The godfather of independent film, and mentor to legions of greats from Francis Ford Coppola to James Cameron, alleges he's owed $170 million in litigation against a financial planner who claims he's "not the black [Bernie] Madoff."
This story first appeared in the March 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
Roger Corman's life is a tale in three acts. The first tells how the 89-year-old director and producer made more than 400 B-movies, reaping far more than $100 million in an extraordinary career that saw him help invent the independent film business; tutor such talents as Francis Ford Coppola, James Cameron and Ron Howard; and win an honorary Oscar along the way. In the second act, he lost most of the money; it's a tragic twist that involves a bitter dispute with his children, an overseas bank account that held his life savings and a disgraced hedge fund manager who insists he's "not the black [Bernie] Madoff." Then there's the third act — still being written — in which Corman is fighting to recover all that he lost in litigation set for a trial later this year in Los Angeles.
"If you're just a straight businessman, your pictures will not be good," Corman says of his career, seated in the living room of the Santa Monica house he shares with Julie, his wife and business partner of 46 years. "And if you're just a straight artist, you'll lose money. You have to be a businessman to understand art, and an artist to understand business."
Their home is a modest hideaway by Hollywood standards and a bit of an aesthetic mess, with modern-looking paintings hanging above such antique pieces as an Egyptian throne. Corman, a professorial presence in person, admits he's angry at being stuck in court over money at an age when most of his contemporaries are enjoying retirement, but he does so in a calm and collected way, as if a bit of anger is what has propelled him through a career that began in the early 1950s when he scraped together the money for his first film, The Monster From the Ocean Floor.
Having moved to Beverly Hills with his family when he was 14, Corman went to work at 20th Century Fox after college at Stanford, until he became frustrated and asked his father for a loan to make his own movie. His dad said no, so Corman sold $500 and $1,000 shares in the film to friends from school, put in $3,500 of his own money from a script he had sold, and got a huge break when the president of a film lab offered to defer payment until after the picture came out. In total, Monster From the Ocean Floor cost $30,000 and Corman earned twice that from Lippert Releasing Co., which in 1954 distributed the film. Corman repaid investors and immediately went into production on his next project, The Fast and the Furious, a drama about a wrongly convicted man who escapes from prison and joins a police-eluding racing circuit. (He would later license the title to Universal for its own car-racing franchise.)
Corman (left) with wife of 46 years Julie, Bogdanovich, Paxton, Fonda and Dern, photographed Feb. 11 in front of his honorary Oscar. “We couldn’t figure out where to put it,” says Corman. “Julie suggested a marble column in the middle of the room with a spotlight and a hallelujah chorus, and I thought maybe that’s a little too much.”
With competing offers on Fast and the Furious from three studios, including Columbia Pictures, Corman demanded that the winning bidder not only take that picture, but advance costs on two more films. "To the best of my knowledge, nobody had ever done that before," says Corman. "The idea of putting together a series of pictures with a guaranteed pickup against the profits for the distribution, I believe that was original."
The multipicture output formula — which he repeated again and again — allowed Corman and, later, his and Julie's New World Pictures and New Horizons Pictures, to become a bona fide low-budget film factory at a time when the demand for product in theaters, drive-ins and then television was booming. Corman, often in association with Samuel Z. Arkoff's American International Pictures, birthed an astonishing number of movies with titles such as Attack of the Giant Leeches, A Bucket of Blood and, of course, The Little Shop of Horrors, which famously took just two days to shoot and starred a young Jack Nicholson.
Corman (left, with Dern and Fonda) on the set of 'The Wild Angels' (1966). Made for $360,000, the film earned $5 million.
Corman recognized the emergence of youth culture in the '60s and '70s long before the studios did, putting up-and-coming actors onscreen and touching on counterculture subjects like drugs and sex. In the process, '70s filmmaking icons such as Coppola, Martin Scorsese and Jonathan Demme, along with such actors as Peter Fonda and Bruce Dern, came up under his wing. James Cameron, before he went off to write and direct Terminator, headed special effects at New World, and created spaceships and set designs that were reused on many films. Ron Howard's directorial debut, Grand Theft Auto, was financed by Corman, who acknowledges the irony that his acolytes went on to make some of Hollywood's most expensive films. Proteges often would cast him in small acting roles in their movies, including Apollo 13 and Silence of the Lambs, just to have him on set. Playing a senator in The Godfather: Part II, Corman remembers, "On the first day I was shooting, Francis came to my dressing room and he said, 'Roger, you will see there's a lot of wastage going on here. I could save Paramount a million dollars on this picture, but that's not my job.' "
Dorothy Malone and John Ireland in Corman’s 'The Fast and the Furious' (1955), the title of which Corman later licensed to Universal.
