See the quote: "manipulate the gold market"
Wednesday February 07 11:39 AM EST
The Secret Life of a Billionaire
By David Ruppe ABCNEWS.com
If you believe the rumors, he's done it and seen it all. Stories are told of billionaire Marc Rich slipping out bathroom windows, spreading rumors to manipulate the gold market and trading arms around the world. But perhaps his biggest prize of all was a presidential pardon.
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When reporter A. Craig Copetas was researching his unofficial biography on the elusive fugitive billionaire Marc David Rich in the early '80s, he thought he'd finally cornered his subject into a little face time at a restaurant in Switzerland.
Copetas had learned Rich would be having lunch at a pizza joint in Rich's town of residence - Zug, Switzerland. When the physical commodities trader, then wanted by the FBI, U.S. Customs Service, U.S. Marshal's Service, Interpol, and many other law enforcement agencies got up to go to the bathroom, Copetas hailed him and followed him in.
But in the bathroom he found no Rich. A waiter standing at a urinal told him one of the world's richest men had just fled the reporter by climbing out an open bathroom window.
That's just one of the many strange tales Copetas tells about the man controversially pardoned by President Clinton just before leaving office last month. The pardon is the subject of a congressional hearing Thursday in Washington.
Most Wanted ... and Generous?
Born in Antwerp, Belgium, in 1934, and raised largely in the United States, Rich made his fortune in the 1970s and 1980s trading raw commodities and is considered a major philanthropist, donating more than $100 million to charitable, cultural and civic organizations, his supporters say.
He was also, until Clinton's pardon, one of the most wanted men in the world for numerous alleged crimes, including: 51 counts of wire fraud, racketeering, evading more than $48 million in U.S. income taxes, and trading with the enemy.
Rich has never been that hard to find at home. He lived for years in Zug, Switzerland. United States government wanted posters even listed an address: Himmelrich 28, 63340 Barr. He still works in Zug, in a tall glass office building, but today he lives in a palatial villa in nearby Meggen. But for some 17 years the United States has been unable to get Swiss approval to extradite him or arrest him as he traveled.
Rumors that Rich has cooperated at times with foreign intelligence agencies and governments seem to have strong foundation. A former director of Israel's Mossad, Shabtai Shavit, wrote a letter to President Clinton on Rich's behalf asking for his pardon. Rich's supporters say he anonymously contributed $400,000 to help settle a dispute between Egypt and Israel related to the killing of Israeli civilians.
But Rich also is believed to have traded in oil with South Africa during the embargo over apartheid, oil with Iran while militants there held 53 Americans hostage for 14 months, and missile guidance systems to Iran during the Iran-Iraq war.
Rich was one of the U.S. Marshals Service's most wanted men and was on the the Justice Department's list of six most wanted international fugitives. But he also received testimonials from top Israeli leaders, including the mayor of Jerusalem, the former ministers of Justice and Foreign Affairs, not to mention former Prime Minister Ehud Barak.
Adding to the intrigue, Rich hired president Clinton's former top lawyer, Jack Quinn, to plead his case and win the president's pardon.
Rich fled the United States for Switzerland 17 years ago to escape prosecution after his federal indictment and he and his partner Pincus Green obtained Swiss citizenship and tried unsuccessfully to renounce their U.S. citizenship to block efforts to extradite them.
Rich's companies pled guilty to criminal charges in 1984 and paid more than $200 million in fines and penalties, but federal authorities wanted Rich and Green on criminal charges. If convicted on all 51 counts, Rich would have faced a sentence of 300 years in prison.
Some suspect conspiracy, the unseen support of major governments in Rich's remarkable tale. But not Copetas.
"This guy was just a businessman who changed the rules and never got caught," he says.
Controversial Pardon
The House Government Reform Committee tomorrow will examine the latest odd event in Rich's life: a controversial presidential pardon granted by Clinton on his last day in office.
Even Clinton's allies say the pardon, at the very least, was a conflict of interest, particularly given that Rich's ex-wife had showered the Clintons and the Democratic Party with her largesse.
Denise Rich, a singer/songwriter, has donated more than $1 million to support Democratic candidates, including both Clinton and his wife, Sen. Hillary Rodham Clinton. She also gave the Clintons an expensive table and chair set they took with them upon leaving the White House.
Defending the pardon, Quinn argued the indictment against Rich was flawed, the case didn't warrant criminal prosecution, and that Clinton granted the pardon strictly on its legal merits. Other U.S. companies that ran afoul of price controls, Quinn argued, either never faced charges or were allowed to reach a settlement without criminal prosecution.
Morris Weinberg, one of the lead prosecutors in the federal cases against Rich, says that's "just a bunch of nonsense. The evidence is overwhelming"
"In essence there were two sets of books. Phony deals. False transactions. Inflated invoices. We had witnesses inside and outside the company. He took off, which shows a consciousness of guilt, they did all kinds of things during the investigation to obstruct the investigation that made the case famous," he says.
The committee should hear both sides of the story, as Quinn, Weinberg and his former co-prosecutor Martin Auerbach, former Deputy Attorney General Eric Holder, former Counsel to the President Beth Nolan, and former Assistant to the President and Deputy Counsel to the President, Bruce Lindsey, are expected to testify.
How Rich Got Rich
So who is Marc Rich and how did he become one of the richest men on the planet? Facing religious persecution, his Jewish family moved from Belgium to Vicchy France and eventually immigrated to the United States in 1941.
