Such a Tease
Randall Emmett, Art Trust, Crypto Mecca, Crypto Exchanges, and Looted Artifacts
As COVID-19 forced movie theaters to shut down, a lot of movies delayed release, and others decided to release on streaming services. Mixed in with large budget studio releases, people (like me) browsing streaming services might run across titles with big name actors like, say, Bruce Willis, that we hadn’t read anything about. That’s because there is a part of the film industry that specializes in making low budget, formulaic action movies with big names on the poster. One of the most prolific producers of these films is a guy named Randall Emmett:
Emmett, who is 50, has directed just one other film, which has yet to be released. But as a producer, his credits include more than 110 movies, which have grossed in excess of $1.2 billion, most of them bad enough to require a category all their own.
But over a career spanning more than two decades, Emmett has made a fortune producing bad movies; that he has done so while pissing off investors, directors, and screenwriters — and, arguably, misleading audiences — hardly matters in Hollywood, where feature films have become increasingly difficult to finance and box-office receipts recently approached a 40-year low. There’s a crude, blunt brilliance to Emmett’s filmmaking formula: Accept money from just about anyone willing to hand it over, offer vast sums of it to an aging star for a day or two of work, then leverage that actor’s name to presell the movie in foreign markets.
So who is Emmett? His backstory is straight out of one of his movies:
For those old enough to remember his early days in Hollywood, Emmett is still Mark Wahlberg’s former personal assistant, the hard-partying hanger-on who helped inspire the character Turtle on HBO’s Entourage.
“We spent every minute together,” Emmett recalled on the podcast Behind the Velvet Rope. “So I took a job with him and we traveled the world.” For two years, whenever Emmett told his boss he wanted to be a producer, Wahlberg said, “Good, then produce me a drink!” In the late 1990s, Emmett met George Furla, a wealthy ex–hedge-fund manager, who agreed to bankroll his vision. Lerner, meanwhile, gave Emmett a crash course in getting movies made by any means necessary.
Emmett came up under the tutelage of Michael Oblowitz, who pioneered what would come to be called the “geezer teaser”:
“I invented the formula,” Oblowitz says. “What I did with Steven [Seagal] with The Foreigner and Out for a Kill was the formula that everybody uses today to get an aging, overweight action star in and out as fast as possible, and it created a template whereby you can cut him through the movie.”
Emmett found stars - Willis, Mel Gibson, Nicolas Cage, Sylvester Stallone - willing to take a million or two dollars for a few days’ work, and put their names on some truly terrible movies. He shot on a shoestring - often filming an entire movie in a week and a half - and shoehorned in whatever scant footage he had of the stars. The results were bad, but if his $2 million dollar movie made $10 million, it was a win for the studios.
The investors behind Emmett’s films, however, were not always the best people:
In March 2011, Emmett secured $525 million from Remington Chase and Stepan Martirosyan, whom the Los Angeles Times once described as having made their fortunes in the oil business in Russia. Their interests, however, were diversified. Both men had convictions related to cocaine trafficking, and the Securities and Exchange Commission later charged Chase with fraudulently raising $62 million for motion-picture enterprises, then spending the majority of that money on personal expenses and other ventures; Chase settled, agreeing to pay over $10 million without admitting any wrongdoing.
The film business combines two things money launderers love - huge amounts of money being thrown around, and access to celebrities:
In 2013, a grand jury indicted Christopher Eberts, producer of the Nicolas Cage film Lord of War, on federal wire-fraud and money-laundering charges. He pleaded guilty and was sentenced to nearly four years in federal prison. More recently, the SEC accused Guy Griffithe of defrauding investors of nearly $4.85 million by selling fictitious interests in a legal marijuana business; Griffithe, who along with Emmett is credited as a producer on Speed Kills, starring John Travolta, was accused in the complaint of using his investors’ money on “unrelated business ventures […]
Emmett would periodically produce decent movies - such as Wahlberg’s Lone Survivor - which gave his studio enough credibility to keep the money flowing. As studios distanced themselves from Emmett’s production company and the lawsuits piled up against Emmett and his co-producers, he told a film podcast he was pivoting to directing. His first picture released last month to pretty abysmal ratings, perhaps because he’s been blackballed by most of the unions in Hollywood. Strangely, the stink of Emmett’s lousy movies hasn’t tarnished the reputation of stars like Willis, who produces four or five geezer teasers a year.
