Former Bear CEO Cayne in bridge headache

Forth Bridge Blues

As the financial crisis simmered, Bear Stearns Chief Executive Jimmy Cayne's love of bridge drew him away from the office at critical times.

Eight years, a job departure and one whistleblower later, the cerebral card game is again causing him public headaches.

Late in August, two of Cayne's teammates on the competitive bridge circuit, Lotan Fisher and Ron Schwartz, were accused of cheating, casting doubt on the legitimacy of a key tournament victory.

A nasty fight has since erupted between the rival who made the allegations and the pair he is targeting. The 81-year-old Cayne, who fellow players say paid the accused players for their participation on his team, has offered to forfeit a long-sought championship title the group won if they are found culpable.

It's an unusually public contretemps in the sleepy world of bridge, a sport favored by sharp logicians that often resurrects images of grandmothers and great aunts and rarely makes headlines beyond the game's fan sites. Warren Buffett and Bill Gates are both avid players, but they don't frequent the competitive scene, where Cayne—who left his job at Bear Stearns just months before the firm's collapse in 2008—is among the biggest names.

And Cayne isn't the only sponsor to face allegations of teammate misconduct.

In recent weeks, four other prominent players have also been fingered as cheaters: No. 1 and No. 2 ranked players Fulvio Fantoni and Claudio Nunes, members of the Monaco team who have so far declined to comment on the accusations; and German team players Josef Piekarek and Alex Smirnov, who have admitted to "some ethical violations" and have dropped out of the upcoming Bermuda Bowl, a highly anticipated matchup that starts Saturday in Chennai, India.

Several bridge organizations are investigating the allegations against the six players, and the World Bridge Federation, the governing body of international competition, has threatened action against any proven cheaters.

Cayne himself does not stand accused of cheating, but the issues his two players now face have dealt at least a temporary strategic blow. That's because of the structure of top-ranked bridge teams, many of which are sponsored by a single, deep-pocketed player who hires other talent to participate in groups of six individuals.

Cayne can play on a team of four without Fisher or Schwartz, or replace them with one or more players in upcoming tournaments, say other players, but top teammates can prove elusive at this point in the bridge year, which starts in earnest during the summer, when new groups are often formed.

For their part, the top-ranked Monaco team players, Fantoni and Nunes, have said little publicly about their predicament.

"We will not comment on allegations at this time reserving our rights to reply in a more appropriate setting," reads a Sept. 14 post placed on the website fulviofantoni.com, which describes itself as Fantoni's official website. (Fantoni has not responded to a direct message posted on his site, and Nunes could not be reached.)

Cayne's latest bridge imbroglio stemmed from his team's mid-August victory in the Spingold Knockout Teams competition, a prestigious bridge game sponsored by the American Contract Bridge League that was held this year in Chicago.

Taking home the Spingold trophy was a coup for Cayne, who fellow players say had longed for a big win in recent years. But for Boye Brogeland, a 42-year-old professional Norwegian player and bridge columnist who had lost one of the tournament matches to Fisher and Schwartz, it was unsettling.

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Convinced that something untoward had occurred, Brogeland spent a sleepless night reviewing the match; about 10 days later, he went public with accusations that Fisher and Schwartz had bilked him. Ironically, they had played for two years alongside Brogeland on another sponsored team before they were hired away by Cayne.

Posting Aug. 24 on bridgewinners.com, a popular player site, Brogeland was frank in his intention to forfeit past awards he'd won while playing with Fisher and Schwartz, Israelis who are both in their 20s.

"If you have a cheating pair on your team, I believe you should lose whatever Masterpoints, Seeding points, and titles you have won together," he wrote, referring to the ranks earned in competitive bridge.

Bridgewinners.com began buzzing with player reactions, and bridge watchers soon began studying the hands that Fisher and Schwartz had played in recent years. Many soon took the Norwegian's side, saying the cheating was apparent and suggesting that the Israeli players had communicated which moves to make to one another, either by placing the card tray usually at the center of the bridge table in specific locations, coughing to each other, or making other predetermined moves. Other players came to the Israeli pair's defense.

The reaction from Fisher and Schwartz themselves was swift.

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"Jealousy made you sick," Fisher reportedly wrote in a Facebook post, apparently referring to Brogeland. "Get ready for a meeting with the devil."

On Sept. 1, Dror Arad-Ayalon, a Tel Aviv-based lawyer representing Fisher and Schwartz, dispatched a letter to Brogeland accusing him of "offensive defamation which is not supported by one iota of truth" and engaging in a "harsh smear campaign" borne of a difficult bridge loss.

"They are very, very positive they never did anything wrong," Arad-Ayalon told CNBC of his clients in a Sept. 17 telephone interview, adding that once an Israel Bridge Federation's proceeding was resolved, the players intended to sue Brogeland for defamation.

Brogeland, who posted the letter from Arad-Ayalon along with other information about the cheating accusations on a website dubbed bridgecheaters.com, said in a series of recent telephone interviews that he was undaunted. "I'm not here to be scared," he told CNBC at one point. "My only motivation is to try to clean up the game," he said at another.

Cayne, who was initially quiet about the allegations, apparently broke his silence on Sept. 7 with a post on bridgewinners.com put up by a friend, Steve Weinstein.

"I make this statement with heavy heart," the post read. "I have been made aware of charges leveled against Lotan Fisher and Ron Schwartz, a pair on my team." The hands "lead me to conclude that Fisher-Schwartz may not continue to play on my team unless they are cleared of all charges which might be filed against them."

Representatives for Cayne, including a publicist and lawyers at his longtime firm, Kramer Levin Naftalis & Frankel, did not respond to repeated comment requests for this article.

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This latest chapter of Cayne's bridge career resurrects what are no doubt painful memories of his final year at Bear Stearns, where he was CEO for a decade and a half. Despite the firm's rapid rise to prominence during the mortgage boom of the 2000s—an ascent that made Cayne a billionaire on paper—his at-times hands-off management style brought him negative attention as the financial crisis got underway.

An account by this writer in The Wall Street Journal late in 2007 detailed his meanderings outside of work at a time when two Bear hedge funds were melting down and signs of a mortgage crisis were mounting. The referenced behavior included 10 days spent at the Spingold competition, held that year in Nashville, Tennessee, and numerous games of golf.

The Journal piece also recounted Cayne's penchant for unwinding with marijuana, a habit in which he had indulged in the men's room during a 2004 bridge tournament, according to someone who was there at the time. Asked about the incident for the Journal report, Cayne said there was "zero chance" it happened.

Under pressure from shareholders in the months that followed, Cayne relinquished his post in January 2008; two months later, after coming close to bankruptcy, Bear was sold to JPMorgan Chase.

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