Hidden Wealth

January 1, 2007 7:39 PM

Could someone be richer than the usual suspects (Gates, Buffet, et al.) and not have that fact be known to the world at large?

If so, how do you escape the various and sundry "world's richest" lists? (Perhaps by earning your fortune as a criminal mastermind?) If not, is it simply not possible to have so much wealth and remain unknown?

Trust me, I'm in no danger of having to worry about making the list. (Well, I don't like to brag, but I am a hundredaire.)

posted by maxwelton to work & money (22 comments total)

It is difficult to imagine that someone could beat Gates and be unnoticed - his wealth is equivalent to the GDP of Morocco - and that sort of money requires a lot of public scrutiny and public dealings to make. But you may be able to disguise a couple billion you got illegally. The best bet you have is the corrupt dictator approach - since you just steal from your country or its resources, and you keep the records. Saddam was estimated to have stashed away $8 billion or so by 2000. Here is how he hid it:

"He might have a finance person in, say, Switzerland tell him to open an account in his own name and how much money it will have in it and exactly what he wants done with that money," says Nick Peck, another Kroll investigator who worked on the firm's Iraq investigation and now heads Kroll's office in Johannesburg, South Africa. "That person's family will typically be in Baghdad, and he'll know that they'll be hurt if anything were to go wrong with that money."

One of the most notable of Saddam's foreign investments uncovered by Kroll was a stake in the French magazine publisher Hachette. At one point, Kroll investigators estimated that a Panamanian front corporation called Montana Management owned 8.4% of Hachette's publicly traded stock, accumulated since 1981. At the time, Hachette said Montana wasn't represented on the board of directors and had no influence on corporate affairs.

In another case, the U.S. Treasury Department said in 1991 that an Iraqi businessman living in the Los Angeles area used some $4 million in Iraqi funds to set up a London-based company called Technology and Development Group. That company went on to acquire Matrix Churchill, a British tool company with a subsidiary in Ohio.

But otherwise it seems hard to hide large fortunes...
posted by blahblahblah at 8:01 PM on January 1, 2007

Well, the Forbes list doesn't seem to have much of a reputation for reliability:

TIMOTHY O'BRIEN: Forbes looks at the publicly held assets of individuals who have stock in publicly traded companies. That's just a fairly straightforward exercise when you have a Bill Gates whose wealth is tied up in Microsoft, or a Warren Buffet whose wealth is almost solely tied up in Berkshire Hathaway. It becomes a little trickier when you've got somebody like Donald Trump who has wealth and real estate which isn't publicly traded, the valuations are always elastic. And anybody that's based in the private world has a lot of leeway to tell Forbes whatever's on their mind, including how big they think their wallet is. " [source]

I would suspect that being publicity-averse and having your wealth somewhere where it doesn't need to be public record (i.e., not stocks — possibly hedge funds (?), gold doubloons, cocaine) would do the trick. There are such things (in a few states) as bearer share corporations, which are corporations whose ownership is determined by the physical bearer of the stock — these have been used to avoid the IRS without much success, but I imagine they'd work well to avoid the press as long as you rendered unto Caeser.
posted by IshmaelGraves at 8:12 PM on January 1, 2007

I would assume that the same principles apply to the world of money laundering.
posted by sonicbloom at 8:27 PM on January 1, 2007

It is very possible that some drug lords are substantially richer than Bill Gates.
posted by Osmanthus at 8:30 PM on January 1, 2007

i don't think you could be a drug lord bigger than bill gates and remain unknown to the u.s. drug enforcement administration.
i'd look at russia and particularly china after they privatized state industries. the big russians such as berezovsky and khodorkovsky occasionally get western press play, the big chinese are better at keeping their names out of the papers.
posted by bruce at 9:22 PM on January 1, 2007

It looks like Amado Carrillo Fuentes had an estimated net worth of around $25 billion at one point. Forbes listed Pablo Escobar as the 7th richest man in the world in 1989. Being dead keeps both of them off current lists.

Somewhat less lurid, Forbes' list of the 400 richest Chinese in 2006. Top guy shows up at a little more than $2 billion.

For comparison, Forbes lists Gates as being worth $50 billion this year.

Of course, if someone was successful at hiding their status, we wouldn't know about them.
posted by gimonca at 9:55 PM on January 1, 2007

I was mainly curious at what level of wealth it becomes impossible to not be known, just by the footprints you leave on the world markets.

