Corrupt Hollywood Accounting

There’s an old joke in the movie industry about the 1997 movie “Titanic” which was the highest grossing movie ever made.  The joke goes something like this: “Titanic was the first movie in Hollywood to have ever made any money.”

You see, Hollywood movies never make money…at least not on paper or in what is reported to the government.  Of course this must be a mistake since cinema is a multi-billion dollar business. However, for accounting purposes, movies lose money.

Mel Brooks, the famed director and Broadway producer, actually wrote a play about it. “The Producers” follows a Broadway producer whose star is fading. He stumbles onto the fact that a terrible play can actually make more money than a great one and so proceeds to write the worst musical comedy ever.  The scheme fails because his play actually becomes a surprise hit leaving him in financial ruin.

This whole notion is explored in detail in a fascinating book,  “The Hollywood Economist” which delves into the accounting practices of movie making. The write-offs, tax breaks and deals in which everybody gets paid but nobody makes any money is laid out for all to see.  Further, the book explores the political correctness that pervades everything in today’s society. It points out that big business is the only “enemy” that has no lobbyist fighting on its behalf.

Then there’s the irony and paradox: Hollywood loves to make movies about the evils of capitalism and the many ways businesses rob and hurt the little guy. Here is just a tiny sample of famous movies where big business was portrayed by Hollywood as pure evil:

*Wall Street – Michael Douglas plays the ruthlessness of a Wall Street financier.

*Avatar – Sigourney Weaver battles a ruthless corporation that tries to mine minerals on a distant planet.

*Erin Brockovich – Julia Roberts takes on the malfeasance of an energy company and the damage done to the environment.

The “chutzpah” of making of these types of movies is unbelievable! A Hollywood director making a movie about the evils and greed of big business while financing it in such a way that is completely unethical and deceitful… for the purposes of evading income tax obligations.

If you think hedge funds are ruthless, “The Hollywood Economist” cites numerous examples of how Hollywood’s power brokers fleeced many a hedge funds through chicanery. Even these masters of finance were unaware of the depths of corruptions that exist in Hollywood. Yet, these same power brokers make films and TV shows about how hedge funds fleece the American public while they themselves fleece the hedge funds! Most recently, check out “Billions” on Showtime.

This “entertainment economy” reminds me of the famous painter M.C. Escher whose paintings made it hard to distinguish which way is up. In his painting “Relativity” a maze of stairs interconnects, each with a different orientation to gravity. The paths wind and intertwine. There is no “up” or “down.”

Filmmakers making movies about corruption while financing movies in a corrupt manner make it hard to tell which end is up.

Ironically, you would have thought Hollywood to be one of the best places to work given the abundance of films about championing the underdog. For decades, those protectors of women and gays wore their righteous indignation for all to see and applaud; yet, it t urns out Hollywood is engulfed in sexual harassment scandals that objectified women and gays during those same decades. What hypocrisy!

Famed producer Harvey Weinstein, who produced some of the biggest hits in Hollywood, seems to be the poster boy for everything wrong in the industry. For years he was lauded for his contributions to the Democratic Party:  “Party of the Oppressed.”  All the while his disgusting behavior was apparently well known, documented and joked about. The entire industry was complicit.  One of the most powerful actresses of stage and screen , Meryl Steep, once compared Harvey Weinstein to God. Yet she had no problem denouncing Donald Trump for his poor behavior towards a man with disability (later found to be untrue) or rally to support women who allege harassment by him.

In 2013, TV producer Seth McFarlane read the list of female actresses nominated for award recognition and actually joked  (on live T.V.) that the real award was that that “they no longer had to sleep with Harvey Weinstein.”  How do Meryl Streep and other powerful women in the film industry claim they had no knowledge about his predatory ways?  If Streep had real courage she would have spoken about what she surely knew. But she didn’t. Why? Because it would have hurt her career and her income. Rather than take the truly courageous step and expose the abuse she weighed her options, reviewed her finances and remained silent

Good art is meant to challenge us. It serves a purpose by mirroring society in order to challenge conventional wisdom, shine a light upon the oppressed and, hopefully, elevate the human condition. Having been a connoisseur and champion of the arts, I feel saddened by the great lengths members of the film industry have gone to amass their fortunes and cover-up the exploitation of women. The arts (not unlike the press) have their roles as critics of society. When it comes to Hollywood, the claim to have been there fighting the battles all along belies the truth that they were silent and complicit.

Dietrich Bonhoeffer, German Lutheran Pastor who sought to bring down Hitler, said “Not to speak is to speak. Not to stand is to stand.”  Hello? Meryl?

Steve

sleeclark@gmail.com

 

The Reality of Jerusalem

One of the most eye-opening lessons of having been a divorce attorney for close to 15 years was the realization that most, if not all, clients know the truth of their relationship even if they choose not to believe it. This means that whatever the reason turned out to be for the failed marriage, the underlying truth of the deficiency was known but ignored. Sometimes the reason “for looking the other way” was financial; sometimes it was because it was easier to stay the course than brave the unknown…but an awareness of the underlying truth was none-the-less present. It made me acutely aware of our propensity to see only what we want to see and only what supports our current belief system.

This propensity isn’t limited to our personal relationships. It’s starkly evident in our politics. You either hate Donald Trump, seeing everything he does as evil, or you love him, believing he can do no harm. Yet, truth is not so clearly defined.

Donald Trump is human and, therefore, flawed. This means that he sometimes makes good decisions and sometime bad ones. It means he can be emotionally arrested at, perhaps, some adolescent stage of development while at the same time being intellectually competent and able to strategize with a high degree of success. There is no incompatibility in the co-existence of such facts even if the combination of them if less than ideal. He is who he is.

I try and make my evaluations of the President’s behavior not within the context of the “love him or hate him model” but rather upon the wisdom, or lack thereof, of each individual action. This allows me to sometimes stand with him and sometimes stand in opposition to him.

This brings me to where I stand on his decision regarding Jerusalem.

As I stated at the outset of this post, we humans have a hard time with reality when it flies in the face of what we prefer to believe. So, the wife who denies that her husband is having an affair, even when all the evidence points to the contrary, has much in common with the person who denies Jerusalem is the capital of Israel, even when all the evidence points to the contrary.

The evidence was factually and succinctly set forth in President Trump’s announcement of the U.S. recognition of Jerusalem as the capital of Israel:

It was 70 years ago that the United States, under President Truman, recognized the State of Israel. Ever since then, Israel has made its capital in the city of Jerusalem — the capital the Jewish people established in ancient times. Today, Jerusalem is the seat of the modern Israeli government. It is the home of the Israeli parliament, the Knesset, as well as the Israeli Supreme Court. It is the location of the official residence of the Prime Minister and the President. It is the headquarters of many government ministries.  For decades, visiting American presidents, secretaries of state, and military leaders have met their Israeli counterparts in Jerusalem, as I did on my trip to Israel earlier this year.

Facts are pesky things to those who deny their existence. But denial of fact does little to diminish its existence.

As an American Jew, you might think I have a dog in this hunt and maybe I do. But as a lawyer, I can tell you that many a juror has a vested interest in some aspect of a case they may be seated in deciding. But we ask such jurors if “despite your feelings or experience, do you think you can hear the facts of this particular case and make a fair and impartial decision based upon the facts?” When the answer is “yes” we seat that juror.

Having an interest does not necessarily translate into having a bias.

In the instance of Jerusalem I cannot comprehend why any American, especially Jewish Americans, cannot put their political lens aside and simply examine the facts as set forth by the President in his decision-making process. The capital of Israel is Jerusalem whether you are a Democrat or Republican…unless, of course, you are first-and-foremost a single issue, political creature rather than a human who discerns and accepts facts, distinguishing them from agenda or wishful thinking.

My way of analyzing President Trump is a balanced approach which allows me to see the totality of the man while at the same time distinguishing between his weaknesses and his strengths. It allows me to be repulsed by the way he has referred to women or demeaned his opponents; yet, it also allows me to take great comfort and pride in his courage to speak truth to power and stand for what is right by recognizing Jerusalem as the legitimate capital of Israel.

Carole

(contact@carolegold.com)

How To Profit

Last week saw the final step in closing a deal that would have made me a decent amount of money in the short run and, potentially, a great deal of money in the long run. I could have ignored my principles and my gut thereby finalizing the details of the deal. Or, I could have stood on principal, followed my gut and likely caused the deal to crash and burn. I stood my ground.  It crashed and burned. I feel really good. If making money is the measure of success, I failed. But if the measure is what was ethical, legal and honest then I scored big. This deserves an explanation.

