What's up guys and welcome to wall street millennial today we're taking a look at one of the most epic stories of investment losses in history. We're looking at the story of patricia kluge patricia made her money by marrying billionaire media mogul john kluge. She divorced her husband and used her nine-figure divorce settlement to start a wine vineyard. After just a few years of running the operation, she squandered the entire fortune and was forced to declare bankruptcy in this video we'll go over the wild tale of patricia kluge, including former president donald trump's, unlikely involvement in the case.

In 1974, 27 year old, patricia rose met 60 year old billionaire john kluge. An elite london ball patricia was born in baghdad. Before moving to england, she worked various jobs at nightclubs, belly dancing and starring in adult films. John kluge was a german american billionaire entrepreneur in the telecom and media industries in 1989, forbes estimated his net worth to be 5.2 billion dollars, making him the richest man in the us at the time.

Despite an age gap of more than 30 years, they quickly fell in love and got married in 1981., can't know for sure patricia's true intentions when she agreed to marry jon. But she reportedly told her friend that quote: i've met a guy who's stone rich shortly. After meeting cloogy after marrying, they moved to cluj's 24 000 square foot estate in virginia, while with john patricia lived, a lifestyle of luxury and developed expensive tastes. She took an especially keen interest in luxury wine and became somewhat of a wine connoisseur in 1990.

Just nine years after their marriage patricia filed for a divorce as part of the settlement, she received ownership of the virginia mansion, as well as perpetual annual payments of one million dollars per year. Because of her fondness for wine, she decided to invest her settlement to establish khloe estate, winery and vineyard. She had grand ambitions to turn her mansion in virginia to be an east coast mecca for fine wine. Her vineyard started making expensive wine meant to appeal to rich elites, such as herself.

She had some high-profile early successes. For example, she sold her wine to chelsea clinton's wedding in 2010. excited by the early success. She borrowed 65 million from banks and other lenders to fund growth of her operations.

Most of these loans were secured against her virginia mansion with the new capital she purchased new equipment and hired new staff. She was so confident in the quality of her product that she commissioned a batch of 30 000 bottles to be produced. She only had one vineyard, so she lacked the economies of scale necessary to make mass-market wine at cheap prices. So the only way she could make money is to position her wine as a luxury brand and charge the high price for each bottle.

It's not easy to sell expensive wine when a bottle costs more than 100 wine critics have extremely high standards for quality. Most luxury wine comes from famous vineyards in france that have built up their reputations over decades, if not centuries, as a nascent startup in virginia. It was very difficult for kluge wine to compete in this space of the 30 000 bottles produced, patricia was only able to sell less than fifteen thousand. The rest sat in her warehouse is untouched, with the sales undershooting her forecast by such a large margin.

She did not have the money to repay her 65 million dollars in loans. Things were not looking good for clergy as they were about to get even worse. In 2009, in the depths of the real estate crash property values, including the vineyard plunged facing looming debt, maturities, patricia put it up for sale through the sophie's international realty. Where is originally listed for 100 million dollars after realizing that getting that much money for the failed remains of a winery was hopeless.

They cut the price by more than half to 48 million dollars a year later, with still no interest. They cut the price again by half down to 24 million dollars. Still, no buyers were interested in chilling out tens of millions of dollars for a worthless operation. Eventually, the banks were forced to foreclose on the property due to patricia's inability to service her debt.

Things got so desperate for patricia that she was forced to auction off her own luxury belongings in a 48-hour fire sale by sotheby's auction house, her jewelry collection, 338 thousand dollar chip and dale dresser, and a chinese clock that went for 3.8 million dollars alone, contributed to The auction bringing in 15 million dollars from her once proud estate, she also did a fire sale auction of the winery after it couldn't sell for the reduced price of 24 million dollars. However, interest in the winery was so low that didn't even sell in the auction, because no one was willing to pay the 19 million minimum bid for it to sell. At this point, farm creditor of virginia foreclosed on the property and immediately stopped all of its operations. It eventually split up the land on which the vineyard was built into separate parcels and sold them at auction, in which there is no minimum bid.

All the farm equipment was similarly liquidated. Patricia had also decided to stop making mortgage payments on her multi-million dollar mansion at albermele defaulting on tens of millions of dollars of loans from bank of america after a forced auction, where there were no buyers, bank of america repossessed the property. This left, patricia with nothing left of her old billion dollar fortune in june of 2011. Patricia's venture had bled out all of its assets and more and was forced to declare bankruptcy in order to avoid paying creditors.

She had taken out lines of credit on her once great fortune and assets, similarly to how ordinary people might max out their credit cards when times are good, but with patricia the size of her credit card was much bigger than the average person at the time of Her bankruptcy she listed her assets at 2.6 million dollars in her liabilities at 47.5 million dollars that put her at about 20 times debt to assets with net debt of 45 million dollars. Donald trump ended up trying to take advantage of patricia's distress situation. He knew patricia from before and was well aware of the need to sell the winery and mansion trump ended up, making a bid on both the winery and the mansion. Though the offer was a far cry from what patricia had thought her estate was worth.

Trump was only willing to pay 3.6 million dollars for the mansion which bank of america refused. Instead trump bought just the 217 acre front yard of the mansion. This was trump's genius by buying the front lawn. He prevented any other potential buyers from being interested in the mansion shortly thereafter, when the vineyard went up for auction by farm creditor of virginia trump bought it for 6.2 million dollars.

All that was left was the mansion and trump owned all the land surrounding it, because of this bank of america was unable to attract any bidders for the mansion. This is the same tactic that trump used to acquire. The famous mar-a-lago resort in florida, with mar-a-lago trump bought the section of beach right in front of it and threatened to build, in his words, the ugliest building ever on it to obstruct the view of mar-a-lago. If it were ever to be owned by anyone else, as a result, the 30 million list price resort was eventually sold to trump for only 8 million dollars.

The same thing happened with albert molly: trump was able to eventually get the mansion for six and a half million dollars a far cry from the original 100 million dollar asking price. As for patricia, she still lives in a 3 million mansion with her new husband. It is one of the many mansions that she built in her glory days of wine making as part of a real estate development venture that went sour in 2008. They currently rent it.

They pay the rent by working day jobs, including patricia working for donald trump. At the very winery that she used to own, what we can learn from this epic boom and bust story is that having capital alone isn't enough to start a successful business, patricia kluge didn't have experience in wine or business and thus failed to make savvy business decisions. She took on too much risk and assumed that her wine would be able to sell. In the end she stole tens of millions of dollars from banks.

She borrowed money from and lost the billion dollar fortune. She was left with from her divorce instead of chasing fanciful dreams of mansions and wine glory, it's better to take a rational approach to growing a business and preserving your wealth, alright, guys that wraps it up for this video, if you like, the content, make sure to Smash that like button and subscribe for future videos, also check out our second channel wsm research, where we post dd on high growth stocks. As always. Thank you so much for watching wall street millennial signing out.

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