We talk fairly often about art markets, but what about the artists who are trying to make a living from them? The vast majority of artists can’t expect to make a living producing art, and it’s difficult and expensive to “break out” into the top tiers. So, in 2004, when a company called Artist Pension Trust told artists it had a new business model to help artists get paid, a bunch of artists signed on:
The venture got off to a promising start, fueled by the involvement of art world luminaries like the former Whitney Museum director David Ross and well-regarded curators who recruited emerging artists from around the world.
Over time, the company gathered more than 13,000 artworks from 2,000 artists in 75 countries, with an insured value of at least $70 million as of 2013, according to company records.
The idea was that APT would exhibit, market, and eventually sell the artwork, and all the members of the group - the company set up collectives in different markets around the world - would share in the proceeds. APT would handle storage, insurance, and sales, in exchange for a cut of the profits.
Things went well at first, as big names in the art world signed on to the project. But it took over a decade for the first payout, which was paltry:
But in 2016, the first distribution of $169,000 in proceeds from sales mitigated some of those misgivings. The payouts were small — mostly in the hundreds of dollars, and just to artists in the New York and Los Angeles pools. The payouts the following year were larger and the most vested artists from those pools received as much as $6,000 each.
Artists had started to question how their artwork was being stored, who was in charge of marketing it, and why there was so much staff turnover at APT. The first APT auction in 2017 was disastrous:
The trust’s first foray into the auction market, at Sotheby’s in New York in 2017, did not go as planned.
Nearly all the 15 works it offered sold, but the prices were low enough that galleries and artists feared that their brands could be damaged; after they protested, a second auction planned in London was canceled.
Now, multiple artists are suing APT claiming breach of contract and trying to reclaim their work. As the company cut staff, artists found themselves without any contact at APT, and no knowledge of how their art was being used - or not - or where it was being stored. In theory, artists can reclaim their unsold art in 2024 as part of their contracts, but it’s unknown whether the company will exist by then.
APT is a for-profit company with an Israeli founder, who set up its “pools” of artwork via shell companies in Delaware and the British Virgin Islands. As with many things, a venture that sought to help artists - maybe with good intentions - seems to have fallen apart when the people in charge lost interest, or realized it wasn’t going to be the cash cow they’d envisioned. Now, millions of dollars’ worth of art may be caught up in legal limbo for years, if it isn’t lost entirely.
Back in March, Federal agents raided multiple homes in Keene, New Hampshire. Dozens of heavily armed troops, multiple armored vehicles, and drones were used in the assault. Who were the people at the center of this crime ring? A couple of libertarian podcasters and some Bitcoin enthusiasts:
By the end of the day on March 16th, six people were in custody: including [Ian] Freeman, his girlfriend, and a married couple who lived nearby. Two co-hosts on the radio show were also named: [Aria] DiMezzo and a man born as Richard Paul, who had legally changed his name to Nobody in protest of the bureaucratic state. According to the indictment, all six had been involved in Freeman’s Bitcoin dispenser business. An indictment filed under seal the day before the raid counted out thirteen instances when someone from the group had contacted a bank on behalf of the business since April 2017, listing each call or email as a count of wire fraud.
Freeman is the host of a popular libertarian talk radio show called Free Talk Live, which is syndicated across the country. He has spent years trying to turn Keene into a libertarian paradise - called the Free State project - and had succeeded to some degree, convincing local stores and restaurants to accept Bitcoin as payment.
The issue the government had with Freeman was his Bitcoin ATMs - the government claims they were laundering millions of dollars. The Feds had spent years building a case against Freeman, his associates, and his Shire Free Church.
We talk a lot about Bitcoin and cryptocurrency more generally, and the many ways it can be used to launder money and do crimes. Whether Freeman was doing crimes or not, his loud advocacy for Bitcoin as a way to avoid government oversight made the Feds mad. Unlike the Wall Street crypto financiers, Freeman never sought to work with authorities to bring his ATMs or his other crypto ventures into compliance. So they drove a Bearcat through his front window.
