Rise and fall of a Main Line investment adviser

Main Line investment adviser Barry R. Bekkedam pitched deals for the wealthy who needed lots of income to support high-end lifestyles.

Bekkedam, with his taste for Ferraris, Aston Martins, and private-jet travel to meet clients, also knows something about expensive living.

That drive for income, typically found only in exclusive private deals, entangled Bekkedam in a Florida Ponzi scheme - a debacle that has forced him out of the investment-advisory business and left him stunned at how things fell apart.

"I rip my eyeballs out for an investment that didn't work. What did we do wrong? How did it not work? In some . . . in this environment . . . there's nothing you could have done," said an exasperated Bekkedam, referring to the collapse in certain real estate markets.

"When prices drop 50 percent, what can you do? There's no metric to have planned for that."

Bekkedam's firm, Ballamor Capital Management, had at least 30 percent of its clients' assets in private investments that were restricted by federal securities law to investors with at least $1 million in net worth or income of at least $200,000. Such investments are designed to generate greater returns; the risk is that there is no public market for them.

During an interview last month in the Radnor Financial Center, home to what had been the Ballamor offices, Bekkedam, 43, still looked fit and lean. He wore a light-blue dress shirt, faded jeans, and loafers with dark socks. He refused to have his picture taken, pointing out that he never sought coverage during good times.

Bekkedam is perhaps best known here as a basketball player at Archbishop Carroll and Villanova University in the 1980s. He has not sold Ballamor, which he founded in 1997 and expanded quickly to a peak of $3 billion in assets under management - though private deals are tricky to value.

In its latest Securities and Exchange Commission filing, dated March 31, the company claimed $1.67 billion assets under management. One client, a medical-malpractice insurer on Long Island, accounted for about $1 billion, said Bekkedam, who is a native of Ontario, Canada.

Unable to sell because his company was in too much distress after its run-in with convicted Ponzi-schemer Scott Rothstein, Bekkedam reached a "cooperation agreement" under which another registered investment adviser, Family Endowment Partners L.P., of Waltham, Mass., will assume responsibility for his clients, if they agree.

Family Endowment has been meeting since last month with former Ballamor clients to try to win them over and is trying to determine the status of the two dozen or so private partnerships involving Ballamor clients.

One of Bekkedam's earliest clients, South Jersey resident Martin M. Monteleone Jr., said he was moving to another local investment firm and trying to get out of the private deals, though he has nothing against Bekkedam.

"I don't think Barry is dishonest in the least," Monteleone said. "He got ahead of himself."

Ballamor clients invested $30 million in Fort Lauderdale, Fla., lawyer Rothstein's fraud through the Banyon Income Fund, which promised investors a 15 percent return on money that was supposed to be used to buy legal settlements at a discount.

Banyon was a mistake, but "I didn't do anything wrong," Bekkedam said.

Fierce ambition fueled the fast rise of Bekkedam in an industry in which it is difficult to persuade people to turn money over and then even harder to manage it successfully for the long term. But for much of the last decade, Bekkedam's rise was aided, as was the economy overall, by generally increasing asset values.

Then came the financial crisis, which obliterated investments of all sorts.

"Our goal was to build investments for the 100-year flood," Bekkedam said, "not knowing that the 200-year flood could happen."

Suddenly, he had to spend time tending investments, dealing with companies that could not make their debt payments.

To compensate for these circumstances, Bekkedam had, at the end of 2009, more employees than ever, he said. "Adding those people allowed me the flexibility to focus on making sure that investments in this environment were able to recover."

One of the most troubled investments was the Stokes Land Group, a Jacksonville, Fla., real estate developer with projects from North Carolina to northern Florida. A $125.5 million investment in common and preferred equity in 2005 was followed by a $25 million loan in 2006.

Bekkedam said Stokes management had projected that Ballamor investors would eventually recover half their money. Stokes chairman E. Chester Stokes Jr. did not respond to requests for comment.

Ballamor clients also ran into trouble with their $10 million investment in an Atlanta bank that failed in December. Bekkedam blamed the failure of RockBridge Commercial Bank on bad timing. "Management didn't do anything wrong," he said.

But Rollo Ingram, who was RockBridge's chief financial officer for the first year of the bank's existence, said the bank was a disaster because it focused on buying loans from troubled banks.

As to Bekkedam's role there, Ingram said: "I think, if anything, he was sold a bill of goods" by the people who organized the bank.

Bekkedam resents the focus on investments gone bad, arguing that he has found many successful private investments for clients, some of whom "had cash-flow needs that weren't being met by the public markets."

But many of his clients did not understand the illiquidity of private investments, he said, "no matter how many times you try to explain."

Investors cannot easily retrieve their money from certain Ballamor investments because it is tied up, for example, in a major construction development or in a private company that has a set number of years before it has to pay money back. There is no outlet, as there is for publicly traded stocks and bonds.

When asked about his reputation for fast living, Bekkedam made clear he thought there was nothing unusual about his use of a private jet to visit clients in out-of-the-way places. He cited a meeting this year with an executive who drove away in a Bentley.

Bekkedam has a $4 million house in Radnor Township that he is trying to sell and a $1.25 million home in Florida about a half hour north of West Palm Beach. But it is the extraordinary cars - like an Aston Martin and a Ferrari - that have been a lifelong passion of Bekkedam's.

As a youth, he said, he watched Magnum P.I. just for the cars - in the 1980s television series, the star drove a Ferrari.

"I'm not just some guy who has a Ferrari," he said.