From Profiteer to Politician: Billionaire Jeff Greene Races for Senate Seat

On the surface, it's easy to see how Florida's open Senate seat may have looked like an attractive -- and attainable -- prize for billionaire Jeff Greene. Although the Democratic frontrunner, Kendrick Meek, has spent the last eight years in the House of Representatives, he has kept a low profile and made a minimal impact on the Florida electoral stage. It doesn't help that Meek inherited the office from his mother and ran unopposed in the last three elections. A well-positioned, nationally-known money man with exceedingly deep pockets, Greene seemed a likely candidate for the seat.

Eddie Haskell?

Of course, that was before the unsavory aspects of Greene's past came to light. Meek was quick to attack the billionaire with a Leave It to Beaver-themed campaign, the centerpiece of which is an ad titled "Leave It To Greene!" On the two-minute video and an accompanying website, Meek compares his opponent to Eddie Haskell, Wally Cleaver's smirking, shady friend.

Meek's video had barely hit the airwaves before pundits were mocking it for a supposed lack of cultural relevance. After all, critics argued, Leave It to Beaver ran from 1957 to 1963, which means that its heyday as a powerful metaphor petered out at about the same time LBJ became President.

But this misses a major point: Meek is campaigning in Florida. In "Death's Waiting Room," 35% of the voting-aged population is over 55. This demographic segment is particularly significant when it comes to voting: According to the census bureau, 71% of those aged 55 and older vote, compared with only 63% of the general population. In Florida, this means that roughly 42% of the votes in the Meek vs. Greene race will be cast by people who could have seen first-run episodes of Leave It to Beaver.

Playboy or Slumlord

Even among Florida's non-retirees, Greene should be an easy target. Hard hit by the recession, Sunshine State voters aren't likely to embrace a billionaire Wall Street money man who owns a handful of houses and three Lear jets. And, while Greene is currently scurrying to clean up his image, he hasn't always been quite so circumspect: In The Greatest Trade Ever, Gregory Zuckerman reveals some of the sordid details of a 2005 cruise that Greene took around the Black Sea in his 145-foot yacht: "[He] brought two Ukrainian strippers on board...and hired stewardesses from coastal towns to serve as his crew. Some doubled as massage therapists, which came in handy after a day of scuba diving, jet skiing or kayaking."

Greene's spokesman, Paul Blank, paints the story in more positive terms, with a statement tailor-made for Florida's large Jewish population: "Jeff was traveling on his boat with his rabbi and his younger brother to visit Jewish sites in Romania and Odessa." Then again, these accounts may not be contradictory: Greene's Los Angeles parties were legendary and his rabbi, David Baron, was apparently a regular. Interviewed on the subject, the rabbi said: "If you were single, it was a great place to hang out. There were a lot of terrific women there."

Other events from Greene's past are even tougher to explain. For example, there's the year that he spent living with famed madam Heidi Fleiss, an event that he tried to soft-pedal. "She's a nice girl," he told Forbes. "I've had her over to Passover dinner with my mom." And then there's the $616,000 that he had to pay Ron Howard when the director sued him for, basically, being a slumlord ("The moral of this story is, don't ever try to be in a lawsuit against a celebrity in Los Angeles.")

Democrat or Republican?

But while Greene's playboy past may be embarrassing, many voters could probably overlook it. That's less likely to happen with his checkered political history. In 1982, he ran as a Republican in a Congressional primary in California's San Fernando Valley. Greene's spokesman, Blank, attempted to explain this as an attempt to unseat a Republican incumbent, but later admitted that the California election was for an open seat, which makes it hard to see Greene's candidacy as anything but a sincere attempt to run as a Reagan Republican.

It won't be easy for Democrat voters to dismiss this dalliance with the GOP, and Greene's case isn't helped by his subsequent political involvement. In the ensuing years, Greene donated to the Republican campaigns of Pete Wilson and Meg Whitman. His gifts to the Democratic party, while generous, date back to June 2009, less than a year ago, and seem to be a quickie attempt to establish his credentials among Democrat voters. Although Greene's spokesman claims that the billionaire donated to Barack Obama's inaugural fund, Greene is notably missing from the list of donors.

Florida's Housing Market

Even Greene's greatest strength may also be an Achilles heel. The billionaire, who is personally financing his run for office, is quick to highlight the political value of his impressive wealth, along with the independence that it affords him. "I am the only candidate...who owes nothing to the special interests," he said in a promotional video. "I won't take a penny of [the] special interests' money in this campaign."

On the surface, this bold assertion sounds great, painting a vision of Kennedyesque noblesse oblige and suggesting a statesman who is far above the political fray. The trouble is that Greene's wealth -- which he attributes to a lifetime of hard work -- has far more to do with an extremely risky and highly controversial move that he made on the eve of the recession. A real-estate millionaire for years, Greene entered the big leagues -- and Forbes' list of the world's billionaires -- when he bet that the bottom was going to fall out of the housing market.

In 2006, noting that the real-estate market had become overblown, Greene took a meeting with John Paulson. Paulson -- who, ironically, is the Wall Street villain du jour -- pointed out that, if Greene was right, he could try shorting real estate. Basically, the method that Paulson sketched out involved Greene taking out insurance policies on bonds that were backed by subprime loans. When the loans failed, the bonds would tank, and the insurers -- such as AIG -- would be stuck paying off Greene.

Over the course of 2006 and 2007, Greene bought $50 million in credit-default swaps written against loans in California and Nevada. The first person to do so, he ultimately made more than $800 million off the deals. In the process, he gained national attention: The Wall Street Journal dubbed him "The Meltdown Mogul" and Forbes nicknamed him "the Man Who Shorted Subprime."

A Gift to Republicans

Meek, Greene's opponent for the Senate, has tried to suggest that the billionaire's risky bet was directly tied to the Florida housing market and that Greene directly benefited from the suffering of Florida homeowners. This is factually incorrect, but in a state that has been devastated by the recession, it might not be a hard sell.

Between 2005 and 2009, housing sales in Florida fell by 50%, while foreclosures doubled. The number of housing starts, or the beginning of construction on new homes, fell by more than 80%, contributing to a loss of 150,000 jobs across the state. According to Bloomberg, the state's housing sales won't rebound until 2011.

Regardless of who wins the Democratic nomination, Florida's general election is going to be tough: the Democratic nominee will face likely Republican candidate Marco Rubio and Gov. Charlie Crist, who plans to run as an independent. If Greene's billions manage to buy him the Democratic nomination, his peccadilloes, profiteering and questionable political alliances should make it easy for the other two candidates for the Senate seat to eat him alive in November.

Long before then, however, he could quite possibly push Kendrick Meek out of the running, effectively clearing the way for a Republican win in November. In other words, Jeff Greene may just be the best gift Florida Republicans have ever had.