Sunday, December 14, 2008

Chapter 16-Finding a Nugget in Pandora's Box

Although it was almost seven by the time I got home, the sun was still up, and it was a warm, October night. When I pulled into the driveway, I noticed that Charlie’s best friend Lizzy was visiting. Her Jeep was parked next to Charlie’s, and the two cars are almost identical, just like the two of them had been inseparable since first grade.

After I parked the Escalade, I could hear music coming from the back of the house. Charlie and Lizzy were most likely taking advantage of the pool before the weather started to change. Instead of interrupting them, I headed inside through the mud room. Lorna was busy at the sink and didn’t bother to look up. She wasn’t about to get over the experience from the day before, and I wasn’t going to incite her by telling her about my call with Alan.

When I went to pour myself a scotch, she did say “Just so you know, I’m pretty certain that Charlie shared yesterday morning’s event with Lizzy and Michele. You shouldn’t be surprised, they are her best friends.”

Lorna almost enjoyed pouring salt on the wound. Not only was Michele the school gossip, but her Dad and I had been buddies since the time the girls were in grade school. He was a serial CEO, with dozens of connections on Wall Street and throughout the venture capital community. He’d be one of the long list of people I didn’t want knowing that I was the target of an FBI investigation, let alone the parents of half of Charlie’s schoolmates.

I went to my study and phoned Sercowitz’s cell phone. I wanted to update him on what little I had learned about the film, and why I thought the FBI might be interested, as well as my conversation with the Feeb earlier in the day. I also wanted to find out what, if any progress he had made on his end.

An hour later he phoned me back and said that he had left a message with the AUSA assigned to my case, but hadn’t actually spoken with him. He was nonplussed when I expressed my frustration about the FBI shouting “fire” while visiting my former workplace, and otherwise poisoning my reputation. He was however intrigued by the articles that I told him I found on the Internet, and he instructed me to print them out and bring them with me the next time we met. He also told me that I had to zipper my lips the next time the Feebs call, and to point them to him.

I held off on trying to connect to Stuey. Instead, I went to my study and started a second night of digging into the Internet for anything additional I could find about Glassman, Nardone, Hutkins and LHO. And I found more crumbs about the crumbs, ones that I had overlooked the night before.

In a website focused on science fiction movies, I found an interview of Sir Tony Hipkisn, the film’s big star, it was from just three weeks before.

“Sir Tony Hipkin told SCI FI Wire that the new film version of the Pulitzer Prize winning novel, in which Hipkins plays the role of the lawyer representing a writer who sold his sold to the devil will never be finished. “They pulled the money out, apparently, so it’ll never be seen,” Hipkins said. “The producers have no money to finish it.”

Great, I sarcastically thought to myself. The film was made, but it wound up on the cutting room floor because it ran out of money before it could be completed.

My next query hit what I thought was a small jackpot.

I came across a news release from May, only six months earlier. It had been put out by a German entertainment company, one whose shares were publicly traded on the DAX Market. The news release was in German, so I ran a language translator on the website, and even though the translation software wasn’t perfect, it was good enough.

The company’s release focused on their most recent quarterly earnings statement, but also included a lengthy reference to a RICO law suit the company had just filed in Los Angeles District Court. The defendants in the action included the completion bonding company and a former parent bank of HLO. Morowitz’s HLO had apparently been bought and sold three times since its formation in 1989. The suit in question was connected to a time frame shortly before SecPac, its current owner, had acquired it.

According to the announcement, the plaintiff entertainment company had apparently agreed to provide 47% of the financing required for a slate of ten different HLO film projects over a two year period. In consideration for putting up almost half the financing, they’d be receiving the European distribution rights to each of the films. They apparently since discovered that the budgets on each film had been padded, in some cases by twice the amount that was actually spent making each film. The lawsuit charged that two of defendants, HLO and the insurance company, had conspired together to inflate the budgets, as in each case, the bonding company had provided the completion insurance and their insurance fee was based on the budgeted amount of each film, and they were necessarily was privy to the respective project budgets and accounting statements.

The suit was seeking $225 million in damages, $75 million representing actual ‘double billing’, and $150 million in punitive damages, including attorney fees. The Wall Street analysts that covered the entertainment company apparently thought the suit had strong merits, as the company’s share price surged 21% on the day the news release was issued.

Then I searched for Global Film Finance’s website, Cardone’s insurance company. When I found the URL in a film industry database, I clicked on the link, but the return page said “Site is Temporarily Down”. It was either being re-designed or something else had happened.

More than interesting, I thought to myself. $75 million in budget padding that tied together two of the groups that participated in the drafting of the letter. The article didn’t mention any specific film titles, but I thought there must be a link to Glassman as well. Aside from the obvious fact he had been doing deals with HLO and Cardone in the past, I had also discovered that Glassman’s production company, “Pushing Edge Productions” the one that was producing the movie, was a US subsidiary of another German entertainment company.

As stimulating as my research was proving to be, it didn’t explain who had instigated the FBI to come hunting for me, or where I fit into any of the possible scenarios. It was obvious that the film production had been green lighted, and apparently without any reliance on Jake making any investment. The fact that the movie had temporarily run aground was hardly unusual, but it smelled like someone was trying to collect on the insurance policy before the shoe store had burned down, and I was being made the fall guy.

I sat back in my chair and tried to figure out how The Letter had even gotten into the hands of the Feebs. I reached into my briefcase and took the file that I was becoming a bit heavier by the day, and pulled out the copy of The Letter that the Feebs had provided, along with the subpoena. There had to be a clue here.

How I had managed to miss it at first glance was beyond me, but I just found another crumb. On both the top part of the copy, it displayed time and date stamp, along with the sender’s fax numbers and the recipient’s fax number. The copy the Feebs had gotten hold of had apparently been one that had earned more than a few frequent flyer miles. On the top part of the copy, I could make out a date stamp of 05.01.2001, with a 213 area code. I did a reverse look-up on Google and discovered that the phone number belonged to Danny Glassman. On the bottom part of the page, there was a separate date and time stamp, it displayed “Sent from Louis Morowitz Organization May 20, 2001.” The recipient fax number was a 486 area code.

Why would anyone be faxing back and forth this letter five months after the fact?. Duh? I thought to myself, that’s when the shit was apparently hitting the fan with the film production.

On Wall Street, some traders, after making a bad trade, make the irrational decision of “hiding their trading ticket in a drawer.”, or not reporting it to their firm for processing. No different than hiding dirty underwear under a bed, but eventually, its discovered.

Somebody at HLO, obviously Glassman’s partner Lutkin, had hidden this particular letter in a drawer, and decided to pull it out months later, as if they had discovered the dirty laundry. Or maybe, Morowitz was in on the whole thing at the outset. After all, he had green lighted the twenty five million for the project. If it was starting to implode in May, maybe he had decided to put in a claim with the insurance company that provided the film completion bond, and maybe he was looking for a scapegoat.

The only thing I didn’t know was whether Jake knew about all of the shennigans that these guys were up to, or whether he was just a bit player, and perhaps didn’t appreciate the scale of what his film finance friends were up to. I emailed Jake the links to the articles, as it might be information that he could leverage, but I didn’t point out what I discovered, that the letter had been bouncing around between Glassman, LHO and who knows who else months after it was supposedly shredded. I’d save that bit of news for the next time I talked to him.

One thing that I was certain of, if Jake thought that he was being set up, or had been double-crossed, or was being made a fall guy, whoever was responsible would be getting more than just a long drive into the Nevada desert.

And if I was going to go down, I’d make sure to bring others with me.

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