Media

A deal is….

HB4116

John Letourneau, the accountant who could remember almost nothing, on the witness stand Monday.

After a week of Superior Court testimony surrounding a $1 million napkin deal between failed Alaska Dispatch News owner Alice Rogoff and former editor Tony Hopfinger, a key player in the lawsuit appears to have concluded the two had a valid contract.

“I don’t think it’s really disputed that they had an agreement,” Judge Andrew Guidi said Monday. “The question was what it was.”

Guidi’s comment came after the Anchorage jury for the case was dismissed for the day and attorneys for Rogoff and Hopfinger began debating what instructions they thought the judge should give the jury after testimony and closing arguments in the lawsuit are done. That is now expected Wednesday.

Attorneys for Rogoff wanted the judge to instruct jurors they could decide that contract was never consummated because the parties failed to sign a formal, lawyer-approved document.

Jeffery Robinson, Hopfinger’s attorney, strongly objected. He pointed out that Rogoff herself repeatedly testified under oath that she’d made a deal with Hopfinger.

And the more Mara Michaletz, one of the attorneys for Rogoff, tried to persist with the opposite argument, the more Guidi’s opinion on the subject appeared to solidify.

“They both acknowledged there was some sort of contract in effect,” he eventually told Michaletz. “I don’t know that is an issue anymore.”

He then went so far as to state that “a directed verdict may take that out of consideration.”

A directed verdict is a judge’s ruling that all or part of a case has been clearly decided on the basis of the law, and the jury is not required to weigh any evidence.

In this case, Guidi could rule that the testimony in court to date has plain established that the napkin signed and dated by Rogoff in March 2014 –  the napkin that promised Hopfinger $100,000 per year for 10 years – was a legally binding contract, and that the jury’s job is only to sort out how much or how little she owes Hopfinger.

What exactly she agreed to pay for is a key issue in the dispute.

“Your client has a theory,” the judge told Michaletz. Hopfinger has a theory.

What those theories have in common is the napkin. Where they differ is to what Rogoff was buying.

$1 million question

Hopfinger has testified the $100,000 per year agreement was to reimburse him for his remaining interest in Alaska Dispatch. Dispatch was an online news site he started in his kitchen with now ex-wife Amanda Coyne.

They grew it from nothing to an Alaska media presence with the help of a small team of reporters and about $1 million per year coming indirectly from billionaire businessman David Rubenstein, one of the founders of the Carlyle Group.

Rubenstein – who is based in Washington, D.C. – sent $2 million to $5 million per year north to Rogoff, his estranged wife, as part of a marital separation agreement. She used the money to finance what began as a Hopfinger-Coyne effort to build a new media presence in Alaska.

Starting in 2009, the couple labored 10- to 16-hours per day to grow the Dispatch. The long days strained their marriage, and they parted ways in 2012. Coyne eventually sold her 5 percent interest in the still fledgling Alaska Dispatch Publishing back to Rogoff for $5,000 and $90,000 in payments for a year.

Hopfinger put his nose back to the grindstone. Rogoff pumped more of Rubenstein’s money into the Dispatch, and its online profile grew. By the end of 2013, the website was big enough and carried enough journalistic clout to convince The McClatchy Company to talk to Rogoff about a sale of the Anchorage Daily News/ADN.com.

The state’s largest newspaper and most-visited, Alaska news portal on the internet, the ADN was making money, but its profit margin was in a steady state of decline, which wasn’t helped by the presence of the upstart Dispatch.

When Rogoff in 2014 agreed to pay $34 million for an operation some now estimate to have been worth only a third to a half of that, the California-based McClatchy couldn’t hardly turn down the offer.

Before the sale was complete however, Rogoff and Hopfinger entered into discussions about his role with a new company – the Alaska Dispatch News – being formed to run the newspaper along with the combined Alaska Dispatch and ADN websites planned to operate under the ADN banner.

The duo negotiated a contract for Hopfinger to serve as the new ADN’s executive editor and president at $190,000 per year and cut a separate deal for $1 million over 10 years.

Both agree the latter deal was reflected in a napkin signed and dated by Rogoff. Hopfinger has said he wanted something in writing to guarantee a return on the sweat equity he’d put into building Dispatch to put Rogoff in position to buy the Daily News – a purchase he recommended against.

Rogoff, however, has a different view. She says the payments were part of an incentive package on which Hopfinger could only collect if he stayed in Alaska for the next 10 years. She paid him the first $100,000 at the start of 2015.

“I had committed to pay him,” she testified under oath in court last week. “I never walked back from my commitment to pay him….”

