Indecent Exposure (69 page)
Peter Gruenberger flew to Los Angeles the evening of Sunday, May 14, intending to confer with
Ilana
Cytto the next day and see Lisner later in the week. However, earlier that Sunday, Mother's Day, without telling any of
the investigators, Audrey Lisne
r flew to Mexico City with her dogs and dog handler, Ric Chashoudian.
Ilana
Cytto the next day and see Lisner later in the week. However, earlier that Sunday, Mother's Day, without telling any of
the investigators, Audrey Lisne
r flew to Mexico City with her dogs and dog handler, Ric Chashoudian.
When it became clear early in the week that Lisner was missing, Richard Kerns obtained from her travel agent the name of the hotel where she had been scheduled to stay, and was surprised when she answered his call.
"Audrey, this is Dick."
"Oh. hello, Mr. Kerns."
"Oh. hello, Mr. Kerns."
"What the fuck are you doing? You know you were suppos
ed to meet with Peter Gruenberge
r! You agreed to the date!"
ed to meet with Peter Gruenberge
r! You agreed to the date!"
"My dogs wouldn't act properly if I wasn't with them." "But you weren't supposed to go in the first place." "Why can't he interview me by phone?" "He needs to
see
you in person. That's what you agreed to." "Well, I'll b
e back in a few days. He can see
me then."
see
you in person. That's what you agreed to." "Well, I'll b
e back in a few days. He can see
me then."
In New York, Todd Lang sent Irwin Kramer a five-page, singl
e-spaced letter, marked "Confidential/Attorne
y-Client Privilege," setting forth in elaborate detail the history of Berte Hirschfield's employment with the market-research firm of E. J. Wolf & Associates.
e-spaced letter, marked "Confidential/Attorne
y-Client Privilege," setting forth in elaborate detail the history of Berte Hirschfield's employment with the market-research firm of E. J. Wolf & Associates.
At your request, in order to support our initial view, we recently have conducted an investigation of the circumstances of
Berte
Hirschfield
's employment by Wolf and of Wolfs contractual relationship with Columbia. We have interviewed Berte Hirschfield, Ed Wolf, and certain present and former employees of Columbia with knowledge of the facts.
Berte
Hirschfield
's employment by Wolf and of Wolfs contractual relationship with Columbia. We have interviewed Berte Hirschfield, Ed Wolf, and certain present and former employees of Columbia with knowledge of the facts.
The letter concluded:
No facts developed in the course of this investigation suggested that there was anything improper about the business relationship between Columbia and Wolf or with respect to
Berte
Hirschfield
's employment by Wolf. Nor have any facts come to our attention suggesting that Columbia did not receive the services from Wolf which were expected under the contracts from Wolf.
Berte
Hirschfield
's employment by Wolf. Nor have any facts come to our attention suggesting that Columbia did not receive the services from Wolf which were expected under the contracts from Wolf.
Accordingly, based upon the scope of the investigation and the facts revealed by that investigation, as detailed above, we confirm our view previously expressed to you that Columbia has not been required under the federal securities laws to disclose publicly
Berte
Hirschfield's employment with Wolf.
Berte
Hirschfield's employment with Wolf.
On Tuesday, May 16, and again the following Sunday,
The New York Times
published one of the most sweeping retractions ever to appear in a major American newspaper. Still under threat of a libel suit by Allen & Company, the
Times
retracted major portions of the February article by Lucian Truscott, IV, which had suggested that the
Allens
had tried to "hush up" the
Begelman
scandal so as not to interfere with an alleged plan to sell the Allen interest in Columbia, that the
Allens
had dealt with organized crime figures, and that Charles Allen had been a "mystery power behind the Hollywood set ever since" the early fifties.
The New York Times
published one of the most sweeping retractions ever to appear in a major American newspaper. Still under threat of a libel suit by Allen & Company, the
Times
retracted major portions of the February article by Lucian Truscott, IV, which had suggested that the
Allens
had tried to "hush up" the
Begelman
scandal so as not to interfere with an alleged plan to sell the Allen interest in Columbia, that the
Allens
had dealt with organized crime figures, and that Charles Allen had been a "mystery power behind the Hollywood set ever since" the early fifties.
