Recreating (and advancing) pk’s censored domains: Macroinformation.org &
Knatz.com / Personal / Stories / Themes / Business /
@ K. 2005 11 24
|Tax Shelters||By Misha|
1978. PK Fine Arts, Ltd. was plodding along. I was staying alive. The income for each year was doubling. It was never enough, never nearly enough, but it was on an upward curve. Artist David Tamerin introduced me to some tax shelter people: Misha. Misha said he liked me, said he liked my artists: my style, my eye, my salesmanship. Misha was going to publish ninety editions for me using my artists, plus one or two of his own additions. I didn’t like his additions, but what the hell. My artists were to get $1,000 per image, selling the copyright outright. In some cases they’d get more. In all cases I would get $1,000 per edition: and distribution rights. My grand was to help with marketing — advertising and such, to help with insurance, and to pay me for being so great. I didn’t see how I could afford not to.
I didn’t trust Misha an inch, didn’t believe a word he said; but believed that I was safe so long as I could tell the artists to refuse to sign the graphics if anything seemed wrong.
I was naive. Everything was wrong. It took time to find out how wrong. And all of the graphics got signed. … My control was very much compromised, Misha talked to my artists behind my back: and they let him! (He was the one who seemed to have the money.)
Of course none of the money was Misha’s. He was connecting me and mine to a Philadelphia lawyer who was selling the tax shelters. Now that’s the business I should have been in. The tax shelter salesmen themselves needed tax shelters! (I had no interest in being the Philadelphia lawyer, or Misha. The lawyer was making close to seven figures: and Misha was talking … Never mind what Misha was talking.) The actual money came from dentists, plumbers, hi-tech hotshots, manufacturers.
Misha’s Madison Avenue office made me increasingly nervous. He hid in there behind triple locks. I started hearing stories of his clients from last year hammering on the unanswered door, screaming that they’d kill him. “Where’s my money?!”
Trouble was, it was already underway.
Then one day he calls me. Come in and get my checks.
Sure enough: he had a stack of contracts, each with a check attached, each check made out to PK Fine Arts, Ltd. $72,000 was that day’s total, a lot more coming.
Ah but there was a mistake. The silly Philadelphia office had made a mistake. Money that was supposed to have gone to Misha got included in my checks: I was supposed to get $1,000 each. Here the checks were made out for $2,000, $3,500, $4,000 … I was such a good guy: certainly I’d make out my check for the discrepancy, and Misha would hold it till my deposits cleared.
Sure. I’m such a good guy. I write Misha a check for much of the $72,000. I agree to do the same when the next stack of contracts arrive.
Meantime, I’m getting editions, told they’re ready. I go pick them up, rent space in a warehouse. Actually, even the ugliest of them don’t look as bad as I’d expected.
The other stack arrives at Misha’s office. I give him another check. My deposits clear: I’ve got $90,000, as promised: and the other editions are getting finished daily.
I started narrating this story today as part of my Help! Police! section: a cop threatening me after I’d pressed the burglar alarm, not troubling to see that I really was in danger, needed help. But the bulk of the story belongs here. I have to explain who Misha was: it was some hood attached to Misha like a leech that was doing the threatening. Misha was trying to detach him by attaching him to me, convince his debtor’s hood that I had Misha’s money. Misha was broke, and so was I, and I owed Misha nothing; but ire. So, the story is getting told inside out.
Misha’s Tax Shelters
I’ve already told some about the tax shelters. I may tell more. But right now I’m just going to detail some of what was wrong with MY tax shelters: Misha’s tax shelters:
One of Misha’s many lies was that the Philadelphia office had screwed up. The checks were correctly made out. PK Fine Arts. Ltd was supposed to get $2,000 to $4,000 per edition: not according to Misha, but according to the Philadelphia lawyer. I now know, to my sorrow, that even that wasn’t enough. When my business had a few hundred bucks, I was fine. When my business had $90,000 I was flat broke within months.
The flood of tax shelters half-crippled the business it was supposed to help: the multiple original graphics business, artists, secondary art markets … Suddenly art was glutting the galleries. Galleries which had paid cash, now wanted consignments: or stopped paying even in 30 days. Suddenly artists were spoiled rotten. Last year they made thirty cents, this year they make $100,000 … and next year they can’t even make thirty cents.
Misha didn’t lie to me about what money I got in the deal; he lied to me about what I was supposed to get. He was already making plenty. Only greed, combined with Middle Eastern ethics, made him want to gouge my end. It was foolish because with the money I was supposed to actually get it all might have worked anyway, or crashed less violently. Never having had a paid staff before, I had no experience of how money could hemorrhage. If I had hired people, one at a time, under difficulty, maybe I could have gotten them to produce, rather than merely drain.
