The Vanity of Christopher Mallick
Details, Mar 2011
Inside Hollywood’s Greatest Vanity Project: After earning a fortune processing online-porn payments, Chris Mallick spent $32 million to make Middle Men, a movie about his fabulous rise. It bombed – but that was just the beginning of his problems.
[Article also at Details]
The sun was shining at LAX as Chris Mallick lumbered up the stairs onto a private jet surrounded by a bevy of blondes. He fumbled with his crutches, awkwardly favoring his left leg—he’d recently broken his ankle and knee. But his physical injuries were the least of his worries.
A few weeks after the accident, his movie, Middle Men, had bombed. It had cost him $32 million and would earn a total of just $754,000 at the box office, and it hurt all the more because it was not just his first major production, but was all about him. One of the most brazen vanity projects in Hollywood history, the movie focuses on one man—based on Mallick—and his entrepreneurial genius, his business acumen, and his uncorruptible core, which allowed him to keep his moral bearing amid a sea of sleaze and filth. He’d cast Luke Wilson in the lead—as himself, essentially—and also enlisted James Caan and Giovanni Ribisi. And the movie was good—Variety called it “compelling [and] skillfully made.”
Still, it was a flop of epic proportions. Confined to the couch, Mallick was hardly able to think about anything else. So as soon as he could hobble around, he decided to blow off some steam. He’d get through this—he still had ePassporte, the online-payment-processing business that was his cash cow. And he wasn’t a newcomer to that industry. In fact, that was what Middle Men was about—how he’d made a fortune brokering online transactions for the porn industry.
At the top of the steps, he and his entourage of hot women settled into the cabin and took their seats—Cabo San Lucas was only two hours away. It was September 2, 2010, a little more than three weeks after Middle Men‘s disastrous opening weekend and swift flameout. And for the first time, it appeared things were okay.
But then the plane landed. As he posed for some holiday snapshots by the jet with the girls, he was bombarded with a series of frantic voice mails from the ePassporte offices. Apparently Visa had dissolved their business relationship. Mallick was stunned. His company could not function without the credit-card giant—ePassporte without Visa was like a car without wheels.
“You know when things are so bad they make you laugh?” he says. “I was like, ‘You’re fucking with me! Okay, is there a tsunami now? What’s next?’ ”
A month later, ePassporte folded. That’s when Mallick’s problems stopped adding up and started multiplying. The company had roughly 100,000 account holders, and they wanted their money back—now. As the days turned into weeks, their fury lit up the adult-industry message boards: Why wasn’t Mallick paying them back? In online posts, account holders’ estimates—guesses, really—of the missing funds ranged from $20 million to $100 million. (Mallick suggests the number is more like $5 million.) Soon sites began to crop up with names like christophermallickscam.com, chrismallickfraud.com, and chrismallickswindler.com. The pictures of Mallick and his lady friends by the jet and in Cabo, which had been posted to a friend’s Facebook page, appeared elsewhere on the Internet, further inciting the online mob.
Wealthy men are lured to Hollywood all the time by the promise of becoming producers. But few have the audacity to make a movie about themselves. When Mallick embarked on Middle Men, he was a little-known businessman with a questionable reputation—the film wasn’t telling his story but rewriting it, scene by scene. If it was an effort at whitewashing, it backfired in grand fashion. Today, “Mallick” is slang for “swindle” in certain circles (Urban Dictionary’s sample usage: “I can’t believe my uncle fell for one of those Nigerian scams. They totally mallicked him out of $10,000″). A Google search for Chris Mallick returns page after page of accusations and vitriol—the link to the Wikipedia entry for his crowning achievement, Middle Men, is buried beneath a deluge of hate sites.
Mallick is limping alone through the lobby of the Casa del Mar hotel in Santa Monica, California, when I meet him in December. He’s older and heavier than his onscreen alter ego, as portrayed by Wilson, more tanned and bulbous. But he has charm: a gleaming smile with luminous white teeth, and a rich baritone voice that is at odds with how fast he speaks. After a torrent of pleasantries, he says finally, “Look, I know you want to talk about ePassporte. But my hope is that this interview will be more about the movie?” He shrugs and tilts his head hopefully.
