Sons of Wichita: How the Koch Brothers Became America's Most Powerful and Private Dynasty

by Daniel Schulman

  “He pretty much went his own way. He knew what he wanted and did it,” said Bertram Beach Culver III, another classmate and a member of the family who founded the school. “He was not unpopular but kind of set the terms on things like friendships. He decided if he wanted to be around you.”

  At Culver, Bill began to accept the ways he differed from his brother, if not fully embrace them. But at MIT, they were once again thrown back together, living in the same house, attending the same classes, sharing the same group of friends. When old animosities flared, it was typically on the basketball court. The brothers’ towering size—both of them were verging on six feet five—made them ideal recruits, and they joined MIT’s junior varsity team as freshmen.

  “Bill was always trying to keep up with Dave. He always felt inferior and always felt that Dave got the best of things,” recalled Bill Bloebaum, an MIT friend and teammate of the brothers. “If they bumped into each other at practice, Bill would quickly get verbal on it, but it wouldn’t bother Dave that much. Bill was the more emotional guy. He wore his emotions on his shoulder.”

  A top rebounder with a deadly jump shot, David quickly emerged as the team’s star player, and one of the finer athletes ever to pass through the university. (He even set the freshman pole-vaulting record.) Bill was a second-stringer, who occasionally subbed for his brother and was better known for his on-court tussles than his basketball prowess.

  MIT’s basketball team had a dismal track record—a 3 and 13 season was an average performance. They were called, after all, the Engineers, as if to highlight the fact that their skill lay off the court. During the 1959–1960 season, Jack Barry, MIT’s varsity basketball coach, inherited a team composed largely of sophomores, including David and Bill. Recognizing their inexperience, he drilled the players on a single formation. “He always said that our team was not good enough to have more than one play, so we ran that one play all the time,” said Burns, who played the high post (David played the low post) in this formation.

  Both David and Bill remember their charismatic coach fondly. “He organized the team to compensate for everybody’s weaknesses,” Bill recalled. “One guy couldn’t dribble, so he said, ‘You just stand here.’ Another guy could shoot from the outside but not the inside, so he said, ‘O.K., your job is shooting over here.’… He emphasized complete teamwork and instilled in us the attitude that we MIT nerds could win.” (David later donated $2 million to endow the head coach position at MIT.)

  In December 1959, during Bill and David’s sophomore year, the Engineers piled onto the team bus for the hour-and-a-half trip to Hartford, Connecticut, to face off against Trinity College, where they were handed their first double-digit loss of the season. The next game—a highly anticipated matchup with their Cambridge rivals, Harvard—was a 50-point blowout so humiliating that the Crimson’s contrite coach apologized to Barry after the game. Just before Christmas break, though, things began to look up. The Engineers eked out a 1-point victory over Worcester Polytechnic Institute, when David drained the deciding basket. The team was riding high off that victory when they faced Springfield in early January. By the second half, David had scored 23 points.

  Then disaster struck.

  With minutes on the clock, he aggravated an old knee injury that sidelined him for the rest of the season. He watched from the bench as the team embarked on a dispiriting losing streak that netted the Engineers a 2 and 20 record.

  “We were basically a disaster,” said Mead Wyman, a teammate and Beta brother, who remains close with David. “It was a long season.”

  Things turned around the following year, when David returned to the court. Averaging 24 points a game, he ranked among the top 30 scorers nationwide and won a spot on the All New England team. “His moves were just so good,” Wyman recalled. At the conclusion of the Engineers’ impressive 11 and 8 season, MIT’s newspaper reported: “The backbone of the team on the floor was Dave Koch.”

  Bill dropped off the team their senior year, while David was elected its captain, a role he had been passed over for as a junior. (“It was an attitude thing,” one of his teammates said. “He was more focused on himself junior year.”) David described his squad that year as “hustling, fighting, aggressive,” and he predicted at the start of the season that the 1962 team would be MIT’s best ever.

