Burkle gets Bill Clinton's ear, no respect from Ovitz
Sunday, 11 November 2007
Seth Lubove
“Sweet'' Alice Harris can't heap enough praise on Los Angeles billionaire Ronald Burkle. The founder of investment firm Yucaipa Cos., Burkle made his fortune in the grocery business and opened the first supermarket in the gritty Watts neighborhood long abandoned after the 1965 riots.
When Burkle was inducted into the Black American Political Association of California's Political and Religious Hall of Fame in November 2006, Harris accepted the award on his behalf.
``Come Thanksgiving, our senior citizens and the ones that really need turkeys will get turkeys because of Mr. Ron Burkle,'' Harris said of his donation to the community group she founded.
It was just one example of Burkle's philanthropy. The 54- year-old California native estimates he's raised $100 million for charities and politicians, opening his 5-acre (2-hectare) Beverly Hills estate to the City of Hope, the Los Angeles Ronald McDonald House and the Rape Treatment Center at Santa Monica-UCLA Medical Center.
Another picture emerges from lawsuits, U.S. Securities and Exchange Commission filings and interviews with business associates. Burkle is accused of exploiting his relationships with unions to muscle control of companies while he sues partners who cross him.
``He gives many occasions to many people to sue him by his conduct,'' says Los Angeles attorney Hillel Chodos, who represented Burkle's ex-wife, Janet, and his son's former nanny, Chelsea Fesenmaier, in separate lawsuits.
Burkle sued Fesenmaier in January 2004, claiming she'd made fraudulent charges on his credit card. He dropped the suit in January 2006. On Dec. 20, 2006, Fesenmaier sued Burkle in Los Angeles Superior Court, alleging malicious prosecution. Her suit is ongoing.
Burkle, who started as a box boy in a Stater Bros. food store at 13, says he's completed $40 billion in deals after founding Yucaipa in 1986 to invest in the grocery industry. He hit the jackpot in 1998 when he sold his Fred Meyer Inc. supermarket chain to Kroger Co. for $13 billion in stock and assumed debt.
Since then, Burkle has sued Hollywood agent Michael Ovitz and New York-based real estate developer Raffaello Follieri. Burkle or Yucaipa have been sued by Burkle's daughter, a private jet charter company, former part-time New York Post gossip columnist Jared Paul Stern and various investors in companies in which Burkle owns stakes.
Former Los Angeles Mayor Richard Riordan sued Burkle on Sept. 6 and then filed a request to dismiss the case less than two weeks later after Burkle agreed to repay Riordan a portion of an investment.
``The more money you make, the more you end up as a target,'' Burkle says in a conference room in his office on the Sunset Strip in Los Angeles.
One of Burkle's longest-running feuds involves a soured deal with Ovitz, whose Creative Artists Agency represented Tom Cruise, Steven Spielberg and Robert Redford. Burkle originally sued Ovitz, 60, in Los Angeles Superior Court in February 2005 over a 1998 partnership he claims the two had formed to participate in each other's investments.
Burkle also says Ovitz failed to pay him at least $16.5 million that Ovitz owed on Internet companies they had agreed to invest in equally. Ovitz denies there was a formal partnership. The litigation has escalated into an all-out war.
Burkle is furious that Ovitz allegedly hired Hollywood private eye Anthony Pellicano to spy on him. Ovitz denied in a court filing that he hired anyone to investigate Burkle. Ovitz filed a counter complaint arguing that if Burkle had a right to share in his investments, then Ovitz should get a piece of Burkle's much larger deals.
Currently, both sides are fighting each other on demands for investment records and depositions.
``Mr. Burkle's conduct here is, in a word, inexcusable,'' lawyers Eric George and Marta Almli of the Beverly Hills law firm of Browne Woods & George LLP said in a Sept. 12 filing asking a judge to force Burkle to sit for a deposition. Burkle's lawyers say he was out of town that day.
``The very allegation of partnership made by Burkle would require Burkle himself to pay substantial sums to Ovitz,'' George said in October.
The bitter allegations are detracting from the benevolent image Burkle is cultivating through his philanthropic foundations and donations and his friendship with Bill Clinton. Until last year, Clinton was an adviser to three of Burkle's funds, helping scout investments and other tasks.
The former U.S. president remains a frequent houseguest at Green Acres, Burkle's mansion, and a passenger on Burkle's private Boeing 757.
Burkle jokes he stages so many soirees -- including a March fundraiser for Hillary Clinton -- that he's made his landscaper wealthy from repairs to the estate's lawns. The landscaper, Avraham ``Avi'' Shemesh, co-founded CIM Group Inc., which controls much of the real estate along Hollywood Boulevard.
On Oct. 7, the Tony Hawk Foundation descended on Green Acres for a fundraiser that included a 50-foot (15-meter) half-pipe. Among the 1,000 guests were the mayor of Compton, California, and 14 youths who want to build a skatepark in that city.
