Questionable Encounters

Stranger-than-fiction happenings at Columbia Pictures

Opening scene: the time is February 1977. The place: Beverly Hills. A lanky, soft-spoken actor is sorting through stacks of bills and payments with his secretary, in preparation for filing his federal income tax return for 1976. Suddenly he spots a document from a major studio attesting that he received $10,000 for services rendered during the year. Puzzled, the actor looks at his secretary. "I didn't work for them in 1976,"he says.

Thus began a bizarre story that might conceivably have been offered as a script proposal to, say, Columbia Pictures. But the plot and the principal characters were real. The actor featured in the opening scene was Cliff Robertson (Obsession). His puzzlement over the unreceived $10,000 check led to the disclosure that David Begelman, 56, the powerful, wheeler-dealer president of Columbia Pictures' film and television divisions, had ripped off his studio to the tune of $61,008; he had forged checks in the name of Robertson and others and had padded his cushiony expense account by an additional $23,000. Begelman, when found out, admitted his guilt. In almost any other industry, a company executive caught with his hand in the till would be abruptly dismissed. Not so, apparently, in Hollywood. Begelman, who submitted himself to psychiatric care, was simply suspended. After his analyst announced a cure, Begelman--who had paid back his ill-got gains--was reinstated as chief of Columbia's motion pictures and television operations.

To his ardent fans in filmdom, Begelman is a show-biz wizard who helped save a major studio from bankruptcy. To his enemies, he is a relentless competitor whose prominence and prestige reflect the mercenary standard of Hollywood. New York-born and Yale-educated, Begelman elbowed his way into entertainment as an agent. Among his early clients was Judy Garland; in 1967 she and her husband Sid Luft brought legal action against Begelman and his then partner Freddie Fields for misdirecting part of Judy's earnings into their own pockets. Judy dropped the suit a year later, but Luft remains bitter. "The real Begelman story goes a long way back before Columbia," he says.

If so, it made little difference to Hollywood, which, above all, worships success, and Begelman was wildly successful. As an agent, he was an expert at "packaging"--bringing directors, actors, writers and producers together into deals that would produce profitmaking blockbuster films. In 1973, when Columbia was floundering from huge losses and debilitating debts, Begelman was tapped for the studio's presidency, and brought out a string of flicks that restored Columbia to financial health (net income for the fiscal year ending last June was $34.6 million). Among his big moneymakers:

Shampoo, The Deep, Funny Lady and Tommy. Columbia's latest winner, Close Encounters of the Third Kind* may outgross 20th Century-Fox's Star Wars as the biggest box-office success of all time.

No wonder that so many people sprang to Begelman's defense after rumors of his fiscal sins began to emerge. Says Herbert A. Allen, the president of the Wall Street investment banking firm of Allen & Co., which dominates the Columbia board: "We felt we owed him a fair shake." Cries Superagent Sue Mengers: "It is ironic that the film industry, which is so often accused of being heartless, should now be crucified for showing compassion for a man's plight!"

Hollywood, however, had somewhat less compassion for the plight of Actor Robertson, whose initial concern had only been to avoid paying taxes on money he had not received. After his secretary told Columbia that he had been credited with $10,000 that he had not earned, Begelman himself sent a message to explain that the mystery had been cleared up: a young Columbia employee had admitted forging a check made out to Robertson, made full restoration and begged for forgiveness. Robertson was willing to forgive and forget. His accountant, however, insisted that in order to keep the record straight, they should get a copy of the check. The teller in a Wells Fargo branch in Beverly Hills remembered who had cashed the forged check: David Begelman.

Advised that he would face possible prosecution by failing to report the fraud, Robertson told Beverly Hills and Burbank police about the incident, but they did little. Robertson then turned to the FBI, also with no results.

Aware of the rumors, Columbia's board on Oct. 3 suspended Begelman, who placed himself in the care of Hollywood Psychiatrist Judd Marmor. The studio also engaged outside accountants and attorneys to conduct an investigation into Begelman's affairs. In his absence, Alan Hirschfield, the president of the parent company, Columbia Pictures Industries, took command of the studio.

Many Hollywood insiders were puzzled over Begelman's bizarre behavior. True, in his agent days, Begelman had been a heavy gambler; but in recent years he had apparently abstained from his old vice. As studio president, Begelman had an annual $400,000 income including numerous fringe benefits. He could easily have raised more money by asking Columbia's board for a loan or a bonus. Begelman himself seemed bewildered by the embezzlement. "I've made a terrible mistake, and I'm heartsick," Begelman told a friend. "Now I am trying to find out why I did it."

Columbia's directors were also beginning to think they might have made a mistake. Although he was a skilled financier, Hirschfield lacked the experience to run a major studio. Furthermore, the directors feared that Begelman might be hired by competitors. Admits Allen: "Frankly, it would have been a big loss to lose him, and a bigger loss to have him in another studio."

After three months of treatment, Dr. Marmor told Columbia's directors that Begelman had been passing through a "temporary period" of self-destructive behavior but was now cured. A number of filmdom's most influential people, including Producer Ray Stark and Columbia Stars Barbra Streisand and Jack Nicholson, bombarded the directors with phone calls urging Begelman's reinstatement. Late last month the majority of directors favored bringing him back as studio president (although stripped of his corporate posts of director and senior vice president). Hirschfield, who originally wanted to rehire Begelman only as an independent producer, finally relented and asked him to return as president of the movie division. Now Hirschfield appears in danger of losing his post as president of the parent corporation because of his handling of the affair. And Cliff Robertson has to wonder whether by raising the scandal in the first place he may have jeopardized his film career.

* In 1976 Time Inc. acquired a minority investment position in seven Columbia films, including Close Encounters, The Deep and Fun with Dick and Jane.

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