It was in the spring of 2008, shortly after their marriage, when the hedge-fund manager Buddy Fletcher and his wife, Ellen Pao, a Silicon Valley venture capitalist, bought their first home in San Francisco. Situated on the 23rd floor of the exclusive St. Regis Residence, the $3.85 million, three-bedroom apartment seemed to float above the city, with its walls of windows—set above built-in benches of honed cream limestone—offering spectacular views of the Bay Bridge. At nearly 2,600 square feet, it had a vast chef’s kitchen, but also room-service dining, along with butler and concierge service—luxuries that attested to the couple’s wealth and their success.
Alphonse “Buddy” Fletcher was well-known on Wall Street. His hedge-fund company, Fletcher Asset Management—with a reported $500 million in assets—may not have been the biggest, but its results over the years were reported to be staggeringly impressive, at times as high as 350 percent. In 2009, when Fletcher was 44 years old, Forbes named him one of the country’s richest African Americans, estimating his net worth at $150 million. And he had been generous with his wealth. He donated millions of dollars to cultural institutions—including the Metropolitan Museum of Art, schools, libraries—and to civil-rights causes, including a headline-grabbing pledge of $50 million for fellowships whose recipients included Anita Hill and Elizabeth Alexander, the 2009 inaugural poet. At Harvard, his alma mater, a $4.5 million gift finances the Alphonse Fletcher University Professor, which is held by the prominent critic and scholar Henry Louis “Skip” Gates Jr.
Hers was perhaps a quieter success. At 38, Ellen Pao was a junior partner at Kleiner Perkins Caufield & Byers—if no longer the leading venture-capital firm in the Silicon Valley, then certainly the most venerable. A former corporate attorney who had worked at several tech companies, including Microsoft, she did not attract headlines, as Fletcher had, but she nevertheless had a foothold in the higher circles of the business world. The daughter of Chinese immigrants, Pao’s résumé was as gold-plated as Fletcher’s. A Princeton graduate, she also had Harvard law and business degrees. Fletcher and Pao had married just six months before they bought the apartment. Their marriage, barely four months after they met, had surprised some friends, in large part because, for several years, Fletcher had been living with his longtime boyfriend, Hobart “Bo” Fowlkes Jr. But whatever had brought them together, they resonated as a couple. With their wealth and success, theirs was a powerful American Dream narrative—a story of obstacles overcome, and brilliance, hard work, intense drive, and ambition rewarded.
And then everything seemed to fall apart. During the last two years, Fletcher and Pao have become embroiled in bitter and sensational conflicts that have been the talk of Wall Street and Silicon Valley. In February 2011, to the shock and titillation of New York society, Fletcher sued the co-op board of the Dakota, the iconic 129-year-old apartment building on Manhattan’s Upper West Side whose famous residents have included Yoko Ono, Lauren Bacall, and Leonard Bernstein, and where John Lennon was shot to death in 1980. Furious when the Dakota’s board denied his application to buy his fourth apartment in the building, a $5.7 million two-bedroom, Fletcher sued the board for racial discrimination. In his complaint, Fletcher painted the Dakota, one of the city’s most exclusive co-ops, as a hive of bigotry, where victims were said to include the singer Roberta Flack and the actor Antonio Banderas.
A little more than a year later, in May 2012, Ellen Pao dropped her own bombshell lawsuit, alleging that she had been the victim of sexual discrimination by Kleiner Perkins. Her exhaustively detailed, sometimes lurid allegations roiled Silicon Valley. There was inter-office sex, steamy advances from senior partners, client dinners to which only men were invited, because, according to Pao, one partner told her women “kill the buzz.” Equally shocking to many was Pao’s claim that she had complained repeatedly to Kleiner’s management, including to John Doerr, a senior partner and the much-respected dean of the Valley, and that she had been ignored.
The response to both lawsuits was stinging. As the Dakota board would tell the court, Fletcher’s application had been rejected because the co-op’s finance committee—a group of high-powered financiers and lawyers—had concluded that Fletcher could not afford the apartment. Far from being a successful hedge fund, Fletcher’s F.A.M., according to the Dakota, was overstating its assets and losing money. But that was only the beginning. The Dakota lawsuit—which is winding its way to trial in New York’s State Supreme Court—set in motion a series of events that have put Fletcher on the ropes financially. Today, F.A.M. is being sued by three Louisiana public pension funds trying to recover $145 million; his main hedge fund filed for bankruptcy; others were ordered liquidated by a Cayman Islands judge; and aspects of his business are under investigation by the S.E.C. and the F.B.I. Kleiner Perkins denied that Ellen Pao had been discriminated against—firing back in a high-stakes battle in which a settlement could reach as high as $100 million. It also said that, despite her claims to the contrary, Pao had never, during the five years in which she alleged she had been harassed and discriminated against, complained to anyone at the firm. All of which only intensified the ongoing mystery of what really happened to Ellen Pao and Buddy Fletcher.
