On Tuesday Jackson agreed to an out-of-court settlement with the 14-year-old Beverly Hills boy who accused him of sexual abuse and brought a civil suit against him. Lawyers won’t discuss the terms of the settlement, but sources say that it falls between $10 million and $20 million and that it includes a trust fund. The L.A. County District Attorney’s Office says its criminal investigation of Jackson is “ongoing and will not be affected” by the settlement; the Santa Barbara sheriff’s office is also still investigating. The boy’s lawyer, Larry Feldman, insists that “nobody’s bought anyone’s silence.” Still, in California, victims of sexual abuse can’t be forced to testify. And as criminal defense lawyer and former L.A. County Deputy District Attorney Harland W. Braun puts it, silence follows settlement “as night follows day.”
Why did Jackson, who’s reportedly worth $150 million, take so long to settle? Says one California legal expert, “That’s the $6 million question.” Some think the singer got bad advice from his private investigator Anthony Pellicano and his entertainment lawyer Bertram Fields, both of whom resigned in December. Fields’s colleagues say he objected to a settlement because it would be construed as an admission of guilt and because he wanted a chance to crossexamine the boy. According to the expert, Pellicano and Fields also “apparently believed that if they settled all sorts of people would come out of the woodwork with allegations. But once this whole matter became public, the damage was already done.”
On the professional front, Jackson has become a bad risk, both as a pitchman (Pepsi parted ways with him in November) and as an entertainer (he is being sued for more than $20 million in a fraud and breach-of-contract suit due to his canceled world tour). On the personal front, he has been subjected to a strip-search he called “the most humiliating ordeal of my life.” And he seems to have lost every supporter but Elizabeth Taylor, who proclaimed her friend’s innocence again last week. Says Jackson biographer J. Randy Taraborrelli, “This has been a nightmare victimization … but [Jackson] brought it on himself through tremendously bad judgment. In his fantasy world, people who are different are heroes. In the real world, they’re perverts.”
While Jackson’s life was falling down around him, the boy’s lawyer, Feldman, was busily backing the singer into a settlement. With Jackson due to be deposed in January, the attorney gave him an idea of what he was in for by lacing his public court filings with salacious excerpts from other depositions. Feldman grilled Jackson’s ex-housekeeper, Blanca Francia, about the singer’s soiled underwear for four full pages of transcript. Pellicano and Fields may have opposed a settlement, but Johnnie Cochran (a defense lawyer hired at Taylor’s suggestion) was shrewder about damage control and promptly settled. “If Cochran had been handling this from the beginning,” says a legal expert, “it would never have spun out of control.”
Jackson’s attorneys maintain that the singer is innocent-that the allegations have, in the words of his lawyer Howard Weitzman, “taken an icon of our lifetime and destroyed him.” In all likelihood, we’ll never know if the singer is guilty or not. Feldman’s suggestion that the boy might still testify in a criminal case seems to be at odds with other statements he made about his client last week: “He cannot heal, he cannot get better, unless this matter is put behind him.” Within the Los Angeles legal community, the consensus is that the boy will refuse to testify and that the D.A. can’t make a case without him. As Taraborrelli puts it, “Even a biographer such as myself doesn’t rely on butlers and housekeepers for information.”
The loss of their star witness may infuriate the D.A.’s office, or it may suit them fine. Says Braun, “The D.A.’s sitting pretty. He’s probably glad because [the settlement] gets him off the hook.” Jackson himself must have ambivalent feelings about the deal: he will never be proved guilty, but he’ll never be proved innocent, either. Taraborrelli thinks the singer can still make fans forget this ugly case. “The Michael Jackson redemption of 1995,” he says, “will be something to behold.” It had better be.
title: “The Check Is In The Mail” ShowToc: true date: “2023-01-11” author: “Paul Heim”
If business fades–as is implied by the slide in stocks–tapped-out consumers will catch the blame. Retail sales are softening. Serial shoppers seem to be pausing to catch their breath.
But how bad is that, really? “There’s nothing to say the sky will fall, even with personal debt so high,” says economist Sandra Shaber of the WEFA Group in Philadelphia. She’d pop the whole flock of Chicken Littles into a casserole if she could. Year after year, Shaber says, most Americans manage their money well. Now and then they charge up a storm, as happened last Christmas. Then they repent and throttle back. This ebb and flow is as natural as the tide. Recessions often follow consumer spending shifts, but not always.
