Then, poof, Kavanaugh’s firm went up in smoke, prompting five lawsuits against him from irate investors who had lost money. While Kavanaugh may be an irresistible salesman, it is still surprising that so many of the entertainment industry’s heaviest hitters had handed over their cash to a twentysomething kid with no MBA and little investment experience. When I asked Kavanaugh, now a movie financier, how he’d landed such big fish, he said it was simple.
“I got really close to a lot of business managers,” he said. “It spread through them.”
Still, those who wish to blame the business-manager culture for the Madoff-related losses should resist the urge. As one movie producer told me, “The story isn’t the few that got their clients in; it’s how many kept their clients out.”
“Our job is to talk people out of those things that are in vogue but without any proven substance,” says Howard Altman, a partner at the Beverly Hills business-management firm Grant Tani Barash & Altman (which, according to Federal Election Commission records, has actress Jennifer Garner and studio chief Jeff Robinov of Warner Bros. as clients, among others). “Many of our clients do not have the time, the ability, or the interest to meet the actual person who’s going to execute the trade or structure the investment. In fact, their expectation is they’ve hired us to simplify the process so that they do not have to.”
In sharp contrast to the East Coast, where people often bragged of their status as Madoff clients, in Hollywood, many clients didn’t even know they had invested with him. According to more than one West Coast investor, their business managers provided them with account documents in which Madoff’s name was never mentioned.
“I got statements four times a year. But they didn’t list transactions, just a grand total and what our percentage return was,” says one former television-marketing executive who lost all of her savings, $600,000, which she had invested in a Madoff fund.
Another Madoff investor, as far as she knew, had her $1.4 million pension invested with an amazing guy in New York who had gotten her 18 percent returns every year for the past eight years. Again, the statements she received did not specify where her money was invested.
“It just sounded too good to be true,” says the woman’s new business manager, who declined to be named. The client hired this manager just days before Madoff’s scheme was revealed. “We had a lunch set up with the person who had put her in these investments, an investment manager she’d found through a previous accountant. And then the client received an email from him and told us, ‘I had money with Madoff. All my money’s gone.’ ”
There’s a saying in Hollywood: Publicists and agents come and go, but business managers are forever. Steven Spielberg, for instance, has been a client of Gerald Breslauer’s for more than three decades. According to the Los Angeles Times, they first met in the early 1970s. After seeing Amblin’—a 24-minute film Spielberg had made while interning with Universal Pictures’ editing department—at the home of Ray Stark, the legendary movie producer, Breslauer sought out the then-unknown director and offered his services. Soon, Spielberg was serving as Breslauer’s conduit to young Hollywood.
By the mid-’80s, Breslauer and the partners in his firm, then known as Breslauer Jacobson Rutman, had formed alliances with Barry Hirsch, an entertainment attorney, and Michael Ovitz, one of the biggest agents in town. As Ovitz built Creative Artists Agency into the reigning talent mill for the film and television industries, Breslauer’s practice grew too. His firm’s clients included superstars Barbra Streisand and Prince; movie producers Jon Peters, Peter Guber, Jerry Bruckheimer, and Don Simpson; Fox Inc. chairman Barry Diller; and music executive Irving Azoff, among many others.
David Geffen, who was a Breslauer client for years, referred Michael Jackson, Bruce Springsteen, and other performers to the firm, which at one point reportedly controlled an estimated $750 million in assets. It was often described as Hollywood’s premier management company. “Gerry Breslauer was the king,” says a person who was close to clients who invested with him in the ’80s and ’90s. “His was the club everyone wanted to be in.”
