On July 17, 2015, less than two weeks before the film company Relativity Media declared bankruptcy, one of its lenders, OneWest Bank, swept $17.9 million out of a Relativity account meant to pay fees to producers, writers, performers and other staffers who worked on the company’s movies. During the next two months, OneWest swept another $32 million out of Relativity accounts, leaving the company desperate for cash to pay hundreds of other creditors.
“This liquidity crisis caused the debtors to largely have to stop paying many vendor bills, to postpone production of certain film projects, and to postpone the release of certain completed films,” a restructuring expert hired by Relativity wrote in a Chapter 11 filing when the company declared bankruptcy.
OneWest was owned by Steve Mnuchin, Donald Trump’s nominee for Treasury Secretary, and a handful of other wealthy investors. Mnuchin is as qualified for the job Trump has offered him as any other recent Treasury Secretary, with an impressive resume as a well-connected Wall Street money man. His father, Robert Mnuchin, was a top trader at Goldman Sachs who later became a renowned art dealer. The younger Mnuchin graduated from Yale and eventually became a partner at Goldman, like his father. Then he left for the hedge fund world, working with icons such as George Soros (one of the biggest Democratic megadonors) and John Paulson, the billionaire who has been one of Trump’s top advisors. Mnuchin joined Trump’s team over the summer as its chief fundraiser.
But Mnuchin’s dalliance with Relativity appears to have been a rare blunder in an otherwise shrewd career as an investor. Mnuchin started his own hedge fund, called Dune Capital Management, in 2004, with one of his earliest investments being a stake in a group of films issued by Twentieth Century Fox, including the hit Avatar. A huge opportunity arose in 2008 when IndyMac, a big California bank, went bust, and there were few investors with the guts to buy bank assets amid a wipeout in financial markets. Mnuchin put together a group including Soros, Paulson and investor Chris Flowers, who bought IndyMac for $1.55 billion.
They renamed the bank OneWest, and with help from the FDIC, shored up its assets. That included a lot of foreclosures on bad loans IndyMac never should have made, which brought protesters to Mnuchin’s $26 million Bel Air mansion, after he moved from New York to Los Angeles in 2009. “It was terrible,” he told Bloomberg in 2012. “Something I never want to experience again.”
Mnuchin also dove deeper into film financing after moving west. He funded two firms—Dune Entertainment and Rat-Pac Dune Entertainment—that helped fund movies such as “Suicide Squad,” “American Sniper” and “Sully.” Warren Beatty gave him a cameo appearance in his new film, “Rules Don’t Apply” (yes, irony alert). In 2014, Mnuchin, 53, divorced his wife Heather, mother of their three kids, after a 15-year marriage. He is now engaged to Louise Linton, a 35-year-old Hollywood figure who describes herself as an “actress-producer-lawyer.”