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The Devil's Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers

ISBN: 978-0-470-54086-2
296 pages
March 2010
The Devil


The inside story of what really happened at Lehman Brothers and why it failed

In The Devil's Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers, investigative writer and Vanity Fair contributing editor Vicky Ward takes readers inside Lehman's highly charged offices. What Ward uncovers is a much bigger story than Lehman losing at the risky game of collateralized debt obligations, swaps, and leverage.

A can't put it down page turner that opens the world of Wall Street to view unlike any book since Bonfire of the Vanities, except that The Devil's Casino isn't fiction.

  • Details what went on behind-the-scenes the weekend Lehman Brothers failed, as well as inside Lehman during the twenty years preceding it
  • Describes the feudal culture that proved both Lehman's strength and its Achilles' heel
  • Written by Vicky Ward, one of today's most connected business and finance writers

On Wall Street, Lehman Brothers was cheekily known as "the cat with nine lives." But as The Devil's Casino documents, this cat pushed its luck too far and died?the victim of men and women blinded by arrogance.

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Table of Contents

Cast of Characters.


Part One: The Ponderosa Boys.

Chapter 1 A Long, Hot Summer.

Chapter 2 The Beginning.

Chapter 3 The Captain.

Chapter 4 The “Take-Under”.

Chapter 5 Slamex.

Chapter 6 The Phoenix Rises.

Chapter 7 Independence Day.

Chapter 8 The Stiletto.

Chapter 9 The Ides of March.

Chapter 10 Eulogies.

Part Two: The Echo Chamber.

Chapter 11 Russian Winter.

Chapter 12 Lehman’s Desperate Housewives.

Chapter 13 The Young Lions.

Chapter 14 9/11.

Chapter 15 No Ordinary Joe.

Chapter 16 The Talking Head.

Chapter 17 The Sacrificial Ram.

Chapter 18 Korea’s Rising Sum.

Chapter 19 The Wart on the End of Lehman’s Nose.

Chapter 20 Damned Flood?

Chapter 21 Closing the Books.


A Note About the Sources.





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Author Information

VICKY WARD has been a contributing editor to Vanity Fair since 2001, specializing in investigative reporting. She has profiled, among others, Jean-Marie Messier, Carly Fiorina, CIA agent Valerie Plame, businesswoman Louise MacBain, Morgan Stanley, the late Bruce Wasserstein, counterterrorism expert Rich-ard Clarke, François Pinault, the Getty, the Guggenheim, Fairfield Greenwich Group (a Madoff feeder fund), Brooke Astor, and Kate Moss. Ward is a weekly columnist for the Huffington Post and a contributor to CNBC. She was previously the executive editor of Talk magazine. Her work has appeared in the New York Times, the Financial Times, the London Times, and the Daily Telegraph. A native Briton, Ward was the runner-up for the Catherine Pakenham Award in 1994, Britain’s most prestigious award for young women writers. She holds a master’s degree in English literature from Cambridge University and has lived in New York City since 1997.
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"Contains some fascinating pen-portraits of Lehman's characters—Mr Fuld and his sycophantic court . . . ." (The Economist Online)

"Ward sheds light on the four childhood friends who planned to take the financial world by storm while keeping their heads on their shoulders, and how quickly the second part of the play fell by the wayside amidst a brutal corporate coup and bumbling mismanagement that brought the firm down. The Devil's Casino serves as both an impressive work of investigative journalism and a cautionary tale of the culture surrounding American finance." (The Daily Beast)

"Ward's book is rich on details . . . when Ward connects the dots, the rough conclusion she comes up with is that fatal flaws of Fuld's culture brought Lehman down." (Reuters)

"A fascinating, deftly paced tale." (Metro.co.uk)

"Vanity Fair Contributing Editor Vicky Ward serves up a book about an investment bank that is a spicy, dishy dish . . . Ward builds a convincing case that duplicity and betrayal in the mid-'90s eventually led to the demise of Lehman Brothers." (Bloomberg BusinessWeek)

"…The Devil's Casino has everything readers might want to know about the personal foibles and shopping habits of key Lehman leaders and their wives…a fascinating read." (Financial Times)