  It was. The Engineers went on a 15-game winning streak to end the season, boasting a 17 and 4 record. David set a longstanding MIT record of his own that season, scoring 41 points during one game against Middlebury College. His record remained intact for 46 years, until it was surpassed by MIT’s Jimmy Bartolotta, who went on to play pro basketball in Europe.

  On the final game of the 1962 season, against the University of Chicago, David walked off the court to a standing ovation. But the record-breaking season still ended in disappointment. The players and their coach believed the team was a shoo-in for the NCAA tournament. New Hampshire’s Saint Anselm College was selected instead.

  The season was filled with highs and lows, but one of the most memorable moments occurred earlier that year at a home game in MIT’s Rockwell Cage. The tall, beefy player guarding David had pushed him around for most of the game. The referees seemed oblivious, which made the opposing player that much more brazen in his manhandling of the Engineers’ star player. At one point, dispensing with any pretense of finesse, he roughly shoved David to the ground. Moments later, a lanky form suddenly leapt from the stands and charged David’s startled opponent, leveling the big player with a single blow.

  “Bill went out and knocked the guy flat,” remembered Bill Bloebaum.

  Tom Burns recalled: “Bill was not going to let anybody push David around like that.” He added, “I think everybody was thinking, ‘well, that’s Bill. You can’t stop him once he gets going.’ ”

  The Engineers received a technical foul, and Bill was promptly ejected from the Rockwell Cage.

  Charles remained in Boston after completing his bachelor’s degree in 1957. He occasionally dropped by the Beta house to look in on his brothers and watched their basketball games from the bleachers. David and Bill attended parties at Charles’s apartment, and the three brothers sometimes dated together. They were closer than ever.

  Like the twins, Charles thrived at MIT, where the environment was a welcome change from the highly regimented gulag of military school. “We didn’t even have to attend class—all we had to do was do the work. I felt liberated,” Charles has said.

  Similar to his younger brothers, he displayed no pretensions of privilege. “You had no idea of the wealth he represented,” said Ellis Braman, a fraternity brother. “He was a great guy, very personable, very friendly. He charmed the girls. He was a good looking fellow—tall, blonde.”

  The challenging engineering classes at MIT came easily to Charles, and on the nights before big exams, when his friends crammed, he’d often repair to a local beer and pizza joint and kick back. “Just smart as a whip,” Braman said.

  Outside of academics, Charles’s primary passion was rugby. His legendary competitive streak truly flared on the rugby pitch, though he even played games of flag football with an unusual level of intensity. “It was like he was playing the Super Bowl,” recalled an MIT graduate who refereed games Charles played in.

  He attended graduate school at MIT directly after college, and completed a master’s degree in nuclear engineering in 1958. Charles had contemplated making a career in this fledgling industry, but he soon thought better of it. The federal government tightly regulated the nuclear sector. Working in the industry, he would be at the perpetual mercy of Washington bureaucrats. His budding libertarian sensibilities were repulsed by the notion. So he took a second master’s, this one in chemical engineering. By 1959, Charles was working as an engineer for the Boston-based consulting firm Arthur D. Little. He enjoyed living in Boston, and moreover, he loved his job. In Wichita he was Fred Koch’s son, but in New England, Charles had found a way to step out of his father’s shadow.

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sp; A year went by, then two. Back home in Wichita, Fred Koch grew restless. He wanted Charles home. He was in poor health. His blood pressure was sky high and he had a family history of heart problems. His mother had died of congestive heart failure. A heart attack had also claimed his older brother in the 1950s, after which Fred helped to pay the private school tuitions of his nieces and nephews and gave them a small bloc of stock in his company.

  Fred had grown forgetful and gone was the great vigor and drive of his younger years. In a letter to his friend Robert Welch, intended to nudge the aging John Birch Society leader to consider stepping aside for the good of the movement, Fred confided that while he had always intended to “remain in business until I died,” his failing memory and waning energy had forced him to reconsider. “Regretfully, I came to the conclusion that the time had come for me to gradually withdraw from business and to turn it over to someone else,” Fred wrote. “I suppose what this all means is a gradual hardening of the arteries and a reduced supply of blood to the brain so the gray matter just doesn’t function like it should.”

