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Money, Politics and the Undoing of Stan Lee Media

A fund-raiser for Hillary Clinton triggered events that contributed to the Web firm's collapse. In the fallout, several may face prison terms.

July 20, 2003|Michael Cieply and James Bates | Times Staff Writers

In the long, hot summer of 2000, Stephen M. Gordon and his associates wrote big checks by the dozen.

One, for $63,788.48, went to Wolfgang Puck's restaurant Spago, for catering. Another, for $12,800, paid Rogers & Cowan for publicity. Yet another, for $30,048.31, covered a private jet trip for Cher.

The money came from brokerage accounts in the Century City office of Merrill Lynch & Co. and was to fund what became a cornerstone event during the week of the August 2000 Democratic National Convention in Los Angeles -- an A-list Hollywood gala honoring outgoing President Clinton that raised $1 million for First Lady Hillary Rodham Clinton's fledging New York Senate campaign.

Gordon was right-hand man to entrepreneur Peter Paul, who provided the money by borrowing against Merrill Lynch margin accounts secured by more than 1 million shares in Stan Lee Media Inc. Gordon was then Stan Lee Media's executive vice president in charge of operations, and Paul, officially a consultant to the company, was its co-founder.

This was New Economy money: Stan Lee Media had never turned a profit. It had value thanks to the dot-com bubble and the reputation of its namesake chairman, comic book genius Stan Lee.

With startling speed, the money disappeared into the hungry maw of a political venture that was growing more expensive by the minute. Ultimately, the checks written that summer would contribute to Stan Lee Media's collapse and help trigger a sequence of events that may lead to a prison sentence for Gordon.

They also sparked the interest of prosecutors investigating how a young, little-known Los Angeles fund-raiser, Aaron Tonken, now facing criminal charges in a growing scandal, so easily gained access to the highest levels of political power and celebrity.

Paul had hoped to draw attention to Stan Lee Media by funding the Clinton gala. He planned to spend $525,000, but the tab kept soaring. Two weeks before the Aug. 12 fund-raiser -- set to coincide with the Los Angeles convention -- Gordon told Paul that he already had committed $1.3 million.

By Gordon's recollection, Paul, his face "beet red," cornered Hillary Clinton's national finance director, David Rosen, who was organizing the gala from an office in Stan Lee Media's Encino headquarters. In a rage over the mounting costs, "he was swearing at Rosen," Gordon remembered.

Gordon said that Rosen answered: "Guess what, Peter. If you don't come up with the money, we'll just call it off."

Unwilling to pull the plug, Paul and his people kept writing checks, until they totaled more than $2 million -- helping to make for a glittering tribute in Mandeville Canyon that overshadowed other events during the convention.

Three years later, the fallout continues from what turned out to be a perfect storm of ambition, Web-mania and political need.

In recent weeks, federal investigators have expressed interest in reviewing with Tonken the details of his political fund-raising and related matters, said sources familiar with the situation. A protege of Paul, Tonken has said he connected Paul with the Hillary Clinton campaign by calling with an unsolicited offer of support and joined Rosen in helping to launch the August 2000 fund-raiser.

In May of this year, Tonken was charged with mail fraud in connection with his charitable promotions that weren't connected to the political activity. The California attorney general accused him in a civil suit of diverting or failing to account for more than $1.5 million from charitable events such as the "Family Celebration 2001," which was co-sponsored by the Clintons and the cast and crew of the "Ally McBeal" TV show.

Gordon is set to appear in federal court for sentencing Aug. 4. The former Stan Lee Media executive and two associates were convicted in what prosecutors described as a "check-kiting" scheme connected with the company's collapse, which came just months after the Clinton tribute.

Gordon, who plans to appeal his conviction, maintains that he is innocent and is merely a convenient target -- a small part in a much larger scandal. "I know I didn't do anything wrong," Gordon said in an interview.

Paul, who has been in prison in Brazil awaiting extradition, faces trial both in Los Angeles and in New York, where he, Gordon and others have been charged with additional fraud counts connected with the failed media company. Legal representatives for Paul said they expected him to mount a strong defense.

Stan Lee hasn't been charged, and prosecutors haven't leveled claims against anyone connected with the Clinton campaign.

Lee declined to discuss the fund-raiser or Stan Lee Media's collapse. Rosen, who operates a Chicago consulting business called Competence Group, declined several requests to be interviewed. A spokesman in Hillary Clinton's New York Senate office declined to comment.

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