Robert Vesco
Encyclopedia
Robert Lee Vesco was a fugitive
United States
financier
. After several years of high stakes investments and seedy credit dealings, Vesco was alleged guilty of securities
fraud
. He immediately fled the ensuing U.S. Securities and Exchange Commission investigation by living in a number of Central America
n and Caribbean
countries that did not have extradition
laws. Charges emerged following the Watergate scandal
that linked Vesco with illegal funding for a company owned by Donald A. Nixon
(Richard Nixon
's nephew).
Vesco was notorious throughout his life, attempting to buy a Caribbean island from Antigua in order to create an autonomous country and having a national law in Costa Rica
made to protect him from extradition. A 2001 Slate.com article labeled Vesco "the undisputed king of the fugitive financiers." After settling in Cuba
in 1982, Vesco was charged with drug smuggling in 1989. In the 1990s he became involved with Donald Nixon again, and was indicted by the Cuban government for "fraud and illicit economic activity" and "acts prejudicial to the economic plans and contracts of the state" in 1996.
Vesco was sentenced to 13 years in jail by Cuba. Five months after his death in November 2007 the New York Times reported he succumbed to lung cancer
at a hospital in Havana, Cuba.
, Michigan
, where he grew up and attended, and then dropped out of, Cass Technical High School
. Vesco was the son of a Detroit autoworker. He dropped out of engineering school while he was in his early twenties to go to work for an investment firm. After a short period he struck out independently with an $800 stake matching buyers and sellers in the aluminum market, until he eventually acquired a portion of the profits of a floundering aluminum plant. By 1965, he was in a position to borrow enough money to acquire International Controls Corporation
. Through aggressively hostile expansions and debt-financed takeovers of other businesses he grew ICC quickly. By 1968 the company owned an airline and several manufacturing plants, and Vesco held shares totaling US$
50 million.
, a mutual fund investment firm with holdings of $1.5 billion run by financier Bernard Cornfeld
, who had run into trouble with the SEC. When his firm ran into financial difficulty, no "white knight" was willing to get involved. Vesco saw his chance and began a protracted battle to assume control of the company, opposed by Cornfeld and others. The battle quickly turned nasty; Cornfeld was thrown into jail in Switzerland and Vesco was accused of looting the company of hundreds of millions of dollars. Many prominent figures in global business, finance, and royalty were tied to the mess, receiving money from one party or the other for support. Among the accusations against Vesco were that he parked funds belonging to IOS investors in a series of dummy corporations, one of which had an Amsterdam
address that was later linked to Prince Bernhard of the Netherlands, and that he broke into a Swiss bank vault to obtain shares. These allegations are unproven, as Vesco fled the country and spent the next fifteen years hopping between countries that lacked extradition treaties with the United States.
In February 1973, with criminal charges against him imminent, Vesco took the corporate jet and fled to Costa Rica along with about $200 million worth of IOS's investments, according to SEC allegations. Vesco would continue to wage a legal battle from Costa Rica and the Bahamas to try to maintain control over his 26 percent of ICC stock, but, with five outstanding indictments for securities fraud against him, he could not return to the United States. It was not until 1981 that ICC had completely become free of Vesco's control, after paying out almost $12 million to him and his family.
, the SEC accused Vesco of embezzling $220 million from four different IOS funds. In 1973, Vesco fled to Costa Rica
. Shortly before his departure, hoping to shut off the SEC investigation into his activities, Vesco routed substantial contributions to Richard Nixon
through his nephew, Donald A. Nixon
.
Vesco was also investigated for a secret $200,000 contribution made to the 1972 campaign
to re-elect Nixon. As counsel to International Controls Corporation, New Jersey lawyer Harry L. Sears
delivered the contribution to Maurice Stans
, finance chairman for the Committee to Re-elect the President
. Vesco had wanted Attorney General
John N. Mitchell
to intercede on his behalf with SEC chairman William J. Casey
. While Vesco fled the country, Stans, Mitchell, and Sears were indicted for obstruction of justice
, though charges against all three were dismissed.
