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Michael Jackson’s agreement with AEG – FRAUD IN THE ARTIST’S COMPENSATION. part 3

April 4, 2011

PART 3

We are analyzing the AEG ‘contract’ with Michael Jackson slowly and step by step. This part will be short but will give enough food for thought the way it is. But first let us remember what was said a couple of days ago.

In part 1 we discovered – in addition to Michael’s forged signature on the AEG  ‘contract” – that at the moment of signing it (January 26, 2009) the Artist was supposed to pre-approve 31 shows in the period of July 26 – September 30, 2009 or agree to a minimum of 18 shows in the first leg of the Tour.

Let me emphasize that as regards 31 shows the ‘contract’ was speaking of pre-approval only, and that the minimal 18 shows were not agreed, but only very strongly recommended by AEG for the first leg of the tour which was to be 10 weeks or so.

Eighteen is of course a bigger number than ten shows Michael Jackson spoke of but it is also much less than fifty shows for which AEG actually sold tickets.

The spread of shows within one leg was not too bad at that moment as it gave the Artist some time for recovery between the shows – if you divide 67 days (July 26-Sept.30) by the number of 18 you will get one show per 4,7 days.

However there is one thing which I completely overlooked when discussing all those things and it was the date when AEG expected to start the shows July 26!

This date means that in winter 2009 when this ‘contract’ was allegedly signed AEG thought they would need 6 months for preparing the tour and would therefore start on July 26, but in spring  – when even the dancers were not yet selected for the show – they suddenly started selling tickets for July 8 which was almost three weeks earlier?

This is a highly surprising fact because firstly, the initial date of July 26 was fixed in their so-called ‘contract’ and secondly, the partners were terribly pressed for time and were not ready to start on July 8 or even July 13.  So AEG’s decision to move them to a much earlier date was simply insane as it made the situation even worse than it was – unless of course AEG Live and Randy Phillips wanted it that way and deliberately built up pressure on Michael by scheduling the first show that early.

Those three weeks were critical for making the show ready – all of us saw “This is it” documentary and the way it looked at the end of June the show was far from being ready even for dress rehearsals. And please note that they also needed time for moving all the equipment across the ocean and setting it up there!

Let us make a mental note of this strange change in AEG’s plans and move further.

In part 2  we made an astonishing discovery that all production costs were to be charged to Michael and that this crucial point was stated in some God-forsaken attachment (called Exhibit A) which didn’t have a date or signatures on it and could be therefore added to the main ‘contract’ at any time.

Production costs of a show and the party responsible for them are so crucial a matter to any tour agreement that they should be stated in capital letters and as one of the main clauses of the contract too.

If you and I were in the place of the Artist we would have immediately refused to enter into business with our partner if he had openly declared to us that all they would pay for was the venue, its staff, sale of tickets, some advertising and manufacture of show-related merchandise,  while we should pay for everything else – the equipment, production of the show, salaries to personnel, their food, accommodation, union dues, visas, trucking, bussing, freight, etc. – in short for everyone and everything in the arrangement of the show.

Knowing that Michael wouldn’t agree to it of his own free will, AEG employed a very dirty trick and stated this crucial matter not in their ‘contract’ (or whatever it was) but in their attachment to it called Exhibit A.

Let me repeat that the legality of this attachment is extremely dubious as it is a separate paper with nothing to prove that it is indeed an attachment to their ‘agreement’. Since there is no date or signature on it, there is a very high probability that the paper shown to Michael then was different from the one we see now. 

If Michael had seen it then he would have run away from it without looking back, especially since he had a proposal from a rival promoter at the time (AllGood Entertainment) with whom they had already signed a Letter of Intent.

Exhibit A carries no date and no signature. Point 3 defines The Artist’s Net Tour Income” as Contingent Compensation minus the sum of Production Costs”.

If you look at the attachment closely you will see that even inside its text AEG do not clearly indicate the party which is to pay for the production expenses – no, they do it in an indirect way, saying only:

  • “Artist’s Net Tour Income” means the Contingent Compensation minus the sum of Production Costs.

The above indirectly implies that Production Costs (the enumeration of which is given in part 2 and is a complete knock-out as to its scope and range) are to be covered by the Artist.

Knowing how costly Michael’s show was I never doubt for a second that he would have never agreed to cover all production costs himself. Who needs a producer if you are to pay for everything yourself? Renting a stage and taking care of the tickets could have been done through a minor agent for a small fixed fee – you don’t need the AEG giant for that…

This is the only entry on the last page of Exhibit A. It does not carry a date or signatures of the parties. Is it valid at all?

The absence of Michael’s signature on this attachment and several other factors show that the horrible “present” prepared for him by AEG was not known to Michael at the time he signed this ‘contract’ and that the definitions contained there were most probably intentionally changed by AEG much later. Another factor which points to it is that the text of the ‘contract’ and text of the attachment contradict each other.

This becomes clear when we look at the next clause of the contract called Artist’s Compensation.

