On October 7, 2008—the day the stock market would plummet another 500 points and the financial world as everyone knew it imploded—Doug Von Allmen was having a meeting about his yacht-in-progress. It wasn’t just any old boat. Von Allmen, the son of a Kentucky milkman and 67 at the time, had amassed a fortune in the hundreds of millions of dollars, enough to not think twice about building a $37 million floating “work of art,” as he calls it, even though he already owned two luxury yachts. This one, the Lady Linda, would be a knockout, named for his wife of 23 years.
At 8:30 that morning, Von Allmen gathered the yacht design team at his sprawling duplex on the 74th and 75th floors of the Time Warner Center, from which he could gaze over Central Park or, if he swiveled in his chair, take in the George Washington Bridge. “The view was so spectacular that it did not quite register as real,” noted G. Bruce Knecht, a former senior writer at the Wall Street Journal, who was there to research his book, Grand Ambition (out this month), on the building of the Linda—and was about to have much better material than he ever dreamed.
Evan Marshall, the yacht designer, had flown in from London with a stack of renderings. Von Allmen and his wife were impressed with his idea to recreate The Chariot of Aurora, a carved, painted and gilded relief that had graced the interior of the Normandie, the French passenger ship built in 1935 that had set a gold standard for ocean liners. Marshall thought it could be the centerpiece of the Linda‘s main entryway, wrapped around the grand staircase.
That morning, as the meltdown was happening literally outside his panoramic windows, Von Allmen was mostly concerned with making sure the stairs wouldn’t “creak”—some steps on one of his boats creaked and that annoyed him, Knecht wrote. Assured the steps would be silent, they moved on to other matters of import. Such as the headboard in the master suite, which Marshall envisioned as a backlit panel of etched glass, with impressions of fish or birds, “maybe a peacock.” And the plans for the sky lounge on the top deck, which would have a grand piano.
The meeting ended near noon, with Marshall declaring he needed a gin and tonic. In retrospect, they all should have had a drink.
Linda and Doug Van Allmen in spring 2012
The story of the Lady Linda started out so simple. Von Allmen just wanted a new yacht. And damn it, the man had worked hard for it. He’d come from nothing and earned millions by buying profitable companies and making them even more profitable. But one thing he couldn’t improve was the economy. While he was building the Lady Linda, the U.S. markets crashed, his net worth and everyone else’s shrank, and panic set in. But unlike most people, Von Allmen isn’t the panicky type; in fact, his calm is astounding. Which kept him afloat not only through this financial storm but also another to come.
That day, as he and his wife fretted over creaks and what to etch in glass, the economy was in freefall. “I usually have CNBC on,” Von Allmen says today, “but I never have the sound on.” It wasn’t until the afternoon that he realized the market had taken a nose-dive. “And you know? It wasn’t a big deal with me,” recalls Von Allmen from his home in Florida in January. “I wasn’t in the stock market, per se, and I really didn’t think it would affect me. But it ended up it did.” He says this with a breezy nonchalance.
But a few days after that meeting, Von Allmen wasn’t so nonchalant, recalls Knecht, who had lunch with him to see how he was holding up. “That’s when he began to say, ‘My God, 85 percent of my expenses are boats’ and ‘I don’t know if I can afford it.'”
A view of the 187-foot long, 782 ton Lady Linda
And with the bottoming out of the economy, Von Allmen also found himself in a morass of headaches with Linda‘s construction. The yacht-building business was sinking, and his boat’s components were coming in late and way over the $37 million budget. Marshall recalls, “There was only so much leverage Doug could extract, because he was also in financial difficulties. There’s only so much you can pound your fist, and he’s not a fist-pounding sort of person anyway.”
Von Allmen would soon add to his difficulties by making a highly unusual investment, one he thought would solve his problems and help cover the boat’s ballooning costs. What he put his money in would turn out to be a Ponzi scheme—and a cagey one at that.
Von Allmen built a career on trusting his own judgment. He wasn’t a stock-market guy, and he wasn’t the type who valued other people’s opinions over his own. His fortune was amassed by his own shrewd instincts.
And it was against the odds. As a boy growing up in Louisville, Kentucky, he saw his father lose his job as a milkman. The family moved to Florida, where his father began selling reconditioned tires. Doug dropped out of school and got a job. Then when Doug was just 17, his father died at the age of 42. He and his mother moved back to Louisville where he finished high school and started working in a cardboard-box factory.
At that job, he realized he wanted more out of life. “He told me how he came home and said to his mother, ‘I’m going to go to college,'” Linda recalls. “She said she didn’t know how he would do that, and he replied, ‘I don’t know either, but I’m going.'” With money his mother borrowed from a relative and through her own efforts (she took on a variety of jobs and as Doug likes to say, “she could save money even when there was no money to save”), he enrolled at the University of Kentucky, where he studied accounting and graduated second in his class. (Thanks to a $5 million gift, the college’s School of Accountancy was named for him.)
