Going back to the Root of Michael Jackson Financial problems.
Spanish Version is here:
All the documents used below can be found here:
After so many years spent presenting our point of views in twitter, getting insults in return and being called nasty names, the sale of the Michael Jackson catalog’s shares was probably our breaking point.
- It became unbearable observing too many fans accepting as fact that MJ created a huge hole in his finances by lack of discernment in spending money, megalomania and other bad habits.
- It became unbearable reading “selected and selective” information in such subliminal disguised way aiming to disparage Michael Jackson before the eyes of his own fans and the world.
So we went back to the root of the misinformation and we have decided that we will present to fellow fans the documents that has been kept away by whom had and have interests in bury the truth and rewrite MJ HIStory.
Detailed and documented facts regarding Michael Jackson’s financial tale/problems will be presented to fight against MEDIA, journalists, writers, his own Estate and unfortunately also by some people who call themselves Michael Jackson’s fans. All of them have mastered the art of telling you the best lies covered with half-truths.
Going through the documents of the countless lawsuits that persecuted, bittered and haunted the last years of Michael Jackson’s life, we have got to see that these papers tell us a different story from what of little and distorted we’d gotten used to hear, particularly from a business/financial standpoint.
In this blog entry, we will show Michael Jackson’s strong belief in a conspiracy against himself, perpetrated for many years by various shadow individuals and the entertainment industry. We will use the official depositions, video of people been aware of MJ thought and the MAN himself. And you will notice how vocal he was in this regard. You will be able to read and judge yourself.
In the next blog entries, through this year, we will offer detailed facts and numbers about Michael Jackson’s finances giving back to the fans the HONORABLE MAN they love, erasing a fake narrative meant to point the finger against MJ for his financial problems, purposely ignoring what “THEY” did to take him into the brink.
For this blog post, we are going to start talking about the Prescient Acquisition lawsuit and Michael Jackson:
As soon as Michael Jackson was acquitted on child molestation charges, a lending intermediary company called Prescient Capital of Englewood Cliffs sued him for breach of contract, asserting that he owed $48 million in fees for work the company did to secure financing to cover the debts at Bank of America (BOA).
At the conclusion of the case in 2007, few tabloids and magazines revealed a conspiracy against Michael by reporting MJ’s words in his deposition.
Some captures taken from MJ’s deposition:
Here Donald Stabler short summary depositions. (It’s a long deposition in 3 phases with plaintiffs and defense lawyers questioning: most of the episodes have been told superficially and going through the legal papers and other depositions we discovered he had hired another company in order to study and analyze the documents. So in synthesis he did not perform the job he was supposed to do).
Don Stabler was an enrolled agent specialized in tax, tax law and business management and has his own firm called Stabler & Associated located in Los Angeles. During July 2004 Stabler was contacted by one of his client that happened to be Randy Jackson (he helped Randy in a tax return issue) who was looking for an accountant to assist him to handle the financial/accounting matters of his brother Michael who was involved in a horrible criminal case. Randy wanted MJ concentrated in preparing the trial with his new criminal legal team, Tom Mesereau and Susan Yu. Mesereau had known Randy Jackson for many years. Initially, when the search of Neverland took place, he did get a call from him about flying to Las Vegas to meet Michael Jackson. He could not do it because he was tied up in the Robert Blake case, but eventually he had a falling out with him and about three months after that, he got another call to fly to Florida and meet Michael, and one thing led to another and officially he became the defense Attorney for his criminal case.
Stabler main tasks were to put in order documents needed to restructure and refinance a loan MJ had in place with Bank of America and help to reduce the costs of MJ commercial activities (Michael had three offices and he wanted to close two pouring all the employees into one). Another task was to check the law firm of Allan Whitman that until then served as Michael’s business manager: in short, Stabler should have cared to pay the bills, check accounts, receipts and bank statements.
At the beginning of the deposition held in New York, Stabler was reluctant to disclose his private conversations with Michael to Mr. Altman (attorney for plaintiff Prescient) but Mr. David (attorney for Perfect Circle plaintiff) invited him to speak because of issues he was judging relevant.
Actually Mr David invited Stabler to talk about what Michael Jackson thought to be the origin of his financial problems and the on going child allegations trial: a conspiracy against him that involved the taking of his catalog of music referred to as Sony/ATV.
