by Jane Mayer
John Menard Jr.: $9 billion
Ken Griffin: $6.5 billion
Charles Schwab: $6.4 billion
Richard DeVos: $5.7 billion
Diane Hendricks: $3.6 billion
Ken Langone: $2.9 billion
Stephen Bechtel Jr.: $2.8 billion
Richard Farmer: $2 billion
Stan Hubbard: $2 billion
Joe Craft: $1.4 billion
Elaine Marshall, whose fortune was estimated at $8.3 billion in 2014, dropped off Forbes’s list of billionaires in 2015. When her estimated 2014 worth is added to the cumulative fortunes of the known participating billionaires during the Obama presidency, the total tops $222 billion.
The gap between: Jacob S. Hacker and Paul Pierson, Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class (Simon & Schuster, 2010), says in 2007 that the top 1 percent of earners took home 23.5 percent of the country’s income, when capital gains and dividends were factored in.
Liberal critics: See Chrystia Freeland, Plutocrats: The Rise of the New Global Super-rich and the Fall of Everyone Else (Penguin, 2012), 3.
“We are on the road”: Paul Krugman, speaking in an interview with Bill Moyers about Thomas Piketty’s book Capital in the Twenty-First Century. “What the 1% Don’t Want Us to Know,” BillMoyers.com, April 18, 2014.
“Wealth begets power”: Joseph E. Stiglitz, “Of the 1%, by the 1%, for the 1%,” Vanity Fair, May 2011.
Thomas Piketty: Thomas Piketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Belknap Press/Harvard University Press, 2014).
“disconnect themselves”: Mike Lofgren, “Revolt of the Rich,” American Conservative, Aug. 27, 2012.
Only one full guest list: The list was published by the Web site ThinkProgress, on October 20, 2010, in a news story by Lee Fang. In 2014, Mother Jones published an additional partial list.
vulture fund: See Ari Berman, “Rudy’s Bird of Prey,” Nation, Oct. 11, 2007, regarding the New York State legislature enacting legislation to aid his pursuit of repayment. In addition, Singer sought help from the U.S. courts in pressuring Argentina to repay him at a profit for bonds on which the country had defaulted.
In the wake of the 2008 market crash: According to David Carey and John E. Morris, King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone (Crown Business, 2010), “The catalysts that spurred Congress to action were Schwarzman’s birthday gala and the looming Blackstone IPO, say people who followed the congressional discussions.”
three domestic servants soon sued him: Christie Smythe and Zachary Mider, “Renaissance Co-CEO Mercer Sued by Home Staff over Pay,” Bloomberg Business, July 17, 2013.
The sum was so scandalously large: Ken Langone, whose wealth Forbes estimated at $2.9 billion as of 2015, argued that Grasso’s pay was reasonable, an argument that eventually prevailed in court.
“if it wasn’t for us fat cats”: Mark Halperin and John Heilemann, Double Down: Game Change 2012 (Penguin, 2013), 194.
“an even wealthier man”: “Richard Strong’s Fall Came Quickly,” Associated Press, May 27, 2004.
“prepaids done slightly differently”: David Cay Johnston, “Anschutz Will Cost Taxpayers More Than the Billionaire,” Tax Notes: Johnston’s Take, Aug. 2, 2010.
By 2009, DeVos’s son: “DeVoses May Pay a Price for Hefty Penalty; Record Fine Presents Problems; Lawyers Say They Will Appeal,” Grand Rapids Press, April 13, 2008.
“largest private hoard”: Daniel Fisher, “Fuel’s Paradise,” Forbes, Jan. 20, 2003.
Later, Massey was bought: In 2015, Alpha Natural Resources, the country’s fourth-largest coal company, filed for bankruptcy protection.
Harold Hamm: Josh Harkinson, “Who Fracked Mitt Romney?,” Mother Jones, Nov./Dec. 2012.
Further, in the summer of 2008: Koch Industries argued that it was in compliance with the trade ban because it had used a foreign subsidiary to help Iran build the largest methanol plant in the world. By using offshore employees as a cutout, Koch Industries adhered to the letter of the law while evading the intent of a U.S. trade ban that had been in place since 1995. Asjylan Loder and David Evans, “Koch Brothers Flout Law Getting Richer with Secret Iran Sales,” Bloomberg Markets, Oct. 3, 2011.
Paternalistic and family-owned: For an excellent history of Bechtel, see Sally Denton, Profiteers: Bechtel and the Men Who Built the World (Simon & Schuster, forthcoming).
