Threshold Resistance

by A. Alfred Taubman

  Then I was taken to a room with seven beds. This is where I would sleep, I was told, during my three to six days of orientation. With me were two other recent arrivals. One was from Hawaii. The other was a big, strong thirty-six-year-old African American named Ben. He was from Cleveland, and right away we got along. Ben, who had already been in the prison system for eleven years, was serving a twenty-year sentence for a drug-related conviction. He was intelligent, had a good sense of humor, and from our first day together in Rochester he became my advisor and protector, which I appreciated very much.

  After the orientation period, I was assigned to my permanent room. It really wasn’t what you think of as a cell. It was more like a hospital room, with a standard door. My roommate was a thirty-nine-year-old Mexican-born fellow from California. He was serving the last three years of a fifteen-year sentence for dealing drugs. We got along fine. In fact, he repeatedly asked me to adopt him. His plan for when he got out was to become a member of the Taubman family. This was a complicated matter, I explained to him. It would require a thorough review by my children, who would have to decide if they wanted him as their brother, and by my estate trustees. We discussed his proposal many times—he would wake me up in the middle of the night to repeat the merits of his plan—but we never closed the deal. (I still get mail from him, though. He ends his letters: “Best to my family and to stepmom Judy.”)

  One thing you learn right away as you interact with the other inmates is to never show any signs of disrespect. An inadvertent bump in the lunch line may be interpreted as a major personal affront. Pride is the only thing inmates have left to protect—everything else has been taken away. The guards regard you as a number, not a person. Your schedule is determined, your every move directed. Since my release, many friends have asked me if the prison administration wanted me to teach a course on real estate or business. Believe me, such enrichment and interaction are not high priorities. I was never asked to do anything other than show up for roll calls and follow directions.

  Essentially, the prison is a human warehouse, plain and simple. Prison officials are in the human warehousing business, storing people away for a period of time. From my experience, there is nothing correctional about the environment of a federal prison. Not even close.

  The warden was a good man, and he did the best job he could within the system. He wasn’t given a lot to work with. Even though Rochester was an all-male facility, the prison’s medical director was a gynecologist! And the budget for food, I learned, was $2.52 per day for each inmate. Thank goodness we had a clever food administrator, who did wonders with the crap he was given (the inmates were the cooks). Almost every can of corn, peas, and soup he worked with had an expired “must be eaten by” date on the label. If something should have been consumed by July, we were eating it in January. It really was like being back in the service!

  Everything had strict limits, and you had to understand the boundaries to get along. For instance, there was a point system that determined the number of visitors an inmate could have. We got fifteen points per month. Each weekday visit counted as one point. Visits on weekends or holidays counted as two. My son Bobby set up an elaborate schedule of visits by my friends and family (each of whom had to be prescreened and approved by the Bureau of Prisons), making efficient use of the allotted points.

  Phone time was also carefully supervised. Every conversation was recorded, and it was a no-no to discuss business. The people you called also had to be preapproved by prison officials, and you were not permitted to transfer a call or patch in another party. That’s the only rule I ran afoul of while in the big house. While talking with my assistant Melinda Marcuse one day, I learned that my dear friend Max Fisher, who was ninety-three at the time, had been rushed to a hospital in Palm Beach. I had to talk with him to make sure he was all right.

  “Melinda, transfer me to the hospital. I have to talk with Max.”

  “I can’t do that, Mr. Taubman.”

  “I have to talk with Max!”

  “One moment, sir.”

  That’s what I heard played back to me at my disciplinary hearing the next day. My counselor, who was a decent guy, made sure I had an opportunity to tell my side of the story. I pleaded my case but lost my phone rights for seven days. Believe me, that was a major punishment. When you lose your freedom, every contact with the outside world is precious.

