Bankrupt Businessman James Agate Angles for a Slice of Billionaire Ted Forstmann's Riches
Like many Los Angeles businessmen who have fallen on hard times, James Agate is struggling to regain the lifestyle he once enjoyed.
As head of a Hollywood printing company, Agate claims to have eclipsed $100 million in sales and printed more than 5,000 movie posters for the likes of MGM and 20th Century Fox. He lived the good life, cruising on yachts in the Caribbean and flying on private jets to Vegas for gambling junkets. A scratch golfer, Agate belonged to the historic Wilshire Country Club and the exclusive Lakeside Country Club, a playground for Hollywood stars dating back to Clark Gable, Bing Crosby and Bob Hope.
But Agate's professional life took a nosedive in 1998, when Fox began investigating him and other printers around town for bribing studio executives. Fox later fired and sued several employees for accepting bribes and banned anyone at the studio from working with Agate's company again.
Then things got worse. Agate's business, Agate Printing, was suspended by the California Franchise Tax Board. He was hounded by the IRS for back taxes, and the State of California filed several liens against Agate, at least one in excess of $100,000.
Agate, who bears a striking resemblance to Rodney Dangerfield, was getting no respect.
By April of last year, Agate had "hit rock bottom," he wrote in an e-mail to a former golfing buddy. "I was evicted from my three previous residences, my car was repossessed, my residence has been burglarized three times (twice while I was hiding in the next room), resulting in a substantial financial loss. I have been kicked out of both golf clubs and no longer play golf. I am still massively in debt to the government."
By the time Agate wrote those lines, he had turned much of his attention toward a wealthy and famous golfing buddy, the billionaire Ted Forstmann.
At 70, Forstmann is one of the most powerful men in the sports and business worlds. He made a killing as a player on Wall Street in the 1980s and '90s, buying and selling big-name companies — Dr. Pepper, Gulfstream, 24 Hour Fitness — the way a kid trades baseball cards. His latest conquest and occupation is sports and media giant IMG Worldwide, which counts superstars Tiger Woods, Roger Federer, Gisele Bündchen and the NCAA as clients.
In the fall of 2007, Agate told Forstmann that he was sitting on explosive accusations that could destroy Forstmann's reputation. These included allegations that Agate had placed hundreds of thousands of dollars' worth of sports bets for Forstmann and that Agate had incurred tax liabilities as a result of the wagers. Agate later said, according to communications viewed by the Weekly, that he would seek his money in court if they couldn't settle the matter themselves.
Forstmann, who declined to be interviewed by the Weekly, denied he had any tax obligations related to Agate or gambling.
He also denied that he had wagered as much as Agate claimed and refused to pay him.
So in 2008, Agate sued Forstmann, claiming that he had reneged on promises to "indemnify" Agate for unspecified "services" and to get 24 Hour Fitness to do business with Agate's company. For the time being, Agate withheld any details of Forstmann's betting.
Forstmann denied the claims in the suit but, on the advice of his attorneys, eventually settled: In a confidential settlement, he paid Agate $575,000 to go away.
Agate agreed as part of the settlement to write an apology letter to Forstmann and never discuss the allegations or file more litigation.
"I deeply regret falsely attacking your character and falsely describing your activities to many people," Agate wrote in the apology letter. "I apologize for all my erratic and harassing e-mails."
But then, Agate in October filed a second lawsuit against Forstmann in Los Angeles Superior Court.
The accusations were nearly the same as in the earlier lawsuit, except this time Agate sued under his then-defunct company's name and he included detailed allegations that he placed close to $7 million worth of bets for Forstmann over eight years on pro and college sports, including wagers on or against IMG clients Federer and Woods. Agate claimed that the IRS wanted nearly a million bucks from him in back taxes for revenue that appeared to be going to Agate's company in the form of Forstmann's gambling checks, and that Forstmann had agreed to indemnify Agate Printing from tax liabilities related to his betting.
The claims quickly gained the attention of the media. Gossip website TMZ breathlessly reported, "A blockbuster lawsuit was just filed against the company that manages Roger Federer and Tiger Woods."
Within days news outlets, from little-known sports blogs to New York magazine, offered their take. Forstmann was on the national hot seat, dubbed the "Pete Rose of tennis" by AOL columnist Greg Couch.
Agate didn't stop there. He included a rash of additional allegations that had almost nothing to do with the tax liability or printing business issues at the heart of the lawsuit, and which Forstmann not only denies but which appear dubious: that Forstmann was racially insensitive to African Americans (even though he has adopted two children who are African) and that he conspired to destroy Tiger Woods' career (even though, as CEO of IMG, Forstmann benefits from the success of Woods).
Agate also claimed that Forstmann had persuaded his housekeeper to lie to the police for him about a car accident, a claim refuted by police reports.
Forstmann has acknowledged gambling on sports and IMG client Federer. He has argued that the bets were only recreational and that he's so rich, whatever amount he frittered away was a mere fraction of his wealth. And while the NCAA and pro tennis tour have frowned on Forstmann, both say he didn't break any rules that were in place at the time.
Forstmann distanced himself from Agate, publicly calling him a "stalker," a "shakedown artist" and an "extortionist."
But Agate presses on.
There is a story circulating among a couple of Agate's country club pals that's told to a reporter who inquires about Agate and Forstmann.
Agate was at a West L.A. restaurant several years ago, the story goes, when he bumped into an acquaintance. Looking disheveled, Agate walked up to the man and said something about having the goods on Forstmann and making him pay.
When the acquaintance asked what Agate was talking about, Agate replied that he had some damaging information about Forstmann, and then spilled the news about the gambling. The acquaintance, however, didn't think sports betting was a big deal, and told Agate as much.
Agate replied, "You don't understand, my attorney has already told me to pick out a new house."
"What does that mean?" asked the acquaintance.
Agate replied: "It means I'm going to hit the jackpot."
Los Angeles is home to many of the nation's richest celebrities and public figures, a population particularly vulnerable to characters threatening to damage them with embarrassing disclosures. It is unknown how many such incidents occur and how many cases are quietly resolved. On rare occasions, however, one breaks into public view. James Agate's pursuit of Forstmann is one of these exceptions.
Their friendship centered around golf and tennis at some of L.A.'s most exclusive country clubs.
They initially met in 1988 at a tennis event, when Forstmann flew in from New York. The two men started hanging out when Forstmann swung through town and wanted to play golf. As a member of both Wilshire and Lakeside country clubs, Agate, a natural athlete who played on the tennis team at USC, would set up golf outings with Forstmann and his friends.
At the time, and for much of the friendship, Agate was a successful salesman in the Hollywood printing business, with clients that included MGM and Fox. Acquaintances of both Agate's and Forstmann's from the country club circuit say Agate was a "charming" and "funny guy" but seemed slightly out of place with Forstmann and his exceptionally wealthy and successful comrades. Still, Agate eagerly took his seat aboard the Forstmann Express, hanging out and occasionally traveling with Forstmann on his yacht to the Caribbean on golf trips.
It was during this period that Agate was involved in a Fox bribery investigation. According to court documents filed by a former Agate Printing employee and a former Fox executive's sworn declaration, reviewed by L.A. Weekly, the story goes like this:
In exchange for Fox's business, Agate was buying Fox advertising executives gifts, including the deposit for a diamond engagement ring and transportation to Las Vegas on a private jet. When the dust settled, Fox fired several employees and banned anyone at the company from working with Agate Printing.
But that apparently did not stop the former tennis star.
According to the one-time Fox executive's sworn statement, Agate crafted a deal whereby his remaining contact at Fox would give work to a company called Donahue Printing, and then Donahue would perform the work and cut Agate a percentage. Agate formerly worked at Donahue Printing and kept an office there from which he ran Agate Printing.
Things apparently worked well for a while, until, one day in 2007, Agate began complaining to his Fox contact that he wasn't getting enough business. According to the sworn statement, Agate then went to the studio and ratted out his friend, telling Fox that he had been giving his contact gifts in exchange for business. Agate's contact was soon fired.
In an interview with the Weekly, Agate says he doesn't want to talk about what happened. Tom Donahue Sr., owner of Donahue Printing, denies any such deal existed, though he says he still pays $600 a month toward Agate's health insurance for bringing him Fox as a client. Donahue also acknowledges that Fox's ban of Agate Printing was the beginning of the end for the company and its owner.
"Jim had a couple of large entertainment accounts and a couple ad agency accounts," Donahue says. "The ad groups went broke, MGM merged with Sony and hired someone else, and Fox told him they didn't want to deal with him, and that was the end of his business. He was supposedly going to get work from 24 Hour Fitness or IMG, and obviously we haven't seen it yet. I really don't know how he was surviving."
Says an acquaintance of Agate's, who did not want his name used for fear of being sued by Agate, "Jim told me he got into partying hard, and he started getting more business by taking care of executives. But it got Jim basically banned from the business and he's had nothing to do with printing for years. All roads led back to him making bad decisions that cost him his career, and the only thing he had left to make money was bookie stuff and taking bets."
Agate claims he began taking Forstmann's bets around 2000. They ranged in size, Agate claims, from a couple hundred bucks to the now-famous $40,000 bet Forstmann is accused of placing on IMG client Roger Federer to beat Rafael Nadal at the 2007 French Open. Agate says he placed the bets at Las Vegas casinos and off-shore sports books.