"The phrases 'Godfather' and 'hush up' and the use of the photograph of an organized crime figure may have created the incorrect impression tha
t Charles Allen was connected wi
th the Mafia or had engaged in illegal activities," the
Times
said. "The article did not inten
d to suggest that (
the
Allens
) were connected with organized crime or involved in illegal activities. The
Times
regrets any such unwarranted implication."
t Charles Allen was connected wi
th the Mafia or had engaged in illegal activities," the
Times
said. "The article did not inten
d to suggest that (
the
Allens
) were connected with organized crime or involved in illegal activities. The
Times
regrets any such unwarranted implication."
The breadth of the retraction in effect covered every indication of "illegal activities" in the article, including an attempt to conceal the Begelman scandal in order not to interfere with a sale of stock.
"The statement used as a basis for the article's assertion that [Charles] Allen had been a power behind Hollywood for 25 years was incorrect," the
Times
said. The paper also corrected the false statement that Columbia Pictures had been unprofitable for a number of years until
Close Encounters
put it in the black.
Times
said. The paper also corrected the false statement that Columbia Pictures had been unprofitable for a number of years until
Close Encounters
put it in the black.
The retraction was notable not only for its scope but also for the prominence of its publication. Unlike most corrections, it was highlighted by a note on the front page and another note in the news summary and index. The notes referred to an article
about
the correction under a two-column headline on page one of the business and financial section. That article reported the gist of the correction, whose text then appeared in a headlined box on the letters page of the Sunday magazine, and was flagged by a note in the magazine's table of contents.
about
the correction under a two-column headline on page one of the business and financial section. That article reported the gist of the correction, whose text then appeared in a headlined box on the letters page of the Sunday magazine, and was flagged by a note in the magazine's table of contents.
Having achieved their essential goal, the
Allens
agreed to drop the lawsuit.*
Allens
agreed to drop the lawsuit.*
David
Begelman
made an unexpected appearance in Burbank Superior Court on Wedn
esday. May 17, and entered a ple
a of "no contest" to the charge of felony grand theft.
Begelman
made an unexpected appearance in Burbank Superior Court on Wedn
esday. May 17, and entered a ple
a of "no contest" to the charge of felony grand theft.
*
Despite the magnitude of the Truscot
t retraction, it tame
to look relatively modest in 198
2 when the
Times
found it necessary to
retract an entire article its magazine had published on Cambodia. Large portions if not all of the article apparently had been fabricated. A year earlier.
The Washington Post
adjoined that
one of its ma
jor articles, which had won a Pulitze
r Prize, was a hoax.
Despite the magnitude of the Truscot
t retraction, it tame
to look relatively modest in 198
2 when the
Times
found it necessary to
retract an entire article its magazine had published on Cambodia. Large portions if not all of the article apparently had been fabricated. A year earlier.
The Washington Post
adjoined that
one of its ma
jor articles, which had won a Pulitze
r Prize, was a hoax.
Meanwhile. David Begelman
's threatened suit against New West
and Ne
w
York
magazines for suggesting that he
had mishandled Judy Garland's funds wa
s never begun, lawyers for the two sides discussed possible forms of rebuttal Bege
lman might make, but
nothing was published and. as Begelman later put it the matt
er "dwindled away."
's threatened suit against New West
and Ne
w
York
magazines for suggesting that he
had mishandled Judy Garland's funds wa
s never begun, lawyers for the two sides discussed possible forms of rebuttal Bege
lman might make, but
nothing was published and. as Begelman later put it the matt
er "dwindled away."
Sentencing was sched
uled for June 28.
Begelman
did not change his not-guilty pleas to the forgery counts, but it was generally assumed that those charges eventually would be dismissed.