  On that score, I was truly blessed. My wife, children, their spouses, my grandchildren, and friends made regular pilgrimages to Rochester. They came with love, conversation, quarters for the vending machines, news of the wonderful world outside the walls, and hope. My granddaughter Ghislaine took her first steps during one of these precious visits. When my wife arrived one day with the medical device I need to breathe at night (I was suffering from sleep apnea), she was told that the only way they could accept it was through the mail. On her way back to the plane that evening she dropped the machine off at a UPS store in Rochester and sent it overnight back to the prison. It eventually got to me, and I slept much better.

  Plenty of mail arrived daily. The personal notes were uplifting. I received correspondence from friends, customers, employees of my companies, and folks I had never met from all over the world. Many wrote several times. Tom Monaghan, founder of Domino’s Pizza and former owner of the Detroit Tigers, whom I hadn’t heard from in years, took the time to check in with me on a regular basis with his best wishes and prayers. Nancy Kissinger was kind enough to send me pictures of her new puppy. The newspapers and magazines also helped keep me sane. It really is a different experience reading Art & Auction or Vanity Fair in a federal penitentiary.

  Not everyone in the Federal Medical Center was so lucky. Close to 90 percent of the men I met—most were African Americans or Latinos—were serving time for nonviolent drug-related offenses. Thanks to mandatory sentencing guidelines, they were taken away from their families and communities for outrageous lengths of time—many for more than twenty years. In almost every case, their wives had divorced them, their children had lost touch, and their communities had forgotten them. They received no mail, welcomed no visitors, and had little hope.

  My worst day in Rochester—other than the day I walked into that guardhouse—came in December when Attorney General John Ashcroft sent out a directive limiting the discretionary authority of wardens and other law enforcement officers. Concerned that criminals were getting off too lightly, Ashcroft mandated that all prisoners must serve at least 90 percent of their sentences. Until that point, all indications were that I was going home before my birthday at the end of January. Ashcroft added at least five and a half months to my stay.

  The most distressing thing to happen in this period had nothing to do with prison. On November 13, 2002, just a few months into my stay in Rochester, the Simon Property Group launched a hostile takeover attempt against Taubman Centers, Inc. Political scientists note that democratic nations rarely attack other nations. In the business world, it used to be true that family businesses didn’t attack other family businesses. So much for history. Simon had locked itself into an acquire-or-die growth strategy and saw us as easy prey. David Simon, son of company founder Melvin Simon, told my son Bobby that the action was intended to strike at us while we were most vulnerable. They were betting that the embarrassment of my conviction would weaken the company’s resolve to insist on fair value for its shares. Keep in mind that Mel and his brother Herb Simon had been friends of mine—at least I thought they were—for decades. In fact, just a few weeks before Simon Property Group’s attack, I received a very warm letter from Mel.

  He let me know that he was in a “funk” about my jail sentence and expressed how badly he felt for me and my family. Graciously, he pledged to be “available to do anything you request of me.” What a warm and, I thought at the time, heartfelt letter.

  Before I could pen a response, the New York Times reported Simon’s unsolicited $17.50 offer for Taubman Centers’ shares. Either David Simon hadn’t shared his host
ile intentions with his father (who is cochairman of the Simon Property’s board), or Mel’s letter was a shamefully disingenuous communication. The only other explanation is that his son’s reckless strategy had left Mel feeling guilty and embarrassed. I’d like to give Mel the benefit of the doubt.

  The Simon offer was pathetically low and easy to reject. Our five independent directors—S. Parker Gilbert, Jerome Chazen, Allan Bloostein, Peter Karmanos, and Graham Allison—were certainly no shrinking violets. Parker is a former chairman of Morgan Stanley; Jerry headed Liz Claiborne, Inc.; Alan was vice-chairman of May Department Stores; Peter founded one of the most successful high-tech companies on the planet (Compuware); and Graham built Harvard’s Kennedy School into an international academic powerhouse. In addition, Taubman Centers’ chief financial officer, Lisa Payne, who had joined the company from a senior position at Goldman Sachs, brought valuable Wall Street experience to her role on the board.

