Allen Klein: The Man Who Transformed Rock & Roll

by Fred Goodman

  What isn’t disputed is that Machat started his career as a negligence lawyer. Only chance, in the form of a phone call from a former high-school classmate who’d just had an accident while driving the boxer Sugar Ray Robinson in his cab, led Marty into the entertainment business. Machat began representing Robinson, who was friendly with many performers and musicians, and soon had a thriving music-business practice. In the coming years, his clients would include the Four Seasons, James Brown, Phil Spector, and Leonard Cohen. But no one would be more important to his career than Allen Klein.

  The two most likely met in 1957 when they worked together on behalf of the film composer Dimitri Tiomkin on a grievance hearing before ASCAP, the American rights organization for songwriters and composers to which Tiomkin belonged. “Marty knew nothing about economics and math, and I’m pretty sure he retained Allen to be his expert in an arbitration hearing,” said Kronfeld. “In fact, Marty was a pretty lousy lawyer and I didn’t think he really knew the law that well.”

  Klein didn’t care if Machat thought writs were crackers. “He was a good contact for me,” Allen said, and he launched a charm offensive. Just before Allen’s wedding, he and Marty discussed teaming up to conduct audits on behalf of two of Machat’s clients, the singer Brook Benton and the record producer Morty Craft. Figuring he had a couple of potentially juicy jobs lined up for when he returned home from his honeymoon, Allen was confident about getting his company off the ground. He phoned Machat as soon as he returned to New York. “Oh,” Klein recalled Machat saying, “that’s not happening.”

  Annoyed, Allen then learned that two of the clients he’d been counting on, Aldon and his father-in-law’s health club, wouldn’t be signing on with Allen Klein and Company after all. In both cases, the partners feared favoritism and were uncomfortable with having their books handled by someone the business’s owner was so close with. The only good news was that Kirshner could at least hook Allen up with the singers Steve Lawrence and Eydie Gormé and a pair of Texan musicians and songwriters, Buddy Knox and Jimmy Bowen.

  Under Knox’s name and as Jimmy Bowen with the Rhythm Aces, Buddy and Jimmy had written and recorded several rockabilly hits, including 1957’s million-selling “Party Doll” and “I’m Sticking with You.” But their record company, Roulette, was slow to pay them. Klein, eager to prove his mettle, demanded an audit.

  Roulette’s owner, Morris Levy, didn’t receive many demands for anything. On the contrary; Levy was widely regarded as the music industry’s toughest operator, a man both respected and feared. His route into the business had been through the hat-check concessions in nightclubs, enterprises notoriously susceptible to Mob influence, and Levy offered no apologies for his friendship with gangsters. He went on to own several famous Manhattan music clubs, notably Birdland, the Downbeat, the Embers, and the Peppermint Lounge. Levy’s connections included a silent partnership with the all-important rock disk jockey Alan Freed, and he also owned a chain of record stores and operated as a lender and collector of last resort for other record labels. He was, as they say in those quarters, someone you just don’t fuck with, and there was nothing unusual in the particulars of Bowen and Knox’s case; it was Levy’s habit to pay performers as little as he could get away with. But as tough as Levy was, Klein found him straightforward and amenable to a settlement—as long as Levy could dictate the terms. The two hit it off.

  “He had a charming way—he really did,” Klein said. “I came in to do the audit and he didn’t mind. He had a bookkeeper named Fischer who was a nice guy.” Yet when the audit showed that Bowen and Knox were owed money, Levy was unperturbed. He proposed to pay them what he owed over four years. When Klein said that wasn’t acceptable, Levy shrugged and invited Klein to sue him. Morris wouldn’t deny that he owed the money, he said—he’d simply tell the court he didn’t have it. “I’ll tell the judge I’m a little tight but that I’ll pay it out to you,” he told Klein.

  Allen knew he’d been outmaneuvered, and he wasn’t going to pay a lawyer to chase Levy through court for a year when he was unlikely to get anything better than the schedule he was being offered now. Instead, he went back to Bowen and Knox and convinced them to take the drawn-out settlement. For Klein, it was an important lesson: it was better to get what was possible than hold out for the impossible. “I got them money and I bought myself a car,” he said. As for Levy and Klein, the affinity they felt for each other was real, and they became friends, with Levy occasionally throwing him work. Over the years, Allen visited Morris several times at his horse farm in upstate New York; twenty years after they met, when Klein’s son, Jody, celebrated his bar mitzvah, the biggest gift—an Israeli bond—came from Levy.

