Insider Bill Gross’ high-profile billionaire divorce case

Bill
Gross, cofounder and cochief investment officer of Pacific
Investment Management Co., or Pimco, at the Morningstar
Investment Conference in Chicago, June 19,
2014.
REUTERS/Jim
Young

• Bill Gross, the world’s most famous bond investor, has
  been mired in a contentious divorce for over two
  years.
• Sue Gross, the billionaire’s ex-wife, alleges he
  trashed their $31 million California mansion, killing the
  plants and putting dead fish in the
  vents. 
  
  Bill denies trashing the
  house.
  
• Bill alleges Sue moved towards
  him with a silver object in her hand “which may have been a
  knife” at a concert by their son’s band. Sue denies ever
  threatening him. 
• After the concert, Bill hired security guards to
  monitor Sue’s family members from morning to night; they also
  kept tabs on her twin sister, brother-in-law, and
  others, court documents allege.
• Business Insider sorted through hundreds of pages of
  testimony and evidence to piece together an overarching account
  of their messy divorce.

---

The text came in at 7:23 a.m. on Valentine’s Day 2018:

“Good morning … checking in at Newport Beach.”

Later that afternoon the private investigator texted his boss
again:

“She left the house around 8:00 am while Joseph came back from
jogging around 8:30 am, than she came back home around 10:00 it
was quiet most of the day, she just left with her sister at 3:50
pm ‘in a black Mercedes Benz’ sedan.”

That conversation is one of hundreds between Empire Intelligence
agents, hired by billionaire bond investor Bill Gross, to monitor
the whereabouts of his ex-wife, Sue Gross and her family
members. 

The texts were revealed in court documents from an ongoing suit
between the two in which Sue alleges the 74-year-old billionaire
has stalked, harassed, and threatened her and her relatives.

Bill, in reciprocal filings, alleges his ex-wife has also
harassed him and his assistant over the course of the couple’s
yearslong, high-profile divorce case — one that has involved
public spats, dead fish, and a fake Picasso painting.

It wasn’t always this way

Bill Gross in his 1965
Duke yearbook.
Duke University
Archives

Bill Gross, a young
Vietnam veteran in Los Angeles by way of Middletown, Ohio,
founded the Pacific Investment Management Co. in 1971 after
graduating from Duke University just five years before.

As business was beginning to take off, Bill, a recent divorcé,
was set up on a blind date with Sue Frank, then a clerical
worker. They were married shortly after, in 1985.

Over the course of the next decades, the firm, known as Pimco,
would grow to $2 trillion by making bond investing accessible to
the masses of retail investors. Gross’ Total Return Fund
hit a peak of $293 billion, in April 2013, and by the next
year, Pimco funds would eventually
account for 14 cents of every dollar invested in taxable
bonds, according to Morningstar data.

“Gross is one of those high-profile names that contributed to the
explosion of bond trading and innovation back in the ’70s and
into the ’90s with other names like Ron Ryan of Ryan Labs, Lew
Ranieri at Salomon Brothers, and Larry Fink with First Boston,
and then obviously BlackRock,” Rich Sega, global chief investment
strategist for Conning, which oversees about $122 billion in
assets, told Business Insider.

As Pimco grew, so did Gross’ bank balance. When the company was
purchased by German insurer Allianz in 1999, Gross
locked in a $200 million annual salary, more than 20 times
the pay of Allianz’s chief executive at the time.

Over time his riches ballooned to as much as $2.5 billion,
according to Forbes.

After seeing a
heart-wrenching “60 Minutes” report in 2012, the couple

reportedly started writing anonymous $15,000 checks to
workers laid off from the Space Shuttle program after NASA ended
it. Gross subsequently made a pledge to donate $2 billion of his
wealth, telling Bloomberg at the time that the amount was
“staggering,
even to me.”

Together, the couple became synonymous with Southern California
philanthropy, with Sue leading their eponymous foundation.
Hospitals and research wings throughout the state bear the Gross
family name, as well as a $10 million Smithsonian Institution
stamp-collecting gallery in Washington, DC, where the avid
philatelist’s collection is on display. Sue is no longer
connected to the foundation, a representative said, and runs
another under her own name.

Eventually, the high-flying bond market took a turn. Gross’ fund
performance stuttered alongside falling yields on US Treasuries.
In 2013, the fund would post its second-worst annual performance
in more than a decade. What’s more, dissension was growing among
the Pimco ranks — especially after Gross gave a speech while
wearing sunglasses and sent clients an investment update that
was mostly a
eulogy for his recently deceased cat.

Well before sunrise on a Friday in September 2014, at 5:30 a.m.,
the news flashed on Bloomberg Terminal screens and newspaper
websites around the world: Gross had been fired.

Not to be deterred — though he would later sue his former
employer for wrongful termination and breach of contract —

Gross joined Janus Partners, a much smaller firm, effective
the very next Monday. His new office is visible from Pimco’s
Newport Beach headquarters,
and just a five-minute walk away.

Bill Gross’ new Janus office, just steps from Pimco’s
Newport Beach headquarters.
Google
Maps

Investors yanked $23.5 billion from Pimco’s total return fund,
previously managed by Gross, following his departure in what
Morningstar said were withdrawals of “unprecedented magnitude.”
The outflows were so great that Pimco eventually ceded its title
of world’s largest bond fund to Vanguard. A representative for
Pimco declined to comment for this article.

“Some people will look at a firm and trust the process without
attaching their faith so much to an individual,” Sega said.
“Other times it’s the cult of personality that takes over. You
really trust the guy instead of the firm. If the guy goes
somewhere else you figure that same process will be replicated.”

