Investment Fraud Newsroom

Michael Jackson is so strapped for cash, he may be forced to start selling assets, including the song catalog

Super star Michael Jackson is so strapped for cash, he may be forced to start selling assets, including the song catalog of The Beatles, sources tell The Post.

Jackson, who overspent his income by more than $8 million last year, has been advised by his brother and business manager Randy Jackson to stop paying some creditors in order to stanch the bleeding.

One West Coast art gallery told The Post it plans to file a suit against the former King of Pop this week for nonpayment of bills.

"Randy Jackson is our contact and not paying," said a representative of the West Hollywood-based Mayfair Gallery, where Jackson allegedly failed to pay $179,000 of the $379,000 he spent on antiques, including a malachite urn, Louis XVI-style bust clock and a silver bread holder. 

"Jackson doesn't pay on time," said the rep. "They say this week, next week, next month and then nothing happens. We are serving him next week."

This would be at least the fourth lawsuit for nonpayment against Jackson. The mother of his children, Debbie Rowe, is suing him for $1 million in alimony, and a former manager, F. Marc Schaffel, is asking for more than $3 million for services.

"If you look at the patterns in these types of situations, [Jackson] must start shedding assets," says Jack Myers, a media consultant and industry newsletter publisher. "He has too many liens, and he's not making money from his own albums anymore."

Myers said the most likely sale is of Jackson's prized possession — a 4,000-song music catalog of everyone from The Beatles to Bob Dylan to Pearl Jam. It's worth at least a half-billion dollars.

Jackson repeatedly has used the catalog to raise money, first by selling a 50 percent stake to Sony in 1995 for $100 million.

More recently, Jackson took out a $200 million loan from Bank of America using the catalog as collateral. But Jackson's credit is so bad that the bank insisted on an arrangement where it takes its payments automatically from the singer's royalties.

If Jackson sells the catalog, Bank of America is entitled to half of the profits.

Jackson has been in a precarious financial state for some time. He owns homes, cars and art, but has not unloaded any significant asset — preferring to rely on loans.

In 2002, he used a diamond watch as collateral for a $2 million loan from Bank of America, according to Fox News columnist Roger Friedman. The year prior, Jackson was sued for $1.45 million by David Orgell, a Beverly Hills jeweler, for allegedly taking that same watch home and then failing to return the watch or Orgell's calls.

But the legal defense for the current molestation case, which could cost Jackson $5 million or more this year alone, will break the back of his unstable finances, according to legal experts. Even his sprawling Neverland Ranch estate has an $18 million mortgage.

Sony officials said they are in constant negotiations to buy the rest of the catalog, but Jackson has stalled. Though selling his share would solve his debt problems, it would cut off his primary source of income.

Jackson makes an estimated $30 million a year from the catalog and his own music, though his own records account for a smaller and smaller portion of that amount. A royalties lawyer who worked with Jackson said he brought in about $5 million last year from "Thriller," "Bad" and his other hits.

But once you subtract Bank of America's take (about $13 million), and the costs of his legal defense, taxes and upkeep on the sprawling Neverland estate, Jackson ends the year $8 million in the hole.

Selling the catalog would leave Jackson with only about $150 million after paying off Bank of America — hardly enough to sustain a man who buys Rolls-Royces on a whim and faces expensive legal challenges.
Jackson's financial troubles have been piling up:

Debbie Rowe, Jackson's former wife and mother of his two children, Prince and Paris, has not yet received her yearly $1 million alimony payment. As a result, she is retaliating with a visitation suit and is considering auctioning off her diamond engagement ring to generate cash.

 In 1993, Jackson settled for an estimated $15 million with the family of a boy who alleged molestation. But beyond the settlement was the loss of endorsements. McDonald's, concerned about public perception of Jackson, pulled out of a multimillion-dollar agreement to sell one of Jackson's singles in its restaurants.

In June 2003, Jackson settled a $12 million lawsuit filed by his former financial adviser, Union Finance and Investment Corp., alleging that Jackson failed to pay his fees.

 In December 2002, Jackson was ordered to pay concert promoter Marcel Avram $5.3 million for canceling his scheduled appearances at two millennium concerts. Jackson said a spider bite on his foot caused him to limp during the trial.

A November 2004 lawsuit filed by former gay-porn producer and Jackson adviser F. Marc Schaffel seeks $3.1 million in unpaid loans and fees.

The complaint alleges that Schaffel paid Jackson's expenses and provided $8.5 million in loans and that "Jackson's need to borrow cash from plaintiffs greatly accelerated when Jackson's increasingly more frequent excessive use of drugs and alcohol impelled him into irrational demands for large amounts of money and extravagant possessions."

In November, Joseph Bartucci Jr. filed a civil complaint in New Orleans federal court claiming that Jackson had sexually abused, battered and imprisoned him during the 1980s, when the claimant was 18 years old. His suit is ongoing.

The cost of the current trial will be even more staggering, but Jackson will likely spare no expense, since a conviction could send him to prison for years.

"This will cost Michael Jackson millions — and that's before the lengthy list of other [pretrial] support," says Victor Rocco, criminal-defense attorney and former chief of the Criminal Division for the U.S. Attorney's Office for the Eastern District of New York. "The defense lawyers are only the tip of the iceberg."

Jury selection also includes weeks of preparation. J. Lee Meihls, who consulted for the defense in both the John du Pont and Robert Blake murder cases, could cost Jackson more than $3,000 per day, according to Dr. Joseph Rice, president of the Jury Research Institute.