Tonga king finds jester no longer amusing

Friday, July 12, 2002

Some might say that as official court jester to the island kingdom of Tonga, Jesse Bogdonoff isn't very funny.

Instead of cracking them up in the South Pacific nation, the Sonoma County, Calif., resident has performed just one notable trick so far: He made $24 million belonging to the Tongans disappear, according to a lawsuit filed by the kingdom last month in San Francisco.

The loss has thrown the impoverished kingdom into uproar. Bogdonoff, who also was Tonga's financial adviser, has been fired. Government ministers have resigned. And in a nation ruled by a king and 33 noble families, commoners in Parliament are using the scandal as evidence that the time has come for more inclusive government.

But Bogdonoff, 47, is still very merry. Though his financial career is in ruins, he is confident that the debacle ultimately offers lessons both for him and the Tongan people.

The events that led Bogdonoff to become first jester, then financial adviser and then persona non grata in a nation he had barely heard of a decade ago, began in Bank of America's San Francisco office.

Bogdonoff was an investment adviser, working on commission and charged with persuading bank customers to make better use of their money by investing in securities.

One day in 1994, he stumbled upon the Tonga Trust Fund. It was no ordinary checking account: more than $20 million was just sitting there.

"But being the sales professional that I am," Bogdonoff said, he began making long-distance phone calls. He quickly learned that they did business a little differently in Tonga.

The ministers he needed to speak with were always out of the country or unavailable, he said. So he decided to pay a personal visit.

In November 1994, he boarded a plane in San Francisco, and nearly 24 hours later found himself standing alone by a dusty landing strip outside the capital city of Nukualofa.

He was stunned by the signs of poverty: the dirt roads, the absence of street lights, pigs roaming free.

Captivating island

But the bright blue ocean and skies and the palm trees swaying in the warm, tropical wind captivated him, as did the friendly, relaxed people. On his third day in the islands, Bogdonoff met King Taufa'ahau Tupou IV.

They hit it off immediately, Bogdonoff said. The king and the investment adviser launched into a passionate two-hour conversation on subjects ranging from literature to the O.J. Simpson murder case. O.J. didn't do it, the king told Bogdonoff.

He also met with government ministers in charge of the trust account. He says he explained the concept of stocks and bonds and promised them a much higher rate of return than they were getting from the checking account. Soon, Bogdonoff said, he was sitting in a government office, furiously stamping bank papers with the royal Tongan seal and preparing to fax them across the ocean to close the deal.

Stamping the papers with the seal was his idea, Bogdonoff said, "to make this thing real." From then on, he claims, he carefully managed the Tongan account, and its fortunes rose with the bullish market of the late 1990s, making $11.8 million over five years.

In 1999, Bogdonoff decided to leave Bank of America. He said the reason was personal: He feared for his health because of an increasing workload and was disillusioned with changes at the company. Bank of America officials would not comment.

There was just one problem: Bogdonoff faced a lawsuit from the bank if he took the Tongan account with him - unless he somehow became an employee of the kingdom.

He flew to Tonga and explained the situation to fund managers.

It was during those talks that Bogdonoff, who happened to have been born on April 1, had an idea. He told the king: "I'm a natural-born fool, and you're a king, and I'd like to become your jester."

The king at first was cool to the request, Bogdonoff said, protesting that he had no use for a jester. But Bogdonoff persisted, promising that he would make it part of his duties to be a Tonga booster, encouraging tourists to visit the islands.

Becoming a funny man

In April 1999, according to a royal decree Bogdonoff asked the king to draw up, he became "King of Jesters." The Tonga Trust Fund appointed Bogdonoff as its adviser at an annual salary of $250,000, allowing him to leave Bank of America with the account.

At that point, the fund was worth $26.5 million, the lawsuit states.

Bogdonoff then recommended that Tonga invest $20 million in a company that purchased life insurance polices from senior citizens. He also arranged for the trust to invest $6.5 million in other companies.

The kingdom lost almost all of it.

The life insurance company, Millennium Asset Management, was to pay Tongan officials $26 million by June 2001, a return of $6 million. According to the lawsuit, the company has not paid. The company could not be reached for comment.

A second investment was in a company whose stock, according to the suit, is now worthless. Another investment involved a high-tech start-up that has since filed for bankruptcy.

Tongan government officials said in a statement that the Tongan attorney general will go to San Francisco to consult on the court case against Bogdonoff. Bogdonoff said the saga taught him many life lessons, among them that "money isn't the only thing in the universe."

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