Alles Ist Meine!

Glock Family Goes Down, Guns Blazing

King Lear, strippers, and show horses: Inside the $500 million lawsuit that could bring down Gaston Glock’s gun empire.

10.11.14 10:55 AM ET

Guns, money, sex, and betrayal: Rarely do the news gods smile down on us with such charity. But Helga Glock, ex-wife to Gaston Glock Sr., the gun industry’s most successful and secretive tycoon, has given us all that and then some with a new lawsuit filed in an Atlanta federal court earlier this week.

In the complaint—filed in Georgia, where the Austrian company’s U.S. headquarters is based and most of its business conducted—Mrs. Glock’s attorney accuses the 85-year-old gun manufacturer of a racketeering scheme that spanned decades and the globe, all in an elaborate plan to steal the business that Mrs. Glock and the rest of their family had helped to build from a mom-and-pop machine shop into a company with $400 million in sales each year. An enterprise so successful—it supplies U.S. police with two-thirds of their firearms and dominates the civilian market—that Mr. Glock’s criminal dealings have cheated her out of around $500 million, the suit claims, making the case one of the largest civil suits ever under the Racketeer Influenced and Corrupt Organization Act.

This isn’t the first time the Glocks’ legal dramas have played out in the media.

The family’s dirty laundry was aired in 2011 during divorce proceedings that would end the Glocks’ 49-year-long, if not happy then lucrative, relationship. The short story: After Glock suffered a stroke in 2008, his nurse-slash-mistress Katrin Tschikof, 50 years his junior, restricted the family’s access to the ailing magnate. And in a tale more suited for TMZ than The Wall Street Journal, by 2010, Gaston Glock had locked his wife out of their mansion in Austria, fired his three children—Brigitte, Gaston Jr., and Robert—from the family business, and stopped speaking to his grandchildren.

Helga and Gaston’s divorce was final on June 28, 2011. By the following day, Mrs. Glock (she kept her name) was no longer a part of the company. He married Tschikof later that year and appointed her to the company’s advisory board.

It would be simple to frame Helga Glock’s newest court battle as one brought by a lover scorned. But this is strictly a business case, her Atlanta lawyer, John Da Grosa Smith, told The Daily Beast.

Helga and Gaston Glock met in 1958, married in 1962, and a year later co-founded Glock KG. With the savings they had put aside for a condo in Vienna, the newlyweds bought land for a factory to make a gun he had designed for the Austrian army. The Glocks had day jobs—he as an operations manager for a company that made car radiators, and she as a secretary—but at night, the couple and their growing family worked to build the business.

That factory, as BusinessWeek reporter Paul Barrett chronicled in his book Glock: The Rise of Americas Gun, and noted in a 2012 interview, “was almost uniquely efficient, and the gun has been uniquely profitable as a result. His costs are so low that he was able to sell the gun very cheaply and basically grab the market away from companies like Smith & Wesson.”

By 1980, the Glock family was living atop their factory, making curtain rods as well as weapons. While Gaston designed firearms, the rest of the family kept the factory going. In 1985, after winning contracts with the Austrian army, the Glocks brought their business to the States, creating the U.S. subsidiary Glock Inc. Shortly after that unit was formed, the complaint alleges, Mr. Glock transferred 50 percent of the ownership of Glock Inc. out of the parent corporation—for the insanely low price of $75,000—and into Unipatent, a shell company that he controlled completely.

Ms. Glock says she knew nothing about the transfer, and didn’t learn about it until a quarter-century later, during their divorce proceedings.

By the 1990s, Glock’s focus on law enforcement was working and sales spiked, after a vocal majority of police unions called for better firepower following the high-profile shooting deaths of several officers. From there, the company continued to do exceedingly well, likely beyond any of their initial expectations.

And Gaston’s deceit continued, Helga Glock claims. In court documents, her lawyers colorfully relay the saga of how a billionaire ex-husband conspired with associates to steal half a billion dollars from the family that helped him build an empire.

The complaint is interspersed with quotes from former associates culled from past legal proceedings including one from Peter Manown, a former Glock vice president who a decade ago admitted to stealing millions from the company: “[Glock] spends money on mistresses, on houses, on sex, on cars. He bribes people. He’s just a bad guy.”

The complaint goes on—for 350-plus pages—to detail just how bad. This is, of course, only one side of the story. The general counsel of Glock Inc. in Georgia did not return calls for comment and Gaston Glock did not answer his phone in Austria.

According to the court filing, Gaston Glock Sr. carried out his schemes by paying himself inappropriate royalties; setting up a network of sham international companies from Bermuda to Hong Kong; laundering money through phony companies, leases, and loans; and paying Glock-owned companies that provided neither services or products.

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When Helga Glock would ask questions about the business, she says Glock Sr. would reply, “I strongly hope you will trust me, won’t you!” or “Trust me, it’s all for the family,” she states in the documents.

Meanwhile, Glock entertained clients and associates with lavish dinners and visits to a since-closed strip club, Atlanta’s Gold Club, Mrs. Glock’s complaint states. Glock used those strippers to represent the company at trade shows and flew them around on the corporate jet.

The complaint further alleges that Glock had a personal slush fund that he used to “cavort with women around the world.” One sham corporation was allegedly set up for the sole purpose of owning homes “to house and entertain his metro-Atlanta-based paramours.”

When Charles Ewert, nicknamed Panama Charly for the regions in which his shell corporations were located, partnered with Glock, they carried out elaborate schemes to stash profits away from his family and fund his grand private lifestyle, according to the complaint. Ewert later tried, but failed, to have Mr. Glock murdered, to hide his own $100 million embezzlement. Helga Glock maintains her ex-husband never told her about the incident. (Ewert was convicted on charges of attempted murder in a Luxembourg court in 2003 and sentenced to 20 years in prison.)

Besides working methodically to hide funds from his family’s reach, Glock convinced both Helga Glock and his children into donating their company assets and waiving inheritance rights in exchange for being made the beneficiaries of private foundations in Austria, Mrs. Glock’s suit claims. After his divorce, Glock used his power to remove his ex-wife, his children, and their descendants from these foundations and made himself the sole beneficiary.

These foundations that were supposed to ensure the financial stability of his wife and heirs now fund a horse farm, where an Olympic show-jumper named London lives. Glock gave London to his new wife as a present and, at $15 million, it is one of the most expensive horses ever purchased.

“From what she’s now discovered, Ms. Glock accepts as true that Mr. Glock betrayed her trust in so many ways in the course of their business partnership and has amassed much of the stolen assets in foundations that he established and ultimately controlled in Austria,” John Da Grosa Smith said.

Smith also oversaw the reversal of an embezzlement conviction of former Glock executive Paul Jannuzzo, reports Paul Barrett in BusinessWeek, which is notable in that Jannuzzo was found to be less of a criminal and more a victim of Gaston Glock’s personal vendetta.

No doubt Smith hopes to paint Glock as a monster once again, and the theatrical complaint pulls no punches. Glock’s actions, Smith writes, “resemble the senseless and self-destructive rage of Shakespeare’s King Lear, when he foolishly mistreats a loyal but candid daughter, Cordelia, in favor of cunning and ruthless flatterers. Perhaps neither pathology nor psychology can provide a satisfactory explanation for why an aging billionaire would spend his twilight years seeking to terrorize members of his own family.”