``He doesn't have to do what he does for us,'' Harris says. ``When you meet him, he's just as humble and meek as he could be.''
In the case of developer Follieri, Burkle can't avoid controversy even when he's trying to do good. Burkle's $577 million Corporate Initiatives Fund targets ``underserved'' areas and minority-controlled businesses. It has invested in the Piccadilly Restaurants LLC cafeteria chain and Christian Casey LLC, maker of entertainer Sean ``Diddy'' Combs's line of Sean John clothing.
The California Public Employees' Retirement System -- the largest U.S. public pension fund, with $250 billion in assets -- committed as much as $200 million to the fund in 2001. Calpers' Web site says the fund has produced a 9 percent net internal rate of return. That compares with a 48 percent return for the 20-year life span of the Yucaipa firm itself, or 42 percent including unrealized gains, Burkle says.
In 2002, Calpers committed as much as another $560 million to two other Burkle funds. These have posted internal rates of return of 19.9 percent and 19.7 percent, according to Calpers.
``Generally, we have had a good experience with Yucaipa funds,'' says Clark McKinley, a Calpers spokesman.
Corporate Initiatives hit a snag with Follieri. In 2005, Burkle agreed to commit as much as $105 million from the fund into a joint venture with the developer, putting in $55.6 million by March of this year. The plan was to invest in surplus inner- city properties owned by the Catholic Church.
Instead, Burkle's fund sued Follieri on April 23 in Delaware Chancery Court, claiming he'd misused at least $1.3 million of assets.
Burkle's fund contends the money went for ``improper personal expenses'' such as private jets, medical expenses for relatives, dog care and ``massive charges for `five-star' lodging, meals and entertainment,'' according to the complaint.
Follieri responded with a June 11 petition in the same court to dissolve the venture, saying Yucaipa exhibited little interest. Follieri's lawyers didn't respond to messages seeking additional comment.
Burkle was then named personally in a lawsuit, also filed on June 11, by charter jet company Direct Airway Inc. It claims the Follieri-Burkle partnership owes $458,852 in unpaid bills.
One invoice from July 31, 2006, shows Direct Airway flying Follieri and his girlfriend, actress Anne Hathaway, to Rome and Nice, France, on a Gulfstream G450. The cost was $244,826. Follieri's lawyers deny all of the allegations involving Direct Airway.
Yucaipa, also named in the suit, has filed motions asking a judge to remove it from the litigation since it didn't contract for the flights and doesn't have operations in New Jersey, where the flights originated.
Money has always played a big role in Burkle's life. As a child, he literally counted pennies with his father. A manager of a Stater Bros. grocery store in Pomona, California, Joseph Burkle hauled home $50 sacks of pennies so Ron, the elder of two sons, could forage for his collection.
Burkle followed his dad into the grocery business, working the 5 a.m. shift in a Claremont, California, Stater Bros. for $1.72 an hour.
``And a half,'' Burkle says, recalling the extra half penny he also earned. He's less nostalgic about the clip-on tie he endured, one reason he rarely wears a suit and tie. On this day in September, he's attired in his trademark black Polo shirt and olive-green cargo pants.
While Burkle was counting coins, his father was teaching him about investing. In 1968, Joe promised that if his son could save enough for a car and invest the cash, Joe would buy him the car.
Burkle bet $3,000 he earned from Stater Bros. on a stock called American Silver Co., earning 10 times his money, he says. It was more than enough for the $3,900 SS 350 Camaro he lusted after. Not able to drive at age 15, he sat in the garage and listened to Iron Butterfly's ``In-A-Gadda-Da-Vida'' on the car's radio.
Graduating early at 16 from Claremont High School, Burkle enrolled in California State Polytechnic University with the intention of becoming a dentist, for no reason other than it sounded respectable. He dropped out within two years and never completed a college degree.
``It was a horrible idea,'' he says. ``I didn't want to be a dentist.''
He didn't stop investing or working at Stater Bros., where he became a manager. When he learned that Stater's then owner, Petrolane Inc., a propane gas distributor, wanted to sell the chain, he figured he had as good a chance as anyone of buying the stores.
``We thought we could do this,'' he says of himself and a partner at the time.
In 1982, as Burkle was trolling for financing, an acquaintance introduced him to Charles Munger, best known as Warren Buffett's behind-the-scenes partner. Then, as now, Munger was vice chairman of Buffett's Berkshire Hathaway Inc. Munger agreed to match Burkle's equity investment, leaving Burkle with 51 percent control and Munger with 49 percent.
``We did agree to join him in what could be called the precursor of an LBO of Stater Bros.,'' says the billionaire Munger, 83, answering his own phone in his Los Angeles office.
