Morgan Stanley Fell for Curry’s Double-Talking Pal-but Why?

In a matter of weeks, the class of 1999 will show up for its first day

in the analyst training program at Morgan Stanley Dean Witter &

Company. Oh, what a lucky–or is that fortunate ?–bunch they

will be. There, in the Times Square headquarters of the bluest of the

blue-chip investment banks, they will be trained in the art of making

money, for their clients and themselves. They will learn to keep their

dealings secret and their relationships lucrative and warm. They will learn

how to work hard, perform menial tasks, keep grueling hours. But if they

are any good, they will learn quickly enough that there is a dividend. If

you work hard, remain discreet, nurture those connections–the world is


In other words, they will have to be everything that Christian Curry was

not. A little over a year ago, Mr. Curry, then a 24-year-old renegade

analyst from a good school and a better family, got fired for his workplace

indiscretions: namely, allegedly padding his corporate expense account with

purchases like $300 worth of designer shoes (if not for appearing naked and

aroused in a gay pornographic magazine).

No sooner had Mr. Curry’s cubicle been cleared than an old

frat-house acquaintance, a student of big-business etiquette with a knack

for finding stuff out, began burrowing his way into Morgan Stanley’s

inner circles. The burrower was Charles Joseph Luethke, a 29-year-old man

with an uncertain past and a penchant for scandal. By ingratiating himself

with business associates, police and even Mr. Curry, Mr. Luethke scored

himself $10,000 for getting his old friend arrested on charges of computer

hacking. The Manhattan District Attorney’s office has dropped the

charges, and Mr. Curry has filed a $1.35 billion wrongful-termination suit

against his former employer, charging discrimination.

And, in an ironic twist, it’s Mr. Luethke and Morgan Stanley who

are now being investigated by the District Attorney. And, The

Observer has learned, the New York Police Department has launched an

internal probe into its dealings with Mr. Curry and Mr. Luethke, too.

It’s a tale of manners, really. Morgan Stanley is all about

discretion and connection. Mr. Luethke mastered the art of making–or

pretending to make–connections. He got in. Mr. Curry, on the other

hand, either did not know how to be, or chose not to be, discreet, both in

his expense account filings and in his appearance in the gay porn magazine.

He got kicked out. He violated the code: In exchange for money and power,

you protect that of others. You don’t embarrass the firm, even

inadvertently. You don’t talk to the press about the firm. (Remember

Phil Potter, the Yalie who got himself fired in 1997, and upbraided by

Morgan Stanley president John Mack, for telling The New York Times

what he was buying with his bonus.) And you don’t try to steal from

the firm.

Of course, everyone bends the rules a little bit. In the training

program at Morgan Stanley, analysts often take liberties in their expenses.

According to several former Morgan Stanley trainees, the analysts are often

forced to cover expenses on business trips for their superiors. Sometimes

the analysts, who are making, say, $70,000, have to carry tens of thousands

of dollars on their credit card, paying the interest on the float until the

back-office bureaucrats reimburse them months later. So maybe you charge a

couple more bucks for a cab, or take a friend out to dinner and write it

off. It’s a way to keep things fair, in an old prep-school

honor-system kind of way.

But if Morgan Stanley’s reply to Mr. Curry’s suit is to be

believed, Mr. Curry went much further than that. According to Morgan

Stanley’s answering court papers, filed in Manhattan’s U.S.

District Court for the Southern District on June 7, he filed more than 150

fraudulent expense claims, seeking “hundreds of dollars of

reimbursements” for such personal purchases as Cole-Hahn shoes, liquor

and car washes. They also allege that he fabricated expenses on a stolen

pad of receipts and offered a Morgan Stanley employee a $100,000 bribe to

plant racist e-mails.

Mr. Curry’s attorney, Benedict P. Morelli, scoffs at Morgan

Stanley’s explanation. “I think it’s ridiculous to say that

there were 150 abuses of the expense account … But let’s assume

for a moment that there’s 150 of these, and in their own answer, they

say there’s 150 and it amounts to hundreds of dollars! … So each

one was what, a buck? Maybe down there in the ivory tower where they sit,

these things sound plausible. But to a jury, these sound


Ridiculous or not, the point Morgan Stanley is trying to make is, it

wasn’t race. The firm says 20 percent of its U.S.-based employees are

minorities, including some managing directors like Bill Lewis, who helped

Mr. Curry get his job, according to Morgan Stanley’s papers. But when

asked how many people have been fired for expense account abuse, a

spokesman for Morgan Stanley said he couldn’t comment.

In fact, in the eyes of many observers, it had nothing to do with

expenses or race. Before the response was filed on June 7, people all over

Wall Street were snickering at Morgan Stanley’s response to the suit.

Expenses? Yeah, right. It was the cock shots! But now that

they’ve seen Morgan’s explanation for the expense account

violations, they get it. They’re buying the allegations, and what the

firm says this guy was doing you just don’t do. He wouldn’t

play the game.

