Money Management

9 Largest Fortunes Wasted

Warren Buffet lives hard by one steadfast rule: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” His rule has helped him amass and, most importantly, keep a fortune. These nine largest fortunes ever wasted are stories of people and families going from riches-to-rags.

(1) The Stroh Family: The End of a Generation

The Stroh Family, known for their multigenerational brewery business, lost everything. In an issue of Forbes Magazine, Frances Stroh talked about her relationship with her father: “My life with my father felt like living inside of a gilded bubble.” The company was once valued at $9 billion. During the 1980s and 1990s, the company took on excessive debt to become the nation’s third largest brewing franchise. Going national without liquid finances caused a perpetual family empire to collapse almost instantaneously. The Stroh Family heirs received their last check in 2008. The last remaining vestige of the Stroh brewing empire is an almost-empty office building in Detroit.

 

(2) The Vanderbilt Family: Once Richer Than the US Treasury

The Vanderbilt Family story is now one for the annals of history. Cornelius Vanderbilt borrowed $100 from his mother and turned it into a $100 million business empire. “Commodore” Vanderbilt started piloting a passenger boat from Staten Island, and went on to build a railroad empire. At the height of the Vanderbilt’s fortune, around 1850, the family was worth an inflation-adjusted $200 billion. However, Vanderbilt’s sons lived lavishly, building mansions and gambled. By the 1970s, the Vanderbilt clan had a family reunion and not a single descendant of the “Commodore” was a millionaire.

(3) Losing the Pulitzer

In divorce proceedings from 1982, Roxanne Pulitzer revealed that her ex-husband Peter was worth approximately $25 million. Peter Pulitzer and his twin sons ran into some financial issues win 2006 when their citrus business started going under. Since losing thousands of grapefruit trees to citrus canker, the Pulitzer fruit business has been besieged by debts and liens. Roxanne Pulitzer’s new husband, Tim Boberg, helped save the family orchard. Bomberg’s financial assistance includes a $220,000 mortgage, a $6,000 monthly interest payment on a $1.2 million dollar mortgage, and a $400,000 line of credit to Peter and Roxanne’s twin sons.

(4) Allen Stanford: Ponzi in Disguise

Allen Stanford may be one of the biggest hoaxes of all time. Stanford stepped into grace during the 1980s, opening banks in the Caribbean and making millions in charitable donations. In 2009, the FBI and SEC began investigating the Stanford Financial Group, investigating the company’s theft over $7 billion from investors. In 2012, Stanford was sentenced to 110 years in prison and a $6 billion fine, a debt that he will most likely never repay.

(5) Sean Quinn: Celtic Tiger Turned Bear

Sean Quinn, owner of the Quinn Group, was once valued between €4 and €5 billion (around $5.5 billion). In 2007, his company saved BUPA Ireland, one of the country’s largest health insurance firms. When the Great Recession swept the world in 2008, Quinn’s company was hit hard. After being fined for not reporting certain loans, Quinn was forced to give up leadership of his company. Quinn got carried away during the good years and didn’t plan for the recession.

(6) Vanilla Ice and MC Hammer: Not Legit to Quit

These rap legends are known for their great hits in the early 90s, including “Hammer Time,” “Too Legit To Quit,” and “Ice Ice Baby.” At his boom, MC Hammer was worth around $30 million. Hammer spent millions on lavish parties and personal indulgences. After going $13 million in debt, Hammer filed for bankruptcy in 1996. He’s released a few singles, but became a pastor. Vanilla Ice, aka Rob Van Winkle, didn’t fare much better. After fading into oblivion, Van Winkle recently had a foreclosure noticed filed against him in 2012.

(7) Björgólfur Guðmundsson: From Financial Hero to Zero

Björgólfur Guðmundsson is not necessarily a household name, except in Iceland. At one time, Forbes ranked this former billionaire as the 1014th richest person in the world. He chaired Iceland’s bank, Landsbanki, before it was nationalized in 2008. Overnight, Forbes devalued Björgólfur from $1.1 billion to $0. In fact, Björgólfur owed Landsbanki $500 million. The Icelandic government is in the process of investigating Björgólfur’s actions as part of its national inquest resulting from the past financial crisis.

(8) Nicholas Cage: Gone in $150 Million Dollars

Nicholas Cage is one of the leading actors in Hollywood, starring in movies such as The Rock and Gone in 60 Seconds. He regularly commands $20 million per film. Between 1996 an 2011, Cage amassed a fortune of more than $150 million. By the 2014 tax season, Cage found himself in debt and owing the IRS more than $13 million. Where did Cage spend all of his money? If 15 private homes weren’t enough, Cage felt the need to purchase a 40-acre island south of the Bahamas for $7 million. If nine Rolls-Royces weren’t enough to get him around, Cage also bought a $30 million private jet to fly between filming locations.

(9) Michael Jackson: The King of Pop and Debt

Michael Jackson signed a $1 billion dollar record contract with Sony Records in 1991. Even today, that amount for vinyl is unheard of. Mike Tyson was once one of the richest athletes, whose yearly salary represents only about 3% of the King of Pop’s big record deal. However, Jackson always struggled with finances. Jackson’s financial woes went through the roof before his death in 2009, burning through $30 million in cash per year. Before he died, Jackson also filed for bankruptcy. However, Michael Jackson’s legacy lives on and his heirs still make a living from his royalties and amassed fortune. What did Jackson spend his money on? Jackson’s Neverland Ranch was situated on a 2500 acre property that cost $17 million and he once spent $47.5 million to buy the Beatles’ back catalogue, angering his former friend Paul McCartney

Anyone can lose a fortune, a businessperson or a pop culture icon. These moguls lost their fortune and, ultimately, their lifestyle because they could not keep their outrageous spending habits in check.

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