  Still, dealing with Levy convinced Allen that he couldn’t go to war without a loaded gun. Klein’s audit deal for artists was simple: anything he found, they split fifty-fifty. He now offered to split his 50 percent with Machat whenever he needed a lawyer to sue—or at least threaten to sue—a publisher or label.

  It was a natural match. “Marty was one of the only lawyers in New York engaged in the music business,” said Kronfeld, adding that Klein probably would not have found a receptive ear with a more strait-laced industry attorney like Walter Hofer or Paul Marshall. “The others simply would not have tolerated Allen—nor Allen them.”

  It was the first of many agreements between the two. Eager to establish himself as a force, Allen needed Machat’s assistance and business. “We wooed him,” said Betty Klein. “We used to go out to dinner [with Machat] every Friday night.” For his part, Marty started steering his clients, like producer and label owner Morty Craft and disk jockey Jocko Henderson, to Klein. But before long the parameters would shift. “The relationship with Marty was unequal, then equal,” recalled Betty. “Then Allen became dominant.” This would become the standard pattern in Klein’s relationships. Allen’s ability to make rapid, hardheaded reads of people and craft unique strategies and solutions coupled with his voracious personality and overweening desire to succeed made him formidable. Seemingly devoid of self-doubt, he was headstrong and needed to be in charge. When Allen’s associates Henry Newfield and Marty Weinberg found that the days working in Manhattan for Klein exacted a heavy toll on their New Jersey practice, they proposed a merger. The resulting firm, Allen Klein, Newfield, and Weinberg, was 85 percent owned by Allen and an almost instantaneous failure. When the new company hit a cash shortfall, Allen shrugged and wrote checks the business couldn’t cover. Horrified, Weinberg was sure he’d made a terrible mistake throwing his lot in with Klein. What kind of accounting firm wrote rubber checks? “Henry Newfield was a very easygoing guy and friendly with Allen,” said accountant Joel Silver, who’d joined the company in 1960 when he was still a student at NYU and stayed his entire career. “But Marty Weinberg was a no-nonsense guy. When a check bounced, Marty went bonkers. It didn’t bother Allen that much,” he said with a laugh. “Allen did not do partnerships well.” After just three months, the firm was once again named Allen Klein and Company, with Newfield staying on as an employee and Weinberg departing, eventually becoming an FBI agent.

  Dealing with Allen could be rough, even if you were a friend or client. “We were somewhat friendly—he was at my wedding,” said Marvin Schlachter, a partner in Scepter Records, for which Klein did some accounting. Still, Schlachter found him hard to take: “He was a sharp, bullying sort of an individual.” Klein made no apologies. Indeed, he could sound more like a gunfighter than an accountant. “I’d go over the books and I’d find that the companies were always short. Whenever I caught them at it, I’d take 50% of whatever I found for the artists. Which was fine with the artist—but I was making the record companies look like crooks even if it was an honest mistake on their part. They hated my guts. Said I was an unethical bastard. I don’t know if what I did was ethical or not; it was just my hustle. A way to get into the business.” Others felt gratitude, loyalty, and admiration for him. Lloyd Price, the singer, songwriter, and bandleader, came to Klein as a cl
ient in 1961 and became a lifelong friend and fan. “I was signed to ABC/Paramount and Allen found me sixty thousand dollars,” he said. “After that, we just had a great relationship.” Price said they shared “innumerable lunches” over the next four decades.

  Many of Klein’s employees were equally devoted to him, finding him an unusual and engagingly idiosyncratic boss. Over the years, the company developed a rhythm and style tailored to the boss’s habits; most employees were in by ten, but little was done until Allen arrived a few hours later, and then the day began in earnest and often lasted late into the evening. No one complained about the long hours, and everybody’s meals—first from the best delis Allen could find and later from Zabar’s—were delivered and covered. Indeed, the typical lines between the professional and the personal were blurred from the very beginning. In its aspirations, ethics, style, and practices, the company was in every way an extension of Allen Klein. Though Allen Klein and Company’s corporate successor, ABKCO Industries, would rapidly become a music-industry powerhouse and ultimately the manager of the Beatles and the Rolling Stones, it would never stop being what it was at its core: a Jewish family business.

