Lisa Falcone: Who You Calling 'Wife Of'?

(Corrects spelling of "Diary" in 5th paragraph.)

Lisa Falcone is sitting at the head of a conference table, rapping to music by Swizz Beatz and waving her tanned arms above her head. She's meeting with the two employees of her fledgling company, Everest Entertainment. Just outside the room, her husband, Philip Falcone, is running his $9 billion hedge fund, Harbinger Capital, but that doesn't hold her back. She produced the song and sings along as it blasts from iPod speakers on the table: "Come on bitches, get your hands in the air, ugly bitches too, we don't care!"

Harbinger analysts walking by barely look up at Lisa, 41, who is striking in a low-cut leather dress and a huge diamond cross pendant. They know she's the boss's wife. Harbinger's young, blond British receptionist brings a tray with a mug of green tea for Lisa, who likes to point out that the space is as much hers as her husband's. "This is our office," she says. "Eighteen years and no prenup means family office." She quickly adds that Everest will soon move to a new location away from Harbinger, revealing a dilemma that is central to Falcone's ambition: how to leverage her husband's connections and resources while differentiating herself as an entrepreneur in her own right.

Philip, a former hockey-playing junk bond trader who founded Harbinger in 2001, made a fortune betting against subprime mortgages in 2007. His fund has since encountered rockier times, but that hasn't damped the Falcones' enthusiasm for lavish living. At the height of the financial crisis, when other billionaires were pulling back on ostentatious spending, the couple bought a $49 million townhouse that formerly belonged to Penthouse founder Bob Guccione and embarked on a series of high-profile philanthropic donations.

As eager as Falcone is to establish herself as a movie producer and patron of the arts, she relishes the role of an outsider. She comes from an underprivileged background and doesn't censor her behavior for anyone. By starting her own entertainment company, she has taken the traditional role of the Park Avenue spouse and turned it upside down, while also giving hope to independent filmmakers who have seen their opportunities dry up over the last few years. Falcone's venture has attracted Hollywood talent such as Annette Bening and Paul Giamatti, and Sony Pictures Classics and Fox Searchlight have agreed to distribute her first few movies. While she didn't have to go out and find investors to finance her projects like most independent producers, that doesn't mean she hasn't worked to get where she is. "Obviously, my husband's made the money, but we've been together 18 years, and the person behind the person isn't usually seen," she says. "So the money I'm using I've earned."

It was through the New York City charitable circuit that Falcone first made herself known to the world. In 2007 she appeared at the American Friends of Versailles tour in Paris, where tickets cost as much as $50,000 per couple. She was wearing a backless, white-and-purple gown with a matching hairpiece and arrived on the arm of a Filipino stylist named Zaldy Goco. Then, in 2009 she leaped—literally—into the public consciousness by grabbing the microphone in the middle of a speech by Joshua David, the co-founder of a charity that raises funds for New York's High Line park, and announcing a spontaneous $10 million donation. She later held the after-party for Everest's first production, Mother and Child, at the High Line, where she danced onstage with Kerry Washington and Alicia Keys. She also joined the board of trustees of the New York City Ballet. "She's something of an enigma," says New York Social Diary editor David Patrick Columbia. "She looks out of place at all these things but she puts herself out there. She's a stranger in her own land."

Before they started the renovation of the Guccione mansion, expected to cost $10 million, the Falcones hosted an elaborate third birthday party there for their twin daughters, Carolina and Liliana. Lisa had muralists paint the walls with The Wizard of Oz scenes and sent out hand-calligraphed invitations, according to two guests. Little people wore uniforms monogrammed with her daughters' initials in green rhinestones. (The Falcones are living in the townhouse next door, which they also own, during the renovation.)

One afternoon early this summer, Falcone lounged on a plush daybed in her Versailles-inspired drawing room. She smoothed down her Balenciaga minidress and lifted a toned leg, braced in a cast, up onto the couch. She had recently fallen off a Vespa that her husband had given her. "I thought it worked like a regular bike," she laments, "but it had a motor."

When the couple bought the mansion, it looked exactly like a place you'd expect the Penthouse mogul to live in—a piece of Las Vegas transplanted to Manhattan. Now Falcone says she's trying to restore it to its pre-Guccione elegance. "It's actually not the Guccione Mansion, but the Milbank House," says Falcone. "[Jeremiah Milbank] had two daughters who loved to swim, then Guccione bought it and turned it into a 1980s Caligula."

Either way, it's a long way from Spanish Harlem, where Lisa Velasquez was born and raised, as she tells it, by a "rageaholic" single mother on welfare. "It was like walking on broken glass," she says, describing her childhood. "You don't even want to make noise on that broken glass."

She is reluctant to discuss her upbringing in detail—she won't disclose where she went to high school, for example—but says she learned through the experience to seek out the positive aspects of any situation. "People with challenging backgrounds are the most optimistic, I heard," she says. Her father, whom she saw intermittently growing up, "was the best busboy in the world." She still has a slight Puerto Rican accent, the legacy of her immigrant parents. "I'm proud of my background," she says. "I'm not changing, and I'm not getting a speech coach. I do what I want to do, and I wear what I want to wear."

She met Falcone at Canastel's restaurant on Park Avenue South, now Angelo & Maxie's Steakhouse, when he was a young junk bond trader. She was working as a model and happened to be sitting with some friends who knew Falcone. He came over and sat with them, and five years later, in 1992, Philip and Lisa married.