The first point of this clause says the following:

  • 4.1. Contingent Compensation. Artist shall be entitled to receive ninety percent (90%) of the Net Pool Revenue on a fully cross-collateralized basis (“Contingent Compensation”). The Shows and all Pool Revenue and Pool Expenses shall be fully cross-collateralized.
  • Within five business days thereafter, and subject to Promoter’s right to recoup Advances, Promoter shall pay Artistco an amount equivalent to ninety percent (90%) of the Contingent Compensation, if any, based on the applicable preliminary settlement.
  • By no later than sixty (60) days after the final Show in the Term, Promoter shall prepare and deliver to Artistco a final settlement of all Pool Revenue and Pool Expenses, on a fully cross-collateralized basis. Within five (5) business days thereafter, Promoter shall pay Artistco any remaining Contingent Compensaiton owing. Promoter shall retain all other Net Pool Revenue.

First let us see what “Pool Revenue”, “Pool Expenses”, “Net Pool Revenue” and “Cross-collateralization” are all about.

Cross-collateralization is a rather difficult notion and depending on what you apply it to it can mean different things. The closest where it comes to our entertainment contracts is in the law governing publishing business and this is which lawyer Ivan Hoffman says about it:

  • “When a publisher and author enter into an agreement, whether for one book or a series of books, there is a clause that deals with cross-collateralization that should be negotiated. This term refers to the provision that allows the publisher to recoup, recover, any unearned advances paid the author from book 1 against royalties or monies coming due from book 2. Or vice versa.  Or any such other combination of books depending upon the nature of how the clause is structured.”  http://www.ivanhoffman.com/cross.html

Since AEG wanted to arrange several legs of Michael’s show this cross-collateralization evidently referred to those legs of the tour in the same way the publisher refers to different books of one author and recouping some unearned advances for one leg from the money collected from another leg.

If we don’t pay much attention to this rather complicated issue all the rest in the formula suggested by AEG for the Artist’s compensation seems clear enough:

  • Pool Expenses are to be deducted from the full Pool Revenue collected and the resulting Balance (called Net pool revenue) is to be divided 90%-10% in favor of the Artist.

The 90% due to the Artist is actually the sum of Contingent Compensation. This arrangement could be perfectly fair –  but only if it weren’t for those costly production expenses which the Artist later found (from the attachment to this ‘contract’) placed on his shoulders . So apart from those expenses everything in this text looks okay at the moment…

As the word “pool” is crucial here I double checked it in the dictionary to see what it means. The dictionary defined it as follows:

  • A grouping of resources for the common advantage of the participants
  • An available supply, the use of which is shared by a group
  • A fund containing all the money bet in a game of chance or on the outcome of an event.

So just as I expected “pool” meant “grouping together the resources of the partners”, and the idea behind “pool expenses” is that both the Artist and AEG were to invest their funds in the show. Well,  as regards the producer of the show this is no surprising news – a producer is called a producer because he either invests his finances in the show or finds sponsors to do the same. But what about the Artist?

It turns out that investing some funds in the show by the Artist is not very much surprising either– information about Standard Live Performance Contracts cited earlier says that musicians are required and even prefer to bring their own instruments and have them insured themselves. In addition to that the budget of the show cannot be limitless and since the creative fantasy of the Artist can sometime bring about very costly production decisions I would even understand why AEG would expect Michael to pay for some of his most extravagant ideas if they went beyond the budget agreed between the parties.

So the general impression about “pool expenses” in clause 4.1 is that all of us – the Artist, we and the dictionary – read the expression “pool expenses” as joint expenses of both parties.

But over here a really big surprise is awaiting us. The attachment added by AEG to this ‘contract’ shows that they are of a different opinion about this word and they even give a different interpretation of “pool” depending on what they are talking about!

Let us read the definitions they provide in their Attachment (Exhibit A) mentioned in clause 1 of their so-called contract. At first the definitions coincide:

Point 5 (see the above photo) expresses the same idea which we saw in the ‘contract’ – all the money they jointly collect minus all joint expenses make up the net revenue (to be divided 90%-10% in the Artist’s favor):

  • “Net Pool Revenue means Pool Revenue generated during the Term less Pool Expenses incurred during the Term, on a fully cross-collateralized basis”.

Point 6  defines the Pool Revenue in the way we understood it from the ‘contract” – it enumerates all the sums collected by Promoter, Artistco and Artist from the tickets, merchandise, sponsors’ contributions, money brought by recordings of the show and other various sources.

And it is only the interpretation of “Pool Expenses” which is different here.

Point 7 says that in the opinion of AEG “Pool Expenses” means the following:

  • Customary and mutually–approved show costs incurred by Promoter in connection with any and all Shows (e.g. venue rentals, net advertising, marketing material, public liability insurance, security, ticketing costs, local stuff, venue staff, power, venue expenses related to pre-rigs, roof rental relating to outdoor shows, etc)…
  • The cost of mutually-approved support talent, if any, at any Show
  • Mutually agreeable expenses associated with secondary ticketing activities and anciallary ticketing activities in connection with the Shows; [let the words “mutually agreeable” not mislead you – secondary ticketing activities were a wholly Promoter’s business]
  • Cancellation insurance covering the risk of loss of Pool Expenses (inclusive of mutually-approved advertising, venue rent and other direct show costs) on Shows throughout the Territory, if any, provided that the cancellation insurance shall be placed through customary channels; [Out of two cancellation insurances in this contract this is a cancellation insurance covering Promoter’s expenses. Who is to obtain it is not clear – the contract says it “may be obtained” by the Promoter, while the attachment includes it into the list of Production Costs to be covered by the Artistco!]
  • Mutually agreeable expenses required by mutually-approved tour rider in connection with any and all Shows;
  • Mutually-agreeable costs incurred by Promoter in connection with the manufacture and sale of Artist Merchandise;
  • Ad mat and advertising materials (e.g. radio spot, print ads, television, etc.) associated with the Shows; [wholly Promoter’s business]
  • Sponsorship commissions (including commissions owing to either party’s affiliates) and related fulfillment expenses;
  • 3rd party ticket sales commissions and related expenses, and [wholly Promoter’s business again]
  • Other customary documented mutually-approved tour pool expenses. 

Well, the first thing we see is that the Promoter’s expenses are laughable in comparison with the Production expenses placed solely on the Artist’s shoulders.

Secondly, ….wait a minute…… why do they speak here of Promoter’s expenses only? Didn’t they declare them as Pool expenses earlier and why do they all of a sudden call them Their expenses now?

This is where a big, very big fraud comes in.

What the ‘contract’  called POOL expenses – the universal understanding of which is JOINT expenses – this ‘attachment’ now calls THEIR expenses only.

You think, what difference does it make – joint or theirs? Isn’t it only just a word which cannot mean that much? Okay, let us make a couple of calculations and see what difference in the world it makes:

  • If pool expenses are joint expenses then Net profit will be all the money collected minus the expenses of Both parties. The balance will be divided 90%-10%.
  • But if pool expenses are only AEG’s expenses then Net profit will be all the money collected minus AEG’s small expenses only. This leaves them with a huge balance and it is out of this sum that AEG gets its 10%. The remaining part (Contingent Compensation) is to be given to the Artist but please remember that this sum still includes the Artist’s production expenses which may be gigantic and when he deducts them from it, only God knows whether anything will remain there at all.
  • In addition to that AEG is not going to pay full Contingent Compensation at once. No, it will first only pay 90% of it and two months after the last show they will make some more deductions from the remaining 10% because of all that cross-collateralization! (“Promoter shall pay Artistco an amount equivalent to ninety percent (90%) of the Contingent Compensation,  if any. By no later than sixty (60) days after the final Show in the Term, Promoter shall prepare and deliver to Artistco a final settlement of all Pool Revenue and Pool Expenses, on a fully cross-collateralized basis. Within five (5) business days thereafter, Promoter shall pay Artistco any remaining Contingent Compensaiton owing. Promoter shall retain all other Net Pool Revenue).

You probably realize now that the real purpose of this ‘agreement’ becomes clear only after you see the full package of documents attached to it. If Michael saw them separately (first the ‘contract’ and then Exhibit A where the crucial terms were actually defined) there was no way for him to know in which crazy way this AEG swindler would calculate their money.

What everyone defines as joint expenses AEG defines as theirs only – and this crazy definition is not even given in the body of the ‘contract’ but in some later attachment the origin of which is very much questionable too.

This makes me doubt more than ever that the attachment Michael originally saw as Exhibit A is the same document we see now. No wonder it doesn’t carry his signature on it and does not provide the date when it was made…

It is a great pity that the general public has read only the Radaronline redacted version of the AEG ‘contract’ . Without studying the whole package of AEG documents you cannot grasp the real intentions of AEG behind this fraudulent deal.

But I see that the abstract idea of their scheme has not made you fully aware of the appalling fraud AEG prepared for the Artist – so let us try and translate it into concrete figures then:

Let us assume the tour brings them $101 mln. and that AEG spent only $1 mln. on those laughable services (like roof rentals of their own arena) while the Artist spent $30 mln. on production of the show.

  • $101 mln minus $1 mln (AEG expenses) makes $100 mln.  AEG takes their 10% out of it, which is $10 mln.
  • the remaining $90 mln. go to the Artist, however since he spent $30 mln. on production costs, the balance remaining after he deducts his expenses will be $60 mln. only.
  • Now, according to clause 4.1 it is from these $60 mln. that AEG will pay the Artist only 90% as they are going to make further deductions from the remaining 10%. This gives AEG another 10%  ($6 mln.) and leaves the Artist with the remaining $54 mln.
  • And please remember that after all “cross-collateralization” of the advances given to the Artist (for producing this show, by the way) the Artist may stay with next to nothing or nothing at all…. This is the reason why AEG says “payment, if any

So AEG gets the first $10 mln. + the second $6 mln. + plus at least $30 mln as compensation for production expenses returned to them by the Artist (*info added on 16.03.12) which makes at least half of the initial sum both parties collected! And please do not forget that ‘cross-collateralization’ is still to be made after that!

Does it look like the initial 90%-10% division which we earlier saw in that ‘contract’? And if “cross-collateralization” is to be added too? Oh my God…

However there is another top important aspect to all these calculations.

Up till now we have completely overlooked it but in terms of Michael Jackson’s death it might be regarded as a decisive and most sickening factor. Look at what this money-division formula means in terms of the number of shows:

  • No matter how big the production costs are, AEG is to receive their guaranteed 10% of all the money collected.
  •  First they receive their share of money and then the Artist is to pay the production costs.  Therefore the sum spent on the show does not affect AEG and shouldn’t worry them a bit.
  • No matter how big the Production costs are AEG’s share depends only on the overall sum they collect from the shows and this makes Randy Phillips’s public complaints about their high expenses highly hypocritical and totally false.
  • But there is a much more important thing. If you come to think of it all AEG’s share depends on is ... the number of shows!  The more the number of shows is, the more tickets they sell and the bigger the overall sum they collect. And the more they collect the bigger their 10% is. 
  • But the bigger the number of the shows is the higher the production expenses are and the lower the share of the Artist is.

Yes, a bigger number of shows is damaging ONLY to the Artist. Not only does it mean a more strenuous itinerary for him but it also involves more production costs as each new show means additional expenses on the wages of the artists, their feed, accommodation, etc.

Each new added show REDUCES the Artist’s share and simultaneously INCREASES the share of AEG! Doesn’t it explain why they so easily increased the number of shows to 50 without asking the Artist and paying attention to his protests?

Please remember that all these incredible transformations occurred only because of a difference in interpretation of one word (“pool” expenses) in the contract and the attachment to it! And this cannot be a chance mistake – this discrepancy was inserted into these papers on purpose!

Now you do understand why it is so important to agree about every definition before you sign anything?

Now you see that all definitions should be stated in the main text of the contract and not in some God-forsaken attachment which doesn’t not carry a date or signature on it, don’t you?

Now you realize that AEG could easily state one thing in the original variant of the attachment (which the Artist has seen and probably signed) and later replace it with another thing in a different version of the attachment (which the Artist hasn’t seen and hasn’t signed)?

So what word shall we find for this type of behavior of AEG company headed by a devout Christian at that? I think the word “fraud” applies here very well. “Malicious intent” is also a nice word suiting the situation in an admirable way. Legal experts will probably find more precise qualifications for the above actions on the part of AEG and let us hope that one day this is will indeed be done.

In the meantime all musicians, artists, performers, singers, dancers and everybody else – BEWARE!

The above is the type of thing you will have to deal with if you go into business with a partner like AEG….


20 Comments leave one →
  1. June 9, 2011 12:00 am

    Just get Murray´s background ceck, especially his financial woes ,which were serious.1.25 mln to Federal government for overbilling and then lesser but still considerable sums for childsuppots, and his home was in foreclosure, is no longer.
    His life style is defineteky improved.
    Clear up the mysterios finances of murray.And try to guess who could be behind that. In court he was treated with silk gloves and got what he wanted.Expensive and unnecessary further medical experiments, maybe even get the pig to drink Propofol.
    Also get Thome-Thomes backgruond cjhec.

    Like

  2. June 8, 2011 11:35 pm

    What the JACKSON family need to do first thing is to get all those conntracts in their hands and then a lawyer who specializes in contracts.They do exist, to carefully analylyse those conntracts.They leave much to be desired and aren´t even holding up to careful legal analysis.They were deceptive and fraudulent
    Michael was the one who got the whole burden pushed on him,and then he was treatad
    in a despicable manner.Those people did not even have have normal sense and just
    piled up stress and more concerts on an unvillimg Michael.Ot top of all they were rude, exept Kenny Ortega, only a few days before he died.Murray, the heavily
    indebted doc was the hitman and as an md bears mutch guilt.He deserves to be punished.It has been a mess from the start.I can see Randy Phillips lahghing
    manically once they got those concerts increased.It was agreed upon between him anf thome-thome over the thelephone! I hope Mesereau can help with some advice.
    He always maintained the regard for the human being Michael Jackson-

    Like

  3. Dialdancer permalink
    April 10, 2011 4:06 am

    @ gigi,

    That has to be some Media nonsense, there has to be a logical reason that statement found its way into the article. Unless he had decided to try for an insanity plea, I can’t image Murray saying that no matter how it was meant.

    Like

  4. April 9, 2011 1:48 pm

    “There has to be a contract stating 50 concerts with a later date than Jan. 26th that we haven’t seen.”

    Susan, yes, there should be a final contract, but the problem is that it is nowhere to be found. Katherine Jackson was provided with a copy of the same ‘contract’ as numerous quotations in her lawsuit to AEG and the order in which the clauses come are the same as in our version. Hers also starts with the Promoter’s right to sell merchandise – and ours too. Such a beginning for any contract is absolutely unique, so if both versions start with it we can be more than sure that we are talking of one and the same paper.

    “We both agree that attachments have to match the body of the contract and the Jan. 26 contract does not match, so that is why I feel it is not the final version.”

    But if that final contract ever existed than is should have a different date. However the attachments refer to January 26. Having the final contract at a later date would result in another discrepancy – then the attachments will refer to an earlier date and the final contract will carry a date after it. So whichever way you look at it, nothing fits in!

