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Stephen Schwarzman joined Lehman Brothers investment bank (see Stephen Lessing) in 1972, eventually heading its mergers and acquisitions unit. In fact, Schwarzman initiated the failed 1980s merger of Lehman with American Express. Schwarzman quit in 1985, co-founding the Blackstone Group with his ex-Lehman mentor, Peter Peterson, who was commerce secretary under President Nixon. Blackstone leveraged connections to become the biggest buyout fund in the world. Early Blackstone hires included Reagan Budget Director David Stockman and Roger Altman, a top Treasury official under Carter and Clinton. Blackstone also hired Paul O’Neill as a senior advisor right after President George W. Bush ousted his first treasury secretary. Blackstone’s far-flung Hospitality Services Division went on a 1990s hotel-buying binge that started with lower-end franchises and expanded to luxury hotels such as London’s Savoy and Washington’s Watergate. Blackstone’s hospitality division became Cendant Corp. in a disastrous 1997 merger with CUC International that combined hotel assets with Avis rental cars and real estate franchises Century 21, ERA and Coldwell Banker. The next year Cendant reported that it was slashing its reported earnings over the past three years by $650 million due to widespread accounting fraud at CUC. Cendant sued Ernst & Young (see Les Brorsen) for certifying CUC’s cooked books. The company, with ex Defense Secretary William Cohen, ex-Canadian Prime Minister Brian Mulroney and Craig Stapleton (see Dorothy Stapleton) on its board, then settled investor lawsuits for a record $3.1 billion. Ex-Cendant Vice Chair E. Kirk Shelton was convicted of federal fraud charges in 2005. American International Group (see Hank Greenberg and Ned Cloonan) invested $1.4 billion in Blackstone in 1998. The $38 million that Schwarzman paid for a Park Avenue apartment in 2000 set a Manhattan record.
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Membership
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Of Special Interest
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| Profile last updated
Jan 6, 2005
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