"What's remarkable about this narrative is that Ward...manages to humanize many of the central figures involved in the rise and fall of one of Wall Street’s largest firms, offering profound insight into the titans of finance whose recklessness, greed, and competitiveness brought the US economy to the brink of collapse. The story plays out like a Shakespearean tragedy (Ward even includes a "Cast of Characters") in which the very principles upon which the firm was built prove to be its undoing. . . The Devil's Casino. offers a fascinating glimpse into the culture of one of the most powerful firms on Wall Street. One hopes that the history it chronicles will also serve as a cautionary tale for the financial industry's still-uncertain future." (The Boston Globe)

"In a terrific book Vicky Ward takes us into the heart of the denial machine. Hers is the story of Lehman Brothers, then Wall Street's fourth largest investment bank, soon to be its biggest casualty. . . Ward takes us into the world of these bankers, and shows us the lives they were leading in the years before the crash. At first, they saw themselves as "good guys" – bankers who would not become blinded by greed. But then they began to see how much money could be made and their lifestyles changed. They did not seem to be their old selves any more. This is what Ward does so well: she shows us the world of private jets and helicopters, the women with personal shoppers and shelves full of unworn shoes. She shows us how it is that people, even though they are multi-millionaires, can still have an addict's desperation for money." (The Guardian)

In the fall of 2008, the 150-year-old financial institution Lehman Brothers spectacularly melted down. The liquefied remains then ignited, joining the worldwide conflagration that became the great recession that is now either over or not, depending on whom you talk to. In short order, a host of formerly rock-solid institutions showed cracks that ran all the way from their foundations to the aeries occupied by their greedy, ineffective senior management. Firms that once represented all that was trustworthy in our financial system teetered, then fell. Even insurance companies that were responsible for the welfare of others were revealed to be the oldest permanent floating craps game in New York.

"Vicky Ward's "The Devil's Casino" is an able new entrant into this crowded genre, and people who hate losers who are not their friends should enjoy it very much. It chronicles the sad and messy end of the House of Lehman in a relatively terse and fast-moving 270 pages, making it a mere social X-ray of a book by today's standards of nonfiction heft, which often rivals the unsecured debt load of a failed bank. Ward carefully and skillfully tracks the last 25 or so years of the great, doomed enterprise, and her portrait of a business entity is often engaging, spicy and amusing. I particularly enjoyed the horror stories about those few, strategically challenged souls who had the temerity not to learn golf. Theirs was a demise that only outsiders to our fascist corporate golfing culture can appreciate. And the tick-tock of deals, fads, decisions and transactions that took place over a very long time can be exciting. The book also does a fine job of sketching several outlandishly banal individuals who rose to prominence in the firm and ultimately were responsible, each in a different way, for its demise." (The Washington Post)

"Vicky Ward is a British export to New York, with a degree in English Literature – and it shows. She writes stylishly and she understands, unlike other authors who have rushed into print with accounts of the financial crisis, that enduring literature is not created by unravelling transactions but by illuminating complex personalities." (Mail on Sunday)

“Vicky Ward's The Devil's Casino is an able. entrant into this crowded genre, and people who hate losers who are not their friends should enjoy it very much. It chronicles the sad and messy end of the House of Lehman in a relatively terse and fast-moving 270 pages. Ward carefully and skillfully tracks the last 25 or so years of the great, doomed enterprise, and her portrait of a business entity is often engaging, spicy and amusing. The book also does a fine job sketching several outlandishly banal individuals who rose to prominence in the firm and ultimately were responsible, each in a different way, for its demise.” (Stanley Bing, The Free Press)

“A terrific tale of the weird and not‑so‑wonderful world of Lehman Brothers: the personalities, the bonuses, and best of all the backstabbing politics of the Louboutin-shod bankers' Wags. The now-vilified former CEO, Richard Fuld , is portrayed not just as the aggressive "Gorilla" of Wall Street lore but as a human sponge who absorbed the attributes of smarter colleagues to the point of stealing their entire personality.” (The Guardian)

