Business Insider Edition

A Trump ally with links to Jeffrey Epstein, Harvey Weinstein, and Michael Jackson was just called out by an activist investor

Theron Mohamed , Business Insider US
 Nov 27, 2019, 04:20 PM
BEVERLY HILLS, CA - APRIL 29:  Thomas Barrack, Exe
Thomas Barrack, Executive Chairman and CEO, Colony Capital, participates in a panel discussion during the annual Milken Institute Global Conference at The Beverly Hilton Hotel on April 28, 2019 in Beverly Hills, California. (Photo by Michael Kovac/Getty Images)
  • Tom Barrack's links to the Mueller investigation and ties to Michael Jackson, Harvey Weinstein, and Jeffrey Epstein were thrust into the spotlight on Tuesday after an activist investor published a scathing letter calling for his resignation as CEO of Colony Capital.
  • Blackwells Capital detailed a laundry list of Barrack's alleged shortcomings, from his iron grip on Colony and decision to pursue a merger, to his Aspen address and polo playing.
  • "We know of no public company board that would continue to employ a CEO who lived 900 miles from headquarters, has been persistently mired in investigations and scandals, appeared to put friendships above objective business evaluations and who had destroyed so much shareholder value," Blackwells wrote.
  • Barrack "appears to be a magnet for famous people involved in scandals; he has had widely reported personal relationships with Michael Jackson, Harvey Weinstein and Jeffrey Epstein, for example," Blackwells wrote in a footnote.
  • For more stories, go to www.BusinessInsider.co.za.

Tom Barrack's links to the Mueller investigation and ties to Michael Jackson, Harvey Weinstein, and Jeffrey Epstein were thrust into the spotlight on Tuesday after an activist investor published a scathing letter calling for his resignation as CEO of Colony Capital.

Blackwells Capital, which owns about 1.85% of the real estate investment firm, detailed a laundry list of Barrack's alleged shortcomings, from his iron grip on Colony and decision to pursue a merger, to his Aspen address and polo playing.

"Colony's board has given Tom Barrack too much deference and too much latitude for too long," Jason Aintabi, Blackwells' investment chief, said in the letter. "His continued, imperial reign over the company damages its credibility and business prospects and creates a tremendous overhang on the stock."

Blackwells continued: "We know of no public company board that would continue to employ a CEO who lived 900 miles from headquarters, has been persistently mired in investigations and scandals, appeared to put friendships above objective business evaluations and who had destroyed so much shareholder value."

Barrack "appears to be a magnet for famous people involved in scandals; he has had widely reported personal relationships with Michael Jackson, Harvey Weinstein and Jeffrey Epstein, for example," Blackwells said in a footnote.

(In "Fire and Fury," author Michael Wolff reported Barrack, Epstein, and Donald Trump were a "set of nightlife musketeers" in the 1980s and 1990s.)

Blackwells added that it would nominate five "exceptional candidates" to Colony's board at its upcoming annual meeting.

Colony's board and management team are "committed to acting in the best interests of the company and all of its stockholders," Colony said in a statement to Business Insider. "There are a number of factual inaccuracies in Blackwells' press release which we will address at a later date."

These are some of the most colorful quotes and incendiary claims from Blackwells' letter:

  • Colony's three-way merger with NorthStar Realty Finance and NorthStar Asset Management created a "Frankensteinian combination" of real estate investing and advisory businesses.
  • The board allows Barrack to "dilly-dally" and work from Aspen, where Colony has no offices.
  • Colony's latest earnings call was "disjointed, sloppy, and unprofessional."
  • The board has been "irrepressibly derelict" in its duties.
  • Barrack treats Colony as his "fiefdom" despite his "abysmal track record."
  • Colony's bosses are "over-compensated" and it's "unfathomable" that its overheads and infrastructure costs are similar to those of rival Brookfield, which has nearly nine times the value of assets under management.
  • Barrack suffers from "enormous personal distractions and tangible conflicts of interest," and has been "persistently mired in investigations and scandals," including at least two Congressional investigations and at least one reported criminal investigation.
  • Sen. Elizabeth Warren sent Barrack a letter accusing him of engaging in "improper and unethical activities."
  • The House Oversight Committee cited Barrack in a staff report for "lobbying the Trump administration for personal appointments and special arrangements that could have involved transferring nuclear technology to Saudi Arabia." Barrack negotiated directly with Trump and other White House officials in a bid to become the special envoy to the Middle East or the ambassador to the United Arab Emirates.
  • Barrack, who served as chairman of Donald Trump's inauguration committee, allegedly "used friendship and politics as criteria for business deals." He added Washington lobbyist Rick Gates to Colony's payroll and paid him $20,000 (R294,000) in monthly consulting payments until the Mueller investigation named Gates as a witness and he was indicted on charges including money laundering and violating foreign lobbying and tax laws, Blackwells said, citing a New York Times report.
  • Blackwells said it was "outraged" that Barrack was able to "hand-pick his successor." Colony agreed to acquire Digital Bridge for $325 million (R4.7 billion) in June, and announced its CEO Marc Ganzi would succeed Barrack as Colony's CEO. Barrack has known Ganzi "for decades" and "regularly plays polo" with him, Blackwells said.
  • Barrack has a "history of and recidivistic flirtations with vanity projects" including Neverland Ranch and the Weinstein Co, Blackwells said. After Michael Jackson defaulted on the mortgage for his infamous estate, Barrack used some investor money to buy the $23 million (R338 million) loan and canceled a planned auction of the property in 2008, the Los Angeles Times reported. Colony offered to buy some or all of The Weinstein Company's assets in October 2017 after the Harvey Weinstein scandal broke, but walked away after the two sides failed to agree on a price, the New York Times reported.

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