All of the plutocrats planes and boats are in this week. The Highlander was tied up at Straight Wharf, without the famous Mr. Forbes, but with some lucky off spring. The Endeavor gave the Fourth of July sail. The Ingot. The Doubleday Boat.

So, being the lover of the newspaper that I am, I got to thinking about Plutocrats and that incredible one page ad for the house in Squam. Before you could say ≥Barnett,≤ and with the help of the Hinsons and our friends at Google, I was on it.

≥Pete≤ Musser graduated from Lehigh and, in 1955 founded Safeguard Scientifics in Philadelphia with $300,000 borrowed from family and friends. I did not have the good fortune to be alive in 1955, but I believe $300,000 was nothing to look away from. He must have had good friends.

Either way, according to an article in Forbes (http://www.fortune.com/fortune/technology/articles/0,15114,368251-4,00.html) , he did good things with this money over the years. Safeguard is a company like CMGI, which bought a minority interest in a company, ≥incubated≤ and then cashed out of it when the company went public. For most of the first forty years of its existence, it helped out with auto parts, farm machinery and real estate. In that time, the company made some good bets. It bet on Comcast cable, and won handsomely. It was one of the first to get QVC going. And, most importantly, it helped Novell move into software and networking.

In the late eighties, Safeguard bought tech companies so that by the nineties, the stock moved. Then, in 1999, an internal business to business tech ≥investment fund≤, the Internet Capital Group, went public and the stock shot up. As that stock rocketed, so did the stock for the rest of the company. Henry Blodget (remember him?) predicted the stock would hit $125. Safeguard Scientifics eventually, in 2000, hit $99 a share. . Although he does not know how to use a computer, he claimed in 1996 that ≥we are responsible for the computer revolution.≤ Even at that time, at least one analyst was throwing grenades Let me get this straight," he said at the time. "You have no payment system that works, [Internet] advertising is falling. And customer acquisition is too expensive. What am I missing here?"

However, ≥Pete≤ had become a Master of the Universe. Known for his old cars, yellow sweater vests, and granola breakfasts, he got caught up. In 1994, at the age of 66, he divorced his wife of 43 years and the mother of his two of his kids, and began dating the 29 year old Hillary Grinker. He buys a plane. He buys the spread up here in Squam in 1998, a 3 million dollar farmhouse in Penn (which he almost burns down from a charcoal grill), and makes large donations to charity, including 10 million to Lehigh, and 4 million to Penn State. Like Koslowski, his neighbor in Squam, he gave to the Nantucket Aids Network and to the Hospital. In 1999, at the height of the boom, he was worth almost 1 billion dollars.

The cottage, ≥Higginπs Haven≤ has some fun little amenities brought to it. The garage doors cost $100,000. He built two tennis courts on it. One for regular play, and one for his wife to have lessons on. Both private tennis bathrooms have hand painted tennis racket tiles. For Grinkerπs 35^th birthday, in 2000 he ferried guests from all over the world to Squam. Grinker has been a great Nantucket shopper, outfitting one of the cottages in blue and white porcelain bought on island (Seldom Scene?)( http://magazines.ivillage.com/countryliving/decorate/homes/photo/0,,547454_526960,00.html)

When the stock market collapsed, Pete also got crushed. Most of his money was tied up in Safeguard and some of Safeguardπs companies. As Safeguard shot up, he used his 8,5 million shares as collateral for margin calls on stocks, mostly Safeguardπs own stocks. He was, in essence, doubling down. When the stock was in the nineties, Pete was ludicrously rich. Then the stock plummeted all the way past 20, when his debts became more than his assets, (using his own stock, as the CEO of the company, to make margin calls has led to a shareholder suit. Looking back through the Motley Fool bulletin boards, many of those investors started asking questions about massive insider trades at Safeguard.)

Musser went to the Board of Directors and told his tale of woe. They loaned him $10 million and guaranteed $35 million of his margin debt, so that he didnπt have to dump his stock and send the company even further into a tailspin. Of course, he did later sell 6.5 million shares at 8.25 a share (In the fat years, he had earmarked 1 million shares for a foundation). This year, he sold another 300,000 shares at 7.5 for 2.27 million. He has a few hundred thousand shares left, but the stock now trades at $2.00. Safeguard, once worth five to eight billion dollars, now has 120 million in cash and 187 million is some silly internet stocks.

Musser paid back his $10 million loan, but couldnπt get the scratch for the $35 million. The Safeguard board loaned him $28 million to help pay of the $35 million, but this new loan has strings attached, It carries 7% interest and usesäSquam as collateral. The loan came due January 1, 2003.

But it gets messier. Musser borrowed 14.1 million from Koslowski, using Squam as collateral for that loan. And Squam was already carrying a 4 million dollar mortgage. Tyco never reveals this loan to the SEC, which is a problem, because Musser was on the board of Tycom, a company spun off from Tyco. Koslowskin spun of off Tycom at 32 dollars a share and bought it back at $10. Musser was the independent member of the board. So thereπs another lawsuit from more shareholders.

And Grinker had her share of mess. While she is an ≥interior designer≤ today, she once was a P.R. Flack for the Franklin Institute andäthe C.E.O. of Megasystems, a company that makes equipment for IMAX movies. Safeguard owned about 50% of the company, which Musser started investing in 1995. Musser was loaning company money and ≥incubating≤this company for his 30 year old girlfriend. The company defaulted on a loan from Safeguard for 2.1 million. Again, Shareholders are suing. (Grinker can be found photographed (guytucket??) at the Pops Concert. http://www.nantucketfoggysheet.com/FoggySheetBuzz_POPS.htm)

Now, this matters to Peeps because the Penn pension fund invested $400 million into Safeguard related ventures in the 90πs. It $125 million back. Tax money will probably fill in that gap.

However, life for the 75 year old Musser seems to be getting on. He is the focus of civil fraud litigation and the like, but he is the proud father of baby Connor. Further, Safeguard still pays him $300,000 a year and was worth about 15 million in 2001. His biggest stock holding is in Cambridge Technology Group. Most recently, he was chairman of Nutri/system and sold it to some of his old friends.

≥Just because somebody has a little bit of a business problem, that doesn't mean they're not a great person," says Ron Rubin, chairman of the Pennsylvania Real Estate Investment Trust.