John Textor’s Hollywood special effects studio specialized in making big-screen fantasy appear real.
Taking a page from his company’s script, the relentless salesman created a vision so compelling that public officials suspended their disbelief.
His alluring pitch: Digital Domain, famous for images that appeared in Titanic and Transformers, would bring Hollywood glamour and high-tech jobs to Florida’s then-foundering economy. Politicians, loving the script and ignoring the financial red flags, doled out $135 million in public money.
But in an extraordinary plot twist last year, it all blew up in a crash worthy of the big screen.
For eight months, The Palm Beach Post dug into thousands of documents and conducted dozens of interviews to find out why state officials ignored the usual vetting process to award millions in what became the largest job incentive failure in state history.
Among the findings:
- Outlandish promises. In his pitch for public and private money, Textor touted a Florida State University study predicting Digital Domain would create 6,200 high-paying jobs. Textor promised nothing less than a sexy new industry, complete with what he called “a Pixar-like animation studio” in Port St. Lucie, a thriving school in West Palm Beach and a long line of clients in Hollywood and Washington, D.C.
- Cozy relationships with friendly public officials. Former state Rep. Kevin Ambler — instrumental in landing a $20 million state grant for Digital Domain — received potentially lucrative stock options and a seat on Digital Domain’s board. Frank Patterson, dean of Florida State’s film school and a crucial supporter of Digital Domain’s West Palm Beach campus, received at least $30,000 in consulting fees in addition to the portion of his university salary paid by Digital Domain.
- Shaky finances. Digital Domain’s California studio was in financial trouble almost as soon as Textor took control of the company in 2006, but key decision-makers overlooked precarious finances. Digital Domain careened from one near-default to another, finally entering a death-spiral loan that ended Textor’s dream last year.
Undisciplined management. Textor’s free-wheeling management style — former employees describe it as disorganized — meant desperately needed new revenues never arrived. But expenses kept mounting. Textor negotiated a hefty raise for himself, along with first-class travel for trips to Los Angeles and Cannes, France. He even spent $55,000 to reupholster 138 chairs in the Port St. Lucie studio’s movie theater, from royal to navy blue.
- Desperate borrowing. In a risky and unusual deal, Digital Domain in May last year negotiated a $35 million loan with a New York company that was allowed to “short” — bet against — shares of the company. Textor now says it was the lender’s greed that destroyed his company.
Digital Domain’s path to Florida started in early 2006, when the ambitious Textor put together a group of investors to buy Digital Domain, an Academy Award-winning animation studio co-founded in 1993 by movie mogul James Cameron.
For Textor, a West Palm Beach native who saw himself as a rising star in Florida’s tech industry, entering showbiz seemed a logical next step. He positioned himself as a homegrown entrepreneur weary of seeing his state outshined by California.
The big name in Textor’s group was Michael Bay, the director of Bad Boys, The Rock, and Pearl Harbor. Textor and Bay were fraternity brothers in the 1980s at Wesleyan University in Connecticut, and the pairing seemed ideal fare for the alumni magazine — Hollywood hit maker and Florida financier team up for a bit of empire-building.
“My simple goal is to make Digital Domain an effects powerhouse,” Bay told Variety the day of the announcement.
Textor had no experience in Hollywood, so Bay brought instant credibility. Textor’s inner circle also included Carl Stork, a Microsoft millionaire, and former Miami Dolphins quarterback Dan Marino. Both were investors in Lydian Private Bank of Palm Beach, a financial institution Textor helped launch in 2000.
While well-regarded in the industry, Digital Domain’s up-and-down finances reflected the vagaries of the effects-for-hire business. Movie studios pay animation shops to create special effects, and it’s a competitive niche with thin margins.
In 2004, Digital Domain brought in $60 million in revenue and reported a profit of $7.1 million. It would be the last time the company posted a profit.
To pay for the studio in 2006, the Textor-led group borrowed $30 million from Falcon Investments and paid $4.5 million in cash. Textor and Bay were co-chairmen and Stork became chief executive officer.
Almost immediately, Digital Domain embarked on a pattern that would continue over the next six years — heavy borrowing, expensive loans and disputes with allies-turned-adversaries.
On June 2, less than a month after Textor took over, PricewaterhouseCoopers issued a “going concern” letter — the scarlet letter of accounting that broadcasts grave questions about a company’s finances.
By the end of the year, Digital Domain had violated a spending limit in its contract with Falcon, according to an SEC filing, but the lender agreed to overlook the matter.