Variety
noted that the judge who would pass sentence had a reputation for being a "very lenient trial judge." Looking dapper in a double-breasted blazer,
Begelman
told a throng of reporters and cameramen,
"I
feel this was the right and appropriate thing to do at this time." Everyone assumed that David would get off with probation and perhaps a fine. The change of plea made headlines across the country. (A no-contest plea stands as a conviction of the crime and is legally tantamount to a guilty plea except for one technical difference: a no-contest plea cannot be used as evidence against the defendant in a civil lawsuit, while a guilty plea can.)
uled for June 28.
Begelman
did not change his not-guilty pleas to the forgery counts, but it was generally assumed that those charges eventually would be dismissed.
Variety
noted that the judge who would pass sentence had a reputation for being a "very lenient trial judge." Looking dapper in a double-breasted blazer,
Begelman
told a throng of reporters and cameramen,
"I
feel this was the right and appropriate thing to do at this time." Everyone assumed that David would get off with probation and perhaps a fine. The change of plea made headlines across the country. (A no-contest plea stands as a conviction of the crime and is legally tantamount to a guilty plea except for one technical difference: a no-contest plea cannot be used as evidence against the defendant in a civil lawsuit, while a guilty plea can.)
After a session with his psychiatrist the next morning, David
Begelman
, along with Gladyce, caught the noon United flight to New York and attended the opening of a new Columbia film,
Thank G
od It's Friday,
and a party afterward at Studio 54.
Alan Hirschfield and Joe Fischer flew to Dallas that day for the world premiere of
The Buddy Holly Story
followed by a party at a barbecue jo
int whose reputation for rowdine
ss prompted the local Columbia office to provide Hirschfield with a bodyguard.
Begelman
, along with Gladyce, caught the noon United flight to New York and attended the opening of a new Columbia film,
Thank G
od It's Friday,
and a party afterward at Studio 54.
Alan Hirschfield and Joe Fischer flew to Dallas that day for the world premiere of
The Buddy Holly Story
followed by a party at a barbecue jo
int whose reputation for rowdine
ss prompted the local Columbia office to provide Hirschfield with a bodyguard.
Hirschfield spent the next two weeks concluding arrangements for Dan
Melnick
to become the permanent president of the studio and trying again to interest the board of directors in acquiring Filmways or Mattel. Both efforts increased the acrimony in the company.
Melnick
to become the permanent president of the studio and trying again to interest the board of directors in acquiring Filmways or Mattel. Both efforts increased the acrimony in the company.
Though the board members grudgingly approved the Melnick appointment, they ridiculed Hirschfield for taking nearly four months to choose the person who was already occupying the studio presidency in an acting capacity. Hirschfield angrily retorted that if the board had kept its promise to support him and to certify his own position in the corporation he could have filled the studio position much sooner, perhaps with someone even more qualified than Melnick.
As for Mattel and Filmways. Hirschfield finally realized that there was no hope, and that his persistence was only alienating Herbert Allen further. A tentative offer by the investment banker for Filmways to purchase the
Allens
' interest in Columbia Pictures was, of course, rejected.
Allens
' interest in Columbia Pictures was, of course, rejected.
FIFTY-FOUR
Audrey Lisner and her dog handler, Ric Chashoudian, took a taxi to the Mexico City airport for their flight back to Los Angeles. It was Tuesday, May 30. They had been in Mexico just over two weeks.
As they were walking through the airport after checking their luggage, Audrey suddenly told Ric that she had forgotten something at the hotel and had to go back. Since it was too late to recover their luggage she insisted that he go on ahead and she would catch a later flight. Before he could stop her, she hurried away.
