Nightmare on Wall Street: The life of financier Wardell Lazard inspired a generation of upwardly mobile black Americans. His death has encouraged the worst racist prejudices of the white business establishment

BETTY LAZARD didn't want her husband remembered for the way he died. Naked and alone in a fetid Pittsburgh hotel room. Overdosed on a mixture of vodka and cocaine, and discovered only when the chambermaid raised the alarm. No, Betty Lazard wanted her husband to be remembered for his achievement. So she insisted his funeral be a celebration of his life on earth. And she chose When the Saints Go Marching In as a send-off.

Three hundred people came to the Union Baptist Church in Morristown, New Jersey, on a grey morning in May. Most, like Lazard, were black. But there were his Wall Street colleagues, black and white; his old boss, Gedale Horowitz, from Salomon Brothers, some of his clients, and many of the young bankers he'd worked with over the years - even some of the competition were there.

Betty Lazard, in a yellow jacket and black skirt Wardell had bought her, sat in the second row next to her youngest daughter, 21-year-old Miandre. She had chosen deep green ferns and red flowers to adorn the church. And she had dressed her husband in a red pin-stripe shirt and red tie to go with the Italian suit he had bought two months earlier. 'I wanted the whole look in the church to be real elegant,' she says, enunciating the words slowly, as if trying them out for the first time. Her two older children, Michell and Marcell, were also there. And in the front pew sat two old women, Wardell Lazard's mother and his grandmother.

'We wanted a celebration,' Betty Lazard kept repeating afterwards. 'That is what we all wanted: a celebration.' All through the service, the hymns were interrupted by tributes: Wardell Lazard - born in Los Angeles in 1949 and raised on Edwards Airforce Base in California, where his stepfather was a sergeant - had become the best known black banker on Wall Street.

He founded his own firm, W R Lazard & Co, after persuading his employers, Salomon Brothers, to lend him dollars 250,000. Never before had Salomon helped an employee to set up in competition. Before long, W R Lazard became one of the most prominent black investment banks in America, with a talent for managing pension funds and arranging bond issues for America's biggest cities.

Against all odds, Lazard fought his way into the closed circle of white-owned banks, such as Salomon, Merrill Lynch and J P Morgan. And he helped to dislodge the old prejudice that black people have no money and don't deserve to work on Wall Street. 'Wardell was a frontiersman,' a former colleague, Marianne Spraggins, told me later. 'And Wall Street is the last frontier of the civil rights struggle.'

In the Union Baptist Church, the mourners listened with their faces upturned and their hands crossed in their laps while the Rev Norman Prescott described how Lazard 'did something in his lifetime for others to follow. He set goals . . . that were unparalleled in the financial world.' And many of the mourners nodded when his friend and colleague Frederick Crutchfield concluded: 'To the people in the firm, he was a friend. We know him, we love him and we will miss him.'

When the mourners emerged into the light grey rain, it was with a sense that the service had done what it set out to do in recalling Lazard's earthly achievements. Yet many of them could not stop themselves from thinking of the way he had died. 'He was only 44,' one later told me. 'It was so tragic. So dumb. We still couldn't believe it.'

No one who addressed the congregation mentioned, of course, how Lazard's body had been found. Nor that his marriage had gone through a bad patch and that for two years, until last summer, Lazard had left home. They did not disclose that he was in so much trouble with the taxman that just a month before he died, a lien had been put on the Lazard family home in an attempt to force him to settle the dollars 68,047.71 he owed in unpaid back taxes.

Nor did many know that his firm was under investigation for possible corruption both by the Manhattan District Attorney's office and by the Securities & Exchange Commission, two of the most formidable financial policemen on Wall Street. And fewer still - because his colleagues say Lazard was always so strict about drugs - were aware that, far from being an occasional, recreational drug user (like many on Wall Street), Lazard had had a persistent problem that had once led him to be arrested by the New Jersey police and now had led to his death.

