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Some billionaires losing big in economic crisis

As Wall Street faced a wipeout this year, some of America's richest people got sucked into the vortex too, losing millions.
Image: Leslie Gonda
AIG's losses have turned Leslie Gonda, founder of International Lease Finance, into a former billionaire. Getty Images
/ Source: Forbes

Feeling crushed by the fall in the financial sector? Worried about your investments? You're not alone. As Wall Street faced a wipeout this year, some of America's richest people got sucked into the vortex too, losing millions.

Take Maurice Greenberg. When we published our 2007 Forbes 400, he was the 135th wealthiest American. His net worth was $2.8 billion. As a former chairman of AIG, much of his net worth was tied up in company stock.

He should have diversified. Last week, AIG sold most of itself to the U.S. government for a fire-sale price to obtain some much needed liquidity.

Greenberg's spot on this year's Forbes 400 list? He doesn't have one. He continues to take a drubbing. Since we calculated net worths for this year's Forbes 400 list in late August, the value of Greenberg's AIG stock has declined a further $750 million.

"In a little over a year, I, and other shareholders, have watched the company that I helped build over 35 years into the largest and most successful insurance company in history and one of the strongest and one of the most profitable financial companies in the world lose over 90 percent of its value," fumed Greenberg in a letter.

"Despite repeated assurances from management and the company that everything was under control, it is now clear that nothing was under control," he added.

He's not alone. Last year, the father and son team of Leslie and Louis Gonda both had spots on the Forbes 400 list. Son Louis had a net worth of $1.7 billion; father Leslie had a net worth of $1.4 billion.

Today neither are billionaires. The pair helped found International Lease Finance in 1973, an outfit that acquired and rented airplanes. When they sold the company to AIG, they collected a chunk of the insurance giant's stock.

They took a big hit along with Steven Udvar-Hazy. He co-founded International Lease finance with the Gondas. In the 2007 Forbes list, he ranked 79th with a net worth of $4.1 billion. Now he sits at spot No. 147, with a net worth of $2.8 billion.

Another one dragged down by AIG is Ernest Stempel. He joined the predecessor of AIG as an assistant manager in 1938. He rose through the ranks to vice chairman and eventually developed the company's life insurance division. In 2007, he ranked the 286th wealthiest American with a $1.7 billion fortune. He's no longer on the Forbes 400.

AIG was hardly the only company dealing damage to America's wealthiest. Clemmie Dixon Spangler Jr. posted a $900 million loss to his net worth. The Harvard M.B.A. saw his fortune sapped by exposure to Bank of America and Wachovia.

Ernest Rady, who had a net worth of $2.1 billion last year, isn't on this year's Forbes 400. Rady headed a company that was bought by Wachovia for $3.9 billion in stock in September 2006. The shares were a lot more valuable at the time. The hobbled bank's stock is down more than 70 percent over the past year.

Sanford Weill saw his net worth tumble by $500 million because of his Citigroup stock. Through acquisitions, Weill created insurance leviathan Travelers Group, which merged with Citicorp in 1998. He served as chief executive of Citigroup, the company that resulted from the merger, until 2003. The company's stock is down 60 percent over the past year in the wake of huge write-downs.

Don't fret for Weill though. The Brooklyn native who got his start as a runner for Bear Stearns is still worth $1.3 billion. When it comes to billionaires, down is far from out.