In August 1999, eager to get on the stock exchange and unwilling to take the traditional IPO route, Paul and investment banker Stan Medley concocted a reverse merger with a public company called Boulder Capital Opportunities, Inc. The new entity would be traded as Stan Lee Media under the symbol SLEE. As creative lead and chairman, Lee received stock options for more than six million shares, as did Paul and others at the executive level. The options had little initial value, but promised to make Lee and the others extraordinarily wealthy (Lee’s annual salary was $272,500). In its first year on the top floor of the Encino building (also the point of operations for many of Paul’s other shadowy business endeavors), the company grew to 150 employees.
The flagship franchise would be The 7th Portal, a superhero team battling villains that could travel to Earth through a hidden gateway. Lee took a hands-on approach, according to Buzz Dixon, the vice president of creative affairs. Initially, Lee focused on six or seven projects, writing outlines and character sketches. “Everything I saw had Stan’s creative imprint on it,” Dixon said.9 While Lee and a new bullpen of writers and artists worked through a multitude of ideas, company officials explained to the world what was really for sale—Lee himself, remarking, “The fact is that Stan is a recognized brand in the global marketplace.”10 Paul and other executives even considered starting a Lee clothing line based on his many catchphrases and new ones they might trademark. Interviewers noted that Lee routinely reported to work each morning in his black convertible Mercedes E320 around 9:30 and often stayed until 8:00 p.m.11
SLM debuted the 7th Portal at a star-studded gala on February 29, 2000, that Paul orchestrated at Raleigh Studios in North Carolina. Television personality Dick Clark hosted the party, which featured performances by Jerry Lee Lewis, Ray Charles, and Chaka Khan. Three months later, SLM announced a deal with Paramount Parks to develop a 3-D ride based on the 7th Portal franchise for its twelve million annual visitors.
SLM had plenty of brand recognition, but it didn’t have enough content to capitalize on the multitude of deals Paul had negotiated. Lee backed the ideas of his writers and artists, but his cofounder kept the actual wheeling and dealing close to his chest, ultimately preventing Lee from exercising any significant decision-making authority. According to insiders, Lee, “would sit in business meetings and occasionally say something. But mainly he’d sit there and doodle, or fall asleep.”12 Paul kept Lee and the start-up in the news with the marketing machine operating at full speed. However, fewer and fewer of the deals amounted to any actual content or products.
Using Lee’s involvement as a lure, other celebrities also jumped on the bandwagon. SLM announced high-profile ventures with a range of stars, including the Backstreet Boys and Mary J. Blige. Pundits saw the venture as the culmination of Lee’s long career in comics and believed that given his supervision, SLM might become the Internet era’s version of Disney. It was one thing for the general public to see the “Stan Lee” name attached to an entity and equate it with Marvel’s successes or feel that such a company could become another Marvel, but it was another for the media, stock analysts, and others to climb aboard the same runaway train. The hysteria surrounding the New Economy bubble far outstripped the media’s ability to recognize its farcical elements or anticipate the fated consequences.
Dot.com mania spread from San Jose and San Francisco across the United States to New York City’s Silicon Alley and then around the world to burgeoning technology hubs like Dublin, Tel Aviv, and Moscow. In this overheated environment, when a simple idea for selling mundane consumer products on the Internet could lead to venture capitalists lining up to provide millions or tens of millions in funding, SLM seemed a surefire winner. In early 2000—at the height of the boom—Wall Street valued the company at $31 a share, which would have essentially given SLM enough paper wealth ($350 million) to buy Marvel Comics outright. Pop superstar Michael Jackson considered purchasing Marvel, personally asking Lee if he would run it if Jackson did so. Of course Lee agreed, but the acquisition never took place.
Lee excelled at doing what he always did so well—becoming the face of the organization, and even more importantly, the face of a new generation of online comic books and online media. The extraordinary level of hype and willingness to believe in it with little or no validation created the perfect environment for Lee’s longing “true believers” to truly believe (and get in on the ground floor of a Stan the Man enterprise). When Lee spoke at tech conferences and other events, he stood among his kind of people, a generation of self-anointed nerds who grew up on superhero stories and were avid comic book readers.
Although some SLM employees secretly questioned the legitimacy of the many partnerships and deals, no one outside Paul and a small number of coconspirators understood how fast the company was burning through its start-up and stock funds. Court documents later revealed that SLM had plowed through about $26 million from its earliest incorporation through September 2000. In contrast, the venture only brought in about $1 million in revenue during that span.13
Like many other dot.com “bombs,” SLM was a house of cards—almost completely hype and marketing acumen built atop the good idea of bringing the comic book world online. While many dot.bombs were the outcome of excessive exuberance that capitalized on a pervasive stock market bubble and the notion that size mattered more than profitability, SLM engaged in actual fraud and stock manipulation.14 The company’s 150 workers lost their jobs when the company declared bankruptcy in December 2000. The SEC and FBI started investigations into Paul, Lee, and other SLM leaders. While authorities soon cleared Lee of financial wrongdoing, their efforts fixed on Paul. Soon, people around the world would know his name: he was the guy who caught Stan Lee up in one of the contemporary world’s most egregious Ponzi schemes.15
Just two weeks before Lee’s seventy-eighth birthday, staffers at SLM, despite their concern for their jobs and the ominous news stories about the company’s demise, bought their leader a seven-foot-tall Spider-Man statue imported from Germany. They pieced together the birthday present and kept their fingers crossed that in superhero fashion, Lee would somehow save the day. Maybe the web slinger could magically come to life and lead the charge.
