March 12th, 1932. A luxury apartment in Paris, 5th Avenue, Victor Emmanuel III. Sometime between 10 45 a.m. and noon, a gunshot rings out. The man who just pulled the trigger controlled three-quarters of the world's match production. Matches. He loaned hundreds of millions of dollars to European governments. He was one of the richest men alive. By evening, the world knows that he's dead. And within weeks, auditors discover the truth. At least$250 million in fake assets, forged government bonds, fabricated subsidiaries, one of the largest frauds in history. But here's what makes this story matter for you today, here on the Timeless Investor Show. Because every single technique that Ivar Kruger used in 1932 is being used today. The complexity that hides fraud, the charisma that disarms skepticism, the leverage that multiplies lies, the Ponzi structure that requires constant growth, FTX, Theranos, WeWork, Madoff, they're all running Kruger's playbook in some way, shape, or form. So if you want to protect your capital and if you want to avoid becoming the next victim, you need to understand how the match king built and destroyed a financial empire because those who forget the past are condemned to repeat it. Welcome to the Timeless Investor Show. I'm Ari Van Gemran, your host, real estate fund manager, student of history, and your guide through some of the most fascinating and horrible financial disasters of all time. This is part of our Timeless Greed series: stories of financial fraud, manipulation, and the patterns that repeat across centuries. We previously covered the infamous John Law, wealthiest man in France, the next day fleeing France in drag of, you know, infamy for the Mississippi Company and many other matters. And today we are going to delve into the story of Ivar Kruger, the match king. Ivar Kruger was born in 1880 in Kalmar, Sweden, a small coastal town on the Baltic Sea. His father, Ernst Kruger, managed match factories. The family had been in the match business for generations. His grandfather had built two factories. It was the family trade. But young Ivar wanted nothing to do with matches. He thought they were boring, small time. Beneath him, he had bigger ambitions. So he studied civil engineering at the Royal Institute of Technology in Stockholm. He graduated at age 20 with two master's degrees, mechanical and civil engineering, and immediately he left Sweden. And I just want to add, John Law was brilliant, and Ivor Kruger was brilliant. You have to be relatively brilliant to pull off frauds of massive scale, not to give these guys any props, but it's the truth. You can't be a dummy and pull off a massive fraud. You cannot defraud governments on mass scale and not be quite intelligent. Okay. So young Kruger goes to America in 1900 with$100 in his pocket and a head full of dreams. The classic American story. And he hustled. He worked construction jobs across the United States and Mexico. He helped build some of New York's most iconic buildings: the Macy's Department Store, the Flatiron Building, the Plaza Hotel. The Plaza Hotel, by the way, of Donald Trump ownership and uh ding dang dong from Home Alone 2, Lost in New York. Always have to reference that movie. He was learning how the world actually works, how big projects get financed, how capital moves, how deals get structured. He was observing the machinery of American capitalism up close. And by 1907, Kruger returns to Sweden. He's 27 years old, confident, worldly, and he's got a new idea. Reinforced concrete construction using the con system. It's cutting edge technology, and he sees the opportunity. He partners with another young engineer named Paul Toll. And together in 1908, they found Kruger and Toll, a construction company. And it explodes. They win huge contracts. They build the Stockholm Olympic Stadium for the 1912 Games, major department stores, office buildings. And here's what set them apart. They guarantee completion dates. If they were late, they paid penalties. If they were early, they earned bonuses. This was revolutionary. And they finished projects early. They earned bonuses and they built a reputation as the most reliable construction firm in Sweden. So by his early 30s, Kruger is already wealthy and well connected. His construction company is paying 15% dividends. He's making some serious money. But then in 1911-1912, his father's match factories in Kalmar run into financial problems, and the family needs help. And that's when a group of Swedish bankers approaches Kruger with a proposition. They want him to organize a merger of Swedish match companies, consolidate the industry, raise capital, modernize production. His father's factories would be included. His brother Torsten would help manage things. And Kruger sees something: an opportunity much bigger than construction, much bigger than just helping his family, and more exciting than being a match production guy. So in 1912, he takes over. He merges his father's factories with other small companies to create AB Kalmar Molsteras Tanstigfabrik. Hope you enjoy my Swedish pronunciations. Yes, viewers, listeners, I probably mispronounced it. Please tell me in the comments how to say it correctly. His father and uncle became major shareholders. His brother Torsten becomes general manager. Ivar