Barbie and Ruth: The Story of the World's Most Famous Doll and the Woman Who Created Her

by Robin Gerber

  Assistant U.S. Attorney John Vandevelde, parked at the prosecution table, looked annoyed. There had been meetings in U.S. Attorney Andrea Sheridan Ordin’s office, where Ruth’s lawyers, Herbert “Jack” Miller and Stan Mortenson, argued for a plea deal. Miller, a legal legend, would sit quietly listening, but when he pulled himself up to the table he was a commanding presence. Ordin was less than a year into her job as head of the office, and Vandevelde was a young assistant, but they would not budge from the government’s position. They wanted at least one guilty plea out of the ten counts. They felt the public deserved that much. The final decision, however, rested with the judge, and after meetings in his chamber Vandevelde knew that Takasugi would be more lenient.

  Ruth had been lucky to get Takasugi assigned to her case. There were eighteen federal judges on the bench in Los Angeles. According to one experienced prosecutor, only two or three of them would have been likely to agree to her no-contest plea.

  Ruth arrived with an entourage of family, including Elliot, her children, and her grandchildren. She needed their support. She was desperately trying to end the legal case so she could get back to the work she loved at Ruthton.

  The day of her indictment back in January had been horror enough, but what followed had terrified her. Ruth had endured the court hearing and followed instructions to go to the basement of the courthouse to be processed. She stood with Elliot and her two attorneys in a stark anteroom but could see two holding cells, one for men and one for women, behind a locked door. Within a few minutes, a police officer led Ruth alone through the door. She thought she was going to sign papers, but instead she was fingerprinted and a card was placed around her neck before mug shots were taken. “Cold horror crept down my spine. This is what they do when you’re going to jail,” she thought. A woman officer ordered Ruth to follow her, saying that she had to get rid of her jewelry, adding, “They’ll kill for them.” Shoving Ruth into a windowless room, she had her take off her watch, wedding ring, earrings, gold chain, and belt, and then led her toward the women’s cell. As the guard put the key in the lock, Ruth ran toward Elliot, screaming his name. Her lawyers stepped in, explaining to the jail attendant that there was a mistake and Ruth was not supposed to be incarcerated. Only then did Ruth, still shaking with fear, complete the paperwork that put her in the federal criminal justice system.

  The charges filed in January by the government relied on special counsel Seth Hufstedler’s report, but focused on examples of fraud and false statements that had misled Wall Street and influenced borrowing from banks. Ruth, Rosenberg, Yoshida, and two others were charged. Forty-five “overt acts” of fraud over a five-year period were listed, including bill-and-hold orders, annualization of financial statements to falsely defer expenses and manipulation of excess inventories, tooling costs, and royalty expenses. Jack Ryan, who held many Mattel patents and supported his grand lifestyle on his royalties, had allegedly been cheated. As with the other charges, Ruth claimed to know nothing about Ryan’s royalties. Perhaps, she speculated, he had asked for the reduction because of his own divorce proceedings.

  The charges gave the auditing firm Arthur Andersen a reprieve, with the indictment finding that it, too, had been given false information by Mattel. Unlike Hufstedler’s conclusion, the indictment charged that Ruth traded in Mattel stock, based on her insider knowledge, to enrich herself. In 1972 she sold 8,300 shares for $191,000. She was infuriated by the charge, but she was devastated by another allegation. She and Elliot always prided themselves on taking care of the “Mattel family.” In November 1970, the indictment charged, Ruth and Rosenberg discussed eliminating approximately $2.6 million of Mattel’s contribution to the employee profit-sharing plan to improve earnings.