During a staff meeting, the remaining SLM executives entered the main conference room and announced that the company was shutting down and the entire staff would be laid off. Amid tears and stunned faces, the employees could not believe what they were hearing, even though many had begun to realize how the financial situation had deteriorated. In less than two years the company crashed and burned through tens of millions of dollars, another web venture left to history’s dustbin. Lee physically collapsed after hearing the news and had to be helped out of the building. The memories of Goodman forcing him to deliver similar news to staffers and freelancers at Marvel still burned in his memory.16
If Paul really were a supervillain, one might imagine his slick, tuxedo-wearing exterior transforming into a slimy, super-snake or maybe an energy mass fueled to superhuman power by money and jewels. The list of iconic celebrities and political figures Paul duped is extensive. He also conned the business press as well. The Los Angeles Business Journal, for example, once dubbed him “Spider-Man’s Business Brain” and suggested that his work would transform Lee’s new characters “into a business empire.” Paul boasted that SLM was “the Disney of the 21st century.”17
Paul obviously had vast visions of grandeur. His web start-up scheme seemed simple and followed the same outline that other ventures had created during the dot. com craze. First, he would employ marketing and publicity tactics to hype the startup and Lee. Then, despite limited products and revenue, he would lead the company to public status, even without much actual substance in terms of products or content. The public offering enabled Paul to essentially use the stock money to fund an escalating deficit (and simultaneously line his pockets). In the end, the financial losses would be outsourced to shareholders, while providing riches for Paul and his allies, who turned
their self-granted stock options into countless millions.
What authorities would unravel was a stock swindle orchestrated by Paul and several well-placed henchmen, including SLM executive vice president Stephen M. Gordon, sentenced in 2003 to six and a half years in federal prison for his role in the check-kiting scheme.18 Paul borrowed money from banks using the bloated SLM stock price as collateral, then sold shares illegally. The full scope of the Ponzi scheme would take investigators years to sort out, but Paul also had more straightforward illegal maneuverings, including reneging on paying back a $250,000 personal loan from Lee. He also forged Lee’s signature on multiple contracts (handwriting experts later proved that Lee did not sign the documents).19
On February 16, 2001, SLM filed bankruptcy petitions in the United States Bankruptcy Court for the Central District of California. In August 2002, the Colorado Secretary of State dissolved the company and its case was dismissed for failure to pay U.S. Trustee fees.20 While the legal machinations took time to unfurl, Paul had already fled the scene, turning up in Brazil in December 2000, hoping to avoid prosecution. However, in August 2001, Brazilian officials arrested the fugitive and imprisoned him for two years. U.S. authorities arranged for extradition, which took place in September 2003.
Although Paul would repeatedly attempt to wriggle out of legal troubles, the many complaints demonstrated that he bilked various parties out of at least $25 million.21 In 2005, he pleaded guilty to these criminal charges and first spent four years under house arrest, then in 2009 began serving a ten-year prison term at a federal institution in Anthony, Texas. Officials paroled Paul in late 2014.
Several generations worth of goodwill helped Lee dodge a great deal of the fallout. Not only did Lee physically look the part of the eccentric grandpa in the early 2000s, but it became clear to investigators that he indeed had been duped by his business partners. Not all the revelations were kind, however. Stories circulated in the business press saying that Lee slept through meetings and generally steered clear of the financial side of the firm. He did not control the money, but no one could deny that he may have had some reason to stay more on top of events unfolding at a company bearing his name.
Perhaps the saving grace for Lee centered on just how corrupt and manipulative Paul had been. The list of those he conned ranged from powerful individuals, such as Bill and Hillary Clinton, to Muhammad Ali and iconic actor Jimmy Stewart. Labeled by one journalist as a “sometimes-mysterious figure with searing eyes and grand gestures,” Paul became one of the more fantastical figures of the dot.com age, claiming at one point to have ties to secret government agencies, which necessitated federal officials to create the trumped-up charges in an effort to silence him.22
The SLM debacle virtually erased three years of Lee’s life and changed his basic outlook. “No platitude will ever repair the harm that’s been done, to me and countless others,” Lee explained. “But one thing’s for sure—I’ll never be so stupidly trusting again.”23 After the dot.bomb debacle, most experts and observers figured that Lee’s career would slowly fade to black. Perhaps the superhero industry’s greatest showman would finally call it a day after four decades in the spotlight. Few thought that even the ever-resilient Lee could sidestep the scandal, despite government investigators clearing him from any wrongdoing in the SLM crash and burn.