Philip, 48, grew up in small-town Minnesota, where his father was a utilities superintendent and his mother worked in a shirt factory. He took the first plane ride of his life when he visited Harvard University as a hockey recruit. After graduating from Harvard in 1984, he tried playing professionally until an injury ended his sports career and forced him into a more practical line of work. He joined Kidder Peabody as a bond trader. Early on, according to Lisa, the couple had little income and slept on an air mattress in a tiny studio apartment. That soon changed. Philip became increasingly successful and eventually launched Harbinger Capital. In 2007 he made a spectacular bet against the real estate bubble and amassed an estimated $2 billion fortune.

At its peak in 2008, Harbinger managed $26 billion. It is down to about a third of that after client losses and withdrawals. For the past four years Falcone has been trying to build a high-speed wireless network, and at least 40 percent of Harbinger's assets are tied up in the wireless spectrum wager. Falcone has committed to the Federal Communications Commission to build a network that will cover 100 million people by 2012 as part of the agreement to hold the wireless license. Investors have complained that such a large, illiquid bet is not appropriate for a hedge fund. Harbinger's main fund is down approximately 14 percent so far this year, while rival funds have returned about 5 percent, on average.

It was on Philip's suggestion that Lisa started Everest Entertainment in 2008. "People would have scripts and say, 'Take a look at this,' and I would tweak them and fine-tune them," Falcone says. "Then my husband said, 'You should get into this business.'"

While she doesn't have a film background, Falcone says she loves movies: "I was always trying to figure out the ending before the beginning and pretty much was always right." She grew up watching Gone with the Wind over and over and would ask herself, "How did they do that?" She didn't get a chance to explore her interest until decades later. "It wasn't like my parents were like, 'let's get her a video camera' like Steven Spielberg's did," she says.

With $5 million in family funds as the initial budget for her first project, Falcone decided to focus on independent movies she could relate to. After seeing the critically acclaimed Precious, about a girl's ordeal in the projects of New York that reminded Falcone of her own childhood, she hired one of its executive producers, Tom Heller, as her business partner. When Rodrigo Garcia, who directed Nine Lives and Passengers, sent her a script about an orphan called Mother and Child that he'd been shopping around for a decade, Falcone decided to produce it. She still had an upward climb. "I had one person who has been in this business a very long time saying, 'Don't do this movie,' " she remembers. "But I'm like, 'I'm doing this movie.'"

Annette Bening and Naomi Watts were persuaded to play the title roles, and in 2009 the movie made its debut at the Toronto International Film Festival, where Sony Pictures Classics bought the rights to distribute it. It was later shown at the Sundance Film Festival. Falcone says the man who had questioned her decision to make the movie in the first place approached her after the first screening. "He apologizes a hundred times and is like, 'Wow, what a vision,' " she says. "He said it was like threading a thin needle." She has since established a reputation as a reliable, if eccentric, source of funding for quirky movies. "Even if people have unlimited resources, how many times do you just see vanity projects where they do generic work?" says Geoffrey Gilmore, chief creative officer of Tribeca Enterprises, which runs the Tribeca Film Festival. He says her latest movie, 127 Hours, "isn't necessarily a slam dunk of a story, but at the end of the day she's making choices about films that are complicated, that take risks, and at the same time that I think are going to play."

Early in 2009, Everest hired a third executive, Gareth Smith, formerly a vice-president at the luxury concierge service Quintessentially. They now have two movies in the works. Win Win—written and directed by Thomas McCarthy, who also directed the Oscar-nominated independent film The Visitor—stars Paul Giamatti and Amy Ryan. The other, 127 Hours, features James Franco and was shown at the Toronto festival this month. Fox Searchlight will distribute both. "Given Lisa's position financially, she doesn't need to make money off of this, and the film company doesn't need to make money," says Smith. Instead, a percentage of their profits will be donated to a charity relevant to each film's content, and the rest will be reinvested in the next project.

Falcone says she's committed to producing artistic movies rather than blockbusters. "It has to be something where you can leave the theater and say, 'Holy ____, I can relate to that,' whether it's a happy story or it made you cry."

Back in the Harbinger conference room, she tries to play the trailer for 127 Hours on her iPad, to no avail. "Why won't this open?" she asks as she pokes the screen, bending over with the orange silk of her dress spilling over the papers on the table. "Can someone figure this out?"

When she isn't busy making films, renovating, or giving to charity, Falcone says she spends most of her time with her daughters. On a typical day she wakes up at 4 a.m., eats breakfast, goes to the gym for an hour, makes coffee for her husband, and takes her girls to school. She then works for four hours on her own projects, listening to new music tracks she's thinking about producing and making notes on film dailies. She picks her daughters up from school and takes them to their afternoon activities or to Central Park. Falcone is philosophical about the world she now inhabits. "I've taught my daughters to stop and smell the roses," she says. She glances around her living room. "This is all borrowed stuff," she says. "God kind of loans it to us, and somebody takes it afterward. Am I going to go to Heaven sitting on this couch?" she asks. "Do I take my house with me? No."

With the success of her first movie, Falcone is confident that her next big push, into the pop music business where she plans to collaborate with artists such as Mary J. Blige, Keys, and Jay-Z, will be equally rewarding. "I have a very good ear," she says. "But God gave me something that I'm better at than anyone else. And that's being me."

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