Born in New London, Connecticut, in 1965, Buddy Fletcher was the oldest of Alphonse and Bettye Fletcher’s three sons. His father, who had come north from Louisiana after enlisting with the Navy, worked as a technician at the General Dynamics submarine plant in nearby Groton. His mother was a teacher, a principal, and eventually an administrator in the public-school system. Particularly gifted in math—he created his first computer program, which predicted the outcome of local dog races, when he was 11—Fletcher graduated from Waterford High School at the top of his class. He entered Harvard in 1983, where he majored in applied mathematics.
His classmates remember him as warm and gregarious, someone for whom “it was really important to be liked,” says one. While other African American students at Harvard often felt sidelined, Fletcher, friends say, worked hard to fit in. Hugely popular, he was a member of the exclusive, all-male “finals club,” Phoenix S.K., and voted first marshal by his senior class. One friend recalls how out of place Fletcher felt when he first arrived at Harvard: “There were all these white kids from prep schools who knew what was going on, and he didn’t. He’d gone to public schools. It was like, right away, his first trip home when he told his parents: prep schools” for his brothers, Todd and Geoffrey—both of whom eventually also went to Harvard. Todd, now a composer, was quickly sent to Andover, and Geoffrey, a screenwriter, who won the 2010 adapted-screenplay Oscar for Precious, was shipped off to Choate. But if there was the easygoing, fun, friend to all Buddy Fletcher, there was also the straight-backed, perfectly tailored, reserved Fletcher—cautious and precisely spoken, in sentences “from which all traces of slang or irony have been excised,” as The New Yorker wrote later. At a time when Harvard would not permit R.O.T.C. on its campus, Fletcher joined the Air Force R.O.T.C. at M.I.T. On a largely liberal campus, he was a staunch Reagan Republican. He was “a complicated guy,” recalls his former classmate Michael Meade. “There were a lot of competing forces there.”
Fletcher, who did not respond to requests for comment, graduated from Harvard in 1987. He went to work on Wall Street as an equities trader at Bear Stearns. Two years later he was lured to Kidder Peabody by a huge compensation package. Later, Fletcher claimed he was offered a base salary of $100,000 and told, in a phone conversation, that he would get a bonus of 20–25 percent of his trading profits. There is no question that Fletcher did extremely well at Kidder. By 1990, when he was only 24, Fletcher was one of the highest paid employees at the investment bank. That year his trades generated $25.5 million in profits, which he said should have entitled him to a bonus of at least $5 million. But late in the year, Kidder told him they would pay him only 10 percent of his profits. The firm was struggling; it lost $24 million in 1990—and it denied it ever offered him a fixed percentage of his trading profits.
Fletcher was furious. He resigned and, several months later, sued Kidder for racial discrimination. In his complaint, which demanded nearly $30 million in damages, he would say that he had been told that his promised $5–6 million bonus “was too much money to pay a young black man.” Eventually, the New York Stock Exchange arbitration panel ordered Kidder to pay Fletcher another $1.3 million in bonus, but it dismissed his claim of racial discrimination. Kidder was sold to PaineWebber in 1994, but among some of the firm’s former executives, the bitterness at Fletcher still lingers. “He thought he was the king of the world, and that people around him weren’t smart enough to understand what he was doing,” says one, who also remembers that throughout the negotiations Fletcher “never lost his temper.” For Fletcher, this seems to have been a point of pride. As he told The New Yorker in 1996: “Oh, I was very good at not being furious,” he said, smiling. “Actually, I can’t stand confrontation. I’d sooner walk away.”
By 1996, Fletcher Asset Management had been in business for nearly five years. Headquartered on the 48th floor of the General Motors building, its offices were lavish, with spectacular views of the New York skyline, a private chef on staff, and a personal dining room with a full-time waitress. Fletcher, who had bought his first apartment in the Dakota in 1992, would be driven to work in what the press would describe as his “string of chauffeured cars,” which included a Bentley, a Jaguar, and a Mercedes. When Fletcher moved F.A.M.’s offices to a townhouse on East 66th Street, he had it completely renovated and decorated by his boyfriend, Bo Fowlkes, a writer and photographer whom Fletcher had met in 1993. Fletcher bought a $4.6 million home in Montauk. He also had a $5.9 million, 17-room mansion in Cornwall, Connecticut, which was referred to as “the castle,” and he would eventually own close to 1,100 acres of surrounding forestland. One business publication referred to his cars and homes as his “playboy trappings,” but friends say his lavish lifestyle had a serious purpose.