Some of the debt statistics today are actually looking pretty good. On-time payments improved for auto loans and revolving home-equity lines of credit. Total delinquencies are up, but not by a troubling amount. Loan growth slowed in May for the third straight month, implying that the borrowing orgy has petered out.
A lot of the increase in credit-card use isn’t adding to debt at all. It’s “convenience” shopping by people who choose to put down plastic in place of cash. Some 36 percent of account holders now pay their monthly bill in full, up from 29 percent in 1991, according to surveys by RAM Research in Frederick, Md., which gathers industry statistics. In many cases, they’re using their cards to turn a profit by racking up frequent-flier miles and other rewards.
But although the overall burden of debt isn’t as bad as the headlines make it sound, a small but growing minority is indeed in crisis. The banks are their enablers. Credit cards are so profitable that banks have been dealing preapproved cards to practically anyone with a heartbeat and a mailbox–former bankrupts, 20-card wonders, heavy debtors, octogenarians who never had cards before, even the poor whose credit lines sometimes exceed their incomes. In 1994 and 1995, lenders mailed some 5 billion credit-card solicitations. That’s 32 offers for every American between 18 and 65, says George Salem of the New York investment bank Gerard Klauer Mattison & Co. Credit-card debt declined between 1983 and 1992 for families earning more than $50,000, but more than doubled for those earning under $10,000.
Most of the marginal borrowers manage to pay. In fact, they’re a gold mine because they’re charged high interest rates. If they pay late, they’re socked with fees. On fees–have you noticed? –card issuers are getting to be as inventive as banks.
Sooner or later, however, these borrowers suffer high delinquency rates–not because they’re more careless than others but because they’re more vulnerable to life’s financial blows. The bankers don’t care; they price their cards to cover the risk. It’s the newbie users who suffer, all the way to bankruptcy court.
But bankruptcy isan’t entirely the fault of artless buying or merciless lending. SMR Research, a financial-services firm in Budd Lake, N.J., finds that bankruptcy bears only a slight relationship to debt-to-income ratios or, for that matter, to unemployment rates, rates of mortgage delinquency or poor economic conditions.
The critical factor appears to be state and local public-policy choices, which may put debtors in harm’s way. They lead to huge and unforeseen financial burdens, ruinous even to families that don’t overspend. Some “insolvency events”:
An injury or serious illness with no health insurance. Nevada, with the fourth highest bankruptcy rate in the United States, also has the largest portion of uninsured (nearly 23 percent of the population lacked coverage in 1992). Georgia, Mississippi and California also rank high. Hawaii, by contrast, with only 6 percent uninsured, has one of the lowest bankruptcy rates.
In America as a whole, the total number of uninsured has recently been growing by roughly 500,000 a year–every one of them bankruptcy bait if they’re overwhelmed by medical bills.
An auto accident with insufficient insurance coverage. Bankruptcy may be the only way out if you lose a horrific judgment in court. Seven states don’t require drivers to carry liability insurance, SMR says. Four of them (Tennessee, Alabama, Mississippi and Virginia) are among the eight states with the highest bankruptcy rates. Among cities, bankruptcy’s gold, silver and bronze medals go to Memphis, Birmingham and Tuscaloosa.
Divorce. Lose your marriage, lose your money. Looking state by state and city by city, SMR found a clear correlation between spousal split-ups and bankruptcy rates. California and Oregon stand near the top of this problematical list. But which is the chicken and which the egg? “Usually, divorce follows debt, not the other way around,” says bankruptcy attorney Alan Nisselsohn of the New York law firm Brauner, Baron, Rozenzweig & Klein.
Self-employed business failure. This calamity isn’t state specific, but the toll will rise whenever the economy slows. To support their hopes, entrepreneurs have been known to borrow against every asset they have, including homes and credit cards. If the business fails, bankruptcy may be inescapable.
You can stave off lesser blows, simply by carrying less debt. George Kinder, a Cambridge, Mass., financial planner, offers this advice for lightening your load: (1) List the after-tax cost of each loan you have. (2) Pay the minimum on your low-rate debt and as much extra money as you can afford on the debts that are costing you the most. (3) As the balance declines, plow your interest savings into yet more debt reduction. That’s the highest return on investment you’ll find in the economy today.
