In the film biz, funny money is an old joke
I'm talking about "funny money." Given the fact that every major company seems dedicated to sharing the risk on everything from production costs to cheeseburgers at the commissary, funny money has become more pervasive than ever in Hollywood. And no one seems to worry about it.
They should. Not all funny money is necessarily tainted, mind you, but all sorts of curious people are lured by the glamour of the biz to write big checks in support of a movie or play. Some even came by their money honestly, and some of their money is actually green.
NONETHELESS, MY PERSONAL experience with funny money has run the gamut from strange to stranger. When I was a young executive at Paramount, I noticed a sudden change in the type of people frequenting the lot. The diners in the commissary looked like a casting call for "The Godfather."
It turned out that Paramount had negotiated a surreptitious deal to sell control of the lot to a character named Michaele Sindona. Sindona happened to be a hood, but an interesting one. He liked to quote Virgil and Cicero, often cited the writings of Machiavelli and boasted of his ties to the Vatican bank. Sindona's deal with Paramount ultimately fell apart and he was sentenced to life imprisonment (where he died), but for a time his funny money left a distinct mark on the studio.
During my career as a producer, I once received a job application from a painfully shy, fresh-faced kid who wanted a job as a production assistant. When I hired him, he seemed on the verge of tears. Thanking me profusely, he blurted, "Maybe I can even chip in a little."
I had no idea what he meant until later that day when I received a phone call from a renowned corporate lawyer. "It was great of you to give the kid a break," he said, "so he'd like to reciprocate." I asked what that meant. Explaining that his young client was the heir to a giant pharmaceutical fortune, the lawyer said simply, "He'll finance your entire film up to $50 million."
I swallowed hard. This was serious funny money. I told him "no," I had all the financing I needed, but added that the kid still had the job -- I just didn't want to end up working for him.
I WAS REMINDED ABOUT all this by the recent traumas experienced by several companies engaged in co-financing films. Take Miracle Entertainment, for example. Now I'm not saying that Miracle is tied to funny money; it's just that its roller coaster-like ups and downs have been sufficient to raise a lot of questions.
What other small company can you think of that has nearly half a billion shares of stock outstanding, claims to have abundant funds to spend on production as well as prints and advertising, yet loses its three top executives in one week?
While Miracle Entertainment announced a significant slate at Cannes, and had claimed to be in business with the likes of Barry Sonnenfeld and Barry Josephson, SEC filings suggest it doesn't have enough money to fulfill its commitments. Tony Cataldo, the chairman and CEO, insists his company has sufficient funds, but Nasdaq hasn't helped his cause by de-listing his stock from over the counter trading.
MARTIN LANDAU, A HIGH-PROFILE partner in Miracle, is hanging in there, but the three departing executives -- Gregg Hoffman, Neil Sacker and Julie Savay-Ross -- are claiming breach of contract and fraud. They say they worked assiduously to establish a presence for the company only to discover that Miracle was essentially a "mirage."
Miracle, in fact, had piled up an accumulated deficit of some $35 million by last summer, and allegedly didn't have the money to meet its commitments. Indeed, in an SEC filing in September, Miracle stated that it would "not use its own funds for the production of motion pictures."
That means, I suppose, that the company set up to co-finance films was itself planning to pass the hat to other companies set up to co-finance films -- the ultimate fiscal circle jerk.
Now I don't want to lean too hard on Miracle. They surely have their case to argue and, besides, they're just a small part of a big syndrome. If Hollywood wants others to foot its bill, that's an open invitation for funny money to get even funnier. I wouldn't be surprised to see Michaele Sindona having lunch at the Paramount commissary one of these days. Or at least his ghost.
