The Dems' Corrupt Money Man

The strange case of Hassan Nemazee is a lurid example of the human capacity for self-delusion, and a cautionary tale for all those savvy political players who take pride in their ability to size people up.

Seldom has so talented a con man flourished for so long in the confidence of the high and mighty. For two decades, Nemazee was a top fundraiser for the Democratic Party and—for the past 12 years, it turns out—a Ponzi scheme felon who stole hundreds of millions dollars of other people’s money. Before he was unmasked by the FBI seven months ago, Nemazee campaigned behind the scenes to be a U.S. ambassador in the Obama administration, and personally lobbied his longtime friend, Joe Biden, to enlist his support for a high-level diplomatic post.

“But for this fraud,” said one New York financier, “he was one of the nicest, most respectable, urbane, well-read persons you could ever hope to meet.”

“He was dying to be an ambassador,” says a well-placed source who worked with Nemazee in fundraising and business. “And what was so crazy is that this Ponzi scheme had apparently gone on for a long time, and in order to be nominated and confirmed, he’d have the FBI vetters looking at every single thing he’d ever done. It makes no sense.” This source added: “He talked to everybody, and I mean everybody, about wanting to be an ambassador. He was way too aggressive and over the top.”

It’s unclear what, if anything, came of Nemazee’s conversation with Biden, or whether Biden was receptive to his old friend’s entreaties. A spokesman for the vice president declined to comment on Friday. A proposed meeting about an ambassadorial appointment with Secretary of State Hillary Clinton—for whom Nemazee had raised cash during the 2008 presidential campaign—never occurred, said a well-placed source. The White House, likewise, had no comment.

Nemazee’s friends are variously baffled, saddened, and angered by his betrayal; his longtime business partner, Alan Quasha, is said to have lost around $13 million in the scam. But they are also perversely admiring of the calm and elegant front Nemazee put up, concealing the manic desperation roiling just below the surface.

“Maybe he had a deviant side, but it just never came out,” says a New York financier has known Nemazee for the past 40 years and regularly shared meals with him. “He must have compartmentalized and kept it from everybody. People really liked this guy—even my wife, who can generally smell a rat from a mile away. But for this fraud, he was one of the nicest, most respectable, urbane, well-read persons you could ever hope to meet.”

Another friend, who has frequently socialized with Nemazee and his wife Sheila over the years, suggested ruefully that “he must have some kind of borderline psychological disorder.”

On Thursday, the 60-year-old, Harvard-educated New York investment banker pleaded guilty to three felony counts of bank fraud and one count of wire fraud, carrying a potential sentence of nearly 20 years in prison. According to The New York Times, his plea agreement includes forfeiting millions of dollars in various bank accounts, a 2008 Maserati, a baronial apartment at 770 Park Avenue, one of Manhattan’s more prestigious addresses, and two others in Manhattan’s TriBeCa neighborhood and Rome, as well as a 12-acre estate in Katonah, New York.

While the fallout for the Democrats is unclear, it would be all but unprecedented in recent political history (think Norman Hsu and Jack Abramoff) if Republicans simply let the issue die with Nemazee's conviction. The good news for the Dems, at least until the 2010 midterms, is that the majority party in Congress controls the hearing schedule, and prosecutors have not made a connection between Nemazee's fundraising—including nearly half a million dollars in bundled contributions for the Obama campaign—and his criminal conduct. While various Democratic beneficiaries of Nemazee's largesse have been rushing to donate the equivalent to charity—the $50,000 he gave to Obama's Presidential Inaugural Committee, for instance—it's doubtful that every dollar the Democrats received from his ill-gotten gains can be effectively scrubbed.

Before his shocking arrest at Newark International Airport last August on suspicion of obtaining $292 million in fraudulent loans over the past 12 years, Nemazee was widely considered charming, sophisticated, and unquestionably honest, one of the Democratic Party’s most respected money men, sought out for his policy advice as well as for his fundraising prowess.

When Barack Obama picked Joe Biden as his running mate, Nemazee was “ecstatic,” according to an associate, “because now he would have a direct line to the White House.” He boasted that Biden was among his closest friends, and finally he would obtain that ambassadorship he’d always dreamed of. Indeed, he narrowly missed getting one in 1999, when Biden was his lead defender on the Senate Foreign Relations Committee and Republican senators worked to quash Nemazee’s nomination to be President Clinton’s ambassador to Argentina. A damaging article in Forbes magazine detailing Nemazee’s sharp business practices over the years didn’t help his cause.