. Figueres' constitutional term ended in 1974. Vesco remained in Costa Rica until 1978, when President Rodrigo Carazo (1978–1982) repealed what was popularly referred to as the "Vesco Law."
In 1978 Vesco moved first to Nassau
and then to Antigua
. While in Antigua he tried unsuccessfully to buy the sister island Barbuda
and establish it as a sovereign state. The Costa Rican government blocked his attempt to return in 1978, under President Rodrigo Carazo's administration. In 1982 Vesco tried again to return to Costa Rica, but President Luis A. Monge denied his entry. La Nación, march 1999
He lived in Nicaragua
for a while, while the Sandinista Government was in power. Each of these countries accepted him, hoping that his great wealth would finance local development projects. However, this worked poorly for everybody involved, although Vesco was reputed to have stolen over $200 million, and appeared several times on the Forbes
list of the wealthiest people in the world.
Vesco was indicted in 1989 on drug smuggling charges.
In the 1990s, Vesco became involved once again with Donald A. Nixon after Nixon went to Cuba seeking to partner with the government in conducting clinical trials on a substance he claimed to boost immunity, called trixolan
or TX. Vesco introduced Nixon to Fidel Castro and his brother, Raul Castro, and the Cuban government agreed to provide laboratory facilities and doctors to conduct the trials. Results from the studies were claimed to be positive, however on or about May 31, 1995, Vesco attempted to defraud Nixon and Raul Castro, and Cuban authorities seized control of the project and arrested Vesco and his wife. Nixon was detained for questioning and was released thirty days later.
At the time of Vesco's arrest the Cuban Foreign Ministry said he had been taken into custody "under suspicion of being a provocateur and an agent of foreign special services," or intelligence agencies. However, he was formally charged with "fraud and illicit economic activity" and "acts prejudicial to the economic plans and contracts of the state." In 1996 the Cuban government sentenced Vesco to thirteen years in jail on charges stemming from the scandal. He was scheduled for release in 2009, when he would have been 74. Vesco's wife Lidia was convicted on lesser charges and got out in 2005.
Vesco reportedly died of lung cancer in November 2007 and was buried at Colon Cemetery in Havana. However, these reports of his death have been disputed.
Fugitive
A fugitive is a person who is fleeing from custody, whether it be from private slavery, a government arrest, government or non-government questioning, vigilante violence, or outraged private individuals...
United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
financier
Financier
Financier is a term for a person who handles typically large sums of money, usually involving money lending, financing projects, large-scale investing, or large-scale money management. The term is French, and derives from finance or payment...
. After several years of high stakes investments and seedy credit dealings, Vesco was alleged guilty of securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
. He immediately fled the ensuing U.S. Securities and Exchange Commission investigation by living in a number of Central America
Central America
Central America is the central geographic region of the Americas. It is the southernmost, isthmian portion of the North American continent, which connects with South America on the southeast. When considered part of the unified continental model, it is considered a subcontinent...
n and Caribbean
Caribbean
The Caribbean is a crescent-shaped group of islands more than 2,000 miles long separating the Gulf of Mexico and the Caribbean Sea, to the west and south, from the Atlantic Ocean, to the east and north...
countries that did not have extradition
Extradition
Extradition is the official process whereby one nation or state surrenders a suspected or convicted criminal to another nation or state. Between nation states, extradition is regulated by treaties...
laws. Charges emerged following the Watergate scandal
Watergate scandal
The Watergate scandal was a political scandal during the 1970s in the United States resulting from the break-in of the Democratic National Committee headquarters at the Watergate office complex in Washington, D.C., and the Nixon administration's attempted cover-up of its involvement...
that linked Vesco with illegal funding for a company owned by Donald A. Nixon
Donald A. Nixon
Donald A. Nixon, Jr. is the son of President Richard Nixon’s brother, F. Donald Nixon.Donald Nixon, Jr., grew up in Southern California as the nephew of President Richard Nixon. He attended college and later served in the Vietnam War...
(Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
's nephew).
Vesco was notorious throughout his life, attempting to buy a Caribbean island from Antigua in order to create an autonomous country and having a national law in Costa Rica
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....
made to protect him from extradition. A 2001 Slate.com article labeled Vesco "the undisputed king of the fugitive financiers." After settling in Cuba
Cuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...
in 1982, Vesco was charged with drug smuggling in 1989. In the 1990s he became involved with Donald Nixon again, and was indicted by the Cuban government for "fraud and illicit economic activity" and "acts prejudicial to the economic plans and contracts of the state" in 1996.
Vesco was sentenced to 13 years in jail by Cuba. Five months after his death in November 2007 the New York Times reported he succumbed to lung cancer
Lung cancer
Lung cancer is a disease characterized by uncontrolled cell growth in tissues of the lung. If left untreated, this growth can spread beyond the lung in a process called metastasis into nearby tissue and, eventually, into other parts of the body. Most cancers that start in lung, known as primary...
at a hospital in Havana, Cuba.
Biography
Vesco was born in DetroitDetroit, Michigan
Detroit is the major city among the primary cultural, financial, and transportation centers in the Metro Detroit area, a region of 5.2 million people. As the seat of Wayne County, the city of Detroit is the largest city in the U.S. state of Michigan and serves as a major port on the Detroit River...
, Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
, where he grew up and attended, and then dropped out of, Cass Technical High School
Cass Technical High School
The Cass Tech Technicians football team is a high school football program in Division 1 Public School League, representing the prestigious Cass Technical High School in Detroit, MI. Cass Tech High School has long been recognized nationwide for its extraordinary football program dating back to its...
. Vesco was the son of a Detroit autoworker. He dropped out of engineering school while he was in his early twenties to go to work for an investment firm. After a short period he struck out independently with an $800 stake matching buyers and sellers in the aluminum market, until he eventually acquired a portion of the profits of a floundering aluminum plant. By 1965, he was in a position to borrow enough money to acquire International Controls Corporation
International Controls Corporation
International Controls Corporation was an American holding company incorporated in 1965. Before being taken private in 1997, its subsidiaries included Checker Motors Corporation and Great Dane Trailers...
. Through aggressively hostile expansions and debt-financed takeovers of other businesses he grew ICC quickly. By 1968 the company owned an airline and several manufacturing plants, and Vesco held shares totaling US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
50 million.
IOS scandal
In 1970, Vesco began a successful takeover bid for Investors Overseas Service, Ltd.Investors Overseas Service
Investors Overseas Services, Ltd. was founded in 1955 by financier Bernard Cornfeld. The company was incorporated outside the United States with funds in Canada and headquartered in Geneva, Switzerland. In the 1960s, the company employed 25,000 people who sold 18 different mutual funds...
, a mutual fund investment firm with holdings of $1.5 billion run by financier Bernard Cornfeld
Bernard Cornfeld
Bernard "Bernie" Cornfeld was a prominent businessman and international financier who sold investments in US mutual funds, and was tried and acquitted for orchestrating one of the most lucrative confidence games of his era.-Early life:Bernard Cornfeld was born in Turkey...
, who had run into trouble with the SEC. When his firm ran into financial difficulty, no "white knight" was willing to get involved. Vesco saw his chance and began a protracted battle to assume control of the company, opposed by Cornfeld and others. The battle quickly turned nasty; Cornfeld was thrown into jail in Switzerland and Vesco was accused of looting the company of hundreds of millions of dollars. Many prominent figures in global business, finance, and royalty were tied to the mess, receiving money from one party or the other for support. Among the accusations against Vesco were that he parked funds belonging to IOS investors in a series of dummy corporations, one of which had an Amsterdam
Amsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...
address that was later linked to Prince Bernhard of the Netherlands, and that he broke into a Swiss bank vault to obtain shares. These allegations are unproven, as Vesco fled the country and spent the next fifteen years hopping between countries that lacked extradition treaties with the United States.
