Business

Scandal engulfed L.A.’s storied Magic Castle. Can new leaders turn it around?

Published

3 years ago

May 4, 2022

Scandal engulfed L.A.’s storied Magic Castle. Can new leaders turn it around?

Change has come to the Magic Fortress after a scandalous stretch — and visitors will discover it moments after they enter the storied venue.

For years, there was one thing of an open secret among the many membership’s roughly 4,000 members: the central staircase’s slatted railing afforded males on the ground-floor bar an intimate view of ladies as they ascended the steps.

A 2020 Instances investigation, which disclosed an array of claims about unhealthy habits on the Fortress, quoted a magician who stated different individuals joked about “prime seats” from which girls might be unwittingly ogled. That report uncovered allegations of sexual misconduct, racism and different points on the Fortress, residence to the Academy of Magical Arts, arguably the world’s most prestigious membership for magicians and magic lovers.

There was strain to renovate the venue’s staircase to guard feminine members and guests, but additionally skepticism from those that didn’t assume it was a significant subject. “For those who’re shiny sufficient, and it’s an issue to you, then you definately don’t stroll on that aspect of the staircase,” Homosexual Blackstone, chairwoman of the academy’s board of trustees, instructed The Instances in a current interview. “Widespread sense.”

Academy management ultimately opted to put in picket items alongside the railing. The tweak, made forward of the Fortress’s Could 2021 reopening — it had closed when the pandemic started — obscured the view from beneath. But some academy members query why it took so lengthy. “The quantity of instances they instructed me, ‘No, no, no’ — after which the article got here and it received fastened,” stated Kayla Drescher, who famous that she’d first identified the issue to the group’s management in 2019.

That’s not the one contentious change on the outstanding establishment, although to many members it’s not but sufficient.

In a March election broadly seen as a referendum on the earlier regime, the academy voted in eight new members to its board of administrators, the highly effective physique that oversees the group’s enterprise affairs. Solely certainly one of two incumbents on the poll was reelected.

The board, which expanded from seven members to 9, is probably the most numerous within the group’s historical past. It now consists of individuals who academy member Brandon Martinez stated he’s “extra prone to belief.”

“It alerts one thing completely different,” he stated. “I’m longing for change. It’s simply, everybody’s uninterested in holding their breath and hoping for the best issues to get accomplished and so they’re constantly not accomplished.”

The brand new board is led by Chuck Martinez, an academy member for greater than 40 years and no relation to Brandon Martinez.

“There have been issues on the Fortress that we’re all conscious of — I believe that’s very a lot taken to coronary heart by the whole membership,” Chuck Martinez stated. “It form of speaks for itself that the brand new board has 4 girls on it, three of whom are officers, [and] it has two gents of shade. It actually reveals loads of openness to show the web page and create a complete new period for the Fortress.”

Management might proceed to face fallout from the scandal that engulfed the Fortress in 2020. Amongst these accused of misconduct have been the venue’s administration, employees and performers — in addition to academy members. A few of the accusers had been visitors on the Hollywood facility and others labored there. Former staff who sued the academy alleged that complaints to administration weren’t addressed or that they suffered retaliatory actions. The academy’s beleaguered normal supervisor — who’d been the topic of a few of these allegations — resigned two weeks after The Instances’ report was revealed.

Final yr, the academy settled a lawsuit introduced by a former waitress on the membership’s restaurant who stated she was sexually assaulted by a busboy and fired for elevating the problem of the misconduct. Nevertheless it faces a brand new lawsuit from one other former worker who alleges office harassment and wrongful termination, amongst different claims.

The academy has introduced in new administration, hiring hospitality veteran Hervé Lévy in June 2021 as normal supervisor and chief working officer. He confronted fast monetary challenges: The group suffered important losses through the pandemic and membership has declined in current months. Nonetheless, the academy’s long-term future in Hollywood was lately solidified when one of many group’s members bought the Fortress property for an undisclosed sum, The Instances reported final month. The client, online game mogul Randy Pitchford, stated then that the Fortress, which opened in 1963, would stay the academy’s clubhouse and a magic efficiency venue.

