The Best American Crime Reporting 2009

by Jeffrey Toobin

  SETH TOBIAS WAS RAISED in Plymouth Meeting, a well-to-do suburb of Philadelphia. His father was a doctor, his parents got divorced. It was a common story. After high school, Tobias went to Boston University, where he was an indifferent student majoring in finance.

  In his early twenties, Tobias commuted from Philadelphia to New York on the 5:55 “Triple Nickel” train to a series of jobs on Wall Street. Some of the jobs worked out, some didn’t. At 24, he got his first break. That’s when Tobias began processing trades for a then-unknown portfolio manager named Jim Cramer. Tobias impressed Cramer, but the job didn’t last long. Tobias traded up to a position with the much larger JRO Associates hedge fund. Five years later, Tobias headed out on his own.

  Tobias founded Circle T in 1996, at age 32. He named the company after the first letter of his last name, which he had tattooed on his left shoulder just after college. He started the firm with just one other employee, Steve Schwartz, a 25-year-old protégé of Tobias’s from JRO. He’d sit there in the middle of the room, taking in all the data and chatter, and then bark a buy or sell order. He seemed to have a gift for making the right call. “Seth could just tell when to get in and get out of a stock,” says Schwartz. “Seconds matter. He could see a movement in the cost of steel and figure out how that was going to impact companies that did business with GM and make a snap decision two, three moves ahead of other people.”

  Tobias lived for what he called “the game,” and to him it was a game—who could analyze a company’s quarterly report or process a bit of information fastest and make the first move. He had a pet ritual after the market’s closing bell rang. He’d exhale, check his numbers, then call his friends at other hedge funds and ask them a simple question: “Are you up or are you down?” Simple.

  In the early days of Circle T, Tobias was mostly up. By 2002, the firm was valued at almost $500 million, and Tobias was personally worth tens of millions of dollars. He bought homes—in suburban Philadelphia, on the Jersey shore, and in midtown Manhattan. He bought a luxury box at Veterans Stadium, where the Philadelphia Eagles played. A JRO colleague introduced Tobias to some pals at CNBC, and Tobias became a regular on the network’s Squawk Box program.

  Tobias also liked to party. His longtime friend Patrick Bransome said in a recent deposition that there were many nights when Tobias would get so loaded he had to drive him home. Bransome would drop his friend on his couch and leave once Tobias passed out.

  “Look, Seth was a little crazy,” a former colleague told me. “But we all are. You have to have a screw loose to be in this business and take the risks. You have to blow off steam, or you’ll combust. He liked to blow off steam, too; we’d go to strip clubs and go out drinking. He just blew off steam a little harder than most.”

  IT’S SHORTLY AFTER NEW YEAR’S, and I’m in the West Palm Beach office of Jay Jacknin. Jacknin, Phyllis Tobias’s third husband, is serving as counsel to his ex-wife in the death of Seth Tobias. He’s a short, jolly man with hearing aids in both ears. At one point, he reaches into a file and brings out a picture of Seth and Phyllis on a beach. He starts to make a point about the case but then offers an aside. “She had a great body,” he says. “Women love her. Men find her fascinating. I just couldn’t afford her.”

  Phyllis Tobias was born Filomena Manente in 1966 and was raised in Union City, New Jersey. She was brought up by a strict Italian family, and went to Catholic schools. Now and then, she worked as a waitress. Her nickname, a nod to her personality, was Sunny. Just after she graduated from high school, in 1984, she married Vince Racanati. She was 18, he was 24. They had a daughter but got divorced after a year. Phyllis took a job as a secretary on Wall Street, where she met and married a twice-divorced stockbroker named Arthur Tolendini. That was 1987. They lasted just three years.

  Phyllis moved to Palm Beach and was selling insurance when she met Jacknin, a divorce attorney. They got married in 1993 and had two children. But in October 2002 Jacknin filed for divorce, claiming Phyllis had gotten numerous credit cards without his consent and run the balance to the maximum. Jacknin didn’t move out of the couple’s home after they separated. He was worried about his two children. Phyllis was furious about that. The police were summoned three times in 2003, and each time, Jay Jacknin said his wife was the aggressor. He said she struck him, threw a phone, and pulled his hair.

