Inside Steven Mnuchin’s Hit-and-Miss Path from Hollywood to Treasury Secretary Pick

The Hollywood Reporter

On Nov. 14, 2015, banker, hedge fund manager and Hollywood film investor Steven Mnuchin celebrated his engagement to Scottish actress-producer Louise Linton with a champagne-and-caviar party in the flower-filled Crystal Ballroom at The Beverly Hills Hotel. Among the guests dancing to the cover band that night was embattled Relativity Media founder Ryan Kavanaugh - perhaps surprising given that colleagues say Kavanaugh just months earlier bitterly had blamed Mnuchin's OneWest bank, which had made significant loans to Relativity, for pushing his company into bankruptcy by abruptly pulling millions of dollars from one or more of its accounts.

This wasn't an ordinary quarrel between lender and creditor: From October 2014 through May 2015, Mnuchin simultaneously had served as chairman of OneWest and co-chairman of Relativity. He quietly had exited Relativity a few weeks before his bank acted to recoup some of the tens of millions it had loaned to Kavanaugh's troubled studio. Shortly after that, Relativity filed for Chapter 11 protection. (According to a regulatory filing, OneWest's board had approved all Mnuchin's dealings at Relativity.)

Also among the guests at the engagement party was former William Morris Agency chairman Jim Wiatt, who along with Mnuchin had been a board member at both OneWest and Relativity. Wiatt describes the groom-to-be as "a good friend, really smart with a good sense of humor" and the future bride as "a really terrific lady." But while Mnuchin, 53, has a long history of investing in the movie business - and while the guest list included some who, like Wiatt and producer Cassian Elwes, are well known and long established in the entertainment industry - this was not a gathering that included the industry's top power players. "The core Hollywood establishment was conspicuously absent," says someone who was there.

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Lately, according to a business associate, Mnuchin has been joking that his wedding might take place on the White House lawn - and for good reason. Long considered an important but relatively low-profile industry moneyman, he is on the national stage, having served as finance chairman for Donald Trump's presidential campaign and now, apparently, the president-elect's pick for Treasury secretary. (Full disclosure: Though for decades I have refrained from commenting publicly on politics, I have been a vocal detractor on social media of Trump.) Certainly if Mnuchin faces questions on Capitol Hill as a Trump appointee, they likely will center on controversies involving practices of Pasadena-based OneWest during his time as chairman rather than his dealings in Hollywood. But for entertainment industry insiders, his relationship with Kavanaugh and his dual roles at the bank and Relativity have raised eyebrows. "I'm not saying there's anything wrong with it necessarily," says one senior figure in the financial world, "but you don't see that very often."

Some acquaintances see the relationship with the highflying Kavanaugh as a sign that Mnuchin gradually has become more enamored of show-business glitter. "It's not the first time a middle-aged financier came to Hollywood and got caught up with the glamour and excitement," says one industry veteran who knows Mnuchin. Says another: "He's changed. He became that dude."


But a Mnuchin associate disputes that characterization. "He's been in the finance business since 1985, investing in all different types of things," he says. "He believes in the value of content." Brett Ratner, whose production-finance company RatPac Entertainment is a partner with Mnuchin's Dune Capital Management in the investment entity RatPac-Dune, says that as far as he knows, Mnuchin is a staid businessman who is "not in my social circle." (The nightlife-loving filmmaker and his fellow RatPac co-founder James Packer long have been fodder for the tabloids.) Ratner met Mnuchin many years ago through Sears CEO Eddie Lampert, Mnuchin's Yale University roommate. "I've never seen Steven at any parties, any events," Ratner says. "He's not like a lot of people who get into Hollywood so they can be seen." Wiatt concurs: "He doesn't go out and party every night. That's not who he is. He's a serious guy and a very good businessman." He cites Mnuchin's success acquiring and reviving IndyMac, a notorious failed lender that was renamed OneWest. The bank represented a huge payday for Mnuchin and fellow investors, who acquired it for $1.5 billion in 2009 amid the financial crisis and then collected $1.9 billion in dividends before selling it to CIT Group in July 2014 in a $3.4 billion deal.

An investor in banking and real estate as well as entertainment, Mnuchin is in Hollywood but not of Hollywood. His Dune finance vehicle co-financed a successful run of 20th Century Fox movies (including Avatar) from 2005 through 2012. Mnuchin's dealings in the industry in recent years have teamed him with Kavanaugh, known for making wildly optimistic statements about the health of his struggling company. Dune has a deal with RatPac to invest several hundred million dollars in most Warner Bros. movies. A Mnuchin associate says the investor regards Warners as "the preeminent movie studio" aside from Disney, yet the investment came in 2013 as Warners was entering a protracted slump.