The Magic Fortress is a three-story Chateauesque construction inbuilt 1909 as a personal residence.

(Robert Gauthier/Los Angeles Instances)

Nonetheless, the previous couple of years have been one of the crucial troublesome stretches within the Magic Fortress’s historical past, stated Erika Larsen, daughter of the late academy founders Irene and Invoice Larsen Jr.

“So far as the establishment … I’m glad that it received shaken up,” she stated.

A recent begin

When Lévy started work on the Fortress it grew to become clear to him that the job of remodeling the membership could be the largest problem of his lengthy profession in hospitality.

The Frenchman arrived from the Griffin Membership, a Cheviot Hills tennis membership the place he had been normal supervisor and overseen a big transformation, from its office tradition to a $20-million renovation. The expertise was formative, however the dysfunction on the Fortress and the academy, a nonprofit public profit company, was on one other degree.

“I used to be very shocked,” Lévy stated. “[I had] by no means seen such a corporation with an absence of system and lack of primary instruments.”

Operating the Magic Fortress requires catering to 2 distinct audiences as a result of the ability on Franklin Avenue capabilities as a clubhouse for its members but additionally welcomes most of the people. Folks can go to the membership with an invitation from an academy member, by staying on the adjoining Magic Fortress Resort or through banquets and company occasions. (If you wish to go badly sufficient, there’s normally a manner.) As such, the venue is a well-liked vacationer attraction — the academy’s aura has been burnished by celeb members equivalent to Johnny Carson and Cary Grant — although the membership’s strict gown code has been recognized to stymie some would-be guests.

To enhance the operation, Lévy stated he overhauled the employees, administration construction and management model. Among the many notable modifications, the human assets division was beefed up with the hiring of a brand new director — a management place that beforehand didn’t exist, Lévy stated.

Hiring introduced the employees to just about 160 staff. That’s smaller than the Fortress’s pre-COVID-19 employees of 193, 184 of whom have been laid off when the venue closed in March 2020, Lévy stated.

After a powerful 2019 that noticed the academy generate a revenue of about $1.4 million, it misplaced almost $900,000 in 2020, in accordance with the academy’s controller. The Fortress launched into a phased reopening final yr and misplaced about $328,000.

Pitchford’s buy of the Fortress and its namesake lodge from a household that had lengthy owned the property is predicted to alleviate monetary strain felt by the academy. The group leases the Fortress, and for years, it had been constructing a money reserve that was earmarked for a purchase order of the turreted mansion, which was constructed as a personal residence in 1909. However through the pandemic, that cash grew to become a lifeline. Money holdings of $8.46 million fell by about 50% from 2019 to 2021.

“That was going to be the constructing buy fund — that in the end turned out to be the pandemic survival fund,” Chuck Martinez stated. “However pay attention, it saved the Fortress.”

The academy will stay a tenant on the Fortress, however in Pitchford, who received married on the venue, it has a landlord with a imaginative and prescient for the ability that aligns with the group’s plans.

Thus far this yr, the academy‘s funds have endured an up-and-down stretch: it misplaced about $194,000 in January amid a closure tied to a COVID-19 surge, however swung to a virtually $6,000 revenue in February and a good greater one in March when it netted roughly $228,000.

The academy has raised dues for each new magician members, whose perks embody performing in some areas of the Fortress, and new non-magicians, who’re given affiliate memberships. New, native magician members now pay a $2,500 initiation charge and $150 a month, up from a $1,000 initiation charge and $67 a month in 2020, Lévy stated. New, native non-magician members pay a $6,000 initiation charge and $225 a month, a rise from $114.50 a month in 2020.