“It was very important to him, at that age, because he was so young, and successful, and black. It was hard for him to find people to invest with him, or to do business with him, because they didn’t take him seriously,” says Fowlkes. “I think that a lot of these outward trappings of wealth, like a fancy car with a driver, and a fancy address, were ways of saying, Pay attention to me. I’m for real. I can help you.” And there were other reasons for the car and driver; as he would tell The New Yorker, it was easier than standing on a New York street corner and trying to get a cab to stop for a black man. Many just drove on by. “And not just when Buddy was hailing them,” recalls Fowlkes. “There were a few times when we were together and I would flag down the cab. It would stop, and then Buddy would approach, and it would drive off—with my hand still on the door.”
As difficult as it had been for Fletcher, by 2001, F.A.M. was reporting 10 years of unbroken profits. The fund was lionized in the business press for its “triple-digit returns,” generated by “math wizards,” using “complex computer programs” to do an “arcane form of stock trading timed to dividend payouts.” Who his investors were was not always clear. But Fletcher told one interviewer in the 90s that he didn’t just accept any investor; they had to be “screened.” F.A.M., he said, was only looking for “supportive investors.” The same caution seemed to hold with whom he hired. For years, his brother Todd served as head of investor relations; his mother ran his philanthropy program; his boyfriend, Fowlkes, ran the firm’s marketing and conference programs. F.A.M. was also staffed with several of Fletcher’s friends from Harvard.
There were conflicts; several friends were fired, including Michael Meade, who had also worked at Kidder with Fletcher. In 1995, Meade sued Fletcher, claiming that Fletcher had reneged on their deal to split F.A.M.’s profits. The lawsuit was sealed by the court, but according to a 1995 A.P. report before that happened, Meade alleged that, while Fletcher had paid himself a $1.65 million bonus in 1994, he had refused to pay one to Meade and had also not paid investors a dividend. Meade also alleged that Fletcher had fired him after Meade had rebuffed Fletcher’s sexual advances. Fletcher denied the allegations to the A.P., and eventually the two men came to a confidential settlement. Meade will not comment on the case today, except to say that after several years of not speaking to each other, he and Fletcher resumed their friendship.
Fletcher was not easy to work for. He could fly into rages. He was extremely critical of others, and of himself. “Buddy could not fail,” one friend says. “He had to be the best; not as good as other people, or better—the best.” “I do think Mom and Dad, especially Mom, have a lot to do with what has gone on in the last few years,” says one friend. Both Fletcher’s parents encouraged their sons to achieve, but their mother, says a friend, was “intense.” Fletcher’s father, who died in 1990, shortly before the blowup at Kidder Peabody, was the easier parent. Bettye Fletcher, another friend says, “was just one of those mothers whose children were never allowed to fail”; she pushed her boys, who often seemed “terrified of displeasing her.” Some friends believe that Buddy Fletcher was not ever as keen on his Wall Street career as his mother was. He loved the outdoors, and animals, and teaching—“Buddy was never happier than when he was explaining math to children,” recalls a friend. But his mother enjoyed the perks of wealth, and her son’s prominence. “When she speaks about Buddy’s wealth, she gives the impression it’s a family fortune,” says one friend. A handsome and elegant woman, Dr. Fletcher—as she insisted on being referred to since she completed her Ph.D. in education at Columbia—is, even in their adulthood, a very strong presence in her sons’ lives, “always in the background, pulling the strings, and pushing the buttons,” says a friend. “She did an awesome job, raising three incredibly successful boys, but I think there is a bit of collateral damage.”
If there was, it didn’t show in public. In photographs, Buddy Fletcher was almost always smiling, in his bespoke suits and bow ties. As his philanthropy increased, he was more and more often seen at charity black ties, and award dinners. In 2004, he made a splash with his pledge to donate $50 million to people working to promote civil rights, in honor of the 50th anniversary of the Supreme Court’s landmark Brown vs. Board of Education decision.
By then his Dakota apartment had become what The New York Times would call “a salon for wealthy and famous guests”—including $50,000 “Fletcher Fellow” recipients Anita Hill and Anna Deavere Smith. They were popular soirées, often attended by their neighbors in the Dakota, and arranged to perfection by Fowlkes. On a particularly good night Fletcher would lead his guests in singing boisterous renditions of “Purple Rain” or “YMCA” while he accompanied them on his piano.