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It's easy to see why some think Mnuchin has fallen under Hollywood's spell. A former Goldman Sachs partner who left in 2002 and started Dune two years later, he moved from New York to Los Angeles when he took the helm of OneWest in 2009. He bought a 23,000-square-foot, $26.5 million home in Bel Air, complete with a ballroom, and ended his 15-year marriage to the mother of his three children. Eventually he and Kavanaugh bought a Falcon 50 jet together. (It since has been sold.) Mnuchin took up residence at the Hotel du Cap during the Cannes Film Festival. He and Linton are regulars at the see-and-be-seen Tower Bar restaurant on Sunset Boulevard. He even has a cameo as "Merrill Lynch executive" in Warren Beatty's new film, Rules Don't Apply. Linton also has a minor role in the film, on which Mnuchin is credited as a producer.

The nature of Mnuchin's dealings with Trump, whom he has known for 15 years, is not clear, though he has acknowledged - while declining to elaborate - that he has done business with the president-elect, including investing in a Trump property in Waikiki, Hawaii. And he hasn't escaped Trump's litigiousness. In 2008, Trump sued defendants including Mnuchin's Dune to extend the term of a construction loan for his 92-story luxury hotel and condominium tower in Chicago. The case was resolved out of court.

Mnuchin contributed the maximum to Trump's campaign and gave another $200,000 to the Republican National Committee, according to the Center for Responsive Politics. But Mnuchin and his ex-wife, Heather, also have given to Democrats, including Hillary Clinton in previous elections and California's liberal U.S. Sen.-elect Kamala Harris. "I'm not a traditional fundraiser - I think that was part of the appeal I had for Donald," Mnuchin told The New York Times in May. "I've always believed in supporting the best candidate at the time."

Trump chose Mnuchin as his finance chair in May even though the then-candidate previously had taken a shot at Mnuchin's line of work. "The hedge fund guys didn't build this country," Trump said on CBS' Face the Nation in August 2015. Many hedge fund managers are "paper-pushers," he added. "They make a fortune. They pay no tax. It's ridiculous." Mnuchin has not commented on those remarks and declined to speak on the record for this story.

Described by acquaintances as slightly awkward but with a healthy ego and a terse negotiation style, Mnuchin is the son of octogenarian Robert Mnuchin, another onetime Goldman Sachs partner who now is a prominent art patron with an eponymous gallery on New York's Upper East Side. The elder Mnuchin's collection includes works by Willem de Kooning, Mark Rothko and Jackson Pollock.

Steven Mnuchin has been dogged by a number of legal battles in recent years. In 2010, he and his brother were sued after they refused to return $3.2 million from Bernie Madoff's Ponzi scheme that had been deposited in their late mother's account. Mnuchin and his brother had withdrawn those funds before Madoff's crimes were revealed, and there is no allegation that they had any knowledge of Madoff's misdeeds. "It was my mother's estate, and I was merely the executor," Mnuchin told Bloomberg News earlier this year. "I was not involved in it whatsoever. It's long over, and I had nothing to do with it." The suit eventually was dropped after the trustee seeking to recoup profits from Madoff's fraud ran out of time to pursue claims.

Other legal challenges arose after Mnuchin led a group of investors in the IndyMac acquisition and became the renamed OneWest's chairman. Coming in the wake of the 2008 financial meltdown, the sale was viewed as a sweetheart deal, with the government bearing the risk. In November 2011, picketers showed up at Mnuchin's house in Bel Air to protest the bank's aggressive foreclosure practices, which faced court challenges and which critics alleged were discriminatory.


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More recently, on Nov. 17, a coalition of California community groups filed a complaint with the federal Department of Housing and Urban Development accusing the bank of locating branches in predominantly white neighborhoods, shunning nonwhite borrowers and other discriminatory practices.

Over the course of his tenure in the entertainment world, it appears that some of Mnuchin's partnerships have become strained as the harsh vagaries of the movie business made themselves felt. Though Dune's slate deal with Fox was one of the more successful of its kind, Mnuchin and his partner, Chip Seelig, went their separate ways in 2012. Sources say Mnuchin wanted to sweeten terms of the deal and Fox balked. A Mnuchin associate tells THR that Dune decided not to extend the Fox relationship "for investment reasons" and says the split "was not contentious at all." But Seelig formed his own company and remained in partnership with Fox while Mnuchin did not. By the end, a source says there was "no love lost" between the two. Seelig did not respond to requests for comment.