'It was almost as if,' the same mourner added, 'by saying nothing about it, they could deny everything - the drugs, the trouble, Wardell's death. The whole works.'

There were many reasons for blocking out how Wardell Lazard died. Shock was one; another was respect for the natural delicacy of a funeral gathering. But there was something more: a feeling, even a fear - especially among those who saw Wardell Lazard's success as proof that racial intolerance was ending in America - that airing the details of his drug problem would play to those who still believe that being black and taking drugs inevitably go hand in hand. As one senior Wall Street banker told me: 'If a white man dies of a drug overdose, it's considered a tragedy, but if it's a black man, there's a sort of a what-do-you-expect feel about it. It's awful, but it's a fact.'

IT WASN'T long ago that blacks on Wall Street knew only the back room rather than the boardroom. One black Harvard Business School graduate recalls being told in an interview with Morgan Stanley in the mid-1970s, 'We can't give you this job. Our clients wouldn't like it.' But things have started to change over the past 10 years, and nowhere more than in the Wall Street's municipal finance departments.

Since the mid-1980s, a growing number of black mayors has been elected to office. Marion Barry became mayor of Washington (until he was convicted of cocaine use and forced to resign), Andrew Jackson was elected in Atlanta, David Dinkins in New York, Harold Washington in Chicago and Coleman Young in Detroit. These cities are big borrowers from the Wall Street banks. And it wasn't long before, as one banker explains it, 'the new black administrations started to ask, 'Hey, why don't these guys employ more minorities? Why aren't there any minority-owned firms?' And they started to insist that minority firms be involved.'

Atlanta was one of the first to heed the call, and today the city insists that 30 per cent of its bond issues are underwritten by black firms. Soon, virtually every big city in America boasted an affirmative action programme that gave small minority-owned banks - not just black banks, but Hispanic firms and firms owned by women - a share of the action. Leading the way was the little Wall Street firm of W R Lazard & Co.

Wardell Lazard was no ghetto baby. He grew up in the 1950s within the disciplined stability of a middle-ranking air force family. Although his real father abandoned Wardell's mother, Mabel Jean Jordan, while she was pregnant, when the child was 18 months old she married Sergeant Clarence Murphy, whom Lazard always regarded as his true father. Mrs Murphy is a strong-minded and deeply religious woman, who still leads prayers every Tuesday at her local Church of God and Christ. Her daughter-in-law describes her as 'a real matriarch', who eventually gave birth to five more children.

As a boy, Wardell was quiet and introverted and gave no sign of his potential for future success. Always the tallest in the class, he grew to be 6ft 6in. He was an oustanding athlete, and played the saxophone in a jazz band. But he languished in class, and graduated 62nd from a high school class of 67. 'He was a great big old kid,' said Lola Demek, whose son was one of Lazard's childhood friends.

Undeterred, Lazard worked on his grades and eventually was accepted by California State University at Los Angeles to read journalism. He and Betty Chalmers had been high school sweethearts, and they married when he was 19 and she a year younger. The young couple moved to Sacramento, where Wardell worked for the California state government and went to night school to study law.

'Wardell,' his wife recalls, 'was the first person in his family to go to college. Even then, he had a dream. But he knew he had to go to school first.'

To make ends meet, the family opened a bookshop. 'It was just a small family store,' says Betty, who ran the shop when she wasn't at home looking after her children. But it was also good experience, for she would eventually become the treasurer of Lazard's firm in New York.

Even as late as the mid-Seventies, mainstream American banks were reluctant to promote black professionals. Yet millions of blacks worked for state and municipal authorities. More important, tens of millions of retired black employees - municipal workers, bus drivers, train drivers, clerks and office cleaners - rely on their local government pensions. Lazard was not the first to realise that the public sector offered African-Americans far greater opportunity for a financial career than the private sector. In 1977, he joined Calpers, the California Public Employees Retirement System, as a bond trader.