Michael Jackson was very vocal since 2001 that he believed there was a conspiracy going on against him related to a big fight about his catalog.
And many others were aware of Michael’s beliefs
Before being reached by Prescient (which came into the picture brought by Stabler around November/December 2004), Randy was already in talk since the summer with one German Investment Bank via a men called Bernhard Fritsch, another company called CinVen and GE Capital Group. Although the interest showed by many, there was some reservations and concerns about MJ criminal trial.
Someone introduced Stabler to Robert Pryce (consultant of Perfect Circles Group) which in turn introduced him to Darien Dash, owner of Prescient Acquisition, who then contacted Transitional Investor LLC, a company affiliate to Fortress Corp. Randy Jackson knew Dash name because his brother was a rapper.
Dash wanted an exclusive for the deal but it was mostly impossible because there were open negotiations with Fritsch and CinVen and there was Charles Koppelman and Branca trying to make a deal with Goldman Sachs. John Branca, who was no longer involved in MJ business except for the administration of the songs(Sony kept paying JB directly for his interests in the catalogue and legal fees never performed), wanted a piece of cake and also introduced another deal with a company called Blackstone Group.
Stabler had a meeting with Koppelman and a Goldman Sachs’ rep, Whitman and John Branca at John Branca’s office without informing Michael Jackson and ignoring his instruction not to talk with them about any deal since Michael believed that somehow they were part of the conspiracy, Stabler disclosed the open deal with Prescient/Transitional to them. Through a number of dominos, the situation got out of hand pretty fast.
In fact two years before the Bank Of America (BOA) expiring date loan, Michael had instructed Koppelman to find a way to restructure and renew his financial position and he showed up at few months away of a potential disaster with a deal such as Goldman Sachs that Michael flat out rejected. (if you are not aware of the details of the Goldman Sachs deal, we suggest you to read “The Wrap”series).
This episode tell us that Michael had his financial issues under control and he wisely wanted to deal with things with large advance and evaluate the most cost-efficient solution.
Koppelman’s attitude sounds even more suspicious because MJ found out that Whitman firm was paying Koppelman 100’000 USD per month, leaving unpaid bills that were much more urgent.
Prescient proposed an agreement that Randy and Michael had already discussed as too high in fee and they sent Stabler back to renegotiate the deal but due to Fristch and the other deals delaying too much and probably not going to happen, Stabler decided to get into business with Prescient signing an agreement on behalf of Michael Jackson Publishing Trust without having a formal power of attorney.
And as if that weren’t enough what Stabler did in order to check the average brokerage fee?
He phoned Branca, clearly keeping MJ in the dark. Branca told him that the last time BOA redid the loan they charged 10%.
Continuing to sneak behind Michael’s back, Stabler was a dangerous fellow for him. It also sounds pretty strange that a conservative bank such Bank of America was charging a 10% fee and nobody could understand whether or not these were all origination fees outside of the usual costs and commissions to lend money counter- guaranteed with a face value asset greater 3 times of the loan itself!
The main issue was to refinance Bank of America (BOA)’s credit line, at that time, because with the “current high interests rate” there could have been problems in the repayment. Also the credit line had a series of pretty prohibitive and restrictive clauses that could be triggered upon events that were happening at the time. (Note: MJ was on criminal trial and the world thought he was going to be convicted).
What really annoyed MJ was a clause that he had to maintain the service of Charles Koppelman, to not cause the line default. In fact Bank of America documents required Koppelman to be part of the transaction and to remain as trustee in the trust governing that asset for so long as the loan existed, which also required Michael Jackson to pay Koppelman a fee of 1 million of dollars a year for his consulting relationship with respect to that trust.
And Michael finances at that time would no longer allow for Koppelman payment and in addition to that, Michael was specifically interested in terminating the employment relationship with Koppelman, and as a result of that fact, he was fired.
Bank of America notified immediately to MJ that the termination of Koppelman was going to cause default in the BOA documents and that he could not do that firstly; and secondly, if he didn’t pay Koppelman his fee as required under the loan documents, that would also cause a default on Bank of America loan documents, which would give them a basis for calling in the loan.