  Ruth immediately issued a press release pronouncing her innocence and setting up one of her defenses. She claimed the government had delayed too long by waiting eight years to bring charges. She said she had “turned the other cheek,” and allowed false accusations to be made against her because she wanted to do what was best for Mattel. She had resigned from the company for the same reason, hoping she could help speed Mattel’s financial recovery. But she was changing her tactics. “I cannot ignore these accusations any longer,” Ruth said. “It is now my turn to put the lie to those who prefer to blame me for Mattel’s problems. I am not guilty of any criminal conduct, and I intend to exert every ounce of strength I have to prove my innocence to the Court and to the public generally.” For Ruth, the only bright spot was that Elliot did not get charged. He was helped by a lie detector test offered by his attorneys that affirmed his innocence. Getting a confidential polygraph with a certified polygrapher was a common tactic for defendants trying to ward off an indictment. None was produced for Ruth. Considering the time Elliot spent in R & D and the lie-detector results, the government declined to prosecute him. “I was very glad to get [Elliot] out. There was not an ounce of resentment or jealousy or anything else you might think about,” Ruth said. “I felt very lonely, but that had nothing to do with any bad feelings toward Elliot. I don’t know whether I was more lonely alone than with Elliot. You can be lonely with someone. Even when the two of us were in this thing together at the beginning, I still felt very lonely.”

  For a year Stan Mortenson told Ruth that he was certain the government was going forward. The delay played to her advantage, he assured her. He advised her to try to weather the publicity and focus on her business. There were ways to delay the case, perhaps derail it. There were statute-of-limitations arguments. The government’s case was tenuous. If they gave immunity, their witnesses could be challenged. The trial date was June 13, but motions would be flying and there would be months of wrangling. Mortenson also guessed that the government would offer Yoshida a deal. He was right.

  On February 28, 1978, former Mattel vice president of finance Yas Yoshida pleaded guilty to one count of filing false annual reports with the SEC, including one that overstated the company’s sales by ten million dollars. He had cut a deal that left him facing a possible two years in prison and ten thousand dollars in fines, but with assurances from prosecutors that his cooperation would be brought to the judge’s attention at sentencing. To ensure that he followed through, his sentencing was set to occur after Ruth’s trial. Yoshida’s testimony against Ruth would make the government’s case. It was laid out in the transcript of his appearance before the grand jury the previous summer.

  Yoshida implicated all of the other defendants without equivocation. Did Ruth routinely scrutinize all the sales reports? Yes. Did she generally conduct the daily business of the company? Yes. Rosenberg had set targets that had to be met regardless of sales. Had Yoshida told Ruth what he had done to achieve those targets? Yes, he told her that he had deferred over two million dollars that in the past he would have recognized. Did he discuss eliminating the contribution to the pension plan with Ruth? Yes. Did he outline for Ruth those items that had been falsified in the reports and records, and did she order that the false bill-and-hold documents be purged? Yes and yes.

  Yoshida testified for hours, detailing each year and each event that involved the fraudulent scheme to boost Mattel’s sales and profits. His testimony was precise and damning. He had worked for Mattel since 1950. He would be a difficult, if not impossible witness to impeach.

  While Ruth’s lawyers maneuvered to delay the trial or avoid it, she tried to get on with her life and her new business. It was a tense and bitter summer. One day she would meet with her attorneys at her Century City apartment. The next day she would fly off to fit more grateful women at a Ruthton event. Her activities with the business, however, could not overcome her despair. Every article Ruth read in the Los Angeles Times, the Wall Street Journal, or the New York Times seemed to proclaim her guilt. She was embarrassed to see neighbors on the elevator in her apartment building. She avoided the Hillcrest Country Club, where she and Elliot had been regulars. She sold her Rolls-Royce, not wanting to stand out in any way. Elliot was “in a state of shock,” too, as
Ruth wrote in her autobiography. “He tried in every way to help me get back on track, and he was concerned and supportive during my terrible flashes of despair. But the fact is, I felt very much alone—facing the specter of a prison sentence….”

  Ruth’s lawyers challenged the use of Hufstedler’s report for the government’s charges, claiming it was gathered in violation of the defendant’s constitutional rights. They argued that the government had improperly delayed getting the indictments and that a five-year statute of limitations barred prosecution of any acts before 1973. In all, they filed eight motions trying to dismiss the indictments. On August 4 Judge Takasugi rejected them all. “Motions were all stacked up and we marched down, and the judge denied them all. We were elated,” Vandevelde remembered.