The Blue-Chip Thing

Despite Mr. Curry’s allegations of racial

discrimination–and his depiction of a plantation atmosphere at

Morgan–some say the fallout of the District Attorney’s

investigation is part of a larger picture, that of Morgan Stanley’s

1997 merger with Dean Witter Discover & Company. “There is sort of

an internal battle at Morgan Stanley between [their] people and the Dean

Witter people,” said a source familiar with the firm’s inner

workings. “You can imagine the two different cultures, I suppose:

Morgan Stanley, being this old-line investment bank, and Dean Witter up

until recently being Sears–a retail investment service.”

Of the Morgan Stanley Dean Witter in-house lawyers who were involved

with Mr. Luethke, the two who have been suspended with pay, Monroe

Sonnenborn and Carol Bernheim, hail from the Morgan Stanley side of the

bank. Christine Edwards, the general counsel whose roots are strictly Dean

Witter, has not yet been censured for her dealing with Mr. Luethke, which,

according to the firm, consisted of not disapproving the $10,000 payment

when she learned of it just before it was wired.

But some of the shrapnel is beginning to clip Ms. Edwards, a University

of Maryland at Baltimore law graduate and former Sears Roebuck clerk, who

lacks the blue-chip corporate-law-firm pedigree typical of a general

counsel at a bulge bracket investment bank. When news accounts reported

that she approved the payment, people inside Morgan Stanley have grumbled

among themselves and to The Observer about how she came to be

general counsel. After the merger, she beat out Jonathan Clark, Morgan

Stanley’s general counsel and an accomplished corporate lawyer from

Davis Polk & Wardwell (and, of course, Yale). A Davis Polk guy,

the grumbling goes, would not have allowed this kind of thing to happen.

He’d have known how to handle it. He was one of us .

Now the whole Curry affair shows signs of becoming a cudgel that can be

wielded by the Morgan Stanley and Dean Witter factions in their continuing

but very quiet battle for turf at the merged firm. When it comes to company

politics, any leverage will do, even if exercising it hurts the firm

publicly.”People on the Morgan side have been waiting for someone on

the Dean Witter side to make a mistake,” said one banker familiar with

the firm. “So now the shitstorm is bigger than the kid who started it

[Mr. Curry].”

In a cryptic statement given to The Observer on June 7 and

apparently in response to Morgan Stanley’s court papers, Mr. Luethke

alluded to such an intrafirm dispute. “Obviously this issue is now

being used to oust the Dean Witter people and has nothing to do with

me,” he said.

Wesley McDade, a spokesman for the firm, would only say, “Morgan

Stanley’s answer, as filed in Federal court, speaks for


It’s Who You Know

But even amid the turmoil, some things never change. The oldest game

in town, making connections and dropping names, still gets you places.

That’s how Mr. Luethke managed to work simultaneously with Morgan

Stanley, the Police Department and Mr. Curry, without tipping his hand

significantly to any of the parties–and in the process make a $10,000

profit. To set up Mr. Curry in the sting last August, Mr. Luethke played

the name game. Through a series of personal acquaintances, ranging from Mr.

Curry to partners at one of the city’s largest employment law firms,

Mr. Luethke schmoozed his way into the confidence of top in-house lawyers

at Morgan Stanley.

Mr. Luethke did not return calls for this story by press time and did

not appear for a scheduled June 8 meeting.

One of Mr. Luethke’s key conduits into the firm was his

acquaintance with a number of attorneys at Epstein, Becker & Green, the

employment-law firm where Carol Bernheim, one of the suspended Morgan

Stanley lawyers, was a partner until 1997. A source close to the firm said

that Mr. Luethke met George Sape, a partner at Epstein Becker, and several

other firm attorneys at a Manhattan cigar bar, sometime before Mr.

Curry’s arrest last year. The source said Mr. Luethke approached the

lawyers in a friendly way, using his knowledge of fine wine–an

interest shared by Mr. Sape–to make conversation. “Luethke seemed

quite normal,” said the source. “There was nothing unusual about


At some point, Mr. Luethke began playing softball for the firm’s

team–an informal collection of lawyers and their friends–and may

have been introduced to founding partner Ronald Green in that way. (Neither

Mr. Sape nor Mr. Green has publicly admitted knowing Mr. Luethke.)

A spokesman for Epstein Becker confirmed Mr. Luethke’s acquaintance

with the firm’s lawyers. “Luethke was known to many attorneys at

the firm, just through social acquaintance,” said the spokesman.

“At some point, he came to an attorney at the firm with information

that was potentially damaging to a client of the firm, Morgan Stanley, and

Epstein Becker transmitted that information to Morgan Stanley, as I believe

is their professional responsibility to a client when that information

comes forward.”

Meanwhile, Mr. Luethke had been making some calls of his own to the

legal department of Morgan Stanley, ostensibly to warn officials directly

about Mr. Curry’s alleged plan. Sources close to the investigation

said that in so doing, Mr. Luethke presented himself as a patriot and a

good Samaritan, someone who had stumbled upon a situation potentially

damaging to Morgan Stanley who wanted to set things right. But officials

soon became suspicious of his motives.

