The Bin Ladens Page 37

  To pursue the claim against Howard, Bakr had to submit certain legal briefs to the Texas court system, and in one of them, he referred to the existence, in the Jeddah courts, of an intriguing-sounding document entitled “Financial Position of the Inheritance of the Late Salem Binladin as of February 10, 1990,” which was “the only financial document filed with the court here in the Kingdom of Saudi Arabia regarding the financial affairs” of Salem and his estate, according to Bakr. This document did not make it into the public court file in Texas, however. Its scope is unclear, but one lawyer who read it at the time recalled that it estimated the value of Salem’s personal estate as perhaps several hundred million dollars, and certainly less than one billion dollars. Even that estimate seems high, given Salem’s perpetual cash flow struggles in the last years of his life, although the estimate may reflect the value of his relatively illiquid real estate holdings in Saudi Arabia, Egypt, the United Arab Emirates, and elsewhere.16

  The question of Salem’s personal wealth was also complicated by his debts. He had borrowed large sums from the National Commercial Bank, but it was not always evident, at least to his foreign business partners, when he was borrowing for a personal transaction and when for the Bin Laden companies. According to two individuals close to Salem and NCB, the bank presented Bakr with a demand for repayment after Salem’s death, and Bakr worked out a settlement; the amounts involved are unknown, but according to these individuals, they may have been very large. “He didn’t always talk about it,” Ghoneim recalled, “but I saw he was exhausted. He had to deal with inheritance problems. He was doing his best to pay all the debts.”17

  Bakr’s settlement agreements and his methodical pursuit of claims for Salem’s estate in Europe and America signaled the family’s new direction—more businesslike, better organized, more Arabian. In the absence of a family crisis, it was perhaps a welcome change for some from the volatility and peculiarity of Salem’s rein. But the Bin Ladens were not destined to live placidly. Very soon, as the family’s troubles deepened, Bakr would confront problems and choices of extraordinary importance and complexity. Was he up to the challenge? Despite all his admirable dedication and hard work, his innate caution framed a question he would never entirely shake: What would Salem have done?

  26. AMERICA IN MOTION

  THE IRANIAN REVOLUTION of 1979 cast thousands of privileged Persians into exile. Many gathered in Los Angeles, where they poured their agitations into business. First-and second-generation Lebanese and Armenian entrepreneurs maneuvered among them—builders, restaurateurs, retailers, developers, and hustlers sui generis. Some blocks on the west side of Los Angeles already resembled a stucco-and-Spanish-tile bazaar when the Saudis turned up in numbers, their pockets bulging after the second oil shock. Young merchant scions from Jeddah and Riyadh and Dhahran rolled through Beverly Hills in Porsches and Mercedes-Benzes, their sunglasses just a little too fashionable, their aftershave a little too pungent—as conspicuous a population of marks as ever swam in the seas of capitalism. Accountants looked at them and saw fees; lawyers saw billable hours; stockbrokers saw commissions; jewelers saw gold. There were plenty of Saudi businessmen who held their own in America, but many suffered from deficits of guile and ruthlessness. They were newcomers, flush but lacking in confidence and inside angles, and they did not have a locally rooted diaspora to protect them, as the Armenians and Lebanese enjoyed. Their instincts and traditions did not always serve them well. Arabian elites esteemed dignity, decorum, and reticence. Americans shouted, shoved, and brawled over money. Arabians settled disputes discreetly. Americans sued in open court.

  Salem had thrived on this frontier, but his death cut the main artery connecting the United States to the Bin Laden family. Bakr was certainly interested in business partnerships with American multinational corporations, but he very rarely traveled to the States. By 1989 the most active family investor on American soil was Khalil Bin Laden, who lived in Los Angeles several months each year, usually in the summer, when Jeddah’s heat was particularly intolerable. He was a younger full brother of Yeslam, a half-brother of Bakr and Osama. He had come to America with considerable business ambition. Gradually, however, Los Angeles and its lawyers were threatening to strip him of his money and his serenity.

