Morgan Stanley Lawsuit: The Real Story

The day he filed a discrimination suit against Morgan Stanley Dean Witter & Company for $1.35 billion, 25-year-old former banking analyst Christian Curry, dressed in coat and tie, sat sullenly in his lawyer’s office at Third Avenue and 57th Street, answering a flurry of questions from reporters.

Sitting to Mr. Curry’s right was his fiancée, 22-year-old Marisa Wheeler, who had graduated just hours earlier from Columbia College. To Mr. Curry’s left sat his attorney, Benedict P. Morelli, 52, a bushy-eyebrowed litigator who asserted into multiple microphones that his client’s enormous damages claim was “the only punishment Morgan Stanley would understand.”

Strikingly absent from the May 19 press conference was the man who has become a key player in Mr. Curry’s last year and the final impetus for his suit against the securities firm: a self-described financial consultant named Charles Joseph Luethke. Sources in the Manhattan District Attorney’s office said he is the man who was paid $10,000 by Morgan Stanley to set Mr. Curry up to be arrested in August 1998.

On May 18, the District Attorney dropped all five felony counts against Mr. Curry, saying the involvement of a confidential informant tainted the allegations that Mr. Curry attempted to hack into Morgan Stanley’s e-mail system and plant racist and homophobic messages. Executives at Morgan Stanley are now under investigation by the District Attorney for the alleged payments to Mr. Luethke and for failing to disclose their relationship with him to prosecutors.

Mr. Luethke’s involvement with Mr. Curry, however, runs deeper than this single incident. They have described one another to reporters as “frauds” and leveled harsh charges, including allegations involving prostitution and extortion, against each other.

Mr. Luethke, too, has suffered legal repercussions from his involvement with Mr. Curry: On Sept. 22, a month after Mr. Curry’s arrest, Mr. Luethke was arrested by the Police Department for the aggravated harassment of Ms. Wheeler, Mr. Curry’s girlfriend, a misdemeanor, and for possessing a forged military ID, a felony.

Yet even as Mr. Curry was insisting to both prosecutors and reporters that he had been set up, he had maintained his relationship with Mr. Luethke. As recently as April, the two were drinking together, horsing around and laughing. Together they called The Observer , which has a taped record of the conversation. And, in interviews, Mr. Luethke has told The Observer that he is in frequent contact with Mr. Curry, although he claims it’s because Mr. Curry needs him to help cover up some forbidden secret.

Their continued relationship is one of the more baffling elements in a case that is so bizarre it has dominated the dialogue in New York’s most buttoned-up industry–even spurring heated debate in Vault Reports.com, an Internet chat room usually devoted to more mundane goings-on in the business world.

And the wildly shifting interactions between the two men may offer clues to why the District Attorney dropped the charges against Mr. Curry, after nine months of intense scrutiny.

These days, Mr. Curry appears to be focusing his energy on his civil suit against Morgan Stanley, a 26-page document filed on May 19 in State Supreme Court that names 13 individuals from the firm as defendants, including John Mack, the firm’s president and chief operating officer; Philip Purcell, chief executive, and Carol Bernheim, the in-house counsel. The suit alleges that Mr. Curry was fired from Morgan Stanley because he was black and because his bosses believed he was a homosexual.

The seeds for the suit were sown back in Mr. Curry’s college years, when he posed nude for a photographer. In April 1998, the shots were published in a gay pornographic magazine, Playguy . Two weeks later, Mr. Curry was fired from his position as a first-year analyst in the real estate department of Morgan Stanley.

Morgan Stanley officials insist he was fired for filing false expense accounts. Mr. Curry claims he was the victim of a homophobic, racist harassment campaign.

It was an abrupt ending to a promising career. Mr. Curry grew up in Chappaqua, N.Y., the son of Dr. William Curry, a surgeon at New York Presbyterian Hospital. Christian Curry matriculated at the U.S. Naval Academy in Annapolis, Md., in the fall of 1992, but didn’t stay a midshipman for long. In January 1994, he restarted college as a sophomore at Columbia University. He quickly became involved in extracurricular activities: basketball, Greek life, music and, according to numerous classmates, picking up women.

