Why Does Everyone Love a Hollywood Scandal? : The Heidi Fleiss Case Has Captivated the Public, the Press and Hollywood Itself--Much Like a Famous Case 15 Years Ago

Controversy is innate to the Hollywood lifestyle with the endless stream of divorces, extramarital affairs and drug rehabs. So what is it about the tale of an alleged madam to the stars that has riveted so many, from the sleek offices of the film community’s elite to newsrooms around the world to the coffee shops and beauty parlors of Middle America?

One need look 15 years back for the last scandal that so rocked Hollywood, the case of then-Columbia Pictures President David Begelman. The differences between the two high-profile affairs are many and obvious, but they share at least one commonality in their extraordinary captivation of the media, industry and public.

“I think the public is always titillated by sex, money, power and scandal, and their interrelations--particularly in Hollywood,” says author and former Wall Street Journal investigative reporter David McClintick, whose 1982 bestseller “Indecent Exposure: A True Story of Hollywood and Wall Street” gives an insider’s look at the Begelman scandal, which climaxed when Begelman was found guilty of embezzling $61,008 worth of Columbia funds.

Whereas the Begelman ordeal revolved around one man’s financial improprieties, the tentacles of the Fleiss scandal potentially extend much further by mixing sex and drugs with the rumored misappropriation of studio funds by more than one Hollywood player.

“If the allegations are true, I can’t think of another scandal where so many people were caught in the web,” said one insider.

Like Begelman, the new scandal stands as a symbol of corruption in Hollywood. If Begelman himself has any opinions on the situation, he is maintaining his usual anti-press posture, declining to return repeated calls from The Times.

Needless to say, many others have plenty to say. Hollywood is obsessed with the Fleiss story, with tongues wagging for names to be named.

Evidenced by the appetite for tabloid newspapers and tabloid TV, the general public finds “the flaws of the rich and famous and powerful very enticing,” suggests one industry veteran who like many interviewed for this article asked to remain anonymous.

Dr. Peter Loewenberg, a Westwood-based psychoanalyst and a UCLA professor, observes that scandals share a voyeuristic aspect: “It’s a vicarious way of living something when you read these stories about other peoples’ vulnerabilities and the lasciviousness that underlies the pretense of morality.”

Some assert that a media circus has given rise to Fleiss’ notoriety, but one Hollywood executive defends the press: “The media does exactly what Hollywood does--it gives audiences what they want.”

Another industry source adds, “There’s something exceptionally exciting not only for journalists but for waitresses and hairdressers and others across the country--that is people want to see the rich and famous publicly embarrassed for their sexual and financial exploits. It makes them feel there’s some justice in the world for guys who are living too high on the hog and consume as conspicuously as those in Hollywood do.”

If the Fleiss case reminds people of the Begelman affair “it’s probably because scandals illuminate the power grids of Hollywood,” McClintick suggests. If journalists “can get to the bottom of this, people will learn a good deal about the power dynamics of Hollywood--who has the power to run an operation like that with impunity, without fear that it will ever be exposed, and who has the power to cover it up.”

One of the similarities shared by both scandals is that each was hot on the Hollywood rumor mill before becoming national news stories.

Fleiss and her circle were in many ways, Hollywood’s worst-kept secret for a long time before her arrest catapulted her name into print in June.

As long ago as August, 1992, John Richardson of Premiere magazine wrote about Fleiss, her ex-boyfriend Ivan Nagy and his ties to Columbia Pictures and his friendship with Columbia executive Michael Nathanson. But his editors decided not to run the story, he said, because the characters seemed too peripheral.

Fleiss’ name finally made the papers in reports of her June 9 arrest for pandering and selling cocaine. That short story ran inside The Times’ Metro section on a Saturday, but it generated wide response nonetheless. By Monday, reporters in three sections of The Times and at the entertainment trade papers were being peppered with anonymous telephone tips that Fleiss may have had connections to a major studio. The callers named names, including Nathanson’s, but none of the assertions could be substantiated. Still, the gossip mill ground forward, and by now, the Nathanson rumor was a fixture in the entertainment industry; Columbia money, the assertion went, may have been used to procure drugs and call girls.

