#HedgePapers No. 10 – The Double Standard of Success Academy

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Hedge Fund Hypocrisy: The Double Standard of Success Academy

Success Academy – the charter-school chain and political launching pad for anticipated mayoral candidate Eva Moskowitz — is a favored charity for many hedge fund managers.

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But beneath their rhetoric about fighting poverty and supporting academic achievement is a real double standard. It can be seen in two key ways:

1) Many of Success Academy’s hedge fund board members contribute to political causes that harm the population that Success claims to serve.2) Success Academy’s hedge board members would never allow their own children to be subjected to the harsh disciplinary policies of the charter chain.

This is the first report of its kind to examine the hedge fund hypocrisy at Success Academy. It also reveals the more than 50 hedge fund managers and hedge fund spouses who have notable ties to Success Academy.

HEDGE FUNDS HURT THE COMMUNITIES SUCCESS ACADEMY PURPORTS TO SERVE

The April 20 Success Academy gala at Cipriani is expected to turn out dozens of hedge fund titans — whose self-congratulatory support of Success Academy may well be the only thing they do all year that could possibly be construed as giving back to poor communities of color.

Fair-share tax policies and fewer tax loopholes for the rich would help communities more than charity

In an economic landscape defined by the devastation hedge funds have wrought on New York jobs, and the influence they have bought in Albany, we should be demanding more from the hedge fund elite than a bit of charity.

Fair-share taxation and closing lucrative loopholes would help low-income communities far more than the sprinkling of charitable donations offered up at the Cipriani gala.

Monopoly_man_by_SparrowkeeseThe wealthiest 0.01% of New Yorkers currently report an average of $69.6 million in yearly income, with hedge fund managers making up a nice chunk of that 0.01%.

Because they earn money from their ownership in the limited partnerships that control wildly-profitable hedge funds, New York City-based managers are taking advantage of the “carried-interest” loophole in the New York City Unincorporated Business Tax that gives their businesses lower tax rates than car repair shops, bodegas and independent neighborhood restaurants and bars.

Closing the carried-interest loophole in New York City would yield $200 million in additional revenue per year, according to the New York City Independent Budget Office.[1]

Hedge fund managers further stand to benefit from other absurd handouts given to them by their buddies in the Cuomo administration—tax breaks on luxury yachts,[2] the elimination of the corporate minimum tax,[3] and special tax breaks for luxury condo owners.

Hedge fund tax breaks and special treatment rob New Yorkers of funds that are vitally needed to restore equitable funding for New York’s public schools, which right now falls far short of the level mandated in the Campaign for Fiscal Equity lawsuit.[4]

Hedge Clippers has recommended a full set of fair-share revenue policies for Albany and New York City that would raise between $3.1 billion and $4.2 billion every day to help fund schools, affordable housing and transportation that would help provide a foundation of prosperity and economic stability for struggling New York families.[5]

We’ve also recommended elimination of tax loopholes for yachts and private planes[6], and a significant increase in the minimum wage[7] – both of which have been opposed by billionaires and hedge funds.

Political attacks and virulent racism – that’s not support for New York communities

Success Academy serves a population that’s over 70% African-American, with 82% of students qualifying for free and reduced lunch. But many of Success Academy’s wealthy supporters spend much of their lives attacking the very populations that Success serves.

Take Dan Loeb – he’ll almost certainly be at the Success fundraiser, as traveling to Cuba with his buddy Andrew Cuomo is probably not in the cards.[8]

DanLoeb

Emails surfaced during a lawsuit (later dismissed) brought by a Canadian insurance company showed Loeb calling an Indian executive a “schwarze” which Reuters described as “a derogatory Yiddish word for a black person.”[9]

It’s not the only racist missive that Loeb has fired off against an adversary—public relations executive John Liviakis also accused Loeb of making “racist sort of remarks about my Greek heritage” during a late-90s feud.[10]

Loeb’s political activities have included backing Mitt Romney in 2012, after likening President Obama to an abusive husband.[11]

Loeb has since backed a slew of regressive Republican politicians, donating $130,000 to Karl Rove’s far-right PAC American Crossroads, which aired ads praising legislators for voting in favor of Voter ID bills.[12]

Another big Success Academy booster is hedge fund titan Bruce Kovner, founder of Caxton Associates.

Bruce

Kovner’s wife, Suzie, sits on the board of the Success Network. Kovner is also a major supporter of far-right politics, having previously chaired the American Enterprise Institute (AEI).

Fellows employed by AEI have advocated for policies that perpetuate poverty in America, including branding minimum wage increases as “simply reckless,”[13] and arguing that low-wage giant Wal-Mart is “saving America.”[14] Kovner is reported to be a close personal friend of Dick Cheney’s[15]

While not a hedge fund manager, Success board member Charles S. Strauch is the most perfect representation of Moskowitz’s morally-agnostic fundraising.