But his private life was not so happy. As he become more and more successful, he grew increasingly imperious and difficult to deal with—more “Wall Street-y entitled” in his manner. “When you have people around you who are afraid to challenge you, and they depend on you for their living and have nothing to say to you except yes, yes, yes, yes, you can lose sight of limits to your behavior, how you treat people,” says one friend. In 2003, and then again in 2006, two men who worked as caretakers at his Cornwall, Connecticut, home accused him of sexually harassing them. Fletcher denied the allegations, although both men reportedly won confidential settlements.
By the end of 2004, Fletcher’s 12-year relationship with Fowlkes was in shambles. Fowlkes went to Rome. When he returned a year later, the relationship was over, although they would remain friends. “Bo was wonderful, like this character from Henry James,” says one friend. He was warm and supportive, “a caretaker personality,” who had arranged virtually every detail of Buddy Fletcher’s life.
Buddy Fletcher met Ellen Pao in Aspen, Colorado, nearly two years after the breakup with Fowlkes, in August 2007. Fletcher and Pao had both been awarded the Aspen Institute’s prestigious Henry Crown Fellowships, and met at the institute’s weeklong retreat. As some friends saw it, they had a lot in common.
Pao had grown up in New Jersey, one of three daughters of Young-Ping and Tsyh-Wen Pao. Her father was a mathematics professor at New York University. He had died when Ellen was in high school, and it was her mother, an engineer, who had supported the family, sending all three of her three daughters to Ivy League schools. At Princeton, Pao had majored in engineering, with a certificate from the Woodrow Wilson School of Public and International Affairs. She had also been a managing editor at the Daily Princetonian. Most people who worked on the Princetonian “pretty much bagged their other classes,” recalls one alumni. “To do engineering and the Princetonian is hard-core.” After Princeton, Pao went to Harvard Law School, worked at the law firm of Cravath Swaine & Moore, and then went back to Harvard for business school.
After stints at several tech companies, including Microsoft, BEA Systems, and Tellme Networks, she had started working at Kleiner Perkins in 2005, as John Doerr’s chief of staff. It was a prestigious position within a prestigious firm. As his chief of staff, Pao worked very closely with Doerr. “He was her mentor,” says a friend. And he trusted her with everything from writing his speeches and articles to his correspondence. He was said to be very fond of her, even if other partners were not. Indeed, it was Doerr who had recommended her as a Crown Fellow.
Quiet, extremely serious, Pao also struck some of Fletcher’s friends as “not very warm,” “really intense,” and “an achievement machine.” But those were among the qualities that Buddy “really dug about Ellen,” says one. They had hit it off immediately. As Fowlkes recalls, not long after their meeting in Aspen, “Buddy and I had dinner one night and he told me, ‘There is this girl I really like,’ and I said, ‘Go for it.’” Like many of Fletcher’s close friends, Fowlkes wasn’t surprised that his former boyfriend had become involved with a woman. At least as far as they knew, he had dated only women at Harvard. As for Pao, who declined to comment for this article, she had been married briefly to her Harvard Business School boyfriend, Roger Kuo, now a San Francisco finance executive. According to friends, she very much wanted to have children, as did Fletcher.
Fletcher and Pao were married in San Francisco in December 2007, four months after they met. That spring, they bought the $3.85 million condo in the San Francisco St. Regis and Fletcher began spending more time on the West Coast. In July 2008, their daughter, Matilda Pao Fletcher, was born. One of Pao’s first calls was to Bo Fowlkes to ask him to be the child’s godfather. Touched, Fowlkes accepted. “Ellen could not have been nicer than she’s been to me,” he says.
According to Pao, the trouble at Kleiner Perkins had started on a business trip to Germany in February 2006, almost two years before she met Fletcher. While in Germany, Pao alleges that Ajit Nazre, a married co-worker, who at the time was not senior to her, had made “inappropriate sexual approaches,” which she had “rebuffed.” But Nazre had refused to take no for an answer, she claimed. On their return to California, he had continued to pressure Pao for sex. He “falsely told her that his wife had left him” and “engaged in offensive, obstructionist, and difficult behavior.” At some point, Pao “succumbed” to Nazre’s “insistence on sexual relations.” In her lawsuit, she says this happened “on two or three occasions,” before she ended their relationship in October. Which is when Nazre, who has since left the firm, began to “retaliate” against her. He excluded her from business meetings, removed her from e-mail discussions, and undermined her with colleagues and investment partners—which he would continue to do for “more than five years.” According to Pao’s lawsuit, she complained repeatedly to top Kleiner partners over those years, and they retaliated against her because of her complaints—denying her promotions and lucrative board seats, and, along with other women at the firm, giving her a smaller share of profits than were given to men.
