Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right

by Jane Mayer

During the presidential primaries, Trump had mocked his Republican rivals as “puppets” for flocking to the secretive fund-raising sessions sponsored by David Koch and his brother Charles, co-owners of the second-largest private company in the United States, the Kansas-based energy and manufacturing conglomerate Koch Industries. Affronted, the Koch brothers, whose political spending had made their name almost shorthand for special-interest clout, withheld their financial support from Trump. As a result, the story line adopted by many in the media was that the Koch brothers in particular, and big political donors in general, were no longer a major factor in American politics. Trump had after all defeated far bigger-spending rivals, including Clinton. It might be nice to think the era of big money in American politics is over, but a closer look reveals a far more complicated and far less reassuring reality.

Despite having been elected as a populist outsider, Trump put together a transition team that was crawling with the kinds of corporate insiders he vowed to disempower. Especially prominent among them were lobbyists and political operatives who had financial ties to the Kochs. This was perhaps unexpected, because the Kochs had continued to express their distaste for Trump throughout the campaign. Charles Koch called himself a libertarian. He supported open immigration and free trade, both of which benefited his vast multinational corporation. He had denounced Trump’s plans to bar Muslim immigrants as “monstrous” and “frightening.” Yet there were signs of a rapprochement. The chair of Trump’s transition team, Vice President elect Mike Pence, had been Charles Koch’s first choice for the presidency in 2012 and a major recipient of Koch campaign contributions. David Koch had personally donated $300,000 to Pence’s campaigns in the four years before Trump chose Pence as his running mate. Pence, who in the past had shared the Kochs’ enthusiasm for privatizing Social Security and denying the reality of climate change, had been a featured guest at a fund-raiser that David Koch hosted for about seventy of the Republican Party’s biggest political donors at his Palm Beach, Florida, mansion in the spring of 2016. He had also been slated to speak at the Kochs’ donor summit in August 2016 but canceled after joining the Republican ticket. Meanwhile, Pence’s senior adviser in the sensitive ...

less than a week after having been elected on a wave of populist anger, Trump appeared set to fulfill many of the special interests’ fondest dreams, including the deregulatory schemes of the Kochs. He promised to “get rid of” the EPA in “almost every form” and to withdraw from the 2015 international climate accord in Paris, and against the overwhelming scientific evidence to the contrary, he called climate change “a hoax.” The Trump transition had a self-imposed ethics code barring lobbyists from shaping the rules and staffing the departments in which they had financial interests, but in the early stages, at least, these commonsense strictures appeared to have been sidestepped. Experts in government ethics were aghast. “If you have people on the transition team with deep financial ties to the industries to be regulated, it raises questions about whether they are serving the public interest or their own interests,” warned Norman Eisen, who devised the Obama administration’s conflict-of-interest rules. “Let’s face it, in the Beltway nexus of corporations and dark money, lobbyists are the delivery mechanism for special-interest influence.” Peter Wehner, who served in the administrations of Ronald Reagan and both presidents Bush, told the New York Times, “This whole idea that he was an outsider and going to destroy the political establishment and drain the swamp were the lines of a con man, and guess what—he is being exposed as just that.” The Kochs’ influence reached greater ...

while the media fixated on the extraordinary presidential race, the Kochs and their network of right-wing political patrons quietly spent more money than ever on the three-pronged influence-buying approach they had mastered during the previous forty years. They combined corporate lobbying, politically tinged nonprofit spending, and “down ballot” campaign contributions in state and local races, where their money bought a bigger bang for the buck. Far from shutting their wallets, they simply downgraded their budget to $750 million and directed several hundred million dollars of it to races beneath the presidential level. Few noticed, but in 2016 Koch Industries and Freedom Partners poured huge sums into at least nineteen Senate, forty-two House, and four gubernatorial races as well as countless lesser ones all over the country. They also mobilized what a 2016 study by two Harvard University scholars, Theda Skocpol and Alexander Hertel-Fernandez, described as an unprecedented and unparalleled permanent, private political machine. In fact, amazingly, in 2016 the Kochs’ private network of political groups had a bigger payroll than the Republican National Committee. The Koch network had 1,600 paid staffers in thirty-five states and boasted that its operation covered 80 percent of the population. This marked a huge escalation from just a few years earlier. As recently as 2012, the Kochs’ primary political advocacy group, Americans for Prosperity, had a paid staff of only 450. The...

The Kochs might have disavowed Trump, but in several important respects he was their natural heir and the unintended consequence of the extraordinary political movement they had underwritten since the 1970s. For forty years, they had vilified the very idea of government. They had propagated that message through the countless think tanks, academic programs, front groups, ad campaigns, legal organizations, lobbyists, and candidates they supported. It was hard not to believe that this had helped set the table for the takeover of the world’s most powerful country by a man who made his inexperience and antipathy toward governing among his top selling points. Charles Koch’s mentor, the quasi-anarchist Robert LeFevre, had taught the Kochs that “government is a disease masquerading as its own cure.” Their extreme opposition to the expansions of the federal government that had taken place during the Progressive Era, the New Deal era, the Great Society, and Obama’s presidency had helped to convince voters that Washington was corrupt and broken and that, when it came to governing, knowing nothing was preferable to expertise. Charles Koch had referred to himself as a “radical,” and in Trump he got the radical solution he had helped to spawn.

