10 Celebrity Investments Gone Bad

Before we get into the detail of the article, I really want to thank the team here for letting me post here with them.  It means a lot to be able to get something published for my Johnny Broccolii Blog at great site like this.

We can all learn a lot from the way celebrities invest – and often that means the things to avoid at all costs. Armed with substantial capital, stars from the world of sports and entertainment routinely enter into risky, high-stakes investments but often they have little or no financial expertise to speak of. Nor, it seems, do some of the people who advise them, causing bitterness when things go wrong.

Oh and guys – if you like what you see in the article so far, would you consider sharing my site icyclenow.co.uk on twitter or Facebook?  It would mean an awful lot to me!

Here are some of the worst examples of investments that went wrong: Some testament to the unpredictable market, others to the unpredictable nature of the celebrities caught out.

1. Jay-Z

’99 Problems’ rapper Jay-Z ran into problems after investing in a Manhattan hotel projects through his real estate venture J Hotels.

Reference: www.careersbusiness.co.uk/best-job-boards/

In 2007, J Hotels purchased a large property in the Chelsea neighbourhood of Manhattan and  began to transform the building into a 150,000 square foot luxury hotel.When construction was paused in 2008, due to funding problems caused by the financial crisis, Jay’s company defaulted on the $52 million loan used to purchase the property and was forced to hand the property back to the lenders. A legal battle ensued over additional costs, with the hip-hop star claiming that the lender Highland Capital Management had acted in bad faith. The parties settled outside court in December 2010. The terms were undisclosed.

2. Sven-Goran Eriksson

The former England manager  claims that he lost £10 million after a series of his investments went sour. The investments included the proposed development of two plots of land at the Royal Westmorland Golf Club in Barbados and a residential development of 92 flats in Southsea, Hampshire.

Eriksson says that these investments were guided negligently by his then financial advisor.Eriksson said in an interview with The Telegraph, “He’s probably the only person on earth I hate. I feel let down, angry and disappointed because I trusted this man for many, many years. I gave him too much freedom.”

Eriksson was forced to sell several of his properties to cover the losses including his “dream home” near to where he grew up in Sweden.

3. Larry King

In 2007 celebrated talk-show host and Piers Morgan predecessor Larry King was defrauded by an insurance scam. King was persuaded to ‘flip’ life insurance policies, selling his existing insurance for a profit. As part of this process he gave up two policies worth around $15 million. He made $1.4 million on the policy sales but his family stood to receive a lot more if he had kept them.

4. Zsa Zsa Gabor (pictured)

Hungarian-born actress and socialite Gabor was one of thousands of investors duped by Bernard Madoff’s ill-famed Ponzi scheme. The film star and her ninth husband, Frederic von Anhalt, invested an estimated $7 million with Madoff.

When the money was lost the couple were forced to sell valuable belongings, including artwork and jewellery. In 2011 von Anhalt sold their Bel-Air home.

Speaking in 2009 after revelations of Madoff’s scheme hit, von Anhalt said, “It’s a big hole, you know… We didn’t expect that. When you count on the returns, you depend on the money. It’s bad.”

Director Steven Spielberg and actor Kevin Bacon were among others who invested with Madoff.

5. Bono

In 2010 investment news website 24/7 Wall Street called Bono “the worst investor in America” following a string of bad decisions by his private equity firm Elevation Partners.

The firm, of which Bono is a managing director and co-founder, reportedly sank $460 million into the now defunct smartphone manufacturer Palm and $300 million into Forbes, the publisher whose value then depreciated rapidly.

Since then Elevation Partners has had some successes however: before Facebook went public the firm’s stake in the social media site increased by 400 per cent after another investor sold their share.

6. Debbie Reynolds

‘Singin’ in the Rain’ starlet Debbie Reynolds purchased a Las Vegas casino in 1991, after years of performing on the Vegas strip. The Debbie Reynolds Hotel and Casino became home to Reynolds’s Vegas act, as well as her extensive collection of Hollywood memorabilia.

Unfortunately the casino failed to draw-in enough business and in 1997 Reynolds was forced to file for bankruptcy.

The hotel was purchased by the World Wrestling Federation in 1998 for $10 million; barely enough to pay off the legal claims on the property. Reynolds was said to be heartbroken as she sold off her vast Hollywood memorabilia collection in 2010 after the museum that was to exhibit it went bankrupt as well.

7. Frank Skinner

Comedian Frank Skinner was one of many investors hit by the failure of American insurance company AIG during the financial crisis. According to his memoir, Skinner was strongly advised by his bank Coutts, which he trusted implicitly “because I was with the Queen’s bankers”, to invest his life savings with AIG as a low-risk investment.

AIG was one of the companies bailed-out by the US government during the financial crisis. When the company ran into trouble Skinner was given half of his savings and told that the other half might materialise by 2012. Fortunately, the money was eventually returned to Skinner, but the episode marked a worrying period in his financial life. Top Gear star and motoring correspondent for The Sunday Times Jeremy Clarkson was another famous investor affected by the failure of AIG.

8. Scottie Pippen

In 2005 US basketball star Scottie Pippen filed an unsuccessful legal malpractice law suit against his law firm Katten Muchin Zavis Rosenman, which he claimed recommended a financial consultant whose advice led him to make poor investments. His losses were in the range of $27 million. Among his more questionable investments was the purchase of a Gulfstream II jet for $4.5 million. The jet never took flight.

9. Dorothy Hamill

Dorothy Hamill was made rich by her contract to perform with the ‘Ice Capades’, a travelling theatrical ice-skating show in the US featuring former national and Olympic skating stars.

When the ‘Ice Capades’ went bankrupt in 1991 Hamill tried to save the show, purchasing the company at a liquidation sale in for an unknown sum. The former Olympic star was unable to reinvigorate the show sufficiently, and borrowed millions of dollars during her short tenure as owner in order to stay afloat. She sold the Capades in 1995 and filed for bankruptcy in 1996. Commenting on her experience she told one press outlet, “money is evil”.

10. Darren Gough

Former England cricketer Darren Gough is thought to have lost around £1 million after unwittingly investing in a UK-based Ponzi-scheme. The scam was worth an estimated £80 million and was operated by investment company Business Consulting International (BCI).

comments