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Michael's Missing Millions

Today, a court decides who controls Michael Jackson’s finances. Whoever wins, reports The Daily Beast’s Gerald Posner, will inherit a secret legacy of dicey advisers and vanished cash.

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Mark J. Terrill / AP Photo
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Today, a court decides who controls Michael Jackson's finances. Whoever wins will inherit a secret legacy of dicey advisers and vanished cash. The Daily Beast's Gerald Posner reports:

  • The ongoing fight over Jackson's estate is potentially allowing time for important evidence and electronic records to be destroyed
  • Jackson's finances had "remarkably few checks and balances," one insider told The Daily Beast; his security carried as much as $20,000 in cash
  • The pop star's one credit card, issued by American Express, was closed due to nonpayment
  • Jackson's rehired his longtime attorney and money manager just eight days before his death, after firing him in 2006
  • The singer frequently shuffled money managers and accounting firms to avoid facing reality
  • After the Bashir interview, Jackson urgently sought $1 million to buy jewelry for Elizabeth Taylor so she would appear in a rebuttal
  • Jackson lived on a rural Virginia ranch in 2007, spending time with former Washington Mayor Marion Barry

As the world awaits Michael Jackson’s autopsy results, along with the expected conclusion on which drugs, and which doctors, caused his death, an equally dramatic mystery is playing out in California courts today: How did the pop superstar’s massive fortune disappear?

Getting answers to that question has been delayed by the very people in charge of safeguarding the estate, The Daily Beast has learned. The singer’s mother, Katherine Jackson, will be squaring off today against the estate’s official executors in Los Angeles Superior Court, to determine who will control a fortune once estimated to top $500 million. According to several people familiar with the estate proceedings, speaking only on the condition of anonymity, this fight has delayed an urgent probe into what happened to millions of dollars in missing Jackson funds. Some of these sources say they fear that potential leads and evidence may get cold as those involved in any plundering scatter and have the time to cover misdeeds by destroying paper or electronic records.

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Once, Jackson made an urgent call for $1 million to buy a piece of jewelry for Elizabeth Taylor—so that she would appear in a rebuttal to the Bashir interview.

Jackson’s 2002 will named two longtime friends, attorney John Branca, and music industry executive, John McClain, as the special administrators—today’s hearing involves a suit Katherine Jackson filed to make herself the third executor. Branca and McClain have spent the past few weeks consumed with negotiating a settlement with concert promoter AEG over refunds for Jackson's canceled London shows, as well as working hard to secure the estates’ major asset, Jackson’s one-half ownership of Sony-ATV, which controls the Beatles songs and other artists and may be worth $1 billion.

But some of the Branca/McClain team’s early discoveries are causing concern about how Jackson’s money was handled during the past several years; a Daily Beast investigation confirms that dysfunction engulfed the King of Pop’s finances over the last few years, a system “with remarkably few checks and balances,” as one insider put it.

Branca was involved in Jackson’s money matters, but had not been close to the singer since 2006, when Jackson let him go after 20 years of working together on and off. Then, on June 17, only eight days before his death, Jackson rehired Branca and reiterated his desire that Branca run his affairs together with McClain. Part of the difficulty in reconstructing the singer’s finances is that he frequently shuffled money managers, often had multiple advisers competing with each other for influence, and even the accounting firms that did the paperwork were changed several times over a decade.

In the early 2000s, before criminal allegations of child abuse were first raised, Al Malnik, a Florida entrepreneur who had been named once by Reader’s Digest as mob kingpin Meyer Lansky’s “heir apparent,” got involved with Jackson’s finances as an unpaid senior advisor. (Other than tax charges, on which he was acquitted, Malnik has never been indicted for any crime.) Malnik became “Blanket” Jackson’s godfather, was briefly Jackson’s trustee on a deal to repair Jackson’s battered finances, and the singer often stayed at Malnik’s oceanfront estate in Florida, the largest waterfront home in America. They had a final falling out when Malnik was later dragged into a lawsuit filed by F. Marc Schaffel, a gay-porn producer who had made two “rebuttal videos” to counter the bad publicity from Jackson’s “it’s OK to sleep with children” interview with Martin Bashir. Schaffel claimed Jackson owed him $3.8 million for his work and for cash he had laid out.