Jar joins the board. And then in 1913, he expands this into AB Svenska Fotonad Tanzig Fabrika, merging with more match companies across Sweden. And Ivar becomes general manager. But he's not satisfied with regional business. He has his eyes on something much larger. So in 1917, he engineers the ultimate power move, a merger with AB Junkkoping Vulcan, the largest match company in Sweden. The company that had rejected his merger proposal back in 1912. And but now, after Kruger had spent years buying up all the smaller competitors and raw materials suppliers, Vulcan has no choice. They need to merge. The result? Svenska Tanstix AB, Swedish match, one company controlling essentially all match production in Sweden. And now Kruger sees something. Matches are a necessity. Everyone needs them. Every household, every restaurant, every factory, and the business is fragmented globally. Thousands of small manufacturers making tiny margins. But what if you could consolidate it? What if you could create monopolies? The dream of Gilded Age capitalists worldwide. And I realize we're a little past the Gilded Age here, but nonetheless, close enough for memory to serve. And here's the genius. And I want to use that word carefully, although I've already sort of implied it, because Kruger was brilliant, even if he was a sociopath. After World War I, governments across Europe are broke, absolutely shattered. France, Germany, Poland, Yugoslavia, they all need capital desperately. The war has destroyed their economies, and nobody will lend to them because their credit is ruined. Enter Mr. Kruger with a proposal. I'll loan you the money you need, tens of millions of dollars, reasonable interest rates, long repayment terms, just one condition. You give me the monopoly on match production in your country. The match king, guys, the match king. Stop and think about that for a second. He's trading capital for monopolies. It is breathtakingly clever. I don't know how else to describe it. France says yes. Germany says yes. Poland says yes. By the late 1920s, Kruger controls match monopolies in over 40 countries. He, you could argue, succeeded in bringing all these warring nations together under one great match enterprise. Three-quarters of the world's match production flows through his companies. Amazing. And Wall Street, what do you guys think Wall Street thinks? They love him. They love him. They absolutely worship him. Kruger's companies become the most widely held stocks in America. His bonds trade at premium prices. Financial magazines put him on covers. He's called, get this, guys, the savior of Europe. Just like I said, just like I said, he brought everyone together with matches. Amazing. Investors beg to get into his deals because on paper, it looks perfect. Steady cash flow from monopolies, diversified across dozens of countries, government-backed contracts, a necessity product that everyone has to buy. What could possibly go wrong? Everything. Absolutely everything. Here's what nobody knew. It was all fake. Okay? Not all of it, initially. Sweetest match was real. The early monopolies were real. The construction business was legitimate. Kruger had genuine business acumen. He was a certifiably brilliant individual. But somewhere along the way, probably around 1923 or 1924, Kruger crossed a line. The fraud started small, but it grew. He needed more capital, and the monopolies required huge upfront payments to governments. And the match business, while stable, didn't generate enough cash to fund his expansion at the pace he wanted. So Kruger started manufacturing assets. He created phantom subsidiaries, shell companies that existed only on paper. He'd loan money from one entity to another, then counted his revenue on both sides. He'd fabricate contracts with governments that didn't exist. He invented a whole new category on his balance sheet called other investments, air quotes, worth$400 million, most of which did not exist. And then there were the Italian bonds. Mussolini had refused to give Kruger a match monopoly in Italy. Mussolini, maybe Mussolini saw through it, I don't know. So Kruger decided to create his own collateral. He forged over$140 million worth of Italian government bonds, complete with official seals, signatures, serial numbers. The level of sophistication here is wild. Wild. And when Italian officials eventually examined them after Kruger's death, they discovered the forgeries were crude, misspelled Italian words, incorrect formatting, signatures that did not match. But it didn't matter during his lifetime because nobody checked. Why would they? He was Ivar Kruger, the match king, the man who saved Europe, friend of presidents and prime ministers and kings worldwide. His accounting was deliberately complex, Byzantine even. He'd create layers of holding companies, each one owning pieces of others, with cash flowing between them in ways that made auditing nearly impossible. And when auditors asked questions, he'd overwhelm them with paperwork. Thousands of pages of paperwork, different currencies, conflicting standards, over 400 subsidiary companies. It sounds like a forensic accountant's dream. He also controlled his own banks, which let him loan money to himself and call it income. Classic, classic Ponzi structure. Use new investor