But then lots of distributors crashed after the shelter glut: and they didn’t all get cheated on their cut. I introduced other distributors to Misha, less inexperienced than I, and they all told Misha to take a flying fuck. They recognized his $1,000 per to be what it was: a formula for bankruptcy. They wanted (and deserved) far more than was actually in the Philadelphia contracts.
Misha was supposed to get kickbacks from Philadelphia on my sales. If I could have sold properly, he would have gotten far more, eventually, than the $90,000 he cheated me out of, that I willingly gave him, not understanding the situation.
Another thing that made the situation untenable is that some loose cash made me want to publish more than scrounge around selling. But I was the only one in the company, no matter how many I hired, who had actually sold anything! And with all these salesmen, I stopped selling! I wanted to promote Vickrey. But I couldn’t. Not while getting crushed under new obligations and expenses. Very complicated, maybe you see some of it as is.
Misha encouraged my dreams. He told me that he liked the way the 1978 tax shelters had gone. Now he wanted to get into the legitimate publishing business: using me, my eye, my artist relations … I said let’s publish Vickrey. How about budgeting ten editions the first year, $25,000 production and promotion budget per image. Ido will be the chromist. Misha said, Fine, sounds right, no problem.
But what Misha actually did was sink every penny he earned, every penny he’d cheated, every penny he didn’t put in mink on his mistress’s back, into some hi-fi store: top end audio. And I guess he had borrowed God knows how much from God know whom to put more. And it crashed. Faster than PK Fine Arts, Misha’s whole empire collapsed.
So he starts calling me. How’s sales? How much do you owe me?
Sales? There are no sales. My salesmen can’t sell dick. And they’re stealing me blind. And they expect checks at week’s end. That’s what I could have said. But I didn’t. I gave Misha a little taste of his own medicine. I dangled him.
So one fine day Misha and his whore and this hood show up on Lafayette Street. Misha couldn’t go pee without this guy, looked like cross between Clint and a rat, attached to him. The bosses wanted their money.
I doubt that the enforcer was armed. I doubt that the enforcer was really going to harm Misha, or Phyllis, or me. I suspect that the enforcer’s continuous presence was enough to get people who could pay to pay. But Misha was flat broke, couldn’t even feed his kids. His Madison Avenue office was closed. (I bet his neighbors there were glad.)
The hood stands by my window behind me. I’m high enough up: 7th or 8th floor. The hood tells me how much he likes this neighborhood, how “things happen” here: bodies found in the river, bodies found in the sewer … We’re in Little Italy, for CrySake: though I doubt that this creep was actually Mafia.
I didn’t think he was going to throw Misha or me out the window, certainly not me: I didn’t owe him a dime. I didn’t owe him any but the commonest courtesy. And once he made himself at home in my office, uninvited, I didn’t owe him that.
The trio ignored my hints that I was closing up. I expected to live through it: still, I pressed the hidden alarm under my desk.
Eventually a cop came. The hood instantly looked as innocent as innocent. “We’re all leaving now, folks,” I announced.
The cop didn’t make any inquiry as to what was wrong. I would have told him if he had. The cop was just instantly furious, and abusive: threatened me: which the hood hadn’t: not out loud, just by hints.
How well would the Mafia do if they recruited from the same stock police recruits come from? Sure there are good people, even some with a brain, who become cops; but which pool is in general closer to the sewer? Wise guys? or cops?
PS Finally Misha himself threatened me. And that’s when I told him that I had strung him deliberately: payback, just a tad. His kids had no food? I was sorry for the kids, but not sorry they were his kids. He could burn in hell.
Misha was Israeli. That may not have bothered him a whit.
In the art business, in maybe any business, God, how the European Jews hated the Arab Jews: gave everybody a bad name.
Actually, I get a kick out of some of the Sephardim I’ve known, and done business with. But I’d had it up to here with Misha. I am not familiar with American Jews making bloated promises, but the pack of Israelis I was dealing with in 1979 made nothing but. Details on others must wait for another time.
I should also tell about the tax shelter deal I was invited into for 1979. In a word for now, the 1978 deal netted me $90,000 up front and earned me $4,000,000 new inventory. The deal for 1979, different, seemingly better people, was supposed to net me $250,000 up front and a potential $55,000,000 in new inventory. Some of that “inventory” though would have been in secondary market things I wanted nothing to do with: cocktail napkins, tee shirts …
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