Indecent Exposure Read online

  What he forwarded was not the full story, however. Dick Caudillo, a stocky man in his early thirties, with thinning dark hair, did not tell Christel a curious fact which he found amusing. Cliff Robertson's inquiry was one of dozens of similar inquiries and complaints that had deluged the studio during those late winter and early spring weeks. The furor arose because Columbia, in tightening some of its accounting practices to conform to stricter rules of the Internal Revenue Service, had reported to the tax authorities, via the requisite Form 1099, a substantially greater number of "miscellaneous payments" for 1976 than it had reported for past years. Such payments—to actors, directors, producers, and a host of other people— were a way of life in the entertainment business. In addition to paying the salaries and fees prescribed in contracts for specific services such as directing or acting in a film, the studios also shelled out countless other payments under countless other labels, mostly to retain the goodwill of the recipients. A studio would give an actor $10,000 to cover his "expenses" on a promotional tour, knowing that the expenses would be only a fraction of the $10,000 but not asking for any accounting of unused funds. A director would do some extra work on a picture, and instead of being paid an additional fee, he would be given a new $30,000 automobile. Whether these payments were in cash, cars, or other tender, their tax status historically was in doubt. Theoretically, the payments were taxable, but the IRS never declared them so specifically and the studios rarely bothered to report them to the IRS. The aggregate result was the payment of millions of dollars of tax-free income that was widely taken for granted by those who received it.

  In the seventies, however, the IRS explicitly ruled such payments taxable and also developed more sophisticated auditing methods to detect them. The studios, therefore, began reporting more of the payments to the IRS, with the result that income that had been tax-free suddenly became taxable. Many of the habitual recipients were incensed, and in the early months of 1977—the time for reporting 1976 income—angry letters poured into the Columbia Pictures accounting department. Of course, the recipients of 1099 forms couldn't officially berate the studio for obeying the law. So instead many people simply claimed that they had not gotten the payments indicated by the forms. Dick Caudillo would routinely locate the documentation for payments that were questioned and inform the recipients that they had, in fact, received the payments. Caudillo. a man who rather enjoyed pricking wealthy show business personalities with odious little government forms, assumed that the

  Cliff Robertson inquiry was like the others and that a single letter of rebuff would end the matter, as it had in other cases.

  When Evelyn reported to Cliff that Columbia claimed the $10,000 had been paid to him for his expenses on the Obsession promotional tour, he was mystified. Yes, he had traveled to three or four cities to promote Obsession, but he certainly hadn't been given $10,000 to pay his expenses. His accountants had been reimbursed after billing the studio directly, and the amount had come to far less than $10,000.

  "What are you going to do?" Dina Merrill asked her husband one evening in the Fremont Place house shortly before he completed Washington: Behind Closed Doors.

  "Jesus, I'm not going to pay taxes on ten thousand dollars I didn't receive." Cliff said. "I'll just have to keep pressing until I get to the bottom of this."

  The mystery began to perplex Cliff. He didn't think about it constantly or even frequently, but it had ceased being a minor oddity and had become an issue to be resolved. He told Evelyn to keep needling Columbia. The Robertsons returned to New York in April, and Cliff soon left for Ireland to write a screenplay.

  When Evelyn again telephoned the Columbia accounting department. Dick Caudillo was away, but she left a message that she wanted a copy of whatever document the studio claimed to have dispatched to Robertson. She received nothing. In late April, she called again, and again Caudillo was out. She left the same message to no avail. On Thursday, May 26, she wrote another letter requesting a copy of the front and back of the canceled check.

  Dick Caudillo again called for the Robertson file and, for the first time, actually examined the check. It had been drawn on Columbia Pictures' general account at the main Hollywood office of the Bank of America; made payable to Cliff Robertson, 870 United Nations Plaza. New York City: and sent to the office of the studio president, David Begelman. presumably for forwarding to Robertson. The check bore the endorsement "Cliff Robertson." a bold, sweeping signature written with a felt-tipped pen. and also had been initialed with a ball-point pen. The check had been cashed on September 10. 1976—eight days after it was dated—at some branch of the Wells Fargo Bank in Los Angeles. It had cleared the Bank of America on September 13.

