Allen Klein: The Man Who Transformed Rock & Roll

by Fred Goodman

  Klein, Iris Keitel, and a friend of his, the film executive Julian Schlossberg, moved into a bungalow at the Beverly Hills Hotel and spent several months overseeing the editing. But when they presented their cut to studio heads Sid Sheinberg and Ned Tanen, neither liked it. They convinced Allen to let legendary film editor Verna Fields, who’d worked with everyone from Fritz Lang to George Lucas and Steven Spielberg, take a whack at it. Not surprisingly, Allen thought his edit better than hers and it was ultimately agreed they would test both cuts and release the one audiences preferred. Klein’s version won. Though not well reviewed—the New York Times called it “as witless as it is gutless” and “the literature of vultures who have no interest in tearing into something of the first freshness”—the film proved a moneymaker.

  Throughout this whole period, the IRS was keeping close tabs on Klein, but he didn’t realize it until he and several employees were on a business trip to London, likely on behalf of the Who’s Pete Townshend. In 1975 the guitarist and songwriter had complained to Klein that he wasn’t getting paid by his American music publisher and had asked him to look into it (Allen would ultimately get Townshend paid and renegotiate his U.S. publishing deals). After arriving on the redeye, Klein checked into his usual suite at the Dorchester while the others went to another hotel, the Inn on the Park. At that point, two of them—Michael Kramer and Ken Salinsky—decided to gamble at the Playboy Club, located in a nearby townhouse.

  “It was between noon and one when Ken and I walked in,” said Kramer. “And the two special IRS agents who’d visited the office were in the vestibule. I think they wanted to see if Allen was a gambler.” Kramer wondered if the government had bugged ABKCO’s phones, but in any event, it was obvious that Klein was being closely watched. Indeed, when the case went to trial in 1977, the IRS’s lead investigator on it, Sid Connor, would testify that he’d trailed Klein around the world for five years.

  Charged as coconspirators, Klein and Bennett each faced a six-count indictment: a felony charge of attempted income tax evasion for 1970, 1971, and 1972, and a related misdemeanor charge of making false statements on income tax returns for each of those same years. According to the government, the defendants failed to account for substantial cash received from the sale of Beatles promotional records. Klein was alleged to have received over two hundred thousand dollars in proceeds over the three-year period.

  Saying he had no knowledge of Bennett’s activities, Klein pleaded not guilty to all charges. Bennett pleaded guilty to a single misdemeanor charge and became a cooperating witness for the government against Klein.

  For civil litigation, Klein relied chiefly on Max Freund, a senior partner at Rosenman and Colin. Considered one of the preeminent Jewish law firms in the country, it had long represented CBS and, as a result, had become a powerhouse in the music business; two former Rosenman attorneys, Clive Davis and Walter Yetnikoff, would go on to head CBS Records. Faced now with a criminal case, Freund recommended Klein use Gerald Walpin, a former assistant U.S. attorney who headed Rosenman and Colin’s litigation department and who was considered one of the top white-collar-crime lawyers in New York.

  It looked at first to be a troubled match. Klein, used to devising strategies and theories in his civil cases and then giving marching orders to his attorneys, came in believing it would be the same story in criminal court. Seeing Allen immediately at loggerheads with his attorney, a prescient Betty Klein stepped out of the meeting, phoned attorney Leonard Leibman, and begged him to come down and referee. Leibman, who would go on to serve as Klein’s confidant, sounding board, and daily companion throughout the case (“It took a year out of my life,” he said), was able to restore order and convince Klein that he couldn’t deal the cards himself if he expected to win this game.

  Despite the rough start, Walpin would come to view Klein as one of his best and brightest clients. “I held back no realistic appraisals of the evidence and difficulties,” he said. “I did not have to mince words. In the end, Allen gave me full head in litigating it, unlike in his civil cases.” In return, Klein demanded Walpin’s full attention—and demonstrated that he was willing to pay for it. “Allen was an enormous consumer of time,” said Leibman. “He got Walpin a suite at the Plaza and [Walpin] only went home to Long Island on the weekends.”