The same incendiary style characterized the big donors’ fight against the Affordable Care Act. Rather than respectfully debating Obama’s health-care plan as a policy issue, the Kochs and their allied donors poured cash into a dark-money group called the Center to Protect Patient Rights, which mounted a guerrilla war of fearmongering and vitriol. Television ads sponsored by the group featured the false claim that Obama’s plan was “a government takeover” of health care, which Politi-Fact named “the Lie of the Year” in 2010. Meanwhile, a spin-off of Americans for Prosperity organized anti-Obamacare rallies at which protesters unfurled banners depicting corpses from Dachau, implying that Obama’s policies would result in mass murder. Koch operatives also purposefully sabotaged the democratic process by planting screaming protesters in town hall meetings at which congressmen met with constituents that year. In short, during the Obama years, the Kochs radicalized and organized an unruly movement of malcontents, over which by 2016 they had lost control. “We are partly responsible,” one former employee in the Kochs’ political operation admitted to Politico a month before Trump was elected. “We invested a lot in training and arming a grassroots army that was not controllable.” In other ways too, the Kochs and their allied big donors became victims of their own success in 2016. They inadvertently laid the groundwork for Trump’s rise by too thoroughly capturing the Republican Party wi...

Trump’s inaugural committee featured several members of the Kochs’ billion-dollar donor club, too. Neither Diane Hendricks, a building supply company owner whose $3.6 billion fortune made her the wealthiest woman in Wisconsin, nor billionaire Sheldon Adelson, founding chairman and chief executive of the Las Vegas Sands Corporation casino empire, signaled a break from politics as usual. Inaugurals had long been underwritten by rich donors, so perhaps reading too much into this was unfair. But Trump’s tax proposals, to the extent that they could be gleaned, were if anything even more of a bait and switch. While he had garnered blue-collar support by promising to stick it to the elites who “are getting away with murder,” his proposals, according to economic experts, threatened instead to enshrine a permanent aristocracy in America. He appeared poised to repeal the estate tax, presenting a windfall to heirs of estates worth $10.9 million or more. There had been fewer than five thousand estates of this size in 2015. He also had plans to abolish the gift tax, which put the brakes on inherited wealth. Capital gains taxes and income taxes for top earners were headed toward the chopping block, too. Charles and David Koch, who together were worth some $84.5 billion, stood to benefit to an extent that dwarfed earlier administrations, as did many other billionaires. As the headline on Yahoo Finance proclaimed on the day after the election, “Trump’s Win Is a ‘Grand Slam’ for Wall Stree...

inside the hotel’s dining room, the mood was grim, as if these luxuries merely highlighted how much the group gathered there had to lose. The guests meeting at the resort that weekend included many of the biggest winners during the eight years of George W. Bush’s presidency. There were billionaire businessmen, heirs to some of America’s greatest dynastic fortunes, right-wing media moguls, conservative elected officials, and savvy political operatives who had made handsome livings helping their patrons win and hold power. There were also eloquent writers and publicists, whose work at think tanks, advocacy groups, and countless publications was quietly subsidized by corporate interests. The guests of honor, though, were the potential political donors—or “investors,” as they referred to themselves—whose checkbooks would be sorely needed for the project at hand. The group had been summoned that weekend not by the leader of a recognized opposition party but rather by a private citizen, Charles Koch. In his seventies, he was white-haired but youthfully fit and very much in charge of Koch Industries, a conglomerate headquartered in Wichita, Kansas. The company had grown spectacularly since its founder, Charles’s father, Fred, had died in 1967, and he and his brother David took charge, buying out their two other brothers. Charles and David—often referred to as the Koch brothers—owned virtually all of what had become under their leadership the second-largest private company in Amer...

This faction hoped to use their wealth to advance a strain of conservative libertarian politics that was so far out on the political fringe as recently as 1980, when David Koch ran for vice president of the United States on the Libertarian Party ticket, it received only 1 percent of the American vote. At the time, the conservative icon William F. Buckley Jr. dismissed their views as “Anarcho-Totalitarianism.” The Kochs failed at the ballot box in 1980, but instead of accepting America’s verdict, they set out to change how it voted. They used their fortune to impose their minority views on the majority by other means.

As far back as 1976, Charles Koch, who was trained as an engineer, began planning a movement that could sweep the country. As a former member of the John Birch Society, he had a radical goal. In 1978, he declared, “Our movement must destroy the prevalent statist paradigm.” To this end, the Kochs waged a long and remarkable battle of ideas. They subsidized networks of seemingly unconnected think tanks and academic programs and spawned advocacy groups to make their arguments in the national political debate. They hired lobbyists to push their interests in Congress and operatives to create synthetic grassroots groups to give their movement political momentum on the ground. In addition, they financed legal groups and judicial junkets to press their cases in the courts. Eventually, they added to this a private political machine that rivaled, and threatened to subsume, the Republican Party. Much of this activism was cloaked in secrecy and presented as philanthropy, leaving almost no money trail that the public could trace. But cumulatively it formed, as one of their operatives boasted in 2015, a “fully integrated network.” The Kochs were unusually single-minded, but they were not alone. They were among a small, rarefied group of hugely wealthy, archconservative families that for decades poured money, often with little public disclosure, into influencing how Americans thought and voted. Their efforts began in earnest during the second half of the twentieth century. In addition to...

By Ronald Reagan’s presidency, their views had begun to gain more traction. For the most part, they were still seen as defining the extreme edge of the right wing, but both the Republican Party and much of the country were trending their way. Conventional wisdom often attributed the rightward march to a public backlash against liberal spending programs. But an additional explanation, less examined, was the impact of this small circle of billionaire donors. Of course rich patrons on both sides of the ideological spectrum had long wielded disproportionate power in American politics. George Soros, a billionaire investor who underwrote liberal organizations and candidates, was often singled out for criticism by conservatives. But the Kochs in particular set a new standard. As Charles Lewis, the founder of the Center for Public Integrity, a nonpartisan watchdog group, put it, “The Kochs are on a whole different level. There’s no one else who has spent this much money. The sheer dimension of it is what sets them apart. They have a pattern of lawbreaking, political manipulation, and obfuscation. I’ve been in Washington since Watergate, and I’ve never seen anything like it. They are the Standard Oil of our times.”

