The King of Oil: The Secret Lives of Marc Rich

Rich personally or to his companies on American soil. These included Rich’s stock interests in Marc Rich + Co. and 20th Century Fox. Shortly after the indictment, the IRS issued a jeopardy assessment of more than91 million against Marc Rich International. The assets, “subject to forfeiture to the United States,” included everything from bank accounts, securities, and real estate to office equipment, furniture, and fixtures. The list of seized assets amounted to six pages of the indictment. 31 Rich’s Fifth Avenue apartment was considered blocked, as were his weekend condominium on Long Island, his interest in Steinhardt Investments (the early hedge fund run by Michael Steinhardt), and the interest in his retirement account. Furthermore, the IRS served levy notices on banks and companies doing business with Rich. These companies were advised that money they received from Rich could be seized.They were also prohibited from paying back any money they might have owed Rich.
    “It was phenomenal,” Sandy Weinberg told me with glee. “We tied up all U.S. assets, including 20th Century Fox. We shut ’em down completely. We shut the company down for a year. They couldn’t operate in the U.S. It cost them dearly. I assume it cost them probably a billion dollars.”
Unconditional Surrender
     
    The company’s credit lifeline was practically severed. Many trading houses were trying to reduce their exposure to the company and were cutting their trading limit with Rich. “Our companies were collapsing,” Rich himself summed it up when we talked about the consequences of the freeze. The RICO strategy, with which Giuliani and Weinberg intended to force Rich into capitulation, worked. It pressured him into plea negotiations. “The alternatives were to plead guilty and pay—or to die,” Rich’s Swiss attorney André A. Wicki told me. “RICO was the death sentence against the companies,” said attorney Michael Green. “Giuliani wanted victory at all costs, another feather in his cap. He wanted to polish his image as a crime fighter.” The result was total and unconditional surrender.
    On October 10, 1984, in a plea bargain Marc Rich + Co. AG and Marc Rich International pleaded guilty to making false statements as part of a scheme to circumvent profit controls and thus evade48 million in taxes. The companies agreed to pay a settlement of150 million and813,000 in fines and court costs, to forfeit21 million in contempt fines, and to forgo income tax deductions on the settlement worth up to an additional40 million. Altogether the settlement was worth more than200 million. In return the government lifted the yearlong freeze on Rich’s U.S. assets. In order to pay the settlement, Rich had to sell his 50 percent share in 20th Century Fox, for which he received116 million from Marvin Davis. He also sold an oil refinery in Guam.
    One day later, on October 11, 1984, a memorable meeting took place in the federal courthouse at Foley Square. Rich’s lawyer handed a check for130 million to a lawyer from Chase Manhattan Bank for money owed to fourteen U.S. and European banks. Chase Manhattan’s lawyer simultaneously handed Sandy Weinberg a check for113,018,306.71. The lawyer from Marc Rich International announced the company would abandon rights to the36,981,693.29 that the IRS had seized a year earlier. Giuliani immediately held a press conference at which he proudly waved the check in his outstretched hand. Once again he stressed the historic importance of his success. The total settlement of roughly200 million, Giuliani said, “represents the largest amount of money ever recovered by the United States in a criminal tax-evasion case.” 32
    While their companies were back in business, Rich and Green themselves were not included in the settlement. Prosecutor Giuliani repeated what Weinberg had said to Ed Williams more than a year earlier: He would accept no plea bargain from the traders unless it would “expose them to substantial prison terms.” 33 “Rudy wasn’t very secure, you know,” remembers Sandy Weinberg, and it is easy to believe him when he says he would never vote for Giuliani in an election. “He’s so political. He was concerned that he’d be criticized by the
New York Times
if he did a deal with a fugitive.” All of the charges against Rich and Green remained outstanding for the next seventeen years. Under U.S. law the accused could not be tried in their absence.
    What Giuliani failed to mention to