- Harvey Weinstein was allegedly up against a deadline to pay $600,000 to the American Repertory Theater (ART) for staging a trial run of Broadway-bound "Finding Neverland," which he produced.
- To ensure he made the deadline, he allegedly made a deal with Kenneth Cole to split proceeds of an amfAR auction item, which would allow amfAR to wire $600,000 to ART.
- After others at amfAR grew skeptical of the agreement, the two allegedly took drastic steps to cover up the deal, which may have been against IRS charity rules.
Since June 2015, the American Foundation for AIDS Research (amfAR) has been embroiled in an internal scandal that involves two of the nonprofit's major players, Harvey Weinstein and Kenneth Cole, following a financial deal between the two that's since fallen under scrutiny.
The scandal has led to numerous board members resigning and an investigation by the New York attorney general's office. The New York Times reported on the news of the investigation in September.
According to an investigative report from The Huffington Post published Wednesday, Weinstein and Cole — the clothing designer and non-executive chairman of amfAR for over a decade — allegedly covered up an agreement the two had to split the proceeds of an auction item for a 2015 fundraising gala in Cannes.
The Huffington Post reports that the series of events began when Weinstein needed pay $600,000 by June 1 to the American Repertory Theater (ART) for staging a trial run of the Broadway-bound musical "Finding Neverland," which Weinstein produced. If Weinstein didn't hit the deadline, he and his investors wouldn't recoup the money they initially gave to ART, according to the report.
What allegedly unfolded is an example of the behind-the-scenes tactics Weinstein had become known for utilizing to get his way, which resulted in an alleged cover up involving Cole that also happened to bring to light the sexual harassment and assault rumors that had been floating around Weinstein for decades.
Red flags
Red flags reportedly started flying at amfAR when executives realized that Weinstein and Cole agreed to split the proceeds on an auction item up to $1.2 million, and that half would go to amfAR and the other half would go to ART. If the auction item ended up going for more than $1.2 million, $600,000 would go to ART and the rest would go to amfAR, according to the report.
On the night of the auction, the auction item reportedly ended up going for $909,669. According to the HuffPost story, Cole and Weinstein's deal then changed in light of the item going for less than $1.2 million. Now ART would get $600,000 while amfAR would get the rest, $309,669, HuffPo reports, allowing Weinstein to pay ART enough to recoup his earlier investment.
With amfAR staff asking questions about the agreement and its changing terms, and Cole reportedly being cagey on the full details of the agreement, steps were allegedly made to not pay the money until the auction buyers had completed the experiences they paid for, according to the HuffPost story.
Meanwhile, the June 1 deadline for Weinstein was looming.
After numerous frantic emails between both parties, Weinstein reportedly wired $600,000 of his own money to amfAR, to act as a sort of insurance against any failure to pay from those participating in the auction, and in return amfAR would wire the same amount to ART on June 1. HuffPost reports that internal emails revealed that Weinstein expected to be repaid the $600,000 by amfAR.
The Huffington Post reports that amfAR executives were concerned this deal was against IRS charity rules, which state that “an individual is not entitled to unjustly enrich himself at the organization’s expense.”
However, Weinstein, who for years helped bring in major celebrities to amfAR fundraisers, reportedly wouldn't relent.
This reportedly led the amfAR executive committee to retain Texas trial lawyer Thomas Ajamie to independently investigate the transaction.
The first investigation
Weinstein made himself unavailable for months to Ajamie, according to the report. Ajamie concluding in his eight-page report on the matter that the deal between Weinstein and Cole “exposed amfAR to material risks to its financial integrity and reputation” and that amfAR not disclosing that some of the proceeds would be shared with ART was a “fraud on the bidders,” according to the HuffPost story.
Soon after giving his report on the Weinstein transaction, Ajamie also began to get contacted by anonymous people alleging sexual misconduct from Weinstein, according to the story.
This reportedly led to both Weinstein and Cole using various tactics to bury Ajamie and his report: for Cole it was to keep the negative findings involving his approval of the transaction from spreading, while for Weinstein, it was to keep Ajamie from digging further into the sexual misconduct allegations he was beginning to hear about, according to the HuffPost story.
