Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty

by Daniel Schulman

  “These were learning points that turned the culture around,” he added. “They went on a multi-year crash course to overhaul the company. It was probably one of the most grandiose turnarounds ever.”

  In a reversal of the defiant message Charles had once sent to business leaders, his corporate mantra became “10,000% compliance with all laws and regulations.” This meant that he expected 100 percent compliance from 100 percent of his employees. “While business was becoming increasingly regulated, we kept thinking and acting as if we lived in a pure market economy,” Charles acknowledged. “The reality was far different. The laws of economics seemed less and less relevant in a world where the uncertainty of politics had replaced the uncertainty of the marketplace.”

  During this period, as the company tried to navigate its thorny relationship with the federal government, especially on environmental matters, it lured away the EPA’s assistant administrator Donald Clay. It also hired Alex Beehler, a top trial attorney in the Justice Department’s Environment and Natural Resources Division—the same section that had aggressively prosecuted the company. Meanwhile, Richard Fink, a Rutgers- and New York University–trained economist who had risen to become one of Charles’s most trusted deputies, led a dramatic reshuffling and integration of the company’s public affairs, government relations, and legal departments into a “public sector” division.

  The company also began offloading large swaths of its troublesome pipeline system, eventually downsizing its network from some 40,000 miles to 4,000. Koch pivoted from some of its core businesses to focus on the far-less-regulated energy and commodities trading markets, competing with the likes of Enron.

  “We’ve learned from the nineties we have to be on top of our game and that one of our biggest customers is in fact the government,” said Mark Holden, Koch’s general counsel. “We deal with them every day, so if that’s one of your customers in that sense you need to build relationships with them like you would a commercial enterprise or entity.” He added, “We learned a lot in the nineties, and if we hadn’t, I don’t know what would have happened because the road we were on wasn’t going to be productive.”

  By the spring of 2001, a new era was dawning for Koch Industries. It had emerged from the hellfire of scandal and litigation as a more modern and less politically tone deaf company, though with an institutional bunker mentality forged by years of bitter legal warfare. At the same time, there was also a budding armistice in the 20-year feud between the Koch brothers. Despite his courtroom triumph, 2000 had been a tumultuous year for Bill.

  Around 11:00 p.m. on July 17, 2000, a Barnstable police car pulled down the driveway at 177 Seapuit River Road and stopped in front of Homeport, Bill’s nine-bedroom Cape Cod colonial-style mansion. White with hunter green shutters, the 8,600-square-foot waterfront home was located on the private island of Oyster Harbors, one of the Cape’s most exclusive communities. It was situated on 1.5 acres and featured a deepwater dock and a gunite pool. On the front lawn sat a handful of curvaceous Botero sculptures, and Bill’s art collection crammed the interior of the home.

  Bill had remarried in November 1996. His new wife, the former Angela Gauntt, was nineteen years younger. She hailed from Montgomery, Alabama, though when they met, via a mutual friend, she lived in New Orleans and worked as a fund-raiser for Tulane University. The couple had been out on only a handful of dates when Bill popped the question. Given the state of his personal life at the time they met, it was hard to imagine that Bill was in the market for marriage. He had just battled to evict his former mistress Catherine de Castelbajac—she of the not-safe-for-work faxes—and he was also expecting a child with Marie Beard, whom Bill had met when she tried out for his all-female America’s Cup team.

  After their marriage, Angela added two more children, William Jr. and Robin, to his brood, which now numbered four. But soon their relationship began to unravel, particularly after Bill lost his lawsuit against his brothers over the sale of his Koch Industries stock. “It was something he could not get over—it just ate him up,” Angela said. “After that, everything just took a turn for the worse. He was depressed and despondent.” Bill already had a reputation for swilling copious amounts of pricey French wine—after contracting hepatitis in grad school, he could no longer stomach beer or hard alcohol—and Angela claimed he had developed a drinking problem. “He was not fun to be around when he drank too much,” she said.