Burkle made his bid before 7 a.m. on Feb. 5, 1982. He called his then wife to give her the news that he owned the company. By 3:30 p.m., the deal was dead, and Petrolane fired him.
``They said management can't be out there as renegades'' bidding on the company, he says. ``So I'm unemployed, and I didn't know what to do.''
With enough cushion from his investments, Burkle didn't have to get a full-time job. He put together a plan to buy Kroger's Southern California Market Basket chain, which was dealing with unfunded pension liabilities. When he returned to Munger, lugging three notebooks with five-year plans to justify the deal, Munger was uninterested in Burkle's work.
``He said, `What are these for?''' Burkle recalls. ``He said, `Manage to the opportunity, not to the plan.'''
Munger confirms the story. ``I have a low opinion of forecasts made in investment banking projections, so I don't generally read them,'' he says.
``If I tossed them aside, that would be typical.'' Munger declines to comment otherwise on Burkle's career. ``I know what I read in the paper,'' he says.
Burkle did the deal without Munger's money.
``He gave us credibility,'' Burkle says. It turned out Burkle didn't need the financing. He took over 14 of the Kroger stores and flipped 13 of them so quickly there was no need to go into hock.
His deal career birthed, Burkle bought a candy company before starting a string of grocery store acquisitions, much of it paid for with debt.
His first big purchase in 1987, $35 million for the Falley's chain out of Topeka, Kansas, was backed with $26.5 million in Michael Milken's junk bonds. The piddling amount didn't earn Burkle a meeting with Milken, who was then running Drexel Burnham Lambert Inc.'s junk bond operation in Beverly Hills.
Along the way, Burkle picked up financing from commodities and hedge fund guru George Soros and private-equity investor Leon Black of Apollo Management LP.
While Soros's financing helped on the deals, Stanley Druckenmiller, Soros's star trader, made Burkle rich, investing Burkle's earnings in commodities and currency trades.
``Stan is the reason I have an overpriced house and an overpriced plane,'' Burkle says. ``I lived well because of Stan.''
Reached at the New York office of his Duquesne Capital Management LLC, Druckenmiller returns the compliment. ``That's very kind. I think Ron would have done fine without me,'' says Druckenmiller, who left Soros's firm in 2000, and adds that he's never seen the mansion or the jet.
As a card-carrying member of the United Food and Commercial Workers union at age 13, Burkle developed an appreciation of the power the UFCW had over the grocery stores he was acquiring. He says many of his deals now come through his relations with labor figures, who approach him about companies that may be readying themselves for sale.
Unions asked him to help during takeover battles for Dow Jones & Co. and Knight Ridder Inc. At Dow Jones, the Independent Association of Publishers' Employees used Burkle to explore alternatives to Rupert Murdoch's ultimately successful $5.2 billion bid.
``He was a remarkable man in terms of being fair,'' says Ricardo ``Rick'' Icaza, president of Local 770 of the UFCW, who sat across the table from Burkle during grocery talks. ``We got the best contracts during his regime.''
Icaza was especially appreciative when Burkle decided to reopen inner-city grocery stores trashed during the 1992 Los Angeles riots instead of cashing the insurance check. ``He chose to keep them open and keep those people working,'' Icaza says. ``He was always very respectful of employees.''
Burkle is so tight with unions that it can create yet more work for his attorneys. Hawk Opportunity Fund LP sued Burkle's Yucaipa and the International Brotherhood of Teamsters last April. Hawk claims the two groups had improperly conspired to take charge of Allied Holdings Inc., the nation's largest hauler of new cars, in bankruptcy court.
Hawk filed a voluntary dismissal without prejudice. Burkle then successfully added Allied to his holdings along with Performance Transportation Services Inc., another car-hauling firm he controls, after the bankruptcy plan was approved in May.
In September, Burkle popped up as a union-backed bidder for bankrupt Interstate Bakeries Corp., maker of Twinkies. Straight out of the Allied Holdings script, he's been accused of working with the Teamsters to take the company's reorganization out of the hands of management and use union cooperation as his bargaining chip for a controlling stake.
In an Oct. 1 filing with the bankruptcy court, Interstate lawyers cited the Allied Holdings case as evidence of how Yucaipa uses its relationship with the Teamsters to insert itself into the bankruptcy process.
The company says Yucaipa refuses to sign an agreement to prohibit it from sharing confidential information with the union.
The union blasted management in an Oct. 4 statement, saying, ``The Teamsters and Yucaipa have a long history of working together and are confident that they can work together to preserve jobs at Interstate.''
Burkle and the union made a formal bid for Interstate today without disclosing financial specifics. They also filed separate pleadings opposing an extension of management's exclusive period to submit a reorganization plan.
Burkle's relationship with Clinton has helped to further ``brand'' him with labor unions, the billionaire says. A registered Republican until 2004, Burkle says he wouldn't even take Clinton's call in 1991. After an acquaintance urged him to meet Clinton, Burkle came away impressed.
