- Once some of the richest people in the world, these billionaires were all broke or declared bankruptcy at one point in their lives.
- The former billionaires Bernie Madoff, Allen Stanford, and Eike Batista have all served jail time for financial-related crimes, while others lost their fortunes because of other circumstances.
- We rounded up 10 famous billionaires who went broke or declared bankruptcy, plus the wild stories of how they lost it all or how their companies went under.
- Visit Business Insider’s homepage for more stories .
Some of the most well-known billionaires have declared bankruptcy at some point in their lives, either personally or on their companies. Other wealthy billionaires have claimed to be completely broke.
Many factors contributed to these wealthy people losing it all – economic downturns, bad investments, and even massive fraud cases that landed them in hot water, to name a few.
Some of these billionaires have returned to prominence and are just as rich as they once were. However, others failed to regain much, if any, of the wealth they once had.
Here are 10 famous billionaires who have gone broke or declared bankruptcy, plus the wild stories of their fall from the top.
Patricia Kluge invested a great deal of her high-profile divorce-settlement money into her own vineyard. However, when the housing market crashed, she lost it all — and even had to sell her jewellery and pieces of art at auction.
Patricia Kluge lived the epitome of high-society life before losing it all during the housing-market crisis of 2008. A former heiress and model, Kluge met her second husband, John W. Kluge, on a trip to New York City. Once worth $US5 billion and ranked as Forbes’ richest man in the US, John W. Kluge married Patricia in 1981.
Nine years later, the couple divorced, and Patricia Kluge received a hefty settlement to the tune of $US1 million a year, plus the couple’s sprawling Albemarle estate. Located in the Virginian countryside not far from Thomas Jefferson’s Monticello property, Albemarle would lead to the rise and plummeting fall of Patricia Kluge’s wealth.
Intending to turn her property into a profitable business, Kluge opened the Kluge Estate Winery and Vineyard on 960 acres of land near Albemarle with her third husband, William “Bill” Moses. She saw a brief bout of success as the estate’s wines graced the tables of socialites and prominent people across the country. Kluge’s wines were even served at Chelsea Clinton’s wedding.
However, after a series of poor investments and pouring money into her estate right before the housing market crashed, Kluge lost it all. In 2011, the Albemarle winery was bought by Donald Trump for a fraction of what it was worth after it was seized by Bank of America.
Kluge held an auction of all her fine jewellery and other spoils of wealth to try and save herself from bankruptcy. It didn’t work – Kluge filed for Chapter 7 bankruptcy in June 2011.
The airline and liquor tycoon Vijay Mallya lost most of his fortune after defaulting on bank loans and fleeing to the UK. He is now in the process of being extradited back to India to be charged with fraud and money laundering.
The former billionaire Vijay Mallya was a prominent liquor tycoon known for his extravagant partying and high-flying lifestyle. He also owned the now-defunct Indian airline company Kingfisher Airlines. Beginning in 2012, it was revealed that Mallya had racked up numerous debts to banks in trying to keep his airline business afloat.
When he defaulted on payments, the Indian banks he had borrowed money from came looking for him. Using a diplomatic passport he had attained through becoming a member of the upper house of Parliament in India, he fled from India to the UK. Mallya has yet to return to India, though the government and banks are trying to extradite him to pursue legal action.
According to Business Standard, the businessman is accused of “bank fraud and money laundering charges amounting to an estimated Rs 90 billion,” approximately $US1.3 billion. Mallya’s net worth was greatly reduced after a bankruptcy petition was used to recover £1.145 billion in owed funds.
However, the remaining funds have yet to be repaid.
Sean Quinn was once the richest man in Ireland before he lost it all. Because of bad investments in an Irish bank, Quinn was forced to hand over most of his $US2.8 billion fortune. In November 2011, Quinn claimed his assets to be less than £50,000 when he applied for bankruptcy.
Sean Quinn acquired a great deal of success through his investments in industries such as plastic, glass, and hotels. He also held a 25% stake in Anglo Irish Bank, which had to be bailed out by taxpayers during the 2008 financial crisis. The bank was taken over by the government, and thus began a series of legal troubles between the Quinn family and the bank.
Once considered to be the richest man in Ireland, Quinn lost a majority of his $US2.8 billion fortune. At one point, the Irish Bank Resolution Corp., which took over Anglo Irish Bank, said Quinn owed the bank more than €2 billion.
Soon after, he was charged with contempt of court for attempting to hide his property assets from the bank in an effort to avoid paying back his debts. Financial Times reported that in November 2011, Quinn claimed his assets to be less than £50,000 and said he had applied for bankruptcy.
Kevin Lunney, a close associate of Sean Quinn and a director of Quinn Industrial Holdings, was abducted and beaten in September 2019, showing that there remains a lot of ill will towards Quinn and his company.
