Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty (19 page)

After an extended courtship, David proposed to her on Christmas Eve in 1995, giving Julia the triple emerald cut diamond ring that had belonged to his mother. They wed over Memorial Day weekend in 1996 at David’s Meadow Lane mansion in Southampton (which he dubbed “Aspen East”). Two years later she gave birth to David Jr., followed by Mary Julia (in 2001) and John Mark (in 2006).

Fatherhood suited David and it also changed his public persona as a cad. “That was the old David,” said one of his close friends. “David is now a great dad, loves going home and being with the kids, dotes on those children.” Yet as a first-time father at fifty-eight, “he’s not able to kind of get down on all fours and go ‘ga ga goo goo,’ so there’s
help around there.” This friend added: “Julia is a great mother and a great wife.… David’s an older father to have little kids. And she’s figured it all out. It’s made his life 100 percent better.”

The New York society columnist David Patrick Columbia noted: “When he finally married Julia… many thought she’d be his trophy wife. She has taken on the role, however of Wife and Mother in an ideal form: she is his consort; his life changed and so did his image.”

While David’s marriage gave him a new aura of respectability among New York’s social elite, the transition to being Mrs. Koch—what Columbia called “the construction of Julia Koch”—did not go seamlessly for her. Along the Upper East Side–Southampton social axis, there were expectations of a billionaire’s wife that didn’t exist for a girlfriend, a Byzantine social code that neophytes were somehow supposed to deduce on their own. There were black-tie galas to chair, fund-raisers to organize, parties to hostess, not to mention decorators to audition for their new fifteen-room apartment at 1040 Fifth Avenue, which had once belonged to Jackie Kennedy Onassis. David had bought the apartment for $9.5 million in 1995, shortly after Onassis’s death, and the couple spent the next three years renovating it.

The doyennes of the Upper East Side carefully dissected every move she made as the new bride of New York’s second-richest man (Michael Bloomberg, at that point, was the richest). “She was averse to making mistakes and she didn’t want to do anything that might be interpreted as not winning the seal of approval,” said a family friend. “She is very private.” To Julia’s dismay, her awkward entrée into New York’s
beau monde
played out in the press. “She looked dazed, like a gazelle caught in the strobe lights,”
The New York Times
’s Elisabeth Bumiller riffed in a less-than-flattering assessment of Julia’s formal New York society debut in 1997, when she cochaired the Metropolitan Museum’s annual benefit for the Costume Institute.

The
New York Post
later ran a lengthy article called “How New York Rejected Its Leading Socialite,” which chronicled Julia’s supposed high-society faux pas. “Julia thought it was all about having a lot of money, but it isn’t,” one acquaintance sniped. “She didn’t have the sophistication to carry it off, and New York can be very cruel to people who set themselves up like that.” The story noted that Julia had run afoul of Pat Buckley, wife of the
National Review
’s William F. Buckley, a prodigious charity fund-raiser and den mother to aspiring socialites. Buckley felt Julia shirked the “hard, hard slogging” required for charity work; David’s wife irritated her further when, during one benefit, Julia had talked to a tablemate during Buckley’s speech.

It seemed like she could not do anything right in the eyes of her critics. She was even criticized for barring
W
magazine from photographing the recently renovated interior of their new apartment, on the grounds that she didn’t “want people judging our taste.” But didn’t she understand that, as a socialite, her
raison d’être
was taste making and trendsetting? Julia was also accused of toning down David’s once-raucous shindigs by aggrieved B-listers who no longer made the slimmed-down invite list. When one year the couple dared to throw a subdued version of David’s annual New Year’s Eve bash—inviting some 200 guests instead of the typical 800-plus—one miffed socialite fumed that “Julia’s fingerprints were all over it.”

Given the cattiness, it was no surprise when, in the late 1990s, Julia temporarily fled New York for the more welcoming social scene of Palm Beach, where in 1998 the Kochs purchased Villa el Sarmiento, designed by Addison Mizner, the architect responsible for numerous Gold Coast landmarks, including The Breakers Hotel. “She decided that she wasn’t going to put herself in a position where somebody could have the opportunity to criticize her for no particular reason,” said the family friend.