“The Devil’s Casino, well researched, chatty, lively, sets itself up as a successor to Greed and Glory on Wall Street, Ken Auletta’s 1986 book about Lehman. But the clichés of business articles are too frequent here: standing ovations on the trading floor, the rich wife’s shoe collection and so on. . . as she charts the rivalries of life on Wall Street, Ward entertains with rich detail: the rough-edged Fuld taking elocution lessons and copying the nail-clipping habits of a smoother senior whose job he desires; Henry Kissinger at a board meeting, stirring his iced tea with a pencil. Ward shows that more than two dec­ades ago, Lehman was developing dodgy habits that would cause trouble later. For example, it used a secret cash cushion known as “Dick’s reserve” to polish its results at the end of each quarter. The book skillfully depicts the lives lived in the background of great clashing events. And it also hints at what Wall Street has become since the crisis, at the apparent dominance of two survivors, Goldman Sachs and JPMorgan Chase.” (The New York Times)

"There is more juicy, salacious, icky stuff in this book than you can put in five books . . I kind of like all the icky stuff in it . . . all of the stuff going on with the wives and that. And sex and drugs. . . I'm begging you to read this. It reads like an intellectual Jackie Collins novel."
Don Imus

“The really juicy details behind the Lehman Bros. collapse. Behind-the-scenes account skips geeky economic discourse to examine the underlying history of backstabbing and greed that helped bring down the investment bank. It is not often that a book on the financial crisis makes you want to get a big bowl of popcorn. But Vicky Ward's page-turning yarn about Lehman Bros., the failed investment bank, is the closest thing to a bodice-ripper that the 2008 meltdown is likely to produce. . . . Ward writes about helicopter rides and corporate jets, multimillion-dollar art collections and constant backbiting. . . But for all the book's apparent fluffiness, Ward hones in on Lehman's central problems better than even she could have known. In a series of incidents stretching back decades, she shows how Lehman's traders routinely hid the riskiness of their trades from senior managers and the public. . . To Ward, the rest of the tale is an unstoppable operatic tragedy, albeit one that took 12 years to play out. But it is chock-full of designer clothes and fancy yachts that make for a fascinating read.”
Los Angeles Times

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Press Release

March 23, 2010
The Devil's Casino

You thought you knew everything about Lehman Brothers; you thought wrong.

Vicky Ward got hold of the diaries written by the firm’s top executives and unearthed the unexpected bombshell that Dick Fuld was not the leader everyone thought — and much more.


From her unique vantage point as the only person outside Lehman who has the 2002/2003 diaries recorded by Lehman’s senior executives — the major players of the preceding 20 years, documents that were secretly passed to her, investigative writer Vicky Ward reveals the story no one has told in The DEVIL’S CASINO: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers (Wiley; April 1, 2010; U.S. $27.95).

Ward landed interviews with many previously off-the-record insiders, executives, spouses, and major dealers in the financial industry. Bringing together new information and comprehensive research, she gives us a multi-layered, riveting portrayal of modern Lehman Brothers and its two real leaders; one who brought the small firm roaring to ascendency — and then was brutally betrayed and erased from its corporate history, and another who ruled the firm like Robespierre ruled France — but under a smiling façade while the company crashed and burned.

Lehman lauded itself as “one firm,” a small, diversified unit of fast thinkers who were smart enough and savvy enough to out-deal Goldman Sachs and every other big player on Wall Street. Ward, tapping resources that no one else had reached, has penned an authoritative account of how, far from the widely touted myth, Lehman’s groups were divisive, deadly competitive, risk-blind, and out of control; for the first time, Ward shows us just how fast the corporate stakes were raised and personal cash was flashed.

Rich with fresh anecdotes and the psychological underpinnings that propelled Lehman’s triumphs and demise, The DEVIL’S CASINO is engrossing, revealing, and true, and provides an unprecedented perspective on the how their unexpected and phenomenal success changed good people over time, stretched the boundaries of friendship and ethics, fed backstabbing, destroyed a life, and ultimately brought down America’s oldest investment bank. Ward tells how the Ponderosa Boys – four working class guys (Chris Pettit, Joe Gregory, Steve Lessing and Tom Tucker) — best friends with zero financial expertise, all from the same suburban town on Long Island, with high ideals to “Do the right thing” and determined to rebuild the broken brand, propelled Lehman Commercial Paper into a financial phoenix and resuscitated Lehman.