Corman has been called the "King of B-movies," a moniker that prompted the Academy to award him a lifetime achievement Oscar in 2009. But he hates that term. Instead, he sees himself as a master of genre pictures and of cost-conscious filmmaking, slashing away at inefficiencies in budgets and arriving at a low-risk model for profitable films. That model hasn't always won him friends. Corman drove an on-set equipment truck himself until being warned by the Teamsters he wasn't allowed to do this. He once hired members of the Hells Angels to be background drivers on a film called The Wild Angels — until they were unruly on set and demanded the film's profits. "The Hells Angels weren't very fond of Roger," recalls Peter Bogdanovich. "And they hated me because I was always standing next to Roger, whispering in his ear. So they started to beat the hell out of me. That was the diciest moment of my life with Roger."
By paying his staff very little (Coppola drew just $90 a week as his assistant in the late '60s) and holding back the millions it would cost to fund wide releases (he opened films regionally instead, moving the prints from town to town), Corman was comfortably in the black on most projects: Attack of the Crab Monsters, made for $70,000, earned $1 million in revenue in 1957 ($8.4 million today); House of Usher, made for $270,000, earned another $1 million in 1960; and so forth. "He's famous for knowing how to squeeze as much production out of a buck as you can imagine," says actor Bill Paxton, who worked in the art department on Corman's 1974 film Big Bad Mama.
As he churned out product, Corman was building a library that he could further monetize. "For instance, HBO, their first year in business, we were their number one supplier because the major studios didn't want anything to do with them," says Corman.
Perhaps most important, he took a big chunk of these profits and plowed them into non-Hollywood investments. For instance, when investor George Soros established his massively successful Quantum fund in the early 1970s, Corman was one of his first backers.
By 2008, the Cormans' fortune had become so great that their four children, all of whom had worked for the family film company, allegedly were told by Roger that trusts had been set up to pay them "the collective amount of $120 million to $160 million, with each beneficiary's share to be between $30 million and $40 million," according to a lawsuit.
Then in September of that year, as the U.S. financial crisis was unfolding, Cirio Santiago, Corman's close friend, film partner and godfather to his four kids, died unexpectedly. Santiago's death was an important event in Corman's life because much of the Corman family's money was held through a tax-sheltering entity called Pasig Ltd. in an offshore account. At Corman's direction, Santiago had been held out as an owner of Pasig. When Santiago died, an investigation ensued into who was the real owner of the entity. Corman believed the answer was simple — the money was his — but the probe would set off a multiparty proceeding in an obscure court in the British Virgin Islands.
Sylvester Stallone and Louisa Moritz on the set of the original 'Death Race 2000' (1975).
A few months after Santiago died, having now heard about the offshore funds, Corman's oldest son (named Roger M. Corman) wrote a letter to his father to request an accounting of family assets. According to a lawsuit that soon would be filed by Roger M. and another son against New Horizons, they began to suspect trust money had been improperly removed to secret accounts overseas. The sons claimed they warned their parents about the tax ramifications of such a move, but that such talk particularly upset their mother, Julie, who allegedly became "increasingly violent," would "verbally castigate" their father for even discussing finances, "threatened to leave" him if he did so and declared the assets were hers. In August 2009, the sons would file petitions in probate court over the trust assets, later trying to remove their parents as trustees. They were then fired from New Horizons, which led to another lawsuit claiming the employment termination had been an illegal retaliatory salvo. The Cormans would later respond by telling the court that their sons merely were drawing a paycheck with no real job responsibilities at the family film company. The suit eventually was dismissed, while the trust dispute dragged on.
What all the Cormans didn't know at the time was that this family drama was merely a sideshow to something a lot more disastrous and unforeseen: The fortune that everyone was fighting over already had mostly been lost.
In 2008, about the same time the Cormans began feuding, the family money crossed paths with Buddy Fletcher, a Harvard-educated hedge fund manager who was named by Forbes as one of the country's 20 richest African-Americans alongside Oprah Winfrey, Tiger Woods and Bill Cosby. Fletcher, whose brother Geoffrey Fletcher is the Oscar-winning screenwriter of Precious, lived with his wife, Ellen Pao, at the Dakota, New York's iconic apartment building. (The two would bring a pair of discrimination lawsuits — his against the Dakota for racial discrimination, hers against the venture capital firm Kleiner Perkins for sex discrimination — that would rocket them to larger recognition.) In the midst of the economic downturn, Fletcher ran into trouble repaying investors who had submitted redemption requests. His funds were thrown into bankruptcy, and, as a Chapter 11 trustee wrote in 2013 after investigating the matter, "in many ways, the fraud here has many of the characteristics of a Ponzi scheme."
Fletcher had a deep relationship with the financial services giant Citco Group. His primary contact there was an executive named Ermanno Unternahrer, who had met Corman back in 1996, though there is a bit of a disagreement over the circumstances. According to an affidavit from Unternahrer filed in the British Virgin Islands case, a Citco trading manager had informed him that the Cormans were considering diversifying their offshore investments because Soros' funds were not performing as they previously did. By contrast, Corman says, in a declaration in another suit, it was Unternahrer who initiated the meeting and then pitched the filmmaker on the need to diversify, the chance to work with the largest offshore money manager in the world and to have personal involvement from the "Soros" of Citco, CEO Christopher Smeets.