Mnuchin had met Packer through New Regency financier Arnon Milchan, and with the Fox deal finished, he forged a partnership with RatPac to invest in the Warners slate. "Steven has probably invested in more films than anyone other than the studios," says the Mnuchin associate. The RatPac-Dune alliance started well with the hit Sandra Bullock-George Clooney space thriller Gravity in 2013, but it is believed to have taken a drubbing on such Warners flops as Pan, Jupiter Ascending and In the Heart of the Sea. (The partnership does not have any participation in the studio's Fantastic Beasts series.) Several months ago, Warners accommodated RatPac-Dune's desire to tweak the terms of the deal, according to well-placed sources. Says Mnuchin's associate, "In business deals, there are constant discussions people have with partners. He couldn't be happier with the relationship." (Warners declined comment.)

Steve Eichner/Penske Media/REX/Shutterstock

Meanwhile, Mnuchin and Dune had invested in Relativity, and OneWest had loaned the precariously situated company tens of millions of dollars. In October 2014, Mnuchin became co-chairman of the studio, touting a possible IPO. "I've known Ryan for several years and have closely followed Relativity's success," Mnuchin said in a statement at the time. Some saw Mnuchin's decision to jump into the Relativity fray as a sign that the banker was looking to become the head of an entertainment company, but more likely Mnuchin hoped to pull off a rescue that also would help OneWest get repaid. A former Relativity insider says Mnuchin was "very professional, very smart, very hardworking … a very sane voice" - particularly in contrast to Kavanaugh's inconsistent and often exaggerated statements. Says this executive: "I could see trusting [Mnuchin] in a company I would make an investment in. I would not trust Ryan."

Interestingly, this executive sees echoes of Kavanaugh's unpredictable personality in Trump. "The inability to deal with criticism, the hiding of their finances - the parallels between Trump and Ryan are all over the place," he says. "Maybe there's something about that personality type that [Mnuchin] finds to be manageable or that he's drawn to." Certainly, says this exec, Mnuchin "did the best job of anybody I ever saw in terms of managing Ryan. He kept him on his best behavior. It was like a kid who would act out or misbehave but would not do it with an adult in the room."

In July 2015, Relativity filed for bankruptcy protection, with liabilities of nearly $1.2 billion and assets of only $560 million. Just weeks earlier, Mnuchin's bank had shocked Kavanaugh by pulling millions from Relativity's accounts following Mnuchin's resignation as co-chairman May 29. Blackstone's Tim Coleman, Relativity's financial adviser, said in court papers that the bank's actions largely forced Relativity to "stop paying many vendor bills, to postpone production of certain film projects and to postpone the release of certain completed films." Relativity took steps to stop OneWest from withdrawing even more money. Some in the industry wondered whether Mnuchin might have put the bank's interests ahead of Relativity's when he was working for both. Mnuchin's spokesperson, crisis PR specialist Mike Sitrick, provided THR with a statement from Joe Woolf, OneWest's former head of entertainment finance: "Steven Mnuchin recused himself and, accordingly, had no involvement in any [OneWest] decision relating to the Relativity bank loan once he joined the Relativity board and throughout the bankruptcy process." This statement doesn't seem to address a window of a few weeks between the time Mnuchin left the board in late May and before Relativity filed for bankruptcy July 30 during which the bank withdrew millions from Relativity. In all, the bank withdrew about $50 million shortly before Relativity's Chapter 11 filing, according to court documents.


Despite the funds that OneWest pulled from Relativity's accounts, the bank still was listed as a creditor owed $27.8 million in the bankruptcy. CIT - which acquired OneWest - said in a September filing that it was owed $38.5 million. Apart from the bank, Mnuchin and the Dune investors are believed to have lost tens of millions in the Relativity collapse.

Then along came Trump. In early May, the GOP candidate named Mnuchin, who had supported Mitt Romney in 2012, to head his fundraising effort. A new and sure-to-be controversial chapter in Mnuchin's career got underway.

Should Mnuchin take a role in the new administration (as a political appointee, he would face confirmation by the Republican-controlled Senate), it is unclear what would happen to Dune, or what might be the fate of RatPac-Dune. If Mnuchin is indeed headed to Washington, however, he apparently leaves Hollywood having repaired any ill will on the part of Kavanaugh, who is now trying to sell Relativity. While declining to address the specifics of their past business relationship, Kavanaugh tells THR through a spokesperson, "We remain close friends until this day."

This story appeared in the Dec. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.