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On January 16, 2004, his formal arraignment drew a horde of news media and in Santa Barbara County. The press did not cease to put their nose in his business and in what they called “his mysterious finances.” Depending on the source, Jackson was either spending his way into bankruptcy or presiding over wealthy music and real estate empire.

In reality, MJ had been the target of numerous lawsuits over the years, many of which cost him millions. ( Lee, Sotheby’s, Avram, Vaccaro, Royalty Claim lawsuits dismissed with Motown and Universal). The only successful trial was one of five former Neverland employees that lost a wrongful termination suit against Jackson and were ordered to pay $1.4 million in attorney fees and $60,000 in damages. A jury rejected claims that the employees were fired for cooperating in a probe into the 1993 molestation allegations.

When in March, the Arvizo’s were deposing before the Grand Jury, Michael Jackson had to increase his credit with Bank of America on the credit line guaranteed by MJPT (Michael Jackson Publishing Trust). The lending aggregate principal amount was $72,500,000 at that point. 

Here too, The New York time through Al Manik’s interview, published misleading pieces of information one month before the documents were filled and signed. This third amendment and restated loan agreement of 2.5 million dollars had a specific use, which was: to fund the Minimum Interest Reserve Account, to finance the Borrower’s expenses and professional expenses, to pay the Guarantor’s taxes, to pay the legal fee and approved Invoices.

I wonder which documents provided the “insiders” who diligently fed Media jesters. From 1997 on press was wild and meticulous in detailing over MJ’s crazy borrowing.

Too bad that these assets were already pledged under the bank agreement. By the documents disclosed in various financial lawsuits, it’s clear that numerous agreements were entered into in connection with the MJPT Loan, including, among others, the MJPT Trust Agreement and a Security Agreement between BOA and MJPT, dated September 29, 1999. MJPT was restricted in disposing of, transferring, or selling the MIJAC Catalog or the Administration Agreements until full payment and performance of all obligations under the Loan Document. In short, MJ could not take any action before the loan would not have been fully paid. Neverland was pledged to BOA under this agreement, and if it was not enough, a personal guarantee of MJ was imposed.

2004 April 1, Humanitarian Award

On April 2, 2004, Mark Geragos and Ben Brafman brought a massive amount of pieces of evidence into a Santa Maria courthouse for the preliminary hearing into the Jackson case. The material impacted the credibility of witnesses. One of the evidence they obtained was the Arvizo family court documents in the JC Penney case.

On April 11, Medias reported the allegations of Daniel Kapon, a young man who claimed to have been abused by Michael when he was a kid. It turned out that the Santa Barbara Police Department did not find him credible and closed the case after investigating it.
Regarding the episode, Geragos said: “This appears to be a malicious attempt to undermine Mr. Jackson’s right to a fair hearing on the presently pending charges.”We have to question the timing and purpose of this 20-year-old false allegation being raised at this time.”We believe that this smear campaign is driven by money-hungry lawyers, seeking to capitalize on Mr. Jackson’s current legal situation.”

But everything started to become too dangerous. Gavin Arvizo deposition had been leaked, and several of Jackson’s associates faced charges of conspiracy and obstruction of justice for allegedly threatening the child’s family accusing the MJ molestation. The co-conspirators were: Marc Schaffel, Dieter Wiesner, Ronald Konitzer, Frank Tyson (Cascio) & Vincent Amen.

Michael, who was in Orlando, learned that the Grand Jury had indicted him. He asked his brother Randy to intervene, and Tom Mesereau, that knew Randy for many years, eventually came on board. On April 25, Michael announced that he had changed his legal team. And a few days later was the Nation of Islam turn.

I’m going to introduce a summary of a series of testimonies collected in one of the scummiest lawsuits MJ had to confront with. It would have revealed almost illegal acts of many industry big names and open an embarrassing can of worms. So, most of the media wisely shirked the real content deflecting public over gross gossip against his brother Randy and the charlatans’ group who tried to defraud MJ. By the testimonies, I can say that Randy helped as much as he could. Still, most likely, MJ’s financial structure was beyond its capabilities, and he got into a bunch of crooks with a poor understanding of the whole situation. 

This transaction became a sort of pyramid selling. Time wasted to assure everyone the “right percentage,” too many people involved, and not following the MJ request of discretion in disclosure of pieces of information. It was a real mess that allowed who had an interest in having MJ bankruptcy to organize themselves and buy some time.

