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The Notorious Jack Abramoff
ITIn the early ’80s Jack Abramoff was a smart, stocky young man who had moved from the College Young Republicans to knocking down decent money working for a conservative foundation run by Lewis Lehrman. Lehrman, a drugstore heir, was serving in the early Reagan administration on the Gold Commission, which was revisiting whether the United States might be better served by a gold standard than by a central bank issue-at-will standard. (If you think that’s an unimportant subject, consider the price of a massage-parlor pick-me-up today versus the price in 1983. If you prefer, a loaf of bread is an adequate proxy.) In any case, Abramoff would show up for dinner at a friend’s house in Baltimore, and if his prospective wife came along she would bring their kosher meal. How she heated it in the friend’s debauched oven I never heard.
Abramoff’s father had had some connection with the movie business, and before long Jack was producing films. His first boffo was Red Scorpion, in which Dolph Lundgren turns against the Red army in an African pesthole—and I’m not sure what else happens as I’ve never seen more than fifteen minutes of Red Scorpion, assuming it wasn’t something else I watched with Dolph Lundgren gunning down Russians. The film was shot in what was known then as South-West Africa. Abramoff also did something or talked of doing something in the Marianas, but I can’t find confirmation of that. The common denominator was that a few jurisdictions were so desperate to get on the map that they would significantly subsidize production costs. Jack knew an opportunity when he saw it, and so some movies got made.
I saw him a few times but had no reason to stay in touch. Abramoff made another neat transition, becoming a top lobbyist in Washington. It was that role that got him into trouble and led to prison, but that came later.
In the early nineties, I became interested in a very low-priced stock called Ranger Industries, which had a little cash but a $50-million tax-loss carryforward. The shares twitched around in the five-to-ten-cent range. The guy running it collected a salary. What was needed, I thought, was an acquisition to put the tax-loss to use. In Ranger’s previous life, before bankruptcy, it had been in the entertainment business, sort of, with video games and a godawful line of toys known as Cabbage Patch Dolls. They also made small plastic swimming pools; the company was known then as Coleco Industries. After the 1986 tax act, it was difficult to use carryforwards if a company had a change of business or a change of ownership. But if you defined “entertainment business” loosely enough, maybe, I thought, you could stuff a small movie production operation into Ranger. And it happened I knew someone who had made movies. Best of all, he seemed to have made the films with other people’s money.
I raised a small partnership with the idea of trying to get control of Ranger’s stock, cut the salaried man loose, install Abramoff as president, and employ his skills at making movies without capital in places I didn’t want to visit. It seemed like a reasonable scheme. Two things were needed: some reason for confidence that the tax loss could be used, and Abramoff. I couldn’t get any law firm to commit on the first question, and about a half-hour into my meeting with Jack it was obvious he would be happy to take any check the company wanted to write but his interest went no further. He was making much bigger money lobbying for Indian tribes, hobnobbing with congressmen, and heaven knows what else. So the idea was a bust. I sent the partners their money back, dissolved the partnership and said the hell with it.
That was the last time I had contact with Jack Abramoff. But it wasn’t the end of Ranger Industries. And it wasn’t the end of Abramoff. Within a couple of years, the former management of Coleco—which had a better grasp of the reorganized company than I did—pulled a brilliant maneuver that bumped the value of my five-cent stock to just under $2. When Coleco was being reorganized, there was the usual problem of future liabilities. The company’s little plastic swimming pools were the kind that might have three or four inches of water in them. For some reason, pools like that are irresistible to people standing on balconies who say “Hold my beer!” and then jump. So as part of the reorganization, $12 million was set aside to deal with claims of future quadriplegics. The money was still there, in a product liability trust. Coleco’s former president, Mort Handel, and a partner went into court, convinced the bankruptcy judge that much larger coverage could be bought from Chubb or some other insurer. So the product liability protection was boosted, and suddenly about $10 million was freed up for the shareholders. Handel and his partner had a related deal waiting, or perhaps found one in a hurry, in which you could participate in a new oil company via Ranger or take the cash, just under $2 a share. I took the cash, chastened but nonetheless delighted: I’d been wrong about everything and still made money. The tax loss? Nobody cared.
Abramoff’s career was more spectacular. There was a gaming ship, a shooting in downtown Fort Lauderdale, a wayward congressman or two, Indian tribes that may have gotten clipped, ownership of a fancy D.C. restaurant: pretty much the story of Washington lobbying condensed into a one-man show. A few people went to prison, including Jack on tax and bribery matters. He did three years and change, got out in 2010, worked in a kosher pizza shop for a while, may have written a book, commented on the 2016 election. Wherever he is, he’s probably doing well. Brains make more of a difference in outcomes than any other characteristic.
Apart from the happy accident with Ranger stock, which had nothing to do with Jack, there’s one detail that does. One evening in the late ’80s we went to dinner at our mutual friend’s house in Baltimore. Jack Abramoff was back from his movie-making in Africa. He had brought along an old military rifle with the bolt welded shut. As we stood in the foyer, an Israeli friend arrived with his mother. Ziona was a thin woman dressed severely in black, gray hair in a bun. She spotted the rifle propped against a staircase, lifted it in delight and declared, “A Lee-Enfield! I had one of these in the Haganah! But oh—” she cried, trying to work the action, “—it’s broken!” She was a lovely woman we got to know slightly, as you can know someone who lives half the world away. That, too, really had nothing to do with Jack: we’d have gotten to know her anyway, but without the pleasant memory of her holding a stranger's rifle and recalling days when the stakes were higher than movies, stocks, or prison.
