Glock Family Feud Escalates With Ex-Wife's RICO Suit

Gaston Glock, the gun mogul who supplies firearms to two-thirds of U.S. police departments—and to millions of individual American consumers—has been accused of thieving, money laundering, and racketeering. Glock’s ex-wife, Helga, filed a massive civil suit Thursday against the Austrian industrialist in federal court in Atlanta, near Glock’s subsidiary headquarters in Smyrna, Ga. The 340-page suit invokes the Racketeer Influenced and Corrupt Organizations (RICO) Act and seeks $500 million plus unspecified punitive damages and attorneys’ fees.

Spiced with allegations of fraud and concealment of gun profits, Helga Glock’s claim that Gaston stole her share of a company they built together, beginning in the early 1960s, could raise serious questions of public policy: Does closely-held Glock represent the sort of company to which U.S. municipalities, federal law enforcement agencies, and military units ought to direct millions of dollars a year in taxpayer funds? Might the IRS have any concerns about Glock’s alleged use of shell corporations to transfer firearm profits away from the U.S. and toward lower-tax jurisdictions in the Caribbean, Latin America, and Europe?

Executives at Glock Inc., the company’s U.S. unit, didn’t return phone calls seeking comment. “Usually they don’t comment on any lawsuits,” says a woman who identifies herself as the assistant to Josh Dorsey, a Glock Inc. vice president who serves as the company’s public face. In the past, lawyers representing Glock Inc. and its affiliates have asserted that the firearm empire follows all relevant tax laws and operates ethically worldwide.

Helga Glock’s allegations won’t entirely surprise readers of Bloomberg Businessweek. Beginning with a 2009 cover story, “Glock’s Secret Path to Profits,” the magazine and website have chronicled the Byzantine business practices associated with the most influential and lucrative handgun of the late 20th and early 21st centuries. (My 2012 book, GLOCK: The Rise of America’s Gun, expanded on that account.) Last month, Bloomberg Businessweek published a feature article based on my interviews in Vienna with Helga Glock and her children, in which they provided what amounted to a preview of the RICO suit. The subtitle of that article asked: “Together they made a fortune selling death machines, so why did Daddy abandon them?”

In her racketeering suit, Helga Glock’s answer to that question boils down to one word: greed. Gaston Glock, 85, divorced his wife of nearly 50 years in 2011 and has since married a woman a half-century his junior. Helga Glock is 78.

“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,” Mrs. Glock’s Atlanta lawyer, John Da Grosa Smith, added with a flourish that colors the lengthy complaint. “Whatever the cause of this particular madness and family tragedy,” Smith continued, “its execution by defendants [Gaston Glock and his subordinates] has proceeded in violation of American criminal laws prohibiting transmission or receipt of stolen goods, theft by taking, theft by deception, theft by conversion, theft by receiving stolen property, forgery, mail fraud, wire fraud, money laundering … and racketeering.”

Smith brings impressive legal credentials to what otherwise might seem like an unlikely assault on an influential billionaire and his industry-leading corporation. Last year the attorney engineered the reversal of a criminal embezzlement conviction of Paul Jannuzzo, formerly Glock’s senior-most U.S. executive. At Gaston Glock’s behest, Jannuzzo had been prosecuted by local authorities in Cobb County, Ga., for supposedly stealing from the company. Jannuzzo countered that all of his actions were approved by Gaston Glock and that he was the victim of a personal vendetta after a vicious falling out with his ex-employer.

Now employed by Mrs. Glock, Smith has made a litany of colorful allegations against her former husband. They include:

• arranging for his companies to pay him sham royalty and licensing fees for the use of intellectual property he didn’t personally own;
• using fraudulent invoices to funnel money away from the companies and into his pocket;
• after he divorced his wife three years ago, locking her out of their lakeside mansion in southern Austria and firing her and their children from long-standing jobs with the family gun company;
• diverting money from Glock Inc. to “cavort with women around the world” and to purchase homes for mistresses;
• employing strippers from Atlanta’s now-defunct Gold Club to represent Glock at trade shows and accompany executives on the company jet.

Doubtless Gaston Glock and Glock Inc. will offer responses to the RICO suit. Check this space.

    Before it's here, it's on the Bloomberg Terminal.