The amount of money raised at the summits was also increasingly eye-catching. Earlier businessmen had certainly spent outsized sums in hopes of manipulating American politics, but the numbers at the Koch seminars far outstripped those in the past. As The Washington Post’s Dan Balz observed, “When W. Clement Stone, an insurance magnate and philanthropist, gave $2 million to Richard M. Nixon’s 1972 campaign, it caused public outrage and contributed to a movement that produced the post-Watergate reforms in campaign financing.” Accounting for inflation, Balz estimated that Stone’s $2 million might be worth about $11 million in today’s dollars. In contrast, for the 2016 election, the political war chest accumulated by the Kochs and their small circle of friends was projected to be $889 million, completely dwarfing the scale of money that was considered deeply corrupt during the Watergate days.

Exactly who attended the January 2009 summit, the first of the Obama era, and what transpired inside the resort can only be partly pieced together because the guest list, like many other aspects of the Kochs’ political and business affairs, was shrouded in secrecy. As one Republican campaign consultant who has worked for the Kochs in the past said of the family’s political activities, “To call them under the radar is an understatement. They are underground!” Participants at the summits, for instance, were routinely admonished to destroy all copies of any paperwork. “Be mindful of the security and confidentiality of your meeting notes and materials,” the invitation to one such gathering warned. Guests were told to say nothing to the news media and to post nothing about the meetings online. Elaborate security steps were taken to keep both the names of the participants and the meetings’ agendas from public scrutiny. When signing up to attend the conferences, participants were warned to make all arrangements through the Kochs’ staff, rather than trusting the employees at the resort, whose backgrounds were nonetheless investigated by the Kochs’ security detail. In an effort to detect intruders and impostors, name tags were required at all functions, and smartphones, iPads, cameras, and other recording gear were confiscated prior to sessions. In order to foil eavesdroppers during one such gathering, audio technicians planted white-noise-emitting loudspeakers around the perimeter...

No fewer than eighteen billionaires would be among the “doers” joining the Kochs’ clandestine opposition movement during the first term of Obama’s presidency. Ignoring the mere millionaires in attendance, many of whose fortunes were estimated to be worth hundreds of millions of dollars, the combined fortunes of the eighteen known billionaire participants alone as of 2015 topped $214 billion. In fact more billionaires participated anonymously in the Koch planning sessions during the first term of the Obama presidency than existed in 1982, when Forbes began listing the four hundred richest Americans.

The gap between the top 1 percent of earners in America and everyone else had grown so wide by 2007 that the top 1 percent of the population owned 35 percent of the nation’s private assets and was pocketing almost a quarter of all earnings, up from just 9 percent twenty-five years earlier. Liberal critics, like the New York Times columnist Paul Krugman, a Nobel Prize–winning economist, worried that the country was in danger of being transformed from a democracy into a plutocracy, or worse, an oligarchy like Russia, where a handful of extraordinarily powerful businessmen bent the government into catering to them at the expense of everyone else. “We are on the road not just to a highly unequal society, but to a society of an oligarchy. A society of inherited wealth,” Krugman warned. “When you have a few people who are so wealthy that they can effectively buy the political system, the political system is going to tend to serve their interests.” The term “oligarchy” was provocative and might have seemed an exaggeration to those accustomed to thinking of oligarchs as despotic rulers who were incompatible with democracies like the United States. But Jeffrey Winters, a professor at Northwestern University specializing in the comparative study of oligarchies, was one of a growing number of voices who were beginning to argue that America was a “civil oligarchy” in which a tiny and extremely wealthy slice of the population was able to use its vastly superior economic position to pro...

Mike Lofgren, a Republican who spent thirty years observing how wealthy interests gamed the policy-making apparatus in Washington, where he was a staff member on the Senate Budget Committee, decried what he called the “secession” of the rich in which they “disconnect themselves from the civic life of the nation and from any concern about its well-being except as a place to extract loot.” America, as Jacob Hacker and Paul Pierson described it, had become a “winner-take-all” country in which economic inequality perpetuated itself by pressing its political advantage. If so, the Koch seminars provided a group portrait of the winners’ circle.

While those attracted to the Kochs’ meetings were uniformly conservative, they were not the predictable cartoon villains of conspiracy theories but spanned a wide range of views and often disagreed among themselves about social and international issues. The glue that bound them together, however, was antipathy toward government regulation and taxation, particularly as it impinged on their own accumulation of wealth. Unsurprisingly, given the shift in the way great fortunes were made by the end of the twentieth century, instead of railroad magnates and steel barons who had ruled in the Astors’ day, the largest number of participants came from the finance sector.

“Why should anyone get to enjoy cash from gains now without paying taxes?” Johnston concluded, “The awful truth is that America has two income tax systems, separate and unequal. One system is for the superrich, like Anschutz and his wife, Nancy, who are allowed to delay and avoid taxes on investment gains, among other tax tricks. The other system is for the less than fabulously wealthy.”