The main saloon
Doug Von Allmen landed a job at a top accounting firm, where he heard about a client who’d borrowed money to purchase a business that he re-sold for a profit. Von Allmen thought that was a smart way to earn a living—plus, he could be his own boss. He hunted for small companies to buy. Things went well until the recession of the early ’80s. He lost a fortune, and his first marriage fell apart.
He did, of course, rebound, financially and emotionally. In 1984, Doug was set up with Linda on a “blind lunch.” They were each divorced with kids (he had two; she had three). They both loved to dance. “One thing that was so endearing is he never picked me up for a date without bringing me a gift—like chocolates, a scarf or a card, things that took time and thought,” she says. They married in 1985.
Over the next two decades, he made canny and highly lucrative acquisitions, always of cash-cow companies that were doing fine but had, in his opinion, potential to do better. Every one of the dozens of businesses he bought turned out to be a great investment, including a chain of sunglass stores that was sold to Sunglass Hut for $142 million in 1995. His biggest windfall came after he and his partners consolidated 20 professional beauty-supply distributors into one company that L’Oreal reportedly paid $400 million for in 2007. (He later called this sale “a mistake.” Why? Because, according to the self-made Von Allmen, “striving is a lot more fun than arriving.”) It was around this time that he commissioned the Lady Linda.
Scott Rothstein in his Fort Laudedale law offices in October 2009
Given his M.O. and his own background, it was both shocking and not-so-shocking that he’d be seduced by Scott Rothstein, a pushy, flamboyant attorney who moved into a house on the same street as the Von Allmens. The Bronx-born Rothstein, son of an “itinerant condom salesman” (yes, condom, not condo), made quite an impression when he relocated to the well-heeled part of Fort Lauderdale and opened a firm with 70 lawyers. His $6,000 suits, his ostrich-skin boots, and his collections of pricey watches and cars (including two Rolls-Royces, three Ferraris and a Lamborghini) made him a character on the Intercoastal, as did the painting he hung in the lobby of his opulent offices—of Al Pacino as Michael Corleone in The Godfather. And then there was his new wife, Kimmie, a former bartender.
In many ways, the reticent and Southern-gentlemanly Von Allmen couldn’t have been more different from the in-your-face Rothstein. Still, both were staunch Republicans who donated heavily to their party’s candidates and they were car nuts. (Von Allmen keeps an Aston Martin and McLaren for street use and races a Porsche and Ferrari at the track—about this hobby, he likes to say, “I’m the oldest and the fastest.”)
A luxurious bathroom
Plus, Rothstein had a product to sell that was enticing in that post-crash time. What he was offering was brilliant in its simplicity and its audacity, and it was something that Von Allmen, who prided himself on grabbing the kinds of assets no one else had the wisdom or foresight to grab, could appreciate. What Rothstein, who bragged about handling sexual-harassment and workplace-discrimination suits, was “selling” were stakes in confidential settlements—multi-million-dollar settlements he’d acquired for clients and were to be paid out over time. Like lottery winners, some clients, he said, were willing to take a smaller amount up front, enabling “investors” to make an appealing but realistic 20-25 percent profit. Among the settlements he touted were those of women who’d allegedly been wronged by Jeffrey Epstein, a shady one-time friend of president Bill Clinton (further enticement to a Republican like Von Allmen). None of this was the least bit illegal. The only problem? There were no lawsuits and no settlements. However, there was a convincing paper trail of phony documents and statements created by Rothstein.
Von Allmen did his due diligence, hiring someone to scope out the firm and examine its records. He ended up putting $105 million of his diminishing fortune in Rothstein’s plan in the spring of 2009. For him and his wife, the tip-off that something was wrong came when Linda ran into the lawyer at his favorite restaurant in late October 2009. Rothstein was at the bar nursing a martini. A large payment that the couple had been expecting from him had not arrived and, as Knecht wrote in Grand Ambition, she confronted him.
“Sorry, I’m having a bad day,” he replied.
The sky lounge
Learning that federal agents were closing in on his Ponzi scheme, Rothstein fled to Morocco (chosen because it didn’t have an extradition treaty with the U.S.) on October 27 on a chartered Gulfstream jet, having wired $16 million there. Four days later, he sent a text to his law partners: “Sorry for letting you all down. I am a fool. I thought I could fix it, but got trapped by my ego and refusal to fail, and now all I have accomplished is hurting the people I love. Please take care of yourselves and please protect Kimmie. She knew nothing. Neither did she, nor any of you deserve what I did. I hope God allows me to see you on the other side. Love, Scott”
Persuaded by the authorities, he returned less than two weeks later. Rothstein had conned a total of $1.2 billion from individual investors and from hedge funds. In January 2010 he pled guilty to five federal counts of racketeering, money laundering and wire fraud and was sentenced to 50 years in prison. Even though Rothstein’s con exceeded $1 billion, it received scant attention in the media, dwarfed by the much vaster enterprise of Bernie Madoff.
Von Allmen, who says he was as shocked as anyone by the lawyer’s duplicity, recalls that he and Linda socialized with Scott and Kimmie “a little. We were probably out to dinner with them three times because they were in the neighborhood. He was normal one-on-one.” (The Von Allmens are in litigation over the scheme so are unable to comment further.)
