Man Charged in Scheme to Fraudulently Buy Maxim Magazine
Calvin Darden, Jr. was charged by federal prosecutors Thursday for allegedly crafting an intricate scheme to defraud banks and impersonate his prominent father in an attempt to buy men’s magazine Maxim.
The U.S. Justice Department alleges Darden lined up $28 million in loans from three lenders to scoop up the risqué mag. As part of the scheme, which nearly came to fruition, Darden allegedly impersonated his father, Calvin Darden, a director at Target (NYSE:TGT) and former executive at United Parcel Service (NYSE:UPS).
The indictment filed in the Southern District of New York alleges Darden convinced a lender to provide his firm, Darden Media, with a $3 million loan based on what turned out to be fraudulent financial statements. Further, Darden allegedly said he would provide stocks owned by his father as collateral and presented a made-up brokerage statement as proof of their existence. No payments were ever made on that loan, according to the indictment.
In November 2013, Darden allegedly used what were basically the same financial and brokerage statements to convince another bank, based on Fort Lee, New Jersey, to lend Darden Media $5 million. The bank never received the stocks, so it put much of the loan capital in an escrow account of an unnamed law firm. Darden allegedly forged an email convincing the law firm to wire $4.9 million in funding to an account in Detroit, in the benefit of the seller of Maxim.
The charging documents don’t name the selling company, but media accounts from the time say private-equity giant Cerberus Capital Management owned Alpha Media, the parent of Maxim.
Cerberus didn’t immediately respond to an email seeking comment on the matter. Donaldson, Chilliest & McDaniel partner Xavier Donaldson, who is representing Darden, declined to comment on the matter.
Requiring even more capital to buy Maxim, Darden allegedly attempted to coerce a third lender into putting up $20 million. A source at an unnamed investment bank told U.S. Secret Service Special Agent Paul Deal the deal was contingent on Darden forming a Maxim-based cable network.
To create this illusion, Darden allegedly forged an email between his well-connected father and the president of an unnamed cable company, in which the firm expressed interest in launching such a network. Deal’s research showed the firm expressed no such interest, and the email address on the supposed letter was completely incorrect.
The would-be media buyout attracted press from a wide variety of outlets when it was initially announced. But reports from the time reviewed by FOX Business show the deal fizzled out when it became clear Darden wouldn’t be able to come up with enough capital to pay for the magazine.
Depths Unknown
The indictment repeatedly discusses Darden’s impersonation of his father in crafting the buyout. Between creating a fake email address, fake phone number and fake accounting documents, it’s clear prosecutors are making a case that Darden leveraged his father’s prominence in the business world.
Calvin Darden is a board member at Target and had served as a director and senior vice president at shipping behemoth United Parcel Service before he retired in 2005.
It isn’t clear exactly how much the elder Darden knew about his son’s alleged fraud scheme and whether he would press any charges of his own. An attempt by FOX Business to reach Darden was unsuccessful. A Target spokesperson didn’t respond to a request for comment on the matter.
The younger Darden surrendered Wednesday to the U.S. Secret Service. He is expected to be presented later Thursday in federal court in the Southern District of New York before Magistrate Judge Andrew Peck.
The same indictment also charges Darden in a scheme in which he allegedly convinced a Taiwan-based company to give him half-a-million dollars by saying The New York Knicks would be playing an exhibition game in Taiwan.