Top buyer: Enniscorthy owner waits for Tyco axe
Last year, real estate circles were abuzz about the largest real estate transaction in Albemarle County history. Historic Enniscorthy had reportedly sold for $18 million to an unidentified buyer.
Exactly who the buyer identified in the property transfers as Sea Ridge LLC really was remained somewhat of a mystery. But when Enniscorthy joined the homes on tour during this year's Historic Garden Week, the owners listed were Mr. and Mrs. Mark Swartz.
Swartz is CFO of Tyco, in its heyday a $120-billion conglomerate whose former CEO, Dennis Kozlowski, recently resigned after being indicted for trying to avoid $1.1 million in New York sales taxes on paintings he purchased by Renoir, Monet, and others.
Kozlowski, who's made over $300 million selling shares back to Tyco over the past three years, allegedly borrowed $13.2 million from the company to buy the paintings and had art gallery employees falsify invoices and ship empty boxes to Tyco's offices in New Hampshire as part of his strategy to dodge the sales tax.
Tyco announced last month that Swartz, 41, named the country's highest paid CFO by CFO.com, would resign once a successor had been found. An article in the August 2 New York Times called the move an ouster by new CEO Edward Breen. On August 18, the paper reported that Swartz had been fired.
Swartz will suffer a $91 million reduction in severance pay, despite a contract entitling him to the money. According to the Times story, Breen had threatened to challenge the contract unless Swartz agreed to forfeit the $91 million, and Swartz decided not to push it. Swartz will get $9 million, and he's made at least $180 million selling Tyco shares enough to comfortably maintain a pricey estate like Enniscorthy.
The transfer of Enniscorthy occurred on February 14, 2001, when owner John Pickett, former part owner of the New York Islanders hockey team, and his wife, Robin, transferred title from Enniscorthy LLC and Esmont Farm LP to Sea Ridge LLC.
The Commonwealth of Virginia levies a tax on the recordation of deeds, mortgages, and other transactions.
A published report for this transaction announced the sales price at $18 million, but another source familiar with Enniscorthy pegs it at $17 million. Either way, such a large transaction would normally incur transaction taxes totaling over $50,000– with around $18,000 of that going into County coffers. But, according to County property records, no recordation taxes were paid.
How did that happen?
Shelby Marshall, Albemarle County clerk, points out that a tax exemption is available "to a partnership or limited liability company when the grantors are entitled to receive not less than 50 percent of the profits and surplus of such partnership or limited liability company." Huh?
Does that mean that the Picketts still own part of the property, or is this just another strategy rich people use to save a few thou here and there a perfectly legal stunt unlike, say, Kozlowski and his paintings or Martha Stewart and her alleged insider selling of $228,000 worth of ImClone stock?
Real estate agent Frank Quayle, citing a confidentiality agreement, isn't talking, even to confirm that Swartz is the new owner. Nor would McCallum and Kudravetz PC, agents listed on county tax records. And neither would Richmond and Fishburne, the attorneys who handled the real estate transaction.
Swartz is known for cutting the deals that made Tyco "one of the most acquisitive companies of the past 10 years," says CFO.com. And he has some experience in real estate transactions. In fact, Tyco is currently investigating him. How, Tyco wonders, did Swartz come to be sole trustee of Kozlowski's $5-million Nantucket oceanfront home? Swartz also signed the deed to a Park Avenue apartment Tyco sold to Kozlowski's former wife in 1997.
"There are numerous real estate transactions, and they are a focus of our internal investigation," Tyco spokesman Gary Holmes told the Boston Globe June 12.
Could the Enniscorthy deal be part of Tyco's internal investigation? Holmes won't say.
"I'm not going to be able to give any information on real estate transactions until the investigation is complete," says Holmes, predicting a mid-September announcement.
Swartz's main home is located– perhaps appropriately– in Boca Raton, Florida, where Scott "Beachfront Mansion" Sullivan, the just-indicted CFO of WorldCom, owns an unfinished multi-million-dollar palace. Holmes says Swartz also has a home in New Hampshire, site of Tyco's main U.S. operations.
Tyco is based in Bermuda, which allows it to save $300 million a year in U.S. taxes, according to an article in Executive Times. Some observers wonder if being based offshore means Tyco is trying to hide something.
With his notoriety from the Tyco dustup, Swartz is just the latest figure of note to cross the threshold of Enniscorthy. Back in the 18th century, the plantation was visited by James Madison, James Monroe, Thomas Jefferson, and Patrick Henry.
Will Swartz choose Enniscorthy as his main residence once his Tyco replacement has been found? And what's with all the secrecy about ownership of the property? Swartz, whom on-line magazine Salon has called the "master of obfuscation," was not available to tell all when The Hook called.
As the proud owner of the most expensive real estate ever sold in Albemarle County, he should find Enniscorthy a perfect retreat for a recently ousted exec. Although his tenure at Tyco is in jeopardy, his reign as highest payer in the local real estate market seems secure.