David Molner and David Bergstein: Guilty or Not?

As has been proven many times over, the smartest guys in the room can make the worst decisions

david bergstein"Hollywood is worse than dog-eat-dog; it's dog doesn't return other dog's phone call." — Woody Allen

My mother-in-law once told me you shouldn't dance on somebody's grave. Unfortunately, she's right. 

At the time, I had just heard about David Molner and his Screen Capital International and Aramid Entertainment Fund taking up legal arms against David Bergstein and his Capitol Films for misappropriation of funds (e.g. looting production funds to purportedly pay-off a $950,000 gambling mark at the Mandalay Bay Casino in Vegas and other non-related debts.)  

I worked at Screen Capital during Aramid's first two years in business, during which time they financed over 30 films, including Capitol's films: Tony Kaye's "Black Water Transit", Taylor Hackford's "Love Ranch", "$5 a Day" starring Christopher Walken, "The Edge of Love" starring Keira Knightley, and David O. Russell's famously ill-fated "Nailed", starring Jake Gyllenhaal and Jessica Biel.  

Through this experience I became intimately aware of the corporate pain and collateral damage that Bergstein inflicted upon those who came in contact with, like sales agent Stuart Ford's IM Global, Jeff Sackman's ThinkFilm, and scores of spurned producers and production vendors.  

Bergstein did after all learn from the best: his former film partner at Franchise Pictures was Elie Samaha, a notorious night club owner whose hyper-inflated budget schemes caused millions in investor losses and lawsuits.  So naturally, when I heard Bergstein might be taken down by one of his "victims," it just seemed right.

Then this past week when I heard about David Molner's legal woes with some of Aramid's investors accusing him of fraud and breach of fiduciary duty (i.e. looting and self-dealing), I had to do a double-take. 

Did Molner receive some sort of cursed FTD (financially transmitted disease) from Bergstein, who in turn received it from Samaha, who in turn picked it up from a bar stool in the VIP room of his "Roxbury" nightclub, perhaps left there by some momentarily successful, coked-up ne'er do well that came before him?

As plausible as this may seem, it begs a bigger question of who we do business with and why?  I'll be the first to say that David Molner is one of the smartest people in the business. Likewise, in 2003, Comerica Entertainment's Jared Underwood said of Bergstein, "David's really intelligent and he got this business quickly." 

Unfortunately, as has been proven many times over, the smartest guys in the room can make the worst decisions; and those decisions usually rely too much on smarts and not enough on judgement.  The smarts recognized the potential for profits — but the judgement knew the risk was too great.

Entrepreneurs are natural risk takers — this is the axiom upon which capitalism stands.  Concepts like Fiduciary Duty provide the rule books within which these risks can be taken.  Good and bad decisions can pay-off and both can fall flat — it's the underlying motivation that matters.  Film veteran Mike Medavoy used to say that the only unforgivable sin is a bad decision made for the wrong reasons, and nowhere is this more evident then from the producer who said of Bergstein, "You know he's gonna f— you. But at least you get your movie made."  

That is a sad commentary on the desperation and complicitness of the filmmaking community (from producers and financiers to all forms of agentry, and everyone in between) that they will knowingly and willingly do business with people who (in Bergstein and Samaha's case) have a very public track record of collateral damage.

Legals aside, the thing that Molner and Bergstein are really guilty of is their willingness to hitch their wagon (and other people's money) to the Bergsteins and Samahas of the world, all of which could have been avoided by a simple gut-check. If you have reservations about somebody, for whatever reason, regardless of whether its from their personal or professional life, then walk away and find somebody else, even if you have to pay more. 

You may achieve short term gains, but you will end up in long term misery. If somebody screws somebody in a small way, they're going to screw you in a big way — it's the unifying theory of business. 

When in doubt, ask your spouse, who reminded me that you can't do a good deal with a bad person.