Students who knew Mr. Curry at the time said he left a mixed impression. “He was charming and charismatic when I first met him,” said a Columbia graduate who lived in Mr. Curry’s dormitory one year, “but it quickly became apparent that his charm was just bullshit.”

Mr. Curry has said that his fellow students were just jealous of his modeling career and his success with pretty girls. “I was a black guy, in college, making money,” he told The Observer in one of several interviews since his arrest last August. “I drove this car [a green BMW], I dated the prettiest girls in school, I never did these fraternity things, and people were resentful of that fact–even my coaches.” (Asked for comment on Mr. Curry’s brief stint on Columbia’s junior varsity basketball team, coach Armond Hill said, “He was on the bench a lot. I’m sure he played … but he didn’t start.”)

Mr. Morelli said it was Mr. Curry’s character that convinced him to take the case. “I was actually impressed that he was a straightforward guy,” Mr. Morelli said. “But I also think that, you know, he could be immature sometimes because he’s a young man. He’s 25.”

Mr. Curry spent the summer of 1994 on campus, in his fraternity house, Kappa Delta Rho, on West 114th Street near Broadway. It was then, Mr. Curry told The Observer , that he first became acquainted with Mr. Luethke.

A Military Career

Mr. Luethke’s past is more difficult to pin down. In conversations with The Observer , the slight, balding 29-year-old man with blue eyes and strawberry-blond hair provided only fragmented information. He did, however, confirm that he was a native of Haworth, N.J., who played basketball and football at nearby Demarest High School.

Mr. Luethke has told The Observer that he was honorably discharged after serving in the military in the early 1990’s, in Panama, and attended a prep school for West Point. He told others he performed intelligence work in the military, for which he had been decorated. He also told The Observer that he was ordained as a Presbyterian minister during the summer of 1998 in a Korean church in Queens whose name he could not recall. Further, he has claimed that he is a member of a Missouri-based organization for retired Army chaplains, founded by a retired three-star general named Herman Keck.

A spokesman at the National Personnel Records Center for the U.S. Armed Forces in St. Louis said, “We are unable to identify a record of military service for Mr. Luethke on file.” However, the spokesman stipulated that the center kept records only of discharged, retired, and deceased veterans.

Chaplain Philip Hil, executive officer to Chief of Chaplains for the U.S. Army, said a thorough search of military records, done months ago in response to an inquiry from New York police, had turned up no evidence of a Chaplain Charles Joseph Luethke in any branch of the military. Further, he said he has no record the chaplain’s association claimed by Mr. Luethke exists.

A major at the General Officer Management Office for the U.S. Army and a deputy chief in the U.S. Army Reserves said they had no record of a Gen. Herman Keck serving as a chaplain in either their active or retired rosters. A Herman Keck, reached by The Observer in Springfield, Mo., said he was too ill to answer any questions.

Chaplain Hugh Dukes, from the chief of chaplains office, said no three-star general chaplains exist, and that the current Chief of Chaplains is a two-star general.

Spokesmen at the Presbyterian national headquarters in Louisville were unable to corroborate Mr. Luethke’s assertion that he was ordained as a minister.

Mr. Luethke’s business card, which bears his name and his 44th Street address, lists a “merchant banking & corporate finance” firm called PFI Capital Partners Inc. & Affiliated Companies, located in the Fred French Building at 551 Fifth Avenue.

A visit to the office found it had been a financial consulting firm that consisted of Mr. Luethke and a Douglas Castle. It is now out of business. A sign taped to the door directs deliveries to Positive Mortgage Inc., an unrelated firm that had shared office space with Messrs. Luethke and Castle, but moved to a separate floor shortly before PFI folded. An employee at Positive claimed no knowledge of PFI’s business, and Mr. Castle could not be reached for comment. Mr. Luethke acknowledged the firm had gone out of business. He also says he now works for two foundations, neither of which The Observer could locate.

Back in the summer of 1994, Mr. Luethke appeared at Mr. Curry’s frat house, saying he was a KDR brother from another fraternity chapter, according to Mr. Curry and several other frat members. “That’s a lie,” Mr. Luethke said. “We met during the school year of 1993-4. Through people.” (A staff member at the KDR national headquarters in Greensburg, Pa., was unable to confirm that either Mr. Curry or Mr. Luethke is a member.