The “extractive” industries, oil, gas, and mining, tend to be run by some of the most outspoken opponents of government regulation in the country, yet all rely considerably on government permits, regulations, and tax laws to aid their profits and frequently to give them access to public lands. Executives from at least twelve oil and gas companies, in addition to the Kochs, were participants in the group. Collectively, they had a huge interest in staving off any government action on climate change and weakening environmental safeguards. One prominent member of this group was Corbin Robertson Jr., whose family had built a billion-dollar oil company, Quintana Resources Capital. Robertson had bet big on coal—so big he reportedly owned what Forbes called the “largest private hoard in the nation—21 billion tons of reserves.” Investigative reports linked Robertson to several political front groups fighting efforts by the Environmental Protection Agency (EPA) to control pollution emitted by coal-burning utilities. Almost comically, one such front group was called Plants Need CO2.

The dire stakes surrounding the sinking coal industry’s regulatory fights were evident in the 2010 sale of Cumberland for nearly $1 billion to Massey Energy, just weeks before a tragic explosion in Massey’s Upper Big Branch mine killed twenty-nine miners, becoming the worst coal mine disaster in forty years. A government investigation into Massey found it negligent on multiple safety fronts, and a federal grand jury indicted its CEO, Don Blankenship, for conspiring to violate and impede federal mine safety standards, making him the first coal baron to face criminal charges. Later, Massey was bought for $7.1 billion by Alpha Natural Resources, whose CEO, Kevin Crutchfield, was yet another member of the Koch network.

Among the “frackers” in the group were J. Larry Nichols, co-founder of the huge Oklahoma-based concern Devon Energy, and Harold Hamm, whose company, Continental Resources, was the biggest operator in North Dakota’s booming Bakken Shale. As Hamm, a sharecropper’s son, took his place as the thirty-seventh-richest person in America with a fortune that Forbes estimated at $8.2 billion as of 2015, and campaigned to preserve tax loopholes for oil producers, his company gained notoriety for a growing record of environmental and workplace safety violations.

The legal problems of Richard Farmer, the chairman of the Cincinnati-based Cintas Corporation, the nation’s largest uniform supply company, included an employee’s gruesome death. Just before the new and presumably less business-friendly Obama administration took office, Cintas reached a record $2.76 million settlement with the Occupational Safety and Health Administration (OSHA) in six safety citations including one involving a worker who had burned to death in an industrial dryer. The employee, a Hispanic immigrant, had become caught on a conveyor belt leading into the heat source. Prior to the fatal accident, OSHA had cited Cintas for over 170 safety violations since 2003, including 70 that regulators warned could cause “death or serious physical harm.” As Obama took office, the company was still fighting against paying a damage claim to the employee’s widow and arguing that his death had been his own fault. Farmer, too, ranked among the Koch group’s billionaire donors, with a fortune that Forbes estimated at $2 billion.

the network also included a surprising number of major government contractors, such as Stephen Bechtel Jr., whose personal fortune Forbes estimated at $2.8 billion. Bechtel was a director and retired chairman of the huge and internationally powerful engineering firm Bechtel Corporation, founded by his grandfather, run by his father, and, after he retired, by his son and grandson. Paternalistic and family-owned, Bechtel was the sixth-largest private company in the country, and it owed almost its entire existence to government patronage. It had built the Hoover Dam, among other spectacular public projects, and had storied access to the innermost national security circles. Between 2000 and 2009 alone, it had received $39.2 billion in U.S. government contracts. This included $680 million to rebuild Iraq following the U.S. invasion. Like so many of the other companies owned by the Koch donors, Bechtel had government legal problems. In 2007, a report by the special inspector general for Iraq reconstruction accused Bechtel of shoddy work. And in 2008, the company paid a $352 million fine to settle unrelated charges of substandard work in Boston’s notorious “Big Dig” tunnel project. The company was facing congressional reproach too for cost overruns in the multibillion-dollar cleanup of the Hanford nuclear facility in Washington State.

Thomas Stewart, who built his father’s Seattle-based food business into the behemoth Services Group of America, reportedly loved flying in his helicopter and corporate jet. But when a former company pilot refused to take his aeronautic advice because it violated Federal Aviation Administration regulations, according to an interview with the pilot in the Seattle Post-Intelligencer, Stewart “rose out of his chair, and screamed, ‘I can do any fucking thing I want!’ ”

It was widely assumed that the Kochs, as hard-core free-market enthusiasts, had opposed the huge government bailouts of the private sector. Later, many reporters assumed this too, ascribing the Kochs’ opposition to Obama as stemming from their principled disagreement over issues such as the TARP bailouts. But none of this was true. Had people checked the record carefully, they would have found it quite revealing. At first, the Kochs’ political organization, Americans for Prosperity (AFP), had in fact taken what appeared to be a principled libertarian position against the bailouts. But the organization quickly and quietly reversed sides when the bottom began to fall out of the stock market, threatening the Kochs’ vast investment portfolio. The market began to collapse on Monday, September 29, when, in the face of heavy opposition from conservatives, the House unexpectedly failed to pass the federal rescue plan. By the end of the day, the Dow Jones Industrial Average had fallen 777 points, losing 6.98 percent of its value. It was the stock market’s largest one-day point drop ever. Although some conservative groups and politicians such as DeMint still opposed the bailout, the market panic was enough to change many minds. Among those who flipped during the next forty-eight hours were the Kochs. Two days after the unexpected House vote, as the measure was about to be considered by the Senate, a list of conservative groups now supporting the bailouts was circulated behind the sc...

