acquired by a lender with an outstanding claim of $26.25 million.

Former newspaper publisher Conrad Black used his Palm Beach estate at 1930 South Ocean Boulevard to secure bail after he was charged with fraud and obstruction of justice in 2005, according to the Palm Beach Daily News.

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