Mr. Luethke had attended Columbia’s School of General Studies for one semester, fall 1993, as a part-time student, a spokesman for Columbia University confirmed. At the frat house, according to other frat members and Columbia students, Mr. Luethke and Mr. Curry hit it off right away–so much so, Mr. Curry said, that he invited the supposed fraternity brother to use his room on weekends or when he was out of town. “Yeah, we actually shared a room in the KDR house and I paid him rent,” Mr. Luethke said.

Mr. Luethke began spending time with the fraternity brothers, telling them over drinks in the local hangouts about his Army career, according to Mr. Curry and several friends from that summer.

Mr. Curry alleges that his relations with Mr. Luethke began unraveling when the latter started running up expensive phone bills and taking money from him. Mr. Curry said that unsavory characters appeared at the fraternity house one day, asserting that Mr. Luethke owed them money and threatening violence to Mr. Curry and his friends, who happened to be at home. Shaken by the strange visitors, Mr. Curry decided to take matters into his own hands: When Mr. Luethke returned to the house, Mr. Curry said, he “beat him up and threw him in a ditch,” terminating the friendship.

Mr. Luethke counters that it was Mr. Curry who had the unsavory friends, and denies he took money or ran up big phone bills. Further, he said the fight never took place.

In any case, a frat brother confirmed the falling out and said fraternity members saw little of Mr. Luethke after that. But several Columbia women said they saw plenty of him–too much.

Four women interviewed by The Observer claim that between 1993 and 1996, they endured some sort of verbal harassment or unwanted attention from Mr. Luethke. The women, all of whom requested anonymity, claim that Mr. Luethke met them during classes or on campus, then called them incessantly, attempting to spend time with them and interfering with their other relationships. Several of these women were interviewed by Mary Porter, an assistant district attorney who was handling both Mr. Curry’s and Mr. Luethke’s charges last fall.

“He just sort of followed me everywhere, even though I was obviously not interested in having anything to do with him,” said one woman who graduated from Columbia in 1994, who said she met Mr. Luethke when he sat down with her in the college cafeteria in the fall of 1993. Mr. Luethke vehemently denies harassing any women and counters that Mr. Curry put the women up to spreading stories about him, in return for a cut of any settlement he might get from Morgan Stanley.

An Offer Not Refused

Mr. Curry has said he did not hear from Mr. Luethke again until June 1998–after his graduation from Columbia and his firing from Morgan Stanley. It was then, according to Mr. Curry, that Mr. Luethke ran into Ms. Wheeler, not far from the Riverside Drive apartment in which Mr. Curry and Ms. Wheeler were living for the summer.

“He came up to my girlfriend looking for me,” said Mr. Curry, “and he was like, ‘It must suck for Christian and you that he was fired for this.’ And then he goes, ‘I have all these e-mails from people at Morgan Stanley, calling him faggot, nigger and all this stuff, and thought maybe you’d like to see them. He said he was a frat brother, and one of my best friends from KDR … so she gives him her number–which was mine, too.”

In an interview last October, with his girlfriend by his side, Mr. Curry said he flipped when Ms. Wheeler told him she had run into Mr. Luethke. He said Mr. Luethke began calling his apartment as often as 25 times a week, at first expressing concern over the former analyst’s firing, then expressing interest in settlement monies he might get from Morgan Stanley. “There was a misconception around the Street that I had gotten a settlement [from the firm] already,” said Mr. Curry, “and people were saying, ‘Hey, I heard you got all this money,’ and I was like, ‘What are you talking about?’ So Luethke thought I had all this money …”

Mr. Luethke said it was Mr. Curry who brought up the idea of profiting from his firing. “He offered that if I had gone along with his plan–to plant e-mails on the Morgan Stanley system–that just as he gave the offer to the undercover cop, he had offered to me [a cut of the settlement.”

Mr. Curry counters that he ordered Mr. Luethke to go away. But then he changed his mind. “I was like, all right, I’ve gotta step in,” he recalled. “I call Luethke and leave a message, saying, ‘You call again and I’ll kill you.'” Mr. Luethke confirms that he was threatened at the time by Mr. Curry and continues to be now. Mr. Curry’s lawyer said that his client had spoken in anger and had no intention of following through on the threat.

