The draft of a once-proposed loan agreement between an Alaska Native corporation and Alice Rogoff has shed new light on the 2017 implosion of the 49th state’s largest newspaper.
Despite a widespread, Alaska belief in the deep pockets of the Alaska Dispatch News owner, the then-wife of billionaire business mogul David Rubenstein, the contract reveals Rogoff might have been forced to abandon the newspaper business with the costs of her fascination with media threatening her personal income.
In a hearing in Superior Court in Anchorage last week, Rogoff publicly admitted for the first time that her Alaska journalism adventures were funded by payments of $5 million per year from then-estranged and now ex-husband Rubenstein. But what has not been previously known is that the couple’s marital-separation agreement contract contained a monetary cap.
A copy of a proposed loan agreement with Sitnasuak Native Corp. obtained by craigmedred.news reveals that the annual payments from Rubenstein to Rogoff had less than six years left to run when Rogoff started negotiations to buy the Anchorage Daily News/ADN.com from The McClatchy Co. in late 2013.
“…The balance to be paid under the second amendment to the marital agreement (MA) is not less than $28,750,000 as of 4-1-2014,” the documents disclose.
A Nome-based company, Sitnasuak was looking to loan Rogoff $4 million to aid the Daily News purchase. The loan was never made. Sources familiar with the document believe Sitnasuak might have been among a group of companies approached by PT Capital, a company trying to help Rogoff find newspaper investors.
Rogoff was one of PT’s founders. She has said at trial she still maintains an investment in the company but is not active in its management. PT is now trying to gain a piece of the Alaska Permanent Fund to manage.
How to lose millions
Rogoff burned through approximately 75 percent of her nearly $29 million pot of money in about three years of ADN ownership, her statements and court records in the U.S. Bankruptcy Court revealed last year. Rogoff claims to have poured $23 million into subsidizing ADN operating costs after she bought the newspaper from the California-based McClatchy in April 2014.
ADN employees have said she told them in early 2017 to stop paying bills. The newspaper and its companion website were in bankruptcy by August and sold to the Binkley Company from Fairbanks by September for $1 million. The newspaper is now back to being the Anchorage Daily News.
By early 2017, the numbers would indicate Rogoff was down to a marital-settlement guarantee of only $6.75 million to support her high-flying, $5-million-per-year lifestyle in future years.
A private pilot, she once owned two Cessna 206, single-engine aircraft – one of which she showed off to then-President Barack Obama when he visited her lakefront Anchorage home in 2015 and one of which she crashed in the Halibut Cove Lagoon near the south end of the Kenai Peninsula in July 2016. She was lucky to survive that crash.
The two planes were worth upwards of $1 million and costs tens of thousands of dollars a year to maintain. She also had high lifestyle costs. She traveled extensively, and still does, to visit an old, family home on Nantucket Island and to attend conferences around the world to discuss the Arctic, a region of the planet on which she considers herself an expert.
After a long separation, Rogoff and Rubenstein finally divorced late last year. Details were not revealed, but it was widely thought among those who had known Rogoff well in Alaska that the woman who once wanted half of Rubenstein’s estimated $3 billion fortune settled for significantly less in order to maintain the cash flow necessary to support what most Americans would consider a lavish lifestyle.
Since the divorce, Rubenstein has helped bail his ex-wife out of trouble in Bankruptcy Court where accusations of possible fraud were raised. It is unknown if that was part of the divorce settlement.
Wheeling and dealing
Rogoff bought the Daily News/ADN.com from McClatchy in April of 2014 and rebranded it the Alaska Dispatch News/ADN.com after completing a $34-million deal that required little of her cash.
The bulk of the $34 million came from GCI Inc., an Anchorage telecom and cable company that bought the old, 125,000-square-foot Daily News headquarters in the Airport Heights area of Anchorage out the deal for about $15 million. Rogoff borrowed another $13 million from Northrim Bank.
She has told different stories about the sources of the remaining $6 million. In a sworn affidavit in the U.S. Bankruptcy Court after she took the Dispatch News into bankruptcy, she said she put $6 million into the deal.
At that time, Rogoff was still trying to conceal just how much Rubenstein was paying her to live in Alaska. She has since been forced to reveal more in state court where former Dispatch News president Tony Hopfinger is suing the now 67-year-old millionaire for the balance of $900,000 of $1 million she promised him in an infamous napkin-deal.
On the stand and under oath in state court, Rogoff said last week that only $1 million of the $6 million buy-in was hers and the other $5 million was Rubenstein’s. All indications are that her attorneys structured the deal to allow the annual payments from Rubenstein to Rogoff to help her subsidize ADN operating costs as she merged the Dispatch, an online only news operation started by Hopfinger and ex-wife Amanda Coyne, with the Daily News newspaper and its far bigger online news website.
Her scheme was to build a dominant Alaska media empire. In court on Monday, on the stand in the Hopfinger lawsuit for the fourth day, she claimed to have built “virtually a state monopoly” on Alaska news before the ADN bankruptcy.
