Barbie: Ruth Handler's IRS Comment Explained

Contains spoilers for "Barbie"

In Greta Gerwig's record-breaking "Barbie," Barbieland is a surreal place. The houses don't have stairs, the ocean looks like it is fashioned out of papier-mâché, and things like death and cellulite are unknown concepts. The real world turns out to be just as strange. Bumbling executives kidnap life-sized dolls and, in a moment that's as poignant as it is otherworldly, the ghost of Barbie inventor Ruth Handler appears in the annals of the Mattel headquarters.

Handler, played by Rhea Perlman, doles out some life advice to Barbie (Margot Robbie). Though the film doesn't get too much into Handler's background, it does take a moment to wryly reference the inventor's tax scandal. "I am Mattel," Perlman's Handler says with a smirk. "At least, until the IRS got to me."

Ruth Handler co-founded Mattel with her husband Elliot and their business partner Harold Matson, ultimately launching the first Barbie doll in 1959. Between 1945 and 1975, she served as Mattel's first president — a fact that Will Ferrell's character alludes to in "Barbie." She and her husband were ousted from their positions due to allegations of fraudulent financial reports, and the Securities and Exchange Commission underwent an investigation of the company, at which time they were fined and forced out.

In 1978, Ruth Handler was indicted by a federal grand jury on charges of fraud and false reporting to the SEC. The indictment also charged Handler and former executive vice president Seymour Rosenberg with falsifying Mattel's sales records from 1971 to 1973 in order to make Mattel seem more profitable than it was and to influence the company's stock price. She was sentenced to 2,500 hours of community service and ordered to pay a $57,000 fine.

For Handler, the implosion at Mattel was inextricably linked to her cancer diagnosis, which led to her getting a mastectomy in 1970. She later said that the diagnosis left her "unfocused" and unable to "get back in and grab hold" at Mattel, giving other employees decision-making powers in her stead, as quoted by The Guardian.

Handler also thought her gender had influenced the jury's decision in her indictment. "Bring down a woman, a famous woman, an uppity woman who had the nerve to climb to the top — just think of all the reputations that could be made by bringing her down," she wrote in her memoir (via Insider).

After leaving Mattel, Handler went on to produce the Nearly Me prosthetic for women who had undergone mastectomies through her new company, Ruthton Corporation. "When I conceived Barbie, I believed it was important to a little girl's self-esteem to play with a doll that has breasts," Handler told a reporter in the 1980s, per Jewish Women's Archive. "Now I find it even more important to return that self-esteem to women who have lost theirs."