Jocelyn Wildenstein was rumoured to spend $US1 million a month on lavish purchases and $US5,000 a month on her phone bill. In May 2018, the socialite declared total bankruptcy, saying she had $US0 in her checking account.
Once worth billions, Jocelyn Wildenstein is worth much less now, according to Money. In May 2018, the socialite and former wife of the late billionaire art dealer Alec Wildenstein filed for federal Chapter 11 bankruptcy protection.
The New York Post reported that in the filing, she said her monthly income was $US0, and that she survived on $US900 Social Security payments and assistance from her friends and family.
Much of her financial troubles, she said, are from a faulty divorce settlement. Despite spending most of the $US2.5 billion she received in the divorce, Wildenstein told the New York Post that she was promised much more. She was given two paintings in the settlement, one by Diego Velázquez that turned out to be a forgery and another by Paul Cézanne that sold for a fraction of what it was originally appraised at.
In May 2018, the former billionaire told the New York Post she is on the lookout for a “top lawyer” to get her everything she feels she is “supposed to have for [her] lifetime.”
Bernard “Bernie” Madoff holds the infamous title of leader of the largest Ponzi scheme in US history. His investors’ losses accumulated to about $US65 billion and went undetected for decades. In 2008, Madoff was charged with 11 counts of fraud, money laundering, perjury, and theft. He received a maximum sentence of 150 years in federal prison.
Bernie Madoff is widely known as the leader of the largest Ponzi scheme in US history. A financial-industry veteran, Madoff flew under the radar for decades before his eventual demise in December 2008. Before the scandal, he and his wife had a personal net worth between $US823 million and $US826 million. Now he’s broke and serving a life sentence.
How did he get away with it for so long? Madoff appeared trustworthy – he had started his Wall Street firm, Bernard L. Madoff Investment Securities LLC, in 1960, and had served as the chairman of the Nasdaq.
His gigantic Ponzi scheme began to unwind after investors requested a total of $US7 billion in returns. At the time, Madoff had only $US200 million to $US300 million left to give, according to a previous report by Business Insider. Madoff conned his list of investors out of a whopping $US65 billion, according to CNN Business. Madoff ended up with only about $US20 billion from his various investors, however, at the height of the scheme. He was tried by the Department of Justice for 11 counts of fraud, money laundering, perjury, and theft.
Bernie Madoff received a maximum sentence of 150 years in federal prison. Before going to prison, Madoff relinquished most of his assets in a deal with the prosecutors. In exchange for Madoff giving up most of his wealth – an estimated $US80 million worth of “mansions, jewellery, cars, and art” – his wife, Ruth Madoff, was given $US2.5 million. She has since moved to Old Greenwich, Connecticut.
Madoff is now serving his sentence at a federal prison in Butner, North Carolina, and has pushed for his release due to his terminal kidney disease and the rise of the coronavirus. Prosecutors, however, have refused to release him as of yet.
Elizabeth Holmes was once a Silicon Valley star on the rise with a net worth of $US5 billion. Her blood-testing company, Theranos, was valued at $US9 billion. It would soon come out, however, that Theranos’ blood tests were highly inaccurate. Holmes was charged with wire fraud in June 2018 and has a current net worth of $US0.
Elizabeth Holmes was once lauded as a star on the rise in Silicon Valley. Her blood-testing startup, Theranos, gained attention in the early 2000s as an exciting investment opportunity. The company promised to revolutionise the way patients are tested and treated for various diseases and illnesses. By the end of 2004, the company had raised roughly $US6 million from private investors, some of whom had strong personal connections to Holmes.
However, as the buzz grew around Theranos, so did speculation about the new company’s practices and regulations. In 2012, after Holmes tried to get Lt. Col. David Shoemaker to sign off on a test run in the military, he raised his concerns with the Food and Drug Administration. The Centres for Medicare and Medicaid Services (CMS) then performed an inspection of the company. They were told that “the device was still under development.”
Tension was mounting at Theranos and, despite one FDA approval, news outlets were investigating its validity. By November 2015, Theranos had lost its two major partnerships with Safeway and Walgreens. In 2016, CMS concluded Theranos’ testing might pose a safety risk to patients.
After multiple lawsuits, layoffs, and a federal allegation that Holmes had conducted “massive fraud,” Theranos closed its doors in September 2018, narrowly avoiding bankruptcy. Holmes then forfeited control of Theranos and paid a $US500,000 to settle charges by the SEC.
Forbes lists Holmes’ personal net worth at $US0.
Björgólfur Gudmundsson was once the second-richest man in Iceland and a major stakeholder in the Icelandic bank Landsbanki. After the bank went under in October 2008, Forbes revised Gudmundsson’s net worth from $US1.2 billion to $US0 when the billionaire declared bankruptcy.
