In what may be the largest overstatement of a public official’s net worth in history, Forbes claims that Commerce Secretary Wilbur Ross Jr. flat out lied about being worth $3.7 billion, and the former Rothschild banker and investor has less than $700 million in assets.
In an article to be published in the December 12 issue of Forbes, journalist Dan Alexander performed a deep-dive into disclosure forms filed by Ross, which revealed a net worth of under $700 million, putting the Commerce Secretary at serious risk of removal from the coveted Forbes 400 list . The 79-year-old Ross didn’t take the news sitting down – claiming he transferred over $2 billion into family trusts “between the election and the nomination.”
“As long as you explain that the reason is that assets were put into trust, I’m fine with that,” Ross told Forbes.
Forbes then spent the next month digging for the truth about Ross’ missing $2 billion, only to come to the following conclusion: “That money never existed. It seems clear that Ross lied to us, the latest in an apparent sequence of fibs, exaggerations, omissions, fabrications and whoppers that have been going on with Forbes since 2004.”
It was 2004 when Ross first appeared on the Forbes 400 list, with a net worth listed at $1 billion – an amount Forbes claims was around four times the real figure.
“I told him we’re going to start him at $1 billion,” added the reporter, who no longer works at Forbes . “And he said ‘Yep, fine, thank you.’ ”
“Everyone that I knew that worked with Wilbur knew it wasn’t true,” says a former colleague of Ross. A legend was born, and like most legends, this one had its roots in a myth. –Forbes
In 2015, Ross sent Forbes a detailed list of holdings for the Forbes 400 list, noting $1.1 billion in municipal bonds, $1.25 billion in partnership interests, $500 million in equities, $200 million in art, $110 million in real estate and $200 million in cash – for a total of $3.4 billion. Forbes felt the figure was bogus, but listed him at $2.9 billion, where he currently sits – perhaps for not much longer.
Former associates and employees of Ross were apparently well aware of Ross’ overinflated pocketbook. When Ross took the job as Trump’s Commerce Secretary, one ex-employee stated “It was surprising because he would have to reveal to the world that he wasn’t a billionaire,” adding “I was surprised that he would take that risk.”
“Wilbur doesn’t have an issue with bending the truth,” according to Forbes contact David Wax, who worked alongside Ross for 25 years and served as the No. 3 person in his firm. Another former colleague, who requested anonymity, was less circumspect: “He’s lied to a lot of people.”
Known as the “King of Bankruptcy,” Ross took a job at the Rothschild investment – pocketing nearly $6 million a year by the early 1990s and helping the bank raise $200 million for an internal private equity fund that would leverage his bankruptcy experience to identify, restructure and flip companies in financial trouble.
Three years later in 2000, Ross bought the fund out and named it after himself. Two years after that, his firm invested in a bankrupt steel company, LTV, which had gotten itself into trouble after overextending itself with a $1.2 billion investment into new plants while having to lay off 7,500 union employees and face a $3.4 billion pension burden. Ross turned the company around and flipped the company to Indian billionaire Lakshmi MIttal in 2005 for around $4.5 billion cash and stock.
That looked great on paper, however Forbes determined that Ross’s cut was an estimated $260 million – far less than the $1 billion needed to be on the Forbes 400 list.
In the ensuing years, Ross raised a $1.1 billion investment fund and sold WL Ross & Co to Invesco for $100 million up front plus a $275 million optional payment depending on how much money Ross could raise. With a fire lit under him, Ross raised $4.1 billion in 2007 – putting about $70 million of his own money into that and another fund, according to three former employees.
Forbes says Ross lied to them in 2007, listing his net worth at $1.7 billion when it was most likely around $400 million.
That wasn’t enough. “I would say the total now is a bit more than $2 billion,” Ross wrote in a 2011 email, according to notes taken at the time. In 2013, a different Forbes reporter realized that prior estimates seemed to include not just Ross’ money but that of the investors in his funds. Ross strung us along, leading us to believe he would provide evidence of his assets, but never did. Just months later, he was insisting that he was even richer, and Forbes continued to largely fall for it. “2.75 [billion] is a bit low but probably close enough,” he wrote in an email around the start of 2014. In September, he was arguing for a valuation of $3.45 billion but begrudgingly accepted a smaller figure: “3.1 [billion] is low, but I understand why you wish to be conservative.” -Forbes
In 2010, Ross opened a new private equity fund, hoping to raise $4 billion in the wake of the financial crisis. After two years, he was able to raise just $640 million, while telling the media he had raised $2.2 billion by including assets which came from other funds or accounts that paid virtually no fees. Invesco clarified the matter on an earnings call.
Then, in 2016, Invesco-owned WL Ross settled charges related to fund transparency amid claims that the firm had overcharged investors between 2001 and 2011, paying a $2.3 million fine. Invesco also paid an additional $43 million in reimbursements and regulatory expenses incurred over the previous two years. While public filings don’t explicitly mention WL Ross, four former employees told Forbes they were all tied to Wilbur Ross’ firm.
Several former employees have also gone after Ross for various allegations. Via Forbes:
In 2012, Ross’ longtime No. 2, David Storper, left the firm but said he retained interests in many of the funds. Three years later, Storper alleged in a lawsuit that the firm sent him inaccurate financial information after his departure and that Wilbur Ross stole his interests outright. Ross denied the allegations, and the lawsuit remains ongoing. A few years earlier, a vice chairman of WL Ross sued Wilbur Ross for more than $20 million, alleging that Ross tried to cut him out of interest and fees he had been promised. The parties had reached a settlement by 2007, which former employees say cost about $10 million.
The Storper case has other ex-employees looking back to be sure they were sent proper information. Joseph Mullin, a former member of WL Ross’ 15-person investment team, filed his own suit against WL Ross & Co., also alleging that Ross took his interests after he left. The firm filed a motion to dismiss in February, but the case remains active. A third ex-colleague, who is not in litigation, argues that Ross’ tactics went beyond hard-nosed negotiating: “Everybody does some cheating, everybody does some lying. Not everybody steals from their employees.”
So when Ross told Forbes that he transferred $2 billion in assets to a family trust, bringing his publicly disclosed net worth to under $700 million, Forbes had questions. Why would Ross have done this, triggering over $800 million in gift taxes – right before President Trump might be eliminating the estate tax?
After an October 16 report in Forbes detailing questions over Ross’ finances, six Senate Democrats wrote a letter to Trump’s top ethics official, asking him to figure out what was going on with Ross’ finances. “It is imperative that Congress and the Office of Government Ethics know the full extent of Mr. Ross’s holdings to ensure he is not putting personal gain ahead of the interests of the American people,” the letter read.
And after the Department of Commerce issued a statement saying the $2 billion gift never happened, Forbes points out:
The only problem with that statement: The person who told Forbes that the transfer had taken place, that it had happened after the election and that it had meant more than $2 billion of family assets weren’t on the disclosure was none other than the sitting secretary of commerce, Wilbur Ross.