But when a former company pilot: In 2010, Stewart, his wife, daughter, and two others were killed in a helicopter crash that investigators reportedly believed was caused when his five-year-old daughter, who was sitting in the cockpit, kicked the controls.
He understood how to sell: Sean Wilentz, “States of Anarchy,” New Republic, March 30, 2010.
In hopes of staving off: TARP details come from Hank Paulson, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (Headline, 2010), chaps. 11–13.
Among the groups now listed: On October 1, 2008, the day of the Senate vote, Senator John Thune’s office released a list of groups that supported the bailout, and AFP was on that list: http://www.thune.senate.gov/public/index.cfm/press-releases?ID=8c603eca-77d3-49a3-96f5-dfe92eacda06.
A source familiar: In his book, Democracy Denied (BenBella Books, 2011), Phil Kerpen, who was a top Koch operative at Americans for Prosperity, admitted that although he “hated the bill,” “I was genuinely frightened that our financial system would disintegrate.”
“the fight of their lives”: Bill Wilson and Roy Wenzl, “The Kochs’ Quest to Save America,” Wichita Eagle, Oct. 15, 2012.
“like to slice and dice”: Barack Obama, Keynote Address, Democratic National Convention, July 27, 2004.
CHAPTER ONE: RADICALS
Koch fought back: The most thorough account of the legal issues appears in Clayton A. Coppin, “A History of Winkler Koch Engineering Company Patent Litigation and Corruption in the Federal Judiciary.” Unpublished. Commissioned by Koch Industries, shared with author.
“The fact that the judge”: Koch family associate in interview with author.
But by 1932: Alexander Igolkin, “Learning from American Experience,” Oil of Russia: Lukoil International Magazine, 2006.
Fred Koch continued to provide: The reference to one hundred units is attributed to the “Economic Review of the Soviet Union” as quoted in a report titled “Why the Soviet Union Chose the Winkler-Koch Cracking System” by Clayton A. Coppin, commissioned by Koch Industries.
Wood River Oil & Refining: Koch Industries’ Web site, History Timeline.
“enjoyed its first real”: Charles G. Koch, The Science of Success: How Market-Based Management Built the World’s Largest Private Company (John Wiley & Sons, 2007), 6.
During the 1930s: Fred Koch’s business trips to Germany were described by a family member.
Archival records document: Rainer Karlsch and Raymond Stokes, Faktor Öl [The oil factor] (Beck, 2003).
“agent of influence”: Davis was never charged with criminal wrongdoing. After he died in 1941, a Justice Department investigation implicating him was covered up, according to Dale Harrington, Mystery Man: William Rhodes Davis, American Nazi Agent of Influence (Brassey’s, 1999), 206.
The president of the American bank: Ibid, 14. Charles Spencer of the Bank of Boston refused to have anything to do with the deal. Instead, he foisted it off on lower officers at the bank who were less scrupulous.
“Gentlemen, I have reviewed”: Ibid., 16.
personally autograph a copy: Ibid., 19.
“deeply committed to Nazism”: Ibid., 18.
“produce the high-octane gasoline”: Ibid., 19.
“was hugely, hugely important”: Peter Hayes, interview with author.
“Winkler-Koch benefited directly”: Raymond Stokes, interview with author.
“Although nobody agrees”: Fred Koch to Charles de Ganahl, Oct. 1
938, in Daniel Schulman, Sons of Wichita: How the Koch Brothers Became America’s Most Powerful and Private Dynasty (Grand Central, 2014), 41–42.
The nanny’s iron rule: Descriptions of the nanny are based on interviews with a knowledgeable source who asked not to be identified in order to maintain ongoing relations with the family.
“My father was fairly tough”: Bryan Burrough, “Wild Bill Koch,” Vanity Fair, June 1994.
“a real John Wayne type”: John Damgard, interview with author.
Koch emphasized rugged pursuits: Interview with Koch family cousin.
“By instilling a work ethic”: Charles G. Koch, Science of Success, 9.
“Father wanted to make”: Maryellen Mark, “Survival of the Richest,” Fame, Nov. 1989.
Clayton Coppin: Coppin worked at the Program in Social and Organizational Learning, based at George Mason University, which was largely funded by the Koch family.
Portia Hamilton: Hamilton was a 1940 graduate of Columbia University who wrote popular newspaper columns on psychology suggesting that child’s play and Rorschach tests could shed light on inner turmoil. In one column, “Troubled Little Minds,” Milwaukee Sentinel, April 3, 1949, she described a little girl who received “too much love” from her parents and grandparents.