In February 1973, with criminal charges against him imminent, Vesco took the corporate jet and fled to Costa Rica along with about $200 million worth of IOS's investments, according to SEC allegations. Vesco would continue to wage a legal battle from Costa Rica and the Bahamas to try to maintain control over his 26 percent of ICC stock, but, with five outstanding indictments for securities fraud against him, he could not return to the United States. It was not until 1981 that ICC had completely become free of Vesco's control, after paying out almost $12 million to him and his family.
Nixon scandal
Among the charges that emerged in the years after WatergateWatergate scandal
The Watergate scandal was a political scandal during the 1970s in the United States resulting from the break-in of the Democratic National Committee headquarters at the Watergate office complex in Washington, D.C., and the Nixon administration's attempted cover-up of its involvement...
, the SEC accused Vesco of embezzling $220 million from four different IOS funds. In 1973, Vesco fled to Costa Rica
Costa Rica
Costa Rica , officially the Republic of Costa Rica is a multilingual, multiethnic and multicultural country in Central America, bordered by Nicaragua to the north, Panama to the southeast, the Pacific Ocean to the west and the Caribbean Sea to the east....
. Shortly before his departure, hoping to shut off the SEC investigation into his activities, Vesco routed substantial contributions to Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
through his nephew, Donald A. Nixon
Donald A. Nixon
Donald A. Nixon, Jr. is the son of President Richard Nixon’s brother, F. Donald Nixon.Donald Nixon, Jr., grew up in Southern California as the nephew of President Richard Nixon. He attended college and later served in the Vietnam War...
.
Vesco was also investigated for a secret $200,000 contribution made to the 1972 campaign
United States presidential election, 1972
The United States presidential election of 1972 was the 47th quadrennial United States presidential election. It was held on November 7, 1972. The Democratic Party's nomination was eventually won by Senator George McGovern, who ran an anti-war campaign against incumbent Republican President Richard...
to re-elect Nixon. As counsel to International Controls Corporation, New Jersey lawyer Harry L. Sears
Harry L. Sears
Harry Lloyd Sears Jr. was an American lawyer and Republican Party politician who served for 10 years in the New Jersey Legislature...
delivered the contribution to Maurice Stans
Maurice Stans
Maurice Hubert Stans was an American accountant, high-ranking civil servant, Cabinet member, and political organizer...
, finance chairman for the Committee to Re-elect the President
Committee to Re-elect the President
The Committee for the Re-Election of the President, abbreviated CRP but often mocked by the acronym CREEP, was a fundraising organization of United States President Richard Nixon's administration...
. Vesco had wanted Attorney General
United States Attorney General
The United States Attorney General is the head of the United States Department of Justice concerned with legal affairs and is the chief law enforcement officer of the United States government. The attorney general is considered to be the chief lawyer of the U.S. government...
John N. Mitchell
John N. Mitchell
John Newton Mitchell was the Attorney General of the United States from 1969 to 1972 under President Richard Nixon...
to intercede on his behalf with SEC chairman William J. Casey
William J. Casey
William Joseph Casey was the Director of Central Intelligence from 1981 to 1987. In this capacity he oversaw the entire United States Intelligence Community and personally directed the Central Intelligence Agency ....
. While Vesco fled the country, Stans, Mitchell, and Sears were indicted for obstruction of justice
Obstruction of justice
The crime of obstruction of justice, in United States jurisdictions, refers to the crime of interfering with the work of police, investigators, regulatory agencies, prosecutors, or other officials...
, though charges against all three were dismissed.
"Vesco law"
In Costa Rica, Vesco donated $2.1 million to Sociedad Agricola Industrial San Cristobal, S.A., a company founded by President Jose Figueres. Figueres passed a law to guarantee that Vesco would not be extraditedExtradition
Extradition is the official process whereby one nation or state surrenders a suspected or convicted criminal to another nation or state. Between nation states, extradition is regulated by treaties...
