America has a lengthy history of outrageous corporate exploits. But nobody โ and we mean nobody โ comes close to touching Lou Pai in finesse, timing, and sheer dumb luck.
Enter: Lou Pai
After obtaining both his bachelorโs and masterโs degrees in economics from the University of Maryland โ where his father was an aeronautics professor โ and after earning his stripes in the US federal government, Lou Pai joined the now-infamous Enron circa 1987.
Back then, it was nothing more than a regional energy supplier. But in time, it would transform from a fledgling operation into the worldโs largest energy trading company thanks to the vision of CEO Jeffrey Skilling and, of course, the implementation of said vision by Pai himself as a โtop lieutenant.โ
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Itโs Always The Quiet Ones
Like many mathematical geniuses, Lou Pai was viewed as an extremely introverted and something of a social enigma, whom certain employees actually doubted the very existence of. During his tenure as the big dog of Enron Energy Services (EES), which occurred from 1997 to 2001, he was often referred to as โthe invisible CEO.โ
โThink of any generic guy you donโt ever remember too muchโฆ He is that guy,โ said former Enron employee Tony Huang (via Houston Chronicle).
โPai wouldnโt look him in the eye. Heโd be on the elevator, wouldnโt say hello. He was clearly not a people person,โ noted another unidentified ex-employee.
Though his reputation wasnโt that of a squeaky clean and straight-laced pencil pusher. Quite the opposite, in fact.
Despite being married with two kids, Pai was known to spend โinordinate amounts of timeโ in Houston strip clubs a la James Harden. And to make this amusing little detail even more salacious, the noted enthusiast of exotic dancers pursued his horny antics during work hours.
โHe made it rain like it was going out of style.โ
Eyewitness account (via Asian Dawn)
Unsurprisingly, similar to other Belfort-level operators in this era, his well-documented addiction wasnโt the sole instance of white-collar excess and general debauchery. Lou Pai also had a habit of using the Enron private jet for his commutes and took part in the time-honoured corporate tradition of expensing long lunches to the company.
Eventually, Chairman Ken Lay had to step in and call a stop to the shenanigans.
Now hereโs where the story takes an interesting, and rather serendipitous, turn.
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Iโm โN Luv (Wit A Stripper)
Somewhere in between his first front row show by the pole and his 1,000th lap dance, Lou Pai began an affair with stripper Melanie Fewell, who was also married at the time. This twilight romance led to many a private rendezvous, and the private rendezvous led to an extra-marital pregnancy.
Hell hath no fury like a woman scorned, and when old Louโs wife at the time of 20-plus years, Lanna Pai (nee Lee), learned the truth about all those โlate nights at the office,โ she naturally filed for divorce.
There was simply no denying it, either. Partially because the intimate voicemail messages Lou and Mel exchanged had somehow been transferred from the Enron execโs office phone to the message box of several subordinates, according to EES analyst Rudy Sutherland (via Houston Chronicle).
In 2001, to satisfy the financial demands of his divorce settlement, Lou Pai liquidated a buttload of Enron shares in exchange for what many estimate to be between $240 million and $260 million USD (not adjusted for inflation).
It would soon prove to be the ultimate blessing in disguise, redeeming Paiโs otherwise atrocious pull-out game.
Happily Ever After
Anyone keen on a deep dive into the downfall of a Wall Street darling can check out the brilliant summary published by Investopedia or check out Alex Gibneyโs damning documentary Enron: The Smartest Guys In The Room (2005).
Suffice it to say, the companyโs rise to dizzying heights wasnโt entirelyโฆ legitimate. There were fake holdings, off-the-books accounting practices, debts and toxic assets swept under the rug, as well as a sprinkling of insider trading right before it culminated in bankruptcy.
But given how Lou Pai cashed out nice and early โ along with his โmysteriousโ exit from the firm before shit hit the fan (which still doesnโt have a proper explanation to this day) โ he managed to escape all criminal charges and, most importantly, keep his millions.
Although that isnโt to say his saga wasnโt without a few loose ends.
There were plenty of class action lawsuits in the aftermath, one of which saw Pai forfeit a measly $6 million taken care of by Enronโs insurance policy for company officers, while the rest were largely dealt with by solid legal representation and exercising his Fifth Amendment rights.
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There were serious accusations of insider trading, which was settled out of court years later in 2008 with $31.5 million ($1.5 million in civil fines, $30 million in restitution) โ one of the largest settlements ever obtained by the SECโs insider trading enforcement program; the man was also barred from serving as a public companyโs officer or director for five years.
All in all, Lou Pai came out virtually unscathed. While the world witnessed a historic white-collar scandal and the spectacular collapse of what was once Americaโs fifth biggest company, he and wifey #2 were chilling on the enormous Taylor Ranch heโd bought with his Enron money, which included its own 14,000-foot mountain dubbed โMount Paiโ by his neighbours, and effectively made him Coloradoโs second-largest land owner.
โHeโs either very lucky or heโs a genius,โ Brian Cruver, the author behind Anatomy of Greed, told NPR.
โI mean, heโs sitting on the biggest pile of money and heโs in the least amount of trouble.โ
These days, the Pai clan lives in relative obscurity. After selling that ungodly Colorado ranch, Lou and Mel operated a few Canaan Ranch locations in Texas and Virginia where they raised thoroughbreds and trained them for dressage โ a passion their daughter Natalie seems to have inherited (see: below) โ before settling in Wellington, Florida.
What a tale.