  There was never much doubt about Fred’s choice of successor. His artistic eldest son had no interest in the engineering field, or the family business. “MIT is not for you, Frederick. I think Harvard is for you,” Frederick recalled his father counseling him. Ever since his arrival in Cambridge in the early 1950s, he pursued a very different life and very different interests than his three younger brothers.

  At Harvard, Frederick studied English literature and acted in theater productions. His fondest memories are of singing in the Glee Club. The Boston Symphony Orchestra’s conductor, Charles Munch, enlisted the Glee Club to perform as the chorus in a series of concerts featuring the symphonies of Berlioz. RCA Victor recorded the performances, enabling Frederick to proudly play an LP for his parents in which he sang in Romeo and Juliet and the Damnation of Faust. “I had a wonderful time there,” Frederick said of his Harvard years.

  The eldest Koch brother left the faintest of impressions on his dorm mates in Harvard’s Adams House. They remember him as a thin, pale boy and recall that he was unfailingly polite and arrived at school with an enormous collection of opera LPs. Based on Fredericks’s affect, they guessed at his sexuality.

  After graduation, Frederick attended Harvard Law School for a year, before abandoning the program to enlist in the U.S. Naval Reserve in the fall of 1956. His first duty station was in Millington, Tennessee. The young petty officer, first class, was attached to a technical training unit, then transferred to a logistical command, where he oversaw officer personnel records. This was “far more interesting work than what was required of me” in his prior post, he reported to Harvard classmates in an alumni update. In 1958, before his discharge from the Navy, Frederick served aboard the USS Saratoga in the Atlantic fleet.

  After returning to civilian life, Frederick attended the Yale School of Drama, majoring in playwriting. For his master’s thesis, he collaborated with Clark Gesner (later known for composing You’re a Good Man, Charlie Brown) on a musical theater adaptation of the 1941 book No Bed for Bacon. Set in the Elizabethan era, the comedic book was later cited for inspiring some of the plotlines in the Academy Award–winning film Shakespeare in Love.

  Frederick, in these years, explored the gay lifestyle, at least from an academic perspective. In the late 1950s, he became a follower of the ONE Institute of Homophile Studies, an organization for gays and lesbians founded in 1956, and a subscriber to its quarterly journal. In a July 1959 letter to the organization, requesting a copy of a book it had published called Homosexuals Today, he also inquired whether the institute was “familiar with a booklet or pamphlet listing, by name and address, the gay bars and restaurants in various European cities?… If you are aware of the title and editorial address of this publication, I should appreciate receiving this information.”

  A fellow Yale classmate, Bob Murray, remembered Frederick for his “prim campus haberdashery,” which usually included a coat and tie, and for the fact that he often kept to himself and was occasionally ridiculed because of his priggish appearance. “His mark,” Murray said, “seemed limited to his… aloofness, his marginal presence, his formal dress, his ‘aloneness.’ ” Frederick appeared to have few friends, nor much of a social life.

  Murray recalled his surprise when, before Christmas recess in 1960 or 1961, Frederick threw a large party at his off-campus apartment, located across the street from New Haven’s Shubert Theater. When Murray and his wife arrived, students spilled into the hallway and down a stairway leading to the apartment. A refrigerator stocked with champagne was ajar and partygoers were handing bottle after bottle into the crowd.

  “The host was not seen in the crowd and the crowd was simply helping itself, some stuffing several bottles into their coat pockets and leaving the premises for a private party of their own,” Murray said. Murray and his wife finally located Frederick “in a far corner of his dark living room looking, we decided later, lost and baffled by being caught in a riot. We left after having acknowledged the host, feeling even more sorry than before for ‘the poor little rich boy.’ ”

  Frederick moved from New Haven to New York City after completing his master’s program in 1961. He taught script writing for a semester at New York’s New School and apprenticed with theater producer Charles Hollerith Jr., but he mostly lived off a trust fund Fred Koch had established for his son the year Frederick graduated from Yale. “The arrangement,” Frederick recalled, “was that I would receive dividends on a quarterly basis and this would continue until the age of 45,” when he could access the principal. The Koch patriarch structured it in this way because he feared Frederick, left to his own devices, would blow through his trust fund on ill-advised theater productions. “My father was quite concerned about my having chosen a very risky profession,” Frederick said. “And he was particularly concerned about the temptation I might have to invest my own capital in plays that I would produce. And he wanted… me to have some assurance that I would have an income quite apart from the theater.”