  Late on the evening of July 17, Angela frantically summoned the Barnstable police, accusing her husband of domestic violence. Wyatt, Bill’s red-haired fourteen-year-old son, was staying with them, and Angela alleged that her enraged husband had threatened “to beat his whole family to death with his belt.” She claimed Bill had also punched her in the stomach. Based on her allegations, which Bill strenuously denied, the police arrested him and charged him with domestic assault and threatening to commit murder.

  Angela was granted a restraining order, forcing Bill to live in the guest quarters of their Cape compound and stipulating that he had to refrain from drinking 24 hours before visiting their children. It also included an eyebrow-raising proviso allowing Bill to be in Angela’s proximity only if the couple was entertaining.

  After the incident, they attended counseling and tried to reconcile. Then Angela learned that Bill had hired a private investigator to follow her. “It was frightening, and embarrassing,” she said at the time. “At that point, I knew there was no hope of reconciling. I had become the enemy.” She filed for divorce that September. Bill approached the dissolution of their marriage in his customarily pugilistic style. According to Angela’s lawyer, he told his wife, “I’ll litigate you into the ground.” But Angela could play hard ball, too: The pace of their negotiations heated up after she attempted to have court records unsealed in Bill’s divorce from his first wife, Joan Granlund. By November, she dropped a civil suit against Bill and recanted her accusation that he had threatened to kill her and his son Wyatt, though she maintained that an assault had taken place. (Several witnesses, including Wyatt, backed Bill’s account that no physical altercation occurred.) Soon thereafter they entered into a $16 million divorce settlement.

  For a time, their acrimonious split made it difficult for Bill to gaze on one of his favorite paintings, Amedeo Modigliani’s sensuous Reclining Nude, which hung in his Palm Beach living room nearby a Matisse and a Picasso. “I liked looking at it when I was happily married, right before I would go to bed with my wife,” he told a reporter wistfully a couple weeks after the divorce was finalized. “You can’t tell what she’s feeling. Is she pensive? Is she happy? Bored? Is she looking to get out of there? In a way, this painting combines the sensuality of women and the elegance of their bodies with the mystery of their souls.”

  Bill had begun to do some soul-searching of his own. The Koch brothers had entered their sixties. In the time that Bill had spent battling his brothers, Charles’s children had grown up and graduated from college. David had gotten married and started a family of his own. Bill didn’t know their children; they didn’t know his. The brothers had spent a third of their lives—more if you count the explosive fights during their childhood—at one another’s throats.

  In October 2000, in the midst of Bill’s messy divorce, the long-running lawsuit among the four Koch brothers reached the end of the road when the Supreme Court declined to hear Bill and Frederick’s last-ditch appeal. A few months earlier, the federal judge who heard Koch Industries’ oil theft case in Tulsa had denied the company’s motion requesting that he overturn the jury verdict. The company eventually settled for $25 million, of which $7.4 million went to Bill and the rest to the federal government. (Koch Industries also paid Bill’s formidable legal bills, estimated at $25 million.)

  During the summer of 2000, as their legal travails wound down, Bill initiated a cautious rapprochement with his brothers—conveying, through his lawyers, that he was ready to begin the process of deescalating their feud. The fight between the Koch brothers—at least as far
as Bill, David, and Charles were concerned—had always had to do with much more than money.

  As negotiations quietly commenced, the most contentious talks had nothing to do with dollar figures, but how the brothers would divide their father’s possessions. “During the settlement discussions,” Bill recalled, “we were dealing with large sums of money but the biggest thing we argued about was who was going to get what painting out of my father’s collection. The most valuable painting he had in there was worth peanuts compared to what we were talking about. It wasn’t the money, it was the emotional stake.” He said at another point, “We ended up in a heated argument, almost fisticuffs, over my father’s art collection.”

  The talks continued for nine months, persisting even after 60 Minutes II aired a story that Bill had tried to dissuade the show from running, which featured a previously taped interview in which he accused Koch Industries of “organized crime. And management-driven from the top down.”