Gregarious, intelligent and with growing ambitions, Lazard quickly made useful contacts among the banks that fight to arrange bond issues for such municipal entities as Calpers. In 1980, Salomon Brothers offered him a job in its municipal finance department, and the Lazards, with their three small children, moved to New York.

Few blacks who join Wall Street firms suffer the overt racism encountered by the banker whose colleagues, on hearing that he had been promoted to the rank of vice-president, had business cards printed for him that said 'Shoeshine Boy'. But insidious racism exists.

'Say five people start as trainees,' explains one banker who worked for Morgan Stanley's municipal finance department before setting up on his own. 'The four whites find a 'godfather', (someone) to tell them the game, the politics, who's a friend, who's gunning for you. That's very important information. Without that kind of information and mentoring you don't get the good assignments. If you don't get good assignments, you can't generate business. Blacks somehow don't find mentors. And without a mentor basically you don't get anywhere.'

Nor do things get any easier when blacks launch out on their own. 'My biggest problem,' recalls this banker, 'is reaching a level playing-field.' He recounts a story about a fellow (white) business school graduate who asked one of the big US banks for dollars 10m when he started his venture capital firm. 'They came back to him and said, 'Sir, will you take dollars 30m?'

'Now, our two businesses are the same size. So I went to the same bank and, knowing it would be a bit more difficult, I asked for only dollars 5m. And the guy there said, 'F-I-V-E M-I-L-L-I-O-N D-O-L-L-A-R-S? God, that's a lot of money.' Guess what I got? Zero.

'The question you begin to ask yourself is this: 'Is the glass half-full, or is the glass half-empty? Why can't they get over the real problem? Here is a black man wanting to deal with real money.'

Lazard did well at Salomon's. 'He was good,' recalls his boss, Gedale Horowitz. 'We hired him because he was able, intelligent, aggressive, competitive. He'd been to law school at night, and he had lots of the values you would want anybody who works for you to have.' Bani Bose, who worked with Lazard in the early 1980s, remembers him for his good humour and ready smile. 'The sort of guy who liked kids and dogs. Clients liked him.' And, as Horowitz says, 'he also happened to be black, which was a plus. So he progressed rapidly.' At the end of 1984, Lazard decided to set up on his own. 'That was his dream,' Horowitz remembers. 'He wanted to make a mark.

'He said he needed dollars 250,000. So I went to talk to (Salomon's then chief executive) John Gutfreund. And we took a decision to loan him the money. It was very unusual. There was no security. And we owned no stock. It was a personal loan to him. And I hope we did it for the best of reasons.'

W R Lazard & Co began with just three people: Wardell; Betty as treasurer, leaving Wardell free to get in the business; and a secretary. 'Oh, we worked so hard,' Betty Lazard remembers. 'We worked all the hours God gave us.'

If Salomon is proud of its benevolence towards Lazard, it also did well out of the relationship. The small black firm began as an adviser to the bigger municipal authorities, and quickly began participating in some of the cities' bigger loans. Salomon often got a slice of the business.

Nor was Lazard slow in capitalising on the pension fund experience he had gained while at Calpers. Soon the firm offered a range of financial services from underwriting to pension fund management for municipalities, colleges, unions and private companies across the country.

The obituary handed out to the mourners at Lazard's funeral said that the firm 'was characterised by resilience, toughness and tirelessness'.

'He was always pushing us to be better,' says Dwight White, the former professional footballer who heads W R Lazard's Pittsburgh office, and who was possibly the last person Lazard spoke to before he died. 'He was a perfectionist, and he was tough.' But being a black entrepreneur wasn't easy. In 1986, when W R Lazard began acquiring other firms, Salomon refused to lend Lazard the dollars 2.5m he needed, so he turned to Drexel Burnham, the same gung-ho bank that employed Michael Milken.