I had been in negotiations with the creator of an app.  He was trying to raise seed money; first round investors. Even if you’ve got a great product or service, which this guy seems to have, that first round of fundraising is always a challenge. After all, you’re doing it with no profits or sales to back up your claim of value. And of course, the developer always thinks the value of his product is worth gazillions and the investors always think it’s not. There was a target amount to be raised by a date certain and I was trying to reach that target by that date. One week prior to the deadline I had succeeded in securing an investor willing to put up 50% of the target. Further, I had contacted an additional investor who had an interest and, if terms were agreeable, was willing to put up twice the target amount in addition to the 50% I had already secured.

Terms. The magic word.

You see, from the first presentation that I attended as a potential fundraiser, the terms for potential investors were vague and changeable. In fact, whenever the developer was asked the terms, he repeatedly said, “everything’s negotiable.” Trouble was, what he said and what he did were inconsistent. When it came to terms he was inflexible and demanding. In fact, he was dictatorial in his delivery. Further, he refused to put anything in writing.

I am a lawyer. Terms in writing, even offers to contract that are yet subject to negotiation, need to be in writing. This is not a quirk of mine. This is standard legal and business practice. Further, this developer was refusing to put in writing even the terms that pertained to me as a broker.

I grew up watching my father, a successful entrepreneur, make many a deal on a handshake or someone’s word. I am “of that school” even though I am also a trained attorney. So, in this particular instance, sharing some common cultural background with the developer and wanting to believe the best of him, I was proceeding as if on a handshake.

But things started to not feel good in that “gut” I spoke of earlier. I call it intuition but it’s the same thing. It’s an internal instinct and “caution” light that goes on which says, “Pay attention. Something is out of alignment and doesn’t feel good.” It was the developer’s continuing refusal to commit to writing along with his increasing disrespect towards me and my investor’s rights the more certain he was that the investor was on board and the closer we got to closing the deal.

Three days before the target deadline, the developer sent me an email with terms. They were not the terms repeatedly discussed and those which were there were woefully inadequate and poorly defined. The email closed with a “take it or leave it” directive and a demand that I not respond with any counter-offer or other terms. I was to reply simply “Yes” or “No.”

Well, there’s the kiss of death to a lawyer. Under the best of circumstances I am unlikely to not have something to add! And these were definitely not the best of circumstances. So I replied with a detailed explanation of terms as my investor believed them to be based upon representations made to him (and me). Further, I set forth in detail why those terms were in everyone’s financial interest.

I received no direct reply. However, three days later, on the target date deadline, I received a call from a third party involved in the fundraising who informed me that the developer’s “team” had advised him to accept the terms as I had forwarded them. However, I was also told he was in another city that day trying to raise other money.

Well, we were at a deadline set up by the developer, not me. He had not replied to my email of three days prior. My investor was calling me to ask why there was no contract to sign as this was the target date. So, I sent an email and text to the developer at 5PM stating that if I did not have confirmation in writing by 6PM of an agreement to terms and proof of the remaining 50% of funds raised as per the budget that my investor’s offer would have to be renegotiated once the 6PM deadline passed. At 6:35PM I received a scathing email from the developer who suggested that his lawyer contact a third party in the fundraising and attempt to negotiate the close of the deal. The last sentence of the email was , “But I am completely okay with us not doing business.”

We did not do business.

I could have let the refusal to commit to writing go; I could have ignored the ever changing terms; I could have disregarded the firm deadline; I could have overlooked the increasing disrespect; I could have seen grey everywhere instead of seeing black and white. After all, a lot of money was potentially in my future. A lot! As in similar to owning early shares of Apple or Uber.

But I think letting all that go is one of the primary ways this country got itself into the economic mess it’s in. Without principles we are lost. Without principles, it’s impossible to know when to leave the room…or the deal. Without principles money isn’t our means of transaction, it’s our god.

The terms should have been set forth, committed to writing and respectfully negotiated back and forth until the point of mutual agreement. The deadline, set by the developer, should have been able to be counted on and honored by all sides. The manner in which communication was exchanged should have been respectful and not demeaning.

I feel sorry for people who do not know the core principles that form the basis for their existence. These are my principles. So when they were not met, it was easy to know when to leave the room and the deal. I do not have the money that was a part of that opportunity but I have my self-respect and I have not added to the decline of values and principles that so many in our nation bemoan the loss of. I am not part of the problem I am part of the solution. It’s a different kind of profit that I made on the deal…but profit none-the-less.