Julia eventually settled more comfortably into the role of society
wife, despite the cold shoulder from Pat Buckley, turning up at all the places where it was important to be seen, clinging gracefully to David’s arm at galas and benefits, and presiding over parties at their home, where guests such as Glenn Close, Princess Firyal of Jordan, and Barbara Walters mingled over Dom Perignon and caviar.

Barely had they settled into Jackie O’s old pad when, in 2004, David plunked down $17 million for a 9,000-square-foot duplex in 740 Park Avenue, the Upper East Side apartment building where, coincidentally, Jackie O grew up. The expanding family, David explained, couldn’t possibly squeeze another child (and another nanny) into their old apartment, which spanned the entire fifteenth floor of 1040 Fifth Avenue. In a nod to their Oz-like surroundings, a plaque in the marble entryway to their current digs reminds visitors:
TOTO, I DON’T THINK WE’RE IN KANSAS ANYMORE
.

Not long into his courtship with Julia, David faced a second brush with death. In 1992, at the age of fifty-two, a routine blood test showed elevated prostate antigens, and his doctor soon diagnosed him with an advanced form of prostate cancer. He believed that he was again staring down death. “That puts the fear of God in you!” he recalled. “I thought I was going to die, certainly in months, if not in weeks.”

Treated with radiation at Sloan-Kettering, David was handed a reprieve when his cancer went into remission. In his exuberant style, he celebrated twice-cheating death with an extravagant, champagne-fueled Southampton soiree on a clear August evening in 1993, with music by Michael Carney’s orchestra and a $100,000 fireworks display put on by Long Island’s Grucci family. But the cancer soon returned, requiring more radical treatment. In 1995, he underwent prostate surgery.

Once again, the cancer vanished only to reappear. Though each of his brothers was later successfully treated for prostate cancer,
David’s cancer was incurable. He could only try to forestall the slow-moving disease as long as possible. He was treated with hormones to stop the production of testosterone that fuels prostate cancer, a therapy that kept his cancer in check but sapped his sex drive and enlarged his breasts. When eventually that treatment began to falter, he joined a clinical trial for an experimental drug called Zytiga. “The side effects,” he quipped to a reporter, “are minor compared to dying.”

After Flight 1493, David had become an outspoken airplane safety advocate, drafting up a detailed list of technical recommendations to prevent future tragedies, testifying before a congressional committee probing “aircraft cabin safety and fire survivability.” (“I’m a chemical engineer, and I’m trained to analyze things in a technical fashion,” he told the assembled members of the House Government Activities and Transportation Committee.) He attacked cancer with a similar analytical intensity. David took the approach, said his friend John Damgard, that “cancer was just something he had to outsmart.”

David had begun serving on hospital boards in the 1980s, but his experience with cancer inspired him to make medical research a main thrust of his philanthropy. “Discovering that I had cancer and the terrible fear that it generated in me turned me into a crusader,” he once said, “a crusader to provide financing to many different centers to develop cures—not only for prostate cancer but for other kinds of cancer as well.” He would eventually spend at least a half-billion dollars on projects like these, including underwriting the construction of the sleek, glass-walled David H. Koch Institute for Integrative Cancer Research at MIT, where world-class biologists and engineers collaborate on innovative cancer treatments.

By pouring hundreds of millions into cancer research, David hoped to promote advances that would prolong, if not save, thousands of lives—including his. One by one, he knew, his treatments
would fail, requiring him to have a new therapy at the ready. His life depended on financing breakthroughs that would keep him one step ahead of the disease that’s trying to kill him. He likened his philanthropic approach to the one time he attended the Kentucky Derby and managed to place a bet on the winner. His strategy entailed betting on every horse in the race.

Where David had once calmly prepared himself for death in the smoke-choked cabin of USAir 1493, he was now doing all he could to buy more time. For a man for whom money was no object, he recognized the harsh irony that his billions could not purchase the thing that he desired most after becoming a father—to live long enough to see his three children graduate from college. “I can’t have what you have and what no amount of money can buy,” he once lamented to Damgard, “the assurance that you’ll watch your children grow up and your grandchildren. But I’m going to make goddamn sure that I give it my very, very best shot.”

Bill did nothing in a small way, as his ongoing battle with Koch Industries had shown. But even some of his closest friends, well acquainted with his take-no-prisoners temperament, thought Bill was delusional when, in 1990, he announced an audacious bid for the yachting world’s most coveted prize, the America’s Cup.