Then, Mr. Curry said, Mr. Luethke requested a meeting–saying he had copies of incriminating e-mail messages from Morgan Stanley, in which staff members made racist or homophobic remarks directed at Mr. Curry.

“So then I played him for a day,” said Mr. Curry. “I said, ‘Just give me the e-mails.’ And he said, ‘If you want the e-mails you can have them, and I want 10 percent of the settlement,’ and like a fool, I said, ‘Fine, anything you want. Just give me the e-mails.'” Mr. Curry said Mr. Luethke stalled for weeks but finally had a friend–allegedly with copies of the e-mails–call Mr. Curry and dictate one of them to him over the phone. According to Mr. Curry, it was then that Mr. Luethke offered to fix him up with his hacker friend, an alleged Morgan Stanley employee who would be able to take the sample e-mail and look for similar messages in the system. Mr. Luethke said: “He wrote out in his own handwriting exactly what he wanted planted, which is irrefutable.” He added that the note is in the District Attorney’s hands.

On Aug. 17, Mr. Curry said, he and Mr. Luethke went together to a small park on East 43rd Street near Lexington Avenue, where they met with the alleged Morgan Stanley employee who was really a police officer. “I should’ve just walked away from this guy,” said Mr. Curry. “I gave this guy this [sample e-mail] and a couple hundred dollars; I didn’t even do any talking. And the cop kept trying to get me to say things, and I was like, ‘I’m not quite sure what you wanna do here.’ Joe was with me the first time. So he goes, ‘You can get this?’ and the guy’s like, ‘Oh, yeah.’ So we left. And then the guy called me up again and left a message saying, can you meet me at the same place.” Three days later, after a similar meeting at which Mr. Luethke was not present, Mr. Curry was arrested.

But, according to Mr. Curry, that was not the end of his relationship with Mr. Luethke. Mr. Curry said Ms. Wheeler was receiving threatening phone calls at their Riverside Drive apartment from Mr. Luethke. “He started gloating, calling my girlfriend, saying, ‘How does this feel about Christian? Going to jail?’ And he won’t stop calling,” said Mr. Curry. So Ms. Wheeler called the police, who went to Mr. Luethke’s apartment on East 44th Street and arrested him. Mr. Luethke denies the account and has pleaded not guilty.

The two officers, one of whom was Detective Luis Serrano, booked him for harassing Ms. Wheeler–a misdemeanor–and also for having what they described in a police deposition as a fake military chaplain’s ID, a charge Mr. Luethke has said arose because he asked Mr. Serrano “where the toilet plunger was” (an apparent reference to police officer Justin Volpe and his attack on Haitian immigrant Abner Louima).

The case has been overseen by at least three different prosecutors and is still pending. In a Nov. 16 letter to Assistant District Attorney John Ryan, who was handling both the Curry and the Luethke case for several months but has since left the District Attorney’s office, Mr. Luethke articulated his complaints:

“I have never been arrested. I had a former high-ranking FBI agent vouch for me (my character) [sic] because law enforcement could find very little information. I am an Ordained Priest who was ordained by a retired three-star General from the US Army who is a world leader within the religious community. I have served my country honorably during war (one of the few chosen out of thousands during combat for USMAPS) … [I] received one of the first nominations of my class for West Point from a Congressman. Since then, I have worked extremely hard to become an Ambassador-at-large for two very prestigious foundations which emphasize integrity. You and Det. sEroneous [sic] speak to me as if I am a criminal. I guess you … have decided on your own that innocent until proven guilty is no longer the rule of law in the United States of America. I pity the both of you. If stupidity were a crime, you would both be on death row.

“You ended our last meeting because I would not speak about Morgan Stanley. If there was any evidence, even slightly unethical, or possibly illegal activity on MS’s part that I could possibly provide, how could I tell you? You have failed to protect me and my girlfriend from Curry & Co.”

New Allegations Raised

Mr. Luethke has claimed that Marisa Wheeler signed a confession that she lied to the police about his alleged harassment of her, and submitted the statement to officials at the F.B.I. Asked if she had signed such a confession, Ms. Wheeler replied: “Absolutely not.” She added that, in a May 25 meeting with Assistant District Attorney Leroy Frazer, “I saw a copy of that confession … and it’s obviously forged.” A spokesman for the F.B.I. said that due to agency policy, he could not address Mr. Luethke’s statement.