    Like

  5. Susan62509 permalink
    April 9, 2011 11:47 am

    Hi vindicatemj:
    Thank you for your response. IMO, the January 26, 2009 is only a preliminary contract. I had read (don’t remember where) over a year ago that the AEG contract was revised 3 times. There has to be a contract stating 50 concerts with a later date than Jan. 26th that we haven’t seen. We both agree that attachments have to match the body of the contract and the Jan. 26 contract does not match, so that is why I feel it is not the final version.

    Like

  6. April 9, 2011 5:04 am

    Murray was out and about at The Grove in LA. He had the audacity to say in response to the photographer’s question about Michael’s kids “That’s my children.” The man is a walking/talking destruction and this is the stupidest crap I ever seen in my life. The man can’t even take care of his own kids he had with all these women, now his claiming Michael’s children (the man he killed!) are now his kids. He shows no remorse and is so nonchalant about everything. Sigh…smh

    http://www.thehollywoodgossip.com/2011/04/dr-conrad-murray-on-michael-jackson-kids-thats-my-children/

    Like

  7. Dialdancer permalink
    April 9, 2011 1:26 am

    Helena,

    The judge has told Murray’s Defense team they have begun to reach. He is not allowing them to use Michael’s finances or lack there of as an excuse.

    Like

  8. April 8, 2011 4:05 pm

    Thank you for this in-depth look at the MJ-AEG agreement.

    The agreement being examined does make you wonder whether there were revisions made or whether there was a more formal contract drawn up after this. However, in Katherine Jackson’s law suit against AEG et al it refers to “a written agreement dated January 26, 2009.” The suit doesn’t refer to any revisions or others contracts and the points made in the law suit refer to the clauses contained in the agreement being examined here. There are no points made in the law suit which aren’t contained in the agreement.

    Attorneys for AEG et al in the Demurrer only refer to the same agreement mentioned in KJ’s law suit. They also don’t refer to any revisions or subsequent contracts or drafts. (It is interesting that they refer to the separate AEG-Murray agreement as a ‘draft’ agreement, even though Murray had signed it. MJ hadn’t signed this ‘draft’ agreement.)

    So it does appear that this is the only agreement between MJ and AEG.

    There are reports of a crucial meeting between MJ and AEG representatives, including Anschutz, at the MGM Grand in Las Vegas in January 2009. An article from link below refers to this meeting. (I don’t know how reliable the media outlet is.) It also has Randy Phillips talking about an earlier meeting between himself, Tom Barrack and Tohme where Phillips presented a plan he had been working on, which is very interesting because of the number of concerts discussed and agreed to.

    “‘Phase one, Phillips told Barrack and Tohme, would be the announcement of 10 shows at the O2 in London. THE DEAL AGREED, there was only one hurdle: to get the concerts insured.”

    http://www.thisislondon.co.uk/standard/article-23661911-detoxing-brand-jacko.do

    Like

  9. April 7, 2011 8:19 pm

    How is Frank Dileo doing?

    I’ve found this about him from the Floacist http://floacist.wordpress.com/2007/11/21/hit-man-frank-dileo/:

    When Jackson went on trial in 2005, Frank stayed in Los Angeles for over three months, on his own dime. “I know that he is innocent,” Dileo says. “A lot of people attack him for a lot of different reasons. One is, everybody would love to get their hands on the Beatles’ publishing. And he’s just one of those guys, he’s real kind and real nice and he can easily be taken advantage of.

    “In this particular case, this kid had cancer, he found him a doctor, they didn’t have any money, he allowed them to live on his ranch. And when it was over, they didn’t want to leave. It was like blackmail. That’s all it was.

    “We talked at each and every break,” Dileo continues. “I wanted to let him know that I know he didn’t do it. In fact, when I went there, he didn’t know I was coming. It was very emotional. He went, ‘Frank, I can’t believe you’re here.’ And he started to cry. And I went over and I hugged him and we got on the elevator and he told [defense attorney] Tom Mesereau, ‘This is Frank Dileo. He used to manage me. I’ve had nine managers since then. He’s the only guy that showed up, or even called to see how I’m doing.’ That was a very rough thing on him, a very emotional thing.”

    Dileo harbors no ill will toward Jackson over his firing in February 1989. “It’s a shame it ended,” Dileo says. “I really like Michael. It ended for a lot of reasons. First of all, Michael and I spent every day together for five-and-a-half years. A lot of people were jealous of that. And at that point in time, we had a lot of power between us. There was one or two record executives, and a lawyer, possibly two lawyers, that sort of needed me to get out of the way, so that they had more control with Michael. And it also was a way for them to get rid of Yetnikoff [former chief executive of CBS Records], who had a lot of power and was my friend.”

    P.S. “Shortly before his death Michael Jackson had retained John Branca and Joel Katz as entertainment counsel. He was in between personal managers, transitioning between Dr. Tohme Tohme and Frank Dileo.” (from the Estate’s report)

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  10. April 7, 2011 7:55 pm

    In a pre-trial hearing, Chernoff explained his theory that Jackson was so distraught over his declining musical empire and vast amount of debt that he took his own life, and asked for access to Jackson’s financial records in order to gather proof. “He was actually in more debt as a result of the concerts than he would have obtained from doing the concerts,” Chernoff said.