  Three weeks later Seymour Rosenberg pleaded no contest to the charges against him. Like Ruth, he faced more than forty years in jail. At a meeting with the judge, the Justice Department attorneys protested Rosenberg’s request for a plea deal and the guarantee of probation rather than jail time. Rosenberg implored the judge to consider his wife’s poor health. Takasugi, the first Japanese American appointed to the federal bench, had been serving less than two years. As a twelve-year-old living in Tacoma, Washington, he had been interned with his family during World War II. He was known for being fair and for protecting minority rights. Then–U.S. Attorney Andrea Ordin remembers that he was known as a more compassionate and sympathetic judge than some others from his time in Superior Court. Rosenberg’s sentencing was set for December, but the judge made clear that he would not have to worry about being sent away from his ailing wife.

  Ruth’s trial was set to begin October 3. Her lawyers, telling her it could last three months, accelerated their demands for meetings. She sat with them in total misery. She wrote extensive notes, desperate to prove her innocence and obsessed with restoring her reputation, yet she wanted the ordeal to end.

  One day Ruth found the pressure unbearable. Her lawyers were insisting that she appear in court on a date when she had scheduled an out-of-town promotion for Ruthton. Her promotions were set two or three months in advance, and she did not want to cancel. Her lawyer explained that she was under court order and had to appear. In frustration she told him that she would not do it and asked if there was something that could be done to end the continual pressure her legal problems were creating. He said she could plead no contest, explaining that the plea was the equivalent of admitting guilt but that she probably would not be put in jail. But she was not guilty, she protested. She told him she wanted to plead no contest and also say that she was innocent.

  Her idea flew in the face of accepted practice, but her lawyers promised to do some research to see if she could have her way. Assistant U.S. Attorney John Vandevelde had already made a statement to the press after Rosenberg’s plea that the Justice Department “did not think it [was] in the best interest of the public to accept” no-contest pleas. No doubt, Justice would be equally vociferous in fighting Ruth’s attempt to follow Rosenberg, especially if she wanted to thwart the common understanding of the plea as an admission of guilt. Judge Takasugi had made it clear to Rosenberg that his plea was equivalent to an admission of guilt, although it could not be used against him in other proceedings.

  Within days, hanging his theory on an obscure legal maneuver called an Alford plea, after a Supreme Court decision from 1970, Ruth’s lawyer told her she could plead no contest but still assert her innocence. As she sat at the defense table, feeling like the whole world was watching, she held tight to her prepared statement and her fierce desire to claim her innocence.

  Judge Takasugi, a short, stout, and serious jurist, announced that an “agreement” had been reached. He decided to allow Ruth to plead no contest. In exchange, she would not be imprisoned. She must realize, however, the judge made clear, that her action was the equivalent of a guilty plea. Did she understand that she was making a guilty plea, he asked? “I believe that I am innocent of any criminal wrongdoing,” Ruth answered, “but I decided, with my attorney’s concurrence, to plead nolo.” The judge seemed satisfied, but the prosecutors were not. Takasugi ordered that a judgment of conviction be entered on all ten charges and set a date for sentencing in December. Then Vandevelde rose to protest. He said the government was not taking part in the agreement. As with Rosenberg’s case, the Justice Department lawyers felt the public was entitled to a full airing of the charges and evidence.

  When the hearing ended, the judge told reporters that there was a “tacit agreement” with the prosecutors that Ruth would not have to go to jail, but U.S. Attorney Andrea Ordin did not agree. “We believe the public interest requires a final, public, and unambiguous resolution,” she told the Los Angeles Times. Ruth’s claim of innocence despite her plea “calls into question the integrity of the system,” Ordin argued. She had not yet seen the statement that Ruth was handing out as she left the courthouse.