In 2015, however, Hopfinger moved to Chicago, where his wife had taken a job and his mother was dying of cancer, and began commuting irregularly to Anchorage to run the Dispatch News. The Hopfinger-Rogoff relationship began to fray through the year.

Eventually, there was a full-fledged falling out between the once best friends, and Rogoff failed to make the $100,000 payment for 2016.

Instead, she devoted her full attention to running the Dispatch News. It went bankrupt in less than two years. The remnants of the newspaper have since been sold to the Binkley Company from Fairbanks and the name changed back to the Anchorage Daily News.

The ADN of today and the ADN of Rogoff have almost no relation to each other except that Dispatch News/ADN editor David Hulen and much of the newspaper staff he hired remain the staff of the Daily News/ADN.

No business business

That Rogoff had a unique style of running her businesses was underlined on Monday by certified accountant John Letourneau, the bookkeeper who couldn’t remember anything; Hopfinger and Daniel S. Kleinberger, a $600 per hour expert witness Rogoff’s defense brought north from Minnesota. 

Kleinberger, who estimated he made at least $20,000 off his trip to Alaska, was called to testify as to whether Rogoff’s many limited liability companies (LLCs)- The Moon and the Stars, Alaska Dispatch Publishing (since renamed M.O.N.), Alaska Dispatch News, AK Publishing, Alaska Native Media, Umailik and more – were part of some sort of scam.

LLCs are set up to protect the personal assets of investors. The companies formed under LLCs – as was the now bankrupt Alaska Dispatch News – become responsible for any company losses instead of the investors in the company.

Without LLCs, Kleinberger said, investors become less likely to take risks on new businesses and “the economy grinds down.” LLCs encourage people to invest in risky startups and help fund those risky adventures by allowing the investors to in some cases write off company losses.

Usually, he testified, LLCs are abused by their managers “siphoning” off assets for their own benefit.

“It is the way in which the bad person gets their ill-gotten gains,” he said.

Asked by Rogoff attorney David Gross whether any siphoning had been done by Rogoff, Kleinberger testified, “no, to the contrary.”

“The typical mixing (of assets) is mixing that takes money away,” he said, but the mixing Rogoff did with her various LLC seems only to involve her cash being thrown into the companies.

Rogoff lost a reported $23 million in less than three years at the Dispatch News alone.

Kleinberger was not asked for his opinion on what the mixing looked like if sizable tax write-offs were involved, or if the commodity of value was something other than money.

Rogoff used the Alaska Dispatch and the Alaska Dispatch News to gain significant public and political influence.

Alaska journalist Dan Fagan has accused her of using the Dispatch News to help friends Bill Walker and Byron Mallott win the 2014 election. Walker is the soon-departing governor and Mallott the former lieutenant governor.

Walker basically fired Mallott as a sex scandal was stirring in October. The sitting governor ended up getting caught in the fallout. He elected to withdraw from this year’s race when it became obvious he had no chance of winning re-election.

“She printed too many columns and news stories to count hyping a National Guard scandal (then-incumbent Gov. Sean) Parnell had very little to do with,” Fagan wrote. “But it was the only thing Ms. Rogoff had that came close to resembling dirt on the guy so she ran with it. It worked.”

Whether Fagan’s accusations are true or false, there is no doubt Rogoff’s ownership of the newspaper gained her unique access to influential figures. When President Barak Obama visited Alaska in 2016, he dined at Rogoff’s Campbell Lake home.

Her newspaper reported that “Rogoff, who has been acquainted with the president for several years, described it as a private dinner featuring an Alaskan Grown menu. She did not disclose who attended the dinner or how many guests were invited.

“‘It was a chance for the President to have a conversation with a diverse group of Alaskans,” Rogoff was quoted as saying.” Her newspaper never reported who attended, let alone what was discussed, and let Rogoff get away with the suggestion all the group did was make small talk.

Rogoff enjoyed talking business, as she did and does at many Arctic gatherings, although she isn’t very good at practicing business.

No control

The bespectacled accountant Letourneau, looking a little like a skinny John Lithgow, was supposed to take the stand to shed some light on her business practices Monday. Instead he revealed:

  •  “I have no specific memory of that; my memory is imperfect.”
  • “I don’t recall the specific people’s names.”
  • “I have no specific memory of that.”
  • “I have no memory one way or another.”
  • And more of the same.

His only statement of any substance came in a response to Gross when Letourneau said, “it was always been my understanding Alice wanted to make a profit eventually off this enterprise.”

Rogoff does not appear to have ever run a business on which she earned a profit. She has always run businesses that lose money. Hopfinger said he believed she was writing the losses of on her taxes.The trial has only hinted at how much those write-offs might have been.

