Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty (20 page)

As Bill splashed money around and nabbed headlines, Charles and Koch Industries had little choice but to respond in kind. “They became just much more engaged locally,” said the former city official. “I think they consciously wanted to build their local image. Bill Koch really smoked them out.” The more conspicuous tenor of their giving was evident in the combined $2 million gift Charles and Liz Koch and the company made to the local Salvation Army
in 1994 for the construction of a new headquarters, dubbed the Koch Center.

But other factors may have influenced their effort at image building. One September evening in 1993, the Kochs’ sixteen-year-old son, Chase, blew through a red light as he sped down Wichita’s East Douglas Road on the way to a local mall. The teenager’s Ford Explorer barreled through the intersection just as twelve-year-old Zachary Seibert, listening to Kris Kross on his headphones, crossed the street. Seibert died at a local hospital about an hour later.

Rumors circulated that the Kochs would use their power and influence to make any charges disappear, but Charles and his family instead seemed determined that their billionaire status not become an issue. Instead of retreating behind the gates of their Wichita compound and leaving lawyers and crisis management professionals to handle the fallout, the enigmatic family made a public showing of support for the Seiberts. The Kochs escorted their traumatized son to the boy’s funeral, “where every eye in that church was on them,” one attendee remembered. Chase later pleaded guilty to a misdemeanor charge of vehicular manslaughter and was sentenced to 100 hours of community service and 18 months of probation. The judge also imposed a 9:00 p.m. curfew for 10 months. (This was a fairly harsh sentence, according to the special prosecutor in the case, who said an adult would have probably gotten off easier.)

“That was a tough deal to go through,” said Charles’s friend Nestor Weigand. “It was just a very, very painful time. I think it was one of those things that families do. They just do whatever they can to try to survive it.”

After his son’s accident, in addition to becoming more visible in his charitable giving, Charles and his company permitted the local paper rare access to write one of the first in-depth profiles of Koch Industries, its chief executive, and his family. It marked a
new era of cautious public engagement for the company. “Before, our whole strategy was that no one needed to know anything,” Paul Brooks, a Koch senior vice president, said at the time.

Despite Charles’s best efforts, however, his estranged brother continued to enjoy widespread popularity, especially among state and local officials. The fact that they persisted in lauding Bill for his generosity stung Charles and others at Koch Industries. The company employed thousands of people in Kansas. Didn’t Bill’s friends in government realize that he was on a revenge-fueled crusade to destroy everything Charles had built?

Finally, in 1997, Koch Industries sent the state a subtle but unmistakable message when it announced plans to expand—in Houston, not Wichita.

“Billy is going to take five years off Charles’ life,” Nestor Weigand complained to
The Wichita Eagle
, telling the paper that the Koch family was aggrieved by a “lack of insight” into Bill’s motives. “Everything Billy does Charles feels deeply.”

“The only thing I do know,” Weigand said, “is the day this is over, Billy is gone. You won’t even see his smoke.”

Another layer of the conflict played out in the shadows. This war, like most, had its covert aspect, with allegations of espionage and skullduggery on both sides. Bill, especially, seemed to relish the use of cloak-and-dagger tactics, which over the years he employed not just against his brothers but against a wide range of rivals, including sailing competitors, employees, at least one former girlfriend, and the second of his three wives.

In the 1980s and 1990s, the brothers unleashed a small army of private investigators on each other. “We’re up against a very secretive company that operates like a cult,” Oxbow’s spokesman, Brad Goldstein, once told
The New York Times
, explaining the company’s heavy reliance on PIs.

The elaborate operations hatched by Bill’s operatives seemed
right out of the CIA playbook. In one case,
Vanity Fair
reported, his crafty investigators established a phony company and posed as corporate headhunters in order to glean intelligence from ex–Koch Industries employees, donning body mics to secretly record their interviews.

Former Oxbow employees claim Bill’s investigators resorted to underhanded electronic surveillance techniques, including buggings and wiretaps. “He has bragged to me that he has had his brothers and other people tracked by private investigators and he has wiretapped their discussions,” one former Oxbow executive, Michael Aquilina, said in a 1988 lawsuit against Bill and his company. (Aquilina was fired from Oxbow after Bill accused him of submitting fraudulent financial statements.) Though Bill denied having his brothers followed or conducting any illegal surveillance—“I didn’t authorize using it, and never will,” he once said—he did acknowledge that he had on one occasion worn a bug, tucked into his breast pocket, to a meeting with J. Howard Marshall II. (“The recording wasn’t worth shit,” Bill said.)