  Khalil Bin Laden had studied business at the University of Southern California during the 1970s, but he never graduated. He was a thin, shy man, exceedingly polite, curious about American mores but conservative in his habits of mind. He dressed well but not flamboyantly—he wore Greg Chapman gray flannel suits handmade in Beverly Hills and Bally shoes. For a time he drove a Rolls-Royce convertible; later, as he settled into America, he chauffeured his family in a considerably less conspicuous green Ford minivan with cloth seats. He prayed punctually five times each day and gave up alcohol after a few cursory experiments, according to friends. He could be ruthless at French card games—“In cards, I don’t know my own mother”—but he was otherwise gentle and diffident. When he met his future wife in a Beverly Hills nightclub, some of his acquaintances thought she was probably the first woman he had ever dated seriously.1

  She was a formidable character—Isabel Bayma, a Brazilian who had grown up in poverty in her native country, migrated to the United States, and found her way to Beverly Hills. She had had a child by a previous marriage by the time she met and won Khalil. He adored her, according to people who knew them, and he showered her with luxuries she had never known. Some acquaintances described her as strong and stalwart; others as difficult and demanding. They married at the Riviera Country Club in Bel Air. They started a family, and as their household brimmed with young Saudi-Brazilian-American children, they bought a home in fashionable Brentwood, on Jonesboro Drive, and contracted for a $600,000 luxury renovation.2

  At USC, Khalil met a Beverly Hills jeweler, Michael Kazanjian, who sold high-end pieces to members of the Bin Laden family. Kazanjian was a client of Alexander Cappello, a young USC business graduate who aspired to build a boutique investment bank with global reach. Cappello was a handsome, dark-haired, Gatsby-esque character from Bakersfield, California, who would become an assiduous collector of Italian Renaissance art and statuary. He met Khalil through the international students department at USC. He operated from well-appointed offices in a prestigious skyscraper in Century City. Initially, he helped Khalil with real estate investments.3

  Khalil’s business goals were vague. “If I don’t know what’s going on, I just say no,” he would explain as he turned down one American promoter after another. He seemed mainly to be hedging his bets against political trouble in Saudi Arabia, trying to build up enough American real estate and business activity to generate a secure $200,000 to $300,000 in annual income outside the kingdom, just in case. He tinkered and continually generated new ideas. He was attracted, as were many in his family, to tangible investments such as real estate and aircraft leasing, but he was also willing to consider some unusual ventures.4

  Early on, Khalil registered a Delaware company called Kabeltan Corporation, where Alex Cappello served for a time as president, according to company documents. Kabeltan acquired a one-story blond-brick office building in Carrollton, Texas, outside Dallas, about five miles north of the Lyndon B. Johnson freeway. In nearby Garland, at 3737 Dividend Drive, the company bought a light warehouse rented out to industrial tenants. Other investments were more exotic. Through Cappello’s firm, Khalil purchased an interest in a loan made to the country singer Kenny Rogers for the purchase of an Arabian horse named Nujad, which was estimated to be worth $10 million to $20 million. The breeder who had sold the horse kept a ranch in Northern California and had agreed to lend Rogers a portion of the purchase price. Later, because he needed to raise cash quickly, the breeder offered to sell Cappello’s firm the loan at a considerable discount. Cappello made sure the horse had adequate life insurance, and Khalil agreed to participate in the transaction; his only risk involved the creditworthiness of Kenny Rogers, which proved to be a sound bet. Bin Laden made a
profit of more than 30 percent in less than a year from the country singer’s loan.5