The sea and sky lounge
Not long after the scandal broke on Halloween weekend 2009, Von Allmen spoke to Bob Norman, a Palm Beach blogger who followed the Rothstein case. “The amount of money [I lost] was substantial,” Von Allmen said. “It was an amount I wish I’d given to charity instead of that investment.” However, he declared, “It won’t change my lifestyle that much, but it was a nice sum. I will still eat out at a restaurant every night—this is just something I need to get through.”
In another interview, he added, “All I can say is it’s a damn shame. This does nothing good for anybody. Hopefully everybody affected by this will still have a good life. They may not have as many toys.”
But to his team working on the Lady Linda, he was not so flip. Marshall remembers meeting with the couple after they’d just returned from a cruise to Fisher Island. On that trip, they learned that everything they’d invested with Rothstein was gone.
“As soon as they came in, I could see on their faces that something was wrong,” remembers Marshall. “Linda took me into the Great Room and said, ‘Evan, this weekend we got some extremely bad news of a financial nature, and it’s really just devastated us.'” Doug suggested to Marshall that they keep an eye on the budget. Some changes were made—The Chariot of Aurora was scaled down to a painted mural, bringing the cost from $100,000 to around $15,000; the carpeting would be synthetic, not wool; and the sky lounge wouldn’t have a grand piano—but they weren’t that significant. Von Allmen, the pragmatic businessman, had decided to sell the boat after it was completed, and he realized the best way to sell the yacht was to build the most beautiful one he could.
What was most striking to Marshall and Knecht was that Von Allmen never lost his temper or his cool. Marshall had seen clients blow up over far less stressful events, like the wrong paint color. But Doug remained Zen-like. Knecht asked him how he was able to stay so composed: “And he said to me, ‘If you show people you’re angry, you allow them to control you.'”
Within weeks of the October 7 meeting, Von Allmen had put his Time Warner spread on the market for $18.45 million; it sold in 2011 for $15.7 million. (“I miss that apartment terribly!” Linda told me. “I loved it. But as Doug said, ‘You can go to New York any time you want, and it’s a lot cheaper not having that place.'”)
A bathroom on Lady Linda
The Von Allmens also sold much of the duplex’s contents. “Furniture, paintings, knickknacks—even garbage pails—were all labeled with detailed descriptions and prices. Although nothing was inexpensive, the little signs had transformed the grand apartment into a kind of rarefied tag sale,” Knecht wrote. The table where they’d all sat for the design meeting was tagged for sale at $10,500. While Linda showed the pieces to appraisers and a housekeeper vacuumed, Knecht was sitting with his subject: “Doug Von Allmen said, ‘I have been poor and I’ve been what I guess you could call rich’—the milkman’s son was never comfortable using that word to describe himself—’and to tell you the truth, it’s easier to be poor than it is to be rich.’ Gesturing toward the housekeeper… he added, ‘When you’re poor you don’t need to have all these people around you all the time.'”
Linda Von Allmen says that one of her husband’s strengths is his ability to keep things in perspective. And Doug’s childhood is never so far behind. While he admits to indulging in the best of everything—yachts, cars, shoes—he still has the thriftiness of someone who’s come from nothing. He’s a man who’s never once ran up credit-card debt in his life. “If I can afford it, I’m not frugal about things that I want. On the other hand, I get upset if somebody walks out of a room and leaves the light on.”
He is talking to me on this late January day from his bayfront home in Fort Lauderdale, where the Lady Linda is docked in his backyard.
“Oh, she’s absolutely beautiful, I’m looking at her now! She’s right behind my house!”
Von Allmen is remarkably chipper for a guy who’s been through so much. It helps, of course, that he recovered a portion of his losses from the Ponzi scheme through settlements from TD Bank.
But still, his beloved yacht is up for sale. After all the Sturm und Drang, isn’t he a little sad?
“Well… I’m not gonna be sad about not having two boats!”
He now has a 50 percent partner, automotive billionaire Roger Penske, in the other yacht he still owns, the Linda Lou, now re-named the Lime Light. This has cut his expenses significantly. (About the costs of maintaining a luxury yacht, Linda says, “it’s a bottomless pit”; in fact, a boat that size is estimated to drain up to $4 million to $5 million a year.) The Lime Light was also the boat for which he once received—and turned down—a $100 million offer. He’s gotta regret that, right?
“Nooo,” he says, chuckling. “I don’t regret anything in life. I mean, if I made one change…”
Yes? What would that be?
“If I made one little bitty change to my life, it may have resulted in me walking across the street and getting hit by a car, you know? So I don’t regret anything!”
We chat for a bit longer, and then Doug Von Allmen has to go. He’s leaving on a cruise—on the Lime Light, his half-a-boat. He and the real Linda will be sailing from Fort Lauderdale to Los Angeles.
And not on the Lady Linda?
“Actually,” he admits, “we’ve never been overnight on that boat.”