Freeman isn’t a penniless victim - the Feds seized millions of dollars’ worth of crypto assets and hundreds of thousands in cash. Furthermore, his brand of Free State libertarianism can lead to dangerous situations. But the story is a reminder that the US government has wide latitude to levy criminal charges and use the might of the DoJ to go after crypto enthusiasts if it chooses to. The conditions of Freeman’s pretrial release bar him from using Bitcoin, which is rough for someone who convinced an entire town to use it as a legitimate currency.
It’s easy to point and laugh at a group of largely white male cryptobros who tried to fight the law, but the tactics the government used against them - aggressive raids, destruction of property, seizure of assets, trumped-up charges of organized crime - are the same things it does to the poor and communities of color across the country. Crypto raids are only going to become more and more common as it becomes more valuable, and more people use it in ways that violate current laws. Meanwhile, the crypto startups and investment funds are taking in billions of dollars from traditional finance. The line between a BitMEX and a Coinbase is blurry, and drawn by government lawyers.
Speaking of, this WSJ article talks about how easy it is for Americans to circumvent bans on accessing overseas cryptocurrency exchanges.
Basically, Americans want access to shady derivatives markets in unregulated offshore exchanges like Binance - remember them? In the past it was relatively easy to circumvent the Know Your Customer (“KYC”) rules because foreign exchanges didn’t really have any. Americans could log in via a VPN and they were good to go:
At FTX, for instance, until this week users signing up for the lowest level of trading access only needed to provide their names, emails and country of residence, with no requirement to provide documents to confirm their identity. Such “level one” access gives users a daily withdrawal limit of $9,000.
Offshore exchanges “block” American customers so they don’t have to comply with US financial regulations. We’ve talked plenty about the crazy amounts of money that flow through these offshore exchanges, with no regulation and little oversight.
US investment firms are bullish about the future of unregulated offshore crypto trading, however. FTX is founded by an American, and recently raised $900 million dollars from Silicon Valley VC firms and Softbank. So, basically, US regulators are working to protect Americans from foreign crypto markets…that are being run and funded by people in the US. Why not.
Some good news for the people of Iraq, who recovered 17,000 looted artifacts this week:
On Tuesday, plywood crates holding the thousands of clay tablets and seals — pieces from Mesopotamia, site of the world’s earliest civilizations — were stacked next to a table displaying a few of the artifacts as the Iraqi Culture Ministry took custody of the cultural treasures.
The bulk of the artifacts came from our friends at the Museum of the Bible, owned by the family behind Hobby Lobby. But! A different collector had donated 5,000 pieces to Cornell University in 2000. The questionable provenance had archaeologists skeptical:
That collection from a previously unknown Sumerian city of Garsana was donated to the university in 2000 by an American collector. Partly because the city was unknown, it was widely suspected by archaeologists to have come from a looted archaeological site in the south of Iraq.
So, good news Iraqis! You can have some of your stolen stuff back. The Museum’s defense of its actions - many of which have resulted in legal action and fines - remains unconvincing:
Hobby Lobby’s president, Steve Green, has said that he knew nothing about collecting when he started the museum and that he had been misled by unscrupulous dealers.
Unfortunately, when you’re a billionaire with a “museum”, you can continue to acquire stolen treasures from unstable nations without much consequence. I am certain this isn’t the last we’ll see of the Museum of the Bible in the news.
Polygon - “A new lawsuit alleges that Key Master is intentionally rigged against players. It’s marketed as a game of skill, but players claim machines bar against awarding successful runs, making Key Master more of a chance-based game.”
NPR - “Before going to extremes, many hacking victims try the usual routes to get customer service but quickly find out it seems impossible to reach someone at Facebook to help fix the problem.”
Vice - “So I think it is worth examining why it may be that our real-world CEOs’ next big high tech concept is sprung from an overtly dystopian context of mass poverty and violence; one where an immersive, shared 3D digital environment where anything goes offers most people’s only opportunity to escape from an intolerable reality.”
Kotaku - “Over the past few days, a bewildering TikTok ad featuring clips from Roblox has torn through the internet. Some believe it’s an instance of performatively offbeat marketing. Some think it’s a fairly run-of-the-mill scam. Others say it was an accident, a technical mishap on the app’s backend. But everyone agrees on one thing: It’s weird AF."”
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