  During one of his annual sojourns in Saudi Arabia, it occurred to Khalil and Isabel that the kingdom lacked a proper toy store of the kind they and their children had grown accustomed to in Los Angeles—a supermarket for children, like Toys “R” Us. They decided to launch Saudi Arabia’s first large toy store, a somewhat daring venture in a kingdom where many religious scholars regarded dolls as blasphemous idols. Khalil explored the possibility of purchasing a Middle Eastern franchise from Toys “R” Us itself, but the price was too steep. (Companies that issue franchises under a famous brand name can also be sticklers about requiring a franchise owner to perform extensive hands-on work at the business, to ensure its success. The Bin Ladens explored purchasing McDonald’s franchises for the Middle East, according to a family member, but learned that owners were required by headquarters to put in long hours frying hamburgers and french fries; there was some joking within the family about which Bin Laden brother could be dispatched to deep-fat-frying school in America, but they ultimately decided to pass.) In the end, Khalil decided to launch his own business, Toyland, in Jeddah. To stock its aisles he hired in Los Angeles an experienced American toy merchandiser, Mark Love, and they used a new company, BIN Corporation, to handle purchasing and shipping between America and Jeddah.6

  As these endeavors flourished, Khalil slowly became entangled in American legal proceedings. He seemed allergic to property taxes, and over the years he allowed a number of his real estate properties to fall into arrears, which led government attorneys for the State of California and Dallas County, Texas, to file civil cases against him. His Brentwood home-renovation project produced vituperative civil lawsuits between Khalil and his Iranian-owned building contractor in Los Angeles, a dispute that carried particular irony for a descendant of such a famous contracting family.7 But his greatest trouble began, in the aftermath of Salem’s death, as Khalil moved into the novel business of private American prison leasing, through the auspices of a new company he formed called America in Motion Corporation.

  America in Motion shared an office suite with BIN at 15260 Ventura Boulevard, a granite-and-glass building more than twenty stories tall in Sherman Oaks, California, in the San Fernando Valley, just over the chaparral hills from Hollywood. When he was in Los Angeles, Khalil worked at the Sherman Oaks office from time to time, but mainly he delegated day-to-day management to his American executives and employees. By the late 1980s, Alex Cappello had faded from the scene. He was replaced by Franklin Frisaura, a real estate broker who was Khalil’s brother-in-law—Frisaura had married Isabel Bayma’s Brazilian sister, Regina, whom he had also met at a Los Angeles nightclub. Frisaura brought a touch of entertainment-industry cachet to the Bin Laden enterprise. He had grown up in Southern California; his father was a comedian, and his mother, after performing as a young adult in the Ringling Bros. and Barnum & Bailey Circus, had also earned a living as an entertainer. Frisaura had attended junior high school with the sons of Mo Austin, the former president of Warner Brothers Records. The Bin Ladens had accommodated relatives by marriage in jobs at their various enterprises for almost a half century, and Frisaura followed in this tradition; he served as an adviser and manager for Khalil on real estate and other business projects.8

  America in Motion made an initial foray into tax-oriented aircraft leasing, but this did not turn out very well. One early customer was Steven McKim, the president of a small Northern California company, Magnum Aircraft International, whose investors included Clint Eastwood, the actor then renowned for his Magnum Force and other movies. Magnum Aircraft, headquartered near Eastwood’s home in Carmel, was involved in research into retractable landing gear for helicopters. For reasons that remain opaque, McKim persuaded Khalil to purchase and lease back to Magnum a vintage 1958 twin-engine Spanish fighter jet, according to court documents. McKim’s successor at the company, Darius Keaton, later said that Magnum was “a small corporation located in Monterey with no business outside the state. None of the employees of Magnum did any significant travel…The last thing needed was a $225,000 jet.”

  In any event, soon after its purchase, Magnum stopped making lease payments. America in Motion sued. Khalil Bin Laden’s lawyers named as defendants not only McKim but also Clint Eastwood. The lawsuit was ultimately dismissed without a judgment against the actor-director or the payment of any settlement. America in Motion wound up in possession of an old jet suitable for aviation hobbyists.9

