Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Wed, Aug 19 1992 Date: Wed, 19 Aug 92 04:20:00 EDT Message-ID: 08-19 0000 BONUS: Wayne Newton's economic woe USA TODAY Update Aug. 19, 1992 Source: USA TODAY:Gannett National Information Network Entertainer Wayne Newton, 50, filed for protection from creditors Monday in Reno, Nev. under Chapter 11 of the Federal Bankruptcy Act. "He's unable to pay his loans and debts," says his lawyer, Gerald Gordon. "He's a victim of the recession just like everyone else, only on a larger scale." ON WHAT KIND OF SCALE DOES WAYNE NEWTON EXIST? Well, OK - much larger. He owes nearly $13,000 on his American Express card, and that's the 19th-largest debt listed in his filing. He pops up on Arsenio and Roseanne, writes and sings a hit song about a note Elvis once wrote in a hotel room and makes $250,000 a week when he plays Las Vegas. Who would know he's really just a typical Joe who can't make ends meet? CAN THE AVERAGE PERSON RELATE TO NEWTON'S PROBLEMS? Really, it's pretty hard for most of us to get our arms around how a Wayne Newton can end up in bankruptcy court - how his payments for mortgages, legal fees and medical bills can get so far ahead of his earnings. On the face of it, the idea seems absurd. Newton makes $5 million to $7 million a year from his regularly-scheduled shows on the Las Vegas strip. He makes $100,000 to $200,000 for other performances. He gets bit parts in TV shows and films. His pinky rings alone - one a 7-carat emerald-cut diamond and one a 13-carat round diamond that looks like a golf ball - are worth more than most people's lifetime earnings. DOES SUCH EXCESSIVE WEALTH EVER RUN OUT? He owes up to 200 creditors a total of $20 million, according to papers filed in bankruptcy court. In the filing, he estimates his assets at between $1 million and $10 million. Gordon won't give exact figures. Newton could not be reached. WHAT CAUSED HIS BANKRUPTCY FILING? The bankruptcy filing likely was triggered by a lawsuit filed in June by Newton's biggest creditor, Northeastern Bank of Pennsylvania in Scranton, Pa. After years of negotiations over payments Newton owed the bank, the suit was filed for more than $7 million plus other fees, says Wayne Miller, a group vice president for the bank. Newton's relationship with the bank "goes back to the early 1980s, when he came and bought a resort in the Poconos," Miller says. Newton later sold the resort. ARE ALL OF NEWTON'S CREDITORS HARD-PRESSED FOR THEIR CASH? Some of Newton's creditors don't seem too worried about getting the money he owes them. Considering his assets and earnings, Newton may be able to use Chapter 11 to stall creditors and protect himself from lawsuits until he can get his finances in order, they say. "He'll pay us - he always has," says Doug Hernthel of Alamo Pintado Equine Medical Center in Los Olivos, Calif. Newton owes the center's horse-veterinary practice more than $23,000. $23,000 FOR A VETERINARY BILL? Newton has a number of horses at his 52-acre Las Vegas ranch - and for the past 17 years, whenever one became sick, he's trucked it to Alamo Pintado. His bill runs $20,000 to $40,000 a year. "He's spent a lot of money here," says Hernthel. "I know he's always been good for it, but a guy like that, if I had to, I'd write it off as a friend." CAN NEWTON AVOID NORMAL CHANNELS WITH OTHER CREDITORS? On a stiffer note, Frank Fahrenkopf, a Washington lawyer owed nearly $52,000 by Newton, says, "He is merely working through the proper system to resolve current capital and cash-flow difficulties." Fahrenkopf had represented Newton during Newton's mid-1980s libel lawsuit against NBC over a news series that tried to tie Newton to organized crime. Newton won a $19 million award, then an appeals court reduced the award to zero. By that point, Newton owed Fahrenkopf more than $2 million in fees. WHAT KIND OF INVESTMENTS CAUSE SUCH LARGE-SCALE DEBT? Most of Newton's debts are tied to real estate. "Any investor, from Wayne Newton to the doctors down the street, can be caught by falling real-estate values," says Judith McGee of McGee Financial Group in Lake Oswego, Ore. Declining or flat real-estate prices in many parts of the West have clobbered Newton's empire, reducing the value of Newton's assets and hurting his borrowing power. He owns a huge tract in Lake Tahoe, Nev., that likely will figure prominently in his settlement - that's why he filed in Reno, which is closer to the property than Las Vegas. Newton owns a mansion and ranch in Las Vegas and has bought and sold property nationwide over the years. HAVE DIFFICULTIES IN REAL ESTATE EXISTED FOR LONG? Newton has been having financial trouble tied to real estate. In January, First Western Savings Bank of Las Vegas sent him foreclosure notices for failure to make his mortgage payments - $32,000 to $37,000 a month for his home on a $4 million loan. The bank said he had not made payments since October. In 1989, a savings and loan tried to foreclose on land Newton owned across the street from his home. In February, the Internal Revenue Service hit him with a tax lien for $341,000 in back taxes. And Newton owes Douglas County, Nev., more than $14,000 in back property taxes. WHAT OTHER DEBTS HAS NEWTON BUILT UP? Newton's other big debts are for legal fees. He owes more than $300,000 to seven law firms, his bankruptcy filing says. Plus, he owes Methodist Hospital in Houston $54,000 and a Dr. Hartgrove in Las Vegas more than $18,000, the filing says. Some of that may stem from several bouts Newton fought with pneumonia in recent years. In the meantime, Newton has to make a payroll. Court documents show that he has 20 to 99 employees. IS NEWTON NOW PAYING FOR HIS OWN SENTIMENT? Amidst all those heavy financial burdens, Newton has been known to splurge in ways that probably have made his creditors grind their teeth. At an auction in June, Newton paid more than $13,000 for a handwritten, melancholy note written by old pal Elvis Presley during the King's dark days. Luckily for Newton, his song "The Letter" and a subsequent video the note inspired have become minor hits. Last year, Newton heard that child actress Dana Plato of "Diff'rent Strokes" was arrested for stealing from a Las Vegas video store. Newton had never met her but posted her $13,000 bail, citing empathy for troubled child stars. WILL NEWTON BOUNCE BACK FROM FINANCIAL WOE? While Newton may not have a way with money, he does have a way with song. With a payment schedule, Newton likely will be able to work his way free of his debts, thanks to his entertainment earnings. "He's a tough guy," says Hernthel. "He'll pull out of it." Anyone who can start out in show biz as a boy squeaking out "Danke Schoen" in the 1960s and later become one of the world's highest-paid entertainers knows a thing or two about comebacks. Bonus Editor: Martin Baucom. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM