Wednesday, December 10, 2008

Chapter 7- The Devil in Danny Glassman & Co

My buried memory of that incident had become jogged loose, and just like I could readily recall every big trade I had made over the course of years, especially the ones that resulted in big losses, my brain was displaying the however short, horror movie that had played out in two days subsequent to the drafting the letter, with the official letterhead of The Bank; the one that I had once been a Vice President of and later consulted to.

When Jake phoned me on that Saturday two years earlier, and asked if I still had Bank stationery, he knew I used to be a Vice President of the world’s largest commercial bank, and that I still consulted to them. I said that “Yes I have stationery, as I still correspond on their behalf.”

That’s when he said “Good, I need you to do me a favor.”

We’ve done lots of favors for each other, mostly innocuous, and sometimes introductions or providing professional references for each other. Other times, he’s asked me to draft deal summaries for him, or other collateral material, a talent that I’ve been called upon by many to exercise over the years, and I’ve assembled a solid portfolio of memos and plans that have helped in closing many different kinds of transactions, all legitimate.

Jake had said that in the course of final discussions putting together an investment in the latest film project he was working on, an indie project, but one with a $30 million production budget, and one that had already contracted some of the biggest starts in Hollywood, he needed to have a letter that confirmed his “bona fides.” A letter of reference that attested to his financial wherewithal, and in this case, a letter from his ‘private banker’ was being requested.

Jake had represented that he, and a group of investors that he had assembled, would be putting up $5 million towards the cost of production of the $30 million movie. He was actually one of several that were being solicited for “indications of firm interest” by the Hollywood bank that had greenlighted the project. That bank had already committed to funding the projection loan, and had already gone to the next phase, one that every underwriter does; committing to the underwriting, and then selling off smaller pieces at a slightly higher equity value in order to hedge their majority position. Given that the film was a remake of an epic from the 1940’s, and the latest version include a slate of famous actors, including Sir Tony Tipkin, a six-time Academy Award winner, with more than fifty major films to his credit and more than $2 billion in box office sales, the opportunity to invest at the early stage, however speculative, was, according to Jake, oversubscribed, meaning it was in hot demand. As the film progressed through the production cycles, its value would increase substantially as it came closer to the time where it would be auctioned off to distributors.. And, since Jake had an inside relationship, courtesy of his “frequent and trusted partner”, Danny Glassman, he had a front row seat as far as early stage investing.

Although most of Jake’s deals were above my pay scale as far as my making a personal investment, (each required at least several million dollars to buy into), I never had any reason to question his talent for putting investors into good deals. I had met more than a few of his financially out-sized friends at social gatherings, all of whom attested to enjoying big profits thanks to Jake. And as far as movie deals, Jake had co-produced at least three box office blockbusters, as well five Emmy-award winning TV shows over the past fifteen years; all profitable. As far as his financial bona fides, I had seen his tax returns, and because he had asked me to identify and execute stock and option trades for him, I had seen his brokerage account statements, which displayed more than $5 million on account.

Reticent to use Bank stationery to attest to Jake’s character, what I had planned on writing would be nothing more complex than a standard reference letter.

Jake told me to wait for a call from his ‘partner’ Danny Glassman; the guy that had put the whole deal together and was sitting in the seat of executive producer. His company was the US film production subsidiary of a publicly-traded European entertainment company, and one that Jake had been involved with for the past year or so.
Jake said that his ‘great pal’ Danny could be “trusted like a brother”, and that Danny would tell me what he needed in writing.

Danny Glassman called me within the hour; and like any talented Hollywood schmoozer, he had given me his hard sell; who he was, what the project involved, all of the people involved, telling me what a coincidence it was that I knew Baldson, etc. etc. After boasting about himself and how he single-handedly put this project together, he cut to the chase and casually said that they “were in a last second bind”, as shooting had already started in Manhattan, and more than 100 production crew members were sitting in New York, waiting on the five-time Academy Award winning actor, who was sitting in his G3 on the tarmac at LA’s LAX Airport. Glassman had said that Jake told him I could help come up with a letter that said I was a banker for Jake, who had apparently committed to putting some money into the project, was otherwise financially capable and readily prepared to write his check.