When Clinton left office in 2001, the Yucaipa job was the only private sector offer he accepted, according to Clinton's book ``Giving'' (Knopf, 2007).
Burkle won't reveal how Clinton is compensated. In remarks attributed to Burkle and Clinton advisers in an April 2006 New York Times story, Burkle said the former president earns a share of returns in two domestic funds if the returns exceed 9 percent over the life of the funds. He also earns payment from a third international fund. Hillary Clinton's 2006 annual Senate financial disclosure form says her husband earned up to $2,500 in income from two Yucaipa funds.
Burkle says the publicity from his Clinton friendship has been a mixed blessing. ``I've gotten more out of it than I wished,'' Burkle says. ``I hope it fades away.'' Messages left with the Clintons' spokesmen weren't returned.
The Clinton relationship is central to Stern's accusations. The former gossip columnist sued Burkle in March in New York State Supreme Court, accusing him of defamation, libel and slander. Stern alleges Burkle set up a sting to record Stern attempting to exchange favorable news coverage for money.
``The tapes are very clear as to what Mr. Stern said and what he didn't say,'' a Burkle spokesman said at the time.
The suit also names the Clintons and claims Burkle orchestrated the sting in the first place to intimidate reporters and suppress gossip about the couple.
No charges were filed against Stern, according to the suit and two Stern attorneys. The Clintons have filed a motion to dismiss claims against them, as have Burkle and the other defendants.
``It leads all the way back to the Clintons,'' says Larry Klayman of Miami, one of Stern's attorneys. On Sept. 7, state Supreme Court judge Walter Tolub rejected Klayman's attempt to represent Stern in a New York court, citing prior courtroom antics that included ``abusive and obnoxious behavior during depositions.'' Klayman is planning an appeal.
In the Ovitz case, Burkle says it's not a question of the $16.5 million he says the former talent agent owes him; it's the principle of being snooped on.
``Michael hired Anthony Pellicano to come out and tap my phones and provide other illegal activity, which I think is repulsive and, I think, it speaks to his character,'' Burkle said in a deposition.
Pellicano attorney Steven Gruel declined to comment. In October, Pellicano was in the Los Angeles Metropolitan Detention Center awaiting trial on federal wiretapping charges unrelated to Burkle. He pleaded not guilty to the charges, according to a February 2006 news release from the U.S. Justice Department.
In 1998, Burkle says, he was looking to get involved in the Internet following the windfall from the sale of his grocery companies to Kroger. He and Ovitz had helped raise funds for a new $1.3 billion University of California, Los Angeles, hospital and attempted to bring a National Football League franchise back to Los Angeles. They agreed to a partnership and founded online retailer CheckOut.com, the first of several Internet startups.
It was a troubled union almost from the start, according to Burkle's complaint. He says Ovitz reneged on a vow to fund 50 percent of the Internet ventures, forcing Burkle to cover $29 million of costs for CheckOut.com alone.
Burkle also claims Ovitz was supposed to give him the option to purchase a 10 percent stake in Ovitz's Artists Management Group LLC, a Hollywood talent agency. When AMG was sold for about $12 million in 2002, Burkle says, Ovitz didn't tell him of the sale, much less let Burkle share in the profits.
``The claims advanced by Ron Burkle are as spiteful as they are baseless,'' Ovitz's lawyer George says.
Burkle even says Ovitz cheated him out of a chance to profit in the Google Inc. initial-public-offering windfall. Ovitz received pre-offering shares when a small search company in which he owned stock was sold to Google.
``I reached out to Michael and tried to help, and he put me in the middle of something, and he never paid,'' says Burkle, referring to the various deals Ovitz arranged. ``Frankly, it's not a big deal to me.''
Burkle is more incredulous at the gossip he reads about himself. He's been photographed with actresses Sara Foster and Kate Hudson, as well as Brazilian model Gisele Bundchen. The reports would have you believe Burkle and the women are items. Nothing there, he protests.
``Leonardo DiCaprio and I are very good friends,'' says Burkle, explaining how he knows Bundchen, who had gone out with the actor.
``So Gisele and I had known each other, and one day we leave a restaurant together and we're dating,'' he says, exasperated at how the incident was falsely characterized.
He knows Hudson through her mother, actress Goldie Hawn, and Foster through her father, David, a music producer.
Burkle's wife filed for divorce in 2003. She sued him in 2004, claiming he withheld assets she was entitled to as part of a prior agreement.
Last year, a California appeals court affirmed a lower court decision that Burkle didn't conceal assets from his wife.
Burkle says living well is the best revenge. ``My definition of winning is having a good life, not the other person losing,'' he says. ``I know how to make money, and when I fight, I'm not making money.''
With so many lawsuits brewing, Burkle's battles may cut into the time he has to enjoy that good life -- or add to his billions.