Advisers to Obama later acknowledged that he had no inkling of what he was up against. He had campaigned as a post-partisan politician who had idealistically taken issue with those who he said “like to slice and dice our country into red states and blue states.” He insisted, “We are one people,” the United States of America. His vision, like his own blended racial and geographic heredity, was of reconciliation, not division. Echoing these themes in his first inaugural address, Obama had chided “cynics,” who, he said, “fail to understand…that the ground has shifted beneath them—that the stale political arguments that have consumed us for so long no longer apply.” The sentiment was laudable but, alas, wishful thinking. Had the newly sworn-in president looked down at the ground directly beneath his polished shoes as he delivered these optimistic words, he might have been wise to take note. The red-and-blue carpet on which he was standing, which had been custom made in accordance with a government contract, had been manufactured by Invista, a subsidiary of Koch Industries. In American politics, the Kochs and all they stood for were not so easy to escape.

Oddly enough, the fiercely libertarian Koch family owed part of its fortune to two of history’s most infamous dictators, Joseph Stalin and Adolf Hitler. The family patriarch, Fred Chase Koch, founder of the family oil business, developed lucrative business relationships with both of their regimes in the 1930s.

as he would later tell his sons bitterly and often, America’s major oil companies regarded him as a business threat and shut him out of the industry, suing him and his customers in 1929 for patent infringement. Koch regarded the monopolistic patents invoked by the major oil companies as anticompetitive and unfair. The fight appears to be an early version of the Kochs’ later opposition to “corporate cronyism” in which they contend that the government and big business collaborate unfairly. In Fred Koch’s eye, he was an outsider fighting a corrupt system. Koch fought back in the courts for more than fifteen years, finally winning a $1.5 million settlement. He correctly suspected that his opponents bribed at least one presiding judge, an incompetent lush who left the case in the hands of a crooked clerk. “The fact that the judge was bribed completely altered their view of justice,” one longtime family employee suggests. “They believe justice can be bought, and the rules are for chumps.”

In 1930, his company, then called Winkler-Koch, began training Russian engineers and helping Stalin’s regime set up fifteen modern oil refineries under the first of Stalin’s five-year plans. The program was a success, forming the backbone of the future Russian petroleum industry. The oil trade brought crucial hard currency into the Soviet Union, enabling it to modernize other industries. Koch was reportedly paid $500,000, a princely sum during America’s Great Depression.

What happened next has been excised from the official corporate history of Koch Industries. After mentioning the company’s work in the Soviet Union, the bulk of which ended in 1932, the corporate history skips ahead to 1940, when it says Fred Koch decided to found a new company, Wood River Oil & Refining. Charles Koch is equally vague in his book The Science of Success. He notes only that his father’s company “enjoyed its first real financial success during the early years of the Great Depression” by “building plants abroad, especially in the Soviet Union.” A controversial chapter is missing. After leaving the U.S.S.R., Fred Koch turned to Adolf Hitler’s Third Reich. Hitler became chancellor in 1933, and soon after, his government oversaw and funded massive industrial expansion, including the buildup of Germany’s capacity to manufacture fuel for its growing military ambitions. During the 1930s, Fred Koch traveled frequently to Germany on oil business. Archival records document that in 1934 Winkler-Koch Engineering of Wichita, Kansas, as Fred’s firm was then known, provided the engineering plans and began overseeing the construction of a massive oil refinery owned by a company on the Elbe River in Hamburg.

In his biography of Davis, Dale Harrington draws on eyewitness accounts to describe Hitler as declaring to his skeptical henchmen, “Gentlemen, I have reviewed Mr. Davis’s proposition and it sounds feasible, and I want the bank to finance it.” Harrington writes that during the next few years Davis met at least half a dozen more times with Hitler and on one occasion asked him to personally autograph a copy of Mein Kampf for his wife. According to Harrington, by the end of 1933 Davis was “deeply committed to Nazism” and exhibited a noticeable “dislike for Jews.” In 1934, Davis turned to Fred Koch’s company, Winkler-Koch, for help in executing his German business plan. Under Fred Koch’s direction, the refinery was finished by 1935. With the capacity to process a thousand tons of crude oil a day, the third-largest refinery in the Third Reich was created by the collaboration between Davis and Koch. Significantly, it was also one of the few refineries in Germany, according to Harrington, that could “produce the high-octane gasoline needed to fuel fighter planes. Naturally,” he writes, “Eurotank would do most of its business with the German military.” Thus, he concludes, the American venture became “a key component of the Nazi war machine.” Historians expert in German industrial history concur. The development of the German fuel industry “was hugely, hugely important” to Hitler’s military ambitions, according to the Northwestern University professor Peter Hayes. “Hitler set out to...

In late 1938, as World War II approached and Hitler’s aims were unmistakable, he wrote admiringly about fascism in Germany, and elsewhere, drawing an invidious comparison with America under Franklin Roosevelt’s New Deal. “Although nobody agrees with me, I am of the opinion that the only sound countries in the world are Germany, Italy, and Japan, simply because they are all working and working hard,” he wrote in a letter to a friend. Koch added, “The laboring people in those countries are proportionately much better off than they are any place else in the world. When you contrast the state of mind of Germany today with what it was in 1925 you begin to think that perhaps this course of idleness, feeding at the public trough, dependence on government, etc., with which we are afflicted is not permanent and can be overcome.”

Fred Koch’s willingness to work with the Soviets and the Nazis was a major factor in creating the Koch family’s early fortune. By the time he met his future wife, Mary Robinson, at a polo match in 1932, the oilman’s work for Stalin had put him well on his way to becoming exceedingly wealthy.

