The Case Against Rich: How He Got In Trouble

Until their pardon last week, Marc Rich and his partner, Pincus Green, faced a truly impressive array of charges. The rogue commodity traders were indicted in 1983 on 51 counts of tax evasion, racketeering, conspiracy, mail fraud, wire fraud and trading with the enemy. Had they not fled to Switzerland, each might have been sentenced to years in prison. The principal allegation against them concerned a scheme from 1980 and 1981, in which their U.S. company made nearly $100 million by selling oil at several times the government-controlled price then in effect. The indictment claimed that Rich's firm bought petroleum for as little as $5 per bbl., then ran the crude through a series of complex transactions that obscured its origin before selling it back to a Rich subsidiary at a markup as high as 400%. Much of the profit went to a Rich company in Switzerland, which paid no U.S. taxes on the allegedly ill-gotten gains.

In arguing for the pardon, Rich's American attorneys contended that, at most, Rich should have faced civil, not criminal, charges. They pointed out that many of the allegations leveled at their client could not be brought today under Justice Department policy and current law. Other U.S. companies that also ran afoul of price controls either never faced charges or were allowed to reach a settlement without undergoing criminal proceedings.

Rich, Green and their company were at first accused of illegally buying oil from Ayatullah Khomeini during the hostage crisis. That charge was subsequently dropped against their company because the purchases were made only by its Swiss subsidiary and should not have been subject to U.S. prosecution.

If Rich's case was so strong, why did he flee to Switzerland and remain there for 17 years? He claimed that a fair trial in the U.S. was impossible. Rather than go home to face a jury, he spent millions trying to settle his case through shadowy negotiations with U.S. authorities. The pardon will allow Rich and Green to go to the U.S. without facing the threat of immediate arrest. Experts say a civil case against them is highly unlikely.

--By Adam Zagorin