Personal tax records have been redacted and Guidi has generally steered the trial away from any sort of probe into Rogoff’s personal wealth and what level of taxes she pays. The $5 million per year Rubenstein was paying Rogoff to stay in Alaska in recent years would have been subject to a maximum tax rate of $122,000 on the first $418,000 and 39.6 percent on the amount over $418,000.

That comes to almost $2 million, but Rogoff is thought to have paid only a fraction of that given various write-offs, potentially including the nearly $8 million per year losses on the Dispatch News and the approximately $1 million per year losses on the Alaska Dispatch before that.

Where the money went at the Dispatch appears difficult to track. Hopfinger testified on Monday that Rogoff’s businesses were sloppily run and documents submitted to the court underlined that.

“Since early 2014,” one of those documents revealed, “Thomas, Head and Greisen (the company which employed Letorneau) has been involved with accounting for Alaska Dispatch Publishing LLC (“the Dispatch”). With no internal accounting or bookkeeping staff, our roll has been to maintain the accounting ‘life support systems.’ Busy with tax season, we essentially kept the employees and vendors paid, while making the cash fund requests to Gail, Alice’s accountant back East.

“Our experience has been that Dispatch has virtually no accounting and human resource controls, policies or procedures. Accordingly, there has not been a policy for vendors to submit a W-9.”

The company reported it had to resort to a QuickBooks record to figure out  who was to be sent W-9 statements. Rogoff, all testimony has agreed, was the person in charge of the business side of the Dispatch while Hopfinger ran the news side.

Hopfinger testified repeatedly that he was not happy with the way the business side of Dispatch ran or the company losses, but bowed to Rogoff’s wishes.

“It was her money,” Hopfinger said. “We just had different philosophies, and she was going to win those arguments.”

Gross tried to turn that argument in Rogoff’s favor.

Fleecing a rich old lady?

Over the course of about seven years, the well-dressed attorney noted as he added up numbers on an oversize pad on an easel in front of the jury, the 67-year-old Rogoff paid Hopfinger more than $880,000 to run the Dispatch while she was losing more than $6.2 million on the enterprise.

“I totalled this all up,” Gross said. Hopfinger’s salary ranged from $93,000 to $97,000 at the Alaska Dispatch, and rose to $190,000 at the Dispatch News newspaper where he took on the job of  president as well as executive editor.

“I was paid to do my job, yeah,” Hopfinger said. He didn’t think his salary had anything to with the $1 million he says Rogoff agreed to pay him for building Alaska Dispatch into the organ that helped her convince McClatchy to sell the Daily News.

Gross wanted to know if Hopfinger knew sweat equity sometimes has no value.

“I think there are instances like this, yes,” the editor agreed.

The two parried over how Hopfinger and Rogoff parted ways before Gross dove into character issues by asking Hopfinger about his 2015 Permanent Fund Dividend application. Hopfinger said he collected a 2014 dividend, but not 2015.

“I know I didn’t apply for it,” he said.

Gross challenged him on that and Hopfinger responded, “did you check with the PFD?”

Gross then wanted to know if Hopfinger had under oath signed the 2014 PFD promise to stay indefinitely in Alaska.

“If I did, that was a mistake,”  Hopfinger said.

Before he could say any more his lawyer objected. The lawyers huddled with the judge before Gross returned to questioning Hopfinger, who was asked to read the PFD statement.

“I am now and intend to remain an Alaska resident indefinitely,” Hopfinger read.

Was it inappropriate to apply for that dividend if you were planning to leave Alaska? Gross wanted to know.

Hopfinger agreed that it was.

“Are you going to return it?” Gross asked.

“Sure, why not?” Hopfinger said. After the hearing, he said, he is trying to figure out how one does that. The PFD exchange sparked some interesting conversation among a handful of court observers later.

The court room has seen only a handful four to seven spectators in attendance on a regularly basis, nearly all members or ex-members of the media. There is nowhere near the public interest expected by Rogoff’s attorneys who before the trial wanted jurors specially screened because of fears they’d have trouble finding a pool of people unaware of the mess she’d made of the local newspaper.

That did not turn out to be a problem.

After quibbling over Hopfinger’s PFD application, he and Gross tangled over a Hopfinger Bankruptcy Court filing for severance after being fired from his job. He asked for half of the $190,000 that was his original Dispatch News salary, but he’d reduced his salary by $35,000 and transferred that money to Hulen while working remotely from Chicago.

Hopfinger said he followed his attorney’s advice in submitting the form and would amend the paperwork to reflect the proper half-year pay for $165,000.

 

 

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7 replies »

  1. Craig, Given the fact that Alice got a nice pay-off from David R. for the divorce, why on earth is she fighting over this $100K/year for 9 more years? It’s a drop in the ocean and her lawyer fees will probably be more than she owes Tony. What gives with her?