During Glassman’s first call, I explained that all I could do was confirm that Jake was a qualified investor, in accordance with the loosely described investment industry definition, that he had more than $1 million in liquid assets, and that he was an experienced investor, and was experienced in film investing. I said I’d go so far as to put that in writing, otherwise pushing an envelope by using Bank letterhead, but for all intents and purposes, the representation I proposed to make about Jake’s finances wasn’t untrue.

Unfortunately, my first draft fell short of what they really wanted. Over the course of at least eight more calls, including conference calls with three other characters, including a guy named David Lutkin, who Glassman introduced as his “partner on the film”, and who subsequently introduced himself as the “head deal maker” from HLO Bank, the widely-known film finance subsidiary of SecPac, a major California-based bank that had $5 billion in capital and commercial lending groups specializing in just about every industry, from real estate, to casino construction to commercial jet leasing.

HLO Bank, whose corporate logo depicts a large angel-esque halo that overshadows an illustration of the famous Hollywood Hills, home to the famous 25 foot tall sign with letters H-O-L-L-Y-W-O-O-D, had been acquired by SecPac two years before, after it was first created by, and since run by Hollywood legend Lou Morowitz, a guy that is the antithesis of what many envision an angel to be, but he’s the one credited with concocting the template for modern day film finance structures.

Morowitz is the legendary ‘special purpose vehicle’ guru, and he had a garage full of special luxury vehicles paid for by the million dollar fees that he collected every time he employed his creative financial craftsmanship. Aside from practicing the dark art of film finance, he actually lectures on the topic to film industry legal and accounting groups. In this case, HLO, with Lutkin acting as its point person, was providing funding for this indie project.

The second guy on most of the conference calls was Sal Nardone, who Glassman introduced as the head of the insurance company that was providing the film completion bond. Another guy that had joined into the last round of calls was introduced as a lawyer that worked for HLO, and each went to great lengths to advertise their important roles in the industry.

The tone and tenor of the letter they wanted evolved to the point where I knew what I was being asked to write had gotten way of out hand, even if it was only three paragraphs. During those several hours, while they kept on requesting ‘better verbiage,” including a representation that Jake would be funding $5 million, his piece of the $25 million financing, in the next two days, and that funds would be available from his account at The Bank. That was very aggressive for a simple reference letter, especially when Jake didn’t have $5 million on deposit with The Bank.

I told Glassman that Jake didn’t have that kind of cash on deposit at The Bank, and he said “Don’t worry, Jake and I have already put together the investors, they’ll be signing the docs next week and depositing the cash.. The money is good. But we need the letter now.”

“Dicey” didn’t begin to describe what Glassman had just said, and none of his cohorts on the line bothered to comment.

With that, I said I’d get back to them, and then I attempted to phone Jake at least five times, each time getting his voice mail. He finally called me back from the 19th Hole at the Las Vegas Country Club, and when I explained what had transpired, and what they wanted, he said, “Don’t worry, you’re covered. These are good guys, and if they say they just need something for a file, you can give it to them.”

When I called Glassman back, he insisted on conferencing in his associates, and the guys on the other end of the phone each played a role in dictating the iterations of the final letter. They had otherwise pounded me over the phone over the course of several hours extending into the early evening, as each of them clearly had a critical stake in the movie.

They kept insisting they needed the letter for their files, to appease one of the film’s starring actors, Sir Tony Tipkin, who was sitting in a studio jet on a tarmac in LA, insisting that his $5 million fee be paid before the plane took off, which otherwise required the bonding company to add an addendum to the film’s policy. And of course, by adding another $5 million coverage to the film’s $25 million umbrella policy, that would generate a big fat, and upfront premium fee that the bonding company was charging the production company, which was coming out of HLO was not only earning equity in the film with each dollar they were lending, they were also paying themselves investment banking fees for the loans.

Each of them understood that I was providing a favor to my friend Jake, and indirectly, them; all self-described friends of my friend. I hadn’t solicited, nor had anybody offered any compensation, and I made it clear that I wasn’t making any representation on behalf of the bank on whose letterhead they insisted the letter be written.

I knew that the final draft was not only inappropriate, but after hitting the ‘send’ button on the fax machine, I had called Jake and reminded him again that if he and his pal Glassman didn’t actually have the funding commitments, what had been dictated to me, and signed by me, could be considered fraudulent misrepresentation, were the letter to get into the wrong hands. Again he re-iterated, “Don’t worry, you’re covered,” words that Jake was famous for upholding.

An hour after the fax was sent, his buddy Glassman called me to say that “Everyone was really appreciative of your spending Saturday helping us out of a bind, as the letter “inspired” Sir Tony to take off and head for New York, and that the production was back on track, all thanks to you”.

Glassman even invited me to attend the location shooting “any time” while they were in New York, and that he’d even arrange for a “reunion dinner” with my old ‘pal’ Alan Baldson. By that time, my nerves were frayed, and his suggestion that I would be impressed by a dinner with Baldson re-enforced my concern for having agreed to help Jake on his request.

What transpired over the six hours on that Saturday, and then over the course of the next two days was an experience that resulted in my having massive angst, three sleepless nights, and culminated with a small brush fire ignited by sparks from the final letter that was drafted.

The following business day, which was actually a Tuesday, as the Monday was a national bank holiday, I received a call from the EVP that I reported to at the Bank. He said he had “just picked up a weird voice mail message from a guy with an Italian-sounding last name”, and though the message was garbled, the EVP said “The guy was asking who I was, and who Jake Bronson was, and that he was looking for a wire transfer from The Bank, one that had not yet arrived.”

The EVP actually knew who Jake was, as I had brought them together several months before for a lunch meeting. The agenda included the Bank’s potential interest in providing a credit facility for one of Jake’s food businesses, and because the Bank had a small West Coast office that was also involved in film finance deals, it was a good opening for Jake to describe what he did in the film finance industry, which included providing pre-production bridge loans to indie films, and collateralized by pending production and distribution agreements.

I told the EVP that I had been asked to provide a reference for my friend Jake, and I reminded him that Jake was the fellow that we had lunch with several months earlier. Jake isn’t someone that’s easily forgotten, and the EVP said “Oh yeah, interesting guy.”

When I said that I couldn’t understand why the fellow had called The Bank, he apparently found my explanation more than plausible, and simply said, “I’m really too busy to call this guy back, he sounded like a crackpot. So, why don’t you take care of it? If there’s a problem, let me know.”


When the EVP said “Italian-sounding name”, I matched that to one of the characters on the conference call the prior Saturday. It belonged to Nardone, the guy who said he was the head of the insurance bonding company, and the one who needed the letter the most, as it was actually addressed to him.

I immediately phoned Nardone to say that calling my boss was a mistake, and that if there was any problem, he should call Glassman and Jake. I then called Jake to tell him about the uncomfortable discussion with the EVP, and after hearing my angst, he calmly said, “Nardone’s a fucking idiot, I’ve dealt with him before. But I told you that you’re covered. I promise you that I’ll take care of this.”

For the next forty eight hours, I was sitting on pins and needles. I must have spoken to Jake six different times making sure that he had extinguished the fire. Jake had said that he had straightened everything out. He also told me that Glassman had actually secured the money he needed from a different group of investors altogether, and that the whole episode was a fire drill.

I had never heard another word from the EVP on that topic, nor had I had any communication with Nardone or Lutkin from HLO. But I did eventually meet the famous Danny Glassman three months later, while I was visiting Jake at his LA office.

Glassman turned out to be exactly what I had envisioned when we were on the phone; a short Jewish guy in his late 30’s with a big mouth. Although he was wearing a black linen blazer over a black brush cotton T-shirt, I could tell that his 5’7 frame was toned from daily workouts with a personal trainer. He was wearing a Hollywood-style two-day beard, Ferrari sunglasses wrapped around his neck, and a fat, leather-banded Breitling around a wrist that also had a gold bracelet. When we shook hands, his grip was not as strong as I would have expected, suggesting that he wasn’t very practiced in what stands behind hand shake deals; the firmer the grip the louder the unspoken word that the deal would be lived up to. But he had the bravado, and he worked at coming across as if he was Louis B. Mayer, the famous movie studio executive.