  The more Dick Caudillo stared at the endorsement, the uneasier he became. Although he could not be sure, the endorsement looked very much like the handwriting of President David Begelman. Caudillo did not have anything else signed by Robertson with which to compare it. but he was intimately familiar with Begelman's writing, and this signature resembled it to a startling degree.

  Choosing his words carefully, Caudillo phoned Evelyn Christel, apologized for the delay, and told her that a check payable to Robertson actually had been drawn and cashed. "The endorsement may not be Mr. Robertson's, though." he said. "It appears to have been endorsed by someone whose initials are right under the endorsement." He mailed her a copy of the check, and when she received it the next day she immediately phoned Caudillo and confirmed that the signature definitely was not that of Cliff, whose official signature was "Clifford P. Robertson" and whose handwriting was smaller and more delicate than that of the person who signed the check. Evelyn did not recognize the initials. Furthermore, no one had the legal authority to sign Robertson's name on his behalf. Caudillo and Christel agreed that there must be a reasonable explanation for the confusion and that they would investigate further and stay in touch.

  Caudillo, however, had no intention of investigating further himself. He took the file to his immediate superior, the Columbia studio controller. Louis Phillips. Caudillo and Phillips had been close friends for years, and Phillips was the only person in whom Caudillo felt free to confide his suspicions.

  "I think I know who signed that check, Lou." Caudillo said. "I think Begelman himself endorsed it."

  Lou Phillips, a precise, careful man both in speech and manner, perused the check and correspondence. Without responding to Caudillo's fear, he said he would look into the matter and that Dick shouldn't concern himself with it any further.

  THREE

  James T. Johnson, the Columbia studio's vice president for administration, was fond of quipping that he and Frank Sinatra were Hoboken, New Jersey's principal contributions to American show business. Although Johnson savored his company title and the accompanying perquisites, it was his nature to twit his modest role in the entertainment world rather than inflate it. Unlike many eastern street kids who had gotten CPA licenses, come to Hollywood, and put on airs, Jim Johnson had never bothered to smooth all of his rough edges and become a noveau-snob. He owned a spacious four-bedroom house in Encino and drove a Cadillac provided by the studio. But at age thirty-eight, slender with dark hair, he retained, almost intact, the coarse, jocular, one-of-the-boys style of his working-class-Hoboken adolescence. It was't immaturity, just boyishness and irreverence, and he could restrain it when necessary. But it gave him a versatility of temperament that normally served him well in his main function as the vice president for administration, which was to know everything happening at the Columbia studio and keep it running smoothly. He wasn't a meticulous administrator, but he was savvy—as sensitive to the proclivities of clerks and janitors as to those of production vice presidents. Very little escaped his attention.

  Therefore, he was surprised and annoyed on the morning of Friday, June 3, when Lou Phillips presented him with the Cliff Robertson problem. As Phillips's predecessor as studio controller and more recently as his boss. Johnson had handled the occasional snafus that inevitably arose in
the dispatch and receipt of tens of millions of dollars in checks of all sizes. But he had never seen anything like the Robertson inquiry.

  "Fuckin' weird." Johnson muttered as Phillips watched him examine the file. "Somebody sure cashed the fuckin' thing. No doubt about that."

