Celebs who lost big financially
Tough financial breaks don't happen to just the little guy. See how big-name stars made big money mistakes.
The average Joe doesn't need much prompting to tell you how bad it's been in the past few years. Call last year a recovery period if you must, but Americans still saw bank ruptcies rise 9%, to more than 1.5 million, and reach their highest point since bankruptcy-law reform was introduced in 2005, according to the American Bankruptcy Institute and the National Bankruptcy Research Center.
Meanwhile, real estate data firm RealtyTrac notes that foreclosures rose to a record 1.05 million, edging the previous record of 918,000 in 2009. That means 26% of all homes sold last year were foreclosures.
It seems only fair that celebrities contribute to both categories. Some have lost 280 times the $50,000 that the Census Bureau says an American household makes in a year. The following are just 10 examples of celebrities who have taken a huge financial hit during the past few years.
Shaq tried to flip the house for what he thought was a reasonable $32 million to $35 million, and in 2007 almost had a New York Yankees third baseman on the hook for $25 million. But he watched the estate linger on the market for five years amid a housing crisis that flushed Miami housing prices by nearly 40%, according to Florida Realtors, a trade association.
Eventually, Shaq unloaded the house on Russian real estate magnate and Naomi Campbell paramour Vladislav Doronin in 2009 for a reported $16 million -- $2.8 million less than he paid and less than half his asking price. Shaq has since recovered, but only in the world of celebrity investments and bankruptcy can a $2.8 million to $16 million loss be considered getting off light.
This is the singer's second bankruptcy after first filing in 1998, but that was brought on by tension and an eventual split with her record label and poor financial choices, such as accumulating $500,000 in overdraft fees in 1997 alone. This time, much of Braxton's trouble stems from canceling a string of shows in Las Vegas in 2008 after chest pains she experienced during performances were later diagnosed as a heart problem that insurer Lloyd's of London called a "pre-existing condition" in refusing to cover her losses. She was also forced to pull out of the series finale of ABC's "Dancing With the Stars" that year when she had a breast tumor removed.
With a list of creditors including the Internal Revenue Service, Flamingo Las Vegas hotel and casino, the Four Seasons Hotel in Washington, D.C., Cedars-Sinai Medical Center, Neiman Marcus, the Screen Actors Guild, RCA Music Group and Tiffany & Co., Braxton saw her $2.6 million home in Henderson, Nev., go into foreclosure and sell for little more than $1 million. Her $1.2 million home in Duluth, Ga., just went into foreclosure proceedings.
In 2009, the IRS filed a lien on some of Cage's property in Louisiana and said Cage owed it roughly $6 million for purchases made in 2007. They weren't talking about weekend splurges at Harrod's, mind you, but a $15.7 million mansion in Rhode Island; the $8 million-plus Milford Castle in Bath, England; a five-year, $7,700-a-month lease on a 1964 Rolls Royce SC III; and a $3,600-a-month lease on a 2002 Rolls Royce Corniche. The burden forced him to sell two $3.5 million homes in New Orleans back to the bank for $4.5 million, an $8.5 million home in Las Vegas for $5 million, a $9.5 million Manhattan apartment for $7.5 million and -- most crushing -- a Bel-Air Tudor mansion he'd listed for $35 million for $10.5 million after it went into foreclosure.
Meanwhile, he has also listed a $1.7 million home in Newport Beach, Calif., for less than $1 million and that $15.7 million Rhode Island home for $7.8 million. Cage sued his business manager for $20 million in 2009, which led the manager in question to countersue, saying that he told Cage to spend within his means but couldn't stop him from buying $33 million in homes, 22 cars, 47 pieces of artwork and a $276,000 skull of a Tarbosaurus.
As it turns out, the previous club owner's mortgage was in default before Dr. J bought the club, and its value was never close to $11 million. The property ended up being worth $2 million and, because Erving never took a paycheck as the club's owner, he ended up losing about $5 million on the deal.