Lévy stated smaller month-to-month will increase have been assessed to current members, although these ranks have thinned, with about 800 of roughly 3,300 not renewing memberships for 2022. Now, the group has about 2,500 paying members, with an extra 1,500 or so individuals receiving lifetime or honorary memberships which are free, he stated.

Lévy attributed the losses to a number of elements, together with older members who died through the pandemic. He hopes so as to add 10 to fifteen new members a month this yr.

Specializing in such positive aspects and never the scandals of the previous could be a balm for the brand new board of administrators. “We are able to … construct for the long run and make it one thing that we’re actually happy with,” Chuck Martinez stated.

Chuck Martinez, president of the Academy of Magical Arts board of directors.

Martinez’s victory got here in a board of administrators election that was distinctive from the beginning. The academy launched using a nominating committee however allowed others to be nominated by petition. In line with academy management, 4 members of the earlier board sought the committee’s suggestion, however simply two — Sara Ballantine and Ralph Shelton — made the minimize. Solely Ballantine was reelected.

Three members of the prior board of administrators didn’t search one other time period, amongst them its president, Randy Sinnott Jr. An government at a software program firm, Sinnott stated that the board work, which is completed on a volunteer foundation, had change into too time-consuming.

“Navigating the AMA by way of the pandemic, and doing this cultural change, recruiting Hervé — all of the issues now we have accomplished over the previous couple of years — have taken hundreds of hours of my time,” he stated.

Outdated points linger

Even because the academy charts a course ahead, it’s contending with authorized points targeted on its previous.

A lately settled lawsuit filed by former Magic Fortress waitress Stephanie Carpentieri towards the academy and two former colleagues revealed a variety of alleged misconduct.

Carpentieri alleged in her L.A. County Superior Court docket lawsuit that administration didn’t act after she reported a number of sexual assaults by busboy Hector Portillo to her superiors, amongst them Joseph Furlow, then the final supervisor. Carpentieri additionally confronted verbal and bodily abuse from eating room supervisor Mikael Hakansson, in accordance with her grievance. Finally, she was fired, a termination that the lawsuit alleged was a retaliatory act in response to her disclosing the misconduct.

The academy, Portillo and Hakansson denied the allegations in a courtroom submitting. The case was settled in July 2021, authorized data present. Phrases weren’t disclosed.

Guests line up at the entrance to the Magic Castle in 2019.

Chuck Martinez and Lévy declined to debate the lawsuit, saying the alleged conduct in query occurred underneath prior administration. Sinnott declined to touch upon the litigation. Legal professionals representing defendants Portillo and Hakansson didn’t reply to requests to interview their purchasers.

Furlow, who was not a defendant within the case, stated in a press release that Carpentieri’s authentic grievance was taken severely and investigated.

Carpentieri declined to remark through her lawyer, V. James DeSimone.

Nonetheless pending is a grievance filed by Patricia Alaskey, who began working on the Magic Fortress in 2008, ultimately turning into the academy’s membership director. In that function, Alaskey reported to Furlow. However underneath Furlow — the chief who resigned after publication of The Instances’ 2020 report — Alaskey endured sexual harassment and different mistreatment, in accordance with a lawsuit she filed towards him and the academy.

In a single occasion, Alaskey’s June 2021 grievance alleged, Furlow gave her — as a “Secret Santa” current — a Victoria’s Secret lotion present field, together with a present card and the instruction to purchase her boyfriend “one thing good.”

At office gatherings, Furlow pressured Alaskey to drink alcohol, telling her it could be “enjoyable” to see her inebriated, the lawsuit alleged. Alaskey resisted, which led Furlow to harass her, it alleged. Alaskey additionally allegedly endured abuse from an academy member, who as soon as forcibly tried to kiss her by grabbing her face. This incident occurred in entrance of Furlow, who solely watched “in amusement,” in accordance with the lawsuit, which was filed in L.A. County Superior Court docket.