. Figueres' constitutional term ended in 1974. Vesco remained in Costa Rica until 1978, when President Rodrigo Carazo (1978–1982) repealed what was popularly referred to as the "Vesco Law."
In 1978 Vesco moved first to Nassau
Nassau, Bahamas
Nassau is the capital, largest city, and commercial centre of the Commonwealth of the Bahamas. The city has a population of 248,948 , 70 percent of the entire population of The Bahamas...
and then to Antigua
Antigua
Antigua , also known as Waladli, is an island in the West Indies, in the Leeward Islands in the Caribbean region, the main island of the country of Antigua and Barbuda. Antigua means "ancient" in Spanish and was named by Christopher Columbus after an icon in Seville Cathedral, Santa Maria de la...
. While in Antigua he tried unsuccessfully to buy the sister island Barbuda
Barbuda
Barbuda is an island in the Eastern Caribbean, and forms part of the state of Antigua and Barbuda. It has a population of about 1,500, most of whom live in the town of Codrington.-Location:...
and establish it as a sovereign state. The Costa Rican government blocked his attempt to return in 1978, under President Rodrigo Carazo's administration. In 1982 Vesco tried again to return to Costa Rica, but President Luis A. Monge denied his entry. La Nación, march 1999
He lived in Nicaragua
Nicaragua
Nicaragua is the largest country in the Central American American isthmus, bordered by Honduras to the north and Costa Rica to the south. The country is situated between 11 and 14 degrees north of the Equator in the Northern Hemisphere, which places it entirely within the tropics. The Pacific Ocean...
for a while, while the Sandinista Government was in power. Each of these countries accepted him, hoping that his great wealth would finance local development projects. However, this worked poorly for everybody involved, although Vesco was reputed to have stolen over $200 million, and appeared several times on the Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
list of the wealthiest people in the world.
Nixon scandal, Pt. II
In 1982 he moved to Cuba, a country that could provide him with treatment for his painful urinary tract infections, and which would not extradite him to the U.S. Cuban authorities accepted him on the condition that he would not get involved in any financial deals. He married Lidia Alfonsa Llauger.Vesco was indicted in 1989 on drug smuggling charges.
In the 1990s, Vesco became involved once again with Donald A. Nixon after Nixon went to Cuba seeking to partner with the government in conducting clinical trials on a substance he claimed to boost immunity, called trixolan
Trixolan
Trixolan is a purportedly therapeutic agent based on Viroxan, a citronella-based substance used by Stephen Herman, a Californian doctor who used it to treat AIDS patients...
or TX. Vesco introduced Nixon to Fidel Castro and his brother, Raul Castro, and the Cuban government agreed to provide laboratory facilities and doctors to conduct the trials. Results from the studies were claimed to be positive, however on or about May 31, 1995, Vesco attempted to defraud Nixon and Raul Castro, and Cuban authorities seized control of the project and arrested Vesco and his wife. Nixon was detained for questioning and was released thirty days later.
At the time of Vesco's arrest the Cuban Foreign Ministry said he had been taken into custody "under suspicion of being a provocateur and an agent of foreign special services," or intelligence agencies. However, he was formally charged with "fraud and illicit economic activity" and "acts prejudicial to the economic plans and contracts of the state." In 1996 the Cuban government sentenced Vesco to thirteen years in jail on charges stemming from the scandal. He was scheduled for release in 2009, when he would have been 74. Vesco's wife Lidia was convicted on lesser charges and got out in 2005.
Vesco reportedly died of lung cancer in November 2007 and was buried at Colon Cemetery in Havana. However, these reports of his death have been disputed.
Further reading
- Herzog, A. (2003) Vesco: From Wall Street to Castro's Cuba. ISBN 0-595-27209-6
- Eisenhauer, A.L., Moore, R. and Flood, R.J. (1976) The Flying Carpetbagger. ISBN 0-523-00985-2