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Where Are They Now - Tuesday, May 31, 2005

Alberto Vilar: Internet Con Man?

Just when we'd thought we'd seen the last of the Internet scoundrels, a recent news item jolted us from our beer and hotdogs over the long weekend.

We are referring to the story of the arrest of Alberto Vilar, a dot-com gazillionaire if ever there was one. His Amerindo Funds were highly sought after investment vehicles for anyone wanting to reap double digit returns during the boom. According to the NYT, last Thursday, "federal agents arrested him on fraud charges, accusing him of stealing $5 million from a client - and using the money to make good on charitable pledges. As he was led away in handcuffs, there was no doubt that the Vilar bubble had burst once more - perhaps irreparably."

Philanthropist or Fraudster?

Vilar first got some negative publicity a few years ago when he was unable to make good on some pledges he'd made to various philanthropic causes. But despite creating the appearance that he was back in the fast lane, Vilar wasn't even able to post his $10 million bail last week.

If these charges stand - and the prosecutors are already using some pretty tough talk about this being only the "tip of the iceberg" - then Vilar will join the ignominious (and already bloated) roster of Internet scoundrels. How did this happen? Mr. Vilar will have his day in court to explain that.

We recall interviewing Mr. Vilar back when he was on top and were taken aback by his investment strategy, which was simply to buy technology stocks such as Intel, Cisco, Broadvision and others and to hold on to them through thick and thin. This approach has served Warren Buffett well, but Buffett would never invest in tech. To play in tech, you have to be prepared to sell when valuations become extreme. Buying and selling also provides you with work to do day and night which will keep you out of expensive opera seats and philanthrophic obligations that apparently brought down Mr. Vilar.

Read: The Double Ups and Downs of a Philanthropist - [nytimes.com]
Read: Amerindo's Vilar Charged With Stealing From Client - [bloomberg.com]