  Mary Koch lamented in a 1986 interview that her eldest son had an “inferiority complex” that prevented him from achieving more with his life. “Freddie never composed anything himself and his father was upset that he never earned a living. Fred felt Freddie just indulged his pleasures in art, music, and literature when he could have created something.”

  Even though his immediate family lacked confidence in his ability to make a living in the arts, Frederick was popular among his parents’ circle of friends, with whom he seemed more at ease than his contemporaries. On periodic visits home to Wichita for holidays or other special occasions, he often joined his mother on the weekly cocktail party circuit. (Fred was rarely if ever seen at these confabs.) “Freddie used to love to go to those cocktail parties and gatherings,” remembered one fellow partygoer. “He was very good at conversation and always interested in what other people were doing.” He added: “Other people outside the family from Wichita were very impressed with Freddie, by the things that he’d done and the good causes he’d supported. In Wichita, Freddie was the most liked of all the four brothers, in the sense that he often went to those cocktail parties. He socialized more with our parents’ generation.”

  Charles resisted his father’s first few attempts to lure him home to Wichita. Finally, Fred gave his son an ultimatum: “He told me either you come back here and take over the company or I’m going to sell it,” Charles recalled. So Charles dutifully returned home in late 1961 to begin learning the ropes of his father’s company.

  Fred had always seen great leadership potential in Charles. Even so, when Charles went to work for the family company, Fred didn’t want to build up his twenty-six-year-old son’s confidence too much. “I hope your first deal is a loser,” he told him, “otherwise you will think you’re a lot smarter than you are.”

  Fred put Charles to work as the vice president of Koch Engineering, the company he had spun off when Winkler-Koch disbanded in
the 1940s. The company, which composed only a small part of Fred’s business empire, was just scraping by. Most of its customers were overseas, and the fact that the company had no international manufacturing presence was part of the problem. One of Charles’s early assignments entailed surveying possible locations in Europe to site a manufacturing plant for the production of Koch FLEXITRAYs, used for separating (or “fractionating”) oil. After scouring Europe, the young executive settled on a site in Bergamo, Italy. Fred was convinced that this was the money-losing deal he had warned his son about. “I have tried to discourage him,” he told a friend in a letter, “but he won’t listen to papa.” Fred’s aversion to Italy stemmed from his experience there in 1958, during national elections, when he witnessed “how strong the Communists were.”

  “Personally,” he confided to the friend, “I think we are going to pour the money down the drain, but it’s his baby so I am going to let him go ahead.”

  It turned out to be the first in a series of astute business moves by Charles, who, by 1965, had doubled Koch Engineering’s sales. Fred named Charles president of Koch Engineering in 1963 and made him a vice president of his main company, Rock Island Oil and Refining. Working closely with Fred’s right-hand man, Sterling Varner, an Oklahoma native who seemed to have a countrified expression for every occasion, Charles moved aggressively to expand the firm’s crude oil gathering business. They acquired pipelines and small trucking companies—undervalued and unwanted assets that Varner lovingly referred to as “the junk.”

  Varner worked for L. B. Simmons when Fred bought his uncle’s Rock Island Oil pipeline and refinery assets in the 1940s. Varner came along as part of the deal. The son of an Oklahoma oil field worker, he had started out as a crude oil purchasing clerk, rising steadily through the ranks to become an indispensable executive. It was quite a reversal from Varner’s early days with Fred’s company, when he made $2,400 a year and had some reason to believe he was expendable. One summer early in Varner’s tenure, Fred asked him to oversee the drilling of water wells at Beaverhead Ranch. Summer came and went without the industrialist issuing Varner a new assignment, so finally, as Thanksgiving neared, he called his boss.