A Wall Street Legend and His Penthouse Sex Dungeon

0:05Ryan Knutson:Not too long ago, a short story in the Wall Street Journal caught the attention of our colleague Erich Schwartzel. It was a story about a man named Howard Rubin who'd been arrested on sex trafficking charges. He pleaded not guilty.

0:22I had never heard of Howard Rubin before. and when I started to learn more about his biography and realized that he had been a pretty, you know, regular feature of the Wall Street Journal in the 1980s and the 1990s.

0:38Ryan Knutson:Rubin was a star trader on Wall Street who made millions and whose successes and failures over the years got written up in our newspaper, the Wall Street Journal. Along with his reputation as a big-shot trader, he was also known as a family man. When I talked to folks who worked with him at the time, they would tell me that, you know, frankly, Howie, as they all call him, wasn't necessarily the hard-partying type. He was seen as someone who was just a pretty normal guy. And he had the trappings of a pretty domestic life. But something that not many people knew was that Rubin had a dark side. The literary comparison that would often come up is Jekyll and Hyde, this question of, like, someone who appeared to be one person in the daytime and another person behind closed doors.

1:37Ryan Knutson:How would you describe who Howard Rubin is? The answer to that question in 1985 would have been Howard Rubin is a star trader at Solomon Brothers on Wall Street. The answer in 1987 would be Howard Rubin is a disgraced traitor at Merrill Lynch on Wall Street. The answer in late 1987 would be Howard Rubin is a star traitor at Bear Stearns on Wall Street. And the answer in 2017, according to prosecutors, would be Howard Rubin is a sex trafficker presiding over a ring of abuse and torture at a sex dungeon in Midtown Manhattan.

2:20Ryan Knutson:Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudsen. It's Thursday, January 29th.

2:33Ryan Knutson:Coming up on the show, a Wall Street titan and his very dark secret.

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3:51Ryan Knutson:South of Central Park in Manhattan, there's a building called the Metropolitan Tower. It was built in 1987. It's 68 stories tall, and the outside is all glass. It's a skyscraper, and it looms over this block that I kind of came to see as like a quintessential Midtown Manhattan block. It's on the same block as Carnegie Hall, but there's also a small grocery store and a place where you can buy eyeglasses and the Russian Tea Room. So it is this block that has that Manhattan combination of the mundane and the fantastical. and it is where Howard Rubin secretly rented a penthouse apartment where he converted one of its bedrooms into what he called his sex dungeon.

4:37Ryan Knutson:This room and this apartment would be the center of the alleged sex trafficking. Since being arrested for this and other crimes this past September, Rubin has pleaded not guilty. His lawyers have argued that the encounters were consensual. Before news of the alleged sex trafficking broke, Rubin had built a decades-long reputation on Wall Street as a smart and risk-loving trader. Can you tell me the story of how Howard Rubin rose to power on Wall Street? So Howard Rubin, who's now in his 70s, he was born and raised outside of Boston. He was one of three boys. His father worked at Polaroid. And he was the middle son.

5:21And he started his career as a chemical engineer and quickly grew bored of that. And he was a really smart guy, very good with numbers. And he moved to Vegas, and he started gambling, and he was a card counter. And he was so good at card counting, he had to soon start wearing a disguise because casino security would recognize him.

5:43Ryan Knutson:After that stint in Vegas, Rubin went to Harvard Business School, then moved to New York to start a career as a financial trader in the 1980s. But he never lost that gambler mentality. Now, he joins a financial industry that is just on a rocket ship. He joins these firms that are seeing their holdings and their assets just grow exponentially in those years when he's a trader. And he's working at Salomon Brothers, which is seen at the time as sort of being the premier A-class of traders. And Howard Rubin was seen as a star. He was someone who would take big bets, take on massive amounts of risk, but also often be proven right and make a ton of money for the firm.

6:33Ryan Knutson:At what point did he start appearing in the Wall Street Journal? He started appearing in not just the Wall Street Journal, but all over the world in 1987 because Merrill Lynch poached Rubin from Solomon Brothers, paid him this big salary. And it was really also it was explained to me that like this was also a time when Wall Street was starting to recognize individual talent. Like he was seen as like almost in a way that like you might trade an NBA player. Like, you wanted to assemble the right team. And so Merrill Lynch brings Rubin in from Salomon Brothers, and it's seen as this, like, massive poaching and this massive get on their part.