Alaskey was let go amid the mass layoffs in 2020, however her lawsuit contends she was really fired partially as a result of she had reported the claimed mistreatment. She and her attorneys didn’t reply to requests for remark.

In a courtroom submitting, the academy and Furlow denied the allegations. He reiterated that denial in his assertion, including that he’s “assured that the details will reveal themselves transferring ahead.”

A trial is scheduled for Could 2023, courtroom data present. Martinez, Lévy and Sinnott declined to debate the case.

Furlow lately launched a web site to tout a yet-to-be-released guide about his time on the Fortress. It says that the “deliciously scandalous” memoir will reveal “the reality behind the Academy’s sleights of hand,” documenting points together with “inappropriate intercourse” and “on-site drug use.”

In his assertion, Furlow stated that the academy had been “on life help” when he began working there, and he prioritized “offering monetary stability and bettering the general expertise.”

“Any issues introduced up about my administration underneath the path of the Board of Administrators have been totally investigated,” Furlow stated. “I used to be cleared of any wrongdoing.”

Questions stay

A number of academy members stated they’re taking a wait-and-see method to the group’s new management. Some pointed to the group’s board of trustees as a supply of their warning.

The current election additionally gave members an opportunity to pick out new members for the board of trustees, which oversees “the magic features of the membership,” in accordance with the academy’s web site. The seven trustees working for reelection confronted three challengers, every of whom was defeated.

Among the many dropping candidates was Paul Draper, who ran a marketing campaign rooted in reform.

Draper stated that as a part of his platform, he had advocated for coaching on range and inclusion for not solely academy management but additionally extraordinary members of the group. “I’m seeing change within the magic world outdoors the Magic Fortress that’s transferring shortly, and I look ahead to the Magic Fortress catching up,” he stated.

The three-story Magic Castle is a cavernous facility with a baroque decor.

Blackstone stated that the board of trustees has lately been engaged in “fixing issues we didn’t even know we had.” It has, for instance, labored so as to add images and paintings of Black and feminine magicians to the Fortress’s partitions. However certainly one of its current selections relating to decor has obtained a blended response.

For years, some members expressed discomfort with paintings that depicted turn-of-the-century magician Chung Ling Soo. He was a white man named William E. Robinson who pretended to be Chinese language, and copied the act of an actual Chinese language magician named Ching Ling Foo. A 2018 story by the popular culture web site A.V. Membership labeled Robinson’s act an instance of “yellowface,” and “a phony, racist Chinese language persona.”

Heeding complaints from members, the board of trustees eliminated certainly one of three items of Soo paintings forward of the Fortress’s 2021 reopening, Blackstone stated, and added an indication that describes the magician’s life and acknowledges that “moral issues loom massive from the vantage level of a century later.” Two images of Foo, the Chinese language magician, have been additionally added to the partitions, she stated.

One motive the trustees determined to maintain some Soo paintings on show, Blackstone stated, was that the magician was a “performer of such stature which you can’t ignore him. You may’t fake. You may’t say, ‘Oh, this individual didn’t exist.’”

However some members questioned why any photographs of him stay. “I don’t see us placing up portraits of comedians who carried out in black face on the partitions of any cultural establishments,” Brandon Martinez stated.

The rejiggering of the Soo paintings is the form of reform that some academy members characterised as a half-step towards change, and one they stated is emblematic of points on the Fortress. Martinez, for instance, pointed to the brand new signal in regards to the magician. It’s removed from important.

Of Soo, it says: “His data and ability have been plain.”

Business

4 Takeaways From the Arguments Before the Supreme Court in the TikTok Case

Published

4 hours ago

January 12, 2025

Press Room

4 Takeaways From the Arguments Before the Supreme Court in the TikTok Case

The Supreme Court on Friday grappled over a law that could determine the fate of TikTok, an enormously popular social media platform that has about 170 million users.