    Suzy, though I categorically disagree with Chernoff, in a way it is good that they admit now that as a result of those concerts Michael would be in more debt than before them – the only thing it shows is the ultimate degree of AEG’s greed and hypocrisy. There might be some good in such statements from Chernoff – they can demonstrate AEG’s true intentions and will probably help to damage their reputation bad enough to make them more dead than “live”.

    For a devout Christian heading this company, treating anyone in a way they treated Michael is a damning verdict.

    But Michael was far from taking his life. The fact that “shortly before his death” (as the Estate’s report says it) he retained John Branca and was “in transition” from Tohme to Frank Dileo shows that just before his death Michael decided to take drastic measures to get rid of Tohme’s services and sort out things with AEG.

    John Branca was hired by Michael to defend his interests and set things straight for him (and not to take care of his Estate as it ultimately turned out) – so his job was to look into all those beastly and dirty tricks done to him by AEG and by Tohme behind his back. If Branca and Michael had had more time to get all the papers together (and it was difficult to do it as the Estate’s report said – they were scattered all over) that contract could have been either cancelled as invalid or its terms could have been renegotiated and the document formalized in a proper form.

    I hope it won’t be an exaggeration to say that Tohme and Co. had very little time for taking action before the whole of their scheme could be exposed. It was them who couldn’t wait – while Michael could!

    Everyone seems to forget that we have to deal with a murder case and Murray here is most probably just a pawn. The best defense for him would be to tell the whole truth about the matter. This way he could at least do a favor to Michael. It is useless to lie any further – the truth will surface one day all the same. If they hope to turn this case into another Kennedy mystery death this time they won’t succeed – there is too much evidence pointing at a certain group of people and their interests.

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  11. Suzy permalink
    April 7, 2011 7:08 am

    From MJFanclub.net:

    You are here: Home News Latest News UPDATED: Murray Defense: MJ Commited Suicide Over Debt
    UPDATED: Murray Defense: MJ Commited Suicide Over Debt
    (6-4-2011) The attorney for Conrad Murray is claiming his client is an innocent man and is using a new suicide defense to try to prove it.

    As reported by the AP this morning, Ed Chernoff is arguing that it was Jackson himself and not Murray that ended the superstar’s life.

    UPDATE: Dr. Arnold Klein, Michael Jackson’s dermatologist was also ordered to give copies of the music legend’s medical records Wednesday to Murray’s defense team.

    The defense alleges the dermatologist injected Jackson with powerful painkillers dozens of times in the last months of his life, unknown to Murray.

    The Medical Board of California and Los Angeles County coroner investigated Klein after Jackson’s death, but he was never charged, and no action was taken against his medical license.

    In a pre-trial hearing, Chernoff explained his theory that Jackson was so distraught over his declining musical empire and vast amount of debt that he took his own life, and asked for access to Jackson’s financial records in order to gather proof.

    UPDATE: Chernoff argued Wednesday he needed the financial and medical information to make the case that Jackson was “a desperate man in many respects” and gave himself the fatal dose of surgical anesthesia while Murray was out of the room.

    “He was actually in more debt as a result of the concerts than he would have obtained from doing the concerts,” Chernoff said.

    The defense claims that music catalogs owned by Jackson were “essentially worthless” because of several loans in which they were used as collateral.

    “Jackson did a desperate act and took desperate measures that caused his own death,” Chernoff said. “Therefore, his emotional, physical and financial condition are relevant to show his state of mind when he did this act.”

    Prosecutors slammed Chernoff, calling it an attempted side-show to distract jurors and smear and defame Jackson’s reputation.

    UPDATE: A lawyer for Jackson’s estate was successful in convincing the judge not to order estate executors to give the defense detailed financial information about money Jackson owed at the time of his death.

    Los Angeles County Superior Court Judge Michael Pastor denied Chernoff’s request, saying it was both irrelevant and an invasion of Jackson’s privacy. He ruled that the defense subpoena for Jackson’s financial records, which his estate controls, was overly broad.

    “I’m not going to turn a trial involving involuntary manslaughter into an escapade and into a detailed analysis of the finances of Michael Jackson’s entire life,” Pastor said.

    Pastor did however, uphold the defense subpoena ordering Jackson estate executor John Branca to testify in the trial.

    Potential jurors are still being screened for the upcoming trial.

    Like

  12. Jan permalink
    April 6, 2011 9:10 am

    this is off topic but needs to be seen it is about Uri and MJ:

    http://www.bbc.co.uk/iplayer/episode/b01083qg/See_You_in_Court_Episode_2/

    Like

  13. April 6, 2011 8:15 am

    Guys, when writing part 3 and analyzing the division of the money between AEG and MJ I completely overlooked one top important point. After AEG collects all the money and deducts their own expenses from it they immediately get 10% of the rest. The remaining 90% are given to the Artist but though it looks fair at first sight it is not – because then the Artist is to deduct all production expenses (which suddenly became his responsibility under that crazy Attachment A). After all those deductions are made the Artist may be left with very little.

