Section 181 is Back! Again! and Again!

SECTION 181 is back! Everybody's favorite on-again, off-again federal film funding incentive is back.

[Read More]

David Molner and David Bergstein: Guilty or Not?

by Jeff Steele

“Hollywood is worse than dog-eat-dog ; it’s dog doesn’t return other dog’s phone call.”   – Woody Allen

My mother-in-law once told me you shouldn’t dance on somebody’s grave.  Unfortunately, she’s right.  At the time, I had just heard about David Molner and his Screen Capital International and Aramid Entertainment Fund taking up legal arms against David Bergstein and his Capitol Films for misappropriation of funds (e.g. looting production funds to purportedly pay-off a $950,000 gambling mark at the Mandalay Bay Casino in Vegas and other non-related debts.)  I worked at Screen Capital during Aramid’s first two years in business, during which time they financed over 30 films, including Capitol’s films: Tony Kaye’sBlack Water Transit“, Taylor Hackford’sLove Ranch“, “$5 a Day” starring Christopher Walkin, “The Edge of Love” starring Keira Knightley, and David O’Russell’s famously ill-fatedNailed“, starring Jake Gyllenhaal and Jessica Beal.  Through this experience I became intimately aware of the corporate pain and collateral damage that Bergstein inflicted upon those who came in contact with, like sales agent Stuart Ford’s IM Global, Jeff Sackman’s ThinkFilm, and scores of spurned producers and production vendors.  Bergstein did after all learn from the best: his former film partner at Franchise Pictures was Elie Samaha, a notorious night club owner whose hyper-inflated budget schemes caused millions in investor losses and lawsuits.  So naturally, when I heard Bergstein might be taken down by one of his “victims”, it just seemed right.

Then this past week when I heard about David Molner’s legal woes with some of Aramid’s investors accusing him of fraud and breach of fiduciary duty (i.e. looting and self-dealing), I had to do a double-take.  Did Molner receive some sort of cursed FTD (financially transmitted disease) from Bergstein, who in turn received it from Samaha, who in turn picked it up from a bar stool in the VIP room of his “Roxbury” nightclub, perhaps left there by some momentarily successful, coked-up ne’er do well that came before him?

As plausible as this may seem, it begs a bigger question of who we do business with and why?  I’ll be the first to say that David Molner is one of the smartest people in the business.  Likewise, in 2003, Comerica Entertainment’s Jared Underwood said of Bergstein, “David’s really intelligent and he got this business quickly.”  Unfortunately, as has been proven many times over, the smartest guys in the room can make the worst decisions; and those decisions usually rely too much on smarts and not enough on judgement.  The smarts recognized the potential for profits — but the judgement knew the risk was too great.

Entrepreneurs are natural risk takers — this is the axiom upon which capitalism stands.  Concepts like Fiduciary Duty provide the rule books within which these risks can be taken.  Good and bad decisions can pay-off and both can fall flat — it’s the underlying motivation that matters.  Film veteran Mike Medavoy used to say that the only unforgivable sin is a bad decision made for the wrong reasons, and nowhere is this more evident then from the producer who said of Bergstein“You know he’s gonna f— you. But at least you get your movie made.”  That is a sad commentary on the desperation and complicitness of the film-making community (from producers and financiers to all forms of agentry, and everyone in between) that they will knowingly and willingly do business with people who (in Bergstein and Samaha’s case) have a very public track record of collateral damage. 

Legals aside, the thing that Molner and Bergstein are really guilty of is their willingness to hitch their wagon (and other people’s money) to the Bergsteins and Samahas of the world, all of which could have been avoided by a simple gut-check.  If you have reservations about somebody, for whatever reason, regardless of whether its from their personal or professional life, then walk away and find somebody else, even if you have to pay more.  You may achieve short term gains, but you will end up in long term misery.  If somebody screws somebody in a small way, they’re going to screw you in a big way — it’s the unifying theory of business.  When in doubt, ask your spouse, who reminded me  that you can’t do a good deal with a bad person.

9 Responses leave one →
  1. Andy Halmay permalink
    September 7, 2010

    You got some great lines into this one, Jeff, which gave me a chuckle. Thanks. All this takes me back to a meeting with a teenage black kid who grew up on the streets of New York and had the fastest and smoothest mouth in town. He had picked up a 35 year old lawyer as a partner and he was working on me to grab the better share of a music copyright. I let him go on for a few minutes and then said, “You are going to make a lot of money in this business, young man….but not off me.”

