There is also a bunch of stuff keyworded here at FR about Burkle.
Now, for a little trivia tidbit since you seem to be havin’ a good time looking at all of these relationships between the L.A. powerhouses. You have to wonder how they made all that money!
Did you ever see the movie “Billion Dollar Bubble”? It was about a company called Equity Funding Corporation of America, based in Los Angeles (on the 28th floor of the 1900 Avenue of the Stars building in Century City, to be exact). They marketed a package of mutual funds and life insurance to private individuals in the 1960s and 70s. It collapsed in scandal in 1973 after an ex-employee blew the whistle on massive accounting fraud, including a computer system dedicated exclusively to creating and maintaining fictitious insurance policies. Investigation found that from 1964 onward, as many as 100 company employees had engaged in organized deception of investors, auditors, reinsurers and regulatory authorities. The ficticious policies were sold to reinsurers for 180% of the first year premiums. Of the more than $3 billion worth of life insurance ostensibly issued by Equity Funding after that time, more than $2 billion proved to be fictitious.
On November 1, 1973, a Federal grand jury in California indicted 22 Equity Funding executives and employees. When all was said and done, they were all convicted—getting anywhere from 3 months to 8 year sentences. Stanley Goldblum, the President of the firm got 8 years. (Because the Equity Funding Life Insurance Co., a subsidiary, was incorporated in Illinois and other aspects of the case related to that state, Goldblum also received a three to 10-year sentence in Illinois which was allowed to run concurrently with the eight-year federal sentence.)
The company began in 1960 and the fraud was tracked back to having started in 1961. So, it had progressed for at least a decade at the time of the 1973 indictments. In 1969, a Los Angeles mudslide killed the head of the company, Michael J. Riordan, and his partner Stanley Goldblum took the helm. Because of Riordan’s death, he was never prosecuted in the affair but his heirs were sued (unsuccessfully, as I recall) for $26 million that Michael Riordan had benefitted from the fraud. In 1971, Michael Riordan’s wife, the primary beneficiary, became Jacqueline Riordan Getty, marrying George Franklin Getty II, son of oil billionaire J. Paul Getty. Getty died in 1973.
This company, booming from growth due to ficticious insurance policies, also became a hot stock to own. It was pumped by none other than the Michael Milken crew at Drexel Burnham Lambert, who was sued by investors in Equity Funding stock.
Oh, yeah—Michael Riordan was Dick Riordan’s big brother (New York transplants).
Milken who served time for fraud-----is Burkle's best friend----Burkle was instrumental in putting Milken on the list of Clinton's midnight pardon scam.
Quite a story, very interesting! I never saw the movie, but I’ll find and watch it (The Billion Dollar Bubble, 1976, with James Woods).
I have heard a few times of Equity Funding during Enron and WorldCom/MCI implosion, mentioned in the same context as “tulips” and South Sea and other bubbles, which are pretty well known, but I never heard the details of Equity, so I really appreciate you filling in that gap in my knowledge of financial history as well as LA financial power structure.
Thanks.
Ok, the Riordan name drop was really interesting as is the Goldblum. Isn't Diane Feinstein married to a Goldblum? Was that Riordan the one that Bill Simon trounced in the 2002 Repub Primary?
In the late 1960's I was working for a Davis, CA based company that was trying to duplicate this "program" and called it the "balanced investment plan" or BIP, for short! When the negative publicity on Equity Funding broke in '73 it pretty much washed our company out of that whole scenario.