“Let me make sure I have this straight,” his friend and Cape Cod neighbor Louis Cabot deadpanned when Bill broke the news to him. “You’re thinking of entering the America’s Cup, where you have had no experience. You’re thinking of starting from scratch, finding designers and builders to put together this new boat that nobody has ever sailed, and hiring maybe a couple hundred people to run dozens of different departments in what will amount to a small corporation. You’re thinking of moving the whole show to San Diego and building what will amount to a small waterfront village.… And you’re thinking of doing all this in just seventeen months. Is that what you’re thinking?”

The smile that crept across Bill’s face answered the question; this was precisely what he had in mind.

Bill first learned to sail as a teenager aboard a 19-foot Lightning at Culver Military Academy. After he was cast out of Koch Industries, sailing became a sort of therapy for his estrangement from David, Charles, and their mother. Bill felt like a man without a family, like the umbilical cord had been unceremoniously clipped,
but on the water with his crewmates, he discovered a new kind of brotherhood. “In a way,” he said in 1991, “this organization replaces the family harmony I never had.”

The America’s Cup is held every three to five years at the yacht club of its last victor; 1992’s was to be hosted by the San Diego Yacht Club, whose
Stars & Stripes
, with sailing legend Dennis Conner at the helm, had won back the America’s Cup from an Australian team in 1987. To build his racing syndicate, Bill took up residence in a $30,000-a-month bay-front rental in San Diego’s Point Loma. His world-class art collection, as usual, traveled with him. The house featured paintings by Monet and Cézanne, but the Boteros drew the most attention. The two large bronze sculptures that Bill showcased on his lawn included a rotund, cigar-smoking nude that locals unkindly dubbed “Roseanne,” after the comedienne and sitcom actress.

By then, Bill had relocated the corporate headquarters of Oxbow to Palm Beach, Florida, from Dover, Massachusetts, following a lengthy dispute with the Massachusetts tax authorities, who had slapped him with a massive tax bill following the buyout of his shares in Koch Industries. Bill took the Massachusetts Commissioner of Revenue to court, ultimately extracting a massive refund of more than $46 million, but the experience embittered him and he began looking around for a more tax-friendly locale in which to settle. Florida fit the bill.

In between bouts of litigation with Charles and David (and many other adversaries), Bill had spent the past six-plus years building Oxbow into a successful enterprise, with a focus on the development of alternative energy sources and a handful of geothermal power plants in the Western United States and abroad. By 1990, Oxbow claimed annual sales in excess of $1 billion. As Bill set his mind to building his racing syndicate, he handed day-to-day control of Oxbow to a trio of trusted executives. Bill’s friend Louis Cabot had pointed out that creating this sailing team would be
very much akin to constructing a company from scratch. The team, which the mathematically minded businessman called America
³
—a nod to his motto of “teamwork, technology, talent”—would eventually employ some 200 people.

A contrarian by nature, Bill eschewed the conventions of sailing from the outset as he built his syndicate. He passed over yachting’s most esteemed shipbuilders for a team of MIT scientists and recruited his crew largely from the sport’s less headstrong second string. Bill also had no intention of being the crew’s seventeenth man, an honorary slot reserved for boat owners living vicariously through their teams. He instituted an unusual rotation at the helm, in which he took a turn piloting the 70-plus-foot vessel.

Few thought the neophyte from landlocked Kansas, who spoke poetically of glimpsing a virtual ocean as a boy in the undulating prairie tall grass, had a shot at winning the vaunted international sailing race. His fellow yachtsmen viewed him as a dilettante, even a buffoon. “The bespectacled Koch was at various times during the competition referred to as clownish, arrogant and zany, and as the Gerald Ford of sailing,”
Sports Illustrated
reported at the time, noting that he was “so prone to on-board pratfalls that after twice being bonked on the head by a swinging boom he was presented with a San Diego Charger helmet by a local disc jockey.”

Annoyed by the less-than-warm reception he received from the locals and the yachting elite—especially supporters of Dennis Conner, with whom Bill was vying for the honor of defending the Cup—Bill at one point threatened to spin “Roseanne” 180 degrees. That way the Botero sculpture would have its backside pointed directly at the snobbish San Diego Yacht Club.