While Gross was getting settled into hit new job, his marriage
was unraveling

A text message filed by Sue Gross in her application
for a restraining order against her
ex-husband.
Court
Documents

By the summer of 2016, Sue had moved out of the couple’s $31
million seaside mansion in Laguna Beach, opting to split her time
among their other two homes in the Los Angeles area because of
Bill’s “increasingly erratic and abusive behavior,” she alleged
in court documents filed later that year.

Still, Bill was convinced their matrimony was reconcilable and
asked her multiple times to move back in, she claimed, even
taking her to dinner at the upscale Bandera restaurant in October
2016. What happened at that Italian dinner was the final
straw, Sue said in filings.

“Bill became livid with me while we were at the restaurant, and
demanded, ‘Are you coming back or not?!'” Sue claimed. “I was
embarrassed and decided to leave the restaurant. Bill pursued me
aggressively to my car. I was able to avoid him and quickly shut
the car door. He stood with his face at the driver’s side window,
screaming at me. He said: ‘That’s what you always do — you run!’
I was terrified.”

She filed for divorce on November 22, 2016.

“After I filed the petition, Bill commenced a rampage against me
and members of my family,” she alleged in court filings. Sue and
her attorneys filed copies of these emails with the court as part
of her evidence in an application for a temporary restraining
order against Bill.

“You are a piece of work and surely not a friend — for a long
time — a coward too to not say why you really wanted a divorce. I
feel utterly betrayed and will not shy from letting people know,”
Bill said in an email to Sue dated December 4, 2016 that was
filed as evidence by Sue. “You are disgusting — all will know —
and I do mean all.”

In September 2017, one month before the couple’s divorce was
finalized, Bill was invited by his adult son Nick to watch his
rock band, Half the Animal, perform in Costa Mesa. Bill invited
his girlfriend, Amy, to attend, and Sue was also in attendance.

“Bill saw Sue from afar,”one of the hired guards claimed
in court papers filed as part of Bill’s application. A
moment later, the guard claimed, Sue was making a
beeline for Bill and Amy — and “appeared to have her phone in one
hand and a silver object in the other, which may have been a
knife, although Bill is not certain.”

“She was flailing her arms and was screaming other words that
Bill and Amy could not understand,” the testimony continues. “Sue
was acting irrationally as Bill had seen her act many times
before. Bill was anxious and agitated about what Sue might do to
him or Amy, who appeared fearful.”

Bill later hired Empire Intelligence — a Los Angeles-based
security, investigation, and protection firm — to keep tabs on
all of Sue’s whereabouts, as well as her twin sister, Susan
Warpinski, her husband, Joseph Warpinski, and other sister,
Sandra Stubban. He claimed in court the move was “due to Sue’s
violent erratic, and threatening behavior” toward him and his
friends.

Sue has denied those claims in court and through a representative
to Business Insider.

Agents were posted outside at least four addresses frequented by
Sue and her family members, according to text messages filed in
court and pieced together by Business Insider. Sue’s request for
a temporary restraining order alleges that the agents were hired
by Bill, showed up most days between 7 a.m. and 8 a.m., and
detailed anyone entering or leaving those properties to a boss
named Tony. Agents texted the manager to check out every evening
about 7 pm

Empire Intelligence declined requests for comment through a
representative.

Sue claims this behavior amounted to harassment, and that after
the couple’s divorce was finalized, she claims Bill’s harassment
only continued. Even though she had not been living in the
couple’s family home for two years, it was still jointly owned by
both of them. But Sue claimed in court that Bill had been
blocking her access to the house, keeping her from doing routine
things like watering plants and tidying up.

“When I was finally able to obtain access to this house,” she
said in a filing last month. “I was disgusted to see that Bill
had left in a state of utter chaos and disrepair.”

The filing added:

“I found empty bottles of ‘puke’ smell, and ‘fart’ smell in the
garbage; the houseplants smelled foul and had to be replaced. The
carpets were stained, and there was water damage throughout the
house. A one of a kind art installation piece had been dismantled
and removed. The remote controls for the televisions, drapes, and
other technology were all missing. There were balls of human hair
in the drawers. The electrical cord on a treadmill was severed
and the tops of potted flowers were cut off. I even found fish
and dirt stuffed into the air vents.”

Sue also filed photos with the court of empty bottles of “fake
fart” spray and similar bottles she says Bill sprayed in the home
to make it reek. Through his lawyer Bill Gross denied these
allegations to Business Insider.

The couple’s prized Picasso

Pablo
Picasso’s “Le Repos” at Sotheby’s auction house in
London.
Photo by Dan Kitwood/Getty
Images

Sue is a noted fan of fine art. Bill even praised her abilities
in a 2015 letter to investors, saying she loved to trace her own
versions of famous works by projecting them onto a blank canvas.

When it came time to divvy up their assets, in August
2017, Sue won a coin flip for “Les Repos,” a
sensual 1932 painting of Picasso’s “golden muse” and lover,
Marie-Thérèse Walter.

But it turned out Sue had already had the painting. The piece on
Bill’s wall was a fake painted by Sue.

“Bill was shocked Sue already had the piece,” an anonymous source
told the New York Post, adding that Bill said, “She stole the
damn thing.”

Through a representative, Sue claimed there was no way Bill could
have been fooled by her imitation — no matter how pristine —
because it had a different frame than the original Picasso.

“Le Repos” finally sold this spring for $36.92 million at the
Sotheby’s auction house in New York.

The other priceless heirlooms acquired by Bill and Sue during
their three-decade marriage — the antique clocks, luxury cars,
and houses — have been divvied up.

But the couple’s hearing on their mutual restraining orders
doesn’t take place for another seven months, in February 2019.

And the private security guards are still on hire by Bill, a
spokesperson confirmed.