The pair reportedly lost millions of their personal investments in the scheme, and while it may have been somewhat comforting to know that Hollywood figures such as Steven Spielberg and Jeffrey Katzenberg were duped in the same deal, it had to be humbling for the already prolific Bacon to tell Life & Style magazine in 2009 that "I need to work, for obvious reasons." Remember this when you're inundated with commercials for any of Bacon's four projects slated to hit the screen this year.
Snipes paid taxes on his earnings from "Wildcats," "Major League," "White Men Can't Jump," "Jungle Fever," "Mo' Better Blues," "Passenger 57" and "Rising Sun," but suddenly he starts playing a samurai vampire (sorry, daywalker) and he's invulnerable to taxes? Did those eight straight-to-DVD movies he's made since 2004 weaken his powers?
Don't worry, Snipes has plenty of time to ponder this after his final appeal failed last year and he started his three-year prison sentence in December.
Forget their heavy ordnance of a film "Swept Away," her "British" children's book "The English Roses," her directorial debut "Filth and Wisdom," her "American Life" album and her affected English accent. You marry a guy who directs heist movies like "Lock, Stock and Two Smoking Barrels" and "Snatch" for a living and you don't sign a prenuptial agreement?
Madonna was worth $500 million during her marriage to Ritchie, and while the director didn't clean her out when their marriage dissolved in 2008, the $75 million he reportedly got was a nice parting gift.
When Bono bought a stake in private equity firm Elevation Partners in 2004, it gave him a nearly 30% stake in Palm, including stock worth an estimated $325 million. In the pre-iPhone smartphone market, that wasn't too shabby.
When Palm fumbled the Pre, however, and the iPhone surged in market share, that investment started to look a lot shakier. It got worse when Hewlett-Packard bought Palm for $1.2 billion last year, but valued Palm shares at only $5.70 when they were trading at $18 just a year before. The whole deal set Bono back $140 million, and while it's tough to top U2's "Pop" album as a career low point, his disastrous Palm investment trumped it in Bono's typically grand fashion.
His list of defrauded clients read like the guest list at a gala fundraiser: Actress Uma Thurman, musician Paul Simon, actor and singer Liza Minnelli, newsman Tom Brokaw, film producer Harvey Weinstein, talk show host Phil Donohue, singer Carly Simon, photographer Annie Leibovitz, playwright Neil Simon and actor Sylvester Stallone -- who sued Starr in 2002 and claimed his advice caused him to lose $10 million in his restaurant chain Planet Hollywood's stock.
As a reward for their trust, Starr repaid his clients with such dastardly deeds as testifying against Snipes in his tax-evasion trial, bilking 99-year-old heiress Rachel "Bunny" Mellon out of $5 million in a Manhattan apartment deal and tucking away more than $57 million worth of ill-gotten goods in property and bank accounts shared with his wife and former Scores stripper Diane Passage -- including one account in the name of "Poledance Superstar."
Now we're not saying a 66-year-old financial adviser who marries a stripper in her mid-30s and is regularly sued by his clients -- including former radio actor Joan Stanton, who sued Starr for misappropriating "tens of millions" before dying in 2009 at 94 -- is necessarily a bad guy. You just may want to consider all that background before handing him your money.
The good news for Philadelphia Eagles quarterback Michael Vick is that he turned a Comeback Player of the Year season in 2010 into a key to the city of Dallas and a franchise tag from the Eagles that could be worth $16 million to $20 million if the NFL doesn't lock out its players next season. The bad news: The aftermath of his dog-fighting conviction and ensuing prison sentence will put almost all of that money into other people's hands.
It's no secret Vick's past cost him endorsement deals with Nike and AirTran, more than $60 million of his $130 million contract extension that he signed with the Atlanta Falcons in 2004 and 16 months of his freedom. What's less known is that also left him bankrupt, with roughly $10 million to $50 million in debt. According to the Atlanta Journal Constitution, he's been paying off that debt by keeping only $300,000 of the $6.8 million he made with the Eagles during the past two seasons, but he has more than $20 million still outstanding. Though he's recovered from his dogfighting conviction professionally, its fallout will likely keep his paycheck on a short leash in the near term.
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