I imagine a drug lord worth 25 billion might be "richer" than Bill Gates, from a bottom-line-lets-cash-out-now perspective. It seems to me Bill would have a hard time liquidating his assets and actually ending up with a pile of cash even close to the face value of his holdings, as the action of liquidating would make the assets immediately worth substantially less...unless he is very diversified. The drug lord, on the other hand, could probably move money around in a quieter fashion, and almost certainly is very diversified, in an underworldly sort of way.

Very interesting answers thus far.
posted by maxwelton at 10:43 PM on January 1, 2007

You never see Marc Rich, the billionaire that Clinton pardoned, on any of these lists. God knows if you are going to have controlling interest in much of the world's metal stocks and be able to sustain paying $350,000 a week in fines to the US government for years, you've got to have some kind of bank roll, no?
posted by Pollomacho at 10:54 PM on January 1, 2007

Pollomacho: You never see Marc Rich, the billionaire that Clinton pardoned, on any of these lists.

Incorrect. He's #242 in Forbes Richest Americans list for 2006 with $1.5 billion. So I guess he is not under the radar.
posted by blahblahblah at 11:13 PM on January 1, 2007

Ingvar Kamprad, the founder of IKEA, has so much money hidden away in trusts and family controlled "charities" (in actual fact probably nothing more than tax evasion tools) that control IKEA that many have speculated that he might be the world's wealthiest person.
posted by PenDevil at 11:16 PM on January 1, 2007

I think you could hide it if you were willing to be 'lossy' about it, you know, you could just pay people, create shell companies, etc, to hide your money. But how would you make the money in the first place? I mean how could you get so much cash without getting caught?
posted by delmoi at 6:39 AM on January 2, 2007

I think that you need to understand that *some* of your wealth would be visible if you were in the upper echelons of the world's wealthiest individuals. Underworld bosses do have money in stocks, bank accounts, real estate, businesses, etc. It's just a question of how much is hiding on the iceberg.

Sure, the richest guy in China has $2 billion in his bank account, or Marc Rich as $1.5 Billion. But that's only money that is *accounted for*, not the stack of picasso's in the basement and swimming pool full of cocaine.

So if you were a criminal mastermind with more money than Morocco / Bill Gates, then yes, people would know you're rich. You might even be on some lists of "rich folks". But nobody would be able to find the total value of your assests. Think Capone and Gotti and the rest of the crime bosses. Everybody knew (knows) they're wealthy. Just not *how* wealty.
posted by zpousman at 7:19 AM on January 2, 2007

Take it with a pinch of salt (or coke), but in a book on money laundering I read about a year ago, it was mentioned that the DEA (or some other agency) claimed that some recently arrested brothers heading a cartel had accumulated $280 billion!!
posted by daksya at 7:58 AM on January 2, 2007

It's very hard to measure what wealth means at the top; it tends to be in vaporous forms like stock. If you base your rankings on cash-in-the-bank, that excludes plenty of legitimate sources of wealth, but how wide do you cast your net? Must you be in possession of a title deed to own something? Plenty of people manage to control assets without owning them. The Pope arguably controls the Roman Catholic Church, whose assets could be worth more than $1tn.
posted by hoverboards don't work on water at 8:00 AM on January 2, 2007

Seems to me that the "private" & "undisclosed" partial owners of the federal reserver bank could fall into this gray area.
posted by crewshell at 8:22 AM on January 2, 2007

One thing that a lot of people don't know is that the Forbes list are 'opt-in.' I used to work for a company that provided a specific service to the ultra wealthy and many of our clients should have been on the list but declined to provide information to Forbes. The list of the top 400 actually encompasses twice that many people, but half of them don't want to make a public statement of their wealth.

For individuals like Gates and Buffet there isn't much point in opting out because their money is very public. For someone who made a lot of money starting up oil services companies and then selling them, it's a little easier to go under the radar.
posted by DragonBoy at 8:29 AM on January 2, 2007

DragonBoy makes a good point. Years ago I worked at the foundation of a family that, based on publicly traded holdings, ought to have shown up on the Forbes list, and always wriggled off of it, to keep a lower profile.

Furthermore, Cargill is the largest privately held company in the US, but no one shows up on the Forbes 400 list because of Cargill. That information simply isn't widely available.
posted by ambrosia at 10:39 AM on January 2, 2007

Incorrect. He's #242 in Forbes Richest Americans list for 2006 with $1.5 billion. So I guess he is not under the radar.

That's the $1.5 billion that is relatively within public speculation. I'd wager he has anywhere from 10 to 20 times that net worth, and if you ever read Metal Men, you'll understand why the world will likely never know the real amounts. Rich has made a life-long career out of hiding large sums of money in creative (and largely illegal) ways.
posted by allkindsoftime at 1:13 PM on January 2, 2007

The key part of the question would seem to be "world at large", as well as "richer than the usual suspects". There are lots of names on the Forbes' richest list that aren't known to the average person already, but the OP seems to ask whether a person could theoretically exist who would top the Forbes' list... if they were known.