His mother made clear: Wayne, “Survival of the Richest.”
“I pleaded with them”: Brian O’Reilly and Patty de Llosa, “The Curse on the Koch Brothers,” Fortune, Feb. 17, 1997.
“I hated all that”: Charles Koch reminisced about his school years in an interview with Jason Jennings, posted on Koch Industries’ Web site.
Eventually, Culver expelled him: The expulsion is described by both Wayne, “Survival of the Richest,” and Coppin’s unpublished study commissioned for Bill Koch, “Stealth: The History of Charles Koch’s Political Activities, Part One,” a copy of which was shared with the author.
As punishment, Charles’s father: Charles Koch, interview with Jennings. Charles Koch’s reminiscence of his father, from interview with Jennings.
“Father put the fear”: O’Reilly and de Llosa, “Curse on the Koch Brothers.”
“Charles spent little”: Coppin, “Stealth.”
“There was a lot of strife”: Coppin, interview with author.
“I think he thought”: Roy Wenzl and Bill Wilson, “Charles Koch Relentless in Pursuing His Goals,” Wichita Eagle, Oct. 14, 2012.
“As soon as we arrived”: Elizabeth Koch, “The World Tour Compatibility Test: Back in Tokyo, Part 1,” Smith, March 30, 2007, http://www.smithmag.net.
“staring down that dark well”: Elizabeth Koch, “The World Tour Compatibility Test: Grand Finale,” Smith, May 3, 2007, http://www.smithmag.net.
“When you are 21”: Kelley McMillan, “Bill Koch’s Wild West Adventure,” 5280: The Denver Magazine, Feb. 2013.
“Never did such good advice”: O’Reilly and de Llosa, “Curse on the Koch Brothers.”
“you won’t be very controversial”: Lee Fang, The Machine: A Field Guide to the Resurgent Right (New Press, 2013), 100.
“utterly absurd”: FBI memo, March 15, 1961, addressed to C. D. DeLoach (assistant FBI director), uncovered through a Freedom of Information Act request filed by Ernie Lazar.
An alphabet soup: Fang, Machine, 97.
“collectivists”: Charles Koch, “I’m Fighting to Restore a Free Society,” Wall Street Journal, April 2, 2014.
“a very intelligent, sharp man”: Fang, Machine, 96.
“the spirit of Moscow”: Ibid., 102.
Instead of winning: Some conservatives have argued that Goldwater’s candidacy clarified and strengthened the GOP, but others, like Michael Gerson in “Goldwater’s Warning to the GOP,” Washington Post, April 18, 2014, regard his candidacy as disastrous for Republicans, partly because it repelled future generations of minority voters.
Before the emergence: Fang, Machine.
“it bordered on anarchism”: Rick Perlstein, Before the Storm: Barry Goldwater and the Unmaking of the American Consensus (Nation Books, 2009), 113.
“there are certain laws”: Wenzl and Wilson, “Charles Koch Relentless.”
Early on, the Internal Revenue Service: Coppin, “History of Winkler Koch,” 29.
He remained vehemently opposed: Wilson and Wenzl, “Charles Koch Relentless.”
Among other strategies: Gary Weiss, “The Price of Immortality,” Upstart Business Journal, Oct. 15, 2008; “Estate Planning Koch and Chase Koch (Son of Charles Koch): Past, Present, and Future,” Repealing the Frontiers of Ignorance, Aug. 4, 2013, http://repealingfrontiers.blogspot.com.
“So for 20 years”: Weiss, “Price of Immortality.”
he arranged to pass his fortune: In his letters, Fred Koch described his concerns about children given family fortunes at young ages who disowned their fathers, according to Coppin.
“It was pretty clear”: Gus diZerega lost touch with Charles and eventually abandoned his right-wing views, becoming a political science professor and writer on spiritual and other matters. He nonetheless credits Charles with opening his mind to political philosophy, which set him on the path to academia.
“LeFevre was an anarchist figure”: Brian Doherty, interview with author.
As the journalist: Mark Ames, “Meet Charles Koch’s Brain,” NSFWCorp, Sept. 30, 2013. See also George Thayer, The Farther Shores of Politics: The American Political Fringe (Simon & Schuster, 1967). As also recounted by Donald Janson, “Conservatives at Freedom School to Prepare a New Federal Constitution,” New York Times, June 13, 1965, LeFevre claimed in a memoir that he took dictation from saints, drove at sixty miles per hour for twenty miles with his eyes shut, and left his physical body behind while traveling through the air to Mount Shasta, where he met Jesus Christ.
