Looter of Family Office Sentenced

When John Doorly pleaded guilty to looting the family office where he worked for three decades, he faced up to 20 years in prison. Yesterday he got off with a bit less: 17 1/2 years and a $1 million fine.

Update. Here's a more detailed article on the sentencing, with details such as this:

Even as he awaited sentencing, a prosecutor said, Doorly was secretly collecting money from a corporation he had set up with Ayer family funds.

Doorly was led from the courtroom in handcuffs by a U.S. marshal as nearly three dozen descendants of Frederick Ayer watched in silence.

Looter of Family Office Pleads Guilty

On the first day of his trial on charges of looting the Ayer family office of more than $20 million, John Doorly pleaded guilty. He faces up to 20 years in prison – about one year per million.

Remember Doorly, “the Poor Man's Madoff”?

John Doorly reportedly looted the trusts of more than 100 descendants of the Ayer family. Now he's on trial, facing perhaps 20 years in prison. He also may have to part with $20 million and his time-share at the Ritz-Carlton Golf Club and Spa in Florida.

Any trust officer whose wealthiest client asks why he shouldn't set up his own family office should tell him about Doorly.

Googling the Ayer family takes you back to a New England that has largely vanished. The obit of Frederick Ayer, who died in 1914 at age 95, is here.

Frederick Ayer II (a grandson?) lived not quite as long. His 1998 obituary begins thusly:

Frederick Ayer II, heir to a family fortune generated by woolen mills and sarsaparilla, got the message from his father when he was a boy: He was urged to make something of himself and not merely live off his inheritance, so something would be left for future generations.

A research physicist, Ayer II helped fund the sexual research of Masters and Johnson, along with research on UFOs, DNA and cancer. He collected orchids and compiled a grammar of the Balinese language.

"Go to work, support causes you believe in, and feel free to be eccentric." That's how New England once raised its trust fund babies. How did we end up with today's version?

Looting the Family Office

The Wealth Report in the WSJ calls attention to this Boston Globe article:

The money manager of New England's wealthy Ayer family has accused a prominent Boston accounting firm of malpractice and other violations for failing to catch a former family employee who allegedly looted more than $57 million from its trust funds.

* * *

The lawsuit is being brought by Essex Street Associates, a Beverly money manager for the descendants of Frederick Ayer Sr., an industrialist who owned factories in Lowell in the late 1800s. In a separate action, Essex Street, which is owned by the Ayer descendants, said its former employee, chief operating officer James F. Doorly, led a "double life" and looted the family trusts of $57 million at least since 1996. The Ayer family said Doorly spent the money on mistresses, a Gulfstream jet, vacation homes, gambling, and lavish international trips.

Maybe the multi-family office (see preceding post) isn't such a bad idea. If the MFO is linked to a bank with deep pockets, a victimized family might even get some money back.