“When his nomination failed, that was a big shock to him,” says the longtime friend, who met Nemazee as a Harvard undergraduate. “He had been told by the State Department that in order to be ambassador to Argentina, he had to become fluent in Spanish, so he’d been taking State Department courses where they immersed him in the language. He really felt it was going to happen.”

Nemazee had been a valued friend and supporter of Biden, Al Gore, John Kerry, Chuck Schumer, and Bill and Hillary Clinton, who were part of a cavalcade of powerful office-holders who dined regularly at the Park Avenue apartment. Hassan and his wife Sheila were known as gracious hosts, accustomed to life on the A-list. The Washington, D.C.-born Nemazee’s family, led by his father, a real-estate and shipping magnate, had been among Iran’s richest and best-connected, a favorite of the shah’s before the mullahs came to power and prompted the Nemazees to flee the country.

In early 2005, Nemazee responded with righteous indignation when right-wing conspiracy monger Jerome Corsi insinuated in a book that the financier had been working on behalf of Iran’s Islamic dictatorship to encourage normalized relations with the United States.

"The concept that I'm a shill for the mullahs flies in the face of reality," Nemazee told me at the time, when I was writing a column for the New York Daily News. "I haven't been back for 26 years, and everything I had was confiscated by them. It is patently ludicrous… I wouldn't trust the mullahs as far as I could throw them. My belief is that the Iranian government is trying to obtain nuclear capability and will do whatever it takes."

By this time, Nemazee was already deep into his criminal scam, borrowing tens of millions of dollars from various banks, under false pretenses with faked collateral, in order to keep up appearances and sustain a lifestyle of the rich and famous. It included multiple homes, private jet travel, lavish entertaining, and generous donations from Nemazee, his wife, and three children to candidates, Democratic campaign committees and charities, including $60,000 from Nemazee’s friends and family to Bill Clinton’s legal defense fund. Nemazee's credentials also included membership on the prestigious Asia Society's board of trustees; since the unpleasantness, he is no longer listed on the society's Web site as either a current or past trustee.

He was a major supporter of Al Gore’s 2000 presidential campaign, and four years later was on John Kerry’s New York finance team. For the 2006 election cycle, Nemazee signed on as finance chairman of the Democratic Senatorial Campaign Committee, led by Senator Chuck Schumer. But Nemazee left abruptly, according to knowledgeable sources, after he and Schumer had an acrimonious falling out. The problem, say sources close to New York’s senior senator, was that Schumer became frustrated when Nemazee failed to deliver on fundraising goals, and also suspected that he was using his title to burnish his credentials among the Democratic powers that be—and, even worse, was spending time soliciting money for Hillary Clinton.

As one of Clinton’s top New York fundraisers, Nemazee displayed a side of himself unfamiliar to his dinner guests, who saw only the suave, gracious host. “He had sharp elbows,” says a fundraising colleague, “and he constantly grabbed credit for money he didn’t raise.” After persistently lobbying for a formal title in the campaign—something such major fundraisers as venture capitalist Alan Patricof and party stalwart Maureen White resisted—Nemazee finally persuaded Clinton campaign chairman Terry McAuliffe to name him a New York “finance director,” colleagues say. Weeks later, as Hillary’s campaign headed toward inevitable defeat but before the candidate dropped out, Nemazee tried to “position himself as the guy who could deliver the Clinton fundraisers to the Obama campaign,” a colleague recalls with a chuckle. “It didn’t happen.”

After the 2008 election, Nemazee went to the vice president-elect to ask for another ambassadorship; he’d take Italy or Israel, he confided to colleagues in the fundraising community. “He actually thought he could be the first Muslim U.S. ambassador to Israel,” says an associate.

“The politicians are running away as fast as they can, of course,” said a Nemazee relative who declined to speak for the record. Neither Nemazee nor his defense attorney returned phone calls seeking comment.

Correction: This article has been updated because Jerome Corsi was initially misidentified as James Corsi.

Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.