Strauch, the former head of a telecommunications company, has recently made a foray into venture capitalism.[16] He runs a blog “AMERICA’S GREATNESS UNDER ATTACK FROM WITHIN,” which reads like the blog version of a cranky, conservative chain email.

Strauch is not shy about his views that America is in decline and under attack from progressive Americans. Strauch’s website includes assertions that gay marriage is contributing to America’s decay[17], claims that global warming is a hoax, and contains many posts that are racially offensive.

Of particular offense, Strauch’s blog seems to use the term “society’s losers” to refer to African-Americans.

Strauch, paraphrasing a quote he claims to have heard from an anonymous cab driver, has claimed that “The majority of blacks (Democrats) consider themselves as permanent victims of society (losers!!).”

Keeping with the theme, Strauch appears to use the euphemism in another blog post about his support for Eva Moskowitz, who he describes as “fighting in the trenches against the NYC Democratic Party machine to loosen the stranglehold that the Democrat controlled teacher’s union have placed on ‘society’s losers’ in that city.”

Strauch has also used his blog to give voice to anti-Obama “birthers” like Richard R. Silverlieb, whose re-printed drivel questions why the President’s birth certificate didn’t describe him as a “negro.”[18]

Strauch’s wife, Nan Strauch, does not appear to take a more enlightened view of racial issues than her husband:

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HEDGE FUND MANAGERS WOULD NEVER LET THEIR OWN CHILDREN BE SUBJECT TO THE HARSH DISCIPLINARY POLICIES USED BY SUCCESS ACADEMY

It’s a disturbing sort of paternalism: billionaire hedge fund managers are feverish in their promotion of Success whose disciplinary policies Success Academy’s backers would never dare subject their own children to.

Hedge fund elites send their offspring to the best prep schools in the country, where they don’t have to worry about standardized test performance, never mind worry about it so much that they wet themselves.

Children at these elite schools break the rules without consequence, and aren’t subjected to the criminalization of childhood behaviors that occur at Success, where students are suspended at alarming rates for minor infractions.[19]

On the contrary, the children of the wealthy are practically encouraged to break the rules—and their parents are there to sue when they get suspended or throw alternate proms when they get caught with marijuana.[20] [21]

We decided to examine three schools where, according to press accounts, some of Success Academy’s wealthy backers sent their own children. The only metric where Success Academy compares favorably is in the compensation of Eva Moskowtiz, who fits right in with the headmasters of these elite schools.[22]

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WE’RE MAKING A LIST…

Success Academy doesn’t attract just handfuls of hedge fund managers – more like hordes. The following is a list of over 50 hedge fund managers and hedge fund spouses who have notable ties to Success Academy. Though the hedge fund industry’s affinity for Success Academy is well known, this is the first time such a list has been published.

Hedge fund managers occupy nearly half of the seats on the Success Academy boards reviewed, a staggering percentage considering that the industry employs just a tiny slice of the population of New York City, has no special expertise in education, and otherwise appears mostly concerned with making money at all costs.