7:15Ryan Knutson:It wasn't long, however, before stories in the Wall Street Journal about Rubin's success turned into stories about his failure. In April of 1987, Rubin bought up a massive trove of mortgage securities. Mortgage activity at the time was skyrocketing. And it seemed like it was going to go up and up and up and up and up. And so Rubin had bought a bunch of mortgage securities, but he hadn't told his bosses just how many he had purchased, which meant the firm couldn't hedge it. Hedge it, meaning that if he's wrong, there's no safety net that they're building underneath him. No safety net. And then mortgages did fall in value, and Rubin's investment became this$250 million loss.

8:00Wow. At the time, it was believed to be the single greatest loss tied to a single trade. And the stories at the time that were written, I mean, a lot of them are written as kind of like every employee's worst nightmare. Like, there's one that's like, imagine telling your boss you lost$25 ,000 for the company. Now imagine telling him you lost$250 million.

8:24Ryan Knutson:It was such a big deal that Merrill Lynch had to publicly announce the loss to investors. and that Howard Rubin was responsible. And he sort of became, he went from being rather famous on Wall Street to being infamous for this$250 million trade. Did he face any consequences for this other than getting fired? The SEC launched an investigation and Rubin would settle with them. He didn't admit or deny guilt. He just said he had failed to keep accurate records and agreed to take nine months off from the securities industry. But even the$250 million loss didn't slow him down. I had to check and make sure I had the dates right because that was in April of 87.

9:06And before the end of the year, Rubin was back on Wall Street. He was hired by Bear Stearns to start trading for them. And at the time, Bear Stearns had a reputation for hiring the traders who were talented but a little toxic.

9:23Ryan Knutson:Over time, Rubin's trading exploits faded from the pages of the Wall Street Journal. But now, Rubin is back in the news, but under very different circumstances.

9:39Ryan Knutson:Details about Rubin's alleged abuse first started to emerge in 2017, when a group of women sued him. Another lawsuit followed a year later, and eventually, a criminal prosecution. Through court records, Eric was able to put together a picture of what allegedly happened. Before we go on, I should say that we're going to describe allegations of sexual assault and abuse, which for some listeners might be difficult to hear. What do we know about when the alleged sex abuse started? So we're not exactly sure, but the cases against him have evidence and stories that date back to 2009. And who were the women he allegedly targeted?

10:28So several of the women have very similar stories. The details might be different, but the broad outlines are the same, which is that many of them were not necessarily living in New York. They were working some as models, some as waitresses. More than a few had been models for Playboy at one time or another. And these women would be contacted often by an associate of Howard Rubens, who would explain that they worked for a man in New York who was interested in meeting them. He would pay them for sex. He would pay them possibly to take their photos. He might pay them for what they would often refer to as light fetish activity.

11:14And would they be interested in doing that?

11:21Ryan Knutson:The women who formed the civil suits included freelance models and cocktail waitresses. Prosecutors say that many of them were caring for younger siblings or kids of their own, and that Rubin exploited that economic disparity. According to court documents, in a 2014 text message, Rubin wrote that one woman was, quote, broke and says she'll do anything. Typically, Rubin didn't make first contact with these women. One person who allegedly did that for him was named Jennifer Powers. When you read the cases, it sounds like Jennifer Powers filled many roles in this operation. She was Rubin's good cop.

12:00Sometimes she would be his banker. She would send the women money. I came to think of her as like the COO of this enterprise. Oftentimes finding the women, making first contact with them, and then sort of maintaining the relationship throughout.

12:18Ryan Knutson:Those allegations sound sort of like the relationship between Ghislaine Maxwell and Jeffrey Epstein. Yes, and when I would talk to folks, they would make that connection. Powers is pleaded not guilty to charges of sex trafficking and transporting women over state lines for sex. Her attorneys did not respond to requests for comment. For this work, it seems as though she was subsidized quite nicely. She was paid a lot of money. And it came in different forms, too. There was a time where she was paid almost kind of like a monthly stipend. But then, for several years, Ruben just subsidized her entire life.

12:56He paid for all the credit card bills that she and her husband accumulated. And they would rack up like half a million dollars in credit card bills a year. And he would just pay them off. He was paying for their house in Texas. He was paying for private school for their children. I mean, he was really just covering, it seems, nearly every expense they could have had.