  In July 2003, Phyllis got a restraining order against Jacknin, accusing him of assault. Jacknin denied it and retaliated with his own statement. He said Phyllis’s violent moods had reduced him to barricading himself in the nanny’s room. He said that “she will kill” if he tries to gain custody of the kids.

  Jacknin also said that Phyllis was on a cocktail of Xanax, Vicodin, and Ritalin and kept coke in the house. He finished by saying that Phyllis had abandoned the children one weekend in July so she could spend time with her boyfriend at the Breakers Hotel in Palm Beach.

  The boyfriend was Seth Tobias.

  SETH AND PHYLLIS MET while they were both in San Diego for the 2003 Super Bowl. The twist is, Jay Jacknin introduced them. Jacknin actually knew Seth first. The two men had met through a mutual friend, Daniel Borislow, an entrepreneur and racehorse owner from Philadelphia who spends part of the year in Palm Beach. At the time, Tobias was separated from his first wife, Tricia White, a South Jersey native. Phyllis was married to Jacknin, but they were fighting all the time and got divorced later that year.

  Seth fell for Phyllis right away. Why not? She was blonde, fit, and sexy.

  Sure enough, Tobias told his brothers and Circle T partners that he was moving down to West Palm in pursuit of Phyllis. “I can run Circle T from down there,” he said. He and Phyllis could often be seen around town at the Breakers or black-tie charity events.

  Seth and Phyllis’s relationship was insane, even in the early days. Phyllis blasted Seth about his coke habit, but they both were heavy drinkers, especially of Champagne. A former Circle T employee says he personally saw Phyllis give Seth coke and use the drug herself on many occasions. ( Jacknin denies those claims.) Seth questioned Phyllis’s emotional stability. They each accused one another of infidelity. It went back and forth like that.

  Seth and Phyllis split up for a while, with Seth returning to New York. The former Circle T employee says that Seth told him that Sam Tobias was concerned, warning his brother, “That woman is going to kill you or bankrupt you.”

  Tobias didn’t listen. “He was addicted,” says the former Circle T employee, “to Phyllis’s ups and downs.”

  After another breakup, Seth was moping around New York and called Phyllis. By the time he hung up, the two were engaged. Knowing that Seth’s friends and family disapproved, the couple eloped on March 4, 2005. “Seth just didn’t show up for work, and we didn’t know where the hell he was,” says the former Circle T staffer. “That afternoon, he called in all sheepish and said, ‘I’m in Belize. I just got married.’”

  THAT SUMMER, Circle T took a big financial hit. Seth’s Palm Beach pal Doug Kass had a son, Ethan, who was looking to break into the business, and Seth took him on. In July 2005, Google went public. The question at the time was whether the $85 initial offering price was a good deal. Ethan bet it wasn’t. Circle T lost $12 million when he shorted the stock.

  The trades weren’t just wrong. Seth hadn’t signed off on them. The firms’ investments, almost half a billion dollars in 2003, sank to $220 million after the Google screwup. Many hedge funds booked monster years in 2005, but Circle T was down 5.3 percent. There were whispers that Seth was distracted by Phyllis.

  Tobias’s marriage was also tanking. Phyllis would often appear at the office and demand cash. “Give me 15,000 fucking dollars,” she hissed on one visit, according to the former Circle T staffer. Tobias had promised Phyllis that he would stop using cocaine, but she didn’t believe him. In the fall of 2005, the couple was having dinner at Bice, a Palm Beach restaurant, with six other people. Just after sitting down, Phyllis jumped from her seat and placed her lips over Tobias’s nos
e and began sucking. She was searching for cocaine residue.

  A few weeks later, the couple returned to their West Palm Beach home after a night of drinking, and Tobias ripped down a set of drapes that Phyllis had purchased without his knowledge. The police were called, and Phyllis claimed Tobias threw a jar at her. He was arrested for assault, a charge eventually expunged from his record when Phyllis declined to press charges.

  There were more fights, more police visits. The following February, one night when she hadn’t returned home from dinner by 2 A.M., Tobias drove to Cucina, a West Palm Beach restaurant, and confronted Phyllis, who was having drinks with a male friend.