The Icelandic tycoon Björgólfur Gudmundsson made his fortune in the brewing industry. He also served as owner of the UK football team West Ham.
However, in 2009, the man who was once the second-richest man in Iceland filed for bankruptcy. His bankruptcy-protection filing covered a massive $US759 million debt.
At the time, it was the largest bankruptcy filing in Icelandic history.
Much of the reason behind Gudmundsson’s fall from grace was a result of the plummeting Icelandic economy during the recession. Gudmundsson and his son, Björgólfur “Thor” Gudmundsson, were both major shareholders in the Icelandic bank Landsbanki, which went under in October 2008.
In December of that same year, Forbes revised Gudmundsson net worth from $US1.2 billion to $US0 when the billionaire declared bankruptcy. His son dropped down the Forbes list and eventually dropped off completely.
However, “Thor” Gudmundsson has since gained back a great deal of his wealth, in what Forbes referred to as a “crazy comeback.” It is unclear whether his father has had similar good fortune in recent years.
President Donald Trump has never declared bankruptcy personally, but six of his companies have filed for bankruptcy protections.
President Donald Trump is no stranger to bankruptcy. Though Trump himself has never declared bankruptcy, the businessman turned politician has declared bankruptcy on quite a few of his numerous companies.
Trump’s Taj Mahal casino in Atlantic City declared bankruptcy in 1991 after “default[ing] on interest payments to bondholders as his finances went into a tailspin,” The Washington Post’s Robert O’Harrow wrote. Two other Trump casinos have similarly declared bankruptcy, along with the Plaza Hotel in New York.
PolitiFact also discovered two previously unknown bankruptcies filed by Trump – one for Trump Hotels and Casinos Resorts in 2004, which had gone into $US1.8 billion in debt, and another for Trump Entertainment Resorts in 2009.
Trump doesn’t seem to be bothered by his lengthy history of bankruptcies, however. In a 2016 Republican presidential debate,Trump was asked why he could be trusted to “run the country’s business” after his string of bankruptcies.
He responded, “I have used the laws of this country – just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, for myself, for my employees, for my family, et cetera.”
Once Brazil’s richest man, with a net worth of $US30 billion, Eike Batista lost a majority of his wealth when his oil company, OGX, went bankrupt in 2013. In July 2018, he was sentenced to 30 years in prison for bribing former Rio de Janeiro Gov. Sergio Cabral.
Eike Batista once had dreams of becoming the world’s richest man. Those aspirations came crashing down, however, when his once-booming oil company, OGX, went bankrupt in 2013.
The self-made billionaire had been widely known for his lavish lifestyle and became an inspiration for younger Brazilian generations, according to BBC. In 2012, Batista was worth an estimated $US30 billion, making him the seventh-richest man in the world.
But when Batista’s oil company failed to meet demands, and Brazil’s economy slid into a decline, he was forced to file for bankruptcy in 2013. As authorities began investigating Brazil’s top companies and why they had declined so quickly, they charged Batista with money laundering and corruption in January 2017.
In July 2018, he was sentenced to 30 years in prison for bribing former Rio de Janeiro Gov. Sergio Cabral.
On March 24, 2020, it was announced that Batista had struck a deal with Brazilian authorities and will serve four years in prison, pay back $US160 million, and collaborate with prosecutors.
According to BN Americas, a court still needs to validate the deal and the money gained from the fine will be used to fight against the coronavirus.
Allen Stanford is serving a 110-year sentence in federal prison for running the second-largest Ponzi scheme in US history. The scheme culminated in investor losses totaling $US7 billion, and many of Stanford’s victims have yet to be returned any of the money they lost.
The leader of the second-biggest investor-fraud case in US history, Allen Stanford is notorious for his shady business dealings and for conning more than 18,000 customers out of their money. Unlike the victims of Madoff, many of Stanford’s victims have yet to receive compensation for the crimes committed against them.
Stanford’s crimes began after a Texas fitness club he owned went bankrupt; he then turned to offshore banking and began operating his scheme. According to CNBC, many of Stanford’s victims were retirees who were promised “safe investments,” making this case of investor fraud even more nefarious.
When the Securities and Exchange Commission raided Stanford Financial Group’s Houston headquarters on February 17, 2009, they charged the magnate and his associates with running a “massive, ongoing fraud,” CNBC reported.
The investigation alleged that Stanford had been conning investors in order to fund his lavish lifestyle. Holding the title of the second-largest Ponzi scheme in US history, the Stanford scam culminated in $US7 billion in losses for investors.
Stanford was convicted on 13 felony counts in 2012 and is serving a 110-year sentence at a high-security prison in Florida,CNBC reported. The consequences of his crimes live on, however, as his victims continue to suffer from losing millions of dollars during the years the scheme was operating.
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