  Klein clearly got his money’s worth. Before the government could even indict him, Walpin stymied them for a year by bringing an injunction against the grand jury claiming that attempts to subpoena an investigator working for Klein interfered with Allen’s right to counsel. When Walpin lost, he appealed to the Second Circuit Court and bought more time. He frustrated Engel, who had to litigate for a year just to get indictments handed up. “Gerry and I have subsequently become friendly, but we were at dagger points,” he said. “He was a very tough, sinewy kind of lawyer who would seize any advantage.” The person Engel truly did not like was Allen Klein. “He was a sly guy; somewhat oily, in my view. When he took the stand there was something lubricious about him.”

  When the case finally went to trial, Walpin focused on undermining the testimony of Bennett, not an ideal witness to build a case on. Bennett had initially told prosecutors that he’d received only 10 percent of the money from the record sales and had passed the rest to Klein, but it wasn’t difficult to find receipts and bank transactions suggesting Bennett kept a good deal more. Klein testified that, yes, ABKCO had received promotional Beatles records; no, he had not instructed Bennett to sell them; and yes, Bennett had given him money, but it had nothing to do with selling records and represented the repayment of cash advances.

  And how did Klein feel about the trial? He didn’t like being charged with a crime and professed his innocence—he and others at ABKCO suspected the U.S. Attorney was pursuing the case in hopes of finding that records had been sold to buy drugs for the Beatles—but he couldn’t get enough of the action.

  “He absolutely loved it,” said Leibman, who at that point was being picked up at his Connecticut home by a limousine every morning and driven to meet Allen at the federal courthouse. After spending the day in court, the men would have the transcript of the day’s proceedings delivered to ABKCO and then pore over them for the rest of the evening in a quest for openings. “He was totally focused on the case. This was a dream for Allen, because it was a case built on numbers.”

  Unable to rely on Bennett’s testimony alone, the government questioned other ABKCO employees. Allen’s former assistant Paul Mozian was brought to the FBI’s Manhattan offices along with his lawyer and questioned at length. “They asked me about money,” he said. “Money in the safe, money in bags, mink coats, jewelry.” Mozian told the FBI he knew there was a safe with money in it because he’d been sent to get the combination from the desk of an ABKCO accountant, Joel Silver, so Klein could give $5,000 in expense money to the musicians rehearsing for the Concert for Bangladesh. Beyond that, there was nothing he could tell them about the safe or cash expenditures. Paul was grateful when Klein later insisted on paying the legal expenses associated with his questioning.

  Among the ABKCO employees who did testify were Silver, who confirmed that Bennett had given cash to Klein, and former ABKCO in-house counsel Harold Seider, who likewise testified that he had seen Bennett counting cash and giving it to Klein.

  In the absence of uncontested proof that Klein had received proceeds specifically from the sale of records, the IRS sought to build a case by showing Klein had spent more money than his tax returns could explain and must therefore have unrevealed sources of income—a standard tactic in tax investigations known as the net-worth method. But that was a tall order considering the target; Klein, an accountant, seasoned business manager, head of a public corporation, and salesman and strategist par excellence likely knew as much or more than the prosecutors about making money appear and disappear. But government investigators had followed Klein long enough for them to know he was a womanizer and had a steady mistress in his employ in Keitel. Married men with girlfriends alway
s needed money—preferably money that no one knew about. The prosecution’s case soon came to include testimony regarding Klein’s jewelry purchases at Tiffany and Company.

  After a seventeen-day trial, the jury deliberated six days before saying it was deadlocked, and Judge Charles Metzner declared a mistrial. Knowing the federal prosecutor would want to retry the case, Walpin once again sought to derail the prosecution with a variety of challenges and appeals, including arguing that Metzner should have charged the jury to continue seeking a verdict and that a retrial amounted to double jeopardy. “Gerry didn’t want to risk another chance of a guilty verdict,” said Engel.

