Thomas Middlehoff, former chief executive officer of German media company Bertelsmann will serve three years in prison on Friday, Nov.14 after crimes of tax evasion and embezzlement.
Middlehoff, once viewed as one of Germany's highly-respected, media-savvy business tycoons, was sent to jail after being found guilty by Judge Joerg Schmitt on three counts of tax evasion and 27 counts of embezzlement.
The 61-year old took over struggling retail group Arcandor in 2004 to help the company turnaround. However, it was later discovered that Middlehoff was using the money of the company to fund his expensive personal trips on chartered planes and helicopters between his home and Arcandor's office in Essen to "avoid traffic jams."
Middelhoff argued that the expense was legitimate business expense, but Judge Schmitt believed otherwise. "We are certain that this was not commuting between two offices," Schmitt said of the 74,270 euro bill Arcandor paid for helicopter flights.
Middlehoff was accused of embezzling $1 million from the company and is responsible for it going bankrupt 5 years after in 2009.
Before joining Arcandor, Middlehoff worked for Bertelsmann, one of the largest media companies in Germany with holdings in different media companies including music publisher BMG, broadcast network RTL Group and a major shareholder of publisher Penguin Random House.
He spent over a decade at Bertelsmann, with four of those as the company's CEO, attempting to bring the 180-year old company into the Internet age.
In 2002, Fortune profiled Middelhoff in a story that chronicled Bertelsmann's growth and noted that the company escaped a great deal of losses thanks to thanks to Middelhoff's savvy investment in AOL Europe.
The company amassed $7 billion proftits selling its stake back to AOL in 2000, just before stock prices dropped precipitously.
Several media outlets were shocked by the news, as he has a reputation of "executive greed" amidst a country where the gap between the salaries of workers and managers are increasing in the past years.