Name Hedge fund tie (current and/or recent) Success Academy tie (current and/or recent)
Daniel S Loeb Third Point Success Academy central board
Paul Singer Elliott Management Attended last year’s Success Academy fundraiser
Daniel L Nir Gracie Capital Success Academy central board, Upper West board
Jill Erika Braufman Wife of Daniel Nir of Gracie Capital Success Academy central board
Joel Greenblatt Gotham Capital Success Academy central board, Harlem 3 board
Julie Greenblatt Wife of Joel Greenblatt of Gotham Capital Harlem 3 board
Campbell Brown Wife of Dan Senor of Paul Singer’s Elliott Management Success Academy central board
Paul Tudor Jones Tudor Investment Major donor to Success Academy charter effort last year
John H Scully SPO Partners Success Academy central board
Regina Kulik Scully Wife of John Scully of SPO Partners Success Academy central board
Richard S Pzena Pzena Investment Management Success Academy central board, Harlem 2
Howard Shainker Bow Street Brooklyn 2 board, Williamsburg board
Cate Shainker Wife of Howard Shainker of Bow Street Harlem 3 board
Lance Rosen Kinrose, formerly Perry Capital Success Academy NYC board, Harlem 4 board, Harlem 3 board
Samuel Cole Formerly Blue Mountain Capital Management Harlem 3 board, Harlem 5 board
Steven Galbraith Herring Creek Capital, formerly Pzena Success Academy central board, Bronx 2 board
John Petry Sessa Capital, formerly Gotham Capital Success Academy central board, Harlem 1 board
John Sabat Cubist Systematic Strategies, formerly SAC Harlem Success Academy Charter School 4 board
Bryan Binder Castleline, formerly SAC, Caxton Success Academy NYC board, Harlem 3 board
Andrew Feldstein Blue Mountain Capital Upper West board
David N Roberts Angelo, Gordon Success Academy central board
Vinit Sethi Greenlight Capital Bronx 2 board
Sidney Hawkins Gargiulo Partner, Covey Capital Management Bronx board 2
John Gargiulo Husband of Sidney Hawkins Gargiulo of Covey Capital Bronx 2 board
Suzie Kovner Wife of Bruce Kovner of Caxton Success Academy central board
Jay Bryant Blue Mountain Capital Success Academy central board, Harlem 3 board
Scott Friedman Soroban Capital Partners Success Academy NYC board, Harlem 3 board
Kian Ghazi Hawkshaw Capital Harlem 4 board
Stephen Korn Arch Capital Harlem 4 board
Svetlana Artamonova Coastal Investment Management Harlem 4 board
Stirling Levy Hound Partners Harlem 4 board
Mark Cooper Omega Advisors Harlem 5 board
Evan Claar CBI Capital Harlem 5 board
Nik Mittal JANA Partners Harlem 5 board
Kevin Eng Columbus Hill Capital Harlem 5 board
Molly O’Meara Sheehan Wife of Joe Sheehan of Archon Partners Harlem 5 board
Robert Azeke Farol Asset Management Harlem 3 board
Doug Hirsch Seneca Capital Harlem 3 board
Ben Appen Magnitude Capital Harlem 3 board
Greg Martin Pzena Investment Management Harlem 1 board
Richard Barrera Roystone Capital Success Academy NYC board, Brooklyn 1 board, Harlem 3 board
Suleman Lunat Apollo Global Management Success Academy NYC board, Brooklyn 2 board, Harlem 3 board, Williamsburg board
Jarrett Posner Argonaut Capital Success Academy NYC board, Upper West board, Harlem 3 board
Shaun Gordon Ascend Global Investments Bronx 1 board
Andrew Glaze Claar Advisors Upper West board, Brooklyn 2 board, Williamsburg board
Orlando Muyshondt Tyrian Investments Upper West board
Sam Martini Omega Advisors Brooklyn 1 board
Mike Pollack Destrier Capital Management Brooklyn 1 board
John Paulson Paulson & Co Attended last year’s Success Academy fundraiser
Boaz Weinstein Saba Capital Attended last year’s Success Academy fundraiser
Kyle Bass Hayman Capital Attended last year’s Success Academy fundraiser
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 Footnotes

[1] http://www.ibo.nyc.ny.us/iboreports/options2013.pdf

[2] http://nypost.com/2015/03/31/new-york-state-giving-huge-tax-break-to-luxury-yacht-buyers/

[3] http://www.mfa-cpa.com/Alerts-and-Insights/Alerts/2014/New-York-Governor-Cuomo-Signs-The-2014-2015-Budget-Bill-Into-Law

[4] http://ny.chalkbeat.org/2015/02/19/new-database-estimates-how-much-schools-are-missing-from-equity-settlement/

[5] http://hedgeclippers.org/hedge-funds-albany/

[6] http://hedgeclippers.org/albany-budget-tax-free-yachts/

[7] http://hedgeclippers.org/hedgepapers-no-9-hedge-funds-the-fast-food-economy/

[8] http://www.vanityfair.com/news/2013/12/dan-loeb-cuba-car-accident

[9] http://www.reuters.com/article/2011/03/11/us-hedgefunds-fairfax-loeb-idUSTRE72A4NH20110311

[10] http://www.vanityfair.com/news/2013/12/dan-loeb-cuba-car-accident

[11] http://www.cnbc.com/id/40609823

[12] http://www.americancrossroads.org/2014/04/american-crossroads-launches-tv-ad-supporting-speaker-thom-tillis-for-senate-in-north-carolina/

[13] http://www.aei.org/publication/seattle-do-gooders-just-shot-themselves-in-the-foot/

[14] http://www.thenation.com/article/meet-wealth-gap

[15] http://gawker.com/550758/bruce-kovner

[16] https://www.pehub.com/2013/11/lightsail-education-raises-3-5m-series-a/

[17] http://wealthcreatesgood.blogspot.com/2015/04/america-under-attack-from-within.html

[18] http://wealthcreatesgood.blogspot.com/2014/01/leadership-vacuum-truth-and-president.html

[19] http://www.nydailynews.com/new-york/education/success-academy-fire-parents-fight-disciplinary-policy-article-1.1438753

[20] http://www.nytimes.com/2010/09/01/nyregion/01about.html

[21] http://www.nypress.com/punished-for-pot-fieldston-seniors-hold-an-anti-prom-on-a-yacht/

[22] http://nypost.com/2015/02/06/the-eva-moskowitz-revenge-act/

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