Bill’s investigators also engaged in more low-tech methods: Seeking intelligence and clues to Koch Industries’ legal strategy, they pilfered trash from the homes and offices of Charles, David, and three of their lawyers, bribing janitors and trash collectors to gain access to their garbage, according to the brothers’ attorneys. (The Dumpster-diving operation resulted in a temporary restraining order in 1992 that prevented Bill and his legal team from “invading or interfering with the privacy and confidentiality of the defendants, their counsel, and their immediate families, either through efforts to obtain the trash from the personal residences or the offices” of the brothers or their lawyers.)

In Bill’s case, there was often little need to riffle through his garbage cans to dig up dirt, though perhaps Koch’s detectives tried it. He was, as
Vanity Fair
’s Bryan Burrough put it in a 1994 profile, “a man whose closet is free of skeletons in large part because they
all seem to be turning somersaults in his living room.” Bill left a turbulent wake of controversy and litigation wherever he went, and his misadventures provided plenty of ammunition for Koch Industries. In its effort to discredit Bill as hyperlitigious, mentally unbalanced, and fueled by vengeance, the company’s PR shop created a dossier of Bill’s more memorable debacles. “Koch had done a bunch of opposition research on Bill Koch—a fact-based summary of litigation he’d been involved in, and what he’d done and said,” explained a former Koch executive. The company distributed this fifty-page opposition research file, titled “The Truth About
Koch v. Koch Industries
,” widely to reporters covering the legal drama.

The juiciest scuttlebutt often concerned Bill’s stormy personal life (he would eventually sire five children by four women: Wyatt with first wife Joan, Charlotte with girlfriend Marie Beard, William Jr. and Robin with second wife Angela Gauntt, and Kaitlin with third wife Bridget Rooney Koch). The tawdriest of his soap-operatic travails was revealed, as were so many of the Koch clan’s most intimate moments, in a drab courtroom, where in November 1995 Bill faced off against a former Ford model named Catherine de Castelbajac. He’d installed her in his seldom-used, $2.5 million pied-à-terre in the apartment section of Boston’s Four Seasons, but wanted to evict her now that their romance had cooled. (De Castelbajac, the wife of a French nobleman when they began their affair, also became a target of Bill’s detectives when she refused to vacate his apartment. They in turn uncovered her modest origins as, in Bill’s words, a “Santa Barbara surfing girl.”)

As Bill wooed de Castelbajac, he simultaneously juggled at least three other women, including Joan, whom he married in April 1994 to legitimize Wyatt for estate-planning purposes. He and Joan divorced not long after.

The sensational nine-day trial over de Castelbajac’s housing arrangements made news on both sides of the Atlantic, with
tabloid editors one-upping each other with headline puns (such as,
BEAUTY AND THE LEASE
and
JUST ONE OF THOSE FLINGS
). It’s unlikely such titillating testimony had ever been heard in Boston housing court, where lurid details about the couple’s courtship were revealed (“She started kissing me quite passionately. I must admit I did not resist.”) and a series of steamy transcontinental faxes that passed between the pair were entered into evidence.

“Hot Love From Your X-rated Protestant Princess,” de Castelbajac signed one of the racy messages. She referred to herself in a separate fax as a “wet orchid” who yearned for warm honey to be drizzled on her body. In another, she wrote: “My poor nerve endings are already hungry. You are creating such a wanton woman. I can feel those kisses, and every inch of my body misses you.”

Bill’s far-less-sensuous facsimiles displayed the MIT-trained engineer’s geeky side: “I cannot describe how much I look forward to seeing you again,” he wrote. “It is beyond calculation by the largest computers.” In another fax, he jotted an equation to express his devotion, ending with a hand-drawn heart and, within it, the mathematical symbol for infinity.

In late November 1995, Bill won the court’s approval to evict the ex-model. Less than two weeks after the verdict was read, Bill’s newest love interest, thirty-three-year-old Marie Beard, announced she was three months pregnant with his child—and that she was moving into his Palm Beach mansion.