Chashoudian took the flight as planned and at LAX gathered their luggage and took it to Lisner's home where his wife, Sandra, had been looking after Audrey's two daughters. (The dogs were transported directly to their kennel.) Audrey did not arrive on any subsequent flight that day, and by late evening the Chashoudians became concerned. They opened Audrey's luggage and found a large envelope addressed to Ric. Inside were four documents which shocked the Chashoudians. The first was a handwritten letter from Audrey to Ric dated that day:
Chashoudian took the flight as planned and at LAX gathered their luggage and took it to Lisner's home where his wife, Sandra, had been looking after Audrey's two daughters. (The dogs were transported directly to their kennel.) Audrey did not arrive on any subsequent flight that day, and by late evening the Chashoudians became concerned. They opened Audrey's luggage and found a large envelope addressed to Ric. Inside were four documents which shocked the Chashoudians. The first was a handwritten letter from Audrey to Ric dated that day:
Dear Ric,
Unfortunately, I will not be joining you on the flight home. . . . When you read this you will wonder why and what has happened. I can only say that you have become a dear friend and I feel I can rely on you to take care of that which is most dear to me. 1 don't know at this moment what 1 will do or where I will go. I have no future. May I thank you for all you have done and most of all for what must be done now. I cannot face the problems that
are
about to happen to me. Soon you will be aware of what they
are
. I can offer no explanation at this point because there is
are
about to happen to me. Soon you will be aware of what they
are
. I can offer no explanation at this point because there is
none.
...
My friends have always been my family.
1
love them dearly, second only to my children; therefore
1
must spare them any embarrassment.
...
My friends have always been my family.
1
love them dearly, second only to my children; therefore
1
must spare them any embarrassment.
- I
remain as always, Audrey - Also in the envelope were a general power of attorney, notarized at the U.S. Embassy in Mexico City five days earlier, giving the Chashoudians full power to act for Audrey Lisner in all types of business and legal affairs; a handwritten note giving custody of Audrey's sixteen-year-old daughter to the Chashoudians; and a second handwritten note giving custody of her fourteen-year-old daughter to another friend.
- Totally bewildered, and unsure of what to do next, the Chashoudians spent the next few days conferring with their lawyer, police detectives, Columbia Pictures' investigators, and Audrey's friends. There was no further word from Audrey.
- (Actually, Lisne
r had reappeared at the Mexico City airport the same day she left Ric Chashoudian and had taken a Texas International flight to Houston. No one found that out until weeks later, however, when U.S. Customs in Texas turned up Lisner's re
-
entry form in response to a request by the Los Ang
eles Police. By that time, Lisne
r had disappeared.) - Robert Stone, the former Hertz and NBC executive whom Alan Hirschfield had considered, and then privately rejected, for employment at Columbia Pictures Industries, very much wanted to work for Columbia. Although
Hirschfield
had not definitely said no to Stone when they met in April at Herbert Allen's request,
Hirschfield
had not contacted Stone again and Stone held little hope that
Hirschfield
would hire him. However, Stone made it a point to stay in touch with Herbert, and the more Herbert saw of Stone, the more impressed he became. A
fter the revelation of the Lisne
r embezzlements, Herbert grew more convinced than ever that Columbia's financial control procedures were deficient. He recalled Dan Lufkin's note to him during the May board meeting: "This company is out of control." In late May, Herbert introduced Bob Stone to Matty Rosenhaus, who also was impressed. They convinced themselves that Stone, with his reputation as a tough administrator, was just the kind of executive Columbia needed. - Having been unemployed for more than fourteen months, Stone naturally was looking elsewhere as well, and on June 1 he was offered a high executive post with a Dallas company controlled by Bunker and Herbert Hunt, the oil and silver magnates. Stone promised the Hunts that he would give them an answer by Tuesday, June 6.
- Stone still wanted to work for Columbia, however, and he told Herbert Allen of his dilemma: He had had no call from
Hirschfield
but had an offer from the Hunts which he had to accept or reject within a few days. Herbert asked Stone to come to his office early Monday morning, June 5. "I'm very anxious," Herbert said, "that you meet with Alan Hirschfield and somehow get something worked out where you can become executive vice president and chief operating officer of Columbia." Stone was delighted and said he was available to see
Hirschfield
immediately. Herbert promised Stone he would get a call by noon. Stone left, and Herbert went to the eleventh floor, found
Hirschfield
in the hall, and the two of them went into the boardroom. - "I have a plan which will help the company and also solve all your problems with the board," Herbert said.
- "Really," Alan replied skeptically. "What is it?"
