Just a few days after his 30th anniversary shows at Madison Square Garden, Michael Jackson signed an agreement to pay his former business manager, Myung Ho Lee, $12 million in arrears. No funds have been paid, according to Lee. The case wound up in Los Angeles Superior Court and yesterday Lee won an important round.
Because Jackson has let the case, brought by Lee and Union Finance and Investment Corporation, get to this point, certain facts about Jackson's secret life have emerged. Among them are some of his private financial records that detail his spending and borrowing on a massive scale.
Fox411 obtained these papers yesterday exclusively.
Lee, who has an MBA from George Washington University and a law degree from the University of Chicago, handled business affairs that included arranging loans, setting up investment deals and advising Jackson on career matters starting in 1997.
In Lee's complaint, attorney Pierce O'Donnell, states: "Only in 1998 did Plaintiffs learn that Jackson had nearly exhausted all the proceeds of a $90 million loan from Nations Bank (which owned a security interest in all of Jackson's assets) leaving Jackson with only two months' worth of available funds. Michael Jackson is — and was — a ticking financial time bomb waiting to explode at any moment."
The lawsuit provides us with an astonishing look into Jackson's wacky financial picture. Much of it has been described in the press and detailed in this column to the extent that it could be previously ascertained. But now for the first time we can see how Jackson came to be in such tremendous debt.
For example, there is the widely discussed loan against the Beatles catalog. According to Lee, it was he who arranged for Bank of America/Nations Bank to loan Jackson $140 million in 1998. The bank required Jackson to put up his portion of Sony/ATV Music Publishing, which was then valued at $272 million.
In the middle of 1999, Lee says Jackson told him he'd gone through the $140 million and needed more money for his divorce settlement. Quickly, Lee procured for Michael a $30 million line of credit, separate from the $140 million. But in October 2000, the call came again, and Lee was able to raise the original loan by $60 million — with the provision that Jackson use $30 million of the increase to pay off the credit line, which was now due.
It turns out he'd gone through the $30 million credit line in less than a year, according to the suit. All the loans were signed off on by Nations Bank's Jane Heller and Jackson's attorney John Branca.
The loans totaling $200 million and the separate $30 million credit line jibe with numbers this column reported a year ago.
There is no doubt that Jackson needed the loot, and in a hurry. Included in the filings I've seen are a budget for Jackson for October, November, December 2000 which shows his outstanding personal and household debts, as well as open accounts payable listings for January and March 2001. These show a profligate way of life that could break even the most thrifty billionaire.
According to the filing, Jackson paid his ex-wife Debbie Rowe $1.5 million in October 2000.
Then there's Neverland. According to the budget, payroll at the fantasy ranch runs around $250,000 per month. In October 2000, Jackson also paid out $340,000 to Neverland Rides for the attractions at his home amusement park and $170,000 to Neverland Operations just to run the place.
Legal bills and public relations people also cost Jackson a pretty penny. Branca, Jackson's music lawyer, was due $260,000 in October 2000, including $47,000 in reimbursable expenses. Jackson's litigation firms — run by Martin Singer and Zia Modabber, respectively — were due $219,959 and $287,484. PR firms Rubenstein and Associates ($45,000 total) and Robinson, Lehrer, Montgomery ($33,451) were also awaiting payment.
Jackson also had budgeted on his accounts payable $25,000 to Dr. Arnold Klein, his dermatologist, and $10,000 to the Mickey Fine Pharmacy. It makes you wonder whether he really does have Vitaligo and how much of it is covered under Jackson's insurance. Another doctor, named Metzger, had an outstanding bill with Jackson for $20,000.
Jackson was also, at that point, paying off a settlement for missed concerts in the days after Princess Diana's death. Those payments came to $170,000.
The King of Pop also doesn't seem to own a limo. He was out of pocket to one company, MLS, for $100,000 and another Davel, for $114,000.
But even more surprising is Jackson's running bill at Video & Audio Center, a Santa Monica authorized Sony outlet. In October 2000 Jackson owed them $200,000 for a variety of gadgets including phones and stereo equipment. Apparently, Sony wasn't giving Jackson discounts on their products.
On the mundane side: Jackson has subscriptions to People and Variety.
In his statements, Lee says he became involved with Michael through another Korean businessman after a planned children's concert in Seoul featuring Michael was falling apart. Jackson subsequently put Lee in charge of all of his business activites, sending letters to his lawyers authorizing Lee to make decisions on his behalf.
Besides the loans, Lee says he made deals for Jackson with Cheil (Samsung) of Korea, as well as with Neo Genesis, a company Lee says was involved in fuel cell technology.
Throughout, Jackson continued to sign documents authorizing Lee and re-stating his fees and commissions. In August 2001, after dismissing Lee, Jackson rehired him. At the time, Jackson appointed his assistant, Frank Tyson, to be his liaison.
Also described in the complaint, but stricken from the suit going forward, is yet another story about yet another con artist who took advantage of Jackson with a get-rich quick scheme. According to Lee, it involved a woman known as "Samia" who held herself out as an advisor to Prince Nawaf of Saudi Arabia. Jackson, according to Lee, dealt with Samia directly and caused Jackson trouble with creditors.
Now, there are two sides to every story, so Myung Ho Lee's is not the gospel. On Monday I'll tell you what Jackson's attorney, Zia Modabber, has filed in his objection to Lee's suit.
But certain things, like Jackson's budget, etc., are immutable. While Jackson and Modabber may argue Lee wronged Jackson as well, even Modabber agrees Michael signed a piece of paper promising to pay Lee nearly $12 million.
More about all of this on Monday.