Congress enacted the law out of concern that the app, whose owner is based in China, is susceptible to the influence of the Chinese government and posed a national risk. The measure would effectively ban TikTok from operating in the United States unless its owner, ByteDance, sells it by Jan. 19.

Here are some key takeaways:

The court appeared likely to uphold the law.

While the justices across the ideological spectrum asked tough questions of both sides, the overall tone and thrust appeared to suggest greater skepticism toward the arguments by lawyers for TikTok and its users that the First Amendment barred Congress from enacting the law.

The questioning opened with two conservative members of the court, Justice Clarence Thomas and Chief Justice John G. Roberts Jr., suggesting that it was not TikTok, an American company, but its Chinese parent company, ByteDance, that was directly affected by the law.

Another conservative, Justice Brett M. Kavanaugh, focused on the risk that the Chinese government could use information TikTok is gathering on tens of millions of American teenagers and twentysomethings to eventually “develop spies, turn people, blackmail people” when they grow older and go to work for national security agencies or the military.

Justice Elena Kagan, a liberal, asked why TikTok could not just create or buy another algorithm rather than using ByteDance’s.

And another liberal, Justice Ketanji Brown Jackson, said she believed the law was less about speech than about association. She suggested that barring TikTok from associating with a Chinese company was akin to barring Americans from associating with foreign terrorist groups for national security reasons. (The Supreme Court has upheld that as constitutional.)

Still, several justices were skeptical about a major part of the government’s justification for the law: the risk that China might “covertly” make TikTok manipulate the content shown to Americans or collect user data to achieve its geopolitical aims.

Both Justice Kagan and Justice Neil M. Gorsuch, a conservative, stressed that everybody now knows that China is behind TikTok. They appeared interested in whether the government’s interest in preventing “covert” leveraging of the platform by a foreign adversary could be achieved in a less heavy-handed manner, like appending a label warning users of that risk.

Lawyers for TikTok and for its users argued that the law is unconstitutional.

Two lawyers argued that the law violates the First Amendment: Noel Francisco, representing both TikTok and ByteDance, and Jeffrey Fisher, representing TikTok users. Both suggested that concerns about potential manipulation by the Chinese government of the information American users see on the platform were insufficient to justify the law.

Mr. Francisco contended that the government in a free country “has no valid interest in preventing foreign propaganda” and cannot constitutionally try to keep Americans from being “persuaded by Chinese misinformation.” That is targeting the content of speech, which the First Amendment does not permit, he said.

Mr. Fisher asserted that fears that China might use its control over the platform to promote posts sowing doubts about democracy or pushing pro-China and anti-American views were a weaker justification for interfering in free speech than concerns about foreign terrorism.

“The government just doesn’t get to say ‘national security’ and the case is over,” Mr. Fisher said, adding, “It’s not enough to say ‘national security’ — you have to say ‘what is the real harm?’”

The Biden administration defended Congress’s right to enact the law.

The solicitor general, Elizabeth B. Prelogar, argued that Congress had lawful authority to enact the statute and that it did not violate the First Amendment. She said it was important to recognize that the law leaves speech on TikTok unrestricted once the platform is freed from foreign control.

“All of the same speech that’s happening on TikTok could happen post-divestiture,” she said. “The act doesn’t regulate that at all. So it’s not saying you can’t have pro-China speech, you can’t have anti-American speech. It’s not regulating the algorithm.”

She added: “TikTok, if it were able to do so, could use precisely the same algorithm to display the same content by the same users. All the act is doing is trying to surgically remove the ability of a foreign adversary nation to get our data and to be able to exercise control over the platform.”

The court appears unlikely to wait for Trump.

President-elect Donald J. Trump has asked the Supreme Court to issue an injunction delaying the law from taking effect until after he assumes office on Jan. 20.

Mr. Trump once shared the view that Chinese control of TikTok was an intolerable national security risk, but reversed course around the time he met with a billionaire Republican donor with a stake in its parent company.