    Like

    • only Alice can truly answer that question, but she would appear to believe in her heart of hearts that she is a woman wronged by Tony Hopfinger and thus any deal they struck as to payment for his interest in Alaska Dispatch is null and void.

      as she testified in court, she believes that if he’d stayed, the Alaska Dispatch News newspaper would be a going concern and though she, as the owner, takes responsibility for its failure it really was, at the end of the day, Mr. Hopfinger’s fault it went bankrupt.

      Like

  2. As Trump turns the Mexican boarder into the Gaza Strip of North America and ADN reports daily of stolen vehicles, assualts and homicides in Alaska, I am reminded of a song from my youth.

    “I saw ten thousand talkers whose tongues were all broken…
    I saw guns and sharp swords in the hands of young children…
    And it’s a hard, and it’s a hard, it’s a hard, it’s a hard
    And it’s a hard rain’s a-gonna fall.”

    Bob Dylan

    Like

    • Thank God for Trump!!! Arrest and deport those criminal invaders!!! MAGA!!!! So, when you say Gaza, I assume you mean those hispanics are violent terrorists right?

      Like

      • I was actually thinking how “Chemical Agents” such as Tear Gas is being used on homeless refugees on foreign soil (Mexico).
        Most countries banned the use of chemical weapons in 1993, yet the U.S. stills uses it on it’s own people (like protesters in Ferguson, Missouri) and is currently firing canisters into Mexico when these crowds are mixed with many Mothers and little Children?
        This reminds me of how Israeli Soldiers treat Palestinians in Gaza…
        Maybe we should “Make Americans Think Again”?

        https://www.truthdig.com/articles/trump-border-patrol-fires-tear-gas-at-migrants-including-children-at-mexico-border/

        Like

      • Steve I hate to say it , you are right. You are bit over top equation of this tear gas to chemical weapons. That said I believe trumps allowance of it in this instance is a huge mistake. Granted perhaps this is allowed by law and can’t be confused with killing or true abuse . Take a look at pictures these are not true homeless or refugees except perhaps financial but even that I doubt as most are well fed or over fed . By pictures .but that is no excuse to take the low road on humanitarian situation. I don’t agree with letting them in unless they are coming in legally. But it’s a huge mistake for him to treat people this way and is incredible mar on his presidency even though others have done similar. I condemn trumps methods on this case . There are other ways and methods. He spent millions to enforce these actions and could have used that money in a humanitarian methods and shipped the people home . (Expedited paperwork- more man power , more temp housing . A deal with Mexico to house migrants humanly on Mexico side). Not rocket science. Firm – kind and no porous borders . Two wrongs does not make a right . There is no viable excuse for what he has done huge mistake. Sure those mothers put those children in this position but those children have no recourse. Absolutely unacceptable. Sorry Bryan for not supporting his methods. To make America great again a nation must take the high road and be great. To best of our ability. This was not our finest hour . I bow my head in remorse for what’s inflicted on these people and pity the people who did it that will regret these actions even though in their mind it was right . Americans must expect more . Trump needs better stronger advisers. Trumps supporters must speak out when he takes wrong path . It would be disloyal to cause not to . Trumps our strong leader of the cause but not owner of cause. That’s how I see it anyway. Steve you are also right about adderol and other drugs being poor choice for energetic extreme kids . Bad deal.

        Liked by 1 person

      • Opinion,
        Thanks.
        As a parent, I feel for those families caught in a terrible place.
        Many have already witnessed horrible events and are faced with death if they should return home.
        Cartels and Gangs such as MS 13 have turned Mexico and Central America into a “Theater for War” here in North America.
        We as a nation will have to deal with this unsecured boarder and deteriorating situation of “Instability” for many years to come.
        I know most Americans do not consider “Tear Gas” as a Chemical Weapon, yet according to Geneva Convention…it falls under this classification and it is banned from Warfare, yet still allowed domestically?
        When boarder control agents fires canisters into Mexico, they are risking International Critique and hurting our sense of “National Pride” as a nation that supports humanitarian efforts and respects human rights.
        Wikipedia describes Tear Gas below:

        “Tear gas, formally known as a lachrymator…
        is a chemical weapon that causes severe eye and respiratory pain, skin irritation, bleeding, and even blindness…
        Israeli soldiers have been documented…firing tear gas canisters at activists, some of which resulted in fatalities, though the Israel Defense Forces insist that they maintain a strict policy of only indirect firing…
        During World War I, increasingly toxic and deadly lachrymatory agents were used.”

        https://en.m.wikipedia.org/wiki/Tear_gas

        Like

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