Bloomberg
“Sweet'' Alice Harris can't heap enough praise on Los Angeles billionaire Ronald Burkle. The founder of investment firm Yucaipa Cos., Burkle made his fortune in the grocery business and opened the first supermarket in the gritty Watts neighborhood long abandoned after the 1965 riots.
When Burkle was inducted into the Black American Political Association of California's Political and Religious Hall of Fame in November 2006, Harris accepted the award on his behalf.
``Come Thanksgiving, our senior citizens and the ones that really need turkeys will get turkeys because of Mr. Ron Burkle,'' Harris said of his donation to the community group she founded.
It was just one example of Burkle's philanthropy. The 54- year-old California native estimates he's raised $100 million for charities and politicians, opening his 5-acre (2-hectare) Beverly Hills estate to the City of Hope, the Los Angeles Ronald McDonald House and the Rape Treatment Center at Santa Monica-UCLA Medical Center.
Another picture emerges from lawsuits, U.S. Securities and Exchange Commission filings and interviews with business associates. Burkle is accused of exploiting his relationships with unions to muscle control of companies while he sues partners who cross him.
``He gives many occasions to many people to sue him by his conduct,'' says Los Angeles attorney Hillel Chodos, who represented Burkle's ex-wife, Janet, and his son's former nanny, Chelsea Fesenmaier, in separate lawsuits.
Burkle sued Fesenmaier in January 2004, claiming she'd made fraudulent charges on his credit card. He dropped the suit in January 2006. On Dec. 20, 2006, Fesenmaier sued Burkle in Los Angeles Superior Court, alleging malicious prosecution. Her suit is ongoing.
Burkle, who started as a box boy in a Stater Bros. food store at 13, says he's completed $40 billion in deals after founding Yucaipa in 1986 to invest in the grocery industry. He hit the jackpot in 1998 when he sold his Fred Meyer Inc. supermarket chain to Kroger Co. for $13 billion in stock and assumed debt.
Since then, Burkle has sued Hollywood agent Michael Ovitz and New York-based real estate developer Raffaello Follieri. Burkle or Yucaipa have been sued by Burkle's daughter, a private jet charter company, former part-time New York Post gossip columnist Jared Paul Stern and various investors in companies in which Burkle owns stakes.
Former Los Angeles Mayor Richard Riordan sued Burkle on Sept. 6 and then filed a request to dismiss the case less than two weeks later after Burkle agreed to repay Riordan a portion of an investment.
``The more money you make, the more you end up as a target,'' Burkle says in a conference room in his office on the Sunset Strip in Los Angeles.
One of Burkle's longest-running feuds involves a soured deal with Ovitz, whose Creative Artists Agency represented Tom Cruise, Steven Spielberg and Robert Redford. Burkle originally sued Ovitz, 60, in Los Angeles Superior Court in February 2005 over a 1998 partnership he claims the two had formed to participate in each other's investments.
Burkle also says Ovitz failed to pay him at least $16.5 million that Ovitz owed on Internet companies they had agreed to invest in equally. Ovitz denies there was a formal partnership. The litigation has escalated into an all-out war.
Burkle is furious that Ovitz allegedly hired Hollywood private eye Anthony Pellicano to spy on him. Ovitz denied in a court filing that he hired anyone to investigate Burkle. Ovitz filed a counter complaint arguing that if Burkle had a right to share in his investments, then Ovitz should get a piece of Burkle's much larger deals.
Currently, both sides are fighting each other on demands for investment records and depositions.
``Mr. Burkle's conduct here is, in a word, inexcusable,'' lawyers Eric George and Marta Almli of the Beverly Hills law firm of Browne Woods & George LLP said in a Sept. 12 filing asking a judge to force Burkle to sit for a deposition. Burkle's lawyers say he was out of town that day.
``The very allegation of partnership made by Burkle would require Burkle himself to pay substantial sums to Ovitz,'' George said in October.
The bitter allegations are detracting from the benevolent image Burkle is cultivating through his philanthropic foundations and donations and his friendship with Bill Clinton. Until last year, Clinton was an adviser to three of Burkle's funds, helping scout investments and other tasks.
The former U.S. president remains a frequent houseguest at Green Acres, Burkle's mansion, and a passenger on Burkle's private Boeing 757.
Burkle jokes he stages so many soirees -- including a March fundraiser for Hillary Clinton -- that he's made his landscaper wealthy from repairs to the estate's lawns. The landscaper, Avraham ``Avi'' Shemesh, co-founded CIM Group Inc., which controls much of the real estate along Hollywood Boulevard.
On Oct. 7, the Tony Hawk Foundation descended on Green Acres for a fundraiser that included a 50-foot (15-meter) half-pipe. Among the 1,000 guests were the mayor of Compton, California, and 14 youths who want to build a skatepark in that city.
