NINE
Hirschfield juggled secrets all day Monday. After morning conferences about
Begelman
with Joe Fischer, he had to attend a luncheon meeting on an entirely different subject that was just as secret and sensitive in its own way as the
Begelman
affair. The IBM Corporation, which had never been in the entertainment business, had quietly been conducting research on a video system, involving laser and optics technology, which promised to be more sophisticated than other video-cassette and disc systems then being developed by other companies. Hirschfield, along with a young Columbia senior vice president, Allen Adler, had been trying hard to persuade IBM to let Columbia Pictures be the exclusive supplier of programming—the so-called "soft-ware"—for the IBM system. Security cloaking the system and Columbia's potential role in it rivaled that with which the Pentagon guards a new missile system, so it was in hushed tones and cryptic language that
Hirschfield
and A
dle
r discussed the latest developments with two IBM executives at La Cote Basque, which was situated on the Fifty-fifth Street side of the ground floor of the Columbia Pictures building, and functioned during most noon hours as the Columbia executive dining room.
Hopeful that they had advanced their cause with IBM,
Hirschfield
and Adler returned to Columbia's eleventh-floor executive suite where
Hirschfield
had a 2:30 meeting scheduled with Mickey Rudin and Joe Fischer. Passing from one capsule of secrecy into another was especially difficult for
Hirschfield
, a man uncomfortable with secrets. Even more than most people, he loved to share good news instantly, and was quick to seek the solace of friends in the event of bad news. He had wanted to discuss the
Begelman
problem with Adler, whose judgment he valued, but he had resisted the temptation to do so, even though the two had been together a lot in recent days.
As they parted at the door to Hirschfield's office, Adler suddenly asked: "Is something brewing around here? Joe disappeared Thursday and Friday and has been walking around with a long face all morning."
Hirschfield rolled his eyes upward and sighed. "Please don't ask. You don't want to know, take my word for it. We'll fill you in some time this week, but I just can't do it now. And please don't say anything
to anyone else." A confused Adle
r sauntered down the hall to his own office, and Hirschfield went into his meeting with Rudin and Fischer.
Whatever the problem of a particular moment, the presence of Mickey Rudin had always made Alan Hirschfield feel more secure. A heavy man with a deep voice made raspy by ten thousand cigars, Rudin moved slowly, talked slowly, and thought quickly and incisively. The son of a Russian-Jewish
shmatteh
manufacturer, he had grown up in a deteriorating section of the Bronx, moved to the Fairfax district of Los Angeles as a teenager, gone to Harvard Law School where he made law review, and practiced law in Beverly Hills since the late forties. Although he was best known for representing Sinatra, he served a varied clientele. There were few important people in the entertainment communities of Hollywood, Las Vegas, and New York whom Mickey Rudin did not know, few parts of the entertainment industry with which he was unfamiliar, few kinds of information to which he did not have access.
Hirschfield and Fischer showed Rudin the Cliff Robertson and Peter Choate documents and told him all that they had been able to learn. Rudin had a close business relationship with the Wells Far
go Bank and knew Joe Lipshe
r, the vice president who had approved the cashing of the Robertson check, so he assured Fischer and Hirschfield that he could easily obtain any information in the bank's posse
ssion. The name of Peter Choate,
too, rang a bell, but for the moment Rudin could not recall why.
Rudin suggested the retention of a handwriting expert to compare the endorsement on the Robertson check with other examples of
Begelman
's handwriting. And, despite Hirschfield's eagerness to keep the
Begelman
problem quiet, Rudin urged him to inform other key Columbia people, including Todd Lang, the chief legal counsel, and Herbert Allen.
"You can't sit on this yourself," Rudin told Hirschlleld. "You have an obligation to let the board in on it, or at least the executive committee, and your corporate counsel. You certainly have a moral obligation to tell Herbie Allen there's a problem. And you have to think about the SEC. There are some potentially very serious facts here, and I think you have to bring this to the attention of the SEC. That's my opinion to you, Alan. I know you want to be protective of the company and of the man [
Begelman
], but there's a limit, when you're in a public company, of how protective you can b
e. My own knowledge of Sporkin [
Stanley Sporkin, the SEC's director of enforcement]* is that he is rather decent and fair if you level with him and tell him what your problems
are
. But if you hide scandals from him, he can be relentless. I've never found him unreasonable in my dealings with him. You're farther ahead if you level with him and tell him your problems than if you let him discover your problems."
Hirschfield agreed with Rudin's comments and said he would inform Todd Lang and Herbert Allen within the next day or so.
Suddenly Rudin placed Peter Choate. "What did you say his address is?"
"Santa Monica."
"If it's the one I'm thinki
ng of, he's an architect. When I
drive home in the evening, I go past a small office complex out near the beach with a sign, Peter Choate. A.I.A. He's a well-known designer around Beverly Hills."
"Doe
s he do music or acoustics or theater work?"
Hirschfield
asked.
"No, he's a house designer. His father's an architect, too. Did Begelman have anything done to his house recently?"
"Jesus Christ, yes!" said
Hirschfield
. "He had a screening room built, but thirty-five thousand dollars was a lot more than we authorized him to spend on it."
"I'll have my office look into it," Rudin promised.
Hirschfield had to begin a meeting with two advertising people
from the studio concerning preparations for the release of
Close Encounters of the Third Kind.
Mickey Rudin agreed to return the next day.
