Bernard Cornfeld

Infobox_Celebrity
name = Bernard Cornfeld


caption = The book cover of "Do You Sincerely Want to Be Rich?"—A book about Cornfeld and the IOS scandal. Cornfeld is depicted on the left.
birth_date = birth date|1927|8|17|mf=y
birth_place = Istanbul, Turkey
death_date = death date and age|1995|2|27|1927|8|17|mf=y
death_place = London, UK
occupation = Financier and International Playboy
salary =
networth = $100 million (pre-1970); $1.85 million (post-1970)
spouse = Loraine Armbruster
children = Jessica
website = [http://bernhard-cornfeld.biography.ms/]

Bernard "Bernie" Cornfeld (Istanbul 17 August 1927 - London 27 February 1995) was a prominent businessman and international financier who sold investments in US mutual funds, and was tried and acquitted for orchestrating one of the most lucrative confidence games of his era.

The Early Years

He was born in Turkey. When he moved to the US, he first worked as a social worker but became a mutual fund salesman in the 1950s.

Bernard Cornfeld's father was a Romanian-Jewish actor; his mother was from a Russian-Jewish family. They moved to America when Bernard was four years old—two years later his father died. The young Brooklyn-raised Cornfeld worked after school each day in fruit stores and as a delivery boy. Although he suffered from a stammer, he had a natural gift for selling and when a schoolfriend's father died, the two of them used the $3,000 insurance money to purchase and run an age and weight guessing stand at the Coney Island funfair. He graduated from Abraham Lincoln High School in Brooklyn and Brooklyn College.

During the Second World War he joined the US maritime service. Afterwards he went to Brooklyn College, graduating with a degree in psychology, and then did an MA in social work at the New York School of Social Work, Columbia University. He initially worked as a social worker, but then switched to selling mutual funds for an investment house. In 1955, he left New York for Paris and started his own company selling mutual funds using his savings of a mere few hundred dollars. By selling the mutual funds mostly to American servicemen in Europe, Cornfeld was able to avoid both American and European tax regulations. As a US citizen he did not avoid US taxes, and the funds sold to US servicemen were US registered and based funds, in the early years the Fund sold was mostly the Dreyfus Fund, of Lion fame, which was very small then less than $2 million, Bernie had a close and friendly relationship with Jack Dreyfus the founder, and when the management company Dreyfus & Co of the Dreyfus Fund went public, IOS bought an almost 10% ownership in it. It can be stated that Bernie and IOS fueled the early growth of the Dreyfus Fund from very small to several hundred million dollars, due to Bernie's marketing acumen, brilliant advertising of a lion strolling down Broadway and the deft and very able management of the fund by Jack Dreyfus with the fund outperforming its peers.

Investors Overseas Services

In the 1960s, Cornfeld formed his own mutual fund selling company, Investors Overseas Services (IOS), which he incorporated outside the US with funds in Canada and headquarters in Geneva, Switzerland. Although the headquarters were officially in Geneva, the main operational offices of IOS were in Ferney-Voltaire, France, a short drive from the Swiss border to Geneva. Cornfeld hired 25,000 salesmen who sold his 18 mutual funds door-to-door all over Europe, especially in Germany, to small-time investors. He targeted US expatriates and servicemen who sought to avoid US income tax. Cornfeld called it "people's capitalism."

During the next ten years, IOS raised in excess of $2.5 billion, bringing Cornfeld a personal fortune of more than $100 million. Cornfeld himself became known for conspicuous consumption with lavish parties. Socially, he was generous and jovial.

In 1962, IOS launched its "Fund of Funds," which meant investment in shares of other IOS offerings. The offering was very popular in the bull market times, and Cornfeld's one-line pitch, "Do you sincerely want to be rich?" became a by-word for its success. However, the market then dropped and the guaranteed dividends had to be paid straight out of the capital—in effect, it had become a pyramid scheme. IOS was forced into Initial Public Offering to meet its costs. The next bear market made many investors cash their funds, and the IOS stock value decreased further. Cornfeld later blamed a "bear raid" and that a number of German banks sold the stock short.

Share value decreased from $18 to $12 in the spring of 1970. Cornfeld formed an investment pool with some other investors, but they lost when the share value dropped to $2. Even IOS employees and portfolio managers sold their shares. Cornfeld was ousted from IOS in May 1970 and within a year the IOS group collapsed.