  But David Simon had done his homework. He rallied investors who owned stock in both Simon and Taubman to push for the fire sale acquisition of our premier properties—a portfolio that had outperformed Simon’s centers for decades. Ignoring the interests of Taubman shareholders who owned no Simon stock (like me), this “coalition of the willing” wanted to use our company to strengthen the inconsistent Simon portfolio, which was heavy with underperforming, at-risk properties. When Detroit Free Press business columnist Tom Walsh looked up the largest owners of Simon and Taubman stock:

  I discovered they were mostly the same people…Most big investors with holdings in both Simon and Taubman owned much more Simon stock than they did Taubman stock…If Simon could acquire Taubman’s upscale malls on the cheap, that would be a great deal for owners of Simon stock and a not-so-good deal for owners of Taubman stock.

  But as Walsh noted, the obligations of the board were clear: “They must act to maximize the value of the company on whose board they serve.”

  The battle got very ugly. Simon and their attorneys threw every conceivable strategy at the wall—except offering fair value—to negate my family’s voting rights and eliminate a formidable competitor. My son, who was prohibited by the Bureau of Prisons from discussing his business strategy with me while I was in Rochester, did an outstanding job keeping the company focused on its important work. Thanks to Bobby’s leadership and all the employees’ resolve, the company kept its eye on the ball. Simon’s final offer of $20 per share was nowhere near even the most conservative estimates of the Taubman portfolio’s asset value. After draining both companies’ resources for eleven months, Simon, which had been joined in the battle by Australian-owned Westfield Properties, would ultimately withdraw its offer on October 8, 2003.

  Ironically, the takeover fight shone a bright light on the extraordinary quality of the Taubman Centers portfolio and its development pipeline, while highlighting the vulnerability (and prohibitive cost) of Simon’s growth through acquisition strategy. Since the ceasefire through January 2007, Taubman Centers’ shares, which have traded as high as $60, have outperformed those of Simon Property Group. The market has emphatically vindicated the board’s rejection of the inadequate Simon offer.

  Martin (Marty) Cohen, president of Cohen & Steers, Inc.—one of the most vocal of institutional investors described by Tom Walsh as “cross-owning” shareholders—summed up the battle most succinctly in the October 9, 2003 Wall Street Journal:

  Martin Cohen…who had criticized Taubman Centers’ outright rejection of the offer, said one irony is that shopping mall values have drifted upward since the hostile bid was announced last November—just as Robert Taubman, Taubman Centers’ chairman and CEO, had insisted they would. “Bobby was right,” Mr. Cohen said. “$20 was way too low.”

  It was frustrating to be unable to participate in the defense of our company. But it also gave me a sense of perspective. In a few months, I knew I would be leaving the prison and that I would return to my life. The company I had built was still intact. I had homes, a loving family, and friends to return to. The same couldn’t be said for the vast majority of my fellow inmates. Make no mistake: there were plenty of bad guys inside—murderers, rapists, molesters—who should never be free again. I’m delighted that they have been separated from society. But I met so many young men who had lost everything, including the most productive years of their lives, for a single drug-related mistake. Sure, they deserved punishment, even jail time. But to lose your freedom for two decades? The punishment just doesn’t fit the crime. While I try my best to block out the memories of my time in Rochester, I can’t help but think about these abandoned young men every day.

  Ben is one of those unfortunate young men. He was a great friend to me, and we got to know each other very well. We cooked together in the community recreation room. With a few key ingredients (you could buy fresh fruit once a week) and a microwave we created magnificent culinary delights. He had a terrific young family in suburban Cleveland before the police raided his home one night, roughed him up in front of his wife and children, and claimed they found drugs. Now everything is gone: his home, his wife, his family, his future. What a shame. I really believe Ben was set up. Even if he wasn’t, to destroy this intelligent man’s life in the name of punishment is disgusting. I’m hoping Ben can make it out and make a new start. If there is justice in this world, Ben will get the second chance he deserves.

