Accused Rogue Trader Displayed Few Trappings Of Wall Street Life
NEW YORK (AP) _ He lives in a brick house on subdivided farmland 160 miles from Wall Street. He plows his own driveway when it snows. Local businesspeople say they don’t even know him.
Kent A. Ahrens, accused last week of losing a stunning $128 million in college-endowment funds through unauthorized trades he hid for three years, hardly typifies the image of an extravagant Wall Street high-flier.
Acquaintances and neighbors portray Ahrens as a dedicated family man and helpful neighbor _ a contrast from what his accusers describe as a cunning trader who betrayed scores of colleges and universities across the country.
Ahrens, 39, was suspended without pay last week from his job as a trader at First Capital Strategists Inc. of York, Pa. His employer said he confessed to risky investments that violated guidelines of the Common Fund, the First Capital client that oversees about $20 billion in endowment money for 1,421 schools, many of which now face lower investment returns due to the big loss.
The Securities and Exchange Commission, the Commodity Futures Trading Commission and the Pennsylvania Securities Commission are investigating.
But for all the negative publicity, Ahrens has remained mysterious. So far he has refused to comment. Approached on Thursday near the deck of his spacious two-story colonial in suburban York, Ahrens referred questions to his attorney.
His attorney, J. Clayton Undercofler, chairman of a large Philadelphia law firm, also declined comment.
``None of my people knew him,″ said Ken Fetrow, president of First Capital Brokerage, a small retail brokerage also in York that is not related to Ahrens’ money-management firm.
Some neighbors expressed surprise at the allegations against Ahrens, a tall man who looks boyish and wears khaki pants and polo shirts. They described him as a ready lender of tools and help to others in the development, an upper-middle class neighborhood but not among the area’s wealthiest.
``Maybe people make mistakes. I don’t think he did it out of dishonest motivation,″ said Fred Magenheimer, 56, Ahrens’ next-door neighbor of four years.
Two winters ago, Magenheimer recalled that he asked to borrow Ahrens’ snowblower because his was broken. Better than that, Ahrens cleared half of Magenheimer’s two-car driveway before extending the loaner.
``These events haven’t changed my opinion of him,″ Magenheimer said.
For its part, First Capital has not accused Ahrens of any financial motivation in covering up the losses. But lawyers for the money-management firm put the blame squarely on Ahrens, describing him as a ``trusted employee″ who used his knowledge and resourcefulness to circumvent not only the Common Fund’s investment guidelines but the firm’s own safeguards.
If not for recent events, Ahrens may have been just another small-town native who never strayed far from boyhood roots. He was raised in Manchester, near York, about 90 miles west of Philadelphia. His father, Robert L. Ahrens, was a local car salesman who jointly bought a Ford dealership in 1969.
Kent Ahrens received his own license to sell cars in 1978, according to Pennsylvania records. But his career path diverted. That same year he graduated from Rider University, a private college in Lawrenceville, N.J., with a bachelor’s degree in finance. In 1984, shortly after joining First Capital, he received a master’s degree in finance from the University of Baltimore.
His career grew with First Capital, which increased from just a few founding partners in 1980 to two-dozen employees today. In 12 years, Ahrens climbed from back-office clerk to trader’s assistant to senior-level trader entrusted with major money-management accounts.
``I would probably classify him as a young yuppie, young up-and-coming,″ recalled a former next-door neighbor in the small condominium complex in York where he lived until the early 1990s.
In 1991, Ahrens and his wife Nancy, an optometrist, bought their current house on one-half acre for about $344,000, property records show, moving with their daughter into the affluent neighborhood built on rolling farm fields.
But the next year, First Capital says, something went wrong. Ahrens lost a ``small″ amount of money in a stock-trading transaction that he had failed to hedge against investment risk.
But instead of reporting the loss, his employer alleges, Ahrens tried unsuccessfully over the next three years to cover up with more transactions that only relentlessly magnified the losses.
AP Writer Hunter T. George II in Harrisburg, Pa. and AP Researcher Randy Herschaft contributed to this report.