Two board members of General Growth Properties Inc. marched into CEO John Bucksbaum's office to deliver a blunt message. It was time for him to resign.

An internal investigation showed that the Bucksbaum family trust had violated company policy by making private loans to two company officers and failing to inform the board. The departure of Bucksbaum -- whose father and uncle founded the giant mall owner 54 years ago -- would mark an end to the family's management control of the company.

"I accept the decision," Bucksbaum said, according to people briefed on the Oct. 24 meeting.

Yet the harm to the legacy and the fortune of the Bucksbaum family -- one of the richest and oldest real-estate dynasties in America -- had already been done. Aside from the loans, made to prevent a massive stock sell-off by executives, Bucksbaum and his deputies in recent years loaded the company with debts totaling more than $27 billion.

The stock of General Growth, which is redeveloping the demolished Cottonwood Mall in Holladay and operates five other Utah malls, has plunged more than 97 percent in the past year, dragging down the Bucksbaum family fortunes with it. The Bucksbaums' 25 percent ownership stake, worth $3.2 billion just six months ago, is now worth $116 million.

The family could lose General Growth altogether, along with three generations of hard work that began with a grocery store in Iowa. The company was able to negotiate new terms with lenders in recent weeks, but General Growth has told investors it could file for Chapter 11 -- creating one of the largest bankruptcies ever in real estate.

The Bucksbaums' losses show how the 2008 financial crisis is hitting not just risk-loving Wall Street firms and leveraged upstarts but also long-established, family-run companies with histories of conservative growth. The crisis has sparked the most rapid and severe destruction of wealth in recent history, rivaled only by the Great Depression, when the number of millionaires plunged by an estimated 75 percent.

The fallen fortunes span the globe, from Sheldon Adelson, the Las Vegas casino king whose paper fortune has dropped by more than $25 billion in the past year, to Germany's old-money Merckle family and Indian steel magnate Lakshmi Mittal. Even Bill Gates and Warren Buffett, the dynamic duo at the top of the global billionaire ranks, have seen the value of their corporate shares shrink by $12 billion and $15 billion, respectively.

Many got caught in an unavoidable downdraft. But others have themselves to blame for making things worse. The crisis has been particularly hard on executives who gambled badly with their business -- they got into the wrong industry at the wrong time, took on risky investments, piled too much debt on their companies, or leveraged their own finances to a catastrophic degree.

The decline of General Growth is as much a matter of pride as it is money, because the Bucksbaums are still wealthy by any standard. They have collected roughly $590 million in dividends from the company since 1997. Martin and Matthew Bucksbaum, the company's founding brothers, were astute financial investors who also made more than $1 billion from early investments with hedge-funder Edward Lampert, investor Jack Nash and Goldman Sachs. And the company's malls are still among the strongest in the U.S., with an overall occupancy rate of 93 percent.

Matthew Bucksbaum declined to be interviewed regarding his personal finances or General Growth's struggles. John Bucksbaum says he remains "actively involved" in the company as chairman of the board, adding, "We have great assets, great employees."

Short of cash and unable to make debt payments, General Growth is struggling to sell off some of its prized malls and properties, including three on the Las Vegas Strip. It has $3.1 billion in loans due next year and, in a leftover from its acquisition of competitor Rouse Co. in 2004, the company could owe up to $1 billion to the heirs of legendary tycoon Howard Hughes. The company has hired law firm Sidley Austin LLP to advise it in the event of a bankruptcy filing.

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Family roots

The Bucksbaums, rooted in the mom-and-pop grocery business of Iowa, are a tight-knit, driven and intensely private family. Martin and Matthew Bucksbaum started in 1954 with a small shopping center in Cedar Rapids, which they built to house one of the family's grocery stores. They installed trampolines in the parking lot on opening day for visiting children and opened a Kinney Shoes and a Woolworth.

The project's success led them to open more shopping centers. As America's suburbs started to boom, they started building large indoor malls, a strategy known among mall builders as "following the rooftops."

Martin, known as the more commanding of the two brothers, was obsessed with financial details, spending late nights in the office poring over leasing statements or depreciation schedules, and rarely taking vacations. He was a strategic visionary, credited by some urban planners -- and blamed by others -- for the early malling of America. He had few hobbies and died in his sleep from a heart attack in 1995.

Matthew, now 82 and retired, is more shy and has more outside interests than his brother. He and his wife, Kay, are avid art collectors and music supporters.

General Growth's debt troubles date back to the mid-1990s, when Martin's health began to weaken. The family had been conservative managers, building the dominant shopping venues in secondary and tertiary towns such as Bettendorf, Iowa, Hutchinson, Kan., and Fayetteville, Ark.

But after emerging in 1993 for a second stint as a public company, the Bucksbaums decided to grow through acquisitions.

In 1994, General Growth bought a 40 percent stake in CenterMark Properties, which owned 16 regional malls in major cities such as Los Angeles and Washington. A year later, it nearly doubled its size, teaming with four investment partners to buy Sears, Roebuck & Co.'s Homart development division to take over 40 malls. Martin Bucksbaum died, at 74, as the Homart deal was being completed.

Matthew, president at the time, was then named CEO and chairman. There were no other candidates considered for the job, because he and Martin were such a close team, board members say. Matthew moved the company headquarters to Chicago.

He also groomed his son, John Bucksbaum, to take the company's helm. Reserved, solitary and competitive in and out of the office, John Bucksbaum, now 52, is a dedicated mogul skier and cyclist. He logs thousands of miles each year on his bike, sometimes riding with Lance Armstrong. In 1999, Matthew and the board named John as CEO and, once again, there were no competing candidates.

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A new tactic

Yet John proved to be a different kind of manager than his late uncle. Like his father, he focused more on General Growth's internal operations, leaving many aspects of finance and acquisitions mostly to his lieutenants, primarily chief financial officer Bernie Freibaum. It was a role that for decades had been played by Martin.

A lawyer and CPA known for his hardball negotiating tactics, Freibaum, now 56, became the company's finance architect. His tenure coincided with a broader shift in the way some real estate companies were financing their operations. Rather than apply for bank loans, General Growth began taking out short-term mortgages on its malls. As the mortgages came due, the company would replace them with even larger mortgages to provide cash for additional acquisitions.

The strategy picked up steam with the emergence of new debt-trading markets. In the mid-1990s, lenders started slicing up commercial mortgages and selling them to multiple investors as bonds. The boom in trading made mortgage-backed debt much cheaper and more plentiful -- as long as investors were willing to buy.

General Growth was soon at the forefront of this market. And because the company was borrowing mostly against its individual properties, lenders didn't place restrictions on its overall debt load, allowing it to accumulate more and more debt.

Freibaum declined to comment for this article.

In August 2004, General Growth made its biggest acquisition to date -- $12 billion for Rouse Co. Rouse owned three dozen upscale malls in the Midwest and Northeast, including Chicago's Water Tower Place, Boston's Faneuil Hall and Washington, D.C.'s Columbia Town Center. The deal instantly transformed General Growth from a small-town, industry stalwart to one of the leading lights of marquee retailing.