Middle Men tells the story of a straitlaced Texas businessman named Jack Harris, who makes a fast fortune in the Wild West of online porn. He teams up with two degenerate drug addicts who have just created an algorithm to enable credit-card transactions over the Internet but who desperately need our hero to rescue the business from their incompetence. And so he does, but he has to endure the sordid backwash of the porn world in the process, when all he wants is to get back to his wife and kids in Houston. He can’t leave because his partners—”a couple of idiots”—might run the business into the ground while he’s gone. So, trapped in Los Angeles, he uneasily keeps earning a fortune, has a brief affair with a porn star, regrets it deeply, and ultimately returns to his wife, lesson learned—a classic hero’s journey. His partners, meanwhile, get inadvertently mixed up in child pornography and cut him out of the company, out of sheer greed.
“It’s about 80 percent true,” Mallick says. “Luke Wilson’s character arc is very close to mine. He’s trying to do business in a sea full of truly crazy people.”
Mallick did spend five years surrounded by XXX stars in L.A., while his wife looked after their four sons in Dallas, and admits he strayed—but only once. “That’s all it takes.” He shakes his head. “And I was so goddamn guilty.”
It’s also true that Mallick hails from Texas—his ex-wife (they have since divorced) and kids still live there today. But after that, the movie’s account begins to diverge from the facts.
For instance, the company depicted in Middle Men—Paycom—wasn’t nearly the mess that the film suggests. When Mallick joined, in 1999 (according to him) or 2000 (according to the company), Paycom had some 170 employees and a 20,000-square-foot office and had been thriving for four years. The founders, Joel Hall and Clay Andrews, are neither degenerates nor child pornographers nor fools—Hall is a software engineer with an M.B.A. who continues to run the business today (it’s now called Epoch), and Andrews is a qualified website developer, though he struggles with alcohol abuse. Mallick was hired as a consultant, became CEO in short order, and had eventually accumulated enough shares to be considered a third partner by 2005, when, after mounting disputes, he was fired acrimoniously. Paycom alleges in a lengthy legal complaint filed that June that Mallick tried to take over the company by filling key positions with family members and cronies and plotted to oust Andrews by exploiting his drinking problem. It also charges Mallick with using company funds to shower “models” with gifts and take them on business trips on chartered jets.
“It’s all lies,” Mallick says. “Are they suggesting I paid prostitutes with company money? Really? I didn’t. If I did, would I admit it? No.” He laughs, flashing those fluorescent teeth. “You know, it was my undoing, this perception of women. ‘Oh, you have to be sleeping with them.’ But most of my friends are great-looking girls, and the reason they’re my friends is I’m not trying to sleep with them!”
This applies, Mallick insists, to both the alleged “models” and the girls he jetted off with to Cabo.
“Look, I know where this comes from. This comes from people saying, ‘Chris was the greatest guy in the world—why did you get rid of him?’ And they didn’t have a business reason, so they made something up! The truth—which I would appreciate—is that they wanted my third of the company. The more I did, the more successful we became, the less they figured they needed me.” He shrugs and folds his arms in an exaggerated, childlike fashion. “But I’m not going to cry about it.”
And yet he keeps returning to the subject of Paycom, getting more upset each time. At one point he describes getting fired as “the biggest disaster of my life.” And given Mallick’s résumé, that’s saying something.
John Christopher Mallick was the oldest of five children born to a Lebanese-American family in Dallas. He left school at 15 to work. He learned by doing, with no formal training—it’s a point of pride with him. His expertise is, by his own admission, vague. “I solve problems,” he says. And problems always followed him. His career is littered with lawsuits stretching back to the mid-eighties—cases of breach of contract and even civil harassment ranging from Texas to New York to California. Many were dismissed, some were settled. One case in 1999—Suez Equity Investors LP v. Toronto-Dominion Bank—details his track record of tax liens, bankruptcy, and financial disputes with associates, referring often to Mallick’s lack of ability and competence. The court found the bank—Mallick’s employer at the time—had concealed his history from prospective investors.
Yet what riles him most is what happened at Paycom, a company where, he says at first, he made a fortune so vast that he could finance Middle Men single-handedly. He later amends that to say that he amassed the funds for the film over the course of his entire career. Regardless of its financial importance to Mallick, Paycom, it seems clear, is the backdrop for the movie for reasons beyond his cinematic vision.