Koppelman was providing NO SERVICES for the fee he was receiving and was NOT even a trustee of NO ONE of MJ Trusts. He was merely a consultant that was tied up into the BOA loan, which required him to remain consultant and paid separately by MJ (not even by the Trust) for his services on an annual basis.
Definitely a pretty weird clause imposed by BOA. but the change of this insane clause would have undoubtedly resulted in a lot of registrations work and legal fees, but would not have altered the conditions between MJ and the bank. It would have simply removed an unnecessary expense.
As you can notice, the clauses with which MJ had to fight daily and during the criminal trial, were not based on payment defaults for his so called “lavish lifestyle” but on useless halter requirements – toward the outstanding loan – just because, being short in cash, he realized not to want to carry on his performing activities as an ATM machine in favor of these CROOKS inside the industry that like to define themselves “respectable business men”.
Let’s set straight some misinformation about the loan, because that was a common problem among most of people during that time. The 2005/06 reports were a mix up of stories just for the sake of selling tabloids and spreading cheap sensationalism. Media, journalists and even MJ fans, were and are still claiming that MJ had a loan of 272 million, (some said 300, others 400 etc): actually it is just half-truth.
Please keep in mind we are talking about the period 2004/05, for the time being we will not touch what was the situation before in order to avoid distraction on the main subject and create confusion while reading it.
Michael Jackson Publishing Trust (MJPT) had a line of credit of 72.5 million and another Michael Jackson ATV Trust (MJ-ATV) had a loan of 200 million with Bank of America.
You can say… well it’s the same! Both are loans.
No, it is not the same.
In a perfect world (which was not MJ world) conditions and interest rates have different calculations as well as per the collateral.
- The 72.5 million of the line of credit was not guaranteed and secured at the beginning, but then BOA demanded to increase pledges on every renewal (MJJAC catalogue and its royalty operating agreement) (Note: a line of credit is similar to a credit card in that it is a flexible borrowing solution for everyone but MJ at one point)
- The 200 million loan was guaranteed and secured by Michael Jackson interests in Sony/ATV. (Note: a loan is a financial instrument with fixed schedule of payments that will reduce until the loan is paid off).
Michael Jackson had to face with countless lawsuits all financial and all by ex managers, advisors etc and in some cases a court ruling against him may have taken precedence over prior credit obligations. So according to credit card reports Michael’s average credit score was “supposedly” only around 563 in 2007. And you need close to 700 and up just to open a credit card. With a credit score in the 500’s it would be nearly impossible to get an unsecured credit line or a mortgage.
So if the above was the reason to raise Michael Jackson interests on the credit line it could fit. But Michael Jackson had been paying more than 20 percent in monthly interest payments over loans more than guaranteed and secured to BOA.
That comes to about $50 million a year just in interests, fees and expenses!
We know that a book written by Zack O’Malley Greenburg, a journalist reporting business music and finance for a well-known financial US magazine, hinted Michael Jackson financial figures mentioning “heavy interest of about 11 million of dollars per year”, but surely he did not taken into account that these so called “loans” actually are investments hedged .The financial calculation of these loans has a multitude of variabilities: there are managerial fees, compliance fees and general expenses. All paid for by the guarantor. This means that 3-6% of funds is going out the window. And most of the time, these costs are not visible to borrower entering these investments. It is also important to understand how the mechanics of costs work. One of the things that can lead to increase costs of these funds are brokers, guilty of some degree of churning into their clients account, and it constitutes mismanagement. (and this is Michael Jackson case). The industry sells performance and does not talk much about cost. Financial advisors are like any profession – there are good ones and there are bad ones – and a good advisor should alert his client and explain what he’s going to pay and whether there are better and cheaper alternatives out there.
So, where the heck were the Michael Jackson’s “paid quite handsomely” rich and famous financial advisors? How come to allow those “legal” robberies to great advantages of the financial institutions when actually at the eyes of the world this is a plain loan-sharking?
While all these back and forth between Prescient/Transitional and other sharks around MJ (Koppelman, Branca etc), in May 2005 Fortress Corp. purchased the notes of Michael Jackson financial transactions from Bank Of America.
Just more or less 2 months after the meeting Stabler had with Koppelman & Co at Branca’s office.
At this point there was already the issue of whether Prescient was untitled to get his fees or not because, as Ron Burkle pointed out “Fortress purchase was not a refinancing”.
Please check part 2 here:
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