Boston Globe columnist: Karl White “sounds like an unsuccessful salesman with a phony title”

Months ago, the Boston Globe reported that the Federal Bureau of Investigation had questioned Karl E. White as part of a probe into what’s being described as a possible Ponzi scheme. He recommended an investment fund to his former employer, the Massachusetts Bay Transportation Authority, that went belly up. The MBTA has now lost the entire $25M that it gave White to invest.

According to the Globe: “White said he does not know what happened to the MBTA’s money after he left Fletcher in November 2008. But even before that, White said, he never checked to see how the investments were doing. Though he held the title of investment chief, White said he was not in charge of managing the money.”

Globe columnist Steven Syre responded to White’s account by saying that “White sounds like an unsuccessful salesman with a phony title.” From his opinion column:

If you get close enough, the MBTA’s pension fund will remind your eyes and nose of a Florida swamp. You’re pretty sure there’s nasty stuff down there, but it’s hard to see until something pops out of the muck directly in front of you.

Well, Merry Christmas to me. Something unexpected did burble up to the surface just the other day. It was a business called Fletcher Asset Management and an investment account to which the pension fund once entrusted $25 million. But now that account lies sadly empty. Looted might be a better word.

One among several facts that make this particular story extraordinary — even by MBTA standards — is who sold the pension board on the investment in the first place six years ago. That would be Karl White, the man who had been running the pension fund just months earlier.

Shortly after White realized his 2006 candidacy to become chairman of the University of Massachusetts wasn’t going to fly, he quit the pension fund to become Fletcher’s chief investment officer. White quickly sold the MBTA on a new fund but convinced practically no one else to do business with his firm.

Now, White says he actually managed no money at the investment firm that collapsed and went bankrupt in 2012 — well after he left Fletcher. He doesn’t have a clue what happened to the MBTA’s millions.

This could actually turn out to be true. A bankruptcy trustee points his finger at Fletcher’s founder, Buddy Fletcher, who purportedly handled client money in ways that would make Charles Ponzi blush, for most of the investment firm’s problems.

So what was White actually paid to do? Reading the account he gave the Globe’s Beth Healy last week, White sounds like an unsuccessful salesman with a phony title (he called himself a salesman with “gravitas”) who exits — shockingly — when his bonuses dry up. He’s Willy Loman in a camel-hair coat. Maybe it happened that way.

Read the full column here.