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A tough Hollywood debut

A newcomer quickly became a player but now faces lawsuits

August 25, 2008|Claudia Eller and Josh Friedman | Times Staff Writers

Hollywood is a club. But when an outsider with bundles of cash arrives on the scene, the newcomer usually is granted immediate entree. Talent agents, hungry to land clients their next movie, flock to anyone with an open checkbook.

So when David Bergstein, a 46-year-old entrepreneur who spent years buying and selling distressed assets, embarked on an ambitious plan to build a media empire with a deep-pocketed partner -- Los Angeles construction magnate Ron Tutor -- he was instantly welcomed.

In 2003, the pair began their film entry by lending money to a beleaguered movie company headed by nightclub impresario Elie Samaha. By 2006, they had snapped up Capitol Films, whose credits include Robert Altman's "Gosford Park," and ThinkFilm, the prestigious distributor of art-house titles such as "Half Nelson."

Bergstein had become a player. But in the last few months, he and ThinkFilm have been dogged by a string of lawsuits from associates who allege they were stiffed, according to court records.

This summer, Capitol's $33-million "Nailed," a quirky satire starring Jake Gyllenhaal and Jessica Biel, was shut down or delayed several times because of disputes over payroll and the film's financial structure. Bergstein says the actors and directors guilds caused most of the problems by trying to position themselves ahead of creditors, spooking the film's lenders and prompting them to temporarily halt funding.

ThinkFilm has been hampered by a lack of promotional dollars, acknowledges co-founder and President Mark Urman. "I'm very concerned about people not being paid," he said. "I'm trying hard to undo the damage."

The problems at ThinkFilm and Capitol are a reminder of the travails of the independent movie business, which has been squeezed by slowing DVD sales and a film glut that has made box-office receipts harder to come by. The tough economics have claimed Time Warner Inc.'s specialty labels Warner Independent Pictures and Picturehouse. Viacom Inc.'s Paramount Vantage has dramatically scaled back.

Sitting in the conference room at his headquarters on the 30th floor of Century City's Fox Plaza, Bergstein said he had gotten a bum rap in the entertainment press. In his view, he's been a positive force, backing dozens of productions outside the studio system and employing about 150 people in L.A., New York and London.

"I have financed over 40 films over the last three years," Bergstein said. "I have put over $800 million into the space. That makes me the single largest newcomer and one of the largest in the independent sector altogether."

But some filmmakers and suppliers interviewed by The Times say they would hesitate to do business with his companies again.

"Not only would I not do anything for ThinkFilm, I'd think twice about doing any work for other independent distributors," said Matt Bledsoe, a partner in Big Fat Brain, a Covington, Ky., marketing firm, who says his attorneys tried unsuccessfully to collect $15,000 that the company was owed for designing a website promoting ThinkFilm's Oscar-winning documentary "Taxi to the Dark Side."

Asked about the dispute, Bergstein referred the matter to Urman -- who referred it back to Bergstein.

In interviews, associates described Bergstein as a frenetic deal maker who got in over his head and whose brusque style alienated a community accustomed to being schmoozed.

"I don't have a great bedside manner," Bergstein acknowledged.

Although he had decades of experience doing business transactions, he said he never operated a company and faced a steep learning curve. He says he has lined up new financing that will help him pay his bills.

Bergstein does not pretend to be an industry type. "I don't go to sets," he said. "I don't meet with actors. I don't read scripts. I'm not interested in it."

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Moving into pictures

A Brooklyn native, Bergstein said he grew up in a blighted neighborhood and witnessed two murders by the time he was 12. He came to California in 1983 and worked for a mortgage company before breaking out on his own and making and losing millions as a real estate developer.

From the late 1980s through 2000, Bergstein said, he invested in more than 70 troubled businesses in such industries as clothing manufacturing, publishing and electronics. Although "many of my investments did not pay off . . . overall I made a significant amount of money during the period," he said.

Next, he hooked up with his neighbor in the gated western Los Angeles County community of Hidden Hills. Tutor is chief executive of Sylmar-based construction giant Tutor-Saliba Corp., which is behind such projects as downtown's new Los Angeles Police Department headquarters.

Bergstein trained his sights on Hollywood after lending Samaha millions of dollars to keep his company, Franchise Pictures, afloat. When the production outfit went bankrupt, Bergstein wound up with dozens of Franchise titles.

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