  The peace treaty that ended two decades of family warfare was signed on a balmy spring evening in Palm Beach. On May 23, 2001, a light, salt-air breeze blew off the Atlantic, as Charles and David arrived at Bill’s Anglo-Caribbean-style mansion, which evoked the plantation of some Colonial viceroy and straddled a lush, four-acre property that stretched from the ocean to the Intercoastal Waterway. The home featured an open-roofed courtyard in the center, a 35,000-bottle wine cellar with a groin-vaulted ceiling crafted from 150-year-old bricks, and room after room of the kind of art rarely seen outside of the world’s finest museums—paintings by Dali, Degas, Matisse, Winslow Homer, Frederic Remington. Bill and David, it turned out, were practically neighbors. About two miles up the road, David owned the equally glorious Villa el Sarmiento, an architectural masterpiece built in 1923 that featured a Mediterranean-style terra-cotta roof.

  Bill had put together a small dinner party for the settlement signing. The agreement, in addition to dividing their father’s property and providing an undisclosed payout to Bill, included a nondisparagement clause and significant financial penalties if either side breached the peace accord.

  The three brothers had not shared a meal together in nearly twenty years. During that time, almost every word that had passed between them had filtered through attorneys. The lawyers, as always, were present, as the brothers awkwardly reconnected. They chatted about their families, about their lousy knees.

  David still felt a powerful kinship with his twin, even though he had made his life hellish for years. Charles was cordial, but there was a limit to what he could forgive. Bill and he were no longer mortal enemies, but that was the extent of their détente. The brothers did manage a few laughs, as they told old stories. Everyone chuckled at the memory of when Bill, always the hothead, had subbed in for David during an MIT basketball game, only to get ejected within seconds for brawling with the opposing team.

  “My dad used to say it takes two to fight,” Bill reflected after the settlement. “So many punches get thrown, you lose track of who threw the first one. No one in this whole event wears the white hat, and nobody wears the black hat.”

  He added, “There’s nothing more explosive or worse than blood and money.”

  Not too long after the brothers formally ended their feud, Julia picked up her son, David Jr., at his Palm Beach preschool. (Before their children were elementary school age, Julia, not a fan of the cold weather, spent much of the winter with their kids in Florida.) She noticed David Jr. with his arm around another child. This was his new best friend, David Jr. informed his mother. Out of all the other children at the preschool, the blond-haired toddler had befriended his cousin William Jr.

  In time, David and Bill began to rebuild their relationship. By now Bill had a new woman in his life. After divorcing Angela, he began dating Bridget Rooney, the granddaughter of the late Art Rooney, the founding owner of the Pittsburgh Steelers football franchise. A prominent socialite on the Palm Beach–Aspen circuit, Rooney had previously been romantically linked to actor Kevin Costner, with whom she had a son named Liam. She would later become Bill’s third wife, and in 2006 they had a daughter together, Kaitlin.

  Rooney, along with David’s wife, Julia, paved the way for the brothers’ cautious reconciliation, according to John Damgard, David’s longtime friend. “I give a lot of credit to those wives for bringing those boys back together,” he said. Bridget and Julia were around the same age, as were the brothers’ children. Both owned homes near each other in Palm Beach and Aspen. The couples and their kids began getting together.

  In May 2002, Bill and Bridget invited David and Julia to a joint 1970s-themed birthday bash they threw at Bill’s home, where men in powder blue tuxedos and women with teased-up hair dined on new potatoes stuffed with caviar and lamb wrapped in phyllo dough. (Bill was turning sixty-two, Bridget forty.)

  The following year, David and Julia hosted Bill and Bridget at Villa el Sarmiento for a party over Thanksgiving weekend. “Welcome to El Sarmiento,” five-year-old David Jr. greeted guests, with a flourish of his hand, as they pulled up to the oceanfront home.

  Kent Groninger, a fraternity brother of the twins and one of their teammates on the MIT basketball squad, recalled attending a more intimate gathering with the brothers a couple years later. David, who remains close with his MIT teammates, periodically hosts reunions of the squad in Aspen. During one of these get-togethers in the mid-2000s, Groninger and about five other members of the team attended. “David had asked Billy to come by, and we were all a little nervous about that,” he said. “And Dave was so deferential to Billy. I mean, Dave was actually subdued that evening. He just let Billy do the talking. And Billy was talking a little bit about his America’s Cup experience. And I could just see that Dave was tiptoeing around Billy. It was kind of a big moment where the two were in the same room and Dave for once was stepping back and letting Billy be the center of attention.”