Salomon's cautiousness was soon vindicated. When the stock market crashed in October 1987, the business, having jumped in a matter of months from fewer than 20 people to nearly 100, was almost wiped out. Unsigned deals fell apart as borrowers were overcome by fear. 'We had to start sacking people, scale down our offices,' says Mel Eubanks, who took over as head of the firm after Lazard's death. 'It was a really scary time.' Drexel's collapse in 1990 added to the pressures.

It took two years for W R Lazard to regain its health. But it succeeded. And in the middle of last year, it became the first minority-owned firm to be appointed a co-lead manager on a municipal bond issue, a dollars 1.3bn issue for the New York City Water Authority.

As the firm's commercial health improved, Lazard told the Wall Street Journal: 'The shift from being a Ma-and-Pa organisation to a professionally run operation has been made.' Today, W R Lazard occupies three-quarters of a floor at 14 Wall Street, directly opposite the New York Stock Exchange.

W R Lazard insists its business is squeaky clean. Yet the municipal bond business is known as one of the dirtiest. 'You don't get any dirtier,' one banker told me. Broadly, municipal funding is all about you-scratch-my-back-and-I'll-scratch-yours. Candidates for mayor office in any city look to the banks to help fund their campaigns. 'Just as white folks support white folks, we support black folks,' Lazard once said. And the winners reward their backers with big chunks of the city's banking business.

The system is, of course, ripe for abuse. Yet misdemeanours rarely come to light. Lazard knew all of America's most important black mayors. For the most part, he kept his friendships out of the public eye, but in 1987 Bettye Smith, the manager of his Washington office, was forced to resign after it was revealed that she had gone on holiday to the Bahamas with Washington DC's mayor, Marion Barry, and she testified that they had taken cocaine together.

FOR BETTY Lazard, going to college was a dream that had to be postponed as she kept up with her husband's career. She gave birth to her first child the year after she married, and to twins five years later. Early on, she managed the family bookshop and, later, when the Lazards moved east, she managed the family. 'We were building something. Wardell was working so hard, and my children were growing up, so I looked after them,' she says. Only in 1985, when Wardell started his own firm, did Betty Lazard go back to work, as W R Lazard's treasurer. But still she wanted to go back to study.

As the business became successful, Lazard never hid his prosperity. The family moved into a big house in Morristown, a New Jersey commuter town that is home to many wealthy black business people. Set on a hillside, amid two acres of woods containing deer, wild turkeys and racoons, the house has five bedrooms and a large garage. One observant neighbour says 96 rolls of wallpaper were needed to redecorate the hall.

Lazard travelled extensively, visiting at least one of the firm's offices in Washington, Pittsburgh, Atlanta, Dallas, Los Angeles and Columbus, Ohio, every week. 'He moved very fast,' says Dwight White. 'If he came into town, he'd be out of there as soon as he'd finished. I never knew him to stay the night after we'd finished our business.'

'When Wardell was home, I wanted to be with him,' explains Betty Lazard, who says that she has just three girlfriends, 'whom I would see mostly during the week.' At weekends, Lazard would watch videos, occasionally seeing the same film five or six times in a single weekend. Jurassic Park and Cliffhanger were two recent favourites. He also loved cars. He bought a Mercedes 500, and a Jaguar convertible for the summer. But his favourite, according to his wife, was his Chevrolet truck.

The Lazards rarely socialised, and never entertained at home except with other members of the family. 'Wardell would just prepare for the week ahead,' says Betty. 'When we married, we spent all our time working, studying or raising our children. And it pretty much stayed that way.'

Most of Lazard's colleagues were never invited out to the Morristown house. 'Wardell had no friends. He was that kind of person. He was always too busy trying to accomplish his goals. Maybe he didn't trust a lot of people, I don't really know. All I know is that he didn't have any friends.'

But Betty Lazard's knowledge of her husband's life may have been less complete than she imagined. Despite their new prosperity, tensions had begun to surface in the Lazard marriage. 'We had married in our teens,' says Betty, 'and Wardell felt there was a lot he'd missed out on.'