  Adrienne Zanghi Faillace was eighteen when she became the secretary and first employee at Allen Klein and Company. She didn’t mind that, along with the predictable duties of typing audit spreadsheets and answering the phones, her job also quickly came to include fixing Allen breakfast (he liked her to mix his soft-boiled eggs with bread and butter, just the way the nurse had made it for him in the orphanage) and going to his house on Saturdays to babysit for Allen and Betty’s infant daughter, Robin, while they worked. “He was very good to me, even though I didn’t make a lot of money,” she said. “I can’t remember if I got paid when I came in on a Saturday. I would take the subway to his house on Cabrini Boulevard, bring them crumb buns and bagels for breakfast. As a boss, we all liked him. People didn’t leave.” Indeed, Ken Salinsky, who interviewed for his initial job as office boy only because he’d won the appointment the night before in a poker game, stayed over fifty years.

  Just as enamored with Klein’s intelligence and business acumen, Faillace remembered nothing underhanded or untoward in his practices and dismissed most of his critics. Rather, she recalled a nascent and competitive business made up of strivers and schemers who were trying to invent a hustle as they went along—and she believed Klein’s biggest crime was being the cleverest in the crowd.

  “He was a great manipulator,” she said. “Everyone in the business—that was their goal. Don Kirshner, Clive Davis; it was a cutthroat business and everyone was hungry and greedy. They were poor boys who saw they could make a lot of money. And Allen was really the brains behind a lot of this stuff, and not just the audits. He had a way about him that people believed in him, okay? It was a personality thing and in this business it’s all about personality and who you know. Allen was very aggressive and he was very smart. I’m not saying Allen was a saint. But as far as I’m concerned, anything bad that was said about Allen was not accurate. The people who said it were mad and angry that he audited the books of these record companies that were stealing from the artists. They resented that he blew the top off it—they were furious! When you’re the first to do anything, you make a lot of enemies.”

  Though his firm did regular accounting for music clients like Scepter Records and the singer/songwriter Neil Sedaka, audits had become Klein’s calling card. In the earliest days, when he was scuffling along on his own, Allen would round up virtually everyone he could find—his wife, his sister, and even his mother-in-law—and introduce them as his team of auditors. Whether or not they provided anything beyond window dressing, it was Allen’s ability to blow away the financial smoke and crack the accounting mirrors employed by record companies and music publishers that cemented his reputation.

  Taking a cue from his years in the newspaper-and-magazine-distribution business, Klein wouldn’t accept the figures proffered by a record company. Instead, he wanted to see the raw-goods orders. Knowing he was unlikely to get much in the way of cooperation or straight answers, he always asked the kind of questions that shook company employees up and, hopefully, made them reveal things he could use against them. How many record sleeves did they order, and how many were still on hand? How many shipping boxes? How much vinyl? Masters and mothers (the parts needed to manufacture a specific single or album) had limited lives; how many were made or purchased for a particular record? How many hours did the machines run? Where were the bills of lading? The customer invoices? Allen didn’t come in to look at the books—he came in to rewrite them.

  Keenly aware that pressing a hit record was analogous to printing money and that a dishonest record company could cheat an artist simply by having additional records manufactured at an unacknowledged plant, he started with the assumption that every label’s accounting was likely bogus, and it was his job to come away with something. Usually that wasn’t difficult. And when it was, Allen took it as a special challenge.