  “There were friends of both of them there,” Groninger added. “And they kind of made up, shook hands.”

  When Bill married Bridget in February 2005, he asked David to be his best man. At the rehearsal dinner, where guests dined on New Zealand elk and sipped $500-a-bottle 1996 Château Latour, David warmly toasted his brother. “Who would have thought 10 years ago that we’d be friends,” he marveled, “much less that I’d be the best man at my brother’s wedding.”

  Years after their improbable reconciliation, Bill calls David his “very best friend.” His relationship with Charles, however, never recovered. Only in recent years has there been the mildest of thaws. A turning point came in May 2010, when Julia threw a lavish seventieth birthday party for David at the Everglades Club in Palm Beach.

  Located at the west end of Palm Beach’s main commercial drag, Worth Avenue, the club doesn’t look like much from the street. But once visitors step inside, they are transported back in time, strolling through a reception hall that looks as if it belongs in a Spanish castle. A courtyard leads to a golf course and striking views of the Intercoastal Waterway. The Addison Mizner architecture is a stark contrast to the starched, Waspy membership: A member was once reportedly rebuked for hosting Estée Lauder (a Jew) on the premises.

  The party was held in the club’s orange tree–lined ballroom, known as the Orange Garden, which features a retractable roof. On this evening, it had been opened to the sky, so guests could dine and dance under the stars.

  Friends and family, including Charles and Liz, flew in from around the country to attend the Wizard of Oz–themed bash—“Come to the Emerald City,” the invitation read. A yellow brick road and actors in costume greeted them when they arrived. What guests remember most, other than the performance by Lionel Richie and the massive birthday cake fashioned into a fairytale castle, were the speeches—Bill’s in particular.

  Bill had asked Julia if he could toast his brother, and she in turn had consulted Charles, who was in charge of the speaking agenda, according to a family friend. The family politics, even after nearly a decade, remained fraught. “I think
Julia just knew that this could be an ugly moment and that Billy’s kind of unpredictable and he might get up there and put a turd in the punch bowl,” a family friend said. “So I think it was Charles’ decision, in Julia’s view, of whether this would be good or not.” Charles, the family friend said, gave his permission, but, he added, “I’m sure he was holding his breath the whole evening about what Billy was going to say in front of all their friends.”

  When Bill took the microphone, a mild air of apprehension gripped those who knew the brothers best. For better and for worse, Bill had always been guided by emotion and he quickly entered sensitive terrain, but only alluded to the brothers’ twenty-year battle in the vaguest of terms. Instead, Bill spoke of his childhood jealousy of his handsome and talented twin. David had always scored the most girls, the most points on the basketball court. “He said,” according to John Damgard, “ ‘I consider David, and always have, my closest and best friend, not just my brother and I am so pleased we are now able to treat each other in a more civilized manner.’ It was very, very touching.”

  During his emotional speech, Bill burst into tears. “I actually shed tears listening to this, as did a lot of people in the room,” said Kent Groninger. “There were a lot of wet eyes.”

  After his speech, Bill returned to his table, where he was seated with a half-dozen of the twins’ fraternity brothers. Groninger, still choked up, clapped Bill on the shoulder. “That was a wonderful speech,” he said. A few minutes later, Charles appeared next to Bill at the table. Bill stood up, rising a couple inches taller than his brother, and they chatted quietly. “We were all trying to keep our eyes off of it,” Groninger remembered. “It was such an awkward moment. They were kind of kissing and making up, I think. Charlie was quite taken by what Billy had said.” The following day, Charles and Liz accepted a brunch invitation at Bill and Bridget’s home.

  While the brothers may have shared a moment of warmth in Palm Beach, the scars of the past run too deep to fully heal, Charles’s close friends say. “I don’t think he necessarily wants to rekindle whole relationships. I think he just wishes [it] would go away,” one of them said.