It is unclear what Fred Koch’s views of Hitler were during the 1930s, beyond his preference for the country’s work ethic in comparison with the nascent welfare state in America. But he was enamored enough of the German way of life and thinking that he employed a German governess for his first two sons, Freddie and Charles. At the time, Freddie was a small boy, and Charles still in diapers. The nanny’s iron rule terrified the little boys, according to a family acquaintance. In addition to being overbearing, she was a fervent Nazi sympathizer, who frequently touted Hitler’s virtues. Dressed in a starched white uniform and pointed nurse’s hat, she arrived with a stash of gruesome German children’s books, including the Victorian classic Der Struwwelpeter, that featured sadistic consequences for misbehavior ranging from cutting off one child’s thumbs to burning another to death. The acquaintance recalled that the nurse had a commensurately harsh and dictatorial approach to child rearing. She enforced a rigid toilet-training regimen requiring the boys to produce morning bowel movements precisely on schedule or be force-fed castor oil and subjected to enemas.

Fred Koch cared about his boys but was determined to keep them from becoming what he called “country-club bums,” like some of the other offspring of the oil moguls with whom he was acquainted. “By instilling a work ethic in me at an early age, my father did me a big favor, although it didn’t seem like a favor back then,” Charles has written. “By the time I was eight, he made sure work occupied most of my spare time.”

Sibling rivalry in the family, which reached epic levels in adulthood, was always intense. Family photographs and films show the brothers fenced in outdoor playpens, grabbing each other’s toys, making each other cry, and boxing at early ages with gloves almost as big as their heads. Before long, Charles, the second born, emerged as the domineering leader of the pack. Fiercely competitive, driven, and self-confident, he appeared a paragon of handsome, blond athleticism. One family member recalls that Charles’s favorite game was king of the hill. “It hasn’t changed,” another family member said. Charles rarely lost, but when he did, he took it badly. When his younger brother Bill defeated him once in a boxing match, according to family lore, Charles refused to ever box again.

In order to keep him from picking on his brothers, the Kochs sent Charles away to school as well, in his case, at the age of eleven. The school they chose for him was the Southern Arizona School for Boys, renowned for its strictness. His mother made clear that it was done for his younger brother Billy’s sake, which only heightened resentments between the boys. “I pleaded with them not to send me away,” Charles told Fortune in 1997. Charles did poorly at the boarding school, but instead of yielding to his pleas to come home, the Kochs sent him to an even more rigid boarding school, the Fountain Valley School in Colorado. “I hated all that,” Charles recalled. At one point, his parents finally “took pity” on him, he said, and let him attend public high school in Wichita, which he loved, but “I got into trouble,” he recalled, so they packed him off to the Culver Military Academy in Indiana, which also emphasized discipline. There, Charles did better academically but repeatedly got into trouble. Eventually, Culver expelled him for drinking on a train (although he was eventually readmitted, enabling him to earn his diploma). “I have a little bit of a rebel, and free spirit in me,” Charles later acknowledged. As punishment, Charles’s father banished him to live with his relatives in Texas. “Father put the fear of God in him,” David later recalled. “He said, ‘If you don’t make it, you’ll be worthless. You’ve disappointed me.’ Father was a severe taskmaster.” In his confidential re...

Yet later, as a parent, Charles partially repeated the pattern. When his own son, Chase, then thirteen, played a halfhearted tennis match, Charles had an employee pick him up and deliver him to a baking, reeking feedlot on one of the family ranches where he was forced to work seven days a week, twelve hours a day. Charles proudly recounted the story with a grin, telling The Wichita Eagle, “I think he thought he’d have a job here in Wichita and could go out with his friends at night.” Chase became an exceptionally good tennis player but later had another, more serious problem. While driving as a high school student in Wichita, he ran a red light and fatally injured a twelve-year-old boy. He pleaded guilty to a misdemeanor charge of vehicular manslaughter and was sentenced to eighteen months of probation and a hundred hours of community service and was required to pay for the boy’s funeral. After college, Chase, like his father, joined the family company. Meanwhile, in an online blog, Charles’s other child, Elizabeth, a Princeton graduate, described her own efforts to prove herself to her father. Of a visit home, she wrote, “As soon as we arrived I felt an overwhelming urge to prostrate myself on the floor and eat dirt in order to illustrate how grateful I am for everything they’ve done for me, that I’m not the spoiled monster they warned me I’d become if I wasn’t careful.” She described “chasing” her father around the house, trying to impress him with her interest in econom...

David Koch recalled that his father tried to indoctrinate the boys politically, too. “He was constantly speaking to us children about what was wrong with government,” he told Brian Doherty, an editor of the Koch-funded libertarian magazine Reason and the author of Radicals for Capitalism, a 2007 history of the libertarian movement with which the Kochs cooperated. “It’s something I grew up with—a fundamental point of view that big government was bad, and imposition of government controls on our lives and economic fortunes was not good.” Fred Koch’s political views were apparently shaped by his traumatic exposure to the Soviet Union. Over time, Stalin brutally purged several of Koch’s Soviet acquaintances, giving him a firsthand glimpse into the murderous nature of the Communist regime. Koch was also apparently shaken by a steely government minder assigned to him while he worked in the Soviet Union, who threatened that the Communists would soon conquer the United States. Koch was deeply affected by the experience and later, after his business deals were completed, said he regretted his collaboration.

In 1958, Fred Koch became one of eleven original members of the John Birch Society, the archconservative group best known for spreading far-fetched conspiracy theories about secret Communist plots to subvert America. He attended the founding meeting held by the candy manufacturer Robert Welch in Indianapolis. The organization drew like-minded businessmen from all over the country, including Harry Bradley, the chairman of the Allen-Bradley company in Milwaukee, who later financed the right-wing Bradley Foundation.