Mallick continued to add to his net worth while at ePassporte, the processing business that he started under the Paycom umbrella in 2003. When he was fired, he received his brainchild as part of his settlement. Akin to a smaller, offshore Paypal, ePassporte was a platform for e-businesses to conduct transactions among themselves and with consumers. Account holders would wire money to ePassporte’s bank account at the St. Kitts-Nevis-Anguilla National Bank (SKNA), then receive a Visa virtual card to access their funds. Through the ePassporte website, they could conduct transactions with other account holders quickly, easily, and discreetly. Before long, thousands of Webmasters and individuals from more than 100 countries—chiefly pornographers, consumers of porn, and, later, online-poker players—were doing just that.
Mallick felt he was destined for loftier pursuits. “I was on a mission to work myself out of a job,” he says. “To set up ePassporte so it just ran on its own, because, really, I’d always wanted to be a filmmaker. I like the way that movie deals can be structured. And you know what? I’m a frustrated writer. I have creative ideas.” In mid-2005, soon after being fired from Paycom, Mallick founded a production company, Oxymoron Entertainment. Its logo was a grotesque twist on the drama mask—one side white and smiling, the other demonic red.
One of Mallick’s creative ideas was to continue operating after the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA), which scared most of his competition away from online-poker transactions. Although it didn’t go into effect until 2009, as soon as it passed in October 2006, federal authorities began to prosecute payment processors vigorously. NETeller’s founders were arrested in January 2007 and pleaded guilty to charges related to money laundering. Other companies, like FirePay, simply quit doing business with U.S. account holders who wanted to play online poker. But ePassporte persisted unmolested—Mallick didn’t believe the law applied, as it didn’t specifically cite payment processing, and, he asserts, poker is a game of skill, not chance, and thus not gambling at all.
For the rest of 2006 and throughout 2007, ePassporte was one of the only games in town in a business that generated immense transaction volume—with an estimated $60 billion wagered on online poker worldwide in 2005. Web traffic to ePassporte’s site rocketed and so did revenues. Then, in April 2008, following a visit from the FBI, ePassporte quit the online-poker business. “It was probably 75 percent of our revenue,” Mallick says. “It cost us a fortune to quit. And I’m convinced that had we continued, we wouldn’t have had any legal problems.” He withdrew, he says, because ePassporte had worked closely with law enforcement on issues like tracking card fraud and money laundering, and he didn’t want to jeopardize that relationship. “We weren’t going to poke a stick in their face over this. So with an abundance of caution, we stopped.”
Regardless, ePassporte was never prosecuted or fined. “The government just doesn’t have the resources to punish everyone who violates the law, so there are always parties who are lucky and parties who are unlucky,” says John Carroll, an attorney at the New York law firm Skadden, Arps and one of the lawyers who represented NETeller. “Following UIGEA, the people in the industry of good faith left the market.”
The U.S. Attorney’s office declined to comment because charges were never filed. The FBI did not respond to repeated requests to comment for this article.
It was during this time of fast money that Mallick felt emboldened to make a movie about himself. He’d obscured his past for years, and now he had the chance to build his own myth. Whether it was his intent or not, the film took his former partners who’d fired him from Paycom down a notch, and it showed that his fortune came from porn (seedy, perhaps, but not illegal). Call it a $32 million exercise in image laundering.
When he commissioned his friend Andy Weiss to write a script in 2006, Middle Men was conceived as a TV series for HBO. But then Weiss brought in George Gallo, the writer of Midnight Run, and it became a movie. Mallick was closely involved at every stage. He began spending less and less time at ePassporte’s offices and more at Chateau Marmont, lunching with Giovanni Ribisi, or taking Luke Wilson for a beer at the Robata Bar in Santa Monica. Once shooting started, he was on set for every take. The film wrapped in December 2008, and by the following spring it had been edited and was being graded by test audiences. The scores were spectacular. One of the costars, Kevin Pollak, said, “I haven’t seen scores that good since A Few Good Men.”
Meanwhile, big things were afoot at ePassporte, too. Mallick claims he was in discussions to sell the company to SKNA, which would allow him to devote himself full-time to filmmaking. And where account holders’ funds had exclusively been held at one bank—SKNA, which fell under Visa’s oversight—now ePassporte was encouraging its customers to wire their funds to first one then another non-Visa-accredited bank on the nearby island of Curaçao. In September 2010, the designated bank was United International Bank (UIB), where ePassporte’s managing director, Gregory Elias, sat on the supervisory board.