But nothing did more to quiet his critics than vanquishing Conner and his crew in a nail-biting series of races, the final of which, on May 1, 1992, was a blowout. That day, Bill’s gleaming white yacht sped so far ahead of
Stars & Stripes
that he couldn’t even make out the ads on Conner’s sails. When Bill had first announced
his America’s Cup bid, the Las Vegas bookmakers had placed his odds at 100-to-1. Now he was defending the trophy against the Italian racing syndicate Il Moro di Venezia and its thirty-two-year-old skipper, Paul Cayard.

The month after defeating Conner, Bill and America
³
edged past Il Moro in what had been a neck-and-neck race and cruised across the finish line 44 seconds ahead of the Italian crew. Reaching this euphoric moment had consumed nearly a year-and-a-half of Bill’s life and $68.5 million of his then-$650 million fortune. Moët rained down from every direction and family, friends, and America
³
back office staff swarmed the yacht in zodiacs. As Bill’s boat cruised back into the harbor and passed the San Diego Yacht Club, he spotted the Cup on the dock; moments later he flung himself into the water and swam toward his prize, lifting the sterling silver trophy above his head when he reached it. The experience was life altering. “I learned a lot about myself,” Bill once said. “I learned I could do a lot more than I thought I could.”

Bill’s obsessive, single-minded quest for the trophy struck some of his fellow sailors as a pursuit rooted not in a love of sailing, but in his bitter, long-running rivalry with Charles and David. “The real issue is why did he want the Cup,” pondered Gary Jobson, a sailing legend who was one of Bill’s most trusted advisors as he assembled the America
³
team. “I don’t think it has anything to do with sailing. I think it had to do with proving himself to his brothers.”

To David’s great surprise, Bill invited him to San Diego to sail with his team in a few early races. David turned down the offer—how could he go sailing with an estranged brother who had named him as a defendant in an ongoing lawsuit?—but he also declined an opportunity to chair Team Conner. “I can’t bet against my brother,” he said. Whatever Bill’s reasons for battling for the Cup, David was relieved that his twin had won it. Bill’s need to show the world his worth seemed so profound, so all-consuming—imagine how he would have reacted if he’d lost.

During the competition,
The Wichita Eagle
carried regular wire dispatches about Bill’s exploits, and he wasted no time making the most of his new fame in his hometown, a city where he hadn’t lived full-time since middle school. With the court docket ballooning in
Koch v. Koch Industries
, Bill and Frederick’s ongoing lawsuit over the stock buyout, Bill began lavishing money on Kansas in a not-so-subtle campaign to burnish his image among potential jurors. The month after the race, he displayed the trophy in the lobby of Wichita’s city hall. Later that summer Bill pledged $500,000 to create a 15,000-square-foot boathouse in Wichita on the east bank of the Arkansas River (in the same building where Fred Koch’s first office had been located), where
Jayhawk
, one of the racing yachts the America
³
team had sailed, would be on permanent display outside. This was just the start of a philanthropic blitzkrieg. In the years to follow, he sponsored festivals and 5Ks. He footed the bill for the Reverend Jesse Jackson to address employees of the Wichita school district, and twice loaned his art collection to the local museum.

He also became an anticrime crusader. In 1994, after Bill and his son, Wyatt, then eight years old, attended a July Fourth fireworks display in Wichita where gang violence had erupted, he bankrolled a commission to study the state’s crime problem and develop recommendations to help at-risk youth.

“I’m a celebrity in Kansas,” he boasted. “I walk down the street and people ask for my autograph.” He grew close to the state’s Democratic governor, Joan Finney, who conferred on him the honorary title of admiral of the Kansas Navy. Bill—whose relationship with Joan Granlund, Wyatt’s mother, was on and off during their more than twenty years together—also began casually dating the state’s attractive attorney general, Carla Stovall, causing a minor scandal when he gifted her with a $5,000 diamond tennis bracelet that she was later forced to return.

Bill’s flashy style made him a hit with the Kansas press and
helped him to cultivate local journalists. He had provided Kansas reporters with all-expenses-paid junkets to watch him compete in the America’s Cup. Two years later, in 1994, he offered local news outlets heavily subsidized trips to San Diego to cover his announcement of the formation of the first-ever all-female America’s Cup team, which would sail aboard a yacht he’d christened the
Mighty Mary
, after his late mother. (“She took my brothers’ side in all the legal fights, and I guess this is my way of forgiving her and asking her forgiveness,” he told reporters. “Corny, huh?”) The endeavor seemed to combine two of Bill’s passions: sailing—and fit, young women. There was surely some irony in the fact that, in the course of his tribute to female empowerment, he impregnated Marie Beard, a six-foot Texan who had tried out for the America’s Cup team (and in 1996 gave birth to Bill’s daughter, Charlotte).