``He doesn't have to do what he does for us,'' Harris says. ``When you meet him, he's just as humble and meek as he could be.''
In the case of developer Follieri, Burkle can't avoid controversy even when he's trying to do good. Burkle's $577 million Corporate Initiatives Fund targets ``underserved'' areas and minority-controlled businesses. It has invested in the Piccadilly Restaurants LLC cafeteria chain and Christian Casey LLC, maker of entertainer Sean ``Diddy'' Combs's line of Sean John clothing.
The California Public Employees' Retirement System -- the largest U.S. public pension fund, with $250 billion in assets -- committed as much as $200 million to the fund in 2001. Calpers' Web site says the fund has produced a 9 percent net internal rate of return. That compares with a 48 percent return for the 20-year life span of the Yucaipa firm itself, or 42 percent including unrealized gains, Burkle says.
In 2002, Calpers committed as much as another $560 million to two other Burkle funds. These have posted internal rates of return of 19.9 percent and 19.7 percent, according to Calpers.
``Generally, we have had a good experience with Yucaipa funds,'' says Clark McKinley, a Calpers spokesman.
Corporate Initiatives hit a snag with Follieri. In 2005, Burkle agreed to commit as much as $105 million from the fund into a joint venture with the developer, putting in $55.6 million by March of this year. The plan was to invest in surplus inner- city properties owned by the Catholic Church.
Instead, Burkle's fund sued Follieri on April 23 in Delaware Chancery Court, claiming he'd misused at least $1.3 million of assets.
Burkle's fund contends the money went for ``improper personal expenses'' such as private jets, medical expenses for relatives, dog care and ``massive charges for `five-star' lodging, meals and entertainment,'' according to the complaint.
Follieri responded with a June 11 petition in the same court to dissolve the venture, saying Yucaipa exhibited little interest. Follieri's lawyers didn't respond to messages seeking additional comment.
Burkle was then named personally in a lawsuit, also filed on June 11, by charter jet company Direct Airway Inc. It claims the Follieri-Burkle partnership owes $458,852 in unpaid bills.
One invoice from July 31, 2006, shows Direct Airway flying Follieri and his girlfriend, actress Anne Hathaway, to Rome and Nice, France, on a Gulfstream G450. The cost was $244,826. Follieri's lawyers deny all of the allegations involving Direct Airway.
Yucaipa, also named in the suit, has filed motions asking a judge to remove it from the litigation since it didn't contract for the flights and doesn't have operations in New Jersey, where the flights originated.
Money has always played a big role in Burkle's life. As a child, he literally counted pennies with his father. A manager of a Stater Bros. grocery store in Pomona, California, Joseph Burkle hauled home $50 sacks of pennies so Ron, the elder of two sons, could forage for his collection.
Burkle followed his dad into the grocery business, working the 5 a.m. shift in a Claremont, California, Stater Bros. for $1.72 an hour.
``And a half,'' Burkle says, recalling the extra half penny he also earned. He's less nostalgic about the clip-on tie he endured, one reason he rarely wears a suit and tie. On this day in September, he's attired in his trademark black Polo shirt and olive-green cargo pants.
While Burkle was counting coins, his father was teaching him about investing. In 1968, Joe promised that if his son could save enough for a car and invest the cash, Joe would buy him the car.
Burkle bet $3,000 he earned from Stater Bros. on a stock called American Silver Co., earning 10 times his money, he says. It was more than enough for the $3,900 SS 350 Camaro he lusted after. Not able to drive at age 15, he sat in the garage and listened to Iron Butterfly's ``In-A-Gadda-Da-Vida'' on the car's radio.
Graduating early at 16 from Claremont High School, Burkle enrolled in California State Polytechnic University with the intention of becoming a dentist, for no reason other than it sounded respectable. He dropped out within two years and never completed a college degree.
``It was a horrible idea,'' he says. ``I didn't want to be a dentist.''
He didn't stop investing or working at Stater Bros., where he became a manager. When he learned that Stater's then owner, Petrolane Inc., a propane gas distributor, wanted to sell the chain, he figured he had as good a chance as anyone of buying the stores.
``We thought we could do this,'' he says of himself and a partner at the time.
In 1982, as Burkle was trolling for financing, an acquaintance introduced him to Charles Munger, best known as Warren Buffett's behind-the-scenes partner. Then, as now, Munger was vice chairman of Buffett's Berkshire Hathaway Inc. Munger agreed to match Burkle's equity investment, leaving Burkle with 51 percent control and Munger with 49 percent.
``We did agree to join him in what could be called the precursor of an LBO of Stater Bros.,'' says the billionaire Munger, 83, answering his own phone in his Los Angeles office.
Burkle made his bid before 7 a.m. on Feb. 5, 1982. He called his then wife to give her the news that he owned the company. By 3:30 p.m., the deal was dead, and Petrolane fired him.
