The collapse of Regent Media will make one hell of a movie some day, it is by far the biggest gay business scandal ever in LGBT history.
The collapse of Regent Media will make one hell of a movie some day, it is by far the biggest gay business scandal ever in LGBT history. Sure there have been juicy political sex scandals, but never a corporate gay shit show as messy as this.
At the moment Regent Media holds the largest selection of LGBT titles in media and entertainment—the fate of which is uncertain. Merrill Lynch and Bank of America press forward with a lawsuit alleging Regent scammed them out of $90 million dollars through fraudulent practices and breach of contract.
Back in 2009 I was sitting with a friend, after we had both been sacked from our corporate gay media jobs. We joked Paul Colichman, founder of Regent, must be running a Ponzi scheme because there was no way he could be expanding his gay media empire in an economic depression. Regent had recently purchased PlanetOut, the last failing gay conglomerate, for $ 6.5 million.
Turns out we were wrong, in a Ponzi scheme investors are still able to get money out (as long as there are new investors coming in), hence the reason Bernie Madoff got away with it for decades. Regent Media was no Ponzi, they simply never paid.
I’d find it all incredibly funny if not for the fact I know authors who have lost rights to unpublished books becuase they are still under contract. There are other authors who will never see another residual check, not to mention free-lancers who’ve given up on ever being compensated for work, and at least 100 queer filmmakers who lost their rights to movies that may never see the light of day.
I received an email a little over a week ago from one of Regent’s filmmakers whose award winning movie is now stuck in litigation as a part of the “collateral”. She pointed out that, if not for the independent gay press, the story wouldn’t get reported since the Advocate certainly isn’t covering it.
This filmmaker went on to say, “Regent didn’t pay the filmmakers for their films. Regent took millions from Merrill Lynch for marketing and advertising of these films. Regent sold the license to these films to three of their own companies; Liberation Productions, Family Media and The Here! They told Merrill they were spending their advertising dollars on the Advocate, Out, and the rest… “
What recourse do these filmmakers have? The hope, according to Indiewire‘s reporting, would be for the filmmakers to avoid a “class action lawsuit in favor of individual lawsuits from three licensees which would force an involuntary bankruptcy. Although that would not have financial rewards at least they would be able to get their movies back.”
Its hard to fathom the motivation of a gay company who takes advantage of their own community? Is being filthy rich that important? To understand the Regent Media fiasco one need look to an earlier corporate scandal with a similar set of “creative accounting” practices.
In case you forgot the details of that decade old scandal it goes like this: Enron was an energy conglomerate in Texas that used accounting loopholes, “special purpose entities” (“shell” companies), and deceptive financial reporting, in order to hide its debt from its books. Thus the company was able to report inflated and fraudulent profits while hiding their true failures. At the peak of their powers, and with close ties to the Bush administration, Enron engineered the 2001 “rolling blackouts” in California by taking energy off-line during peak hours so their traders could manipulate prices.
The only defendant so far named in the ML/BOA lawsuit is Stephen P Jarchow, chairman of Regent Media. His name appears on slew of shell corporations that allowed Regent to move assets and debts around. These shells are so numerous and convoluted the Plaintiff [ML/BOA] lawyers are still trying to figuring out who is who, and responsible for what. Page 6 of the lawsuit reads: “Plaintiffs are not aware of the true names capacities, whether individual, corporate, associates, or otherwise of the Defendants [Regent executives]… and pray that their names and capacities when ascertained will be incorporated herein by appropriate amendment hereto.”
check out Jarchow’s signature, is there a handwriting analyst in the house, ‘cuz this needs to be interpreted.
The current lawsuit focuses on Regent’s film/video distribution and licensing business, an area of the movie business that long-time partners Colichman and Jarchow know most about. So far, the other media properties; Out magazine, the Advocate, gay.com, planetout.com, shewired.com, are not named in the suit although these titles were used as marketing and advertising tools for all Regent productions.
Last year when it became apparent the Regent Empire was crumbing, the then publisher of Alyson Books, Don Weise, made an offer to Regent to buy it from them—take the leaky boat out of their fleet. Apparently, the offer was more than the company was worth (including Alyson debts), but Regent declined.
Colichman and Jarchow’s acquisition of the publishing and internet properties seemed to be a part of the overall smoke-screen and confusion used to mask their shady deals in the movie business. An unseemly use of once illustrious titles that had moments of real reporting (most recently Eleveld’s work in the White House for the Advocate), and creative output (the innumerable books published by Alyson).
There are so many strange and open-ended questions to this story that I’m sure will continue to come to light as the reporting continues. We just need to keep asking the questions, while waiting for that top tier whistle blower…
Another glaring omission in this story is that Paul Colichman’s name doesn’t appear anywhere in the lawsuit. Colichman managed not to sign a single financial contract. Will Jarchow take the fall all by himself or will others come down with him?
Much like their counterparts in the Enron story, the CEO and CFO Jeff Skilling and Andrew Fastow were sentenced to 24 and 4 years respectively. Founder of Enron, Ken Lay, though indicted of fraud and abuse had his conviction abated because he died of a sudden heart attack right before sentencing. There is a conspiracy theory that Lay took off with all his loot, “faked” his death, disappeared in an unpopulated rural area of Colorado, and out of the country.
Queerty writes that Colichman has been sending money offshore to a home base in the Turks & Caicos since 1980. Funny that.
With all the financial scandals and unregulated corporate and banking practices that we’ve suffered through over this last decade, don’t you just have to ask yourself (if you were one of these “masters of the universe”), is gaming the system worth all the blood on your hands?