Soon after Textor’s group arrived, Digital Domain fired Bradley Call, the company’s president. In August, Call filed a wrongful termination lawsuit. Digital Domain countersued. The dispute went to trial, and Call won a $2.3 million judgment.
Over the next two years, Digital Domain brought in more revenue, but losses widened. By 2007, Digital Domain reported red ink of $20 million on revenue of $78 million.
Running on fumes
Despite the rising losses, on Dec. 11, 2007, Textor asked the SEC for permission to sell shares in a $70 million initial public offering. The stock market was on a tear, with the Dow Jones average topping 14,000 for the first time in July, yet investors wanted nothing to do with a money-losing company in a low-margin business — a tepid response that could have sounded a warning to the public officials Textor approached months later.
Digital Domain abandoned the IPO, and Textor attempted to court private equity companies in 2008 and 2009.
“The first couple meetings would be great,” former Digital Domain President Mark Miller said in a 2011 deposition. “We would get to a subsequent conversation where they got deeper into the books and us explaining losses and what the company was running on, which was fumes.”
That realization inevitably led to “low-ball” offers, Miller said. And it was unclear how long the truce with Falcon Investments would last.
“Week to week, we were trying to stay out of a Falcon default,” Miller said. “All through late 2008 and 2009, it became a week-to-week, month-to-month of, ‘Can we make payroll? Can we stay out of the Falcon default?’”
Kevin Weston was hired as Digital Domain’s chief financial officer in late 2008, and he, too, recalled a financial picture so shaky that the company was unsure if it could cut paychecks.
“Every payroll was scary,” Weston said in a deposition. “The repercussions of a missing payroll would be almost certainly the company would cease to exist.”
Textor managed to keep Digital Domain afloat, but the cash crunch would be a constant theme. As Textor made his pitch to Florida officials, he glossed over the California company’s severe financial problems. Instead, he played up Digital Domain’s ties to Michael Bay and the company’s work on Hollywood hits.
First asked for $150 million
Undaunted by his financial and legal problems in California, Textor turned his attention to Florida, where he aimed to land public support for a Digital Domain studio and school.
Textor contacted Dale Brill, head of then-Gov. Charlie Crist’s Office of Tourism, Trade and Economic Development and Brenda Workman, a vice president at Enterprise Florida, the non-profit organization that fields requests for job incentives.
Textor opened negotiations with an audacious request: He wanted $150 million in subsidies to bring Digital Domain to Florida. While Scripps Florida and several other non-profit biotech institutes had received more, no for-profit company had received a sum approaching Textor’s target.
“He was upset because his expectations were that Florida would provide him with the $150M he was asking for and I had the job of telling him we do not have that kind of money,” Workman wrote in an email after a 2008 conversation with Textor.
Despite Textor’s seemingly unrealistic request, Workman didn’t want to turn away such an exciting prize. So Enterprise Florida started confidential negotiations for job incentives with Textor’s spinoff, Wyndcrest DD Florida. Wyndcrest got a codename — Project Bumblebee, a nod to the flashy yellow Chevrolet Camaro in Michael Bay’s Transformers.
Throughout the second half of 2008, Textor pushed Brill and Workman for state money. And he pitched his plan to developers and economic officials in Palm Beach, Broward and Miami-Dade counties. While Martin County was his first pick, Textor also liked a site near Interstate 95 in Hollywood.
When his incentive package didn’t come quickly, Textor played hardball. In a November 2008 email to an official in the Florida film commissioner’s office, Textor relied on the classic negotiating gambit of threatening to end the whole thing.
“As you know, the communities of Dade, Broward, and Martin County would very much like to see this project happen,” Textor wrote. “Unfortunately, I am starting to feel that I am wasting my time with all of these discussions. I am within days of terminating all discussions in Florida.”
Instead of shutting down talks, Textor broadened them, shopping the project in Sarasota, home to the Ringling College of Art & Design. In December 2008, Textor traveled to Sarasota to meet with local players, including state Sen. Mike Bennett, R-Bradenton. Over dinner at the Ritz-Carlton in Sarasota, Textor outlined his plan to join forces with Ringling’s animation program, and the hosts discussed sites.
“We had a nice dinner, had some nice wine,” Bennett recalled. “The idea was, bring the whole package together, build a sound stage and everything.”
Bennett liked the idea of creating a permanent movie industry in Florida.