    But we have overlooked one very important aspect of this system which may be crucial here (now it has been added to the post):

    If AEG gets its fixed 10% from all the money collected and Production costs are to be deducted only after that, the sum spent on the show does not affect AEG at all.

    No matter how big Production costs are AEG’s share depends only on the money they collect from the shows, so why would Randy Phillips publicly complain about the show being expensive I really don’t know.

    If you come to think of it ALL their share depends on is ……. the number of shows! The more the number of shows is, the more tickets they sell and the bigger the Pool Revenue is. It is from this sum that they deduct their 10% – so the more it is, the more their 10% is.

    A bigger number of shows is damaging only to the Artist – it will mean a more strenious itinerary for him and will involve more production expenses too, but since AEG’s share is completely safe and so very well provided for, let the Artist deal with the rest and all the trouble that comes with it….”.

    Did I tell you that if we are on the right track all small details will start fitting in? This is what we see happening now…

    Like

  14. April 5, 2011 9:25 pm

    “I’m an MJ fan, indifferent to AEG and only commenting from a business contract perspective.”

    Susan, your comments are very interesting, thank you.

    “Katherine did sign the AEG confidentality agreement and that is why Judge Beckloff finally released it to her. Most contracts that reflect dollar amounts and/or salary percentages are confidential documents as they do not want their competitors to see them. MJ’s Estate was entitled to the contract because the Estate is now MJ.”

    Of course all contracts are confidential documents. However it is not only the amounts which may be confidential but points revealing trade secrets as well – for example, methods of “persuading” the partner to accept this or that.

    AEG’s contract was leaked online but no one knows what revision it was.

    Every leak is always done for a purpose – that is why it is interesting to see why radaronline released that contract at all.
    It seems that it was meant to manifest to the public, firstly, the number of shows Michael was supposed to pre-approve (31). Everybody took this figure as an agreed one, though it was not – it was suggested for pre-approval only. And the second idea was probably to show that AEG had been good enough to give Michael advances.

    “I don’t see AEG’s intent as fraudulent or malicious intent. We haven’t seen the final version to determine that”

    Susan, do you mean to say that the documents we see both on radaronline (redacted version) and in Leonard Rowe’s book (full version) are not final? But the promissory note (Exhibit C) backed by Michael company’s assets and inducement letter (Exhibit B) give the same date as this ‘contract’ – January 26, 2009. They both refer to this ‘contract’ as Agreement and since they are the basic documents here, it seems that there is no other agreement existing in this deal.

    “Your second formula of pooled net profit and loss is calculated correctly. For MJ to net $63M and AEG $7M is was a very smart business deal by MJ.”

    What about the first formula? It wasn’t me who invented the definition AEG gave to Pool Expenses.

    In the ‘contract’ they say that MJ is to receive 90% of the Net Pool Revenue but don’t give a definition of it.

    The definition comes only in the attachment which says that Net Pool Revenue is Pool Revenue less Pool Expenses. And Pool Expenses are then defined as the expenses borne by the Promoter only.

    So if the Promoter’s expenses are $1 mln., the formula is as follows:
    $101 mln. (Pool Revenue) – $1 mln. (Promoter’s expenses) = $100 mln. (Net Pool Revenue).

    And it is out of this sum that Michael Jackson receives 90% ($90 mln). and AEG gets the rest 10% ($10 mln.)

    But AFTER THAT Michael Jackson is to cover all production costs, so whatever was spent on the show is to be deducted from only his share of money, not AEG’s. So why would Randy Phillips complain about the show being so expensive, I don’t really know – it shouldn’t have worried him at all as the percentage AEG was to receive was fixed independent of the expenses (it depended only on what they collected – the more the better) and Jackson was to pay all production costs! How much would remain for him after all those deductions only God knows…

    “The only problem lies with the advances loaned to MJ. With MJ not having monies to initiate the tour, AEG financially covered it and needed to write protection clauses into the contract to make sure MJ would pay them back”.

    The problem is this – if Michael hadn’t had to cover production costs he wouldn’t have had to take big advances either. How much money does an artist need to initiate a tour? His job is to provide a first class performance and it is absolutely unnecessary for him to invest his own money in the show. The producer of the show is called a producer because he often provides his own funds to back up the show or finds sponsors to do it. And even if Michael asked for an advance it is standard practice too – even Standard Live Performance Contracts provided on the Internet say that musicians can refuse to perform if they haven’t received a deposit for their performance.

    From the way AEG sounded prior to Michael’s death it looked as if they were extremely generous benefactors to Michael – providing him with a $100, 000 per month home and a doctor with a monthly salary of $150, 000 and this indeed inspired awe among Michael’s fans – look how well they are treating him! But now that we find that it was Michael who was to pay for everything the situation becomes absolutely disgusting.

    “I did not see a percentage rate of how much he was to pay back to AEG per pay period”.

    The promissory note said there was no interest on the $6,2 mln. given to Michael as an advance. If AEG were a bank I would find it magnificent terms that a bank gives a loan and charges no interest for it – but AEG\MJ’s agreement was not that type of a deal. When you take a loan from the bank you don’t spend it on renovation of the bank’s building afterwards – but over here the money received from AEG was to be mostly spent on their joint show. Charging an interest in these circumstances would be an audacity on AEG’s part.