In 1991, Lazard separated from his wife and moved into a smaller house in Harding, a small town near Morristown. Betty Lazard realised that she must continue with her own life, and finally she returned to college, enrolling at law school in California while her husband remained on the East Coast. 'We were still very close. We'd talk on the phone five or six times a day, and meet up for occasional weekends together.' After two years, the relationship had improved so much that she dropped out of law school and moved back to Morristown. Lazard returned home last summer.

But no one really knows the full story of Lazard's life in the years when he lived alone - or even in those last months when his marriage was supposedly repaired and his business was once more a success. When, for example, did Lazard start taking drugs? Who did he buy the from, and who, if anyone, did he take them with? In June 1991, neighbours called the police after hearing screaming in his house. A month later, it was an ambulance that was needed. Lazard had taken a drug overdose. He was arrested at the Morristown hospital and charged with possession of cocaine and drug paraphernalia. As a first-time offender, he was fined dollars 1,000 and released on condition that he enter a drug rehabilitation programme that September.

Lazard spent 11 months under close supervision, which expunged the arrest from his record. But news of his conviction was kept secret from everyone at the firm until after his death, when details of his arrest were leaked to the press by the New Jersey police. 'We had no idea,' says White. 'First I heard was after Wardell died, when I read about it in the newspapers.'

Betty Lazard says she believed her husband had stopped taking drugs after his arrest three years earlier, and had no idea that the problem had recurred after their reconciliation. 'There was nothing in his behaviour that ever indicated to me that he took drugs. I don't believe he did.'

Did Wardell Lazard have a secret life? Secret friends? His colleagues, without exception, say that he never fell down on the job, yet certainly he travelled enough to have secrets. And he was wealthy. If he wanted drugs, he could afford them. He would hardly be alone in that. The pressures of life on Wall Street lead many to try cocaine to help keep pace with the job. Some find the habit hard to control. In March, for example, Larry Kudlow, the economist at Bear Stearns, one of the Street's bigger firms, resigned after admitting that he was a drug addict and alcoholic. All the Wall Street firms screen for drugs when an employee is hired, but none of them routinely does spot checks that might alert management to an employee in difficulty.

Kudlow, now in treatment and reportedly feeling better every day, was lucky. When a Lazard executive was found to have a similar problem, in mid-1992, he was fired. The company then paid for his rehabilitation and rehired him. David Shay, the addiction counsellor hired to help him, says: 'They didn't want to fire the guy. They were very generous. They really wanted to help. One (executive) called to say if the insurance won't pay, the firm will.' Of Lazard, Shay adds: 'He was so concerned, so compassionate. One of the reasons was that Wardell himself had had this problem.' What Shay doesn't add is that Lazard's problem was far from over.

BETTY LAZARD was the sole beneficiary of her husband's estate, and today she owns 90 per cent of the stock in the company. Her first priority has been to ensure a smooth transition in its management and to limit the damage done by Lazard's death and the Manhattan District Attorney's investigation of the firm.

Robert Morgenthau, the Manhattan District Attorney, refuses to comment on the case, but it emerged soon after Lazard's death that the New York Job Development Authority was suspected of paying W R Lazard dollars 548,000 on a transaction that should have cost no more than dollars 70,000 in fees. A spokesman for the D A's office said: 'We want to know what work was performed to warrant payment of these fees.' The implication is that Lazard was perhaps taking bribes. But so far, neither the D A's office nor the Securities & Exchange Commission, which is also investigating the firm, has released its findings.

After the funeral, W R Lazard's new chief executive, Mel Eubanks, visited all the firm's clients. Only one chose to take his business elsewhere. In future, while Eubanks concentrates now on steadying the firm, Betty Lazard's long-term plan is to establish a foundation to help young blacks get a leg-up on Wall Street. Lazard was just 14 that August afternoon in 1963 when Martin Luther King ignited a generation with his 'dream' of racial equality. Thirty years on, Lazard's dream, like that of most black Americans, was not just of equality, but of freedom, jobs, education - and prosperity.