“I was tired of the movie coming to town and then leaving,” Bennett said.
And Bennett was won over by Textor, a sophisticated entrepreneur who radiated enthusiasm and brought bona fide Hollywood connections. A talented skateboarder as a teen, Textor possessed an athlete’s self-confidence, although his short blond hair and business casual wardrobe brought to mind a tech exec rather than an aging skater. A father, he spoke constantly of attending his kids’ soccer games.
Textor’s pitch proved persuasive to Bennett, a gravel-voiced electrical contractor who considers himself a tough mark.
“You’ve got to admit the guy is good,” Bennett said.
Over the next few months, Bennett grew certain that Sarasota was Textor’s choice.
“He absolutely told me that he had picked Sarasota and he wanted to do the deal,” Bennett said.
$6.1 million not enough
Back in California, even Digital Domain CEO Stork was skeptical that government would consider giving money to such a financially unstable company.
“Another doubt I had was whether the management technical skill sets existed to successfully create a visual effects or animation company in Florida,” Stork said in a deposition.
Textor himself admitted in a 2010 interview that Bay dismissed his vision for a Florida school and animation studio as “wacko Textor ideas.”
Bay and Stork had stellar resumes, but Textor waved off their concerns. Textor continued to negotiate with half a dozen counties, and Enterprise Florida crafted an incentive package based on Wyndcrest setting up shop in Martin County.
In a February 2009 email, Workman outlined an $11.4 million award that combined $9.6 million from the state, including $6.1 million in cash, plus $1.8 million from Martin County.
In exchange, Textor would agree to create 300 jobs at an average wage of $64,233, and to spend $77 million on land, a new building and equipment.
In an email to Workman, Textor pushed for more: “We have consistently communicated that $6.1 million is not enough.”
But Enterprise Florida remained skeptical. In a March 4 email, Senior Vice President Bob Rohrlack wrote that the ever-changing details of Textor’s proposal were “problematic.”
Workman said in an interview that Textor constantly changed the deal as he shopped for the best location. And he seemed unable to produce the various documents she needed to recommend state money.
“It was just strange,” Workman said.
Textor, for his part, remained unimpressed by the state’s $11.4 million offer.
“We appreciate any offer, but the number is of little help,” Textor wrote in a March 2009 email to the state’s film commissioner. “Our costs to come to Florida will be huge … training people for 2-3 years before we can even bill them out.”
This challenge — spending money to train Florida workers long before they would generate revenue — would help drive Digital Domain to failure.
Despite Textor’s pleas, Enterprise Florida didn’t budge. The agency also told Textor it was time to choose a home for Digital Domain. In March 2009, Digital Domain officials told economic developers in Broward, Palm Beach, St. Lucie and Sarasota counties that Textor had picked Martin County.
Bennett wasn’t pleased that Sarasota was out. In retrospect, Bennett said, Textor’s proposal didn’t seem so compelling.
“Very evasive. Blowing a lot of smoke. Trying to do the Hollywood dance, trying to impress you with the names of the Hollywood people they were working with,” Bennett said. “There’s something about people who keep dropping names. Every time you ask them a question, they drop another name. It makes you kind of nervous.”
Even after their proposal, state officials continued asking questions, and on March 24, Enterprise Florida executives refused to recommend incentives for Digital Domain to the governor’s economic development office. On March 26, state analyst Tim Proctor and Enterprise Florida’s Rohrlack chatted for half an hour about Digital Domain.
In an email to Brill summarizing their conversation, Proctor ticked off seven causes for concern, including the failed IPO, a $20 million loss in 2007, a looming loan payment and the possibility that the company would use state incentives to pay off a loan.
Did Enterprise Florida sign off?
While Textor’s pitch leaned heavily on his relationship with Bay, and he touted Digital Domain’s work on such films as The Curious Case of Benjamin Button, Textor also argued that the California company’s problems were irrelevant to his Florida operation. It was “a new company which had no financial past, no existing debt, and no prior litigation,” Textor’s attorney wrote in a March letter to Gov. Rick Scott’s inspector general.
Enterprise Florida’s scrutiny of Digital Domain later would become a point of contention. Enterprise Florida insists that it never approved incentives and said Digital Domain “circumvented the due diligence process,” a position echoed by Scott.
But Textor insists Enterprise Florida approved, and in an interview this year, Charlie Crist said he recalled that Enterprise Florida had signed off.