``They said management can't be out there as renegades'' bidding on the company, he says. ``So I'm unemployed, and I didn't know what to do.''
With enough cushion from his investments, Burkle didn't have to get a full-time job. He put together a plan to buy Kroger's Southern California Market Basket chain, which was dealing with unfunded pension liabilities. When he returned to Munger, lugging three notebooks with five-year plans to justify the deal, Munger was uninterested in Burkle's work.
``He said, `What are these for?''' Burkle recalls. ``He said, `Manage to the opportunity, not to the plan.'''
Munger confirms the story. ``I have a low opinion of forecasts made in investment banking projections, so I don't generally read them,'' he says.
``If I tossed them aside, that would be typical.'' Munger declines to comment otherwise on Burkle's career. ``I know what I read in the paper,'' he says.
Burkle did the deal without Munger's money.
``He gave us credibility,'' Burkle says. It turned out Burkle didn't need the financing. He took over 14 of the Kroger stores and flipped 13 of them so quickly there was no need to go into hock.
His deal career birthed, Burkle bought a candy company before starting a string of grocery store acquisitions, much of it paid for with debt.
His first big purchase in 1987, $35 million for the Falley's chain out of Topeka, Kansas, was backed with $26.5 million in Michael Milken's junk bonds. The piddling amount didn't earn Burkle a meeting with Milken, who was then running Drexel Burnham Lambert Inc.'s junk bond operation in Beverly Hills.
Along the way, Burkle picked up financing from commodities and hedge fund guru George Soros and private-equity investor Leon Black of Apollo Management LP.
While Soros's financing helped on the deals, Stanley Druckenmiller, Soros's star trader, made Burkle rich, investing Burkle's earnings in commodities and currency trades.
``Stan is the reason I have an overpriced house and an overpriced plane,'' Burkle says. ``I lived well because of Stan.''
Reached at the New York office of his Duquesne Capital Management LLC, Druckenmiller returns the compliment. ``That's very kind. I think Ron would have done fine without me,'' says Druckenmiller, who left Soros's firm in 2000, and adds that he's never seen the mansion or the jet.
As a card-carrying member of the United Food and Commercial Workers union at age 13, Burkle developed an appreciation of the power the UFCW had over the grocery stores he was acquiring. He says many of his deals now come through his relations with labor figures, who approach him about companies that may be readying themselves for sale.
Unions asked him to help during takeover battles for Dow Jones & Co. and Knight Ridder Inc. At Dow Jones, the Independent Association of Publishers' Employees used Burkle to explore alternatives to Rupert Murdoch's ultimately successful $5.2 billion bid.
``He was a remarkable man in terms of being fair,'' says Ricardo ``Rick'' Icaza, president of Local 770 of the UFCW, who sat across the table from Burkle during grocery talks. ``We got the best contracts during his regime.''
Icaza was especially appreciative when Burkle decided to reopen inner-city grocery stores trashed during the 1992 Los Angeles riots instead of cashing the insurance check. ``He chose to keep them open and keep those people working,'' Icaza says. ``He was always very respectful of employees.''
Burkle is so tight with unions that it can create yet more work for his attorneys. Hawk Opportunity Fund LP sued Burkle's Yucaipa and the International Brotherhood of Teamsters last April. Hawk claims the two groups had improperly conspired to take charge of Allied Holdings Inc., the nation's largest hauler of new cars, in bankruptcy court.
Hawk filed a voluntary dismissal without prejudice. Burkle then successfully added Allied to his holdings along with Performance Transportation Services Inc., another car-hauling firm he controls, after the bankruptcy plan was approved in May.
In September, Burkle popped up as a union-backed bidder for bankrupt Interstate Bakeries Corp., maker of Twinkies. Straight out of the Allied Holdings script, he's been accused of working with the Teamsters to take the company's reorganization out of the hands of management and use union cooperation as his bargaining chip for a controlling stake.
In an Oct. 1 filing with the bankruptcy court, Interstate lawyers cited the Allied Holdings case as evidence of how Yucaipa uses its relationship with the Teamsters to insert itself into the bankruptcy process.
The company says Yucaipa refuses to sign an agreement to prohibit it from sharing confidential information with the union.
The union blasted management in an Oct. 4 statement, saying, ``The Teamsters and Yucaipa have a long history of working together and are confident that they can work together to preserve jobs at Interstate.''
Burkle and the union made a formal bid for Interstate today without disclosing financial specifics. They also filed separate pleadings opposing an extension of management's exclusive period to submit a reorganization plan.
Burkle's relationship with Clinton has helped to further ``brand'' him with labor unions, the billionaire says. A registered Republican until 2004, Burkle says he wouldn't even take Clinton's call in 1991. After an acquaintance urged him to meet Clinton, Burkle came away impressed.
