Bernie Cornfeld -1956-1970

By | November 12, 2016

“Do you sincerely want to be rich?”

bernie-cornfeld

Bernie Cornfeld in 1965

THE CRIME:

Turkish-born Bernard Cornfeld did not look like a comnan but he was; he did not look like a ladies’ man but he was that, too – a remarkably successful one. One lover was the future madam to the stars Heidi Fleiss, even though he was almost 40 years her senior. Other paramours included Victoria Principal and Alana Hamilton Stewart.

Cornfeld started the Investors’ Overseas Service (IOS), an insurance and investment fund, which at one time controlled more than £1 billion in stocks and shares, in Paris in 1956 and then registered it in Panama. IOS salesmen – 10,000 of them – were encouraged to outdo each other and were paid handsomely for their efforts. High-earning salesmen would be rewarded with stays in top hotels in luxury resorts and the highest earning would be taken to Cornfeld’s homes in Geneva, the French Riviera and Beverly Hills, where they could see how the boss lived, with his bevy of 20 bathing beauties and his stable of racehorses. Cornfeld’s skill in moving IOS to Geneva in 1958 meant that, by using Switerland’s secretive banking laws, he could circumvent laws in America and the UK designed to control investors in foreign companies.

American GIs based in Paris, charmed by his slogan “Do you sincerely want to be rich?”, were Cornfield’s first clients. Soon Cornfeld’s stake in IOS was worth &100 mullion but, like all pyramid schemes, paying the commissions of the top people meant that those lower down the system had to work doubly hard to find new clients. IOS lasted five years before it imploded amid claims that assets had been mismanaged and that much of the wealth existed only on paper.

A meeting of shareholders on 9 May 1970 ended with Cornfeld – nicknamed “the Midas of Mutuals Funds” – being replaced as chairman and his shares dwindling in value to just £4 million. On 1 July he was voted off the board. The Swiss authorities began a fraud investigation into IOS and Cornfeld was arrested on 14 May 1973 in Geneva and accused of defrauding IOS investors. He was released on bail on 5 April 1974. His replacement as head of IOS was an American called Robert Lee Vesco but, just when it seemed he had rescued much of the company’s money, he disappeared in April 1972.

WHERE:

22 Boulevard Flandrin, Paris, France; 119 Rue de Lausanne, Geneva, Switzerland

WHEN:

March 1956-Saturday 9 May 1970

THE AFTERMATH:

Robert Vesco fled from country to country, always keeping one step ahead of the authorities until he was jailed in Cuba. He died on 23 November 2007 of lung cancer in hospital at Havana. Bernie Cornfeld was found guilty of fraud in California in June 1978. He had been using a device to bypass paying for long-distance telephone calls and was sentenced to 90 days’ imprisonment. However, a year later, Cornfeld went on trial in Geneva on 24September 1979, accused of persuading IOS employees to buy stock in the company even though he knew it was on the verge of collapse. He was acquitted on 15 October 1979 after a Swiss jury deliberated for 50 minutes.He died of a cerebral aneurysm on 27 February 1995 at London’s Chelsea and Westminster Hospital.

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