- "Hire Bob Stone as executive vice president and chief operating officer."
Hirschfield
sighed and rolled his eyes. "If you'll recall, Herbert, I met with Stone about a year ago, and I met with him again in April, and I decided he's the wrong person for us. He's the wrong kind of personality for this business."
"On the contrary," Herbert said. "I think he's perfect. You ought to reconsider. He's just the man to get this company under control. He's had a job offer from the Hunts in Dallas and he has to let them know by noon tomorrow. But if something can be worked out here, I think he'd prefer to be here. If you make a deal with him today, it would really clear the air between you and the board. You'll get your new contract and we can get back to business around here."
"I must say, Herbert, that this is just about the most bizarre suggestion I've ever heard. Not only do I hire a guy I don't want, but I hire him today." - "I've gotten to know the guy. Al
an, and he's perfect for what we
need. This company is out of control, and the Lisner thing proves it. - Matty, Irwin, Dan, and I all feel that the company is out of control, and Stone has the perfect kind of strong operating background to deal with it."
- "Saying the company is out of control is an outrageous statement!"
Hirschfield
declared. "Is that the 'big lie' you're now going to promulgate—that the company is out of control? There's not one shred of evidence to support it. It's just another excuse to harass me. The fact that one man and one lady out of thousands of employees have superseded the control system doesn't mean the company's out of control! Our controls
are
very good. We've got the lowest operating costs of any company in the industry. It's a ludicrous statement to make today, at the peak of the company's success. Nobody was saying it was out of control five years ago when it was on the verge of bankruptcy! I have no objection to hiring a qualified person, but it's just plain crazy to hire a man for a job in the space of an afternoon, especially when he isn't qualified. Everyone I've talked to about Stone says the same thing—he's very competent, a good operating man, but totally inflexible, abrasive, tied to budgets and numbers, and operates by fear and by the book. That's totally inimical to the kind of company and the kind of people we have."
"I've heard the same things," Herbert said, "and that's exactly why I'm for him. He won't be involved in the creative process. He'll handle budgets a
nd control the flow of money. We
need so
mebody like that around here. We
say yes to everybody on everything. How about somebody who can say no. An operations officer shouldn't be loved
by everybody in the company. We
have enough love to go around, but we don't have enough efficiency." - "That's an insult—this is an efficient company,"
Hirschfield
asserted. "Maybe Stone's right for U.S. Steel or Hertz, but not for the creative environment of an entertainment company.
None of my people—Fischer, Adle
r,
Melnick
—would report to him." - "That's ridiculous. It depends on how you handle it. You can set the guy up to be destroyed or you can support him and set him up to succeed."
- "There's no way B
ob Stone can succeed in this company under any circumstances. And to hire him in one day is absolute madness." - "You could work it out if you wanted to. It would cure this company's problems, and it would get you a new contract. At least see him before you decide."
- With great reluctance, Hirschfield agreed to interview Stone again that afternoon. He told Stone that the management environment at Columbia remained "unsettled" and that he was very hesitant to hire him, particularly on less than a day's notice. But he agreed to consider it further and let him know later in the day or Tuesday morning.
- After Stone left, Hirschfield summoned Fischer and Adler, whom he had already briefed on his meeting with Herbert.
"I'm not going to hire him in one day," Hirschfield said. "This is crazed. It makes no sense. It's a bunch of crap that once I hire him they're suddenly going to give me a contract. Once I hire him, they don't have to give me a contract. They would have a logical successor for me in place. They'd say, "We're letting Alan
Hirschfield
go, but at least we
have a chief operating officer.' They must think I'm completely stupid."
Bob Stone, meanwhile, telephoned Herbert Allen and said it appeared doubtful that Hirschfield would offer him the job. Allen asked Stone to be at the Allen & Company
offices first thing Tuesday morn
ing. When Stone appeared, he found Matty R
osenhaus there with Herbert. "We
want you to join Columbia Pictures Industries as executive vice president and chief operating officer," Herbert said.