Malnik’s testimony offered a rare glimpse into Jackson’s unusual financial world. He said that the singer seemed “bewildered” by money matters. He frequently loaned Jackson money, all of which was repaid. Once, Jackson made an urgent call to Malnik saying he needed $1 million immediately to buy a piece of jewelry for Elizabeth Taylor.

"The reason was that Elizabeth Taylor would not sign a release for her participation in the Fox special (the rebuttal program to the Bashir interview),” Malnik testified. “He knew her well enough that he knew if he brought a piece of jewelry he could obtain the release, and that's how it was done." This at a time when advisers like Malnik were urging him to control his spending.

“'I think that Michael never had any concept of fiscal responsibility,” Malnik told a reporter. Malnik estimated that some of Jackson's advisers squandered $50 million on deals that never panned out—what he described as amusement-park ideas and ''bizarre, global kinds of computerized Marvel comic-book characters bigger than life.'' Attempts to reach Malnik were not successful.

By early 2004, after the police had raided Neverland and prosecutors were working at building a sexual abuse case again, Jermaine Jackson, who converted to Islam in 1989, introduced Michael to the Nation of Islam. Michael LaPerruque, Jackson’s chief of security, and other top advisers, were soon gone. Malnik was done. Leonard Muhammad, the chief of staff for the Nation of Islam, emerged as Jackson’s senior money adviser. Much later, there were reports that Jackson rented a Nation of Islam house for several multiples of its market price. Although the Nation of Islam was officially gone by June 2005, when Jackson was acquitted of his felony sex charges, the organization’s advisers and security personnel stayed close to to the singer until his death. When Grace Rwaramba, the nanny who took care of Jackson’s children for more than a decade, was fired in 2008 for trying to intervene with him over his drug problem, she was replaced by a woman from the Nation of Islam employed by Jermaine. On the day of Jackson's death, Michael Amir, aka “Brother Michael,” arrived at the house before the body was taken away. Estate administrators say they believe that Amir, who moved up from a film student to become Jackson’s executive assistant, might know where the bones are buried. Multiple calls and emails to him have gone unanswered. Leonard Muhammad did not return a call for an interview.

Randy Jackson, Michael’s younger brother, had organized his affairs during the trial and briefly took charge of the finances as Jackson was losing faith in Muhammad. But on June 13, 2005, Jackson left the U.S. for Bahrain, where he was befriended by Prince Abdullah bin Hamad Al Khalifa, the son of the king. Jackson’s financial troubles had mounted through the costly trial, and while he was in Bahrain, under the influence of Prince Abdullah and his friend and lawyer, Ahmed al Khan, Neverland was even shuttered for a few days by state authorities over unpaid worker’s compensation.

After a financial dispute with the prince led to forays in Japan and Ireland, Jackson returned to the U.S. full-time on December 23, 2006. The new power player on the money front: Raymone Bain, a Washington-based publicist—also representing former Mayor Marion Barry and rapper Babyface—took over as the general manager of the Michael Jackson Company in 2006. Jackson gave Bain 10 percent of any business she brought in, while spending the first six months of 2007 in Las Vegas, at a $1 million-a-year rental.

That spring, according to a source personally familiar with what next transpired, Ron Weisner, an old Jackson friend who had worked with him during Thriller and was producing the BET Awards, wanted Jackson to do a “25th anniversary of Thriller” performance as well as present Diana Ross her lifetime achievement award. But Jackson was too incapacitated to appear. Instead, he moved to a 200-acre ranch in rural Virginia. There, he was closer to Bain and by August, published reports said Jackson was spending time with a new friend, Barry, best known for being ensnared, on a federal surveillance video, smoking crack while Washington’s mayor.

