Feature

Bill Koch's Wild West Adventure

The controversial businessman is building an Old West town near Paonia that’s a full-scale reproduction of a 19th-century settlement. But is the town simply the project of an eccentric billionaire, or is there more to the story? 

February 2013

This past October, with the land exchange still in limbo, Koch turned up in the news yet again when former Oxbow executive Kirby Martensen filed a lawsuit in the Northern District of California alleging that Koch had kidnapped Martensen, imprisoned him, and held him against his will at Bear Ranch in March 2012. Martensen had been the senior vice president of Oxbow Carbon & Minerals International’s Asia division, based in Singapore. Martensen claims in the suit that he came under scrutiny after raising concerns about Oxbow’s “questionable” tax-avoidance strategies. He says his relocation to Asia was “a part of a plan being implemented to evade paying taxes to the United States on profits in excess of $200,000,000 per year.”

According to the suit, Martensen asked to be driven to Aspen to catch a flight home after being interrogated for hours at the ranch. “This request was denied,” the suit says. “Martensen was told that he was being taken to Denver. Martensen then was kidnapped and kept captive in the vehicle during the trip to Denver.” Martensen, his attorney, and another former Oxbow executive, Joe Lombardi, who was also at the ranch during the incident and was fired, all declined to comment for this story.

Koch tells a different version of the events. After being tipped off by an anonymous letter in 2011 to possible corporate criminal misconduct by Martensen and two others, Koch began an investigation into their activities. Oxbow management started collecting emails, telephone recordings, documents—more than four million items in total—and testimony from others implicated in the ploy that pointed to the fact that Martensen had “participated in a wide-ranging scheme to systematically misappropriate revenues and business opportunities” and used his position as an executive at Oxbow to “illegally enrich” himself, according to a complaint Oxbow filed in Palm Beach on March 22, 2012. Koch says Martensen and the other implicated executives “had a scam going against us that cost us $40 million.”

Koch says he invited Martensen—and five other executives thought to be involved in the scheme—to the ranch for a corporate retreat in mid-March. They were to hold strategy meetings, and each executive was to undergo a 360-degree performance analysis. The first night, Koch hosted the men for dinner at the ranch. The next day, after the group strategy session, Koch had lunch with the executives and then took them on a helicopter tour of the town, after which the performance reviews took place.

The men were interviewed individually. Steven Fried, Oxbow’s COO, questioned Martensen. Fried says he started the conversation by talking about Martensen’s division’s performance and about Martensen’s contributions to the company, which Martensen thought were “prolific.” The conversation turned when Fried brought up some of the examples of Martensen’s alleged corporate wrongdoings. Fried asked about Martensen’s dealings with a competing company that he was allegedly accepting kickbacks from. Fried asked if Martensen had ever heard of the company. Martensen said no. Fried asked why, then, there had been several email exchanges between Martensen and the company. Ultimately, Fried says, Martensen admitted to some of the alleged misdeeds, but not all of them. Koch, who was interviewing another executive in a different building, says he watched Martensen leave, weeping.

After his review, Martensen was driven to another part of the ranch, Crystal Meadows, to wait for the five other men who were being interviewed, three of whom lived in California like Martensen. On his way to Crystal Meadows, he was served termination papers and a lawsuit. Koch says he separated the six men to avoid any collusion between them. Martensen also had a history of losing his temper, and Koch worried the men would become violent, so he hired an off-duty, unarmed local deputy for security purposes. Once Martensen arrived at Crystal Meadows, his Oxbow-issued computer and cell phone were taken away. Koch instructed his team to ask to inspect Martensen’s bags to ensure that he wasn’t stealing any company property.

Martensen’s lawsuit says he asked to leave but was held captive at the ranch. But in a deposition filed in Florida last month, another Oxbow executive, Charlie Zhan, who was present during the episode at the ranch and was subsequently fired, said neither he nor Martensen were ever physically threatened, restrained, intimidated, or made to feel as if they couldn’t leave. Zhan says there were no armed guards, and that both men were offered a cell phone to use once they left the ranch, where cellular reception is limited. Martensen made no calls, according to Zhan. Both Zhan and Martensen took Koch’s private plane back to California. 

Martensen unsuccessfully appealed the March 2012 suit filed by Koch in Florida. Martensen then took his case to California, where he filed his complaint this past autumn. “They’re playing a legal maneuvering game because they want the case to be held in San Francisco, which would be considerably more liberal than the court in Florida,” Koch says. It could take years for either case to go to trial.

Fried, who’s worked for Oxbow for about 14 years, is mystified by Martensen’s alleged offenses. “Anyone who knows Bill knows that he will chase down someone who has wronged him to the end of the earth. So it’s been staggering to me to know that senior people in the company would steal from him,” he told me at Oxbow’s corporate headquarters in Palm Beach. “He’s obviously a driven guy, whether it’s business or sailboat racing or collecting wine or holding people accountable when they’ve mistreated him. He’s dogged in his pursuit.”

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