The $13 Billion Mystery Angels
For many years, a Los Angeles psychoanalyst to the stars named Milton Wexler led the fight against Huntington’s disease, a rare and fatal congenital illness. His Hereditary Disease Foundation didn’t have much money, so he attracted scientists to his cause by inviting them to parties where they could mingle with his celebrity friends.
In 1997 a single donor began charting a new direction for the research effort into Huntington’s. He poured millions and eventually hundreds of millions of dollars into an aggressive search for a cure. At first he worked with Wexler’s organization, then split off and established his own network of nonprofit foundations. He hired a former banker named Robi Blumenstein to run them. In place of Wexler’s salons, where the talk had flowed freely from chromosomes to the arts, Blumenstein offered conferences with PowerPoint presentations on promising therapies and partnerships with major drugmakers such as Pfizer (PFE). “The word on the street was, wow, this is great. There’s this rich guy who’s creating this virtual biotech that’s tackling H.D.,” says Nathan Goodman, a scientist in Seattle. “My God, our prayers have been answered.”
By 2011 the donor was spending more than $100 million a year on Huntington’s, more than the National Institutes of Health was investing in a cure. Like everyone else, Goodman was grateful for the infusion of money—the disease had killed his father-in-law. He nevertheless found it frustrating that he couldn’t talk to the donor about his spending priorities. He says he grew more curious when he noticed Blumenstein at research conferences accompanied by a middle-aged, bearded man. A few years ago in Palm Springs, Calif., Goodman says, Blumenstein introduced the man to a group of attendees as the “donor’s representative.” He gave the man’s name as “Andrew.”
The unknown man’s donations to the fight against Huntington’s, it turns out, were just a small part of his generosity. A year ago, when I was trying to solve a different mystery, I noticed in an obscure Internal Revenue Service database the existence of two huge charitable funds known as Gabriel Trust and Endurance Funding Trust. They had been established on the same day in 2002. Together, these trusts hold about $9.7 billion. That’s one of the largest pools of philanthropic funding in the U.S., bigger than the Carnegie and Rockefeller foundations combined. Only three private foundations in the country—the Gates, Ford, and Getty foundations—are bigger.
But someone had taken elaborate steps to make sure no one figured out where this money came from, using layers of company subsidiaries to obscure its origins. Gabriel’s and Endurance’s reports to the IRS, on file with the agency in Ogden, Utah, showed the trusts were controlled by companies in Nevada and Wyoming, using the addresses of local law firms. The companies, in turn, proved to be controlled by others in Delaware. I kept digging. Finally in August, a sheaf of papers I’d requested arrived in the mail from the Delaware Office of the Secretary of State. They showed that the man behind the companies that control Gabriel was Andrew Shechtel of Princeton, N.J.
Shechtel had but the slimmest profile on the Internet. A search result suggested he was involved with a hedge fund called TGS Management, about which practically nothing had been written. Over the following months, documents and interviews filled in the rest of the story: He and two other men, all highly gifted in math, had started TGS in 1989 after the firm that had employed them dissolved in scandal. TGS pursued a style known as quantitative, or “black box,” investing, using computers to identify trades. The trio quickly made a fortune. Since they had few outside investors, few heard about their success....MUCH MORE