Stone was discreet enough not to press for details of how Allen and Rosenhaus intended to install him over
Hirschfield
's objections. Instead he said, "Look. I'm very interested in the Columbia thing, very enthusiastic about it. I feel I could make a major contribution. But I just want to be very certain that things will in fact work out for me here." - "Wc feel it will work out," Allen replied.
"Can you give me any kind of time frame?" Stone asked. - "Two or three weeks at most."
A delighted Bob Stone returned to his apartment, telephoned the Hunts, and turned down their offer. - Hirschfield
, who was at home
in bed with a bad back, called
Herbert to say that he had decided against Stone. "You're making a
big mistake, Alan," Herbert said, "but we'll talk about it when
you're back in the office." Hirschfield then called Stone and told
him he had decided not to hire him. Stone thanked Hirschfield for
his consideration. He
did not reveal that he had just been promised
the job by the men who controlled the corporation. - * * *
- Todd Lang's lengthy letter to Irwin Kramer in the middle of May, reiterating that there had been nothing improper about Berte Hirschfield's employment with the Wolf market-research firm, did not satisfy Kramer. He raised further questions and called a meeting of the audit committee for the morning of Wednesday, June 7. Hirschfield, having found previously that displays of sheer fury did no good, took further steps this time. He prepared notes for the meeting and asked his personal lawyer Robert Haines, to attend. Hirschfield had been quietly consulting Haines for weeks on what legal recourse he might have against the board of directors for its conduct toward him.
- His back still hurting after a day in bed, Hirschfield arrived at his office and asked the audit committee to come to him so that he could keep his back as still as possible. Irwin Kramer refused and insisted that the meeting be held in his office. They argued and railed at each other, partly through secretaries and intermediaries, for more than an hour before
Hirschfield
finally agreed to go down to Allen & Company - "What occasioned the renewed interest and investigation concerning
Berte
and Ed Wolf?" Hirschfield asked, referring occasionally to his notes. "Why did it take over two years for Irwin Kramer as chairman of the audit committee to conclude there could be potential problems? If you're not satisfied with Weil, Gotshal & Manges's report, why has the audit committee failed to hire independent counsel? I view this as a deliberate effort to discredit the integrity of Weil, Gotshal & Manges.
...
a deliberate effort to place on the record innuendo, suspicion, and cynicism—two years after the fact and in the face of full voluntary disclosure to the board of Berte's employment. There is an unusual double standard being applied where I am concerned that does not seem to app
ly in similar situations where other
board members are concerned, and where favoritism might be alleged or suspected." - Hirschfield
noted that Irwin Kramer was a member of the board
of directors of the Teleprompte
r Corporation, the nation's largest cable-television system, and had
a business relationship with See
burg Corporation, which manufactured pinball machines in competition with Columbia's Gottlieb unit. He also noted that Columbia Pictures had i
nvested in a Broadway musical, I
Love My Wife,
which had been produced by Kramer's wife, Terry Allen Kramer. In each instance, Hirschfield alleged, there was at least as much if not more potential for conflict with interests of Columbia Pictures as there had been in
Berte
Hirschfield's employment, and yet none of Kramer's relationships had been investigated. - Kramer essentially ignored Hirschfield's points, but Hirschfield demanded that the issue of
Berte
's employment be resolved formally a
nd immediately. Peter Gruenberge
r, who had emerged from the Audrey Lisner investigation long enough to again address the Berte Hirschfield situation, proceeded to answer Kramer's latest questions forthwith. The committee then voted unanimously that the matter was closed.* - That afternoon, Dan Lufkin called and asked if he could sec Hirschfield late in the day. "It's very important," Lufkin said. He arrived at Alan's office at six o'clock. Since Dan Lufkin had joined the board of directors several months earlier at the height of the
Begelman
crisis, a modicum of warmth had developed between him and Hirschfield. Even though Lufkin was a partisan of Herbert's, he at least had acted toward
Hirschfield
in a more congenial fashion than Herbert, Matty, and Irwin had. It was possible for Alan and Dan to have a civil conversation—something Alan had not had with the others in months.
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