This article was corrected on November 11, 1992. Bernard Cornfeld, the toppled ’70s mutual fund king, was jailed in Switzerland on fraud charges in 1973 but later exonerated of those allegations in a jury trial, contrary to a Nov. 5 report in Daily Variety.
Bernard Cornfeld, the toppled ’70s mutual-fund king, has emerged as Giovanni Di Stefano’s partner in a plan to plunk down $ 500 million “in fresh bills” for MGM.
The duo claim they will make an offer for MGM Friday that owner Credit Lyonnais can’t refuse.
The terms: They put up $ 500 million in cash and assume $ 25million of MGM’s estimated $ 1.2 billion bank debt; the French government-owned bank absorbs $ 400 million in MGM bonds.
Once clinched, the new owners say their scheme to turn the beleaguered studio into a healthy operation is simple: First, they will spin off United Artists to function primarily as a library sales operation.
“Then MGM will become a virgin bride for a year. It won’t produce one single film, just distribute films and do indie production deals” schemes Di Stefano.
Third, downsizing. “That company can be run with 80 people,” says Di Stefano. It now has a payroll of 600. “The minute we walk in, everyone will be on notice. They have to prove they are worth keeping. We want hungry, young, aggressive people.
“But we will get rid of all at the top (co-chairmen and co-chief executives) Alan Ladd Jr. and Dennis Stanfill and (president) Charlie Meeker. All go. Goodbye,” he said.
MGM spokesman Craig Parsons said: “We all feel a little like Alice in Wonderland, only it doesn’t get curiouser and curiouser, it just gets funnier and funnier. Anything else would be to give them more credibility than they deserve.”
As for CL’s response, spokesman Fred Spar said: “This purported proposal is not worthy of any comment.”
Other MGM and bank sources howled with laughter when they heard the proposal late yesterday. In the words of one: “Birds of a feather flock together.”
They were referring to the duo’s checkered past: Both were convicted and allegedly later acquitted on unrelated fraud charges.
The swashbuckling Cornfeld was toppled in a palace coup after his Geneva-based Investors Overseas Services Ltd., with offices in 100 countries and a reported $ 2.5 billion in investor funds under management, crumbled when the market collapsed in 1968-70. In 1973 he was jailed on fraud charges but acquitted in 1979.
Di Stefano was sentenced to five years in a U.K. prison in March 1986 for fraud, fraudulent trading and conspiracy to obtain property after setting up an alleged bogus institution enticing, among numerous investors, an African bank. He served three years. He reportedly cannot return to the U.S. since he failed to report the above conviction to U.S. authorities.
Add to this mix the specter of ousted MGM owner Giancarlo Parretti–now wanted by U.S. authorities for fraud and perjury for submitting false evidence during last year’s Delaware trial when CL booted him out.
In a telephone interview from his 12th Century castle in France near Geneva, Cornfeld said late yesterday: “Giancarlo just wants to be involved with MGM’s assets in Italy, the two TV stations. But Giovanni and I are talking about becoming the co-chairmen of the (MGM) holding company. It will be called The Lion Group.”
As for a studio chief, Cornfeld says the two are “talking to somebody Kirk Kerkorian was interested in having run MGM years ago…”
Cornfeld and Di Stefano scoffed at the anticipated rejection by CL because of their brush with the law. “No, our past is not an issue,” said Di Stefano. “The bank is only interested in money. So what if (Cornfeld) was convicted. I was convicted. I was acquitted too. We have perfectly legitimate European cash”–although neither will say where it comes from.