Glassman had been a child actor and appeared in some B-grade movies, until he was twelve or thirteen. Apparently he never had the talent to fill the teenage roles that were always in high demand, and he ultimately moved into the business side of Hollywood, where he started as a junior talent agent at one of the LA agencies. He then landed a series of jobs packaging and selling distribution rights for small studios, and finally, he joined the land of ‘producers’; a title shared by hundreds of people in the Land of Glitter, and a job that typically involved manufacturing more bullshit than a farm full of cows.

Looking at him and listening to him, he was the classic caricature of a Hollywood “talent agent”, a role later perfected by actor Jeremy Piven in the HBO series “Entourage”. On the TV show, Piven’s character is Ari Gold, talent agent, deal maker, and necessarily, a great schmoozer, but someone that is transparently disingenuous, and it’s no wonder why Glassman never made it as an actor; when you meet him in person, it was clear to anybody that he’s nothing more than a Hollywood wannabe brat.

After we were introduced to each other in Jake’s office, Glassman immediately bear hugged me, and said “Hey, you’re the $5 million man!! Great to finally meet you in person! Boy, you did a great job for us on the movie, and I’m going to make sure that you get invites to the premiere!!”

I almost said that he had me confused with someone else, because I didn’t want anything more to do with that episode, but I let it pass. We had a brief lunch in Jake’s office, with Glassman touting to Jake and me how many problems Baldson had caused on the film, which according to Glassman, had tarnished his own reputation, as according to him, “people in the industry think I had sold my soul to the devil when deciding to go into business with Baldson.” But, according to Glassman, notwithstanding the problems that had plagued the film’s production, the final cut would be “ready soon”, and that it would be a great film.

After lunch, Jake and I drove over to the Beverly Hills Hotel in his Bentley convertible, where he had invited me to sit in on a meeting with an aspiring starlet that was hoping Jake would put her into one of his films. Jake thought I’d get a kick at ogling her, which I did, and afterward, he drove me to LAX. On the flight back, I immersed myself in four, flight-sized bottles of scotch to drown out the memory of meeting Danny Glassman in person.

As tempted as I was to recount this entire story to Heckle and Jeckle, and hopefully get a “Get Out of Jail Free Card”, I knew that idea would be a recipe for disaster. So I said “I’m not sure where you think this conversation is going, but obviously there’s some kind of misunderstanding.” I then took the offensive and said “Unless you’ve got a warrant of some kind, and since you haven’t read me my rights, I think this meeting has run its course.”

That’s when Trujillo a/k/a Jeckle displayed a fat smirk that extended from one side of his face to the other, and then reached into his briefcase and took out an envelope that he slid across the bar to me, and said “Well, Mr. Berman, this is a subpoena. It says that you are expected to appear before a grand jury next week. It includes a copy of the letter that you obviously wrote. No doubt you’ll want to contact a lawyer, and if you can’t afford one, the court system does have a system that can provide you a lawyer at no charge.”

I took a cursory glance at the three page document. It stated that I was expected to appear before a grand jury the following week, and it included a demand that I provide a laundry list of documents, including copies of phone records extending from December 2000 to June 2001, and any documents, including drafts of the “letter” in question, fax cover sheets, and any emails that were sent or received in connection with the letter.

I looked up from the subpoena and replied with, “That won’t be necessary. I’ll get back to you. I’d say it was a pleasure meeting you, but given your tactics this morning at my house, I don’t think that would be appropriate.”, and I proceeded to walk away, without bothering to extend the pleasantry of a parting hand shake. Before I was two steps away, Jeckle called out to me to and said,

“Oh, another thing, Mr. Berman.” I turned back to face him, “You’d be wise not to be calling your friend Jake Bronson” he said. “If you speak to him about this, that could be considered obstruction of justice, and given the time you’re already looking at, its only going to make your situation worse.”

With that, I said, “Thanks for the advice”, and I walked away, knowing that their four eyes were piercing the back of my head, and leaving me wondering whether they were going to surreptitiously follow me back to my office, and then make a scene by cuffing me with silver bracelets in front of everyone on the trading floor.

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