Ron Tutor: The Lawsuits, Losses and Private Struggles of the Man Behind Miramax

5:00 AM PST 03/29/2012 by Daniel Miller
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Ryan Schude
Ron Tutor

A marble-appointed 737, a 258-foot yacht, a $32 million mansion and a $3 billion-a-year construction business. The charmed (and controversy-plagued) tycoon has succeeded everywhere but Hollywood, where his $700 million Miramax gamble has the town whispering: Was it worth it?

Tutor is a throwback. He uses coarse language in interviews, angrily dismisses those who disagree with him and has seemed wholly unconcerned with a reputation for business practices that have drawn the ire and scrutiny of commentators, public officials and peers. That win-at-all-costs approach to dealmaking has helped Tutor Perini secure lucrative contracts for massive projects such as L.A.’s Red Line, military contract work in Iraq and the forthcoming 13 million-square-foot Hudson Yards development on New York’s West Side. But he’s known in construction circles for the use of change orders, which allow a contractor to add items to the original scope of work and charge for those additions, inflating the costs of construction projects he has won by being the lowest bidder. These methods have led to speculation that Tutor has tried to cheat public agencies out of millions of dollars and gain influence from campaign contributions.

All this led Tom Bradley, then the mayor of Los Angeles, to say in 1992: “Ron Tutor is the greatest change-order artist that I’ve ever seen. He submits the low bid then makes it up on the change orders.” And Tutor has been largely defiant.

“I told ’em to go to hell,” he told the Los Angeles Times in 1993 when recalling a subway dust-up. Says attorney Nomi Castle, who has represented the businessman since 1974: “He very often does not suffer fools gladly. I have never once known him to do anything other than take total responsibility for the decisions that he makes and not blame others.”

The stakes, of course, weren’t always so high. Tutor, of Armenian descent, grew up the son of immigrants in Van Nuys, a middle-class suburban enclave in the San Fernando Valley. His father, Albert G. Tutor, who was an orphan, anglicized the family surname because people mispronounced or misspelled his last name, the Armenian word for “teacher.” So Tutor’s father chose an English word that was close enough.

In 1949, the elder Tutor founded the family construction business, A.G. Tutor Co., which built houses and small commercial buildings. While attending Van Nuys High School, Tutor worked for his father, “just trying to make some money like any other high school kid,” he told THR last year. “Certainly at that time, the film business was not of interest to me.” But Tutor has said in interviews that for a time, his mother oversaw the women’s wardrobe department at Universal Studios, which sparked his curiosity in film. Tutor began working with his father full time after graduating from USC in 1963 with a degree in business. According to a 1999 profile in the trade publication Engineering News-Record, Tutor’s resolve stems from a rocky stretch shortly after he began working for the family business at age 23. Tutor’s younger brother died in a car crash, and two years later, his father left the business to fight cancer (the elder Tutor died about a decade ago). Then subcontractors he knew went belly-up. “I kind of declared a blood oath to myself: That would never happen to me,” he told the News-Record.

The family business grew quickly under the younger Tutor. In 1972, he partnered with N.M. Saliba Co. to create Tutor-Saliba Corp. During the 1970s, Tutor began joint venturing with Framingham, Mass.-based construction firm Perini Corp. In 1997, Tutor and investors took over the company, and he eventually would become CEO. In 2008, publicly traded Perini acquired Tutor-Saliba in an $862 million deal. With revenue of $3.72 billion and nearly 8,000 employees and 20 offices throughout the U.S. and its territories, Tutor-Perini’s gross profit was $395 million in 2011.

Ranked by revenue, the company is the 15th-biggest contractor in the country, contributing tens of thousands of dollars over the years to philanthropic causes like college scholarships for engineering and construction-management students as well as spending on influential lobbyists. According to the Los Angeles City Ethics Commission, in 2010, while trying to win a contract for construction at Los Angeles International Airport, the company worked with controversial lobbyist Richard Alatorre, a former Los Angeles City Councilman who had previously pleaded guilty to felony tax evasion. Tutor, a registered Republican who has supported Democratic candidates, has backed former L.A. Mayor James Hahn and L.A. City Councilmembers Jan Perry and Richard Alarcon, among other local politicians. “He throws around a lot of money, and these people live off of money to keep their game going,” says Ron Kaye, former editor of the Los Angeles Daily News, which long has covered Tutor’s firm. “His influence in the city and the county is enormous.”