The school taught a revisionist version: The description of the Freedom School’s curriculum is based on interviews with three former attendees, including Gus diZerega, the other two of whom asked to remain anonymous.
bastion of “ultraconservatism”: Janson, “Conservatives at Freedom School to Prepare a New Federal Constitution.”
Charles Koch was so enthusiastic: Clayton Coppin believes that the elder Fred Koch agreed to Charles’s request that he attend the Freedom School for a week in exchange for Charles’s agreement to support the John Birch Society.
Charles was so incensed: “Toe the line” is based on the recollection of a source close to the Kochs.
James J. Martin: Martin wrote for the Institute for Historical Review’s publication, The Journal of Historical Review, and his book The Man Who Invented “Genocide”: The Public Career and Consequences of Raphael Lemkin was published in 1984 by the Institute for Historical Review. In an interview with the author, Deborah Lipstadt, author of Denying the Holocaust: The Growing Assault on Truth and Memory (Plume, 1994), said, “One cannot be officially affiliated with the IHR and regularly publishing in its pages if one is not a Holocaust denier.”
“It was a stew pot”: Gus diZerega, interview with author.
As Angus Burgin describes: Angus Burgin, The Great Persuasion: Reinventing Free Markets Since the Depression (Harvard University Press, 2012), 88.
Hayek touted it as the key: Phillips-Fein writes, “The great innovation of Hayek and von Mises was to create a defense of the free market using the language of freedom and revolutionary change. The free market, not the political realm, enabled human beings to realize their liberty…[T]he free market, not the welfare state, was the true basis of meaningful opposition to fascism.” Kim Phillips-Fein, Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan (Norton, 2009), 39–40.
By the time LeFevre died: In 2010, a spokesman for Koch Industries tried to distance the family from the Freedom School, insisting Charles and David had never been LeFevre’s “devotees,” as I described them in the 2010 New Yorker story “Covert Actions.” The spokesman said, “In fact they have had no contact with him since the 1960’s.” Howe
ver, as Mark Ames first reported, Charles Koch sent LeFevre a friendly letter in 1973 asking for LeFevre’s approval of his plan to personally take over another libertarian organization to which LeFevre had ties, the Institute for Humane Studies.
The private life of the younger Frederick: Deposition of William Koch.
“homosexual blackmail attempt”: O’Reilly and de Llosa, “Curse on the Koch Brothers.”
“Charles’ ‘homosexual blackmail’ ”: Schulman, Sons of Wichita, 130. Schulman describes the blackmail scheme as taking place after the senior Fred Koch died, but that is not the way it is described in Bill Koch’s deposition.
wealthiest man in Kansas: See Coppin, “Stealth.”
Koch Industries acquired the majority share: The Kochs bought the Pine Bend Refinery from J. Howard Marshall II, whose family members became virtually the only outside investors in Koch Industries, retaining a 15 percent share. Marshall became tabloid fodder at the age of eighty-nine for marrying Anna Nicole Smith, who at the time was a memorably zaftig twenty-six-year-old stripper and Playboy model.
“This single Koch refinery”: David Sassoon, “Koch Brothers’ Activism Protects Their 50 Years in Canadian Heavy Oils,” InsideClimate News, May 10, 2012.
“Here I am one of the wealthiest”: Leslie Wayne, “Brothers at Odds,” New York Times, Dec. 7, 1986.
“an iron hand”: Bruce Bartlett (an economist who formerly worked for the National Center for Policy Analysis, a Dallas-based think tank that the Kochs funded), interview with author.
In 1983, Charles and David bought out: Schulman, Sons of Wichita, 142.
Unlike his brothers, Frederick preferred: Among Frederick Koch’s donations was a $3 million gift to restore the Swan, a Shakespearean theater in Stratford-upon-Avon. He attended the opening, at which Queen Elizabeth personally officiated, but requested that she not mention his name.
He lived lavishly: Rich Roberts, “America 3 Win No Bargain Sail,” Los Angeles Times, May 17, 1992.
He, too, barely spoke: Bill Koch broke his silence to speak with Charles at his twin David’s birthday party and at a visit to Bohemian Grove, the exclusive men’s social retreat in Northern California.