  There were many other interesting guys in the prison. Jim was a contractor, restaurant owner, and pilot from Jackson, Michigan. He ran afoul of the law when two gentlemen approached him and inquired about his pilot’s license. They offered him the opportunity to fly commercially to Miami, where he would be provided with an airplane to fly to Jamaica. For up to $500,000 per run, he would pick up a shipment of marijuana, which would be loaded onto his plane by Jamaican police officers, to be delivered to another location in the Caribbean. Jim admitted to loving the rush he got every time he risked everything on these adventures.

  Jim, a personable and talented guy, is out now and doing very well on the straight and narrow.

  Another fellow inmate was formerly the chief of detectives in a major midwestern county. He had great stories and a wonderful family. They came to visit a lot, as did many of his former detectives! Justin Volpe, the young New York police officer found guilty of assisting in the brutal treatment of Abner Louima, was serving time in Rochester. I met his very nice family during several visits (they’re all paying for his terrible mistake).

  The facility had several buildings. One held the inmates with serious psychiatric problems. For most of the day and evening hours, these challenged souls were isolated from the rest of the population. But at lunch, we all came together in the mess hall. On several occasions, a character known as Chainsaw made it a point to sit with me. He was very intelligent and loved to talk politics. He had a particular dislike for George W. Bush and expressed it with vigor. After a few of these political science sessions with Chainsaw, I asked around as to the origins of his colorful nickname. Apparently, he had been a successful restaurateur. Business took a turn for the worse, however, when he murdered two customers, chopped them up with a chainsaw, and served them as hamburger to his unsuspecting clientele. I made every effort to avoid him at lunch, and I was thankful he never learned that I had owned A&W.

  Another guy—who actually was a talented commercial artist—made wine by fermenting orange juice in a hollowed-out portion of a wall hidden by a picture in his room. I put him to sleep drunk one night after hearing him staggering down the hall. (Eventually they caught him and threw him in the brig.) And then there was the very diminutive Jewish bank robber from Chicago. He stood just shy of five feet tall and had a mild humpback. After getting to know him, I suggested that he may have picked the wrong line of work. He was too short to see over the teller’s counter.

  The Jewish bank robber organized Friday night services for us. We didn’t have the required ten to form minyan, but with the help of Larry, a Catholic dentist–drug dealer from Philadelphia (
I think he was married to a Jew), we did our best. Larry was also a great bridge player and single-handedly organized our book club. Seabiscuit was by far our favorite selection. Faith, along with friends and family, can get you through the most difficult of life’s tests. I found great strength and comfort in our tiny community and improvised religious services.

  Another favorite pastime in prison, as you might imagine, was watching television, especially Court TV. Each floor had a recreation room where fifty to sixty guys fought over the remote. One day a few months into my stay, Dominick Dunne aired a Court TV special on the Sotheby’s-Christie’s scandal. Like so many of these cable shows, it played over and over again. So much for my strategy to keep a low profile! Come to think of it, it was shortly after Dominick’s exposé that my roommate came up with his adoption proposal!

  On May 15, 2003, nine and a half months after walking into the guardhouse of the Federal Medical Center in Rochester, Minnesota, the warden escorted me out the back, through a loading dock (he didn’t want to give the news photographers a good shot, either) to meet my wife and son Bobby. Before I knew it, it was wheels up on the Gulfstream IV. I had lost a chunk of my life, my good name, and around twenty-seven pounds.

  I had served my time for others; people going about their lives in New York and London who had initiated, executed, and lied about a serious crime for which they would receive little or no punishment.

  About a year after I left Rochester, I received a letter from Daniel P. Davidson, who had served as the U.S. chairman of Christie’s during the years the two houses colluded, which confirmed my take on the matter. He had read Christopher Mason’s The Art of the Steal and wanted me to know that while he had not been a “principal player” at Christie’s, he had been aware of some of what was going on in his company. As an insider, he concluded that “the real villains in the story were never punished—indeed some of them were rewarded.”