In a 1960 self-published broadside, A Business Man Looks at Communism, Koch claimed that “the Communists have infiltrated both the Democrat [sic] and Republican Parties.” Protestant churches, public schools, universities, labor unions, the armed services, the State Department, the World Bank, the United Nations, and modern art, in his view, were all Communist tools. He wrote admiringly of Benito Mussolini’s suppression of Communists in Italy and disparagingly of the American civil rights movement. The Birchers agitated to impeach Chief Justice Earl Warren after the Supreme Court voted to desegregate the public schools in the case Brown v. Board of Education, which had originated in Topeka, in the Kochs’ home state of Kansas. “The colored man looms large in the Communist plan to take over America,” Fred Koch claimed in his pamphlet. Welfare in his view was a secret plot to attract rural blacks to cities, where he predicted that they would foment “a vicious race war.” In a 1963 speech, Koch claimed that Communists would “infiltrate the highest offices of government in the U.S. until the President is a Communist, unknown to the rest of us.” Blazing a trail that would later be followed by his sons, Koch tapped his fortune to subsidize his political activism. He underwrote the distribution of what he claimed were over two and a half million copies of his book, as well as a speaking tour.

The movement flourished in Wichita, where Fred Koch frequently attended local John Birch Society meetings and was a generous benefactor. Ironically, the organization modeled itself on the Communist Party. Stealth and subterfuge were endemic. Membership was kept secret. Fighting “dirty” was justified internally, as necessary to combat the imputed treacherousness of the enemy. Welch “explicitly sought to use the same methods” he attributed to the Communists, “manipulation, deceit, and even dishonesty,” recalled diZerega, who attended Birch Society meetings in Wichita in his youth. One ploy the group used, he said, was to set up phony front groups “pretending to be other than what they were.” An alphabet soup of secretly connected organizations sprang up, with acronyms like TRAIN (To Restore American Independence Now) and TACT (Truth About Civil Turmoil). Another tactic was to wrap the group’s radical vision in mundane and unthreatening slogans that sound familiar today, such as “less government, more responsibility.” One of Welch’s favorite tropes, decrying “collectivism,” would cause some head-scratching more than fifty years later when it was echoed by Charles Koch in a 2014 diatribe in The Wall Street Journal denouncing his Democratic critics as “collectivists.”

Fred Koch continued to be active in extremist politics. He provided substantial support for Barry Goldwater’s right-wing bid for the Republican nomination in 1964. Goldwater, too, opposed the Civil Rights Act and the Supreme Court’s landmark desegregation decision, Brown v. Board of Education. Instead of winning, the Far Right helped ensure the Republican Party’s humiliating defeat by Lyndon Johnson that year. In 1968, Fred Koch went further right still. Before the emergence of George Wallace, he called for the Birch Society member Ezra Taft Benson to run for the presidency with the South Carolina senator Strom Thurmond on a platform calling for racial segregation and the abolition of all income taxes. David and Charles absorbed their father’s conservative politics and joined the John Birch Society too, but they did not share all of his views. According to diZerega, who befriended Charles in the mid-1960s after meeting him while browsing in a John Birch Society bookstore in Wichita, Charles didn’t accept all of the group’s conspiracy theories. He recalls that Charles, who was several years older, steered him away from the Communist conspiracy books and toward the collection of antigovernment economic writers whose work he found especially exciting. “This is the good stuff,” he recalls Charles telling him. The founder of the John Birch Society, Welch, was a board member of the Foundation for Economic Education, which spread a version of laissez-faire economics so extreme “i...

Convinced that his father would sell the company otherwise, Charles reluctantly returned to Wichita to help but found himself intellectually hungry back in his hometown. In his telling, he was almost feverishly bent on finding some overarching system of political theory to bridge his father’s emotional anti-Communism with his own more analytical approach to the world. He also wanted to merge his thinking about business and his interests in engineering and mathematics. “I spent the next two years almost like a hermit, surrounded by books,” he told The Wall Street Journal in 1997. Visitors to his apartment recall him littering almost every surface with abstruse economic and political texts. He later explained that having learned that “there are certain laws that govern the natural world,” he was trying to discover “if the same isn’t true for the societal world.” Contributing to Charles’s intellectual ferment at this time were his father’s dinner table diatribes against taxation. Fred saw taxes in America darkly, as incipient socialism. Early on, the Internal Revenue Service had sued his company for underpayment of taxes, requiring a large additional payment as well as penalties and legal fees. He remained vehemently opposed to estate taxes, and told Charles that he feared the U.S. government would tax him so heavily it might force him to sell the family business, diminishing his sons’ inheritances. To minimize future taxes, Fred Koch took advantage of elaborate estate planni...

LeFevre liked to say that “government is a disease masquerading as its own cure.” Doherty, the historian of the libertarian movement, related that “LeFevre was an anarchist figure who won Charles’s heart” and that the school was “a tiny world of people who thought the New Deal was a horrible mistake.” An FBI file on the Freedom School shows that by 1966 Charles Koch was not only a major financial supporter of the school but also an executive and trustee. LeFevre, who looked like a jolly, white-haired Santa, had reportedly been indicted earlier for mail fraud in connection with his role in a cultlike right-wing self-actualization movement called the Mighty “I AM” that worked audiences into frenzies as they chanted in response to Franklin and Eleanor Roosevelt’s names, “Annihilate them!” As the journalist Mark Ames recounts, LeFevre escaped prosecution by becoming a witness for the state, but he continued on a wayward path, claiming to have supernatural powers and struggling through bankruptcy and an infatuation with a fourteen-year-old girl. Later, at the height of Senator Joe McCarthy’s anti-Communist crusades, LeFevre became an FBI informant, accusing Hollywood figures of Communist sympathies and leading a drive to purge the Girl Scouts of Reds. A stint writing editorials for the archconservative Gazette-Telegraph in Colorado Springs enabled him to drum up funds to launch the Freedom School on a rustic, five-hundred-acre campus nearby. There, he assumed the title of dean....