In the March letter to Scott’s inspector general, Textor’s attorney wrote: “The confusion … was likely caused by the fact that [Enterprise Florida] never forwarded its recommendation” to the governor’s office.
Either way, Textor didn’t receive incentives through Enterprise Florida. Undeterred, Textor turned to Plan B — a direct appeal to state lawmakers. In this effort, Textor found crucial support from state Rep. Kevin Ambler, a Tampa Republican whose son attended Florida State University’s film school. When Textor approached FSU film school’s Patterson about joining forces for an animation school, Patterson was intrigued. He introduced Textor to Ambler, who became Digital Domain’s champion in Tallahassee.
Ambler and Patterson both later would profit personally from their relationships with Textor.
Textor was impressed that Ambler, unlike Bennett, was swept away by Textor’s vision and didn’t care where Digital Domain landed, so long as it was in Florida.
“He was a guy who said, ‘How can I help the state,’ and never once asked for it to come to his district,” Textor said in an interview.
With Ambler on board, Textor showed his knack for schmoozing was matched by his persistence. He made phone calls and fired off emails at all hours.
Even his supporters grew tired of Textor’s relentless approach. Brill wrote in one email that “everyone, everyone, is beyond fatigued by the calls and emails.”
Ambler’s critical help
During the final days of the legislative session, Ambler wrote a budget amendment that let Crist approve $42 million in incentives without the usual recommendation by Enterprise Florida, and without the customary vote by the Legislative Budget Commission, comprised of members from both state chambers.
Ambler told The Post in 2009 that he wrote the amendment out of frustration with Enterprise Florida, which Textor criticized for a long vetting process that resulted in no incentives.
“It’s become very clear to me that (Enterprise Florida) has got a lot of imperfections,” Ambler said. “If we hadn’t interceded, Florida would have lost this transformative industry.”
Ambler’s amendment, “for the purpose of creating high-wage jobs and business recruitment,” amounted to one paragraph in a 408-page budget document. Legislators approved the budget on May 8, and Crist signed off.
Impressed by Ambler’s support for the $20 million grant, Textor stayed loyal to the Tampa attorney even after Ambler lost his House seat to a Republican rival in a 2010 primary. In 2011, Textor named Ambler to the board of Digital Domain Media Group, the combined California and Florida operations. As a director, Ambler would be paid $20,000 a year plus $2,000 for each board meeting he attended.
Ambler’s son, Jason, joined Digital Domain’s staff after he finished his studies at Florida State. According to bankruptcy documents, Digital Domain paid Jason Ambler $57,104 from September 2011 through August 2012, a period during which the younger Ambler celebrated his 23rd birthday.
But the biggest prize for Ambler came in the form of stock options. Textor awarded Ambler options to buy 150,000 shares at $8.50 apiece. The options were to vest over two years, so, if in February 2014 Digital Domain shares were worth $15.50, Ambler could exercise his options for a $1 million profit.
In a response to an investigation by Scott’s inspector general, Ambler’s attorney wrote that Ambler’s position at Digital Domain was not a reward for his support of the $20 million grant.
“At no time during this process was Rep. Ambler promised any personal benefit as a result of any of his actions in the Legislature, and the opportunity to serve as director of Digital Domain Media Group Inc. was first presented to him long after his tenure in the Legislature ended in November 2010,” attorney Stanley Wakshlag wrote. Ambler would not return calls for comment.
While the inspector general concluded that there were no improprieties, such cozy relationships raise concerns, said Sam Staley, an expert on public incentives and managing director of the DeVoe L. Moore Center at Florida State University.
“Any time a politician serves on a board of directors of a public company, it should raise red flags,” Staley said. “The perception is that the reason the ex-politician is on the board is that they can provide access to state funds.”
Crist, who may have to defend the grant if he runs for governor in 2014, said he found little reason for concern.
“It’s not unusual at all,” said Crist, a Republican-turned-Democrat eyeing a return to his old office.
Crist said he signed off on the $20 million grant because he thought Digital Domain represented a promising opportunity for the state.
“I was really supportive of trying to develop the film industry,” Crist said.
Brill told the inspector general this year that Crist knew of Enterprise Florida’s misgivings but decided to push on anyway.
“According to Dr. Brill, Gov. Crist did some research on his own to better understand the project,” the inspector general wrote in a March report. “Dr. Brill said the governor told him he had confidence that Digital Domain would be able to meet their financial obligation.”