What that is worth has been the subject of much debate at trial.
At the time Rogoff was buying the newspaper for $34 million, Alaska Dispatch co-founder Hopfinger decided he wanted to sell his remaining 5 or 10 percent share (how much he owns is tangled) in the company in which Rogoff bought 90 percent interest in 2009.
He asked for $1.3 million and Rogoff countered with $1 million paid in 10 installments of $100,000 per year. On that all parties now in court agree.
Beyond that it gets complicated. Rogoff contends that in her head – or “in my mind” as she has testified over and over – the $100,000 annual payments were bonus incentives on top of Hopfingers $190,000 per year salary (which he later reduced to $155,000 to give a $35,000 per year raise to ADN editor David Hulen) – intended to keep Hopfinger in Alaska for a decade, though there is no evidence to support that argument.
Hopfinger contends the $100,000 per year was the buy-out of his interest in Alaska Dispatch Publishing, the company that owned the Alaska Dispatch. There is some evidence to support that view, but no document stipulating a buyout specifically signed by Rogoff.
Hopfinger worked with Rogoff lawyers on various drafts of a buyout, but Rogoff never signed one and claims not to have seen the email to which the most explicit draft was attached.
Meanwhile, Rogoff’s attorney for the Hopfinger case is arguing that Hopfinger isn’t owed anything because the interest he was selling wasn’t worth anything, a claim that has been countered repeatedly on the stand in court by his client.
Rogoff has said Dispatch, the Dispatch News, and ADN were worth a lot, but not financially. When she tried to sell the business to an Outside newspaper chain in early 2017, she put the value at $3 million it was revealed in court Monday.
Rogoff has also testified that if Hopfinger had stayed with her instead of leaving the Dispatch (whether he was fired or quit is another source of disagreement), she would still be in business today, and the media operation would be on the way to financial success.
In other sound bites at trial Monday:
- Jennifer Alexander, the Birch, Horton, Bittner & Cherot attorney around when Rogoff signed and dated the napkin promising Hopfinger the $1 million testified “I’m not sure I was in the conference room when it was signed.” “Our conference room is very large,” she said.
- She also claimed she was not all that familiar with the various deals Rogoff and Hopfinger had going: a buy-out, an employment contract to work at the new Alaska Dispatch News, and a possible ownership interest in the latter. She admitted to covering her ears and going “naw, naw, naw” when Rogoff started discussing those things. “That would be something I would do,” she said. She said she was “trying to bring some levity to the situation because it was very uncomfortable.” Hopfinger’s attorney did not ask her specifically why it was uncomfortable, but Alexander indicated Hopfinger and Rogoff wanted to talk about things other than the specific employment contract she was in the room to draft.
- Alexander said she couldn’t remember whether Rogoff wanted a loyalty clause in the contract. Rogoff has fired at least one other employee for violating an “implied” loyalty clause in a contract.
- Alexander testified Rogoff and Hopfinger appeared frustrated, but “I wouldn’t say angry.” Rogoff had earlier testified Hopfinger was banging his hand on the table. Alexander said she saw nothing like that.
- Rogoff, in her last day on the stand, said she and Hopfinger did most of their business verbally. “I don’t do business in writing,” she said. She said she didn’t need to tell him of her idea the $100,000 was an annual bonus. “I didn’t think I had to say it,” she said. “I thought it was clear.”
- Rogoff couldn’t explain why the payment was being kept secret from Northrim Bank if it was part of an employment contract, and not a separate financial obligation requiring bank approval. And she said she wrote Hopfinger a personal check for the first $100,000 because “I didn’t want anyone at the newspaper to see how high Tony’s compensation was.” As a rule, salaries at the privately owned ADN were kept secret.
- Rogoff said the $6 to $8 million lost by the Alaska Native Arts Foundation, a nonprofit and one of Rogoff’s several other failed businesses, was “mostly federal money,” not state money.
- In his first appearance on the stand, Hopfinger testified that he didn’t think of his arrangement with Rogoff as a marriage, as she often referred to it, but as a very close partnership.
- Hopfinger said Rogoff bought her 90 percent interest in Dispatch in 2009 for $75,000 in another napkin deal that wasn’t formalized by lawyers until almost six months later. He always trusted Rogoff, he said. When his employment contract with Dispatch expired, he said, it was never renewed because “I’m not sure either one of us even knew it expired.” But the business went on paying him as if the contract still existed.
- When Rogoff started talking about buying the newspaper, Hopfinger said, “it seemed pretty risky to me. I was an online guy.”
- In the meeting with Alexander, Hopfinger said, he and Rogoff talked about trust, and she was offended that he wanted something in writing. “I trust you,” he testified was his response, “but if you’re in my shoes, you’d want to have something in writing.” She then scrawled out the promise and said if she didn’t pay, “show it to the judge,” Hopfinger said. Afterward, he said, he, Rogoff and Alexander all laughed about it. He was under the impression Rogoff wanted to avoid a formal agreement because of a Northrim Bank restriction on Rogoff spending.