  By the time Klein finally exhausted his challenges and the second trial began, there was a new judge, Vincent Broderick, and a new prosecutor, Steve Schatz. Engel, who had simultaneously prosecuted a tense, high-profile bombing case involving the radical Puerto Rican group FALN, left the U.S. Attorney’s office for private practice and soon bought a home in Hardenburgh, New York, a tiny Catskill hamlet with a reputation of being a hotbed of tax resisters; the majority of residents had become mail-order-ordained ministers in a bid to get off the tax rolls. They elected Engel their town justice.

  Whatever had been lacking in the government’s case in the first trial was corrected in the second—just barely. At the conclusion of the latter trial, the jury found Klein innocent on all three felony charges and guilty on just one of the misdemeanors—specifically, making false statements on his 1972 income tax return. Whether by design or coincidence, the jury returned a verdict on Klein that matched the plea the government had allowed Bennett to offer. Leibman believed the conviction made no sense and would be overturned on appeal; how could Klein have been found innocent of the underlying crime—failure to report income—but guilty of filing a misleading return?

  But Klein opted to accept the verdict. He may have been counseled to consider himself lucky: Judge Broderick, a well-respected and sympathetic judge, said from the bench that he did not think Klein had testified truthfully, and that was sure to be seized upon if Klein chose to appeal. “Considering the evidence, we were all very pleased,” said Walpin. “Including Allen.” Additionally, the case had taken years and consumed a lot of money. “Allen had already paid a million dollars in legal fees which were not coming out of the company,” said Leibman. Though Judge Broderick apparently believed that the jury had erred and that Klein was guilty of the felony charges, he followed their verdict at sentencing: Allen was fined $5,000 and given two months in jail.

  Some in the record business saw it as a miscarriage of justice—or at least a case of extremely selective prosecution. Eric Kronfeld, Marty Machat’s one-time junior associate, had risen to become a powerful music-industry attorney and then the president of a major record company, PolyGram. He described Klein’s prosecution as sui generis. “Allen got punished for doing nothing different than all the record companies have done since time immemorial,” he said.

  Eschewing a minimum-security facility for white-collar criminals in order to stay in New York City, Klein began serving his time on July 14, 1980, at the Metropolitan Correctional Center on Park Row. It was a maximum-security prison, but he was pleasantly surprised to discover he didn’t have to be cuffed when he turned himself in and that he had his own cell on a floor without convicted murderers. Though initially nervous—I can do this, he told himself as they led him into the cell, I was in an orphanage; I’ve been alone—he would later joke that he quickly adjusted. “I was there by myself and I sat down and said, ‘Oh! Finally! Peace at last!’ It was an interesting experience,” he added with evident relief.

  Leibman visited Klein virtually daily—forty-eight times, by Leibman’s count. As an attorney, he was able to meet privately with Allen for hours on end in the counsel’s office. “I’d go in and we’d talk and then we’d play rummy,” Leibman said. Even better for a man who hated solitude and couldn’t abide silence, the office had a telephone.

  Beverly Winston, Klein’s assistant in ABKCO’s London office, was flabbergasted when Allen went to jail. “He never thought he’d be found guilty because he didn’t believe he was, so it was all rather shocking,” she said. Still, Winston was used to spending hours on the phone with him—“I was the one taking dictation and having the long conversations about the profound ethics of life”—and she and her office mates indulged in a bit of gallows humor, joking that at least they’d get a few months of peace with Allen in jail. “But no!” she said. “They gave him phone privileges! It felt like he was on the phone to us in London all day!”

  Through Julian Schlossberg, Allen was able to get films for the inmates to watch, and he acted as the projectionist. As an entertainment-industry big shot, Allen became something of a jailhouse celebrity. That meant pleading ignorance when asked for business advice by wiseguys and taking a ribbing from the guards. “How the hell did they ever get a guy like you?” they’d ask. “Couldn’t you buy your way out?”

  The time was easy but killingly slow, a maddening, smothering torture of enforced vacuity on a hectic mind. He was glad to be released on September 12, a few days early in recognition of good behavior, and eager to return to his world.

  Allen did not, however, go back to living with Betty in Riverdale. She had long known and been unhappy over his dalliances, but when the government literally made a public case out of his relationship with Iris, it was one humiliation too many. Still, Allen didn’t want a divorce and steadfastly refused to consider it even though Betty was willing to give him one and Iris was eager to marry him. His friends and colleagues couldn’t comprehend what he was thinking. It was as if Allen had his own rules and code, his own mystifying one-man religion in which the shonda—the public scandal—was the divorce itself rather than the underlying and all-too-evident acts of pain and betrayal behind it. After his years in the orphanage and a lifetime of obsessing over his father’s indifference, Allen was incapable of splitting from his family—or at least from the idea of his family. As a father, he was unfailingly loving and just as needy as an infant himself, holding his children in bear-hug embraces that were both heartfelt and stifling. He moved into the Plaza Hotel and then, with Iris, into one of the two apartments ABKCO had bought on the Upper East Side. But on the Jewish High Holy Days, Allen Klein went back to Riverdale and sat at the head of the table with Betty and their children. It didn’t have to make sense to anyone but him.

  Klein was just as enigmatic in the office. Joel Silver, compelled to testify against him at the trial, was now viewed guardedly—but he didn’t lose his job. At such moments, it was impossible to tell whether Klein, the man capable of having several motives for any action, was pondering his morality or his popularity. Perhaps Silver knew too much to be let go, or perhaps Klein, who could be jaw-droppingly insulting in a business meeting or negotiation but hated doing anything unpleasant personally, was simply trying to avoid dealing with the situation. When Al Steckler, ABKCO’s ex–creative director, dropped in to visit his former coworkers, the two men ran into each other in the lobby of 1700 Broadway; Klein welcomed him warmly and they chatted amiably on the elevator ride up to the office. Steckler sat down with the first person he saw, and thirty seconds later, the telephone on that desk rang. It was Klein, telling his employee to get rid of Al. On another occasion, Klein flew on the Concorde to England and rented his usual penthouse suite at the Dorchester, taking it for two weeks in order to guarantee its availability for the two nights he actually needed it, just so he could be in the London office when a secretary was fired. He didn’t actually tell her personally—though the woman had to know that Klein was in the office, he wasn’t even in the room when she was given notice—he just had to be there, and it didn’t matter to him if his presence cost more than he paid the woman in a year. More than he wanted money, he wanted what he wanted.

  On the evening of December 8, 1980, three months after Allen Klein’s release from jail, John Lennon was murdered outside his apartment building, the Dakota. Allen was unable to atte
nd the public memorial in Central Park the following Sunday because he had to be at a wedding, but during the reception, he and his elder daughter, Robin, stepped outside, stood together in the cold, and silently lit a candle.

  Eager to pay his respects to Yoko Ono and find out if he could help her in any way, Allen was told to come by the recording studio where she was already assembling the album Season of Glass, her anguished response to Lennon’s senseless death. Ono looked at Klein, who was on his way to an awards dinner and dressed in a tuxedo.

  “He had so much to live for,” she told him. “You should have died instead of him.”

  14

  * * *

  No Sympathy for the Devil

  BY 1980, PEOPLE KNEW three things about Allen Klein: he’d been released by the Beatles, released by the Rolling Stones, and released from prison. The decade ahead hardly seemed promising.

  Seemingly finished in the music business, Allen found his career as a film producer was also stalled. After The Greek Tycoon, he and Ely Landau had tried and failed to develop several other projects, including two films that would eventually get made by others, That Championship Season and The Stunt Man. He passed on a chance to produce Monty Python’s Life of Brian, its humor eluding him, and instead acquired the film rights to a book that had captivated Keitel: naturalist Gerald Durrell’s memoir of growing up on Corfu, My Family and Other Animals. Never satisfactorily developed, the project languished before moving to the BBC, where it became first a ten-part television series and then a feature film. Klein stepped in briefly as an uncredited producer for Robert Towne’s Personal Best when Towne got into a wrenching battle with his backer David Geffen.

  He tried his hand at producing theater. Julian Schlossberg took Allen to a showcase by the husband-and-wife team of Renée Taylor and Joseph Bologna, who were seeking backers for a new romantic comedy, and the two friends decided to take a shot despite having no theater experience. “We’ll learn to do it together,” an upbeat Allen told Julian.