  Johnson and Phillips had never been close and Phillips was obsessively discreet in his conduct of studio business. So he didn't tell Johnson of Dick Caudillo's suspicion that David Begelman had forged the check. He merely indicated that Cliff Robertson's people seemed intent on getting to the bottom of the matter. Still, Johnson' didn't have to be prompted to the possibility of embezzlement. He thought first of Begelman's long-time secretary, Constance Danielson, who had borrowed several thousand dollars from Columbia a couple of years earlier to make a down payment on a house. Jim had had qualms about the loan at the time, not because he didn't trust Connie but because the company normally didn't make loans to secretaries. But Connie had been with David Begelman for more than a decade. Begelman had brought her west with him when he had moved from the New York office of his talent agency to the Los Angeles office, and he had brought her with him to Columbia when he was made president of the studio in 1973. Thus, the loan had been approved as the exception to a rule. Could Connie later have mismanaged her finances and desperately needed money? Johnson doubted it, but it was conceivable.

  It was inconceivable, however, that Begelman himself had embezzled funds. Jim was very fond of David, who had always treated him well and whom Jim credited with transforming a nearly moribund movie studio over the past four years into a lively, spirited place to work. With his huge salary and lavish expense account, David couldn't have needed $10,000. And even if he had, he easily could have obtained it in any number of legitimate ways. Presidents could borrow from their companies more easily than secretaries could.

  But how could Johnson be absolutely sure of anyone, even Begelman? He decided he would have to take the problem to the next level of the company bureaucracy. Normally that would have been Begelman, to whom Johnson reported directly on most matters. But he naturally felt uncomfortable going to David with this, and luckily someone else was readily available.

  Joseph A. Fischer, the balding, mustachioed senior vice president and chief financial officer of the Columbia studio's parent company, Columbia Pictures Industries, was in town from New York with other members of the corporate high command for quarterly budget meetings. Joe Fischer and Jim Johnson were friendly. Fischer had lured Johnson to Columbia from a New York CPA firm in 1968 and had made him controller of the film studio in 1972. Even though Begelman technically was Johnson's boss, Jim dealt directly and closely with Joe Fischer on many financial and administrative matters.

  After listening to Johnson and Phillips's account of the Cliff Robertson problem, Fischer, an impassive and blunt man, examined the check through his steel-rimmed glasses, puffed on his slim Monte Cruz cigar, and looked up at Johnson:

  "That's David's signature."

  "What?"

  "That looks very much like David's handwriting." "You're outta your fuckin' mind," said Johnson, laughing derisively.

  Fischer handed the check to Lou Phillips. "Doesn't that look like David's handwriting?"

  "I suppose there's some resemblance," Phillips said cautiously.

  "You're outta your fuckin' minds. You guys are fuckin' crazy," Johnson repeated. "It might be Connie copying David but it can't be David. What would he do something like that for?"

  "Goddamned if I know—I'm just saying it looks to me exactly like David's handwriting." replied Fischer, who had never shared Johnson's affection for Begelman. Fischer agreed that it seemed most unlikely that David Begelman would embezzle $10,000 from the company. He thought perhaps someone in the Robertson camp had intercepted the check and managed to cash it before it could be entered on the books. But even that seemed farfetched. There had to be an innocent explanation. The three men discussed various possibilities. Finally. Fischer instructed Johnson to ask David Begelman if he recalled anything about the check.

  After lunch. Johnson crossed the hall to Begelman's suite.

  "David. I'm sorry to bother you with such a small and silly question, but do you remember requisitioning a check for ten thousand dollars for Cliff Robertson last September?"

  "Yes, I recall it distinctly. Why do you ask?"

  "Oh. Jesus. I'm so glad to hear that. I was afraid somebody might have done it without your knowledge. Robertson's people have been writing us letters claiming he never got the money." Johnson showed him the correspondence and check.

  "Let me keep this file for a while. I'll handle it. I'll have to refresh my memory, but I'll take care of it."

  "If there's anything I can do—"

  "No thanks, Jim, I'll handle it myself."

  Johnson reported back to Fischer and Phillips that Begelman remembered the Robertson check and would handle the inquiry himself. David hadn't recalled the details on the spot, but he had not seemed disturbed, and Connie obviously was not involved. Johnson was very relieved. Fischer and Phillips accepted the news with little comment.