  “You’re a whore!” Tobias screamed, according to police reports.

  A passing officer witnessed the rest: “F. Tobias immediately responded by striking S. Tobias across the left side of his face with an open hand. The force of the slap turned S. Tobias’ head and made a loud popping sound…it became clear she was intoxicated. I had to grab F. Tobias so she could not get close enough to strike S. Tobias again. I placed F. Tobias in handcuffs.”

  Phyllis spent a night in jail, but the charges were dropped.

  On it went. The West Palm Beach police answered a number of calls to the couple’s home in their first year of marriage. Just before the couple’s first anniversary, Phyllis confronted her husband with evidence of an affair. Tobias responded by filing for divorce on March 10.

  Three days later, the two engaged in an instant-message exchange:

  Phyllis: YOU ARE NOT CAPABLE OF STOPPING TO DRINK, OR DOING YOUR COKE OR BEING HONEST…

  Seth: I am sad about this.

  Phyllis: I HOPE YOU GET AIDS WIT ALL THE WHORES YOU FUK TOO.

  Seth: I am sorry…take a breather.

  Phyllis: NOW IT’S WAR!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  Phyllis cited her husband’s infidelities, gambling losses, and unspecified “illicit activity” in her request for spousal support. She asked for nearly $47,000 a month, including $9,429 for vacations, $1,000 for makeup, $4,400 for clothing, and $3,000 for unreimbursed counseling fees. Her lawyer at the time argued that Tobias had promised a lifestyle grander than the one she could afford on Jay Jacknin’s alimony. Tobias responded by accusing his wife of forging his signature on expensive purchases, including a $74,000 Porsche.

  The couple was on the verge of finalizing their divorce. But within minutes of meeting with their lawyers Seth and Phyllis were apologizing, professing their love, and kissing at the conference table.

  That’s when Tobias promised to move Phyllis from their $1.75 million West Palm Beach home to the Bear’s Club. Phyllis was unsure. The reason, she told Tobias, was that she was now running all her decisions past her online psychic.

  THIS IS WHERE BILLY COMES IN. Billy Ash had a Website called askbilly.com, where he advertised himself as the winner of “many titles” including Best Psychic at the Las Vegas Psychic Convention. Others had a less charitable view. One rival displayed a picture of the 300-pound Ash with the words “Worst. Psychic. Ever.”

  Phyllis started e-mailing Billy through keen.com, an online psychic service, paying the standard $3.99-a-minute rate. Then the two started e-mailing directly. According to Jay Jacknin, Ash told Phyllis that his clients included Sarah Jessica Parker and Nancy Reagan. Jacknin also says that Ash once mailed Phyllis a necklace that Ash claimed the former First Lady had given him. (Ash denies those claims.)

  Phyllis began talking to Ash regularly, paying him as much as $2,500 a month, Jacknin says.

  Not only did Phyllis consult Ash on all decisions. Now she urged Seth to make use of his powers, too. Tobias would roll his eyes, but on a few occasions he called Ash. (Ash says he spoke to Seth “all the time.”) Maybe he could help him understand his wife.

  One day in the summer of 2006, Seth Tobias was back in Circle T’s New York office. According to a deposition Tobias’s longtime secretary has given, she got a call from someone whose name she had never heard before. Billy Ash. Tobias said he would take the call. A few minutes later, he walked out of his office. He looked out of sorts.

  “This man is totally crazy,” Tobias said. “He says I owe him $156,000.”

  According to one of Tobias’s lawyers deposed in the estate case, Ash told Tobias he was billing him for services rendered during their chats. Tobias called his lawyer, who sent Ash an e-mail urging him to cease contacting his client. Ash responded by suggesting that, if he wasn’t paid, he would have no choice but to publicly announce what he’d learned about Seth from their conversations. Ash, Tobias’s lawyer alleged, suggested that the disclosures would not sit well with Circle T’s investors. (Ash denies pressuring Tobias.)

  Phyllis continued to consult with Ash, and Tobias was furious about it. On November 18, 2006, Tobias wrote Phyllis an e-mail. He said he thought their marriage was permanently broken. He saved his harshest words for Ash and for Phyllis’s relationship with him. “In the end, if I threatened your livelihood with lies and extortion; if I manufactured the craziness that he did to me you would have gone nuts. I still have some pride. You promised me you were finished with him. I believed you. I lost.”

