Business: Bernie Cleared

Court circus in Geneva

It took the twelve-member Swiss jury only 50 minutes to decide the long-pending case, and when acquittal was an nounced the Geneva courtroom erupted in applause. Then a smiling Bernie Cornfeld, 52, the bearded hustler from Brooklyn who had founded Investors Overseas Services, the bankrupt European-based mutual fund empire, repaired to a near by cafe for a victory celebration. After a four-week trial that even the presiding judge described as a “circus,” Cornfeld was declared innocent of charges that he had coerced employees of I.O.S. into buying its stock when he knew his operation was collapsing.

That apparently ended the legal troubles that had dogged Cornfeld for seven years since the fall of I.O.S., which he started in the 1950s and built into the world’s largest offshore investment com bine. At its peak in the late 1960s, I.O.S. managed assets totaling more than $2 billion in mutual funds alone; armies of I.O.S. “reps” rang doorbells everywhere to persuade people to put their savings into one or another of I.O.S.’s 130 in vestment outlets. Cornfeld, a onetime social worker, proclaimed that “everyone can be a millionaire.” As if to prove it, he lived a sybaritic life in a Geneva man sion built by Napoleon, where he was sur rounded by purring cheetahs, freeloading jet-setters and a harem of adolescent beauties.

Cornfeld’s fortunes tumbled with the end of the bull market on Wall Street in the late 1960s. I.O.S. shares, which had been going for as much as $25 in mid-1969, were selling for 400 by late 1970.

The I.O.S. board fired Cornfeld as chair man and called in New Jersey Financier Robert Vesco, who returned the favor by milking the funds of an estimated $227 million. He absconded in 1972 to Costa Rica and later the Bahamas. Angered at the way the I.O.S. shambles had be smirched their reputation for financial probity, the Swiss seized Cornfeld when he returned to the country in 1973 and held him for eleven months while they tried to assemble a case.

When it finally came to trial, the case quickly crum bled, in part because many prosecution witnesses ended up praising Bernie; he had already started reimbursing them for their losses in I.O.S. stock when his bail was cut from $3.1 million to $600,000.

Nowadays, Cornfeld lives quietly in Beverly Hills and dabbles in real estate and movie financing. Acquittal or no, he says, “Geneva is not exactly the object of my affection.”