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The Billionaire's Party

Top, Koch and his wife, Julia, at the ballet.  

Fred Koch, a man who drank a tall glass of buttermilk with breakfast every morning, had long had heart problems. In November 1967, David received word that Fred had died. “Father was on a hunting trip bird-shooting in Utah,” he says. “He was in a blind with a gun loader next to him. He was having heart palpitations and wasn’t shooting that well. Finally a lone bird came over. He took the shot and hit it square. The duck falls from the air. He turns to the loader and says, ‘Boy, that was a magnificent shot,’ and then keels over dead.” Charles, who was only 32 but had already worked for his father for six years, was the clear choice to take over the family business.

In time, David and William joined what came to be known as Koch Industries, but with very different trajectories. William, while getting his doctorate, was reportedly entrusted with starting a venture-capital fund for the family. It lost $90,000, infuriating Charles. “Bill couldn’t get to work on time, couldn’t get himself out of bed,” Charles has said. When William officially went to work for the company in 1975, running a coal operation out of a Boston office, things got worse. In Charles’s eyes, William dithered in making decisions, and his ventures regularly lost money.

David had more success. He started at Koch Industries in 1970, working as a technical-services manager and founding the company’s New York office. By 1979, he was put in charge of his own division, Koch Engineering. Since then, that unit has morphed into Koch Chemical Technology Group, which the company says has grown 500 times under David’s stewardship. Under Charles, Koch Industries as a whole has grown into a company more than 2,000 times the size of the one Fred Koch built. It is now the second-largest private company in the U.S., employing some 70,000 people in 60 countries, with businesses that deal in cattle, paper, chemicals, and commodity trading.

“I’ve never been to a tea party event. No one representing the tea party has ever even approached me.”

After Fred Koch died, Charles found a letter in one of his father’s safe-deposit boxes. Fred had written it to his sons when he was 35, before the twins were even born. The fortune they would inherit, Koch wrote, “will be yours to do with what you will … If you choose to let this money destroy your initiative and independence, then it will be a curse to you … Be kind and generous to one another.” It hasn’t worked out that way.

Charles and David each own 42 percent of Koch Industries (the remaining 16 percent was once controlled by J. Howard Marshall, a onetime partner of Fred’s who is now best known for having married Anna Nicole Smith, at age 89). William and Frederick gave up their stakes in the family business more than 25 years ago.

As David told me about his decades of estrangement with his brother William, he began to cry. By 1980, the tension that had been brewing between Charles and William since childhood became strained to the point that William, Frederick, and a group of like-minded shareholders attempted to wrest control of Koch Industries from Charles. The attempted coup failed when one of the investors was wooed back by David at the last minute. Afterward, the board fired William. In 1983, William got together with Frederick and some stockholding cousins and agreed to sell their shares of Koch Industries for $1.1 billion. William walked away with $470 million.

It wasn’t long before William began to think he’d been shortchanged. He felt that Koch Industries was actually worth much more than he’d been led to believe and that Charles had hidden assets when valuing the company. In 1985, William and Frederick began filing what would become a long series of lawsuits against Koch Industries. William hired private investigators to sift through Charles’s and David’s trash. When Mary Koch was unable to persuade William to desist with the lawsuits, she disinherited him. William subpoenaed their mother in one of the cases only a few months after she’d suffered a stroke. “The whole thing broke Mother’s heart, as you can imagine,” says David. Charles refused to shake William’s hand at their mother’s funeral. On the witness stand, in Topeka during a 1998 trial, David broke down. “I didn’t want him to act this way,” he’d said, sobbing. “I wanted him to behave himself and do a good job.” David didn’t speak with his twin for more than twenty years.

In 2001, the Koch brothers finally brought their legal feuding to an end. On the day the settlement was finalized, David, Charles, William, and their lawyers shared a dinner. Although Charles remained angry, William asked David to be his best man when he married his third wife, Bridget. In April, William showed up at David’s Wizard of Oz–themed 70th-birthday party in Palm Beach. The morning after the party, Charles and his wife accepted an invitation from William to come to his home for breakfast. William says he now considers David “one of my best friends.”