  “It is my understanding that I am not admitting that I am guilty of any of the charges leveled against me,” the statement read. “In fact, I steadfastly deny that I am guilty of any criminal wrongdoing. And I feel that were I to stand trial, I would be able to demonstrate the falsity of these accusations.” Ruth had, however, “lost my zeal to fight.” Her new company had totally consumed her life. “In light of this new venture, which I do not wish to jeopardize by personal commitment to a lengthy trial.” In her only nod to the court’s authority, Ruth concluded, “I recognize, of course, that even though I continue to assert my innocence, that for purposes of this particular proceeding, the court will consider my plea as the equivalent of guilty. And I am prepared to accept the consequences that flow from that fact.”

  The prosecutors struggled to contain their anger. Ordin gave an interview to the Herald Examiner. Two days after the hearing, the paper ran a story with the irresistible headline “Did Mattel Official’s Plea Toy with Justice?” Ordin was quoted saying that a no-contest plea deprived the public of the facts. Ominously, she said that she would never agree to a “no jail” commitment without “acknowledgement of guilt.” Ruth’s lawyers wrote to Ordin, protesting her public statements and laying out their justification for Ruth’s actions, but the prosecutor was up in arms. “We intend to point out to the court at the time of sentencing…our views of the relative culpability of the defendants.” Ordin made clear that whether a defendant had “acknowledged their wrongdoing and accepted responsibility for it” would be a key factor in the Justice Department’s recommendation regarding prison.

  Ruth had a momentary victory, but the cost was dangerously high. The Justice Department attorneys were poised to recommend jail time. All she could hope for was the continued mercy of the judge. But Ruth’s lawyers learned that Judge Takasugi was also angry about Ruth’s written statement of innocence. He had full discretion to put aside his “tacit agreement” about jail time, and rising pressure from prosecutors could be enough to change his mind. Ordin concluded her letter to Ruth’s attorneys with the dark promise that she would have a sentencing memorandum to the court before the hearing. Ruth could not understand Ordin’s hostility. “This U.S. attorney, Andrea Ordin, she was a bitch,” Ruth said. “I’ll take all the men rather than one bitchy woman. She felt something was wrong with her career by reason of me. I don’t know why she went after me. She said there was a flaw in the system, and she went on a rampage.”

  Ironically, like Ruth, Andrea Ordin was a woman pioneer. In 1918 the first woman was appointed U.S. Attorney. In 1977 President Jimmy Carter appointed the second. Ordin was the third. She was also the first Latina to get the job. She had never even met Ruth during the course of the litigation, but as head of the office, she became the focus of Ruth’s resentment.

  Three months later at her sentencing hearing, Ruth sat waiting for Judge Takasugi to enter his courtroom. This time she had no statement prepared. She only hoped and prayed that he had not changed his mind about putting her in jail. She accepted that she would be sentenced to community service. She
was prepared for that. She had even tried to influence what her service might be.

  Cathryn Klapp, Ruth’s probation officer, had prepared a presentencing report. If the judge followed through with probation, he would likely rely on Klapp’s recommendation. Ruth had carried a proposal into her first meeting with Klapp in October. For her public service, Ruth suggested, she would be prepared to give free breasts to women who needed them and could not pay for them. She was willing to give away hundreds of thousands of dollars’ worth of the inserts. She loved her idea and argued with passion that it would be a major community service. Klapp was skeptical. Wasn’t Ruth just trying to get good publicity for Nearly Me? How could the court be sure she would not spend most of her time running the for-profit side of the business and delegating the giveaway? Despite heartfelt letters from Elliot and friends attesting to Ruth’s sincerity and goodwill, the probation officer seemed unmoved.

  In Ruth’s mind, Klapp was another “bitch” with a chip on her shoulder about Ruth’s lifestyle. On a visit to the Handlers’ penthouse to discuss appropriate service for Ruth, Klapp looked at the artwork on display—Monet, Renoir, Pissarro, Picasso. The apartment was like a small art museum, its walls covered with millions of dollars’ worth of paintings. “You people have no right owning art like this,” Klapp burst out after a few minutes of looking around. “It belongs in a museum. I hope you’ll at least put them in your will for some museum.” All Ruth could think was “Who is she, telling me what I can and can’t own?”