On July 29, New York Post gossip columnist Richard Johnson wrote “heads are about to roll at a certain movie studio” because of a mention in Fleiss’ “big, black address book”: “It seems the services of those primo call girls . . . were paid for by the studio and written off as ‘development costs.’ ”

Then on Aug. 1, The Times ran a front-page feature detailing Fleiss’ life as an underground celebrity and addressing the rumors that surrounded her arrest. The story reignited the rumors of Columbia’s involvement, which spread like wildfire throughout the entertainment community.

The possibility that those rumors could not be quelled was what prompted Nathanson’s private eye Anthony Pellicano and attorney Howard Weitzman to go to The Times three days later to denounce their client’s association with the Fleiss scandal. That put Nathanson and Columbia’s name in print for the first time, taking the lid off the can of worms.

As for the Begelman scandal, former Times reporter Dale Pollock, who covered the story for Daily Variety, recalls that “rumors were rampant for weeks” prior to the first public acknowledgment by Columbia that something was amiss. That was on Oct. 3, 1977, when the company announced that Begelman had been suspended as president of the studio’s motion picture and television divisions pending an investigation of alleged “unauthorized financial transactions.”

“The rumors were that company funds were used for something clearly of a personal nature,” recalls Pollock, now a producer who heads A&M; Films.

The Fleiss scandal could bare yet another resemblance to the Begelman case if speculation is proven that Columbia and its Japanese parent Sony are trying to cover up any financial wrongdoings by any of its executives or associates. Sony and Columbia have been extremely tight-lipped about their internal investigation, repeatedly issuing “no comment” to all inquiries from reporters.

In spring 1977, Columbia initially tried to sweep aside allegations made by actor Cliff Robertson that Begelman had forged and cashed a $10,000 check in his name.

McClintick reminds how commonplace it is for Hollywood to protect its own: “The inclination in Hollywood is ‘let’s keep it within the family and not embarrass anybody.’ An arrogance of power comes into play--it’s a very strong elemental force in Hollywood.”

Two months after his suspension, Columbia said Begelman had been reinstated as the studio’s president, but he lost his corporate status. Although an in-house investigation found Begelman guilty of improperly acquiring $61,008 in company funds, Columbia defended his reinstatement saying the money had been repaid with interest. Since Begelman was undergoing therapy, the studio determined “emotional problems which prompted these acts will not impair his continuing effectiveness as an executive.”

Columbia’s handling of the situation stirred up the media and the scandal exploded when McClintick broke a story in the Wall Street Journal divulging that the “alleged unauthorized financial transactions” included three forgeries by Begelman: the check to Robertson, a $5,000 check made out to director Martin Ritt and another $25,000 check made out to Ma Maison restaurateur Pierre Groleau. McClintick had made the discovery while writing a routine profile of Columbia and its brass. “My observation was that something was totally preoccupying the high command of the company,” recounts McClintick, who dug further. “It was those revelations that set off a media storm.”

In February, 1978, Begelman was forced out of Columbia. In announcing Begelman’s tendered resignation, Columbia chairman Leo Jaffe mentioned the media pressure, noting that the ongoing “rumors and speculation continued to be reported in the press” had precipitated the company wanting to “resume a more normal atmosphere.” Nonetheless, Columbia gave Begelman an independent production deal.

In May, 1978, Begelman pleaded no contest to charges of grand theft stemming from the forgeries. He was fined $5,000 and placed on three years probation. His parole was terminated in June, 1979, after his grand theft conviction was reduced from a felony to a misdemeanor and he completed a public service documentary.

Begelman was then hired in 1979 to head up MGM, where he oversaw the making of some of the most costly flops in the studio’s history, including “Pennies From Heaven” and “Buddy, Buddy.” Then followed a short stint at MGM’s United Artists, after which Begelman resurfaced as head of Sherwood Productions. After Sherwood was dissolved, Begelman and others formed his present company Gladden Entertainment.

All of this raises questions about why individuals who appear to have it all would risk jeopardizing their careers.

Dr. Stuart Fischoff, a media psychologist with Cal State Los Angeles, surmises: “I think in Hollywood, people get into a kind of mind meld. You can come in as a relatively moral and ethical person, but eventually (Hollywood) produces a re-socializing of a subculture with different norms and ethics based on hedonism and materialism.

“It’s hard to know what’s going to breach the bounds of acceptable criminality in Hollywood. . . . In a climate of insecurity and huge finances, anything goes, until it doesn’t. It produces a very strange mentality.”

Times staff writer Shawn Hubler contributed to this story.