  On April 2, 2007, the West Palm Beach police logged a report from the Tobias home at 4:19 P.M.: “Male is calling. States his wife is throwing bottle of wine and food at him. Female is in the background yelling.”

  Tobias was done. Then he wasn’t. Phyllis continued consulting with Ash, who advised her not to give up on their marriage. She thanked Ash by FedExing him a $10,000 watch.

  Over the last weeks of Tobias’s life, the couple fought over home renovations, over Tobias’s cocaine use, and, of course, over Ash. Seth again threatened to leave her. “This divorce is going to cost me a lot less than the last one,” Tobias told his driver in August. “I’ve lost a lot of money since then.”

  The next month, Tobias was dead.

  JUPITER POLICE OFFICERS EXAMINED Tobias’s body shortly after he died. They noted scrapes on his nose and forehead. His glasses had floated to the bottom of the pool. Phyllis Tobias told Officer Elizabeth Juric that she believed her husband had been snorting cocaine at Bradley’s that evening with Brett Borgerson. Juric then called Borgerson, who admitted it was possible Seth had been doing coke earlier in the day. Phyllis gathered up McGee, the couple’s dog, and left the house a few minutes later. The police got a search warrant and found in the house two small plastic bags, one containing a white powder, the other a bluish substance.

  Tobias was laid to rest in Bucks County, Pennsylvania, on September 7. All his Wall Street friends were there. Phyllis sat silent mostly, occasionally letting out a sob.

  Phone records show that Phyllis spoke to Billy Ash eighteen times in the week following her husband’s death, including for 81 minutes on the day after his drowning. After one of the talks, Ash made a call of his own. It was to Sam Tobias, the brother closest to Seth and Seth’s heir apparent at Circle T. Ash told Sam that he had served as the couple’s assistant, which Sam thought was odd since he never remembered meeting him. Ash then told him that Phyllis had crushed Ambien tablets into a pasta sauce that she’d served his brother the night he died.

  The following day, Sam Tobias called Ash with his lawyer present. Ash repeated his story, and told Sam that he had been paid for his work for the Tobiases through both a PayPal account and with cash FedExed to his San Diego apartment. Sam passed the information to the Jupiter Police Department. About two weeks after Seth’s death, the department sent two officers to San Diego, where they took Ash’s statement and then flew back to Florida. The police won’t say what Ash told them, but they were apparently not too impressed with his story. An investigation is still going on, but the cops have yet to classify Tobias’s death as suspicious.

  In late September, Tobias’s will was read. The will, signed on May 12, 2004, divided Tobias’s estimated $25 million fortune between his brothers, parents, and friends. Strangely, he had made no adjustment to the document after his 2005 marriage. Under Florida
law, this nullified the will and left his wife as sole inheritor of her fourth husband’s assets.

  In a panic, and armed with Ash’s claims, the Tobias brothers filed a motion in Palm Beach County probate court seeking to block Phyllis from inheriting the money, citing Florida’s “slayer statute,” a law that prevents a spouse from profiting from the murder of his or her partner. Phyllis hired four lawyers of her own, including Jay Jacknin.

  Billy Ash, meanwhile, began carpet-bombing reporters with his claim that Phyllis had confessed to him that she had killed Seth. He also added this little tidbit. Seems Seth had led a secret gay life. A brief gossip item appeared in the Palm Beach Post on October 17 publicizing Ash’s claims, but almost no one read it outside the area.

  On December 4, however, the New York Times published a story on the front-page of the “Business” section about Tobias’s death. The paper retailed Ash’s more lurid allegations, including his claim that Phyllis had lured Seth into the pool with promises she would arrange a sexual liaison with a gay porn star-exotic dancer who went by the name Tiger because of the tiger stripes he had tattooed on his body. Ash alleged that Tobias met Tiger at Cupids, a West Palm Beach gay bar. The Times story included a confirmation of sorts from Adiel Hemmingway, the manager of Cupids, who said, “Seth used to come in here back when it was crazy.” Everyone read that.