  The estate of filmmaker Mike Todd hired Klein to audit the manufacturer of the soundtrack to the film Around the World in 80 Days, and the job proved unusually problematic. Though the album was on Decca Records, its pressing was subcontracted to an independent operation in Swarthmore, Pennsylvania, owned by a savvy music-business veteran named Dave Miller. The producer of one of the first rock ’n’ roll hits, “Crazy Man, Crazy,” by Bill Haley and His Comets, Miller actually made his mark with a schlocky but popular easy-listening series, 101 Strings, a budget-priced collection aimed at casual music fans that featured titles like East of Suez, “Exodus” and Other Great Movie Themes, I Love Paris, and The Emotion of 101 Strings at Gypsy Campfires. Miller had the albums recorded on the cheap in Germany using a radio orchestra and handled everything else himself, including manufacturing the covers and pressing the records at his own factory. When Klein came in to audit, he found that Miller had done much the same for Around the World in 80 Days and had all the answers—and receipts. With nothing to challenge, Klein began grasping at straws. “He could manufacture the records,” recalled Klein. “He could create the paper. He would buy the plaster compound and so you wouldn’t know how many [masters] he made. He had his own presses. So I’m there and, oh God, what do you do? I’m looking and I’m looking and I’m looking.” Finally, Klein discovered that while Miller had purchased the necessary mechanical license for monaural albums, he’d neglected to buy a separate one for stereo albums. Though it wasn’t much of an error, it was enough to coerce a payment. Klein had his scalp.

  Aggressive about getting results, Allen was maniacal when it came to selling himself. An invitation to Don Kirshner’s wedding was more than a happy occasion; it was a blessed business opportunity. After the groom introduced singer Bobby Darin to his good friend and genius accountant Allen Klein, Allen didn’t bother with chitchat. When the singer stuck out his hand, Allen said, “I can get you a hundred thousand dollars.”

  This story became part of Klein’s legend, quite possibly because he told it frequently. But how well he delivered on his pitch is unclear. Klein found some money for Darin via a publishing company he co-owned with the songwriter Woody Harris, whom Klein also represented, and he later intimated that he’d discovered Kirshner was shortchanging Darin in their overseas publishing agreements. But an audit of Atlantic Records, to which Darin was then signed, turned up almost nothing, and their relationship was brief.

  That didn’t prevent Allen from using the connection to attract other clients. To woo singer Bobby Vinton away from his then-manager, Klein and Machat promised one million dollars paid over twenty years, and Allen used Darin as his entrée. “I didn’t know much about Allen,” said Vinton. “I said, ‘What did you do, Allen?’ and he said, ‘I was an accountant for Bobby Darin.’ So when I saw Darin on the street, I said, ‘Bobby, what do you think of Allen Klein?’ And he said, ‘You live and you learn.’ And that’s all he had to say! I kept saying to Allen, ‘What does he mean by that? You live and
you learn?’ He said, ‘Ehh ehh ehh . . .’”

  Steve Blauner, an agent who became Darin’s manager, groaned at the mention of Klein.

  “The only [underpayment] he found was ten thousand copies of ‘Splish Splash,’ a single on Atlantic,” Blauner said, adding that Darin’s low royalty rate—a 5 percent payment on 90 percent of all records sold—meant it wasn’t much of a victory. “We’re talking pennies. That’s what he found, period.” Worse, Blauner suggested Klein tried to swindle him.

  “He then got me to buy stock in a Canadian company—maybe Seven Arts, I’m not sure. My father had been on Wall Street and wiped out in the crash. He told me if I ever bought stock, make sure I have the certificates, don’t let the brokerage hold on to them. I called and called and called Klein and I couldn’t get the stock certificates. Finally, I said, ‘You’ve got twenty-four hours before I report you to the authorities—and before I send someone over there who’s going to break an arm or a leg.’ I finally got the stock certificates. Allen Klein was a thief.”

  Klein did have a tenuous connection to Seven Arts. A film company founded by producers Eliot Hyman and Ray Stark, it also held valuable syndication and television rights to cartoons and older movies, and Hyman and Stark would, a few years later, parlay that into a brief ownership of Warner Brothers before selling the combined company to Steve Ross’s Kinney Corporation. Seven Arts’s holdings included United Telefilms, a Canadian company begun by Lou Chesler, a Toronto wheeler-dealer and gambler who’d relocated to Miami and was reputed to have Mob connections. It was in Miami that Chesler met record producer Morty Craft and agreed to back his company, Warwick Records, for which Allen Klein and Company did the books. Craft was a key client, paying Allen $125 a month.