These people had to go through examinations and cross-examination in detail, offering a clear understanding of the dirt that was behind MJ finance troubles. Their statements provide and visualize the vultures that stalked Jackson for about all his life, the way Sony directed and sanctioned his loans from the beginning. The not precisely crystalline attitudes of some of his historic and essential former collaborators, the percentages and bribes applied to his investments, rates that belong to usury banking crimes, prosecuted and convicted in many civilized countries. And last but not least, it shows what Michael Jackson went through during the preparation and all along with 2005, as if the trial and the risk of lengthy detention were not enough.

Michael Jackson at the Santa Maria Court House in Santa Maria California on August 16th, 2004
Fame Pictures, Inc – Santa Monica, CA, USA – +1 (310) 395-0500


During the summer of 2004,  Michael Jackson was preparing to be on trial in connection with the criminal matter involving allegations of child molestation. He was understandably preoccupied with the criminal case and, therefore, could not personally handle his financial and business affairs.

Michael had fired his prior managers, except a few, including the accountant Mr. Whitman. MJ put his brother Randy Jackson in charge of securing a partnering entity to assist in refinancing particular then existing debt. Debts were owed to Bank of America by two of MJ’s Trusts, the MJ Publishing Trust (MJPT), and the MJ-ATV Publishing Trust (MJ ATV).

Randy hired Don Stabler in July 2004, to assist him with the financial management of Michael’s affairs. Mr. Stabler had had an ongoing relationship with Randy Jackson for services concerning tax return. Stabler’s tasks were to order documents and reduce costs.

In September of 2004, Jackson was in a horrific financial crunch.  At the time, the principal concern was the credit line.  Bank of America had an open lockbox and was sweeping all of Michael Jackson’s income into it to repay the interest on those loans. All of the royalty payments and all the other sources of income that Michael had were swept into that BOA account proceeds, and they shouldn’t have done it.  They were, in essence, overreaching. Moreover, the loan terms and conditions were extraneous and very difficult for Michael to manage his own affairs, and as a   result, they wanted to get out of them.

The situation was pretty much tapped financially. There was not enough money to pay the monthly expenses; there were many of the costs for people staying up in the Santa Maria area being charged to Randy’s credit card. Randy’s credit cards had been run-up to the max. Not only his credit cards, but Randy had used the credit cards of friends of his or people who were assisting him during the trial and his representation of Michael.

 (Photo by Hector Mata-Pool/Getty Images)


Tom Mesereau and Susan Yu needed funds to bring experts on due time because they feared that the judge would prohibit them, if not careful, in bringing them on time. In fact, most of the resources were to just get to Mesereau team the money that they needed to hire the experts or to retain them. Throughout the trial, Susan always thought that there was more money than we acknowledged. And she had a hard time believing that Michael Jackson was cash poor.

Due to the enormous expenses derived by the upcoming criminal trial, MJ was looking to refinance the Hayvenhurst property because it was the one asset that was free and clear that could get income. So in an attempt to circumvent the covenant of Bank of America line of credit, it was asked to Janet to get the loan against the Hayvenhurst property. However, she could not handle it.

In October 2004, Mr. Stabler and Randy contacted Robert Pryce of Perfect Circle Entertainment, Inc. with the intent to find sources or contacts in the financial industry to enable refinancing of the BOA debt.  After reviewing the documents received relating to the Bank of America financing and the securitization against the Mijac and the Sony ATV catalogs, the consultant expressed a specific concern detailing various aspects of the documents, including the trust. The analysis was focused on the potential jeopardy to the Jackson Entities’ ownership interest in the Sony ATV Catalog. 

The refinancing purpose was to restructure the outstanding BOA Debt and provide much-needed liquidity to MJ.  Also, the Jackson Entities and their advisors believed that the BOA Loans’ terms and conditions were extraneous and very difficult for MJ to manage his own affairs.

Given the loan amount, the asset of Sony/ATV was more than sufficient. There was no need to have Neverland as a pledge, as well as there was no need to have MIJAC as securitization. Bank of America loan guarantees seemed like it was an overkill request. The Sony/ATV catalog was worth in between one billion, possibly 1.2 billion, which means that the 50% owned by MJ would have an average value of the half. So, why did they need to take all his assets? Something was not right with these loans, and further testimonies will explain it.

Perfect Circle located Prescient, who was “apparently” engaged by the Jackson Entities as an agent to secure financing and “take out” the BOA debt, keeping as security asset the MJ/ATV Trust only. If the loans were funded, Prescient would then be entitled to a fee.

The initial scope of the loan was the $72,500,000 loan of the credit line. That was the focus when these people got involved. The loan was imminent for a disaster that needed to be taken care of first. And that was supposed to be the mezzanine or bridge loan of 90 million dollars. It was the one that could get MJ out of trouble. As previously stated, the $200  million loan was not in jeopardy because it was secured by his interests in the Sony/ATV catalog. 