    All I know about Bergstein is what I have read but I’ve encountered versions of him. There is a way to reform talented rascals like him but it can’t be done in courts of law or with psychiatrists. It takes connections in the underworld. They break legs. And if he bounces back unreformed then they get serious. But sane and civilized people simply avoid this type as we avoid the plague.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  2. Susan permalink
    September 7, 2010

    Molner is guilty and I am happy to dance on his grave. I appreciate your sentiments Jeff.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  3. Louis Mitchell permalink
    September 7, 2010

    Thanks Jeff for telling it truthfully! As a Producers Rep. I could produce a long list of the Pirates in this business. If I could afford
    the Legal Fees! LOL! It’s a business for sure, but it’s to bad that these Lovers of Power and Money are allowed to make decisions about the films that get made. I don’t doubt that most of the people in the business want to make great films, but these “Parasites” seem to always get their hands on the controls of the industry. Thanks for your honesty and candor!

    And I will be the first to contribute to your Legal Defense Fund! LOL!

    Louis Mitchell

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  4. September 7, 2010

    I thought Collateral Damage was a very good film. The best film I’ve seen with DV cameras.

    Love ya, Jeff. I’m off to TIFF in a few days to try and secure financing for ODE. (Driving and sleeping in my car.)

    Someone once said, It’s about having the courage to fail. In Hollywood, this axiom gets tested every day.

    Closing the production financing has always been a war zone.
    It is what it is, and the risks are inevitably enormous.
    The winners and losers are sometimes seperated by fine lines.
    Other times, the lines are more explicitly drawn.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  5. September 7, 2010

    The element you clearly describe above in your informative article appears to prevail in all types of businesses, i.e. deception and corruption; some people do not have a sense of conscious responsibility and don’t care who they hurt.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  6. September 8, 2010

    I think I need to go take a shower and scrub with Clorox after reading this.

    FTD — Financially Transmitted Disease. Now THAT’s funny.

    Thanks for the article.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  7. September 8, 2010

    Heard of Eli Samaha only from hearsay but hell if he influenced Bergestein, than it can only be bad.

    Remember my first Berlin 3 years ago. We spoke to a potential investor into one of our films at the tome and he was singing the laudation for Capitol Films and Think Films..I am just guessing what he is saying now..

    Bergstein has ruined many producer’s career that’s all I can say, as always a very informed and insightful article.many thanks
    Raimund

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  8. September 10, 2010

    Great points Jeff.

    To draw another comparison…I have a female friend or two who were dating a guy and at some point found out they were in a more serious relationship with another woman. The guy promises he’s breaking things off and will be with them and them alone. Eventually he does. I warn them that he will inevitably do the same to them, it’s only a matter of time. And without fail, I am (sadly) proven correct. He starts dating them more seriously, but finds another woman to be the girl on the side and the cycle starts again.

    It really is best to steer clear of people like this.

    Take Care,
    Chris

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  9. LfO permalink
    February 1, 2011

    Producer beware – there are worse things than sharks.

    Jeff can you do an article on how SBLC/Flake Deals work.

    I’ve recently had a friend in Melbourne Australia get sucked into one of these and lost a lot of money personally and also his cash investors. (so wish we had spoken just a week earlier!!)

    I think the more information out there on the web letting indy and less experienced filmmakers know about these things, the better.

    I also spoke to a friend in Europe who told me another terrifying tale, where a collegue of his went to Singapore to close variant of such a deal only to arrive, be arrested, thrown into prison and beaten to a pulp in order to extract the names of his other collaborators !!
    Poor guy lost his million $ and came home seriously beaten up / injured … all in the name of keeping law and order.

    People need to know that even if straight theft isnt involved, these deals can lock production funds away in bank accounts which can be used as collaterol to finance other less savory and illegal activities.

    ie production funds held in escrow accounts controlled by reputable law firms exist for a reason.

    GD Star Rating
    loading...
    GD Star Rating
    loading...

Leave a Reply

Note: You can use basic XHTML in your comments. Your email address will never be published.

Subscribe to this comment feed via RSS