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Bennett S. LeBow

Bennett S. LeBow is a financier and corporate raider. He is also the former Chairman of the Board and CEO of Borders Group, an international bookseller based in Ann Arbor, Michigan and Chairman of the Board of Vector Group, a holding company primarily involved in the manufacturing of cigarette products which is listed on the New York Stock Exchange.

Contents


Education and career

LeBow, a native of Philadelphia, Pennsylvania graduated from Drexel University in 1960 with a degree in electrical engineering. LeBow then went on to graduate school at Princeton University. Before completing his degree, LeBow left Princeton and joined the army where he installed early data systems at the Pentagon. LeBow's first foray into business occurred in the 1960s when he started a computer company to continue his Pentagon project. LeBow eventually sold the business in 1971 for a profit and became a full time investor. LeBow went on to purchase many companies including: Western Union, Information Displays, MAI Basic Four, Liggett Group and Brigham's Ice Cream.

LeBow also started the SkyBox International trading card company and eventually sold the business to Marvel.

Cigarettes and litigation

In 1996, while under his leadership, Liggett Group broke ranks with the rest of the US tobacco industry, including Philip Morris, Brown and Williamson, RJR Nabisco, Loews and Lorillard, when he announced that Liggett would settle the Medicaid tobacco suits brought by forty state attorneys general. Liggett publicly announced that smoking is addictive and causes cancer and other health ailments, turned over long-secret tobacco industry documents, disclosed its ingredients, and testified against the industry. Liggett was the first cigarette company to voluntarily put the label "Nicotine is Addictive" on their product.

LeBow's actions were pivotal to the government in their signing of the Master Settlement Agreement. In addition to this, LeBow was honored with a proclamation by Florida Governor Lawton Chiles for his "invaluable assistance" in helping Florida achieve its historic $11.3 billion settlement with the tobacco industry. Following this presentation, Lebow and Mr. Chiles addressed a group of students, who "saved their toughest questions for Liggett Group chief Bennett Lebow of Miami". One student asked, "If you want to be a watchdog of the industry, why not get out altogether and stop making cigarettes?" to which he responded that if he did, others would continue.[1] LeBow also developed, through Vector Tobacco Inc., the nicotine-free cigarette Quest (cigarette) which is a cigarette designed to help people quit smoking.[2] Also that year LeBow teamed up with corporate raider Carl Icahn to make a bid for RJR Nabisco.

According to court documents, Liggett, while under LeBow's leadership, "engage(d) in marketing tactics that appeal to youths, such as couponing, sampling, and buy one get one free offers for its cigarettes, and advertise(d) in magazines with substantial youth readership." [3]

Lebow has stated that since cigarettes are a legal product, he does not care whether they cause cancer.[4]

Present

In May 2010, following a major stock investment, he became a member of the Board of Directors at Borders Group Inc. and was immediately elected Chairman of the Board, replacing Mick McGuire, who resigned.[5] In June 2010, LeBow became CEO of Borders Group Inc..

LeBow is also Chairman of the Board of Vector Group, the holding company for Liggett Group, Vector Tobacco, New Valley LLC, and Douglas Elliman.

LeBow is also a large supporter of his alma mater, Drexel University. In 1998, Drexel's College of Business and Administration was named the Bennett S. LeBow College of Business in his honor after a contribution of $10 million to the university.[6] Further, he endowed the Bennett S. LeBow Engineering Center, a state-of-the-art facility that houses Drexel's College of Engineering. In November 2010, the 72-year-old West Philadelphia native contributed $45 million for the construction of a new facility for the LeBow College of Business the 12th largest gift to any US business school, and the biggest ever to Drexel University.[7]

In 2011, LeBow was named the nation's 23rd largest charitable donor by The Chronicle of Philanthropy for donating more than $49 million to charitable causes.[8]

In 2009, LeBow made a $10,000 campaign contribution to Manhattan District Attorney candidate Leslie Crocker Snyder, whose law firm - Kasowitz, Benson, Torres & Friedman - had represented the Liggett Group in smoking and health litigation since 1996.[9]

Criticism

Anti-smoking critics have attacked LeBow for his involvement with and ownership of tobacco producer Liggett Group. Critics cite a 1993 deposition, where LeBow was reported to have denied knowing whether smoking caused cancer.[10] By the mid-1990s, however, LeBow had broken ranks with other tobacco producers to settle cases against Liggett and had made statements that he believed smoking was harmful.[11] Then, nearly a decade later, in 2005, LeBow would retract or disavow many of his earlier criticisms of the tobacco industry. In 2005, LeBow could identify only a handful of documents that had led to his earlier criticisms and was reluctant to identify a "direct link" between smoking and cancer.[12] Critics cite evidence that Philip Morris paid at least some of Liggett's legal bills in order to buy its cooperation in anti-tobacco lawsuits.[13]

LeBow has also been scrutinized a number of times for a variety of decisions and business dealings:

  • In 2005, LeBow resigned from the Dana-Farber Cancer Institute Board of Trustees shortly after his appointment over discussions about the propriety of associating with the owner of a company which sells products that are known to cause cancer.[14]
  • In 1993, Brooke Group Shareholder Frank Gyetvan sued LeBow on behalf of other company shareholders, claiming Brooke had improperly lent Lebow money for luxury personal items, such as a $21 million dollar yacht. The suit was settled the following year, with LeBow repaying $16 million to Brooke's other shareholders and giving up his right to receive 6.25 million in preferred dividends .[15]
  • In 1989, LeBow was criticized for using $3 million to fly a planeload of friends to a London party for the launch of his 177-foot yacht. The trip came during the time LeBow controlled MAI Systems, an Irvine, Calif.-based computer network company, and Western Union. Both companies filed for Chapter 11 bankruptcy reorganization in 1993."[16] (Although LeBow later reorganized Western Union and sold it to First Financial Management for $1.2 billion.)[17]
  • In 1984, LeBow completed the sale of Information Displays which subsequently went bankrupt. The buyer sued LeBow and his partners for fraud and misrepresentation. In 1986, the S.E.C. charged an associate of LeBow's (William Weksel) with violations of securities regulations[18]
  • In the past, LeBow's business associations have come into question. In the book "Red Mafiya: How the Russian Mob Has Invaded America", the author states: "Ukrainian mob boss Vadim Rabinovich attended a Clinton-Gore fund raiser at the Sheraton Bel Harbor Hotel in Miami. Rabinovich came as a guest of Bennet S. LeBow, the Chairman of Brooke Group Ltd, Parent of Liggett, a cigarette manufacturing company (LeBow refused to comment)." [19] According to a spokesman for LeBow, LeBow's Brooke Group and Rabinovich developed a business center and luxury hotel in Kiev.[20]

References

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