It was also around this time that tension in Agate and Forstmann's friendship began to build.
In February 2000, Agate filed a lawsuit against Spencer Segura, an investment banker in New York. Agate claimed that Forstmann introduced him to Segura and encouraged him to buy 5 percent of Segura's $2 million interest in an Internet startup called Next Level Communications before the IPO. Agate claimed he had an oral agreement with Segura but that Segura reneged and Agate never received his shares, which soared after the IPO. Segura claimed there never was an agreement. Agate sought $22 million in damages from Segura for breach of contract when the case later went to arbitration.
Agate, however, was awarded only $344,000, a pittance compared to what he was expecting and believed he deserved. He blamed Forstmann, first for introducing him to Segura, and then for not giving a deposition on his behalf, which Agate viewed as a betrayal of their friendship.
Forstmann has said that Agate, desperate for money and disappointed over the relatively low arbitration settlement, then began asking him for money. Agate also began launching a flurry of lawsuits.
Between 2002 and 2006, Agate filed six lawsuits in L.A., including several against former employees who had left Agate Printing after the Fox scandal and started their own company. The common theme throughout was Agate's claims that different written and oral agreements had been breached. Almost all of the cases were settled.
Even then, however, years before Agate sued Forstmann, some of the attorneys facing Agate say they thought he was a shyster.
In 2002, Agate sued a man named Leon Meyberg, claiming Meyberg had not repaid a $9,000 loan and had failed to deliver stock valued at $22,500, per a written agreement. However, Meyberg's attorney, Najila Brent, accused Agate of forging the contract. Meyberg eventually settled, paying far less than what Agate wanted, Brent says.
"It was extortion against my client," Brent says. "Mr. Meyberg decided to pay [Agate] nuisance money just to go away because of the high cost of going to trial. Mr. Meyberg was a man who had a lot of money, and it seemed that Agate sued him just to get a settlement."
However, Brent adds, "Mr. Agate knew the game, and he was very clever."
When Agate sued Forstmann for the first time in February 2008, hardly anyone noticed. And it's hard to think that wasn't by design.
Agate did not mention a word in his initial lawsuit about betting or Forstmann having wagered on IMG clients. It wasn't until May 2008, when Agate filed an amended complaint, that he vaguely alluded to the subject, claiming only that Forstmann reneged on his promise to "defend and indemnify" Agate for unnamed services. The bulk of the lawsuit dealt with Agate blaming Forstmann for the Segura deal, for which Forstmann denies any responsibility, and claiming that Forstmann did not deliver printing business from 24 Hour Fitness.
Behind the scenes, however, was a different matter.
In September 2007, before the lawsuit, Agate contacted Forstmann, urgently concerned about the IRS. According to communications reviewed by L.A. Weekly, Agate claimed he was scared to death of being charged with tax evasion or money laundering and that Forstmann's bets were the reason Agate was in trouble. Agate not so subtly reminded Forstmann that, as the owner of IMG, Forstmann was vulnerable when it came to betting, and wrote, "If I can't reach a settlement with the IRS in the very near future, it is almost a certainty that your recent $40,000 wager on Federer will come to light." Then, in nearly the same breath, Agate apologized to Forstmann for getting himself in a financial mess.
In addition, Agate told Forstmann that no one knew about the betting yet, and that he hoped to resolve the issue privately. "I can only imagine how angry this will make you," Agate wrote.
A week later, Agate contacted Forstmann again, saying that tending to Forstmann's betting habits had been so stressful and time-consuming that it cost Agate his business and his marriage. Agate also seemed to blame Forstmann for being practically broke, stating he had been counting on a windfall from the Segura settlement, so he risked his entire net worth on stock that went belly-up.
Agate again issued a thinly veiled threat, telling Forstmann, "I have always believed that deep down, you have felt some responsibility for my downfall, and when push came to shove you would make me whole," followed by, "I will ... do anything within my legal power to help avoiding any further embarrassments arising from this."
When asked by the Weekly about his communications with Forstmann and why he repeatedly apologized, Agate says, "I knew exactly what [Forstmann] likes to hear."
As for Forstmann's accusations that Agate is an extortionist, Agate calls the charge "silly," saying, "I've never asked for anything other than what he's promised me. It's slander and defamation, and you just can't go around saying things that are not true."
During the last few months of 2007, Agate turned down Forstmann's offer of $10,000 a month and coverage of Agate's medical bills for a year. Agate continued to blame Forstmann for losing millions in the Segura deal, and wrote to Forstmann that he was buried under $2 million worth of debt. At one point, Agate even asked Forstmann for a housing allowance, stating it was impossible for him to rent a home due to a recent eviction and past foreclosures.