Regardless of how they met, Corman began to transfer millions upon millions of dollars for Citco to administer, according to court documents. Over the next few years, Corman and Unternahrer would meet regularly. Unternahrer even attended a Corman family Christmas party in 2001. The next year, Corman says Citco recommended that Pasig — the offshore entity — be set up to streamline all of the Cormans' investments under Citco control. By 2008, the Cormans had a whopping $73 million invested with Citco, their lawsuit claims.
'The Little Shop of Horrors' (1960) featured Jack Nicholson, one of several young stars that Corman featured before the major studios took notice.
According to that suit, Citco handed management of Pasig's investments to Fletcher in June 2008. Citco allegedly did so despite knowing that Fletcher had not made a single profitable investment in the 10 months prior, that Fletcher was having difficulty repaying $20 million to Citco and that Fletcher had taken money from state pension funds he was overseeing to repay his debt. In transferring the Corman money to Fletcher, Citco allegedly paid itself $28 million. And Unternahrer is said to have arranged a side deal in connection with this transfer where he got $6.6 million in cash from Fletcher. "No one at Citco asked us or gave us an opportunity to decline to put our monies with Fletcher," Corman says in a declaration filed in the case. He claims he wouldn't learn about Fletcher until 2012, after the British Virgin Islands court made a ruling on the ownership of Pasig.
When that court finally ruled, the Cormans say they were stunned to discover their $73 million had dwindled to $13 million, with Citco taking an additional $2 million in fees. Corman now claims in the suit against Citco that damages from mismanagement run as high as $170 million. That's the amount calculated for what the Cormans might have earned had they kept their money with Soros back in 1996.
The movie poster for 1959 film 'Attack of the Giant Leeches.'
The Cormans say they spent years in the dark about Fletcher's involvement — even after Fletcher's funds became insolvent and Corman asked for some of his Pasig money to pay taxes. Their lawsuit claims Citco "aligned" itself with the Cormans in the British Virgin Islands case, but also "advised the Cormans that it would not pay out any money until the [Virgin Islands] court made a ruling," even though "Citco knew the money all came from the Cormans." The Cormans further allege when Citco told them in 2010 it couldn't pay out because the Virgin Islands court was examining whether his children were the real owners of the overseas money, Citco kept it a secret that "Fletcher had control of their money."
Fletcher, who did not respond to a request for comment, has been representing himself in the bankruptcy proceedings. He has argued that his troubles can be traced back to defendants in the Dakota lawsuit, whom he alleges retaliated against him by feeding reporters at The Wall Street Journal and other media outlets rumors of asset management troubles, leading to the self-fulfilling prophesy where investors began submitting redemption requests. "I have never supervised anything even remotely resembling a Ponzi," Fletcher testified. He has not been charged with a crime despite SEC and FBI investigations. "I am not the black Madoff," he added.
Corman (left, with Vincent Price) making 'The Pit and the Pendulum' (1961).
"Victims of Ponzi schemes almost never recover their money," says Matthew L. Schwartz, a partner at New York's Boies Schiller firm who once prosecuted Madoff, acknowledging that "private investors have gotten some recoveries from side players." For example, Citco reached a $125 million settlement with Madoff victims last August.
Just days before inviting THR to their home in Santa Monica, the Cormans were granted standing to pursue legal claims against Citco. A trial was scheduled to begin Feb. 24, but it has been delayed to see if a deal can be worked out. "They've already made an offer to settle," says Corman. "It isn't fair enough, but at least we're moving in that direction." In the meantime, he and Julie live comfortably, if not extravagantly, and he's resolved the trust dispute with his sons.
Corman recently had lunch with Jon Davison, a producer of such Cormanesque films as RoboCop and Starship Troopers. Like many in Hollywood, Davison started out in Corman's shop. Davison now lives on a ranch in Colorado away from show business. "Jon was a kid and now he's retired," says Corman. "I told that to Jon: 'Maybe it's time for me to retire too.' His reply was, 'You're too old to retire.' "
So Corman continues to work. He's now remaking his 1975 cult film Death Race 2000, about a dystopian future in which race-car drivers mow down pedestrians for sport, for Universal's home video division. It's his first major studio film in decades and came about when Universal bought remake rights and released a watered-down version in 2008 with Jason Statham in which no pedestrians were killed. Corman says he called the studio on a whim and said, " 'You own the remake rights on my film, but you never really remade it.' They said, 'Why don't you come in and talk?' and then, 'Why don't you remake it and it's called Death Race 2050, and we're back to killing pedestrians?' "
So a deal was struck. Or so Corman thought, until the paperwork became a hang-up, he got angry and then took over negotiations from his lawyer. If Corman can fight the studio system, his own children and even a financial services giant, he certainly can deal with this small challenge. In fact, when it is suggested he should make a monster film about Wall Street, he gets excited: "I should've done The Big Short!"