Much of the online furor, and many of the unsubstantiated claims of malfeasance (Mallick denies any wrongdoing or misappropriation of funds), center on this banking move, but Mallick denies that account holders’ funds were held at UIB, as does Elias. Banks, Mallick says, have accounts at other banks, so SKNA has an account at UIB, and so did EPassporte, for payroll and other expenses. Other events contributed to the outcry: An ePassporte employee communicated with account holders from an Oxymoron Entertainment e-mail address, which later fueled suspicions of a financial link between the two companies.
“No, no, I don’t cross-pollinate businesses,” Mallick says. “It’s not my money. You can’t steal what you can’t touch.” At a later date, Mallick concedes that, in fact, he could access the funds, though he denies ever having done so.
It was May 2009 and Mallick was flying high. Literally: 30,000 feet high, over the Atlantic in a chartered jet with Ribisi, Pollak, Gallo, and 10 other members of his new Middle Men family. The buzz had been building, and studios were clamoring to get a peek at the finished film. All he needed was distribution and a marketing push. So he was doing what producers do: flying to Cannes to throw a party.
“It’s the most glamorous thing I’ve ever been involved in,” he says. “I had a lot of oh-my-God moments looking around and seeing Quentin Tarantino and Brad Pitt and Angelina Jolie. We were all sort of standing in the same lines waiting for the cars to pick us up.” Inglourious Basterds was causing a stir, as was I Love You Phillip Morris, and Middle Men was right up there with them, holding its own. Mallick’s party was a resounding success too. And he was drinking it all in, even the arduous press junkets—63 interviews in a day. “I really enjoy talking about the film. I am so proud of it,” he says. “Professionally speaking, Cannes was one of the greatest experiences of my life.”
He failed to sell Middle Men at the festival, however, and it would be 10 months before he would secure distribution with Paramount and more than a year before the film would be released. There were hints of trouble along the way—a screenwriter sued Mallick in August 2009, accusing him of misappropriating the rights to a Korean thriller he’d acquired. Mallick, who was screen-testing Liv Tyler and Marisa Tomei for what he hoped would be his next feature, acquiesced and stopped preproduction on the film. In March 2010, a businessman brought a suit against Mallick and several partners (including Ribisi), alleging breach of oral contract and promissory fraud relating to the use of 3-D technology; the case was eventually settled.
But the highs more than made up for it. Like the Valentine’s Day screening he held at the 2010 Santa Barbara Film Festival. “There were 2,000 seats in the movie theater, and not one person didn’t laugh when they were supposed to,” he says. “It was the fuse that was lit that will never go out. That’s a high like no other . . .” When the crowd erupted in applause at the end, they were cheering not just Mallick’s film but his life, albeit a somewhat fictionalized version.
“Afterwards, Oliver Stone was waiting for me backstage and we talked for over an hour. He loved the film. For me, that will always be the pinnacle.”
The film—”inspired by a true story”—costarred Giovanni Ribisi and Kelsey Grammer, among other Hollywood notables.
Chris Mallick’s downfall began with a misstep in Las Vegas. The tumble, in July 2010, resulted in a broken ankle and kneecap. Mallick attended Middle Men‘s Los Angeles premiere on August 5 in a wheelchair. When the movie opened, the next day, he was confined to his four-story mansion in Marina Del Rey—his foot elevated but his spirits sinking as the first-weekend numbers dribbled in. He forced himself out of the house, crutches and all, to check the crowd at his nearby theater—not a soul. The film was dead by Sunday night—it had made less than a hundredth of what the weekend’s winner, The Other Guys, had. It was a catastrophe.
“There’s no such thing as a purple heart for film producing,” Peter Bart wrote in Variety two weeks later. “But if there were, I’d give the medal to a Hollywood newcomer named Chris Mallick . . . [He] decided to finance Middle Men to the tune of $32 million, and he’ll likely lose most of it.”
Mallick read Bart’s verdict at home, crippled and alone—through it all, his family remained in Dallas. “What if I fell and I couldn’t get up?” he thought. “No one would get me until the maid got there. That’s a shitty way to be.” But he banished such thoughts. After three weeks of captivity, he needed the healing powers of private jets and pretty girls. Cabo beckoned. Besides, he’d booked the trip several months earlier and he didn’t want to lose his money.
It’s a touchy subject, Cabo. As Mallick finishes his lobster sandwich, he shifts in his seat and a veil of exasperation descends on him. He knows that trip didn’t play well. Not to mention those pictures: He didn’t look like a guy who was facing a potential loss of more than $31 million of his personal fortune and whose business was on life support (a fact he learned after the photos were taken).