  That afternoon, during a break in a budget meeting, Joe Fischer was going over a list of minor business matters with his and Begelman's boss, Alan Hirschfield, the president and chief executive officer of Columbia Pictures Industries. Even though the Robertson matter was not on the list, Fischer mentioned there was some confusion in the studio accounting department over a check made out to Cliff Robertson that someone else might have cashed. Begelman and Johnson were handling it. Nothing to worry about. Hirschfield shrugged.

  After Jim Johnson left his office, Begelman studied the Robertson file for a few minutes and then asked Connie Daniclson to get Cliff Robertson on the telephone. Robertson wasn't at his United Nations Plaza apartment in New York, so Danielson left word for him to call. An hour later, and again two hours later, Begelman himself dialed Robertson's number and left messages for the actor to phone him at the office or over the weekend at home.

  Columbia Pictures threw a splashy reception and dinner that Friday evening for its regional executives from the forty-seven nations and territories outside the United States where the studio exhibited its movies. The party, held in the private Chestnut Room of Chasen's, was the prime social event of an unprecedented four-day convention. Never before had Columbia convened and feted its foreign managers, who came from as far away as India, Egypt, and Finland. Many had never been to America before and hardly realized that they were part of a corporation which made phonograph records and pinball machines as well as motion pictures and television shows. Corporate camaraderie, however, was an integral part of the management style of Alan Hirschfield, the spirited forty-one-year-old show business maven from Wall Street who had taken command of Columbia Pictures Industries four years earlier. "Let's have a convention" seemed to be Hirschfield's answer to a gamut of corporate problems. While some of his colleagues worried that it sometimes seemed to be his primary answer—an insufficient one in view of the complexity of some of the problems—no one could deny that morale in the management ranks of the company under Hirschfield's regime had improved dramatically and had contributed substantially to Columbia's return to prosperity from the brink of financial disaster.

  When Herbert Allen, Jr.,* scion of the New York investment firm of Allen & Company, had bought control of Columbia Pictures in the summer of 1973 and recruited his friend Alan Hirschfield to run it, Columbia's management was a collection of weary cliques with barely enough money left to fight each other, let alone make profits. The company had lost $50 million that year and its bankers were considering forcing it into bankruptcy. But Herbert Allen and Alan Hirschfield, together with David Begelman, the agent whom they hired to run the ailing movie studio, had turned the corporation around. It had become consistently profitable again and in 1977 was poised for new levels of prosperity. Perhaps more than at any time in its fifty-seven-year history, people enjoyed working at Columbia. Alan Hirschfield was very skilled at maki
ng people feel that they weren't just employees of a company but were valued members of a large, happy family. No single event signaled the new spirit more than the party for the foreign executives at Chasen's. It was a stellar evening.

  *Herbert Allen. Jr.. whose full name is Herbert Anthony Allen, technically is not a junior: his father has no middle name. For the sake of convenience, however, the two men have been known for decades as Herbert junior and senior. And unless otherwise specified, the man known as Herbert Allen throughout this book is Herbert junior. In addition, it should be noted that the investment firm of Allen & Company actually comprises two entities: Allen & Company, a family partnership founded in 1922. and Allen & Company Incorporated, a corporation founded in the 1960’s that performs investment banking services for clients. Distinctions between the entities, which share offices, commonly blur in practice. Herbert Allen. Jr. is both the president of the corporation and a general partner of the family partnership. Most references to the firm in this book are to the corporation.

  Huge posters and color slides of scenes from The Deep and Close Encounters of the Third Kind, pictures scheduled to be released later in the year, and from Police Woman. Columbia's hit television series, adorned the paneled walls. Large stereo speakers blared the music of Barry Manilow, the Grateful Dead, and other artists whose records had made Columbia's Arista subsidiary the fastest growing record label in the nation. The music was punctuated by the jangle of four pinball machines installed for the occasion by Gottlieb, the large pinball machine manufacturer that Columbia had acquired for $50 million just six months earlier.