Although Bain still had influence, her financial control was on the wane after a year. She was replaced in 2007 for several months by Londell McMillan, Jackson’s attorney who now represents Katherine Jackson in the estate battle and the Jacksons in the custody dispute with Debbie Rowe. The Bain relationship finally (she stayed there until 2008) ended in a $44 million lawsuit for 10 percent “of monies which had been generated or were due to be generated,” filed this past May, only two months after Jackson announced his multimillion dollar deal with AEG for the London concerts. Bain contends she was responsible for the AEG deal, having started talks with them in January 2007. That suit is pending.

“Londell’s title didn’t change,” says Bain, “he was still just a lawyer. But the money was transferred to him and he ran things for three to four months.” McMillan, who was traveling and not available for comment, was soon eclipsed by yet another influential adviser: Ron Burkle, the billionaire chairman of the Los Angeles-based holding firm, Yucaipa Co., and a noted pal of Bill Clinton. Steve Mortensen, a Yucaipa partner, had offered some financial advice to Jackson during this trial.

“Burkle was a great friend of Michael’s and really tried his hardest to help him out of debt,” says LaPerruque, the former security chief . By then, Michael was obsessed with buying the Sultan of Brunei’s 150,000-square-foot Las Vegas mansion, and Burkle tried arranging it. But Jackson was too deep in debt to swing the deal. “But it was his dream,” says LaPerruque. “As far as Micheal was concerned, Neverland was tainted ever since the police had raided it in 2003. He wanted to buy the sultan’s home and move to Vegas.”

By 2008, Jackson was back in Vegas, this time at a hotel. Replacing Burkle was a Lebanese raconteur, Thome Thome, who was part of the final negotiations with Jackson and AEG for the London concert series. Thome, who could not be reached, is variously described as an herbalist, and although he says he does not have a U.S. medical license, he has at times intimated he has a foreign medical degree. By the end of 2008, he was Jackson’s sole personal and financial manager, and over several months fired a number of longtime Jackson employees. Although he has told the Associated Press he did it for no pay, sources familiar with the estate executors say they want to talk to Thome about allegations that he asked for large commissions, one over $30 million, as part of negotiating potential Jackson deals. ABC News reported that just a few days ago, Thome turned over $5.5 million in cash and goods from Neverland to the estate administrators.

Beyond the muddle left by so many financial managers, from quality firms to lawyers to people with no experience in handling such a complex and large enterprise, the special administrators have also learned that for more than a decade, whenever Jackson left with his security detail, one of the bodyguards carried petty cash, sometimes as much as $20,000. (The Daily Beast has learned that Jackson only once had a credit card, American Express, and that account was closed due to nonpayment.) At the end of the day, the person responsible for the cash provided a written report of how it was spent to Jackson’s executive assistant.

“When I was there doing that from 2001 to 2004,” says LaPerruque, “there was a meticulous system for providing receipts and reports.” But he had heard “horror stories” that before he arrived, whenever Jackson bought electronics or other high-end items, some of the security guards would order doubles and have the spares sent to their homes. Antique purchases would be marked up by 20 to 30 percent, sometimes with the knowledge of the dealer, and the extra money split. “A lot of money was lost since it was all cash,” says LaPerruque.

At the time Jackson made his will in 2002, his estate was estimated to be worth $500 million. But today it’s his debt that looms largest, at an estimated $400 million. As the special administrators try to make the best of a financial mess, they also are eager to start chasing what they think could be tens of millions in improperly lost funds.

“If Michael was as drugged as often as some reports now indicate,” says one person familiar with the estate proceedings, “then a reasonable question is whether his addiction made it easier for some to squander his money. If we don’t waste our time fighting over control of the estate, we can actually start to put all the pieces back together. It’s just the longer we wait, the harder it will be to find the wrongdoers.”

Gerald Posner is The Daily Beast's chief investigative reporter. He's the award-winning author of 10 investigative nonfiction bestsellers, ranging from political assassinations, to Nazi war criminals, to 9/11, to terrorism. He lives in Miami Beach with his wife, the author Trisha Posner.

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