Her first complaint, she says, was made about eight months after she ended her relationship with Nazre. In May 2007, after hearing that several administrative assistants had been “harassed or discriminated against” by unnamed Kleiner partners, Pao says she alerted Kleiner’s management. An investigator was hired, but when her issues with Nazre were not addressed, she says she complained to two of Kleiner’s top partners, Ted Schlein and Ray Lane, and to Juliet de Baubigny, a senior partner in charge of human resources. When she got no response, she says she finally complained to John Doerr—not only about Nazre but also about “inappropriate” behavior by Randy Komisar, a senior partner.
In an eye-popping account, Pao says that on Valentine’s Day, in 2007, Komisar gave her Book of Longing, by the Canadian musician, poet, and novelist Leonard Cohen. Pao describes the work as containing “many sexual drawings and poems with strong sexual content”—which is true. Critics have called it “profound,” as Kleiner noted in court filings, but also “steamy.” To wit: “You came to me this morning/ And you handled me like meat/ You’d have to be a man to know/ How good that feels how sweet.’’ According to Pao, Komisar followed this up by asking her out to a Saturday-night dinner, telling her “that his wife would be out of town.”
Doerr’s reaction, according to Pao, was to have another senior partner deal with her complaint. If Pao is to be believed, the conversation was deeply bizarre: instead of taking the complaints about Ajit Nazre’s harassment seriously, she says this man encouraged her to marry Nazre. But Kleiner Perkins says that this conversation never occurred. The first and last time that Pao ever mentioned Ajit Nazre, Kleiner says, was shortly after she had broken up with him, and then it was to report that she’d had a relationship with him, and it was over.
As to Komisar and Book of Longing—which for many women would rank close to the top of the creepy-boss gift list—Kleiner says that Komisar’s wife bought it for Pao. The reason: Pao had given Komisar a Buddha statue as a holiday gift, and he felt obliged to reciprocate, apparently on Valentine’s Day. Why that book? According to the firm, Komisar is a Buddhist; he and Pao had discussed Buddhism; Cohen had written the book after a five-year stint at a Buddhist monastery. And John Doerr’s reaction to Pao’s account of Komisar’s alleged steamy come-on? Kleiner Perkins says that Pao never mentioned it to him.
In January 2008, shortly after Pao and Fletcher married, Ajit Nazre was promoted to senior partner—which now made him Pao’s superior. According to Pao, the harassment by Nazre now escalated. She says that John Doerr told her it was because she was “happy in her recent marriage,” but that he did nothing to help her. Instead, during the next three years, her lawsuit claims that Kleiner’s top management retaliated against her for complaining. They told her to move her office to a “back annex,” which she refused to do. They asked her to move to the China office, and she again refused. They withheld her 2008 performance review. And then, while she was out on maternity leave, they named Randy Komisar to the board of RPX, a patent-risk-management company. It was a coveted position she believed should have gone to her, because it was one of the start-ups she’d been nurturing.
It was in April 2010 when Buddy Fletcher asked the Dakota to approve his purchase of Apartment 50. A sprawling two-bedroom, with Central Park views, it adjoined his own 2,600-square-foot three-bedroom. His daughter, Matilda, was almost two years old by then, and he said he wanted to combine the two apartments to make room for his growing family. He asked the board for “a quick approval” of his bid. In his application, he offered to liquidate investments in order to pay for the entire $5.7 million transaction in cash. He also offered to pay another $400,000 in cash to cover two years’ worth of maintenance on Apartment 50 and his other properties in the building, which included three storage rooms, an apartment he used for staff, and his mother’s apartment, which was once Leonard Bernstein’s studio.
Fletcher had not expected to have any problems; he not only had lived in the Dakota for 17 years and paid his maintenance promptly, he had been elected to the board eight times and twice served as its president. But on April 28, the Dakota’s finance committee rejected his application—according to the minutes of the meeting, because of “the risk of the applicant’s inability to meet his future financial obligations.” A week later the full Dakota board ratified that decision.
Fletcher was outraged. This was clear in the bitterness of the lawsuit he would file several months later. Bristling with fury and indignation, it was a catalogue of racial grievances, going back to the day he bought his first apartment at the Dakota in 1992, when he was 26. Ever since that fall, when the board “with great reluctance” approved his application to buy a first-floor one-bedroom, he said in his complaint that he been treated “differently from and less favorably than white shareholders and residents of the Dakota.” In 1993, when the board approved his purchase of Apartment 52, it had forced him to sell his one-bedroom, even though white residents were allowed to own multiple apartments. The Dakota board said its policy prohibited shareholders from owning nonadjacent apartments with kitchens partly because John Lennon and Yoko Ono had owned so many apartments that residents had gotten upset.