Brill, who now runs his own company, told Scott’s investigator he “would have been looking for other work” if he had fought the grant to Digital Domain. His money sewn up from the Legislature, which didn’t hold him to Martin County, Textor turned his attention to finding a better deal for his Florida studio. Port St. Lucie, a city hit hard by the Great Recession, emerged as the front runner.
Councilwoman Michelle Berger said she felt both impressed and wary when she first met Textor. During a meeting at city hall, Textor spoke passionately about Digital Domain and its award-winning work. Berger found Textor charming — maybe too charming.
“Pretty pictures and name-dropping — that’s how I would describe it,” Berger recalled. “I said, ‘You seem like a nice guy, but you really remind me of a used-car salesman.’ He said, ‘I’ve been told that before.’”
Berger remained wary, but also felt impressed that a wealthy businessman wanted to bring a desirable business to her city.
“He’s smart, he’s very charming, he has some great social skills,” Berger said. “He’s good at making people believe everything that comes out of his mouth.”
Berger said any misgivings about Textor’s slick pitch were overshadowed by the $20 million in state money — that cash served as a powerful endorsement of Textor’s business plan. Berger and other council members signed off on an incentive package worth nearly $60 million, an offer that easily topped Sarasota’s offer of $32 million plus 9 free acres.
Paying off old debts
As Textor negotiated in Tallahassee and Port St. Lucie, Digital Domain’s California operation faced a major cash crunch. If the company couldn’t raise $6 million by July 30, 2009, it would default on its Falcon loan, then-CFO Kevin Weston said in a 2011 deposition. To raise cash, Textor sold off a division for $10.5 million, but Digital Domain’s picture remained dire.
After Textor and Port St. Lucie publicly announced the animation studio, a Digital Domain spokeswoman was careful to point out to reporters that Textor’s Wyndcrest DD Florida was separate from California-based Digital Domain.
Not for long, though. Soon after the state wired $7 million to Wyndcrest DD Florida, its first installment of the $20 million grant, Textor merged Wyndcrest DD Florida and Digital Domain.
The deal was so complex that even Rafael Fogel, a Falcon executive and a board member of Digital Domain’s California studio, said in a deposition that he didn’t know all the details. Textor’s Wyndcrest DD Florida took control of the California studio. In return, the company assumed an $8 million loan owed by Textor and paid him $500,000 in cash.
“I would be the first to say that the deal that John Textor put forth in the fall of 2009 and that we as a board approved and executed on was the one that saved the company,” Fogel said in a deposition.
Meanwhile, it owed former President Call $2.3 million in his wrongful termination suit. Digital Domain could hardly make payroll, so its Florida operation paid about $1.5 million of that, Weston said in a deposition.
The state’s contract with Digital Domain included almost no restrictions covering how Digital Domain could spend the $20 million grant, except for a line in the contract saying the cash couldn’t be used for lobbying. Digital Domain was required to hit job-creation targets that started at seven positions by the end of 2009 and grew to 500 positions by the end of 2014.
“DDMG met each and every one of the award conditions,” Textor’s attorney wrote in a recent letter.
Expanding into West Palm Beach
The Port St. Lucie deal sealed, Textor again expanded his vision — now he wanted to run a for-profit film school.
In September 2009, Florida State announced plans to partner with Digital Domain. The West Palm Beach native wanted to do a deal in his hometown.
In November, West Palm Beach City Commissioner Kimberly Mitchell said she was flying home from New York when she saw an old friend, Sean Heyniger, on the plane. Heyniger, a Palm Beach resident who ran a Boca Raton company, had been appointed a director of Digital Domain by Textor. Heyniger put the commissioner and the animation executive in touch.
The prospect of bringing an FSU presence downtown thrilled Mitchell, a Florida State graduate.
“This is tooooo exciting to miss. John’s words to me were, ‘It’s WPB’s to lose.’ Let’s get this done,” Mitchell wrote in a midnight email to a city staffer on Nov. 29.
City officials embraced the idea, but the public wouldn’t get its first inkling until nine months later. In August 2010, Textor, the city and FSU unveiled a fully hatched plan. The city would turn over its “tent site,” a signature downtown property valued at $10 million, give $10 million in cash and issue $15 million in bonds.
In return, Digital Domain would build an eye-catching 150,000-square-foot home where Florida State’s film school would offer a bachelor’s degree and Digital Domain’s proposed for-profit school would conduct animation classes for students pursuing certificates.