The foundation will help fight racism, but Betty Lazard has yet to come to terms with the other great threat facing young blacks who seek to follow in Lazard's footsteps: drugs. That her husband somehow brought on his own death is something she cannot accept. 'I knew how Wardell felt about drugs. He was completely against it. Our son had a bout with drugs. And although he'd been drug-free for a few years, it was a concern of Wardell's that one day he might start back. I didn't know Wardell was back on drugs. And he wasn't a drinker either. I find that very strange. He would drink wine or beer. It's been a long time since I've seen him drink vodka.

'I feel that there's more to it than what we know. My gut feeling tells me that. I believe that somebody knows about his death. Who? I don't know. But I believe that whoever it is is somebody that Wardell knew. I think maybe somebody killed him. That's it.'

Lazard flew to Pittsburgh on Tuesday, 10 May, for a lunch meeting with Dwight White. 'I met up (with) him at the airport,' his wife recalls. 'And he just looked so radiant. He looked gorgeous. There was almost like a glow on his face. I commented to him about that. And he said, 'Why, thank you.' We sat down, and he told me: 'You might not know it, but I have made you the most important thing in my life. But you and I are going to have to start calming down so we can live long enough to see our daughter raise our grandson.'

'Then he kissed me, and he turned to go get on the plane. And then he came back and kissed me again, and said, 'I'll call you from the airplane.'

'Wardell had got into the habit of phoning home a lot. He'd say, 'I'm just calling to tell you that I'm thinking of you and that I love you.' But I did not receive a call that night. The next morning I got up early. I had a doctor's appointment and I had to be there at 9 o'clock. He had not called me. As soon as I got home, I checked my messages and I also asked my daughter to see if he had called. She said no. And then I became a little concerned. He'd been happy. He wasn't sad, depressed or anything. So when I received the call the next day I was completely dumbfounded. I couldn't believe it. I just could not believe it. It was just so very difficult to digest.'

When the banker failed to show up for his lunch appointment, White called Lazard's room at the Vista Hotel, the police answered the phone and asked him to come over. Earlier, Lazard's naked body had been found in bed after a maid raised the alert. On the bedside table was a black lacquer tray with traces of white powder on it. His driving licence was nearby. On the table across the room was a bottle of Absolut vodka, three-quarters empty. The coroner's report would confirm later that the powder was expensive; it was 83 per cent pure cocaine. Moreover, Lazard had three times the legal limit of alcohol in his blood.

Police said no one could have entered the room. 'The inside chain was locked. Someone would have had to physically break it to get in,' said Sgt Mark Ninehouser of the Pittsburgh major crimes unit. 'It's not suicide. And it's not homicide. As far as we're concerned this is an average case of drug overdose.'

THE PAST year hasn't been kind to America's black heroes. Mike Tyson. Michael Jackson. O J Simpson. Even Joseph Jett, another black Wall Street banker, only hit the headlines when he was accused by his firm, Kidder Peabody, of masterminding a dollars 350 million fraud. Set up on a pedestal by the pursuit of the black American dream, they are quickly turned to demons when they falter.

Lazard could hardly have been murdered if the chain on the inside of the door was in place when they found him. Yet many of those who mourn him seem to find this hard to accept. Why? If he just overdosed, why is that so hard to admit? Why is it so hard to accept that Lazard's failings were no different from anyone else's?

'It's like the Chicago Bulls losing Michael Jordan,' said the mourner who'd described Lazard's funeral to me. 'Lazard embodied the dream. For us, he was like a world-class superstar player. You can't replace a Michael Jordan. You can't replace a Wardell Lazard. If your heroes turn out to be stupid little human beings, you stop believing in the dream.' -

(Photographs omitted)