When Clinton left office in 2001, the Yucaipa job was the only private sector offer he accepted, according to Clinton's book ``Giving'' (Knopf, 2007).
Burkle won't reveal how Clinton is compensated. In remarks attributed to Burkle and Clinton advisers in an April 2006 New York Times story, Burkle said the former president earns a share of returns in two domestic funds if the returns exceed 9 percent over the life of the funds. He also earns payment from a third international fund. Hillary Clinton's 2006 annual Senate financial disclosure form says her husband earned up to $2,500 in income from two Yucaipa funds.
Burkle says the publicity from his Clinton friendship has been a mixed blessing. ``I've gotten more out of it than I wished,'' Burkle says. ``I hope it fades away.'' Messages left with the Clintons' spokesmen weren't returned.
The Clinton relationship is central to Stern's accusations. The former gossip columnist sued Burkle in March in New York State Supreme Court, accusing him of defamation, libel and slander. Stern alleges Burkle set up a sting to record Stern attempting to exchange favorable news coverage for money.
``The tapes are very clear as to what Mr. Stern said and what he didn't say,'' a Burkle spokesman said at the time.
The suit also names the Clintons and claims Burkle orchestrated the sting in the first place to intimidate reporters and suppress gossip about the couple.
No charges were filed against Stern, according to the suit and two Stern attorneys. The Clintons have filed a motion to dismiss claims against them, as have Burkle and the other defendants.
``It leads all the way back to the Clintons,'' says Larry Klayman of Miami, one of Stern's attorneys. On Sept. 7, state Supreme Court judge Walter Tolub rejected Klayman's attempt to represent Stern in a New York court, citing prior courtroom antics that included ``abusive and obnoxious behavior during depositions.'' Klayman is planning an appeal.
In the Ovitz case, Burkle says it's not a question of the $16.5 million he says the former talent agent owes him; it's the principle of being snooped on.
``Michael hired Anthony Pellicano to come out and tap my phones and provide other illegal activity, which I think is repulsive and, I think, it speaks to his character,'' Burkle said in a deposition.
Pellicano attorney Steven Gruel declined to comment. In October, Pellicano was in the Los Angeles Metropolitan Detention Center awaiting trial on federal wiretapping charges unrelated to Burkle. He pleaded not guilty to the charges, according to a February 2006 news release from the U.S. Justice Department.
In 1998, Burkle says, he was looking to get involved in the Internet following the windfall from the sale of his grocery companies to Kroger. He and Ovitz had helped raise funds for a new $1.3 billion University of California, Los Angeles, hospital and attempted to bring a National Football League franchise back to Los Angeles. They agreed to a partnership and founded online retailer CheckOut.com, the first of several Internet startups.
It was a troubled union almost from the start, according to Burkle's complaint. He says Ovitz reneged on a vow to fund 50 percent of the Internet ventures, forcing Burkle to cover $29 million of costs for CheckOut.com alone.
Burkle also claims Ovitz was supposed to give him the option to purchase a 10 percent stake in Ovitz's Artists Management Group LLC, a Hollywood talent agency. When AMG was sold for about $12 million in 2002, Burkle says, Ovitz didn't tell him of the sale, much less let Burkle share in the profits.
``The claims advanced by Ron Burkle are as spiteful as they are baseless,'' Ovitz's lawyer George says.
Burkle even says Ovitz cheated him out of a chance to profit in the Google Inc. initial-public-offering windfall. Ovitz received pre-offering shares when a small search company in which he owned stock was sold to Google.
``I reached out to Michael and tried to help, and he put me in the middle of something, and he never paid,'' says Burkle, referring to the various deals Ovitz arranged. ``Frankly, it's not a big deal to me.''
Burkle is more incredulous at the gossip he reads about himself. He's been photographed with actresses Sara Foster and Kate Hudson, as well as Brazilian model Gisele Bundchen. The reports would have you believe Burkle and the women are items. Nothing there, he protests.
``Leonardo DiCaprio and I are very good friends,'' says Burkle, explaining how he knows Bundchen, who had gone out with the actor.
``So Gisele and I had known each other, and one day we leave a restaurant together and we're dating,'' he says, exasperated at how the incident was falsely characterized.
He knows Hudson through her mother, actress Goldie Hawn, and Foster through her father, David, a music producer.
Burkle's wife filed for divorce in 2003. She sued him in 2004, claiming he withheld assets she was entitled to as part of a prior agreement.
Last year, a California appeals court affirmed a lower court decision that Burkle didn't conceal assets from his wife.
Burkle says living well is the best revenge. ``My definition of winning is having a good life, not the other person losing,'' he says. ``I know how to make money, and when I fight, I'm not making money.''
With so many lawsuits brewing, Burkle's battles may cut into the time he has to enjoy that good life -- or add to his billions.
Bloomberg