Financier Robert Vesco who, at the time, was also in financial trouble, turned to Cornfeld and offered his help. Vesco proceeded to use $500 million worth of IOS money to cover his own investments in his International Controls Corp. When he was discovered, Vesco fled to Bahamas. IOS collapsed and in the process ruined a number of US and European banks.

Personal life

Cornfeld owned a villa in Geneva, a 12th-century chateau in France, a house in Belgravia, London, and a mansion in Hollywood, as well as a permanent suite in a New York hotel and his own fleet of private planes. He is quoted as saying, "I had mansions all over the world, I threw extravagant parties. And I lived with ten or twelve girls at a time." He had romances with Victoria Principal; Heidi Fleiss; Alana Hamilton (née Collins - a model and former spouse of George Hamilton who subsequently married Rod Stewart [1978-1983] ); and Princess Ira of Fürstenberg.

Cornfeld settled in Beverly Hills and moved in a circle of movie industry people. He lived in the Grayhall mansion, built in 1909 and at one time leased by Douglas Fairbanks. Known for his playboy lifestyle, Cornfeld numbered among his acquaintances Victor Lownes, Tony Curtis and Hugh Hefner, at whose Playboy Mansion he visited and attended parties.

Cornfeld's Decline

A group of 300 IOS employees complained to the Swiss authorities that Cornfeld and his co-founders pocketed part of the proceeds of a share issue raised among employees in 1969. Consequently he was charged with fraud in 1973 by the Swiss authorities. When Cornfeld visited Geneva, Swiss authorities arrested him. He served 11 months in a Swiss jail before being freed on a bail surety of $600,000. Cornfeld always maintained his innocence, blaming the fraud on other IOS executives. His trial did not take place until 1979 and lasted three weeks, with Judge Pierre Fournier finally acquitting Cornfeld.

Realising that his "good time" friends left him during his 11 months in jail, Cornfeld began to seriously start thinking about his life and decided for the first time that he wanted a wife and children. In 1976 he married a model, Loraine, at his Beverly Hills mansion Grayhall. However, he had difficulty settling down. Polygamy was "considerably simpler than monogamy and a lot more fun," he insisted. He was still worth an estimated $1.85 million.

The Final Years

He returned to Beverly Hills, living less ostentatiously than in his previous years. He developed an obsession for health foods and vitamins, renounced red meat and seldom drank alcohol. In his last years he was a chairman of a land development firm in Arizona and also owned a real estate company in Los Angeles. His marriage ended in divorce, and he is survived by a daughter. His daughter, Jessica Cornfeld, wrote an article about her father in the The Mail on Sunday (London, England) 29th June 2003, entitled "My father, the playboy who could never get enough lovers," where she suggests that he maintained a close friendship with Heidi Fleiss until his death in 1995.

Bernard Cornfeld suffered a stroke and died of a cerebral aneurysm on 27th February 1995 in London, England.

External references and links

*"The Bernie Cornfield Story" by Bert Cantor, (Lyle Stuart, Inc., 1970). ISBN 0-8184-0013-7
*With title quoting Cornfeld's celebrated pitch - "Do You Sincerely Want To Be Rich?" by Charles Raw with Godfrey Hodgson and Bruce Page (Originally publ. Andre Deutsch, 1971 ISBN 0-233-96328-6 ). (Reprinted in 2005 ISBN 0-7679-2006-6 )
* [http://www.buyandhold.com/bh/en/education/history/2002/fund.html Article analyzing the workings of IOS and Cornfeld's career]
* [http://www.thebeverlyhillscourier.com/07252003/estate.htm Article about Grayhall, Cornfeld's Beverly Hills mansion, formerly leased by Douglas Fairbanks]
* [http://query.nytimes.com/gst/fullpage.html?res=990CE7DF113AF931A35750C0A963958260 NY Times Obituary]
* [http://www.nydailynews.com/archives/news/1995/03/01/1995-03-01_mogul_bernie_cornfeld__ex-ca.html Daily News Obituary]
* [http://www.time.com/time/magazine/article/0,9171,979060-3,00.html Time Magazine article]
* [http://www.time.com/time/magazine/article/0,9171,983051,00.html Time Magazine on Vesco]
* [http://www.time.com/time/magazine/article/0,9171,916989,00.html Cornfeld cleared of fraud]