In the mid-1990s, an aura of Cold War–esque vigilance enveloped both Oxbow and Koch Industries. In addition to concerns about Dumpster-diving detectives and electronic eavesdropping, both factions also believed the other had slipped informants into their midst.

“We were all paranoid because of the tactics that were in use,” said a former Koch executive. “There was a paranoia at some point that my secretary was a Bill Koch plant. You saw something at every turn.”

Bill grew increasingly distrustful of everyone around him. “There were moles and spies all over,” he has said. He feared his brothers had tapped his phones and believed that Koch operatives had stolen documents from his offices. Once, in an effort to prove Koch spies had infiltrated Oxbow, Bill’s in-house counsel drafted a bogus memo and left it sitting conspicuously on his desk overnight. This fictitious document later turned up in a filing made by Koch Industries, according to Bill and his lawyers.

Bill had taken to furtively recording some of his phone calls on a Norelco Dictaphone, and he employed a shadowy security operator, Marc Nezer, to sweep for bugs and smoke out possible Koch moles. Employees occasionally spotted Nezer at the Oxbow offices on weekends slithering through the heating ducts. It was unclear whether he was combing for listening devices—or perhaps planting them.

Former employees say Bill had them surveilled in an effort to uncover those who might have betrayed him. Among them was Paul Siu, an Oxbow executive and close friend of Bill’s in the 1970s and 1980s. Suspected of spying for Bill’s brothers, he was canned from Oxbow. Afterward, Siu alleged that Bill had him tailed and bugged his phones. “After the proxy fight, he changed completely,” he noted. “… Bill was in the first stage of Howard Hughes syndrome. Very paranoid.”

Spy games became a way of life for Bill, and he used them prodigiously during his bid for the America’s Cup. The race has long had a reputation for a certain amount of espionage. Bill’s competitors, however, accused him of taking things to an absurd and unsportsmanlike extreme. He was unapologetic. “This is more than the gentlemanly sport it used to be,” he said. “This is war.”

Guzzini
, a 30-foot Bayliner speed boat with blacked out windows and a full complement of electronics gear, became the emblem of Bill’s spy operation. As much for psychological warfare purposes as for intelligence gathering, it cruised the waters around
San Diego, shadowing rival boats as crew members pointed handheld lasers at their quarry to record speed and telemetry data. The ever-present boat caused an uproar after a
Guzzini
deck hand, in a cheeky display of America
³
’s surveillance powers, spotted a group of rival sailors playing poker through long-range binoculars and radioed over to advise: “Keep the King. Discard the Jack.”

Bill’s team dispatched helicopters to track and photograph competitors and deployed divers (using rebreathers so the telltale bubbles wouldn’t arouse suspicion) to study the keels of rival yachts. (“I wasn’t alone,” Bill told the
Palm Beach Post
.) Nezer, Bill’s security specialist, who liked to cultivate a 007-esque mystique, also periodically materialized at the America
³
team’s San Diego compound. “He just seemed to come and go,” said Gary Jobson, the syndicate’s tactician. “Nobody knew what he was doing. Somebody said he was a Mossad agent. I stayed away from him.” According to Jobson, Bill hired Italian speakers to lurk around the Italian team, and his investigators combed through the trash of rival syndicates seeking any morsel of information that might provide an advantage.

“They probably have a good idea of how many times we go to the bathroom, how many times I make phone calls,” huffed Il Moro’s skipper Paul Cayard.

Bill’s team was ultimately said to have spent more than $2 million on its intelligence and counterespionage activities. Following the race, America’s Cup officials, alarmed by the widespread spying, instituted a new regulation to curb future espionage. It was known informally as “the Bill Koch rule.”

“That’s been his whole life—private investigators with his brothers and trying to get an edge in all kinds of nefarious ways. The America’s Cup was right there for him,” said Jobson, who experienced his own harrowing brush with Bill’s security apparatus.

A decorated sailor who had won the America’s Cup aboard Ted Turner’s
Courageous
in 1977, Jobson began sailing with Bill
in 1984. He had helped to convince the businessman to make an attempt on the Cup. With “his technical mind and my pragmatic strategic experience, we actually blended pretty well,” Jobson recalled.