Carole (contact@carolegold.com)

What Binds Us

The other day I was listening to the Bill Simmons podcast where he talked about an old  skit on Saturday Night Live. It was about the Brady Bunch meeting the Partridge Family. He remarked how funny it was back then and how that same skit could never work today because, as a society, we no longer have common cultural experiences. In other words, not enough people would get the jokes. He theorized that in our current society there is no one thing that we all share and understand. A mere thirty years ago, everyone in my generation watched those two shows, knew the characters and “got” the inside jokes.

Today, there are no longer common cultural events and national traditions which bind us together. With the advent of cable T.V, YouTube, Netflix and Amazon there are no longer shows we all watch and, therefore, experience together. Today T.V shows, books and movies are created to target niche consumers.  There are few cultural events, aside from sports or politics, where we have a reference point that helps us understand the culture at large.

The ongoing scandal within the NFL where players are “taking a knee” highlights for me the disparate views of what I clearly thought was a cultural norm: standing out of respect for the American flag. A few weeks ago, I wrote a piece on my current thoughts about the NFL and its players kneeling.  I argued they should stand. The response I got blew me away. Some people loved the post while others called mea plantation owner for harboring such thoughts.” The vitriol spewed my way was eye opening.

Part of what shocked me was the divide. There was no consensus. We have come to the point where, as a nation, we are no longer able to agree that standing for the national anthem is the right thing to do.  Perhaps it is the result of growing and entrenched regional biases. I actually understand this possibility better than most. I grew up in the liberal northeast and now live in Texas. The opinions of these two regional groups of people could not be more different. With few exceptions, I can generally gauge in advance where each will stand on most issues. Yet, this prospect saddens and depresses me as I watch this divide grow with passing time.

These divisions are slowly ripping our nation apart. Ironically, I believe many of the problems that we now suffer are similar to the dissolution of a marriage.

In the Catholic faith, when a couple gets married, the priest utters a line that says “…and the two shall became one.”  On a physical plane it is impossible for two peoples’ bodies to morph into one, so the church is referring to something deeper that happens on the spiritual plane where souls merge. A few years ago a friend of mine got divorced. He told me that he experienced such trauma over the issue that he was in immense pain for quite some time. He prayed about it and had a dream where he saw a sword cutting apart he and his former wife with whom he had been “joined.” The sword was cutting the one body into two separate beings. The pain that he was suffering was due to the trauma of cutting away one’s flesh.

Nationally, we find ourselves divorced from the principles on which the nation was founded. How else can you justify the candidacy of Bernie Sanders who campaigned on a socialist platform while living in a capitalist country? Our culture no longer has any shared values. Blue states believe in one America while red states believe in another. There is no common ground.  This post began identifying how even in our expression of entertainment we no longer share a common culture.  Today, the majority of skits on “Saturday Night Live” are focused on politics (always a divisive issue) precisely because there are so few subject matter skits that an entire audience would get.

Sadly, I realize that I no longer live in the same country as my fellow Americans. The country founded upon a document declaring we have unalienable rights from our creator co-exists with one which believes there is no God.  We have become a country where a significant amount of people believe there is no such thing as a man or woman; there is no objective truth; only that with which we “identify” or what gives credence to our preferences. Babies aren’t babies they’re tissue and the definition of marriage is dependent upon what a legislature decides.  The ever changing tide of popular opinion is now what defines and moves our nation, not principals.

If you believe everything is fine and the things I’ve cited here are no big deal I wish I could experience your delusion. I wish I could crawl into that bubble with you… but I can’t. The forces shaping our country are leading us to ruin. We no longer have sufficient commonality to bind us in a meaningful way.  We are a collection of isolated states that happen to occupy a piece of land called America.  We are no longer united.

Over 2000 years ago the Greek storyteller, Aesop, said it best: “United we stand, divided we fall.” If that’s too far back in history for you, then turn over that dollar bill in your wallet.  “E pluribis unum“, adopted by the Founders in 1782, translates as “out of many, One.”  So whether 2000+ years ago or 235…we have turned this principle of standing united on its head. The current mantra of the United States of America is best expressed as “out of One, many.”  Since the past is often instructive, perhaps its worth more than a moment’s reflection on Aesop’s warning: divided we fall.

Steve

sleeclark@gmail.com