From a broader perspective, though, the utter collapse of the dot.com boom caught countless corporate leaders asleep, including many who had worked at the upper echelons of the business world for decades. Their shortcomings put Lee’s troubles in perspective. The widespread bust that shook the global economy made the SLM boondoggle seem like just another dot.com nightmare come true. Plus, as Peter Paul’s criminal past, outlandish scheming to deceive Wall Street, and zany claims about working for secret military operations became public, it became apparent that the con man had swindled Lee, taking advantage of their friendship to set in motion a devious plot for personal gain.
The crash of Lee’s self-titled venture ratcheted up his competitive resolve. Whatever the potential outcome, he would not ease up or retire with the SLM catastrophe as his enduring legacy. Working with Batman movie producer and industry insider Michael Uslan, Lee struck a deal with longtime competitor DC to reimagine the company’s famous characters through his eyes. They called the series Just Imagine Stan Lee, which allowed Lee to rewrite and reconceptualize the major characters in the DC pantheon, including Superman, Batman, and Wonder Woman.
The series led to some private negotiations with DC and its parent company Time Warner to possibly expand its relationship with Lee. The talks included the creation of a boutique publishing operation, potentially as a way, according to one insider, to “remove that yoke of worry from Stan’s shoulders.” Within months of the bankruptcy, Lee and the people closest to him were definitely searching for ways to deflect the negative publicity from the SLM debacle.24
Despite turning seventy-nine years old at the end of 2001, Lee vowed to continue producing superheroes and work on new and exciting projects. As usual, he tapped into his seemingly endless supply of creativity to fashion a new image as pop culture’s elder statesman and the godfather of comic books.
CHAPTER 15
MEANWHILE . . .
Before the first X-Men film hit the big screen in July 2000, Stan Lee had met with director Bryan Singer to discuss the characters and how the film might be brought to life. At that time, Singer explained, “There was no template for it. Comic book movies had died, there was no concept of one as anything but camp.” The discussion with Lee took the proposed film in a new direction. He encouraged Singer to research the characters on his own, which led him to scrap earlier scripts Fox had commissioned and begin anew.1
After an extensive marketing campaign, X-Men set a record for comic book films at that time, earning $54.5 million its opening weekend. Lee appeared in the movie, playing a hot dog vendor. He didn’t have any lines, but he and Senator Kelly stare at each other as the politician emerges from the ocean. The cameo merely provided a glimpse of Lee in his blue denim shirt and bright red apron, but the film’s box office success relaunched superhero films and started Lee’s string of appearances in films about characters he played a role in creating.
Lee’s career renaissance began with X-Men, which eventually made $296 million worldwide. Long after the SLM debacle started to fade into history’s dustbin, Lee grew into a familiar face for Marvel filmgoers. Lee explained that the movie work, even for a moment, ended up “elevating my career again.” Soon, “it became tradition to see Stan the Man wandering through Marvel productions.”2 Lee would appear in eight other superhero films over the next seven years.
In November 2001, Lee joined with attorney Arthur Lieberman and producer Gill Champion to form POW! Entertainment. Lee served as chief creative officer. Certainly part of his rationale for starting POW! had to do with pride. “I just wanted to show that I can succeed,” Lee explained, especially, he continued, when “working with people who are honorable and competent.” He and his partners repudiated the ostentation of Stan Lee Media. Instead, they hired a small staff and kept the operation manageable. Much of the work, however, remained the same as SLM. The team focused on creating characters based on Lee’s ideas. Most importantly, the new company would not concentrate entirely on Web-based products and characters.3
The hyperbole that always came with anything Lee touched continued with the new company. An early press release announcing a three-film deal with the Sci-Fi Channel touted Lee as the “creator and inventor of the modern superhero,” who “revolutionized the comic book industry” via characters that had superpowers but were “none the less plagued by the same doubts and difficulties experienced by ordinary people.”4 The document accentuates Lee’s role in creating Marvel’s most popular heroes, calling them “his most enduring characters” and then naming Spider-Man, the Hulk, and X-Men. Since most of the characters had been around since the 1960s, POW! communicators made an effort to contextualize and r
emind readers of Lee’s central role.
Subsequently, POW! ran up a string of media deals and new projects designed to take advantage of Lee’s status as one of pop culture’s elder statesmen. However, the constant embellishment and lack of completed products left some observers shaking their heads. Inevitably, critics questioned the new company’s viability when so much of its potential required Lee’s creativity and oversight.
The shifting winds of pop culture helped Lee recalibrate. Just as he and his colleagues at Marvel had caught the cultural zeitgeist in the early 1960s, Lee did it again in the early 2000s. Something peculiar took place in the fusion of the Internet, cable television, and expanding film: geek culture took hold—and superheroes were at its epicenter.
Before long, the success of Marvel’s films made the company and its characters as hip in the new century as they had been during Lee, Kirby, and Ditko’s heyday. Fans lined up for hours to get a glimpse of Lee or his signature on their carefully plastic-sealed and cardboard-packaged comic books. Lee found himself surrounded and propped up by a generation of movie directors, screenwriters, artists, and studio heads, in addition to a generation of comic book writers, who paid homage to the work of the early masters. Time had paid Lee in dividends—the people who grew up reading his work and idolizing him came to power and authority across mass media channels and outlets.
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