The zany adventures of “Wild Bill,” as he came to be called, were far more appealing to local reporters than his brothers’ latest pipeline purchase or refinery expansion. The year he unveiled his female sailing syndicate, Bill appeared as the celebrity mystery guest at the Wichita Gridiron Club’s annual show, where as “Captain Koch” he donned a superhero costume in a comedy sketch about his efforts to “save” Kansas. Afterward, he footed the bill for local journalists and their spouses at an upscale Wichita restaurant, which one Kansas journalism professor considered part of Bill’s efforts to purchase “the best coverage money can buy.”

“Bill spent some time in Wichita and just delighted in saying scurrilous things—not for publication—but for people he partied with, and he partied with the press a great deal of the time,” said one veteran Wichita journalist. “The young reporters would come back with stories about what great fun he was. He was obviously courting them and doing one heck of a job of it, too, buying champagne by the magnums, et cetera. The parties went late into the night at the local pubs and they thought he was terrific. Of
course, on the other side, here’s buttoned up Charles. The contrast couldn’t have been greater.”

By 1997, Bill’s stature had risen to such heights in Kansas that he was floated as a possible Democratic challenger to Republican Senator Sam Brownback—a prospect that must have made Charles shudder. He fueled rumors of a potential Senate bid by telling the
Lawrence Journal-World
that he was “listening to the suitors” and found the prospect of elected office “very seductive.” Focus groups Bill commissioned showed that, second to Bob Dole, Bill Koch was America’s best-known Kansan.

The fawning recognition Bill received for his philanthropy infuriated Charles and his supporters. “Billy’s brought his toys to town, shared them and people love it,” Sterling Varner fumed. “Meanwhile Charles has worked his butt off here. He put his heart into building this company. He’s given millions to charity and never said anything. Billy comes to town and builds a little boathouse and he’s a hero. We must be doing something wrong. If it weren’t for Charles, Billy wouldn’t even have a rowboat.”

In the mid-1990s, according to a former senior Wichita official, Koch Industries quietly complained about the boathouse—an aggravating monument to Bill’s sailing prowess—dispatching a lobbyist to city hall to express the company’s displeasure.

“Can you imagine how Charles feels when he drives through downtown Wichita on his way to the airport and has to see that every time?” the lobbyist asked. According to the former official, the lobbyist was told that Charles should consider taking another route, because the boathouse was there to stay. When in 1997 the state opted against reauthorizing Bill’s crime commission, the
Topeka Capital-Journal
cited sources (including Bill) who said that Charles had leaned on Kansas’s new governor, Bill Graves, to shutter the outfit.

It was all the state’s nonprofit community could do to stay out of
the crossfire of the family feud. In one episode, the Kansas Sports Hall of Fame rejected a $50,000 contribution from Bill—along with a model of his America’s Cup–winning yacht for display—after learning that accepting the donation might jeopardize its funding from Koch Industries.

Bill knew his local involvement chafed Charles, and he was candid about the strategic motives behind his generosity. “I’ve had a lot of bad PR in Kansas and part of this is to level the playing field.”

Bill’s aggressive PR machine forced Charles and his notoriously closemouthed company to ramp up their own publicity efforts. In charity, as in everything else he did, Charles preferred to keep a low profile. He didn’t care about seeing his name enshrined on a plaque or memorialized on a building (at least one that didn’t belong to Koch Industries); in fact, he found that sort of attention embarrassing. For years, Charles and Liz Koch, along with Koch Industries itself, had donated generously, but quietly, to a variety of local causes. They paid for the Twilight Pops Concert at the annual Wichita River Festival, contributed to the city’s Institute of Logopedics (which focuses on speech disorders), gave to the local Boys & Girls Club and United Way, and provided a grant to fund a mobile mammography van. They bankrolled Shakespeare in the Park and underwrote a performance by Ray Charles to benefit the Wichita Center for the Arts. Charles also formed his own nonprofit, Youth Entrepreneurs, to educate Kansas students in business and economics.