money to pay old investors, creating the illusion of profitability. His companies paid dividends of 20% or more during the boom years. Investors loved it. But those dividends were not coming from profits. They were coming from new capital raises. It was a machine that only worked if it kept growing. And here's the thing about Ponzi schemes: they only work if they keep growing. Gotta have a greater full. Greater full, put money in, you know, you know how it works. The second you stop bringing in new capital, the whole thing implodes. And it all I'll just say, Ponzi schemes always implode around the same thing. A market crash. And by 1929, you know where we're headed. The Great Depression hits. Credit markets freeze. Investors stop buying bonds. Governments stop borrowing. Banks stop, start, not stop, they start asking harder questions. This is a dire situation. And this is when all the great Ponzi schemes get revealed. When did Madoff get revealed, guys? Around 08, right? Always the same situation. Kruger tries everything. He attempts to merge with ITT to raise cash, but they demand an external audit. He approaches banks for loans. They want detailed financials. He proposes new government deals, but nobody has money anymore. The machine is seizing up. In early 1932, he is desperate. He needs to make over$10 million in payments. He gambles frantically in currency markets and stock markets, trying to prop up share prices. He loses between$50 and$100 million in just weeks.$15 and$100 million in that day, not today. Swedish bankers demand a complete accounting of his empire before they'll extend more credit. They want him to meet with the chairman of Sweden's central bank in Berlin on March 13th or 14th. Kruger knows if he shows them the real books, he's finished. If he doesn't show them the books, they won't lend him money. And if they don't lend him money, he can't make payments. And if he can't make payments, everyone will know it's a fraud. He is trapped. So March 11th, 1932, Kruger arrives in Paris from New York on the ship Ile de France. He's supposed to meet with Swedish bankers that evening to prepare for the Berlin meeting with central bank officials. He meets with Christor Latorin, vice president of Kruger and Toll and his longtime banker Oscar Rydbeck. They discuss the upcoming meeting, they go over the numbers. Everyone knows this is the moment of truth. That night, Kruger goes back to his apartment at 5 Avenue Victor Emmanuel III. The next morning, March 12th, sometime between 1045 and 12, a gunshot rings out. His maid finds him dead in his bedroom, a 9mm pistol on the bed beside him, single gunshot wound to the chest, through the heart. The police rule it suicide. Though decades later, his brother Torsten would claim it was murder, spawning conspiracy theories that persist to this very day. But the evidence strongly suggests suicide. Kruger left sealed letters. He bought the pistol that morning at a shop near his apartment. The shopkeeper remembered him perfectly calm, collected. The initial reaction is shock. One of the richest men in the world dead by his own hand? Why would someone so powerful, so successful, kill himself? But then the auditors arrive. Price, Waterhouse, and Co. sends a team of 30 men to Stockholm. They bring calculating machines and they start opening the books. And that, my friends, is when the nightmare begins. Within weeks, they discover the Italian bonds are fake. Then they find the phantom subsidiaries, then the circular loans, then the forged contracts, then the off-balance sheet entities, layer after layer of fraud, stretching back over a decade. The final accounting takes months. But here's what they find. At least$250 million in fake or missing assets, roughly$6 billion in today's money. Some estimates put it as high as$400 million. The forged Italian bonds worth over$140 million. Kruger personally appropriated about$115 million. His companies reported$300 million in profits over 14 years. The auditors found actual operating profits of only$40 million. And even some of that was questionable. Swedish Match declares bankruptcy. Kruger's empire collapses. Investors lose everything. Some of them are widows who put their life savings into his bonds because they were told they were as safe as government securities. Pension funds, foundations, universities, all gone. The ripple effect spreads globally. Banks that loan to Kruger face massive losses. Credit markets that were already fragile from the depression seize up further. Some economists argue that Kruger's collapse made the depression worse. It cut off access to capital for legitimate businesses across Europe. The Swedish government nearly falls. Prime Minister Ekman is forced to resign because of his connections to Kruger. Municipal tax collections drop 10%. Communist Party membership doubles. Doubles. The king's brother moves into humble quarters because he lost everything in the crash. And the governments that gave him monopolies, they are stuck. They already spent his money. Now they have to figure out how to unwind these contracts while their economies are collapsing. It was the largest bankruptcy in history at that time. And Kruger's name becomes synonymous with fraud on a scale the world had never seen. So, as timeless investors, what