Charles Koch was so enthusiastic about the Freedom School he talked his three brothers into attending sessions. But Freddie, the outlier in the family, who had spent more time than the others studying history and literature, disparaged the curriculum as bilge. He said that LeFevre reminded him of the con artists in Sinclair Lewis’s novels. Charles was so incensed by his brother’s apostasy, Frederick told people later, he threatened to “deck” him if he didn’t toe the line.

At the Freedom School, Charles became particularly enamored of the work of two laissez-faire economists, the Austrian theorist Ludwig von Mises and his star pupil, Friedrich Hayek, an Austrian exile, who visited the Freedom School. Hayek’s book The Road to Serfdom had become an improbable best seller in 1944, after Reader’s Digest published a condensed version. It offered a withering critique of “collectivism” and argued that centralized government planning, in which liberals were then engaged, would lead, inexorably, to dictatorship. In many respects, Hayek was a throwback, romanticizing a lost golden age of idealized unfettered capitalism that arguably never existed for much of the population. But Hayek’s views were more nuanced than many American adherents understood. As Angus Burgin describes in The Great Persuasion, many reactionary Americans knew only the distorted translation of Hayek’s work that had appeared in Reader’s Digest. The conservative publication omitted Hayek’s politically inconvenient support for a minimum standard of living for the poor, environmental and workplace safety regulations, and price controls to prevent monopolies from taking undue profits. Hayek’s ideas arrived in America during the post-Depression years, when conservative businessmen were scrambling to salvage the credibility of the laissez-faire ideology that had been popular before the 1929 market crash. Since then, Keynesian economics had taken its place. Hayek’s genius was to recast th...

Charles’s funding of the Freedom School was his first step toward what would become a lifelong, tax-deductible sponsorship of libertarianism in America. His hope was to use his wealth to inject his fringe views into the mainstream by turning the Freedom School into an accredited graduate school and then a four-year undergraduate program specializing in libertarian philosophy, to be called Rampart College. A 1966 brochure features a photograph of LeFevre with Charles, shovel in hand, breaking ground for the new institution. Martin was hired to head Rampart’s history department. But, as Ames recounts, the venture soon fell victim to mismanagement, leaving a trail of disgruntled backers. Eventually, the school moved to the South, where for a number of years it was sustained by the anti-union textile tycoon Roger Milliken. By the time LeFevre died in 1986, the Kochs had largely distanced themselves from him, perhaps sensing that he was a political liability. But Charles wrote a warm letter to LeFevre in 1973. He also gave a speech in the 1990s crediting the Freedom School with profoundly influencing him. It was, he said, “where I began developing a passionate commitment to liberty as the form of social organization most in harmony with reality and man’s nature, because it’s where I was first exposed in-depth to thinkers such as Mises and Hayek.” He added, “In short, market principles have changed my life and guide everything I do.”

In the midst of this filial rancor, in 1967, Fred Koch died of a heart attack. Charles, then thirty-two years old, became chairman and CEO of the family business, which the sons renamed Koch Industries, in honor of their father. At the time, the company’s principal business was refining oil, operating pipelines, and cattle ranching. Its annual revenues were estimated at $177 million, making it a substantial company but slight in comparison with the behemoth it would become. Fred Koch’s fears of confiscatory taxes turned out to be overblown. When he died, he was described as the wealthiest man in Kansas, and his will made his sons extraordinarily rich. Charles Koch has often lauded the virtuous habits it takes to succeed, publishing a book on the subject in 2007 called The Science of Success. He has been less forthcoming about his inheritance. His brother David, in contrast, has made less pretense of being self-made. He joked about his good fortune in a 2003 speech to alumni at Deerfield Academy, the Massachusetts prep school from which he graduated and where, after pledging $25 million, he was made the school’s sole “lifetime trustee.” He said, “You might ask: How does David Koch happen to have the wealth to be so generous? Well, let me tell you a story. It all started when I was a little boy. One day, my father gave me an apple. I soon sold it for five dollars and bought two apples and sold them for ten. Then I bought four apples and sold them for twenty. Well, this went ...

In 1969, two years after Charles Koch took the company’s helm, Koch Industries acquired the majority share in the refinery. Charles later described the purchase as “one of the most significant events in the evolution of our company.” Pine Bend was a gold mine because it was uniquely well situated geographically to buy inexpensive, heavy, “garbage” crude oil from Canada. After refining the cheap muck, the company could sell it at the same price as other gasoline. Because the heavy crude oil was so cheap, Pine Bend’s profit margin was superior to that of most other refineries. And because of a host of environmental regulations, it became increasingly difficult for rivals to build new refineries in the area to compete. By 2015, Pine Bend was processing some 350,000 barrels of Canadian crude a day, and according to David Sassoon of the Reuters-affiliated InsideClimate News, Koch Industries was the world’s largest exporter of oil out of Canada. In 2012, he wrote, “This single Koch refinery is now responsible for an estimated 25 percent of the 1.2 million barrels of oil the U.S. imports each day from Canada’s tar sands territories.” The Kochs’ good fortune, however, was the globe’s misfortune, because crude oil derived from Canada’s dirty tar sands requires far greater amounts of energy to produce and so is especially harmful to the environment.