Robert Vesco was an American financier who, after building a mutual-fund empire in the late 1960s, was accused by the Securities and Exchange Commission of looting $224 million from investors, indicted for an illegal $250,000 cash contribution to Richard Nixon’s 1972 reelection campaign, and later charged with helping the Medellín cartel move cocaine through the Bahamas and Cuba. He fled the United States in 1972 and never came back, living out more than three decades as a fugitive in Costa Rica, the Bahamas, Antigua, Nicaragua, and finally Cuba, where he died in 2007.
From Detroit Body Shop to Wall Street
Vesco was born in Detroit on December 4, 1935, into a lower-middle-class family. He completed only half a high school correspondence course and started work at sixteen as an apprentice in an automotive body shop.1Encyclopaedia Britannica. Robert L. Vesco By his early twenties he had moved to New York, and in 1965 he incorporated International Controls Corporation by merging two small New Jersey manufacturers. Through rapid acquisitions, he grew ICC’s annual sales from $1.3 million to more than $100 million in three years. The financial press called him the “boy wonder of international finance.”
The IOS Takeover
Vesco’s defining move came in 1970–1971, when he took control of Investors Overseas Services from its founder, Bernard Cornfeld. IOS was a Canadian-incorporated, Geneva-based financial services complex that sold shares in funds-of-funds to overseas investors. At its late-1960s peak it managed roughly $2.3 billion in mutual-fund assets.2TIME. Mutual Funds: I.O.S. Seeks a Home Heavy sales charges and a shift into risky, illiquid investments had sent its share prices tumbling; by early 1972, $1,000 in the flagship Fund of Funds was worth $338.3Forbes. Bernard Cornfeld and IOS Vesco stepped in as chairman with an initial outlay of about $5 million.4TIME. Robert Vesco: The Predator’s Fall
What followed was systematic asset-stripping. The SEC later alleged that Vesco and his associates sold off blue-chip stocks held by four IOS-managed funds and routed the proceeds through banks and shell companies he controlled.5TIME. Business: Vesco in Costa Rica Internally, Vesco reportedly referred to the operation as “LPI,” short for “Looting & Plundering Inc.”6The Guardian. Robert Vesco Obituary
The $224 Million SEC Case
On November 27, 1972, the SEC filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Vesco and forty-one other defendants. The complaint charged violations of the anti-fraud, filing, and proxy provisions of the federal securities laws, including Section 10(b) of the Securities Exchange Act and Rule 10b-5, and centered on the alleged misappropriation of $224 million from IOS-managed funds.7SEC. SEC News Digest, November 28, 1972 The Commission sought an injunction, a receiver, and full restitution. In 1982, it obtained a restitution order for $392 million, but by then most of the money was gone and investors recovered only a fraction of their losses.6The Guardian. Robert Vesco Obituary The SEC later put it this way: “If the Securities and Exchange Commission had a Most Wanted List, Robert Vesco would be the entire Top 10.”8Washington Post. Robert Vesco and the End of the Run
The Nixon Cash
In April 1972, while the SEC investigation was gathering momentum, Vesco sent $200,000 in cash to Maurice Stans, chief fundraiser for Nixon’s reelection committee.4TIME. Robert Vesco: The Predator’s Fall The contribution was secret and illegal. In 1973, Vesco was indicted for making $250,000 in unlawful contributions to the Nixon campaign.1Encyclopaedia Britannica. Robert L. Vesco Former Attorney General John Mitchell and Stans were separately indicted on charges of conspiracy, obstruction of justice, and perjury for allegedly trying to help Vesco with the SEC in return for the cash.
Their joint trial, the first prosecution of former cabinet officers since Teapot Dome, ran ten weeks with fifty-nine witnesses, including former White House counsel John W. Dean III. Defense attorney Peter Fleming argued that the contribution could not have been a “fix” because the SEC had gone on to charge Vesco and his associates with the $224 million fraud seven months later.9TIME. Trials: Mitchell and Stans: Not Guilty After twenty-seven hours of deliberation, the jury acquitted both men on all counts.10The New York Times. Mitchell and Stans Are Acquitted on All Counts Vesco himself never stood trial on the campaign-finance charges. By then he had been a fugitive for more than a year.