But Fletcher said it was a “harsh” condition imposed only on him. According to Fletcher, it was referred to “mockingly” by Dakota board members as “the Buddy rule,” and it had been used against him again in 2002, when he tried to buy Leonard Bernstein’s $1.06 million studio for his mother. The Dakota board would say that they had bent over backward in allowing him to buy it, with the proviso that only his mother be allowed to live there—again because of the rule against nonadjacent apartments with kitchens. Fletcher, however, claimed that even though he and his mother were both board members, his relatives “did not feel comfortable staying overnight in the Dakota.”
And, according to Fletcher, he wasn’t the only one who was discriminated against. The racism at the Dakota was so rampant that, in 2005, when Melanie Griffith and Antonio Banderas applied to buy a first-floor apartment, they were reportedly turned down because Banderas was Hispanic. Fletcher, who was on the Dakota’s board then, alleged that fellow board members made jokes about Banderas’s “desire to have a first-floor apartment so that he could purchase drugs from people on the street.” Banderas did not respond to requests for comment and the Dakota denied this allegation, saying that it had been “generally wary” of celebrity applicants ever since John Lennon was murdered, in 1980, at the Dakota’s front entrance.
Fletcher was also on the board when Roberta Flack, “the only other African American shareholder” at the Dakota, was allegedly mistreated. The board, he said, rejected the singer’s requests for “much-needed” renovations to her apartment, forcing her to endure “the humiliation” of having to make numerous requests to replace her bathtub. According to the board, Flack, who declined to comment, had wanted to install a whirlpool tub, which is generally not permitted in older New York co-ops with their aging pipes. When she resubmitted her application minus the whirlpool, it was approved.
In Fletcher’s account, however, he was the one who resolved Flack’s plumbing problem. Elected president of the board for the first time in 2007, he claims he overheard other board members “whispering and snickering” about Flack’s bathroom applications. He says he put a stop to it—and to other discriminatory behavior. As Fletcher would say in his lawsuit, “this is a case about ‘pay back.’” Despite his wealth and prominence, he said that he had been denied a fourth apartment in the Dakota not because of any problems with his finances, but because of the Dakota board’s “unlawful scheme to retaliate against Fletcher for having the temerity to stick up for the rights of others.”
In its blistering response, the Dakota would say that Fletcher was turned down entirely for financial reasons. His “all-cash” offer was “illusory” and would have “aggravated the perilous illiquidity of his financial condition,” according to the board’s then-president, Bruce Barnes, a private investor who sold his Dakota apartment in January for $29.6 million. The co-op board alleged that F.A.M. had lost money in 2008 and 2009. At the same time, it said, Fletcher was withdrawing money from his company in the form of dividends “to fund personal expenses”—to the tune of $6.4 million in 2008 and $5.3 million in 2009—essentially draining its capital.
Among the many issues the board raised, there was one that might have been an immediate deal-killer even for a co-op board less sophisticated than the Dakota’s. And a possible explanation for why the board’s finance committee turned his application down so quickly—in less than a week. As Barnes noted, he discovered shortly after Fletcher first filed his application that “Duhallow Financial Services,” listed as the independent auditor of Fletcher’s finances, was in fact located in a residential neighborhood in the Bronx, staffed by two former Fletcher employees and run by Denis Kiely, Fletcher’s attorney. In the months that followed, Fletcher tried to get the board to reconsider, but after October 2010, he cut off communications.
In August 2010 Ellen Pao received a lukewarm annual performance review from Kleiner’s partners. It noted her problems with other partners, and urged her to focus more on her interpersonal skills. She claimed the review was “spearheaded” by Randy Komisar, the partner who had given her Book of Longing and snared the RPX board seat. According to Kleiner, Pao had specifically asked to have Komisar on her job-review team.
Whoever is right, by December 2010, Pao had serious problems. According to Pao, members of RPX’s board had complained to her about Komisar. She, in turn, relayed those complaints to other top Kleiner partners. If she had hoped this would get her the seat on RPX’s board she had so wanted, she was wrong. In January 2011, she was removed from the RPX relationship completely.