    “Unfortunately the internet version of this contract was a group of scrambled papers. Attachment A, which are the definitions of the legal terminology used within the contract itself appears to be revised a few times and which revisions ended up on the scanner for the internet version is what is confusing everyone.”

    Definitions should not have been in Attachment A at all. They are the basic terms and notions on which the interpretation of any contract fully depends. They should be fixed once and for all and not change depending on the circumstances.

    But over here if you define Pool expenses as Joint expenses you’ll come to one figure as a result. If you define Pool expenses as Promoter’s expenses only – you’ll come to a totally different result. The same goes for each basic term used in the contract – number of shows, duration of the tour, legs in the tour, etc. How can anyone calculate any projected expenses at all if you haven’t previously agreed on the number of shows and how long your tour will last???

    That is why these definitions should have been incorporated into the body of the contract and the interpretation of the contract text should not depend on which attachment you add to it – otherwise yesterday the situation was one (and you signed it), and tomorrow it will be another (and it is a total shock for you to see it different from what you signed yesterday as the meaning of basic terms changed).

    “The body of the written contract is the legal document at the time it is finalized, dated and signed by all parties. In the final document, Attachment A should have read exactly like the contract itself”.

    Absolutely. The ‘contract’ we see here is not finalized, not properly dated and not properly signed. And Attachment A is not dated or signed at all.

    “If it wasn’t, legally, the written contract would override the atttachment in a court of law”

    This is important, though usually a properly done attachment is considered an integral part of the contract. But how can this ‘contract’ override the attachment if it does not give definitions of its basic terms? And basic terms are given in the attachment only? Without them the contract is just a riddle! These two parts are inseparable from each other as the contract is unreadable without its attachment (and therefore both should be actually a single document – a CONTRACT!).

    So from everything you and I have said it turns out that all these papers are only preliminary ones.

    And since the promissory note and inducement letter refer to the same date as this ‘contract’ it means there was no other contract in the business deal – only these preliminary papers.

    Like

  15. Susan62509 permalink
    April 5, 2011 7:15 pm

    Katherine did sign the AEG confidentality agreement and that is why Judge Beckloff finally released it to her. Most contracts that reflect dollar amounts and/or salary percentages are confidential documents as they do not want their competitors to see them. MJ’s Estate was entitled to the contract because the Estate is now MJ. AEG’s contract was leaked online but no one knows what revision it was.

    I don’t see AEG’s intent as fraudulent or malicious intent. We haven’t seen the final version to determine that. Your second formula of pooled net profit and loss is calculated correctly. For MJ to net $63M and AEG $7M is was a very smart business deal by MJ. The only problem lies with the advances loaned to MJ. With MJ not having monies to initiate the tour, AEG financially covered it and needed to write protection clauses into the contract to make sure MJ would pay them back. I did not see a percentage rate of how much he was to pay back to AEG per pay period. I would not have pooled my money and I would have the accountant reporting to me and not AEG.

    Unfortunately the internet version of this contract was a group of scrambled papers. Attachment A, which are the definitions of the legal terminology used within the contract itself appears to be revised a few times and which revisions ended up on the scanner for the internet version is what is confusing everyone. The body of the written contract is the legal document at the time it is finalized, dated and signed by all parties. In the final document, Attachment A should have read exactly like the contract itself. If it wasn’t, legally, the written contract would override the atttachment in a court of law.

    I’m an MJ fan, indifferent to AEG and only commenting from a business contract perspective.

    Like

  16. April 5, 2011 11:21 am

    “You may find this worth talking about in your next report on this situation. All the links are active except the one for registration it seems to have a virus on it. http://www.michaeljacksonlive.com/thisisit/credits.php

    Dial, thank you for the link. Previously I saw only the “refund” page of it where AEG offered a special souvenir ticket to any holder of the real ticket, which made me think they had retained part of the money from sales of the tickets. I wonder how much.

    The dates of the concerts on another page are interesting. The first leg had 27 shows (instead of the 18 stated in that ‘contract’ as a minimum). I doubt Michael ever gave his approval to that – so increasing the number of shows must have been Dr. Tohme’s doing. He evidently gave it by fax with some Michael’s signature on the approval. Tohme was named by that ‘agreement’ as the only contact person, so no one else could do it to Michael but him.

    The credits say that producers for the show were:
    • Randy Phillips & Kenny Ortega (Randy Phillips is named President and CEO AEG Live)
    • John Meglen & Paul Gongaware (both are named Co-CEO AEG Live/Concerts West )

    It seems to me that one of producers’ responsibilities is to secure funding or even provide finances for the show? But if everything was to be at Michael’s expense I wonder why they don’t call him the producer of the show?

    Like

  17. Dialdancer permalink
    April 5, 2011 3:10 am

    Helena,

    I’d forgotten collecting this in 2009 as a souvenir. You may find this worth talking about in your next report on this situation. All the links are active except the one for registration it seems to have a virus on it.

    http://www.michaeljacksonlive.com/thisisit/credits.php

    From: Michael Jackson Blog actual date unknown: http://lesliemjhu.blogspot.com/

    Like

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