If the court does uphold the law, TikTok would effectively be banned in the United States on Jan. 19, Mr. Francisco said. He reiterated a request that the court temporarily pause the law from taking effect to push back that deadline, saying it would “simply buy everybody a little breathing space.” It might be a “different world” for TikTok after Jan. 20, he added.

But there was scant focus by the justices on that idea, suggesting that they did not take it seriously. Mr. Trump’s brief requesting that the court punt the issue past the end of President Biden’s term so he could handle it — signed by his pick to be the next solicitor general, D. John Sauer — was long on rhetoric extolling Mr. Trump, but short on substance.

Business

'We will not be closing.' Amid the fires, employers and employees walk a fine line between work and safety

Published

5 hours ago

January 12, 2025

Press Room

'We will not be closing.' Amid the fires, employers and employees walk a fine line between work and safety

When Brigitte Tran arrived Wednesday morning at the Rodeo Drive boutique where she works as a sales associate, she was on edge.

Smoke from multiple wildfires raging across Los Angeles County billowed overhead. The luxury shopping corridor usually bustling with tourists appeared a ghost town.

Tran’s co-worker texted their boss to let her know neighboring stores had closed, and described the acrid smoke in the air. But the woman, at home in Orange County, did not seem to grasp their concerns. “We will not be closing unless the mall instructs us to close,” she replied.

Tran, who, fearing professional repercussions, asked that her place of work not be named, grew more anxious as the hours ticked by. Around 3 p.m., she and the two other employees working that day mutinied. They packed up, told the security guard to head home, and locked the doors a few hours before closing time.

As the wildfires have raged across Los Angeles County, choking the air, closing schools and forcing tens of thousands of people to evacuate, employers and employees alike have had to manage a difficult balancing act between work and well being. Some employers responded swiftly to the crisis, shutting down offices and shifting to remote work, providing outdoor workers with masks and other protective equipment, and offering support for employees forced to evacuate. Others have been less adept, clumsy in their communications or wholly unmoved by worker concerns — sparking anger among their ranks as a result.

The fires have underscored the need for companies to have a clear plan in place to respond to emergencies, said Jonathan Porter, a meteorologist at private weather forecaster AccuWeather. The obligation, he said, goes beyond monitoring whether an office is in an evacuation zone. For example, as the current devastation unfolds, businesses should be aware of the “copious amounts of dangerous smoke that’s wafting into the air” and be prepared to provide outdoor workers with quality respirators or move them away from polluted air.

Some employers gave employees flexibility. Snap, the Santa Monica-based creator of the photo messaging app Snapchat, for example, kept its offices open on Wednesday but encouraged employees to work remotely, said a company spokesperson.

Others changed course after fielding criticism.

An announcement by UCLA that the campus would remain open for classes and regular operations on Wednesday drew anger from some instructors and students on social media.

Victor Narro, project director for the UCLA Labor Center and a lecturer on campus, said in a post on X he would ignore UCLA’s mandate and hold an optional class online.

“Students have been up all night panicked about sleeping through evacuation orders, winds still high, branches falling all over Westwood, power outages across city, & our new chancellor (on his 2nd day) thought this should be his first bold call…” wrote Nour Joudah, an assistant professor in UCLA’s Asian American Studies Department, in another X post.

That evening, UCLA changed course as conditions worsened, announcing it would close campus.

On Saturday, UCLA Chancellor Julio Frenk released a statement saying classes would be held remotely for at least another week and campus operations would be curtailed. “We ask for continued flexibility and understanding as we all work through these difficult times,” Frenk wrote.

But for many workers, the chaos of the last few dayshas left them feeling like they are fending for themselves.

Tim Hernandez, a driver with Amazon Flex, an on-demand Uber-like program in which people use their own cars to deliver packages, was assigned a route Tuesday along the Pacific Coast Highway toward Malibu, which was rife with closures.

