Billionaires in the Big House

Sept. 24, 2007 Special to ABCNEWS.com — -- The rich should be a law-abiding lot if the theory that crime has its roots in poverty has any credence. And on the whole it appears they are--or at least can afford the lawyers to keep it looking that way. Of the more than 1,200 wealthy individuals that have appeared on Forbes's annual list of the 400 richest Americans over the past quarter century at least 13 have been convicted of serious crimes or jailed.

They include some well-known names: Wall Street's, Ivan Boesky and Michael Milkin from the Gordon Gecko junk bond era, the silver-speculating Hunt brothers, media diva Martha Stewart and the late Leona Hemsley, the hotelier.

Three other Forbes 400 listers were convicted but later pardoned--commodities financiers Pincus Green and Marc Rich and industrialist Armand Hammer. Two more were charged but acquitted--gangster Meyer Lansky and oil magnate T. Cullen Davis.

See a slideshow of the criminally rich at our partner site, Forbes.com

Criminologists today frame crime in terms of relative poverty. As Karl Marx said, "A house can be large or small; as long as the surrounding houses are equally small, it satisfies all social demands. But if a palace rises beside the little house, the little house shrinks into a hut."

For the wealthy, relative poverty can be measured by having tens or hundreds of millions of dollars less than others. Most of the rich from our list who have found themselves in trouble with the law have done so from pushing the boundaries of business too far.

Take Bernard Ebbers, co-founder and former chief executive of the archetypal bubble era telecoms company, WorldCom. In 2005, he was convicted of fraud and conspiracy as a result of WorldCom's false financial reporting and subsequent $180 billion loss to investors. He is currently serving a 25-year prison term at a federal prison in Louisiana.

Nelson Bunker Hunt was a Texas oil man, who with his elder brother William Hassie, was convicted in 1988 of trying to corner the market in silver in an operation, which lost them $1.5 billion and required then Fed Chairman Paul Volker to organize a bailout for the brothers. The two paid millions of dollars in fines. The same year Bunker Hunt filed for bankruptcy. When he emerged a year later, it was with a debt to the tax man of $90 million and an agreement to pay it off over 15 years.

Alfred Taubman, who had made his money in shopping mall development, acquired auctioneer Sotheby's in 1983, playing the white knight to fend off a hostile bid from Marshall Cogan and Steven Swid of General Felt. He revived the fortunes of the auction house and took it public in 1998. In 2002, he was fined $7.5 million and imprisoned for a year for conspiracy to fix commissions with rival Christie's. Taubman was released to a halfway house after serving 9-1/2 months in federal prison in 2003.

Non-financially related serious crimes by members of the Forbes 400 are rare. John E. DuPont, who used his inheritance to support wrestling financially, was convicted in 1997 of murdering Olympic wrestler Dave Schultz and sentenced to up to 30 years in prison after the jury found him mentally ill. Expert psychiatric testimony described DuPont as a paranoid schizophrenic who believed Schultz was part of an international conspiracy to kill him.

T. Cullen Davis, who made his money in oil, beat both murder and attempted murder wraps. He was acquitted of the murder in 1976 of his stepdaughter Andrea Wilborn at his ex-wife Priscilla's home. The children of Priscilla's then boyfriend, Stan Farr, later sued Davis for wrongful death and were awarded $250,000 in a settlement. In 1978, Davis was arrested again, this time for allegedly hiring a hit man to murder the judge in his continuing divorce litigation with Priscilla. Charged with attempted murder, Davis was acquitted in November 1979. But the litigation bankrupted him.