can we learn from the match king? What are the timeless principles at play here? The ways we can protect ourselves, our families, our firms, the capital that we're entrusted with, whether it's ours, clients, from this sort of thing. First, complexity is the red flag. Brueger's empire was deliberately complicated. Over 400 subsidiary companies, loans between entities, multiple currencies, conflicting accounting standards. When someone says it's too complex to explain simply, it's not sophistication, it's a warning sign, in my opinion. Warren Buffett has a rule. If you cannot explain the business model in one sentence, don't invest. Kruger violated that rule spectacularly, and everyone who invested with him paid the price. Second, charisma plus opacity equals danger. Kruger was charming, brilliant speaker, confident. He dined with presidents and kings. Financial magazines loved him. Everyone wanted to be in his deals. But charisma is not due diligence. Charm does not equal competence. And in fact, the most dangerous fraudsters are often the most charismatic because charm disarmed skepticism. Sound familiar? Elizabeth Holmes, Sam Bankman-Fried, Bernie Madoff, different eras, same playbook. Third, leverage multiplies everything, including fraud. Krueger didn't just lie about his assets. He borrowed against them. He used fake bonds as collateral for real loans and real money. He leveraged phantom profits to create more phantom profits. Leverage amplifies everything. When you're right, it makes you rich. When you're lying, it makes the entire situation worse. It makes it a catastrophe. Fourth, critical for today, in my humble opinion, guys, boring businesses shouldn't trade like growth companies. Matches are boring. They're commodities, low margin, steady demand. They should trade at reasonable multiples, maybe 10 to 12x earnings, maybe. But Kruger's companies traded at 30x, 40x, sometimes higher. Why? Because the story was sexy. Monopolies, government backing, European reconstruction. When a boring business starts trading at exciting valuations, you have to ask why. Usually the answer is fraud or delusion. I'm not sure which is worse. They're both bad. Fifth, every Ponzi scheme ends the same way. Berger's fraud worked as long as the new money kept coming in. The second it stopped during the depression, the whole thing imploded. Ponzi schemes don't usually fail because people figure them out. They fail because they run out of new victims. They fail because the market will usually at some point crash. Well, it will always crash eventually. And when it crashes, the Ponzi schemes, the rats are revealed. Reminds me of a great book my former uh CEO, Ken Fisher, wrote, How to Smell a Rat. Great book. Highly recommend it. It's all about finding and sourcing financial fraudsters in your life. The math is simple and brutal. You cannot pay 20% dividends indefinitely from a business earning 1.5% returns. Eventually the numbers will catch up to you. The match king proves something important. Intelligence and fraud are not mutually exclusive. Kruger was brilliant, genuinely brilliant. You have to be to do this. He revolutionized construction techniques. He built real companies. He understood finance better than most people alive. Clearly, he outweighted the auditors for decades. He even invented financial instruments we still use today. American depository receipts came from him. Think about that. That's awesome. But brilliance without ethics is just theft at the end of the day. And here's what really concerns me today as we look at our world today. We're living in an era where charismatic founders with opaque business models can raise billions of dollars based on charm and charisma alone, where complexity is celebrated as innovation, where leverage is seen as savvy rather than dangerous, and everybody wants to get on the latest get rich story. The tools have changed, the technology is different, but the playbook is pretty much the same as it was in 1932. So when you see the next genius entrepreneur with a business model that requires a whiteboard to explain, remember Ivar Kruger. Remember that on March 12, 1932, one of the richest men in the world shot himself rather than face the music. And remember that fraud doesn't announce itself, never does. It wears a nice suit, speaks confidently, promises extraordinary returns from ordinary businesses. The question is not whether fraud exists. We know it exists. It will always exist because one truism in history, guys, humans never change. Fraudsters have always existed. They're out there. The question is: are you prepared to spot it? Think well, act wisely, build something timeless. This has been another episode of the Timeless Investor Show in one of our new mini-series within the show called Timeless Greed. I'm Ari Van Gemran. If you enjoyed this episode, please share it, leave a review, and subscribe to our newsletter at the Timeless Investor.substack.com. We'd love to have you. The Timeless Greed series will explore the patterns of financial fraud throughout history because those who forget the past are condemned to repeat it. Until next time, stay skeptical, stay disciplined, and whatever you do, don't invest in companies just because everyone else is. I'll see you next week. Thanks for being here.