·The Securities and Exchange
Commission, the federal agency that regulates the issuance, purchase, and sale of securities, in publicly owned corporations, and investigates irregularities that may affect the value o
f the securities, was devoting a lot of attention in the mid and late 1971 to malfeasance by senior officers o
f
major U.S. corporations. The SEC had been a
ggressive in bringing charges against a large number of corporate executives who had authorized the payment of bribes overseas, contributed illegally to political campaigns, abused their expense accounts and other perquisites of office, or otherwise misused corporate funds. As the SEC's tough and relentless e
nforcement chief. Stanley Sporkn was the symbol of this ef
fort to every executive und corporate lawyer in
the nation. Whenever a
corporation discovered a potential internal scandal, one of its first calculati
ons was the way in which the SEC. and Spork
in in particular, might react.
Herbert Allen was a few minutes late getting uptown Tuesday noon from his office in the Wall Street area, and
Hirschfield
awaited him at their regular corner table in the front room of La Cote Basque. On the phone that morning, Hirschfield had been brief: "We've got a serious problem. I can't talk on the phone. It's bad news—terrible news." At the table, over their usual light lunch. Alan quietly but urgently told Herbert the full story—the call from the detective, the Robertson check, Fischer's trip, the discovery of the possibility of a second embezzlement, the summoning of Mickey Rudin, the need for an investigation, the likelihood that more thefts would be discovered. In contrast to
Hirschfield
, who was ebullient when he was happy and agitated when he was upset, Herbert Allen didn't often display bursts of emotion in the face of good news or bad. Although he was trim and fit, he had slightly sunken eyes which gave him a somewhat gaunt, tired look and projected coolness, cynicism, nonchalance, and even indifference, much more often than joy or sadness. His reaction to the
Begelman
news was only slightly more acute than if
Hirschfield
had said that the company's first-quarter earnings would be lower than last year's.
"Do we know anything about his financial status that would explain why he would need money?" Herbert asked.
"No. He lives high, of course, and he's eager to get his new contract."
"It doesn't make sense. He could have borrowed from one of us. What about gambling?"
"I don't know of any gambling. Or women. I'm as close to him as anyone in the company, and I don't think he has a woman. He's devoted to Gladyce."
"Ten thousand, or even forty thousand, seems small for a man at his level," Herbert said.
"We feel there may be a lot more. This may be just the tip of the iceberg. We'll have to have a full audit. Mickey feels we should get a handwriting expert to look at the check before we do anything else."
"I can take care of that."
"Do you think we should tell Ray?" Hirschfield asked.
"Absolutely. He got me involved in this company. He helped get you your job and helped us hire David. We owe it to him to tell him there's a problem. He may even know something that will shed some light on what David's problem is."
"Would you mind calling him?"
"No, I'll do it right now."
Herbert Allen got up from the table and called Ray Stark from a pay phone just inside the mirrored door of the men's room near the restaurant's entrance. Stark. Hollywood's most consistent producer of commercially successful films for the past decade, a close associate of Allen & Company since the fifties, and the architect of its takeover of Columbia Pictures, had become Herbert Allen's closest friend in recent years, following Herbert's divorce and the death, apparently by suicide, of Ray's son. Peter.* Ray and Herbert spent a lot of time together and spoke by telephone at least once daily. Typically Ray would begin his day in Bel-Air between 6 and 7
a.m.
by calling Herbert at his Broad Street office. They knew each other's every nuance, so Herbert required few words on the men's room phone at La Cote Basque.
"Something serious has come up. I can't tell you what it is, but can you get on the next plane?" It was 10:30 at The Burbank Studios. Stark was aboard a I
p.m
. flight from Los Angeles International.
Herbert Allen accompanied Hirschfield back upstairs to the Columbia offices where
Hirschfield
was to continue his meetings with Mickey Rudin and Joe Fischer and. for the first time, to confer with Columbia's chief legal counsel. Robert Todd Lang, who had been summoned from his office in the General Motors Building two blocks up Fifth Avenue. Lang, fifty-three years old, was a top partner at Weil. Gotshal & Manges, one of the largest and fastest-growing law firms in New York. A leading corporate and securities lawyer. Lang represented clients in a diversity of businesses including entertainment and publishing. He represented Barbra Streisand, and his practice had brought him into contact with Alan Hirschfield and David
Begelman
several times over the years. He had been Columbia Pictu
res Industries' general counsel,
since shortly after the Hirschfield-Allen-
Begelman
team took over the company in
1973. A wiry, good-humored man, conservative in mien and dress, Lang was a vigorous weekend tennis player and a neighbor of
Hirschfield in Scarsdale
.
·Peter Stark, at the age of twenty-five, apparently jumped from his fourteenth-fl
oor apartment in Manhattan in Fe
bruary
1970. according to the police like
all big corporations. Columbia Pictures Industries used several lawyers for various purposes. The lawyers are of three general types. The first Is the principal legal counsel, typically a senior partner of a
major law firm. Known as the "outsi
de counsel" because he function
from a relatively independent stance outside the client company, this is the lawyer to whom the company looks for guidance on all major legal issues. Me in tu
rn frequently assigns specific tasks,
depending on the issue, to specialists within his firm The second group of lawyers are
thos
e actually on
the client company's staff—the so-calle
d "inside counsel"—the chief of whom at Columbia was Victor Kaufman, a vice president of the corporation. Kaufman worked generally on business i
ssues with legal overtones, e.g
. contracts and deals, as distinct from providing strictly legal advice, the province of the outside counsel. The third group of lawyers are those retained tempor
arily fur specific purposes, eg
. Hirschfield
's turning t
o Mickey Rudin for help when the Begelman problem first surfaced. In practice, the three types of lawyers frequently cross into each other's provinces and work together when particular situations necessitate.