When he questioned whether making the delivery was safe, he said dispatchers at a Amazon facility in Camarillo brushed him off, leaving him to choose between concerns for his safety and worries that his rating in the Flex app would be hurt if he refused to go. He decided to try to make the deliveries, battling gusts of wind that knocked him over at one point. He lost cell signal, however, and was forced to return to the warehouse without completing the vast majority.

And when he arrived for his shift Tuesday, Alfred Muñoz, 43, an Amazon delivery driver who works out of a warehouse in the City of Industry, said he was handed an N95 mask but given little other instruction.

“It was just kind of business as usual,” Muñoz said.

High package counts and the number of stops on his assigned routes this week have made work even more difficult. On Tuesday, with wind gusts whipping debris around making it difficult to see, he had about 180 stops and 290 packages to deliver. On Thursday, the air thick with smoke and ash, he had more than 300 packages.

He woke up Thursday morning with a bloody nose and a sooty black crust in the corners of his eyes.

In response to a request for comment, Montana MacLachlan, an Amazon spokesperson, said the company was “closely monitoring the wildfires across Southern California and adjusting our operations to keep our employees and those delivering for us safe.”

“If a driver arrives at a delivery location and the conditions are not safe to make a delivery, they are not expected to do so and the driver’s performance will not be impacted,” she said.

At the Brentwood location of popular Italian eatery Jon & Vinny’s, staff complained of headaches and sore throats in a text message group chat. An employee, who asked not to be named fearing retaliation at work, said that on Tuesday, staff huddled around an iPad with a fire map pulled up to keep an eye on the expanding evacuation zone. From the front of the restaurant, they could see the glow of the Palisades fire.

The employee said they were frustrated management kept the restaurant open when the perimeter of the mandatory evacuation zone was just two blocks away. On Wednesday, every server scheduled to work called in to say they were not coming, the employee said.

A spokesperson for Joint Venture Restaurant Group, which owns Jon & Vinny’s, did not immediately respond to a request for comment.

During natural disasters and extreme weather, employers’ choices can sometimes mean life or death, said David Michaels, a professor at the Milken Institute School of Public Health and a former assistant secretary of labor for the Occupational Safety and Health Administration.

He pointed to recent floods from Hurricane Helene that killed several workers at a plastics manufacturer. The tragedy has drawn scrutiny from state investigators, and a wrongful death lawsuit accuses the company of requiring employees to stay on site amid flooding after they requested permission to leave.

“It’s incumbent on employers to ensure the safety of their workers,” Michaels said. “The safety of their employees must take precedence over business concerns.”

Yasha Timenovich, 48, a driver for rideshare app Lyft and food delivery platform DoorDash, is more worried about declining earnings than on-the-job safety. With many restaurants and other businesses closed and would-be customers fleeing the city, he said that rides and deliveries have been slow. Traffic patterns have been strange and unpredictable with families piling into vehicles to flee fires.

Timenovich, who faced an order to evacuate his Hollywood apartment with his fiance and 6-year-old daughter Wednesday night, said he planned to stay with relatives for a few days in San Luis Obispo, where he hopes business will be better.

“I’m going to get out of here because it’s too crazy with these fires,” Timenovich said.

Business

Scott Bessent, Trump’s Billionaire Treasury Pick, Will Shed Assets to Avoid Conflicts

Published

12 hours ago

January 11, 2025

Press Room

Scott Bessent, Trump’s Billionaire Treasury Pick, Will Shed Assets to Avoid Conflicts

Scott Bessent, the billionaire hedge fund manager whom President-elect Donald J. Trump picked to be his Treasury secretary, plans to divest from dozens of funds, trusts and investments in preparation to become the nation’s top economic policymaker.

Those plans were released on Saturday along with the publication of an ethics agreement and financial disclosures that Mr. Bessent submitted ahead of his Senate confirmation hearing next Thursday.