So it seems that yes, you can be a billionaire and not be well known- but it doesn't sound like you can be a billionaire and be unknown. As DragonBoy noted above, the Gates' et al are so rich and public there's no point in pretending otherwise- but some 'lesser' billionaires may not want their names on a Forbes' list for a variety of reasons.

But it seems they, and even the criminal types mentioned in thread, are very well known by plenty of people who have reason or desire to know. And if Ikea's owner/family are richer than Gates (although by that standard, the Walton family is richer than Gates- it comes back to the question of how you count ownership, and whether Gates gets any 'net worth' credit for the nearly $30bn he has dumped into his foundation), I'm sure plenty of people in the US and other governments know very well the assets of these and other titans, even if the "world at large" doesn't use them as a metric of wealth, the way names like "Rockefeller" would have been used decades ago.

I have doubts about a DEA sourced story (not the least being that the DEA is a source!) of drug lords with assets of $280bn- that's just an impossible sum to accumulate, since the amount of drugs being sold to make that much goes through so many middleman, the person in question would have to outright own all levels in the vertical chain. And that simply doesn't happen. From a questionable source doing a quick internet search, I found this quote:

"[T]he value of the global illicit drug market for the year 2003 was estimated at US$13 bn [billion] at the production level, at $94 bn at the wholesale level (taking seizures into account), and at US$322bn based on retail prices and taking seizures and other losses into account. This indicates that despite seizures and losses, the value of the drugs increase substantially as they move from producer to consumer."
Source: United Nations Office on Drugs and Crime (UNODC), World Drug Report 2005 (Vienna, Austria: UNODC, June 2005), p. 127.

By that metric, the source producers make far less than the street value- it's possible that over decades as a major trafficker, like Fuentes and Escobar, your cartel could accumulate billions in drug money, but still not likely topple Gates' standing. The estimated total [street] value of all illegal drugs sold in the US each year is, according to the DEA, $64bn. If you as an individual personally controlled the entire US drug market and collected every penny earned, from production to individual street sales, it'd still take you 5 years to accumulate that $280bn.

And besides, I find it hard to believe if someone had a $280bn drug empire, they wouldn't be public enemy number one, and splattered all over the front pages as a propaganda tool in the War on Drugs. After all, my mom has heard of Escobar, and hasn't even touched pot in her life.

And this comes back to the key point of "world at large": it's not like Escobar or Fuentes were unknown, or a probably fairly accurate idea of their wealth estimated by various governments. If a group of college kids can unravel the Enron mess in six weeks as a class project, I find it hard to believe that the largest drug cartels in the world aren't well understood by the US government among others. In the end, I think the truth is there may be a couple of people, such as the Pope mentioned, who could with creative accounting and fuzzy standards of "ownership" be said to be worth more than Gates. But I don't think anyone approaching Gates' wealth is unknown in the world at large; it's ultimately just the question of whether John Q. Public uses the name "Bill Gates" or something else when talking about insane wealth.
posted by hincandenza at 1:29 PM on January 2, 2007

I think hincandenza helped me clarify my question. I originally was wondering if there could exist a person who had, say, $100B directly in their name or an entity that they controlled and yet remain completely unknown. I see now that would be nearly impossible--with that much money, someone, somewhere, is going to know, even if it's not down to the exact dollar.

Even a looser definition, being that governments or financial experts know of a Mystery Man who controls a vast fortune but is unidentifiable seems unlikely, given the above--they can almost certainly put a name to such a player even if they cannot directly connect all of the dots.

(Ah, well, so much for my suspicions about my landlord.)
posted by maxwelton at 2:03 PM on January 2, 2007

The $280 billion is shared among atleast 3 people, not just one person. Second, this cartel was "disbanded" in 1994. Third, the price of drugs like cocaine has fallen 80% in inflation-adjusted terms over the last decade, and even more so than earlier; furthermore, drug use although it has climbed back up since the early 90s, peaked in the late 70s and remained at somewhat lower levels till mid 80s, when these 3 guys reportedly made most of their cash. Of course, I don't believe the numbers simply because it was the DEA, an agency responsible for stopping such things, which put them out.
posted by daksya at 11:17 AM on January 3, 2007

One other mention I'd like to make is the case study of Fidel Castro.

Good discussion.
posted by gbinal at 2:24 PM on January 3, 2007