During an Aug. 30 meeting with The Post editorial board Textor was ebullient. He said Digital Domain would expand into military and medical animation. He called the film industry an alternative for young people who didn’t want to work at the state’s new biotech labs. He said Digital Domain had turned profitable, an assertion that couldn’t be verified because the company’s finances weren’t public.
In Port St. Lucie, where city officials had been led to believe they would get the film school, Berger broiled.
“I feel like it’s being subsidized by our taxpayers,” Berger wrote in an email to Port St. Lucie’s city manager.
The criticism sparked a phone call from Textor.
“He was very angry and he wanted me to understand that he was angry,” Berger said. “His voice was very loud. He said, ‘I will personally sue you because your words, your attack, is going to damage my company.’”
Behind the charm, Textor was quick to anger. When he felt slighted, Textor would launch profane tirades, the pitch of his voice high, the tone incredulous.
“He comes across as very approachable, very warm. He was the opposite,” Berger said. “He liked to drop the f-bomb. He would lose it on me.”
But West Palm Beach officials remained smitten. When Textor disclosed seas of red ink in a May 2011 filing with the Securities and Exchange Commission, city officials said they were unconcerned. Seeking permission for another IPO, Digital Domain Media Group told regulators it lost $42 million in 2010.
Randy Sherman, then-West Palm Beach finance director, said the numbers Digital Domain filed with the SEC were similar to those the city saw in 2010 when it approved the project. Sherman said the red ink didn’t worry him.
“A lot of these losses are non-cash,” Sherman said — employing accounting jargon to describe red ink that looks ugly but can be overcome.
Digital Domain’s most significant non-cash loss was $24 million in 2010 to account for stock warrants, a form of compensation given to executives. And Sherman said Digital Domain’s balance sheet looked strong — it showed $12 million in cash and $31 million in cash in trust as of Dec. 31.
Digital Domain paid FSU dean
FSU’s Patterson was a stalwart supporter. He was there at the city commission meetings and kickoff events and helped defeat complaints from Florida Atlantic University, which argued that FSU had no right to invade its Palm Beach County turf.
In a sign of the close relationship between FSU and Digital Domain, Digital Domain for three years paid a chunk of Patterson’s $170,000 salary through a consulting contract with FSU’s Research Foundation. In 2011, for instance, Digital Domain contributed $52,414.80 to Patterson’s salary.
Patterson, who didn’t comment about his pay, also had an independent contractor agreement with Digital Domain, for which he received a total of $30,000 in June, July and August 2012, according to bankruptcy records. Patterson was owed an additional $15,000 when Digital Domain went bankrupt.
FSU administrators signed off on the consulting gig, FSU spokesman Keith Bromery said. When Patterson disclosed the relationship, he said the work for Digital Domain would be done from his home office and would require no more than 20 hours a month.
With unwavering support from public officials, Textor nearly achieved his goal of $150 million in public incentives. He was promised $20 million in cash from the state, $60 million from Port St. Lucie, $35 million from West Palm Beach and $20 million in state tax credits.
Textor’s fundraising prowess impressed even his detractors. He pitched and negotiated tirelessly, seemingly working every angle for public and private money.
“John is a magician,” said Scott Ross, who co-founded Digital Domain and sold it to Textor in 2006. “He’s a money-raising machine.”
But as 2012 progressed, the magic would be exposed. To taxpayers, the collapse of Digital Domain’s Port St. Lucie studios in September and the loss of all that public money appeared to be sudden. But the end had been building for months, despite Textor’s sunny outlook.
The story of how it unraveled and why, in next Sunday’s Palm Beach Post.
Textor’s dot-com gamble turned bond analyst into player
West Palm Beach native John Textor scored big during the dot-com boom, making millions on a software company. It was a win that set the stage for his attempt to turn Digital Domain into a player on Wall Street and in Hollywood.
After going to Wesleyan University in Connecticut, Textor pursued a Wall Street career. He worked as a bond analyst at Paine Webber, then in mergers and acquisitions at Shearson Lehman. He returned to South Florida in the 1990s and worked for a time for Michael Swerdlow, a commercial real estate developer in Broward County.
But working for others didn’t fit Textor’s temperament. In 1997, he launched Wyndcrest Ventures, a West Palm Beach company to invest in other companies. Textor wouldn’t have to wait long for Wyndcrest’s biggest win.
In late 1997 or early 1998, Wyndcrest Partners paid $1.62 a share for 324,000 preferred shares of Art Technology Group, a privately held software company based in Boston, according to regulatory filings.