She lays bare the machinations as three of the Ponderosa boys staged a Machiavellian coup, turning on Chris Pettit, a West Point graduate and Vietnam Army Ranger, whose extraordinary leadership skills were the heart and soul behind Lehman’s rise, and betrayed him at his most vulnerable point — when his brother and his marriage were dying. The episode is still called “The Ides of March” by senior Lehman executives. Three months later Pettit was dead.

With a keen eye for the telling detail, Ward provides an insightful lens into the heart of the Lehman psyche, from its heady Camelot days and its fervor to beat Goldman Sachs regardless of risk or cost, to its blind-eyed trading and its last stand in London, when it was blindsided by the Barclays decision — telling for the first time how hopeless the situation really was. She also takes us into the hearts of the players, to spouses who admit they sold their souls for money, showing the tragic human cost of working at Lehman, the camaraderie that soured to sniping and ended up stripping millions from investors. In The DEVIL’S CASINO, Vicky Ward reveals:

  • The Mighty “Gorilla” Ntwadumela (“he who greets with fire”), CEO Dick Fuld, was “neither a leader nor a dazzling intellect,” but rather for many years was “widely considered as someone who had very little to do with” his employees or his business operations; before dropping the hatchet on Pettit, Fuld asked Gregory and Lessing on the phone, “How am I going to do this again?”:
  • Et Tu – The evolution of president Joe Gregory, who morphed from an ordinary emotional hippie and Pettit’s acolyte to his Brutus, a terrifying dictator nicknamed “Uncle Joe” (after Stalin);
  • A Scottish Savior – The untold but crucial role of the “Scottish toff” Hon. Peregrine Moncreiffe in saving Lehman’s name and brand;
  • Holding on to an Ace – How Lehman managed to survive — when no one thought it could — the Russian crisis in 1998 (Ward found the men behind the save, Todd Jorn and Ming Xu), and the Mexican Peso crisis that began in 1994;
  • The Lie of the “Family-First” Culture – On the day her child had suffered a seizure brought on by fever, a Ponderosa wife was forced onto a waiting helicopter to look at the McMansion another Ponderosa couple was building on L.I. — she knew that if she did not board, her husband’s job was at risk; at the mandatory annual summer retreat, Karin Jack, a Ponderosa wife, brought a fake cast to get out of the enforced hike that took place every year; then Niki Gregory showed up with a real broken leg, still planning to climb.
  • High Stakes Gamblers in Charge of the Casino – Mortgage-backed securities became the devil’s dice as the housing market grew, and incentives were created for executives to take riskier bets securitizing mortgages, dicing them up and selling them as financial pieces to clients;
  • 9/11 – How individual actions and decisions on 9/11 saved employees and the firm, which had three floors of offices in 1WTC; how Ian Lowitt, treasurer of Lehman, secretly re-entered the building for vital computer files;
  • The Most Powerful Woman on Wall Street – Erin Callan, prematurely named CFO, was a rookie at the top of an industry in crisis; she became her own worst enemy, and set up to fail, became a scapegoat for the crisis, more played upon than a player;
  • Others Around the Table – The roles of Treasury Secretary Hank Paulson, JPMorgan Chase CEO Jamie Dimon, Barclays CEO Bob Diamond, president of the Federal Reserve Bank of New York Tim Geithner, Korea Development Bank CEO Min Euoo-Sung, Bank of America CEO Ken Lewis, and others in the free-falling final days of Lehman.


At the end, after proving themselves and reaching the high rollers table, the four who set out to be the “good guys of Wall Street” were divided, financially broken, or dead. In The DEVIL’S CASINO, Vicky Ward presents a finely shaded portrait of this group that rose with the glory and bravado of Icarus only to descend burning in flames not so much from a sun, but from a match lit from within.




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