“How totally humiliating,” says one high-ranking woman in Silicon Valley, describing it as a professional slap that would have made anyone angry. Within months, RPX would go public, generating not only millions in profits for Kleiner but also recognition for the Kleiner team that worked with the company. Which Pao missed out on. For Kleiner, Pao’s power play against a senior partner appears to have been an example of her problems as a team player. These are referred to in the stinging June 2011 review of her performance that Kleiner submitted to the court, in which Pao was described as “passive,” a partner who had a “sense of entitlement,” who was “territorial,” and was not trusted by others.
But in her lawsuit, Pao alleged that these reviews were part of Kleiner’s retaliation against her for complaining about its discrimination against women. In her view, she was removed from the RPX team “because of her gender.”
Fletcher filed his lawsuit against the Dakota in February 2011, a month after Pao was removed from the RPX account. Friends warned him not to do it. In New York, co-op boards are kingdoms unto themselves—a powerful city subculture, answerable to almost no one—that have terrorized and humiliated people far wealthier than Fletcher. Few of them have ever dared to sue. “I said: Don’t. Do. This. Loudly,” says one friend of Fletcher’s. “I was just like, ‘I think this could be really bad, because the Dakota is going to totally come back at you,’” says another friend. “He seemed very sure. And it’s hard to question somebody who seems so completely convinced they are right.” The blowback was intense.
There was the release of his financial documents, including his banks statements and Social Security number, which had been dumped into the court record, and sent to the press, by the Dakota’s board, before a judge ordered the media to destroy them. There was an explosion of media stories about his personal life and finances. The stress of the Dakota fight would get so extreme that, according to Fletcher, he got shingles. Close to tears, Fletcher told the Times in February 2011 that the Dakota’s board members were trying to “defame the things I’m trying to do in the world with my success.”
Five months later, The Wall Street Journal published a devastating article. Although F.A.M. reported $500 million in assets, the newspaper alleged that the company’s market investments were less than half that amount, barely $200 million. Basing its conclusions on information gleaned from more than a thousand pages of F.A.M. documents, the Journal said that F.A.M. appeared to have been double counting some of its assets. As the newspaper noted, more than half of its investments were held by three Louisiana public employee pension funds. They had invested $100 million with F.A.M. in 2008. In March 2011, two of the funds had tried to redeem $45 million. Instead of cash, F.A.M. had given them an I.O.U., claiming that their money was invested in assets that weren’t liquid at the time. In response, all three pension funds had asked for their entire investment to be returned. In January 2012, after negotiations with Fletcher broke down, the Louisiana funds petitioned the Grand Court of the Cayman Islands to liquidate the F.A.M. funds they’d invested in.
That same month, Kleiner Perkins received a letter from Ellen Pao’s lawyer. According to Kleiner, this was the first time that Pao registered any complaint of sexual harassment or discrimination—which Pao would dispute. Despite her numerous complaints, she alleged, things had not improved for her at the firm. In 2011, for example, she said there were two dinners to which she was not invited, and to which, according to Pao, only male partners and business associates were. At the second one, at the St. Regis, in August—around the time she received another tepid performance review—Pao was mortified when she ran into her own clients in the lobby of her building and had to explain that she would not be joining them.
That October, Pao flew to New York with a number of Kleiner partners on partner Ted Schlein’s private jet. In her lawsuit, she noted that the men did not include her in any of their business dinners on that trip. And then, in January 2012, around the time her lawyer approached Kleiner, there was an all-male trip to Vail, Colorado, again on a partner’s private jet. But the coup de grâce seems to have come in March 2012, when three men were promoted to general partner, and Pao was not, although she had been at the firm longer than any of them.
Pao told friends that she did not plan to sue Kleiner Perkins. She says she approached them with her attorney because another woman, a junior partner, had complained about harassment and she wanted the firm to address its problems with women. According to friends, she expected that when Kleiner Perkins heard all her complaints, the firm would rectify the problems, and compensate her—and that she would go on working happily at the firm. Kleiner did immediately hire an outside investigator, who, the firm says, eventually concluded that Pao’s complaints were “without merit.” It was at this point, says a friend, that Pao decided she had no option but to sue, which she did, on May 10, a month after Fletcher’s F.I.A. Leveraged Fund was ordered liquidated by a Cayman Islands court, and weeks before his main fund filed for bankruptcy in New York.
To many people, there is no question that Pao is telling the truth. The rumor is that she “has the smoking-gun evidence”—the e-mails and other documentation that Kleiner alleges she never showed them—and that those will surface in court. Many in Silicon Valley, especially women, are appalled by what they describe as Kleiner’s hardball tactics against a woman they say is “totally serious” and “very professional”—a woman “with so much integrity.” “Most of us would walk away,” says Rebecca Eisenberg, a Silicon Valley attorney and former counsel to Reddit, “but Ellen is taking a stand. The Valley is a very sexist place, and women here put up with it because that’s what we have to do to get a piece of the millions that you make here. It’s not like Walmart, where, if a woman is discriminated against, it’s maybe $20,000 at stake. Here it’s $20 million.”
