Backstory: How Dirty Money Built a Teen Playground in East Hampton

Around 2000, the Town of East Hampton bought property on Abraham’s Path in East Hampton for the exclusive use of the teens of this community. It was a modest site on the west side of the road across from a town baseball field able to accommodate a tennis court, a sports equipment shack and a skate tube. Today, combined with more property added on the east side of the street, it is ten times it’s earlier size, with all sorts of athletic activity. Now for everyone. There’s an indoor soccer field, badminton and volleyball courts, a second skate facility and across the way there’s two more other tennis courts, and a basketball court.

A man largely responsible for the funding of this magnificent expansion was multi-millionaire David Silver, who gave generously to complete this project. But if you look deeper at what happened here, you realize that the real benefactor, the man who made David Silver’s millions possible, was a white collar crook named Bernie Madoff. Madoff had no idea this money would be spent on this project. And Silver had no idea that in reality, this money did not exist. Madoff, it was later learned, ran a Ponzi scheme – the largest in the history of the world – and had given some of the money to Silver because Silver wanted some of the “winnings” Madoff had achieved in his behalf. In order to keep his Ponzi scheme going, Madoff needed to provide it. It was money from new investors that Madoff gave to Silver and Silver used to make this park possible.

I drive by the park almost every day. And every time I do, I think, well, dirty money built this park. And also, because it was make believe money, it ruined David Silver. He became a pauper. And to feed his family, he had to rely on friends. Soon afterwards, he died. A man with enormous generosity, who here gave away money that never was.

Let’s take a closer look. In the 1990s, young Alan Madoff went into business by investing other people’s money in the stock market. It seemed he was extraordinarily successful. People who invested with him made 14% interest. It left others scratching their heads. Madoff had the magic touch. How could he do this? No one else could. How he picked the stocks he kept a well guarded secret.

From time to time, one of his early investors might ask to cash out. Madoff would accommodate him. He’d have to. There was no cash. No investment of other people’s money. But he’d be able to get it by bragging about it and allowing a new sucker to climb on board with real money. The real money would secretly pay what the earlier investors wanted. And then the earlier investor, satisfied, would buy an even bigger stake. It was a Ponzi scheme. And so, when in 2009 during a recession Madoff ran out of suckers, it was discovered he’d swindled $64 trillion this way. Silver handed the money over for the park, then found he had nothing. He was wiped out.

Madoff, caught having ruined his investors, went on trial, was convicted and then went to prison to serve double lifetime sentences. His defense? He just wanted people to like him.

I remember meeting Silver after the collapse. He was shivering in the cold wearing ripped and stained clothes. He was being helped by a friend who paid his expenses. But he’d lost everything. Riches to rags. (The Wilpon family, which owned the New York Mets, also lost most everything. They could barely make payroll.)

Would you call Silver a generous man? I would. He gave away what he thought he had. There should be a statue of David Silver at the park.

Have a East End real estate story? Want to share? Text us at 516-527-3566. We’ll call you back, and then write it up for this weekly column. –Dan