  In addition to his brother-in-law Frisaura, Khalil relied for advice upon Musarrat Ali-Khan, a somewhat mysterious figure with a colonial-era mustache who was described in one court document as “a chartered accountant in Pakistan” who had later settled in Jeddah as an employee of the Bin Laden family. When Khalil first opened his Toyland stores in Saudi Arabia, Ali-Khan worked with him there. Later he moved to Los Angeles to help run America in Motion. Khalil paid him a salary of more than five thousand dollars per month. Ali-Khan looked around for business deals that might interest his employer. During the summer of 1988—in the same months that Osama Bin Laden was secretly forming Al Qaeda back in Ali-Khan’s native country of Pakistan—he arranged an unusual investment for Khalil involving some Massachusetts prison facilities.10

  The deal revolved around a company called Resun Leasing, which was headquartered in the Virginia suburbs of Washington, D.C. Founded in 1986, Resun specialized in premanufactured modular buildings for use by governments, schools, hospitals, and businesses; its projects ranged from small offices for security guards to huge warehouses. To avoid tying up too much of its cash, the company looked for private investors willing to participate in its leasing contracts. America in Motion purchased what a court document described as “an undivided one-half interest in certain prison facilities leased to the Commonwealth of Massachusetts” in Hampden and Hampshire counties.11

  The price was just over $500,000. Khalil raised the money by borrowing $770,000 from the Banque Indosuez. Resun then returned the difference to Khalil—more than $200,000—in a transaction that Bin Laden referred to as a “rebate,” but which Ali-Khan called a “kick back,” although it was not clear what he meant by that term. Khalil apparently used the extra cash to pay down separate debts to Banque Indosuez. His obligations in Los Angeles were beginning to pile up; for example, his total debts to Banque Indosuez exceeded $3 million, according to a letter written by Ali-Khan to Khalil in 1989. Khalil eventually went into technical default on some of this debt; he sought to sell some of his Los Angeles investment properties to pay off his loans.12

  In May 1989, America in Motion renegotiated its prison-leasing deal with Resun. As part of the financial transfers generated by this refinancing, one of Khalil’s attorneys in Beverly Hills, Ron Goldie, accepted into a trust account a sum of $227,500, according to court filings. Goldie then agreed to pay $130,000 of this money to Musarrat Ali-Khan, who claimed it was owed to him as part of oral business agreements he had made with Khalil. The confusion was compounded by the fact that Khalil was attempting to monitor the prison transactions by fax and telephone from Jeddah, where he had returned for the winter and spring.

  On BIN Corporation and America in Motion Corporation stationery, Ali-Khan wrote several times to Khalil in Jeddah, providing a history of convoluted financial transfers that had culminated with his receipt of the $130,000, which he described as a “loan” that had been made to BIN Corporation on “my personal guarantee.” Khalil faxed back a series of skeptical questions. “Please provide me with the following details of this said loan,” he wrote, including “the purpose for which we get this loan…actual utilization of this loan…when we got this loan…who is the creditor…If there was a loan agreement, fax me a copy.” Ali-Khan tried to satisfy him but failed. In early June, Khalil wrote to him from Jeddah: “The faxes you sent to us…are still vague and I disagree on many of the contents. Please provide us full details of information especially on the $130,000 loan you said you personally g
uaranteed.”13

  Khalil flew into Los Angeles, talked to the lawyers and executives involved, and concluded that “the $130,000 was fraudulently taken by Khan,” as he put it in a written declaration later filed in court. Ali-Khan stopped coming to work. On September 22, 1989, Khalil Bin Laden drove to the Van Nuys police station in the San Fernando Valley, approached an officer working at the counter, and asked to file a criminal complaint. With this act, he took yet one more step into the mire of the American legal system. Khalil had initially been unsure “if this could be criminal or just civil,” that is, a situation where he should just sue Ali-Khan to try to get his money back, rather than going to the police. He had decided, however, that he was the victim of a crime under American law. The police “sent me upstairs, and upstairs they sent me back down,” Khalil remembered. Finally, “One of the policemen told me, ‘Okay, fill this form.’”14

  Following an investigation, the Van Nuys district attorney did indict Ali-Khan on charges of felony embezzlement, and the police issued a warrant for his arrest. Prosecutors argued in one court filing that the Pakistani was a “possible international thief…wanted for bank embezzlement in Paris.”15