Yet there are also people who doubt Pao—who see her as an employee who had trouble getting along with her co-workers, who perhaps wasn’t as qualified as she thought she was, but who could blame her professional setbacks on gender discrimination.
And in October Pao had a startling setback, when Kleiner Perkins suddenly ended her employment at the firm. Since filing the lawsuit, Pao had gone to work every day, a move that some saw as a particularly courageous refusal to back down, and others as just bizarre, considering how tense the atmosphere there was. But on October 2, Pao herself posted an announcement on Quora, the popular question-and-answer Web site, saying she had been “terminated.” While Kleiner would quibble over semantics, saying Pao “remains an employee” and that Kleiner was facilitating her “transition, over an extended period of time, out of the firm,” Pao stopped coming to work and was eventually replaced on the boards of Kleiner-sponsored start-up companies.
Pao’s attorney, Alan Exelrod, says the termination was in “retaliation” for her lawsuit. Kleiner attorney Lynn Hermle denies this, suggesting Pao’s exit involved job-performance issues. “A lawsuit cannot be a ticket to lifetime employment,” says Hermle. “The firm informed Ellen Pao that it would be separating her employment as the result of long-standing, documented issues and not because of the litigation or because she is a woman. The firm was also generous and fair in its offer to help her transition her career in ways that are inconsistent with retaliatory conduct. They were willing to keep her on the payroll as an employee for six months and to vest in venture funds, and then pay her severance, all without asking her to release her pending legal claims, which is entirely inconsistent with an intent to retaliate.”
At least one friend of Fletcher’s says that Fletcher urged his wife not to sue Kleiner. “Because he was worried about how it would affect her,” he says. “It’s easy to conclude: he’s prone to suing, so he talked her into it. But she was the fallback position, in her good career.” Last year, the apartment in the San Francisco St. Regis was sold, at a small loss—just one sign of the pressures the couple now faces. In September, over Fletcher’s objections, the New York judge appointed a federal trustee to oversee the bankruptcy of Fletcher’s master fund, Fletcher International. In the Cayman Islands, the court-appointed liquidator would note that some $125 million in funds appeared to have vanished. Alleging “evidence of mismanagement and misconduct,” he pointed to questionable expenditures by F.A.M., including a nearly $8 million investment by Fletcher in the company that was producing his brother Geoffrey’s film directorial-debut, Violet & Daisy, the story of two teenage assassins that is scheduled for release later this year. In December, Fletcher’s lawyers in the Dakota suit, among his many creditors, withdrew from the case because they had not been paid in months, although they were soon replaced by other lawyers, including the president of Fletcher’s bankrupt hedge fund. Pao is now giving business advice on Quora and is rumored to be trying to raise money for a start-up as she waits for her lawsuit to wind its way through the California courts, either to a settlement or, in a year or so, a very high-profile trial.
‘All these years, I really loved Buddy and I thought he was my friend,” one Dakota resident says. “We went out to dinner and the theater together. And then all this comes out of the blue. Does he really think that anybody had a problem because he was black? Was he just playing us the whole time?”
There is no question, friends say, that Buddy Fletcher believes with all his heart that he was discriminated against by the Dakota board. “That is very, very core to this,” says one friend. “I have talked to people who say, ‘I can’t believe he is playing the race card.’ I don’t think he is playing a card. Buddy is really convinced that it is a bad thing that people have done, to deny him that apartment.” It is why, friends say, he took the risk of suing the Dakota, something that so few others would dare to try. “When Buddy believes he’s right,” says one friend, “he’s not just right. It’s all about justice.” His anger, and aggrievement, which stunned some at the Dakota, were not so surprising to those who have known him longer. To them, that Fletcher was one and the same with the friendly, accommodating Buddy Fletcher most people saw. “If a change,” says one friend, “consists of not burying all your frustrations, or feelings of being oppressed, or whatever, and letting those types of things come more to the surface, rather than having a big smile on your face all the time—I guess that’s changing. Or it’s just not giving a shit anymore. If it’s always there, is it really a change?” There is the same surprise among some who know her, at the seeming transformation of Ellen Pao—at the unyielding assertiveness, even aggressiveness, in a woman who had long been regarded as quiet, reserved, a conventional corporate good girl. For Ellen Pao, friends say, as with Buddy Fletcher, it is about justice.