In an April 2 fax, Mr. Luethke again suggested that The Observer check out the alleged F.B.I. confession and other allegations of corruption involving Mr. Curry, the Police Department and the F.B.I. “If you are credible, normal and honest, you are more than welcome to break a much bigger story than you first reported,” Mr. Luethke offered. He has since, in subsequent interviews, added to his allegations about Mr. Curry and Ms. Wheeler, all of which have been denied.

Meanwhile, Mr. Luethke has been trying to contact Mr. Curry’s lawyer. “He’s an interesting piece of work, Mr. Luethke …,” said Mr. Morelli. “And actually he has been trying to contact me and I have not taken his calls, because I really don’t think that it would be intelligent for me to do so.”

Although both Mr. Curry and Mr. Luethke have expressed fear and loathing of each other in conversations with The Observer , they apparently have been spending time together recently. Sometime during the weekend of April 10 and 11, the two made phone calls to The Observer , saying that they were drinking together in the Merc Bar–a watering hole on Mercer Street in SoHo. Mr. Luethke later said they had called from a pizza joint.”

“Hey, fat Kate, this is your drinking buddy,” said Mr. Luethke amid background noise. “I’m out drinking with my other buddy. Give me a call, ’cause–I don’t know–I thought there was gonna be a story this Wednesday. Umm, arright, hang on a second. My other drinking buddy wants to talk to you.”

“Hey chubby little fatass Kate, what’s up?” said Mr. Curry, with sounds of laughter behind him. “Fuckin’ c–-. Why don’t you come meet us?” He broke into laughter.

Mr. Luethke broke back in. “He didn’t mean that. He’s drunk. He’s drunk, he doesn’t know what he’s saying. It was a ventriloquist, by some skinny girl who works at the Merc Bar. So, uh, give me a call. [He gave his number].”

Several messages later, Mr. Curry called back–apparently trying to establish some distance between himself and Mr. Luethke: “Kate, what’s up, it’s me. I’m calling to 100 percent apologize for messages that were left by either one of my associates, Luethke, anybody, much too much beer I was drinking [sic]. And no one meant any harm. I really apologize, a hundred percent … Any boys or girls who called you, whatever they said, I don’t even know. I was told.”

In another instance, a call placed by The Observer to Ms. Wheeler in early April regarding Mr. Luethke’s statement about the F.B.I. confession was returned by Mr. Luethke. “Christian just called,” he said, a few hours after a message was left on Ms. Wheeler’s voice mail. “They’re not going to call you back.”

Meanwhile, Morgan Stanley, which has retained Paul, Weiss, Rifkind, Wharton & Garrison to defend them in Mr. Curry’s suit, has less than a month to respond to his $1.35 billion complaint and summons. Spokesmen for the company would not comment for the record, other than to reiterate their initial reaction to Mr. Frazer’s May 18 dropping of Mr. Curry’s charges: dismay.

However, the firm distributed an interoffice e-mail shortly after the decision: “Some of you may have seen the press coverage on the lawsuit filed by an ex-employee of the firm. The lawsuit alleges discrimination and harassment in connection with the termination of an investment banking analyst. We believe that this suit is completely without merit, and plan to defend ourselves vigorously. The case is about employee honesty and integrity. Mr. Curry was dismissed for falsifying his expense reports. We are committed to ensuring a workplace free of harassment and employment discrimination. As always, refer any press inquiries to [chief spokesman] Jeanmarie McFadden.”

Even an acquaintance of Mr. Curry’s, who claims inside knowledge of his case, expressed some doubts. The acquaintance alleges that Mr. Curry has privately admitted to a mutual friend that he did not actually see the words “monkey” and “faggot” written on his desk at Morgan Stanley just days after he was fired–one of the major grounds for his suit. “And I think that’s so wrong, you know. I’m sure there is a lot of racism in those old-school places, but that’s totally crying wolf.”

“I don’t think he did make it up,” said Mr. Morelli. “I really have strong reason to believe that that is true. At the end of the day, when the dust clears, you’re gonna have certain people who are gonna be discredited, and other people who are not. And do I believe that he was discriminated against? The answer’s Yes. Do I believe that he was called a monkey? The answer’s Yes.”

With additional reporting by Josh Benson and Sam Charap.