The documents show the extent of the wealth of Mr. Bessent, whose assets and investments appear to be worth in excess of $700 million. Mr. Bessent was formerly the top investor for the billionaire liberal philanthropist George Soros and has been a major Republican donor and adviser to Mr. Trump.

If confirmed as Treasury secretary, Mr. Bessent, 62, will steer Mr. Trump’s economic agenda of cutting taxes, rolling back regulations and imposing tariffs as he seeks to renegotiate trade deals. He will also play a central role in the Trump administration’s expected embrace of cryptocurrencies such as Bitcoin.

Although Mr. Trump won the election by appealing to working-class voters who have been dogged by high prices, he has turned to wealthy Wall Street investors such as Mr. Bessent and Howard Lutnick, a billionaire banker whom he tapped to be commerce secretary, to lead his economic team. Linda McMahon, another billionaire, has been picked as education secretary, and Elon Musk, the world’s richest man, is leading an unofficial agency known as the Department of Government Efficiency.

In a letter to the Treasury Department’s ethics office, Mr. Bessent outlined the steps he would take to “avoid any actual or apparent conflict of interest in the event that I am confirmed for the position of secretary of the Department of Treasury.”

Mr. Bessent said he would shutter Key Square Capital Management, the investment firm that he founded, and resign from his Bessent-Freeman Family Foundation and from Rockefeller University, where he has been chairman of the investment committee.

The financial disclosure form, which provides ranges for the value of his assets, reveals that Mr. Bessent owns as much as $25 million of farmland in North Dakota, which earns an income from soybean and corn production. He also owns a property in the Bahamas that is worth as much as $25 million. Last November, Mr. Bessent put his historic pink mansion in Charleston, S.C., on the market for $22.5 million.

Mr. Bessent is selling several investments that could pose potential conflicts of interest including a Bitcoin exchange-traded fund; an account that trades the renminbi, China’s currency; and his stake in All Seasons, a conservative publisher. He also has a margin loan, or line of credit, with Goldman Sachs of more than $50 million.

As an investor, Mr. Bessent has long wagered on the rising strength of the dollar and has betted against, or “shorted,” the renminbi, according to a person familiar with Mr. Bessent’s strategy who spoke on condition of anonymity to discuss his portfolio. Mr. Bessent gained notoriety in the 1990s by betting against the British pound and earning his firm, Soros Fund Management, $1 billion. He also made a high-profile bet against the Japanese yen.

Mr. Bessent, who will be overseeing the U.S. Treasury market, holds over $100 million in Treasury bills.

Cabinet officials are required to divest certain holdings and investments to avoid the potential for conflicts of interest. Although this can be an onerous process, it has some potential tax benefits.

The tax code contains a provision that allows securities to be sold and the capital gains tax on such sales deferred if the full proceeds are used to buy Treasury securities and certain money-market funds. The tax continues to be deferred until the securities or money-market funds are sold.

Even while adhering to the ethics guidelines, questions about conflicts of interest can still emerge.

Mr. Trump’s Treasury secretary during his first term, Steven Mnuchin, divested from his Hollywood film production company after joining the administration. However, as he was negotiating a trade deal in 2018 with China — an important market for the U.S. film industry — ethics watchdogs raised questions about whether Mr. Mnuchin had conflicts because he had sold his interest in the company to his wife.

Mr. Bessent was chosen for the Treasury after an internal tussle among Mr. Trump’s aides over the job. Mr. Lutnick, Mr. Trump’s transition team co-chair and the chief executive of Cantor Fitzgerald, made a late pitch to secure the Treasury secretary role for himself before Mr. Trump picked him to be Commerce secretary.

During that fight, which spilled into view, critics of Mr. Bessent circulated documents disparaging his performance as a hedge fund manager.

Mr. Bessent’s most recent hedge fund, Key Square Capital, launched to much fanfare in 2016, garnering $4.5 billion in investor money, including $2 billion from Mr. Soros, but manages much less now. A fund he ran in the early 2000s had a similarly unremarkable performance.