"If you are unable to comprehend the difference between me and a slimeball, then there is probably nothing I can do to convince you otherwise," Agate wrote Forstmann in September 2007.
Four months later, in January 2008, Agate wrote Forstmann, "I have absolutely nothing more to lose in attempting to get you to resolve this dire financial situation I am in (it is just 'pennies' to you, as you often say)."
Agate portrayed himself as destitute, and after he filed the lawsuit on Feb. 29, 2008, it became unmistakably clear that he wanted to settle for big bucks. In May 2008, according to court documents, Agate proposed that Forstmann place $5 million in an escrow account, to be used to pay the IRS, his lawyers and his other creditors. Agate would pocket $300,000 and agree to keep his mouth shut. Five months later, Agate presented a similar offer but upped the amount to $7 million.
Unfortunately for Agate, a multimillion-dollar payday didn't happen. He withdrew his case against Forstmann in August 2008.
In January 2009, a Forstmann attorney wrote to Agate's lawyer, "In truth, Mr. Agate has engaged in a lengthy history of making spurious legal allegations to attempt to extract money from Mr. Forstmann." As for Agate's threats to turn Forstmann over to the IRS, Forstmann's attorney wrote, "Mr. Agate should truthfully respond to the IRS."
The two eventually signed a confidential settlement in April 2009. Agate received $575,000 in exchange for his promise not to sue again.
For nearly a year, Forstmann barely heard a peep out of Agate. The settlement money was being paid in three installments over 12 months, and each man returned to his own life.
For Forstmann, that meant yachts, country clubs and beautiful women. For Agate, it meant something quite different.
His life appeared to be in shambles. Agate Printing had been suspended by the California Franchise Tax Board (the company was reinstated in October), and he was buried under hefty state and federal tax liens. Agate was also embroiled in a lawsuit against his apartment complex near Toluca Lake, claiming he'd been robbed three times in less than a month, and had lost his golf club memberships for apparently not paying his dues.
In April 2010, just days after the final settlement installment was paid, Forstmann claims Agate began demanding money again. Agate sent Forstmann an e-mail, "appealing to [him] on moral grounds." Agate said the settlement "fell pathetically short of satisfying my pressing obligations." He added, "Like a Bernie Madoff victim, I am broke now due to very little fault of my own."
He told Forstmann, "This life I've been living is no way for anyone to live, especially me. I can't have a bank account, lease an apartment, and the printing business is all but dead."
Agate offered several "possible solutions," including that Forstmann start a charity for Agate to run, sponsor Agate on the World Poker Tour, "start a real estate company and split the profits," and lend Agate money "to make me whole."
Five months later, Forstmann was hit with a new lawsuit. It was nearly identical to the one Agate filed in 2008, with one notable exception: This time Agate was not the plaintiff; it was Agate Printing.
The initial complaint did not mention sports betting, and Agate once more hoped to settle the matter quietly.
"If Ted and I had met privately, like I tried because it was a sensitive issue, none of this would have happened," Agate says. "But he immediately gets nervous and says, 'Talk to my lawyer.' Even if I'm half-right, he should have just made this go away."
Six weeks later, however, Agate dropped the bomb he'd been saving for years, letting the world know in an amended complaint that Forstmann had bet on sporting events and an IMG client.
An important issue in Agate's 2010 lawsuit, however, dealt with the confidential settlement he signed a year earlier and whether Agate was barred from bringing nearly the same claims again as a new entity, Agate Printing.
"The settlement agreement never once mentioned Agate Printing," Agate tells the Weekly. "So what am I going to do? They beat me down, I had bills to pay, I was getting evicted at the time, I said, 'Fuck it,' I'll wait a year, and they left the window wide open."
Forstmann's lawyers argue that Agate and Agate Printing are one and the same and therefore cannot sue Forstmann separately.
As evidence, Forstmann's legal team filed a sworn statement by Beth Kropfl, Agate's personal assistant and the bookkeeper for Agate Printing during the late 1990s. Kropfl claims that Agate Printing maintained one bank account from which she wrote checks to cover expenses for both the company and Agate. She also claims that Agate did not draw a salary from Agate Printing and that she wrote $20,000 worth of checks from the Agate Printing account to Las Vegas casinos, which Agate then cashed to pay for gambling markers.
Forstmann's lawyers argued in court that letting Agate Printing assert the same claims Agate had would be to "reward deceptive conduct" and allow Agate "to get a second bite at the apple."
Ultimately, the judge sided with Forstmann and stopped the litigation, sending the matter to arbitration. Forstmann now is going after Agate for breaching the original settlement agreement, and Agate could potentially have to repay Forstmann hundreds of thousands of dollars.
If so, Agate's former life among the country club millionaires would appear to be further away than ever.
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