When Houston socialite, jet-setter and fashionista Valerie Biggs Sarofim opened up her mail one Thursday last October, she was shocked by what she saw.
A friend from England had sent Sarofim an article published by a newspaper in India about an old chum, fellow blue blood Stefan Wathne of Iceland, Moscow and New York, whose family amassed a fortune making leather goods for several designer labels including Ralph Lauren. According to the news story, police arrested Wathne at a New Delhi airport on charges of conspiracy to launder drug money for the most prolific LSD kingpin in American history.
Sarofim's thoughts quickly turned to her own situation. Five years earlier, according to a lawsuit Sarofim filed in federal court in Houston, she'd wired Wathne $150,000 to invest in a Russian real estate venture in which Wathne promised Sarofim her stake would double every couple of months. But over the years she had never seen a nickel from the deal.
Now convinced Wathne pulled the couture over her eyes in a scam, Sarofim is suing Wathne and the Wathne Corporation for around $100 million, the money she says she should have made if her investment had doubled as promised every fiscal quarter over nearly the past five years.
Sarofim is no stranger to convoluted and often baffling situations involving billionaires.
She grew up in River Oaks in the same neighborhood as billionaire investor Fayez Sarofim and his son, Christopher. In 1993, after spending time on the semiprofessional ski circuit, Valerie married Christopher and together they appeared regularly in society columns, hosting fund-raisers and other social events.
Their marriage, however, exploded like a cheap bottle of champagne amid accusations of cocaine abuse, child neglect and infidelity, ending in the couple's divorce in 2000. Christopher Sarofim later wed Valerie's close friend, Courtney Lanier, daughter of former Houston mayor Bob Lanier, who he was reportedly seeing while still married to Valerie.
Since then, Valerie Sarofim has ostensibly landed on her feet. Several years ago she became a financial backer for designer label Thomas Wylde, which makes high-end clothing, worn famously by Lindsay Lohan and Sienna Miller, depicting fashionable-looking skulls. In addition to living in Houston and occasionally winging off to Hollywood, New York and Paris, Sarofim told the Houston Chronicle that she also spends several months a year at her home in Jackson Hole, Wyoming, where she enjoys sipping pomegranate martinis and nibbling steak tartare.
But that's not to say Sarofim's finances have been perfectly in order since her divorce. She has a history of losing money and then recouping it through legal action.
In 2004, an arbitration panel awarded Sarofim $9.2 million after deciding that her investment advisers at Trust Company of the West lost her millions. From 2000 to 2003, Sarofim's account went from $12.7 million to $2.5 million. She claimed that while she spent about $4 million during the three years, the firm lost her $6 million on questionable investments. The arbitration panel agreed, saying the investment company failed to properly diversify Sarofim's money and did not "educate Sarofim about the risks of investing," according to court records.
This brings us back to Stefan Wathne and the $150,000 Sarofim gave him to buy sight-unseen real estate in Russia. It seems Sarofim doesn't need financial advisers to make poor investment decisions.
Part of the same gilded set, Sarofim and Wathne met more than a decade ago in Houston. They partied together and, in at least one instance, according to news reports, Wathne furnished his family company's tote bags as gifts for guests at the 1997 Museum of Fine Arts Grand Gala Ball that Sarofim chaired.
It was during this time that Wathne was allegedly laundering money for LSD wizard William Leonard Pickard.
Pickard was sentenced to life in prison for conspiracy to make and distribute LSD after federal drug enforcement agents in 2000 seized 90 pounds of LSD — the largest such seizure in DEA history — from a decommissioned nuclear weapons silo in Kansas that Pickard was using as his lab.
According to news reports, from 1996 to 2000, Wathne laundered millions of dollars of Pickard's LSD proceeds through Wathne's contacts in Russia, where Wathne was supposedly living. At the time, Pickard was working as a drug policy researcher at the University of California at Los Angeles. Wathne was reportedly taking Pickard's LSD profits and laundering them through his foreign associates, who in turn funded Pickard's position at UCLA.
Wathne is currently free on a $5 million bond while he awaits prosecution in San Francisco federal court on one count of conspiring to launder money.
It was in 2002, after Wathne had finished his alleged secret dealings with Pickard, that he asked Sarofim to invest, says Sarofim's attorney, former Houston City councilman Rob Todd. The deal was never written down; it was made over a simple handshake.
"They were actually very good friends," says Todd, "and he passed himself off as being somewhat of a financial wiz." In the end, "she took his word for it," says Todd.
Periodically, Wathne would call Sarofim to reassure her that the investment was doing well. Sarofim trusted that it was. That is, until she got the newspaper article in the mail.
Sarofim and Todd contacted the Wathne Corporation in New York, and say they were told the Russian real estate in question does exist, though Todd says he has yet to see any proof. Todd then sent the Wathnes a letter asking for the $150,000 plus interest plus attorney's fees. The Wathne family, which includes perennial New York socialites Thorunn and Soffia Wathne, wired Sarofim $209,783.81 to resolve the issue.
Problem is, "They didn't pay the legal fees," says Todd.
In light of this, Sarofim and Todd decided to sue Wathne for the full amount owed if the initial investment had continued to double every fiscal quarter.
It's "quite a sum of money," says Todd, "and quite frankly the family is good for it. We're asking the court to award damages for fraud and teach (Wathne) a lesson..." Meanwhile, the Wathne family has filed a lawsuit in the Southern District of New York federal court seeking to bar Sarofim from suing them, stating the debt has already been paid.
Todd says Sarofim still has the money that the Wathnes wired her.
"If they'll take an interview," says Todd, "they'll probably be screaming mad."
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The Wathnes' New York attorney, Bruce Turkle, declined to comment.
Todd says Stefan Wathne's arrest and Sarofim's lawsuit against the prominent family's business are already making for hot conversation on the New York society party circuit.
"The Wathne family is big time," says Todd, "and that's what makes this so bizarre. It makes you wonder why a person who's born into that much money would engage in that sort of conduct. A question for the ages, I guess."