“I was in Mexico for five days, during which I worked every single day,” he says. The first thing he did was write to his account holders: “Please be assured that your funds are safe.” He followed up, a week later, with: “Our staff is working diligently to resolve these issues and the many moving and complicated parts of getting the funds returned. Therefore, please do not mistake our silence as ‘hiding,’ ‘avoiding’ or ‘stringing you along.'” But it didn’t work. In the chaos that followed, of frozen funds and e-mails to ePassporte going unanswered (Mallick says they were answered), Mallick became an easy scapegoat. His image was merged with the Joker’s and a burglar mask put on his face. His Facebook account was hacked and his friends were sent irate messages. And some ePassporte account holders speculated, with some relish, that Eastern European gangsters might take a hit out on Mallick, as in the movies.
By the time ePassporte was shut down, owing to, according to a company missive, “a lack of revenue and circumstances beyond our control,” his reputation had already been destroyed.
“I hate the things that people say about me,” he says. “It hurts my feelings, but nobody gives a shit about my feelings but me. I’m not going to cry about that. . . . I was accused of running off to Mexico with money. Really? What happened then? Because I’m here now.”
Mallick is indeed here, but he doesn’t have all the answers. He can’t explain why Visa abruptly terminated its relationship with ePassporte: “I have a lot of ideas about what’s going on, but I don’t have any facts.” He insists the credit-card company is responsible. Visa says it was merely responding to a request from SKNA. And SKNA won’t comment, pending possible litigation.
“I’m a big believer in conspiracy theories,” he says, “and I can’t say it out loud, but I know exactly what happened here.” And then he says it: SKNA may have screwed him. “It’s Gordon Gekko 101—if you want to buy something, you cripple it, break it up, buy the pieces for cheap, and reassemble it later. That’s just business. It’s not the way I want to do business, but . . .”
“The reality is, I can’t have partners,” Mallick says. “If I have partners, this is what happens. Every fucking time.” This, for Mallick, is the pattern of his life. He was screwed by Paycom, and he was screwed by SKNA. In each case, he says, he was too trusting and paid the price. If he could undo anything about this whole messy affair, it would be the deal he signed with SKNA in 2003. “My kindness was taken for weakness,” he says. He similarly regrets the contract he signed with Paycom when he joined: “Because I’m a nice guy, against my lawyer’s advice, I didn’t take controlling interest when I had a chance.”
So now he’s hurt. He limps, he suffers. And character assassination is only a part of it. “I don’t like people thinking I’m a crook. I sound like Nixon now: ‘I’m not a crook!’ But what else can I say?” He claims that almost all account holders have gotten their money back, and that “95 percent of the people clamoring for their money are frauds.” For those who claim otherwise, he has a promise: “Everyone that is owed money—to the extent that I have anything to do with it—will be paid.” It’s a line you’d expect Luke Wilson to utter in Middle Men, and Mallick says he means it. Though rather than providing an independent audit—”I don’t see a reason for doing that”—he simply offers his word. “Paper is just paper,” he explains. “A handshake is the most important thing.”
Burned as he is, Mallick maintains life is good. “I heal quickly,” he says, referring to his shattered ankle. Though he’s alone, he has many friends, whom he cooks for on Sundays. Occasionally he heads to Vegas to play blackjack. The rest of the time he’s watching Seinfeld reruns or old movies or reading scripts. As ePassporte recedes into the past, Mallick’s Hollywood career improbably still has a pulse. Middle Men is out now on DVD; on-demand will follow. “There are all these ancillary revenue streams,” he says. “Pulp Fiction didn’t do well at all at the box office either. Casino is another one. So even though my movie did terribly at the box office, it will be an economic success for me.”
In addition to Oxymoron Entertainment, he now owns a 3-D studio called Stereo D and has several other projects in the pipeline as well—a boxing documentary, a Christmas movie, a documentary about retired porn stars.
As he lurches to his feet and limps across the restaurant toward the exit, he promises that one day the truth about ePassporte’s mysterious implosion will come out. “I know all sorts of things about why this happened. And if I tell anyone, I’ll tell you,” he says, then smiles. “I’m a filmmaker, I reference movies. You got to think about what Hal Holbrook says in All the President’s Men: ‘Follow the money!’ Who stands to gain? Who stands to benefit? If you think about that for long enough, you’ll figure it out.”