Cerberus Capital Management unloaded Maxim magazine in late 2013, going down as possibly one of the most litigious divestments in publishing history.
Lawyer Harvey Newkirk, formerly with the Bryan Cave firm, this week sits in the legal dock in Manhattan federal court, accused of concocting a fraud with Calvin Darden Jr., a convicted felon, to rob investors of millions of dollars by falsely presenting successful businessman Calvin Darden Sr. as the leading force behind the deal.
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In fact, prosecutors allege, it was the senior Darden’s ne’er-do-well son — who had already spent three years in jail on an unrelated stock swindle — looking to buy the lad mag.
The younger Darden pleaded guilty to his own Maxim-related fraud charges in November and is cooperating with prosecutors in their pursuit of Newkirk.
Newkirk was fully involved in the scam, prosecutors allege.
Newkirk’s lawyer, Jonathan Harris, claims Newkirk is no more than a “victim” — just one of many duped by “con man” Darden Jr.
At least two civil suits were filed by lenders who forked over money because they thought they were lending it to Darden Sr. — only to learn otherwise when it was too late.
One of the lenders was Andrew Nikou’s OpenGate Capital, the company that recently sold its TVGM Holdings (owner of TV Guide magazine).
OpenGate tried to buy Maxim in early 2013 but was outbid by Darden Media Group.
OpenGate nevertheless was lured back in as a short-term lender to Darden. It agreed to provide $3.1 million in financing in November 2013 — for five days.
Darden promised to repay OpenGate $3.41 million on Friday for the loan made on Monday, according to court testimony.
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In addition, OpenGate was to get 10 percent in Maxim plus a $500,000-a-year annual consulting fee, according to testimony. But OpenGate never got a dime after it lent the cash — as the alleged fraud was uncovered.
Once the OpenGate deal blew up, Darden Jr. and Newkirk turned to Mark Weinberg, at Versant Funding and MDW Funding, who agreed to a short-term loan of $5.5 million.
Weinberg’s cash was to be held in escrow until stocks held by Darden Sr. were placed in a collateral account.
But there were no stocks because the elder Darden was never a part of the deal, it is alleged.
Roughly $4.9 million of the $5.5 million of Weinberg’s cash, forwarded to Newkirk, disappeared on Nov. 12, 2013, when a fake email, purportedly from Weinberg, released the money, prosecutors charge.
“What the f–k is going on?” Weinberg wrote in an email to Newkirk on Nov. 12 after learning his cash was gone, according to trial testimony. “I did NOT send that email [releasing the escrow fund].”
“It was one of the most shocking things that ever happened to me in my business life,” Weinberg testified.
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Original article and photo credit: NY Post