July 24 2017
Abramoff’s father had had some connection with the movie business, and before long Jack was producing films. His first boffo was Red Scorpion, in which Dolph Lundgren turns against the Red army in an African pesthole—and I’m not sure what else happens as I’ve never seen more than fifteen minutes of Red Scorpion, assuming it wasn’t something else I watched with Dolph Lundgren gunning down Russians. The film was shot in what was known then as South-West Africa. Abramoff also did something or talked of doing something in the Marianas, but I can’t find confirmation of that. The common denominator was that a few jurisdictions were so desperate to get on the map that they would significantly subsidize production costs. Jack knew an opportunity when he saw it, and so some movies got made.
I saw him a few times but had no reason to stay in touch. Abramoff made another neat transition, becoming a top lobbyist in Washington. It was that role that got him into trouble and led to prison, but that came later.
In the early nineties, I became interested in a very low-priced stock called Ranger Industries, which had a little cash but a $50-million tax-loss carryforward. The shares twitched around in the five-to-ten-cent range. The guy running it collected a salary. What was needed, I thought, was an acquisition to put the tax-loss to use. In Ranger’s previous life, before bankruptcy, it had been in the entertainment business, sort of, with video games and a godawful line of toys known as Cabbage Patch Dolls. They also made small plastic swimming pools; the company was known then as Coleco Industries. After the 1986 tax act, it was difficult to use carryforwards if a company had a change of business or a change of ownership. But if you defined “entertainment business” loosely enough, maybe, I thought, you could stuff a small movie production operation into Ranger. And it happened I knew someone who had made movies. Best of all, he seemed to have made the films with other people’s money.
I raised a small partnership with the idea of trying to get control of Ranger’s stock, cut the salaried man loose, install Abramoff as president, and employ his skills at making movies without capital in places I didn’t want to visit. It seemed like a reasonable scheme. Two things were needed: some reason for confidence that the tax loss could be used, and Abramoff. I couldn’t get any law firm to commit on the first question, and about a half-hour into my meeting with Jack it was obvious he would be happy to take any check the company wanted to write but his interest went no further. He was making much bigger money lobbying for Indian tribes, hobnobbing with congressmen, and heaven knows what else. So the idea was a bust. I sent the partners their money back, dissolved the partnership and said the hell with it.
That was the last time I had contact with Jack Abramoff. But it wasn’t the end of Ranger Industries. And it wasn’t the end of Abramoff. Within a couple of years, the former management of Coleco—which had a better grasp of the reorganized company than I did—pulled a brilliant maneuver that bumped the value of my five-cent stock to just under $2. When Coleco was being reorganized, there was the usual problem of future liabilities. The company’s little plastic swimming pools were the kind that might have three or four inches of water in them. For some reason, pools like that are irresistible to people standing on balconies who say “Hold my beer!” and then jump. So as part of the reorganization, $12 million was set aside to deal with claims of future quadriplegics. The money was still there, in a product liability trust. Coleco’s former president, Mort Handel, and a partner went into court, convinced the bankruptcy judge that much larger coverage could be bought from Chubb or some other insurer. So the product liability protection was boosted, and suddenly about $10 million was freed up for the shareholders. Handel and his partner had a related deal waiting, or perhaps found one in a hurry, in which you could participate in a new oil company via Ranger or take the cash, just under $2 a share. I took the cash, chastened but nonetheless delighted: I’d been wrong about everything and still made money. The tax loss? Nobody cared.
Abramoff’s career was more spectacular. There was a gaming ship, a shooting in downtown Fort Lauderdale, a wayward congressman or two, Indian tribes that may have gotten clipped, ownership of a fancy D.C. restaurant: pretty much the story of Washington lobbying condensed into a one-man show. A few people went to prison, including Jack on tax and bribery matters. He did three years and change, got out in 2010, worked in a kosher pizza shop for a while, may have written a book, commented on the 2016 election. Wherever he is, he’s probably doing well. Brains make more of a difference in outcomes than any other characteristic.
Apart from the happy accident with Ranger stock, which had nothing to do with Jack, there’s one detail that does. One evening in the late ’80s we went to dinner at our mutual friend’s house in Baltimore. Jack Abramoff was back from his movie-making in Africa. He had brought along an old military rifle with the bolt welded shut. As we stood in the foyer, an Israeli friend arrived with his mother. Ziona was a thin woman dressed severely in black, gray hair in a bun. She spotted the rifle propped against a staircase, lifted it in delight and declared, “A Lee-Enfield! I had one of these in the Haganah! But oh—” she cried, trying to work the action, “—it’s broken!” She was a lovely woman we got to know slightly, as you can know someone who lives half the world away. That, too, really had nothing to do with Jack: we’d have gotten to know her anyway, but without the pleasant memory of her holding a stranger's rifle and recalling days when the stakes were higher than movies, stocks, or prison.
July 24 2017
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