For most people, building a fortune is an elusive task. But once they have a fortune, many people find that they have a hard time hanging onto it. Even the greatest of fortune is destined to be destroyed eventually. But the end comes sooner for some than for others. Very often, that end has nothing to do with with the individuals involved, but is just the vagaries of the world. Usually, one expects a billionaire to be shrewd enough to protect their wealth. However, situations could get tough sometimes.
Unfavorable economic scenarios, bad investments or fraud can force billionaires to file for bankruptcy. Economic downturns are hard on everyone. But for billionaires, they can be catastrophic. When people have that kind of money, it isn’t stored as cash in a safe somewhere. It is in the form of things like real estate and business holdings. Exactly how much money any given person is worth depends upon what other people think those holdings are worth. Those valuations can change by the day, hour, or even minute.
Here are the billionaires who went broke.
1. Eike Batista
Peak Net Worth: $30 billion
A man with outsized ambition, Brazilian oil and gas entrepreneur Eike Batista once pledged he would become the world’s richest person. For a while, it seemed possible. In early 2012, Batista was worth an estimated $30 billion as the prices of his publicly traded energy companies, housed under the parent company EBX Group, soared. But within a year, amid failures to meet production and financial targets, his energy empire began to crumble.
It became clear that his flagship oil company OGX had vastly overstated its oil reserves. OGX filed for bankruptcy in 2013 after defaulting on a $45 billion bond payment, marking the largest corporate default in Latin American history. Batista was sentenced to 30 years in prison in 2018 for bribing the former Rio de Janeiro Governor Sergei Cabral $16.5 million in exchange for state contracts.
2. Bernie Madoff
Peak Net Worth: $18 billion
Bernard Madoff was an American fraudster and financier credited for running the largest Ponzi scheme in history, worth about $64.8 billion, including fabricated gains. He was at one time chairman of the NASDAQ stock exchange. He advanced the proliferation of electronic trading platforms and the concept of payment for order flow, which has been described as a “legal kickback”.
Madoff founded a penny stock brokerage in 1960, which eventually grew into Bernard L. Madoff Investment Securities. He served as the company’s chairman until his arrest on December 11, 2008. That year, the firm was the 6th-largest market maker in S&P 500 stocks. On June 29, 2009, Madoff was sentenced to 150 years in prison, the maximum sentence allowed. On April 14, 2021, he died at the Federal Medical Center, Butner, in North Carolina, from chronic kidney disease.
3. Sam Bankman-Fried
Peak Net Worth: $17 billion
Over the course of just a few days, the founder and former CEO of cryptocurrency exchange FTX went from one of the richest people in the world and one of crypto’s most influential figures to the poster boy of the biggest crypto collapse to date. A skeptical report from Coindesk about the finances of FTX’s sister company, Alameda Research, kicked off the decline. The revelation that at least $5.8 billion of Alameda’s assets were tied to FTX’s native token, FTT, caused investors to frantically withdraw their funds from the exchange.
Later reports from The Wall Street Journal and others alleged that Alameda Research used as much as $10 billion of customer funds from FTX to make its bets–something that is highly illegal. Bankman-Fried essentially admitted to trading using FTX customer assets in an exchange with a Vox reporter. Bankman-Fried’s estimated fortune went from $17 billion to close to zero. Alameda Research, FTX and FTX U.S. filed for bankruptcy on November 11, 2022 and Bankman-Fried stepped down as CEO the same day.
4. Mikhail Khodorkovsky
Peak Net Worth: $15 billion
The former head of Russian oil and gas giant Yukos, Khodorkovsky was once Russia’s richest man, worth an estimated $15 billion at the height of his wealth in 2004. But after a public sparring with Putin over government corruption, Khodorkovsky was arrested and jailed for tax evasion, embezzlement and fraud, allegations he has denied and blasted as politically motivated. Yukos, once Russia’s largest oil company, was broken apart and declared bankrupt in 2006; most of its assets were absorbed by the state-controlled oil company Rosneft. Khodorkovsky was pardoned in 2013 and relocated to London.
5. Adolf Merckle
Peak Net Worth: $12.8 billion
Merckle was a German industrialist whose investment outfit got hit badly in the financial crisis of 2008. Making matters much worse was a big bet he made against Volkswagen AG, which backfired in October that year when it was revealed European car giant Porsche was vying to take over the company, sending Volkswagen’s share price soaring.
Merckle sought more than $1 billion in bridge loans to cover the losses incurred by his VEM Vermoegensverwaltung conglomerate, which by that point was heavily leveraged. As his empire teetered toward collapse, Merckle took his own life by stepping in front of a train near his home in Blaubeuren, Germany in 2009. After Adolf’s death, his son Ludwig turned around the tumbling family fortune, selling off pieces but eventually recovering.
6. Elizabeth Holmes
Peak Net Worth: $4.5 billion
Theranos co-founder Elizabeth Holmes was once the toast of the tech world for developing a device she claimed would revolutionize blood testing by using just a drop or two of blood from a person’s fingertip. In reality, the company was nowhere close to delivering the technology it promised. In 2015, the Stanford University dropout was the youngest and wealthiest self-made female billionaire in the United States. After the technology proved to be unreliable and as the company faced a slew of investigations from federal agencies, her net worth dropped to zero.
