Former Valeant Pharmaceuticals CEO Michael Pearson soared into the billionaire ranks and then... [+]
A short year ago, Elizabeth Holmes had a “unicorn” in her blood-testing technology company, Theranos. The term, used to refer to private companies valued at $1 billion or more, was once the stuff of myths and fables when it came to technology-based startups. Yet with a fortune based solely on her 50% stake in the company, Holmes rode to the top of Forbes’ list of America’s Richest Self-Made Women in 2015 with a net worth of $4.5 billion, thanks to investors who were doing the bidding.
Her fairy tale, however, seems to have taken a dark turn. In the latest chapter in an increasingly disturbing saga, Forbes lowered our estimate of her wealth to nothing amid allegations of inaccuracy in its tests and a litany of federal investigations into its practices. (Read more about why here.)
Holmes, in fact, is neither the first, nor will she be the last, to lose her fortune and see her (or in most cases his) Cinderella story end. In just this past decade, a number of the world’s wealthiest have lost it all. Some of these sagas have ended in conviction, corruption, and suicide, while others have happier endings, with tycoons who managed to spin their story into that of the comeback kid. The following list includes five ex-billionaires who represent some of the decades’ most dramatic blowups, and five who also had downfalls but have since managed to recover some or most of their fortunes.
The Blowups
Eike Batista
Once the world’s seventh-richest man in 2012 with an estimated worth of $30 billion and well along his way toward his aspirations for the top spot, the Brazilian investor Eike Batista lost nearly all of his wealth over the next two years. He lost over $19 billion in just 12 months. Massive debt payments swallowed much of his cash as his energy-related empire collapsed, highlighted by the bankruptcy of his oil company OGX in October 2013 in what is the largest corporate default in Latin American history. Many of his trophies–including his Lamborghini, his yacht, cars found at the home of his ex-wife–were seized at least for a time by Brazil’s federal police.
Michael Pearson
Pearson started working with Valeant Pharmaceuticals as an outside consultant in 2007, and then took over as CEO the next year. He presided over a period of tremendous growth, helping boost the company's stock price by more than 1,000% through early 2015, when he joined the three comma club with a $1 billion fortune, based on his ownership of Valeant stock and options. His strategy: ditch risky R&D and replace it with acquisitions. The company took existing approved drugs and drastically raised their prices. It all started unraveling in September 2015 as Valeant came under attack for its drug pricing policies; the stock has fallen nearly 90% from its 2015 peak. Pearson was ousted as Valeant CEO in March. (Read more about Pearson's wild ride at Valeant here.)
Aubrey McClendon
Onetime member of the Forbes 400 list with a net worth of $1.2 billion in 2011, McClendon was hailed by Forbes as “America’s Most Reckless Billionaire” that year. Five years later, the former CEO and co-founder of Chesapeake Energy, a pioneer in the use of new technology in the oil and natural gas industry crashed his Chevy Tahoe into an embankment on March 2, 2016, one day after being indicted on charges of conspiring to rig bids for oil and gas leases. He died at the age of 56.
Vijay Mallya
Mallya, the self-styled “King of Good Times,” who was once India’s richest liquor baron with a fortune close to $1.5 billion, fell on hard times after his now-defunct Kingfisher Airlines racked up debt of more than $1 billion. After selling his controlling stake in United Spirits to Diageo in 2012 and being forced to step down as chairman in February, Mallya left the country as the banks closed in on him and urged his arrest. The embattled tycoon, whose Indian passport was revoked in April, is currently in exile in London.
Adolf Merckle
Once one of Germany’s richest men worth more than $9 billion, Merckle was hard hit by the financial crisis of 2008. His holding company VEM Group owed more than $6 billion in debt held by its three biggest entities—Phoenix Pharmahandel, Ratiopharm, and HeidelbergCement. To stave off creditors, the secretive industrialist gambled on a series of risky short positions, many of which he lost on. With nothing left, on January 5, 2009, he lay down in front of a train passing from Ulm to Sigmaringen, reportedly leaving behind only a note that read, “I’m sorry.”
Allen Stanford
Stanford entered into the ranks of the Forbes 400 in 2008 with an estimated net worth of $2.2 billion, and spent his wealth accordingly, enjoying everything from private aircraft to personal yachts. As it happened, however, Stanford enjoyed these luxuries with ill-gotten gains, and in 2009 was convicted by federal prosecutors of running the second-largest Ponzi scheme in history through his Houston-based Stanford Financial Group, leaving him now penniless and behind bars.
The Fallen Who Have Risen Again
Not all falls in fortune end in tragedy. In more than a few examples, former billionaires managed to recuperate significant portions of their wealth. So there is a glimmer of hope for Holmes
Donald Trump
The presumptive GOP nominee Donald Trump overstates his fortune by billions of dollars, but even we have to give him some credit—he fell off The Forbes 400 list in 1990, only to survive two real estate crashes and four bankruptcies between 1991 and 2009. He returned to the ranks in 1996 with a focus on his brand, which has appeared on everything from consumer products like steak and wine to golf courses and condo-hotels. Forbes most recently estimated his worth at $4.5 billion, his highest valuation ever.
Merckle’s Heirs
After his father Adolf Merckle’s suicide, Ludwig Merckle took over the ailing empire his father had left behind. He turned it around by reducing the stakes in HeidelbergCement, selling off Ratiopharm, and making Phoenix Pharma Group profitable again with the help of a syndicated loan facility. For his efforts towards preserving what he calls his father’s “achievements,” today he is worth $5.9 billion.
Thor Bjorgolfsson
Iceland's sole billionaire lost nearly all of his fortune during the financial crisis when the country nearly went bankrupt and he suddenly had to find a way to pay off more than $1 billion in debts. At the time he was vilified; his Reykjavik home was crudely graffitied with his image and "2008" -- the year of his "death." "Everyone f'-ed up including me," he said. Bjorgolfsson, whose great grandfather faced bankruptcy twice and whose father filed for bankruptcy in 2009, was determined to avoid the same fate. He and his creditors worked out a complex agreement that allowed him time to pay off his debts while holding onto key stakes in several businesses including Polish telecom outfit Play, today his most valuable investment. He returned to the billionaire ranks in 2015. His father Bjorgolf Gudmundsson, who also lost his fortune during the crisis, has yet to recover.
The Schaefflers
The Schaeffler Group, owned by Georg Schaeffler and his mother, Maria-Elisabeth Schaeffler-Thumann, announced a $15 billion debt-financed takeover of Europe’s second-largest tire and auto parts maker Continental AG in 2008. It was supposed to be the deal that catapulted the company to the next level. Then the financial crisis hit and the nightmare began. The family’s fortune was nearly wiped out. But in this case all is well that ends well. The Schaefflers are now wealthier than ever, thanks to a gutsy debt makeover engineered by an ambitious banker-turned-CEO and a fortuitously quick recovery of the global auto industry. In just eight years, their net worth dropped from $9 billion to virtually zero and then soared to a current $25 billion between the two of them.
Yasumitsu Shigeta
Shigeta, a college dropout, started shilling phones via his Hikari Tsushin in 1988 and rapidly grew with the bubble economy. He made his first billion at age 34. A year later, his wealth jumpted to $42 billion. That was February 2000. But the bubble quickly popped. He lost $40 billion in a matter of months and soon fell out of the ranks. After a 14 year absence and much work to diversify Hikari Tsushin, he rejoined the billionaire ranks in 2013.
With reporting by Naazneen Karmali