13:16Ryan Knutson:Powers would tell the women she recruited that Rubin would pay$2 ,000 for a night, or up to$5 ,000 if Rubin had a particularly good time. Many of them came from out of state. And they would be flown to New York, and once they were there, they might go to dinner or get a drink, often at the Russian Tea Room, which is located right next door to this tower on 57th Street. And then at some point, Howard would escort them up to the penthouse apartment that he rented and take them into one of the bedrooms, which had been outfitted into this sex dungeon. That room in the apartment, the so-called sex dungeon, was soundproofed, according to prosecutors.

13:55Ryan Knutson:The room was painted red, and Rubin had it filled with ropes, whips, and sex toys. And the stories that are included in these complaints do show what the women perceive to be a kind of noticeable shift in his behavior and demeanor, especially when it comes to, you know, the man they met at the Russian tea room is behaving very differently than the man they see inside the dungeon. Say more about that. What would they see? This might include everything from, you know, punching, slapping, abusing in all kinds of ways. While some of these women knew to expect aggressive sex, like BDSM, victims say Rubin took it much further than that.

14:36Ryan Knutson:Now, the encounter is often tipped into torture. Rubin did give the women a safe word, but several said he ignored it. One woman said that she was gagged too tightly to even say the safe word. Another time, a woman claimed that the safe word was pineapples and that after she thought Rubin was getting too rough, she said pineapples and he ignored her. In fact, he only grew angrier and more aggressive. And that whenever she shouted the word pineapples, he continued to ignore her and the evening ended in raping her. Multiple women accused Ruben of rape.

15:24Ryan Knutson:The women were told to sign an NDA. And if they broke it, they would have to pay Ruben$500 ,000. So there was a safe in the penthouse that held a stack of blank nondisclosure agreements that the women were told they had to sign before proceeding. And some of the women say that they were inebriated when they signed the form. but the language of it says that they have agreed that in exchange for payment, they've agreed to engage in sexual acts that, quote, including sadomasochistic activity that can be hazardous and on occasion cause injury. And a safe full of blank NDAs in a penthouse that houses a sex dungeon certainly conjures a pretty intense image.

16:19It was interesting that Rubin's attorneys actually cited these NDAs as part of their defense, saying that the language of the NDA bolstered their case, that this was a consensual agreement and that there was no sort of confusion or there shouldn't have been any confusion.

16:43Ryan Knutson:And then what would happen after all of this was over? Well, this is again the kind of the Jekyll Hyde impression that you get reading these stories is that sometimes it would seem as though the spell was broken after the dungeon activities had ended and Ruben might, you know, thank them for a pleasurable evening and say that he had to get going because he was meeting his wife and kids for dinner.

17:14Ryan Knutson:Howard Rubin's secret would eventually get exposed. How that happened is next.

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19:00Ryan Knutson:Howard Rubin and Jennifer Power's alleged sex trafficking enterprise began to fall apart in 2016. It started with a group of women who were at Ruben's apartment at the same time. According to court records, Ruben himself wasn't there, but a fight broke out between two women. We believe over what exactly had happened and transpired in the dungeon. One woman saying that she had been misled into how intense the evening would get. The fight breaks out and the police are called. After the police got to the apartment, one of the women texted Powers. and says, you know, what do we do? The police are here.

19:38And the women claim that Jennifer said, you know, don't tell them who rents this place. You know, hide any incriminating evidence.

19:49Ryan Knutson:After that day, the women started comparing stories. And as the women are talking and the case over this fight is developing, they start talking to lawyers about what happens in the dungeon. and they form a group who come together and collectively sue Rubin in 2017. And that is when it kind of all spills into the open. This is what would ultimately form the basis of two civil cases and later a criminal investigation. What did Rubin and Powers do when they found out that these women were coming together to sue them? It seems as though there was a flurry of activity to try to figure out what to do.

20:32whether it was try and offer payments to settle the cases or to get the women to drop charges. And then once it went to court and once the charges were filed, it was described to me as almost comical, the number of attorneys Rubin and Powers had at their disposal, just sort of sitting behind them to try to counter these claims and really pretty aggressively go after these charges and argue that these were consensual arrangements and that the women were either out to get a payout or out to ruin his reputation, seeking revenge, any host of motivations there.

21:17Ryan Knutson:Rubin was found liable and ordered to pay$3.8 million in total to six women as part of the first case. The second case also ended with a settlement.