A wily oil trader is charged with America's biggest tax fraud
Only a year ago, hardly anyone outside the close-knit world of commodities trading would have recognized the name Marc Rich. Obsessively reclusive, Rich kept his billion-dollar business behind frosted glass. But now Rich is on his way to becoming infamous as a white-collar fugitive. After 18 months of investigation, a grand jury in Manhattan last week accused Rich and some of his associates of evading at least $48 million in U.S. income taxes. U.S. attorneys called the case "the largest tax-evasion scheme ever prosecuted."
Government investigators filed 51 separate criminal charges against Rich and his partner, Pincus ("Pinky") Green, both 49. The men face long prison terms if found guilty on all counts. But the two may first have to be extradited in order to stand trial. Rich and Green fled New York City about three months ago and are believed to be living near the Alpine town of Zug, Switzerland, the headquarters of their commodities firm, Marc Rich & Co. AG.
Justice Department attorneys say Rich and Green created a racket in which their company earned at least $71 million by selling crude oil at several times the Government-regulated price during 1980 and '81. Then they allegedly shipped the money out of the U.S. to escape income taxes. The 1981 tax return for their U.S. subsidiary, for example, declares profits of only $2.4 million, but the Government estimates its earnings were at least $50 million more. While sifting through hundreds of thousands of Rich's business records, federal agents also uncovered evidence to accuse Rich and Green of violating a presidential embargo by purchasing oil from the Khomeini regime during the 1980 hostage crisis.
The formal charges of racketeering, conspiracy, tax evasion, mail fraud, wire fraud and trading with the enemy could earn Rich and Green prison sentences totaling 325 years each, fines of more than $500,000 and confiscation of millions of dollars in assets. One of Rich's holdings is a co-ownership in 20th Century-Fox, which his company controls jointly with Denver Oilman Marvin Davis.
Marc Rich is one of the shrewdest and most successful commodity traders in the world. Acquaintances estimate his personal fortune at up to $1 billion. After starting his own firm in 1974 with about $5 million in seed money, Rich built a group of companies that last year traded some $10 billion worth of such commodities as oil, gold, aluminum, sulfur and sugar.
Rich, who is married and has three daughters, came to the U.S. as a child, fleeing Nazi persecution of Jews in Belgium. His father David worked in a Manhattan burlap-bag factory to put Rich through the private Rhodes School, where he earned a B-minus average and presided over the French club. An indifferent student at New York University, Rich quit to pursue commodities trading for the Philipp Bros. firm.