Mattel and Barbie Made Millions for Creator Ruth Handler—Did She Get in Trouble With the Government?

Spoiler alert: This article contains minor spoilers for Barbie.

As Barbie takes over the cultural environment, many of us have started digging into Barbie’s dark history. Some of it is even referenced in Barbie through Rhea Perlman’s depiction of Ruth Handler’s ghost. When Barbie tries to escape the Mattel HQ, she stumbles upon Ruth, often credited as the creator of Barbie.

Later in the film, however, there’s a joke about Ruth and trouble with the IRS, leaving many Barbies and Kens slightly confused. Regardless, Ruth was a widely successful and creative businesswoman. Considering the fact she was at the forefront of toy juggernaut Mattel in the 1960s and ‘70s, we have to commend her. So what was Ruth’s net worth before she passed away in 2002?

According to various sources, Ruth allegedly had a net worth of $100 million at the time of her death in 2002. She passed away from complications of surgery for colon cancer at the age of 85 years old after she had already battled breast cancer. It’s no surprise that she died with a fortune, though. Ruth was responsible for two of Mattel’s most innovative and successful projects.

To begin with, Ruth founded Mattel along with her husband, Elliot, and their friend Harold “Matt” Matson. (Mattel is a portmanteau of “Matt” and “Elliot.”) The world wasn’t ready for a female CEO, but when Matt left the company behind two years after its founding, Ruth stepped into the role anyway. In 1955, she invested the entire fortune of the company in a new type of advertising.

She decided to target toy ads to children by purchasing 15 minutes of commercial time for each episode of The Mickey Mouse Club. In doing so, the product they promoted tripled sales overnight. This is still a strategy that Mattel (and several other companies) use today to pull on children’s desires and parents' love for their children.

Ruth also invented Barbie, although a designer named Jack Ryan disputed that his role in Barbie’s creation has been overlooked. Jack was debaucherous, to say the least—he used his high earnings to buy a “castle” where he hosted many drug-fueled orgies, despite having a wife and child. He sued Mattel for $16 million when he felt he was underpaid, but that’s not the lawsuit referenced in Barbie.

Mattel and the Handlers definitely had their fair share of scandal, but tax evasion was not part of that. The crimes Ruth was indicted on were more related to misleading the shareholders. Mattel was a publicly traded company early in its formation, so Ruth had a responsibility to shareholders to accurately report earnings.

In 1974, a class-action lawsuit against Mattel found that the company had fudged some of its numbers. According to the New York Times, “It appears that Mattel's reported pretax income of approximately $34 million for fiscal year 1971 may have been overstated as the result of the misstatements in the approximate magnitude of $15 to $20 million.”

Basically, the issue is that the shares of Mattel were traded at inflated prices when they were worth much less during a decline no one wanted to admit. Ruth and Elliot were forced to resign in 1975. As investigations continued, Ruth was indicted in 1978 for fraud and false reporting to the SEC. She pleaded no contest to avoid an arrest and jail time. Instead, she was fined $57,000 (a small dent in her large net worth) and 2,500 hours of community service.

It’s likely that Ruth’s daughter, Barbara (for whom Barbie was named) now manages the Handler estate. Even with the legal tragedy that struck the Handlers, Ruth was definitely a pioneer of her time. A first-generation Jewish woman who became a CEO against all odds? When we take Ruth’s story into account, Barbie is so much more than a perfect blonde depiction of a woman.