Going Once . . . Going Twice

Auctions designed to recoup the ill-gotten gains of executives-gone-bad offer souvenirs from low points in the history of American finance.
Joseph McCaffertyAugust 15, 2006

What would you bid for a piece of scandalous corporate history? Or rather, for many pieces?

In July, auctioneers in Lubbock, Tex., brought down the gavel on a range of assets belonging to the estate of Jonathan “Jody” Nelson, former CFO of Patterson-UTI Energy. In April, Nelson pleaded guilty to embezzling more than $77 million from his employer. (He is currently awaiting sentencing.)

“We consider it the ultimate toy collection,” says Robert Love, of the auction house Ritchie Bros. The playthings included three Cessna aircraft, a Hughes helicopter, a 1954 Corvette, a Boston Red Sox jersey autographed by the 2004 World Series team, and a host of other sports memorabilia, boats, and motor craft. When it was over, the items took in more than $7 million, which will be paid back to the company.

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It was the latest in a string of auctions designed to recoup some of the ill-gotten gains of executives and their companies. The rotating “E” that once adorned Enron’s downtown Houston headquarters-known as the “Disco E”-sold at auction in December 2002 for $33,000.

The biggest haul for a single fraud-related item remains the $5.1 million paid for a Monet in May at Sotheby’s. The painting, Pres Monte Carlo, once graced the lavish digs of former Tyco International CEO Dennis Kozlowski, sentenced to a maximum of 25 years for his role in the company’s accounting scandal.

Fraud memorabilia is a booming market. WorldCom stock certificates carrying the names of Bernard Ebbers and Scott Sullivan now sell for $139.95-more than twice the value the shares traded for when they hit a high of $64 in June 1999-on, an online seller of rare documents.—Joseph McCafferty

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