The 9/11 Heist

In 1998, the Port Authority of New York and New Jersey agreed to privatize the World Trade Center, the complex of office towers in Lower Manhattan that they had owned and operated since their construction in 1973. In April 2001 an agreement was reached with a consortium of investors led by Silverstein Properties and on July 24th, 2001 Larry Silverstein, who already owned World Trade Center Building 7, signed a 99 year lease for the Twin Towers and Buildings 4 and 5.

The lease was for $3.2 billion, and was financed by a bridge loan from GMAC, the commercial mortgage arm of General Motors, as well as $111 million from Lloyd Goldman and Joseph Cayre, individual real estate investors. Silverstein Properties only put down $14 million of its own money.

The deal was unusual in a variety of ways. Although the Port Authority carried only $1.5 billion of insurance coverage on the WTC complex, which earlier that year had been valued at $1.2 billion, Silverstein had insisted on doubling that amount, insuring the buildings for $3.55 billion. Silverstein’s insurance broker struggled to put that much coverage in place and ultimately had to split it among 25 dealers. The negotiations were so involved that only temporary contracts were in place for the insurance at the time the lease was signed and by September the contracts were still being finalized.

Silverstein’s group was also explicitly given the right to rebuild the structures if they were destroyed, and even to expand the amount of retail space on the site if rebuilding did take place.

Within hours of the destruction of the Twin Towers on September 11th, Silverstein was on the phone to his lawyers, trying to determine if his insurance policies could “construe the attacks as two separate, insurable incidents rather than one.” Silverstein spent years in the courts attempting to win $7.1 billion from his $3.55 billion insurance policy and in 2007 walked away with $4.55 billion, the largest single insurance settlement ever. As soon as the deal was announced Silverstein sued United and American Airlines for a further $3.5 billion for their “negligence” in the 9/11 attacks, a claim that was struck down by the courts but is still on appeal.

Perhaps even more outrageously, in a secret deal in 2003, the Port Authority agreed to pay back 80% of their initial equity in the lease, but allowed the Silverstein group to maintain control of the site. The deal gave Silverstein, Goldman and Cayre $98 million of the $125 million they put down on the lease, and a further $130 million in insurance proceeds that were earmarked for the site’s rebuilding.

In the end, Silverstein profited from the 9/11 attacks to the tune of $4.55 billion and counting.

But that’s the 9/11 insurance heist you saw. There was a much deeper, more complex, and well-hidden heist that was taking place behind closed doors on September 11, 2001, deep in the heart of the World Trade Center itself.

Episode 308 – 9/11 Trillions: Follow The Money : The Corbett Report