Life on the Run
Vesco left the United States in 1972, just before the SEC filed its complaint, and never returned. His first and longest refuge was Costa Rica, where he cultivated President José Figueres. Figueres arranged for Vesco to receive a Costa Rican diplomatic passport, and IOS funds were channeled into ventures tied to the president’s circle, including a $2.15 million unsecured loan to a Figueres-owned agricultural company.5TIME. Business: Vesco in Costa Rica Figueres later acknowledged that Vesco was a “major backer” of the party that won the 1974 presidential election, at a time when Costa Rican law imposed no campaign-finance regulations.11Brookings Institution. Dirty Money: How to Break the Link Between Organized Crime and Politics
The United States formally requested Vesco’s arrest and extradition on June 7, 1973. Costa Rican courts refused to issue a warrant.12U.S. Department of State. Foreign Relations of the United States – Costa Rica In March 1974, Figueres signed an extradition bill that American officials characterized as tailored to shield Vesco, a provision that became known as the “Vesco law.” He was finally asked to leave in 1977 and departed the country around 1978 after a controversy involving a machine gun factory venture.13Washington Post. Costa Rica Tries to End Vesco’s Five-Year Stay
He then moved to the Bahamas, where he lived from roughly 1978 to 1980 until authorities there declined to grant him political asylum under pressure from Washington.14Encyclopedia.com. Vesco, Robert Lee In 1981 he surfaced in Antigua, where allegations later emerged that members of the governing Bird family had harbored him.15Library of Congress. Antigua and Barbuda Legal Research According to one account, he contemplated buying half an island from the country’s ruling dynasty to establish his own sovereign territory, but fled after rumors of an FBI raid.4TIME. Robert Vesco: The Predator’s Fall A brief return to Costa Rica and a stop in Nicaragua followed. He arrived in Cuba at the end of 1982.
Cuba and the Cocaine Indictment
Vesco initially lived aboard his fifty-foot yacht off Cayo Largo with his family before settling on the mainland.16NBC News. Robert Vesco Dies in Cuba Diplomats reported in 1984 that he was reclusive, dividing his time among modest houses at three beach resorts.17The New York Times. Vesco Reported in Cuba, as Tangible as a Ghost Fidel Castro said in 1985 that Vesco had been admitted for “medical treatment” and accused U.S. officials of “harassing” him. There was no U.S.-Cuba extradition treaty, and Castro consistently refused American extradition requests.
His time in the Bahamas and Cuba eventually pulled him into the cocaine trade. At the Carlos Lehder trial in Jacksonville in December 1987, U.S. Attorney Robert Merkle publicly identified Vesco as a co-conspirator, and smuggler George Jung testified that Vesco had a “business interest in Norman’s Cay,” the Bahamian island Lehder had turned into a cocaine transshipment hub, and that Lehder claimed Vesco had introduced him to Castro.18The New York Times. Fugitive Financier Is Called Co-Conspirator in Drug Trial
On April 17, 1989, a federal grand jury in Jacksonville indicted Vesco for conspiring with Lehder to smuggle cocaine into the United States. The indictment alleged he had bribed Bahamian officials to allow cocaine-laden planes to use the Norman’s Cay airstrip and had arranged for Lehder’s aircraft to fly through Cuban airspace in late 1984.19UPI. Fugitive Financier Indicted on Drug Charges A conviction would have carried life in prison and a $4 million fine. The indictment reportedly soured his relationship with the Castro government, which was already embarrassed by the 1989 Ochoa affair, in which senior Cuban military and intelligence officials were tried and executed for drug trafficking.
The Cuban Prosecution
After more than a decade of quiet coexistence, Vesco overplayed his hand. He got involved in promoting a plant-based pharmaceutical compound known variously as TX, Vioxan, or Trioxidal, marketed as boosting the immune system and treating cancer and AIDS. Without authorization, he signed contracts with foreign firms for distribution rights, telling them he had the backing of top Cuban officials. The Cuban Health Ministry later testified that the drug had never been approved for distribution.20UPI. Vesco, Wife Guilty in Cuban Drug Scam
Cuban authorities arrested Vesco at his Havana home on May 31, 1995, initially accusing him of espionage.21Los Angeles Times. Vesco Faces Trial in Cuba His trial began August 1, 1996. Four days later, magistrate Edelmira Pedris found him and his Cuban wife, Lidia Alfonso Llauger, guilty of fraud and illicit economic activities. Vesco was sentenced to thirteen years; his wife received nine.22Seattle Times. Cuba Says Vesco Must Go to Prison He served most of the sentence and was released in 2005.
Death
Vesco died of lung cancer in Havana on November 23, 2007, at age seventy-one. Cuban authorities did not announce the death, reportedly treating him as a “nonissue.”23Los Angeles Times. Fugitive Financier Robert Vesco Dies It was not publicly confirmed until May 2008, when the New York Times reported the news based on a Cuban death certificate, burial records at Havana’s Colón Cemetery, and photographs of Vesco in his hospital bed and coffin. His wife confirmed the death to the Spanish news agency EFE.24The New York Times. Reports Confirm Death of Fugitive Financier A U.S. Justice Department official said even then that the government had not dropped the outstanding charges and was still “gathering information” on the reports.