The line of credit caused everyone the most heartburn. MJ accounting had to provide to BOA with monthly reports because there was a covenant in Michael’s line of credit saying that if at any point in time his accounts payables exceeded $2 million, Bank of America would call the note. So Randy’s role was to try and make sure it kept it below the $2 million. Any funds that either Mr. Jackson received or his trust would go through Bank of America. They would then take the portion needed for the loan. And the amounts not required would then be forwarded to a bank account controlled by Allan Whitman at his firm and then used for paying expenditures.

In that line of credit agreement, there were several covenants, any of which could have triggered a default, which would have caused damage to Michael. One of the most uncommon conditions was that Bank of America finance documents required Charles Koppelman to remain as trustee in the trust governing that asset for so long as the loan existed. It also had Michael Jackson to pay Mr. Koppelman a fee of 1 million dollars a year for his consulting relationship for that trust.

Why MJ had to pay someone $100,000 a month? What did he do for him? What did he get for it, when there were other more pressing matters not being paid. Mr. Koppelman was not a trustee of the MJ Publishing Trust or MJ-ATV Publishing Trust. He was merely a consultant tied into the Bank of America loan, which required him to remain as a consultant and paid separately by Michael Jackson, not for his services on an annual basis, paid quarterly. And that troubled everybody because Mr.  Koppelman was providing no services for the fee he was receiving, and Michael Jackson didn’t have the money to continue to pay him.

In 2003 Jackson hired Charles Koppelman to do some kind of a deal or loan to restructure his contract with Bank of America before the expiring date loan. Mr. Koppelman had at least a two-year head start on working on something to do just that and had people in place who were pretty much ready to go. In fact, they had tendered an offer that Michael flat out rejected.

What was Charles Koppelman’s involvement regarding Michael Jackson and the Bank of America loans, again, still staying in late 2004? None: Koppelman was still trying with Goldman in either buying out Michael Jackson’s interest or financing it in some other way.  John Branca also wanted to introduce a deal with a publishing group called Blackstone Group while helping Koppelman with Goldman. But Michael Jackson was specifically interested in terminating the employment relationship with Koppelman. As a result of that fact, Koppelman was fired by Randy Jackson and by Don Stabler.

Bank of America notified them that it would cause a default in the loan documents and that they could not do that first. Secondly, if they didn’t pay Mr. Koppelman his fee as required under the loan documents, that would also cause a default on the Bank of America loan documents, which would give them a basis for calling the loan. The default would cost MJ a 1 % rate increase and possibly 10 million upfront penalties.

Michael believed that the trial’s primary reason was happening, and going forward, was because of a conspiracy connected with the business involved, and he didn’t seem to trust many of the people around him. Michael was extremely concerned that he had the potential that this conspiracy involved taking his catalog of music Sony/ATV and, the major part of this conspiracy had to do with his ownership of the catalog of containing the Beatles music.

Michael was also disenchanted with Sony Music and how it was managing the Sony ATV catalogs. He also felt that Sony Music was siphoning his proceeds, those that he should have received as part of his interest from the income of that entity and securing it for his own profits on the one hand and expending it for extraneous costs and expenses on the other for purposes of the management of the catalog.  So, at the appropriate time, he wanted to buy out or somehow remove Sony from the transaction.

Barlowe and Dash also talked of MJ’s personal catalog and his possible interest in wanting to be involved in companies on Wall Street that might be interested in financing. There was contact with various brokerage firms and a hedge fund. A couple of the companies expressed an interest but had reservations due to Michael’s pending trial. That was a problem for several companies. An example was when Dash reached out to GE Capital to financing for the BOA debt. GE was very interested in the deal but very concerned about the status of Michael Jackson and the negative publicity that was being generated with it. In the end, no transaction was ever effectuated.

In December 2004, another company appeared in the already crowded scenario. Transitional Investor LLC. The task is the same: refinance the permanent loan, the credit line financing. They added an offer for Michael to purchase the 50 percent interest of Sony Corporation in the Sony Music ATV company. Meanwhile, still in December, a meeting regarding Sony/ ATV catalog was held in New York, and Al Manik, one of the two trustees of the MJ/ATV Trust, sent an email informing he only flew charter. Clearly the expenditure was not authorized this time.

In between November and December 2004, some of Michael’s friend Hamid Moslehi files a civil complaint about no payment followed by a crazy Dr. Sebi and Marc Schaffel.



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