Through the years, newspaper stories have suggested that campaign contributions by Tutor and his company have influenced the votes of officials who have approved change orders or new projects for Tutor Perini. During the early 1990s, representatives for Los Angeles County Supervisor Deane Dana voted to approve $45.8 million in change orders for Tutor Perini predecessor company Tutor-Saliba’s subway work; at the time, the company was Dana’s biggest campaign contributor, doling out $28,000 for his re-election effort, according to a December 1992 L.A. Times story. And in a controversial January 2003 decision, after Tutor, his employees and their spouses gave more than $200,000 for Hahn’s 2001 mayoral campaign and the 2002 Hahn-led effort to stop the San Fernando Valley’s secession, the city awarded Tutor-Saliba a $34 million Van Nuys Airport parking garage and bus shuttle terminal project, even though the firm was locked in a legal battle with the MTA over the subway and was considered by some airport staffers to be unfit for the job, according to a January 2003 L.A. Times article.

Tutor-Saliba’s subway litigation with the MTA, which began in 1995, still lingers. The construction company initially sued the agency for $16 million it said it was owed for unanticipated expenses, but a cross-complaint from the MTA argued that Tutor-Saliba was demanding money for illegitimate claims (there have been two trials and judgments in favor of both parties). If Tutor’s company loses its most recent appeal of a 2006 jury finding that the firm violated the California False Claims Act, municipalities could use the violation as a reason to not award the company future government contracts. And since 2010, Tutor has been engaged in a nearly $500 million legal fight with MGM Resorts International, a co-developer of Las Vegas’ CityCenter project, over construction of a flawed hotel and condominium tower. Engineers hired by MGM Resorts have said the 26-story Harmon Hotel, which was supposed to have topped out at 47 floors, would likely collapse in a strong earthquake. Tutor Perini has argued it can be fixed. The stunted Norman Foster-designed tower stands empty, serving as an expensive billboard for Las Vegas buffets and nightclubs. “I wouldn’t do business with MGM again if they were the last owner on the planet,” Tutor told the Las Vegas Sun in 2010.

As he has waged his legal wars, Tutor has paid himself a handsome salary. According to Tutor Perini filings, his compensation in 2010 was $9 million. As part of a five-year employment contract Tutor signed with the company in 2008, he receives 150 hours of annual personal flying time in the company’s 737. Other perks include an apartment in Las Vegas and a car and driver (Tutor is chauffeured in a GMC Denali SUV). Currently, Tutor’s driver is Paul Barresi, who long worked with Anthony Pellicano as a private investigator and until 2006 was a director, writer and producer on such pornographic films as Frat Boys on the Loose 7 and Leather Bears and Smooth Chested Huskies. (Tutor said in a November deposition that many years earlier, he employed Barresi as a personal trainer; Barresi could not be reached for comment.) According to Tutor’s close friend, entrepreneur John Rockwell, the businessman recently commissioned upgrades to the 737 — which has two bedrooms and a marble-appointed interior — making it even more opulent. “He knows how to travel in style,” says Rockwell, who was introduced to Tutor by Los Angeles Clippers owner Donald Sterling about five years ago.

It’s clear that Tutor enjoys the trappings of his success. His estate in the gated community of Beverly Park is an upgrade from a $10 million residence in Hidden Hills that he has listed for sale and previously rented to Britney Spears after his new digs were completed last year. And since the Cannes Film Festival, he has jettisoned the 197-foot Pegasus II, upgrading to the 258-foot, Danish-built Pegasus V, recently ranked by SuperYacht Life magazine as the 75th-largest in the world. He also has given $30 million to alma mater USC for a campus center that bears his name.

In spite of the opulence Tutor cloaks himself in, Rockwell says the mogul is unfussy, even “down home.” He says that Tutor enjoys meals at Monty’s, a modest steakhouse in Woodland Hills, and Ristorante Peppone, an old-school Italian restaurant in Brentwood. Rockwell says Tutor is “very bright. He’s a big reader.” He says Tutor’s generosity is unending: “He’s been so good to me. I can’t tell you how good.” But even Rockwell knows where to draw the line with his good friend. Rockwell once tried partnering with Tutor on a private club on the Sunset Strip in West Hollywood that would have taken the place of the shuttered Le Dome restaurant, which had counted Tutor as an investor. But the deal didn’t work out. And the experience helped Rockwell realize something: “Ron is pretty tough in business. It’d be better to be his friend rather than do business.”

The glamour of show business long has been most attractive to Tutor, say several sources. In addition to his dealings with Bergstein, the father of three grown daughters and a son has a decadelong tradition of attending Cannes, where he is known for his lavish parties. Says Clark Hallren, managing partner of Clear Scope Partners, a Century City-based entertainment advisory firm: “Many people who have made fortunes on nuts-and-bolts businesses are often attracted to what I term the nonfinancial return of being in the movie business.”   

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