Textor’s timing couldn’t have been better. Art Technology Group went public in 1999 at $10 a share. With the company’s revenue soaring in 2000, shares exploded, reaching $126 during the frothy market of 2000.
Textor has said that, after splitting the proceeds with his partners, he made $20 million by selling Wyndcrest’s stake during the bubble. The blockbuster trade established Textor as a player in the world of tech dealmaking.
After his big win, Textor suffered losses. Jester, a tech start-up based on Clematis Street in West Palm Beach, flopped. Two Silicon Valley companies rejected Textor’s repeated buyout offers in 2002.
In another money-maker, Textor helped launch VirtualBank of Palm Beach Gardens. He sold out at a profit long before the institution, renamed Lydian Private Bank, was taken over by federal regulators in 2011.
The wins meant Textor had arrived. He lived in a $4 million house on Jupiter Island and owned a couple of yachts.
And he set his sights on Hollywood, teaming with college buddy Michael Bay to buy Digital Domain in 2006. He would try to build the animation company into something it was not and six years later, despite $135 million in subsidies from Florida governments, it would go into bankruptcy and become his biggest flop.
John Textor: The West Palm Beach native and Digital Domain chairman played a starring role, negotiating for government money to create Hollywood East, an ill-fated idea.
Michael Bay: Hollywood hitmaker, partnered with Textor to buy Digital Domain in 2006
James Cameron: Titanic director, founded the company Textor bought
Dan Marino: Miami Dolphins great, investor in Digital Domain
Dr. Dre: Rap mogul hired Digital Domain to create a virtual version of Tupac Shakur
John Sculley: Former Apple CEO, on Digital Domain board
Carl Stork: Microsoft millionaire, served as CEO
Frank Patterson: FSU film school dean; a tireless supporter; Digital Domain paid him consulting fees, covered part of his FSU salary
Kevin Ambler: Former state legislator, pushed key $20 million grant; later named to Digital Domain board, given stock options
Kimberly Mitchell: West Palm Beach city commissioner championed Digital Domain’s film school
Charlie Crist: As governor, he signed off on a $20 million state grant to Digital Domain approved by the Legislature
Dale Brill: Crist’s head of economic development, he now says he would have lost his job if he had opposed state money for Digital Domain
Enterprise Florida: The public-private partnership spent months scrutinizing Digital Domain, decided not to recommend a state grant
Digital Domain milestones
May 2006: John Textor, Michael Bay and Carl Stork buy Digital Domain Productions, a Hollywood animation studio
April 2008: Digital Domain files for an initial public stock offering but later drops the plan
June 2008: Textor begins negotiating with state officials for incentives
June 2009: Then-Gov. Charlie Crist signs off on state budget providing a $20 million incentive for Digital Domain
July 2009: Digital Domain announces incentive package with Port St. Lucie
August 2010: Digital Domain announces incentive package from West Palm Beach
November 2011: Digital Domain goes public on the New York Stock Exchange
April 2012: A virtual version of late rapper Tupac Shakur performs at a concert in California
May 2012: Driven by Tupac hype, Digital Domain shares hit an all-time high of $9.20; Digital Domain announces $35 million loan from Tenor Capital of New York
Sept. 4: Digital Domain announces default of Tenor Capital loan
Sept. 7: Digital Domain closes Port St. Lucie studio; Textor resigns
Sept. 11: Digital Domain files for Chapter 11 bankruptcy protection
How we got the story
As Digital Domain Media Group began to implode last year, Palm Beach Post staff writer Jeff Ostrowski dug into the company’s story. Over the past year, Ostrowski read thousands of pages of court documents and emails and listened to John Textor’s speeches and presentations. He interviewed Textor before and after the company failed and saw firsthand how the businessman used both bluster and charm to get what he wanted.
Digital Domain’s $135 million subsidy
Delivered to Digital Domain
State: $20 million in cash incentives
Port St. Lucie: $40 million bond to build and equip headquarters, land worth $10 million and $7.75 million in cash. City took back land and building.
West Palm Beach: $10 million in downtown land and $2 million in cash. City won land back in bankruptcy court.
Total delivered: $89.75 million
Promised but not delivered
State: $20 million in film tax credits
Port St. Lucie: $2.25 million in cash
West Palm Beach: $8 million in cash, $15 million in bonds
Total not delivered: $45.25 million