In 2018, she was indicted for wire fraud. The case went to trial in 2021. During her trial, Holmes tried to pin the blame on her ex-boyfriend and Theranos’ former president and chief operating officer, Ramesh “Sunny” Balwani. However, jurors didn’t buy it and convicted Holmes on four charges of defrauding investors in January 2022. Pregnant with her second child, she was sentenced to more than 11 years behind bars in November 2022.
7. Rishi Shah
Peak Net Worth: $3.6 billion
Rishi Shah turned heads as the young, college-dropout founder of buzzy healthcare media startup Outcome Health, which raised $600 million at a $5.6 billion valuation in May 2017. Within two years of Shah entering the billionaire ranks, however, he and two top executives from Outcome were charged with fraud for allegedly stealing about $1 billion from clients, lenders and investors by misrepresenting the company’s financial performance and the success of its products.
8. John Kapoor
Peak Net Worth: $3.3 billion
Pharma industry entrepreneur and investor John Kapoor was the founder, CEO and chairman of opioid manufacturer Insys Therapeutics. In October 2017, Kapoor was arrested and charged with conspiring to bribe doctors to prescribe the company’s fentanyl spray Subsys, which was designed to ease cancer-related pain, to patients who didn’t need it. Insys declared bankruptcy and said it was shutting down its operations in 2019. The Indian-born businessman, received a five-and-a-half year prison sentence in 2020 after a jury found him and four other Insys executives guilty of a racketeering conspiracy.
9. Sean Quinn
Peak Net Worth: $2.8 billion
Sean Quinn was among the richest people in Ireland, but the 2008 financial crisis forced him to file for bankruptcy in 2011. At the time, Quinn claimed that his assets were less than 50,000 pounds (down from his $2.8 billion fortune). He held a 25% stake in Anglo Irish Bank, but during the 2008 financial crisis, the bank had to be bailed out using taxpayers’ money. It was taken over by the government.
10. Jocelyn Wildenstein
Peak Net Worth: $2.5 billion
Jocelyn Wildenstein, who was popularly known as “Catwoman” because of her appearance, was a big socialite. Wildenstein received $2.5 billion in her divorce settlement from billionaire art dealer and businessman Alec Wildenstein and $100 million each year for the following 13 years. It is reported that she used to spend $1 million on luxury purchases, $5,000 on her phone bill a month, and food and wine costs at $547,000. In May 2018, she declared bankruptcy, claiming that she had $0 in her checking account.
11. Allen Stanford
Peak Net Worth: $2.2 billion
A fraudster who gave Bernie Madoff a run for his money, Stanford was convicted in 2012 for running a $7 billion Ponzi scheme through his Stanford Financial Group, an offshore bank based in Antigua. The former billionaire made a killing for about two decades by selling fraudulent high-yielding certificates of deposit and then using the funds for dubious investments and to fund his lavish lifestyle, according to prosecutors. In 2012, he was sentenced to 110 years in prison.
12. Nirav Modi
Peak Net Worth: $1.8 billion
The one-time jeweler to the stars, whose high-priced baubles were adorned by the likes of Kate Winselet, Dakota Johnson and Priyanka Chopra-Jonas, saw his empire become worthless. The Indian-origin diamantaire, who aspired to be the next Harry Winston with stores across the globe, was accused of defrauding the state-owned Punjab National Bank of $1.8 billion to fund the expansion of his firm Firestar International.
Modi fled India in 2018 shortly before the scandal broke and a year later was sighted on the streets of London sporting a handlebar moustache. He was arrested shortly thereafter. The Indian authorities recovered Modi’s dues by seizing and selling his assets, including his much-prized art collection. The Wharton School dropout was born into a family of diamond traders and grew up in Belgium. He moved to India to learn the family trade under his uncle and struck out on his own in 1999.
13. Vijay Mallya
Peak Net Worth: $1.6 billion
Known as “the King of Good Times” for his flamboyant lifestyle, Mallya ran United Spirits, one of India’s largest liquor companies, and owned Kingfisher Airlines. After entering the aviation space in 2005, the liquor mogul racked up debts of more than $1 billion owed to numerous Indian banks as he sought to keep his struggling Kingfisher Airlines afloat.
At one point the second largest domestic carrier in India, Kingfisher became insolvent and shut down in 2012; pilots and cabin staff were unpaid for months on end while Mallya continued to throw extravagant parties. Mallya fled to the U.K. in 2016 after defaulting on debts to lenders by State Bank of India. Mallya was declared bankrupt by a British court in 2021, paving the way for Indian banks to seek repayments of Mallya’s outstanding debts.
14. Björgólfur Gudmundsson
Peak Net Worth: $1.2 billion
Björgólfur Gudmundsson was once the second-richest man in Iceland and held a major stake in a bank, Landsbanki. At the time of the 2008 financial crisis, his bank collapsed and was taken over by the Icelandic government. His net worth dropped from $1.2 billion to $0 after Gudmundsson filed for bankruptcy. He also had to sell the Premier League soccer team (West Ham United Football Club) he owned.
15. Aubrey McClendon
Peak Net Worth: $1.2 billion
Co-founder of oil and gas company Chesapeake Energy, Aubrey McClendon reportedly had a net worth of about $1.2 billion. However, in 2016, he was accused of unfairly manipulating bids for drilling rights and indicted on federal conspiracy charges. One day after he was charged, McClendon died in a car accident. It is believed that he had massive outstanding debts, and thus, his net worth was close to zero when he died.