During his youth he lived in New York City, Philadelphia, Kansas City and again in the New York City area. He attended New York University, but at age 19 joined the commodities trading company Philipp Brothers and worked his way up through the company, traveling to offices around the world.
Dissatisfied with Philipp Brothers, in 1974, he and another senior member of the company founded their own company, created and headquartered in Switzerland, which by the early 1980s became one of the world's leading traders in raw commodities from producer nations to developing countries.
'Spot Market' Trading
Those are the basic facts. But his biggest claim to wealth was his famous creation of the crude oil "spot market," through which he initiated trading outside of the firm control of the world's major oil companies. Through spot market trading during the global oil crisis of the 1970s, Rich made a bundle buying oil from Iran outside of OPEC embargo controls at significantly reduced rates and then selling at market price. His company would eventually trade in nearly every other material that can be extracted from the earth and sold, often controlling major global supplies.
But some of the most profitable trading deals, naturally, turned out to be some of the most taboo. When the world was boycotting Iran during the American hostage crisis, Rich, an American citizen, allegedly purchased 6.3 million barrels of oil from Iran's national oil company at drastically reduced rates, making $200 million through his Swiss company.
When there was an embargo on South Africa, Rich in the 1980s allegedly provided them with oil, and they paid well for it.
As the Soviet Union was collapsing in the early 1990s, Rich made a killing, purchasing at low prices through barter hundreds of thousands of tons of aluminum, effectively helping Russian producers quadruple their aluminum exports to the West, according to reporting in Forbes. With other major operations in Jamaica and the United States, Rich is believed to have controlled more than a third of the world aluminum market.
Another important wealth creation technique, says Copetas, was creating myths that would cause changes in the valuation of commodities. The author says he was with Rich's traders in one famous instance when they concocted a scam to make money off the silver market by spreading an elaborate rumor Ronald Reagan had died of a stroke on the Oval Office.
"Basically, some guy started a really specific rumor. It was beautiful; they had Reagan in the Oval Office with [former Egyptian president] Hosni Mubarak and Mubarak picked up a silver pitcher from the desk with ice water and splashed it on Reagan's face. And they had [invented] all kinds of White House sources."
In the United States, a grand jury indictment charged Rich with rigging a huge scheme to sell oil at several times the government-controlled price. Authorities allege he dodged more than $48 million in federal taxes, concealing more than $100 million in taxable income from largely illegal oil deals - the largest tax evasion scheme ever prosecuted.
Yet despite all the alleged criminality, the U.S. government couldn't seem to keep up with him. In 1985, congressional investigators discovered a Rich company made almost $100 million in sales through a Department of Agriculture subsidy program designed to help foreign countries purchase American wheat and barley, writes Copetas. Then in 1991, a series of congressional hearings showed that Rich's interests from 1989 to 1992 were also making money from $45 million in sales of copper, nickel and zinc to the U.S. Mint.
Conspiracy?
Rich has citizenship in the United States, Switzerland, Spain, and Israel. U.S. authorities believe he has traveled extensively to places like Jamaica, Portugal, Britain, Eastern Europe, the former Soviet Union, and Israel.
Yet his ability to elude capture for so many years has led some to speculate on a conspiracy to keep him out of jail. Copetas tells of an instance in which U.S. authorities were preparing to capture Rich in Finland, only to discover Rich's jet had turned around during the trip at 20,000 feet and returned to Switzerland. And that was one of many near misses, he says.
But Copetas dismisses speculation there may have been a government conspiracy against catching Rich. "Why was Marc Rich able to avoid capture? Because he knew who to pay off and he had the money to do it. Everyone has a price," says Copetas.
To capture felons abroad, he notes, the U.S. State Department must first alert the foreign country before a U.S. agent can enter the country and do the job. "It's not a conspiracy. It's good old-fashioned money, power, and greed," Copetas says. "Mark Rich wanted to make a lot of money. With a lot of other wealthy and powerful people who wanted to make money."
Weinberg says he got all the support he needed from the U.S. government. "We just ran into a brick wall with the Swiss government back in 1984 when they wouldn't extradite him," he says.
"The American government was behind us. We filed the extradition requests. You know, the State Department was behind us. We made all the contacts, and they just wouldn't send him back," he says.
Pricey Book
Even Copetas' book about Rich, Metal Men: How Marc Rich Defrauded the Country, Evaded the Law, and Became the World's Most Sought-After Corporate Criminal, published in 1985, has become a curiosity.
Put out by a major publisher, Putnam, in the United States, Britain and Japan, it strangely has become a rare, hot item, with people asking as much as $400 a copy on the Internet.
Copetas, who now writes for the Wall Street Journal and other publications from Paris, has his theory. He thinks Rich bought them up after they ran their course in the major stores.
"I was told by numerous Rich people that [Rich told his] people to go out and buy up as many copies as they could to keep them off the stands. That their feeling was, in any event no one was going to be interested in his story at this time, which was true," says Copetas.
He tells a story of seeing a man carting away a trolley full of the books out of the old Doubleday Bookshop on Fifth Avenue, New York. Copetas followed the man into Rich's pre-flight headquarters building, and up to his penthouse office suite.
"Now, I don't know what happened to that books after they got in there. But I doubt that Marky-boy was signing copies for his friends."
The new edition is scheduled to be published early April.
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