Court documents say that at the time of Mr. Curry’s arrest, Morgan

Stanley’s in-house lawyers were unaware that Mr. Luethke was a witness

being interviewed by the District Attorney’s office–thus making a

so-called reward payment of $10,000 “entirely legal.” The papers

add, “The payment was a token of [Morgan Stanley’s] appreciation

for what Morgan Stanley then perceived as a valuable service of providing

information that prevented the perpetration of a fraud on the


Mr. Morelli, Mr. Curry’s lawyer, said that explanation is

“preposterous … If they thought it was so prim and proper, why

did they keep it from the D.A.? … All this stuff doesn’t


In fact, it wasn’t long after Mr. Curry’s successful setup and

ensuing arrest that Mr. Luethke attempted to extort money from the firm,

according to court papers. “[A]fter that payment, the informant made

vigorous and extensive efforts to extort larger sums from Morgan

Stanley,” reads Morgan Stanley’s June 7 answer. “That

extortion campaign has involved threatening telephone calls, an extensive

letter-writing campaign to numerous executives of the firm … [and]

extensive efforts to promote and encourage press attention to the

informant’s gross mischaracterization of the $10,000 payment.”

According to a police source with knowledge of the District

Attorney’s current investigation, the criminal charges against Mr.

Curry were dropped largely because of prosecutors’ frustration with

Morgan Stanley and its initial failure to inform them about the $10,000.

Daniel Castleman, the District Attorney’s chief of investigations, did

not return calls for comment.

Still, another source close to the investigation countered that the

firm’s officials had come clean shortly after Mr. Curry’s arrest.

“They said at the time of the arrest, the D.A. did not know about the

payment,” said the source, “but in early October, they were told

about it.” That was about the time Mr. Luethke was turning up the heat

on his demands for compensation, according to Morgan Stanley’s court


The police source added that the Police Department is conducting an

internal investigation based on allegations in Mr. Curry’s civil

complaint that at least two detectives or officers received bribes for

setting him up. Police Department spokesman Marilyn Mode confirmed the


A Youthful Indiscretion

In an industry where a trip with clients to a strip joint is often

described in expense reports as “the ballet,” the alleged padding

of Mr. Curry’s expense account may seem a rather innocuous

transgression. But Mr. Curry’s 10 months at Morgan

Stanley–indeed, his years as an undergraduate at Columbia–paint a

picture of a hotheaded young man who continually made enemies among peers

and superiors alike.

Case in point: his nude, eight-page photo spread in Playguy , a

pornographic men’s magazine. Though identified in the magazine only as

“Leigh,” Mr. Curry’s middle name, one picture after another

displays the former banker in a state of arousal, cupping his genitals as

he mugs for the camera–not the sort of exposure one would expect for a

young man whose parents, a respected surgeon and his wife, were the first

black members of Southampton’s exclusive Shinnecock Hills Country

Club. In past conversations with The Observer , even Mr. Curry

has described the photographs as humiliating. His explanation has been that

it was a youthful indiscretion done to save him the $1,000 cost of a shoot

for his fledgling modeling career, launched years before his employment at

Morgan Stanley. He admits to signing a waiver for the pictures’ use,

but never thought they would come back to haunt him in this manner.

In fact, Mr. Curry was so concerned about the photos, he claimed, that

his initial contact with Mr. Luethke during the summer after his firing was

motivated by fear that Mr. Luethke would show the Playguy pictures

to Mr. Curry’s family.

Why would Mr. Luethke do that? The relationship between the two has been

confusing, varying between outright hostile and downright friendly. That

they are friends at all is testimony to Mr. Luethke’s social skills

and a mutual fear based on bizarre and convoluted allegations they have

made against each other.

Despite hailing from the upper-middle-class suburb of Haworth, N.J., it

is unclear whether Mr. Luethke, whose parents teach at the local high

school, was to the manner born. (Called for comment, his stepmother, Penny

Luethke, said, “There’s really nothing I can tell you.”) But

his machinations reveal a savvy when it comes to schmoozing that suggests

years of careful study.

“Luethke is a prime character in this entire enterprise,” said

Milton Allimadi, editor of the weekly Black Star News , which has

covered Morgan Stanley’s involvement in Mr. Curry’s arrest.

“He seems to know a lot of information, or have a lot of information

on everyone: the D.A.’s office, the N.Y.P.D., Morgan Stanley and

Christian Curry. He talks in riddles, and sometimes grand fantasies. But if

you listen carefully, he has a lot of solid information and facts and,

apparently, tape-recordings. And that’s why Morgan Stanley and the

D.A., Curry and the N.Y.P.D. listened to him originally.”

With additional reporting by Christopher R. Tennant and Sam

Charap. Morgan Stanley Fell for Curry’s Double-Talking Pal-but Why?