In the months that followed, Weinstein reportedly threatened to sue all the board members of amfAR and attempted to persuade at least one board member to vote to allow law firm Gibson, Dunn & Crutcher to investigate the amfAR-ART transaction, along with Ajamie himself. The board member reportedly didn't vote on the firm coming on, but Gibson, Dunn & Crutcher did anyway.
The second investigation
One of the firm's partners, Orin Snyder, "regularly attacked Ajamie, questioning his motives and taking actions that protected Weinstein and Cole over the general interests of the organization" over the next six months, according to multiple Huffington Post sources. The additional investigation reportedly resulted in a report to the amfAR board on the amfAR-ART deal in which Snyder concluded that "this contribution was a lawful charitable donation to ART" and "any contrary suggestion is misinformed and wrong.”
Snyder then allegedly took steps to get the board to sign a nondisclosure agreement on the amfAR-ART matter, HuffPost reports. When some board members refused, Snyder reportedly presented a letter from a Weinstein attorney which said he would contribute $1 million to amfAR over five years if they all signed — but only if Cole remained non-executive chairman, according to the HuffPost story.
Snyder pushed back against The Huffington Post's report in a statement to Business Insider.
“This objectively false narrative is being shopped by a handful of people who are exploiting the news concerning Harvey Weinstein to smear amfAR and advance their own personal interests. I hope these baseless smears and innuendo will not deter amfAR’s mission to find a cure for HIV/AIDS," he said in an emailed statement.
“We were retained by the board to review the contribution to Harvard’s American Repertory Theatre. Our review was thorough, and we concluded and reported to the board that this contribution was a lawful charitable donation to ART, as Harvard itself attested," Snyder added. "In addition, the New York Attorney General declined to open an investigation and has repeatedly referred to this as a 'dispute among board members.'”
Cole reportedly sent an email to the board encouraging its members to sign the NDA. The email allegedly included a line that only now, after the Weinstein stories in the New York Times and The New Yorker in the past weeks, makes sense: "We are signing something that promises confidentiality and that we won’t involve ourselves in Harvey’s affairs in the future,” Cole wrote, according to the HuffPost story.
Multiple board members have resigned since the NDA drama. New York Attorney General Eric Schneiderman recently investigated the amfAR-ART transaction and a probe into amfAR’s corporate governance procedures.
"After the New York Attorney General’s Office reviewed the transaction between amfAR and Weinstein they declined to pursue an investigation," Cole wrote in a statement sent to Business Insider. "It did, however, highlight opportunities to strengthen the governance of the organization. I am personally committed to implementing the OAG’s recommendations to ensure that our fundraising policies and procedures are never called into question again."
“Our recent review raised significant concerns about the governance of amfAR, which is why we recently directed the organization to undertake a series of deep and meaningful reforms," New York Attorney General communications director Eric Soufer said in a statement to Business Insider. "We have discussed these changes with the board, and we will not hesitate to take further action if these reforms are not implemented swiftly and in full.”
Business Insider contacted The Weinstein Company for comment but did not get an immediate response.
Read Cole's complete statement to Business Insider below:
"Since joining amfAR’s board three decades ago, I made the organization’s mission to save lives and find a cure for HIV/AIDS my own. During that time, amfAR has seen its annual revenues triple to more than $50 million and launched the greatest expansion of the foundation’s grant making with its $100 million investment strategy in support of its "Countdown to a Cure for AIDS Initiative." As a result, the organization has played a significant role in breakthroughs for AIDS research, treatment, and prevention.
In regards to the actions of Harvey Weinstein recently revealed in media reports, let me repeat publicly what I have been saying privately: I find his actions deeply disturbing but if there is any good to come out these revelations it is the start of a penetrating self-reflection of our society and our collective behavior.
Over the last several weeks Weinstein's charitable role in supporting amfAR has become the subject of debate and scrutiny. After the New York Attorney General’s Office reviewed the transaction between amfAR and Weinstein they declined to pursue an investigation. It did, however, highlight opportunities to strengthen the governance of the organization. I am personally committed to implementing the OAG’s recommendations to ensure that our fundraising policies and procedures are never called into question again. The mission is too important, there remain millions of lives at risk and the work is far from finished to allow any of us to be distracted from the task of conquering HIV/AIDS."
For the full deep dive into the scandal and the correspondences involved, head on over to The Huffington Post.
Editor's note: This post has been updated to include statements from Kenneth Cole, the New York Attorney General's office, and Orin Snyder.
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