Is there a more cautionary tale in comics than that of the failing fortunes of Diamond Comics owner and über-collector Steve Geppi? Daniel Best reads through some of the court documents on the Montana Estate vs Steve Geppi lawsuit we alluded to the other day, and they are not too thrilling if you are Steve Geppi, the owner of Diamond Comics and once considered the richest man in comics. In a nutshell, back in 2006, a flush Geppi offered the family or Archie artist $1,000,000 for a collection of original Archie art, while attesting that he was worth $20 million, as the attached exhibit shows. As time went by, a few things happened — Geppi made a series of very bad deals which ate up his money, especially as the economy and the real estate market tanked; and the art also lost a lot of value:
Added to the limited appeal of high end Archie art (it really is a niche market), prices realised by Diamond Galleries were well below the original valuations by Jerry Weist. And there was another, more important factor coming into play – at the point of purchase Steve Geppi and Diamond were hemorrhaging money to the point of legal action, not that he told anyone. Geppi was rapidly finding that more money was leaving Diamond than what was coming in from its various sources with the result that his net worth had plummeted to a fraction of its original value. While this didn’t leave him destitute, it did have the effect of leaving Diamond hovering on the brink of bankruptcy. Geppi elected to simply cry poor and not pay the remaining $500,000 owing to the Montana family.
Within a few years, Geppi was not making his yearly payments of $250,000 and the Montana family sued. In a deposition, Geppi very matter of factly explains what happened:
When asked about why the payments stopped Geppi was more forthright. “There was no funds (sic) sufficient to pay it,” he said. “There were no funds available. Diamond International Galleries did not have funds available.” When asked why he had no funds, Geppi simply said, “Credit officers have been asking that questions (sic) for years.” The Montana’s legal representative pressed further asking about Geppi’s net worth. Geppi stated that he did indeed have a net worth in excess of $20,000,000 when he signed the contract in 2007, but as of 2010 his net worth was around the $1,000,000 mark. If true then this is an amazing fall for Geppi. Geppi insisted that the only reason the final $500,000 was not paid was down to, “No funds.” For Geppi it really was as simple as that. No other reason was offered, no other reason was required. However another accusation that Geppi filed was that other items were shown to him by the Montana family but were not included in the final inventory. Faced with Geppi’s answers the Montana family asked for a trial by jury, something that Geppi was keen to avoid.
We’ve covered Geppi’s legal woes in the past, and lawsuits involving the printer for many Gemstone books, a bad real estate deal in Maine, and the like.
One lawsuit that has received less notice is a 2008 claim by Helen Hamilton, widow of Disney specialist Bruce, who sued Geppi over a $4.6 million sales of “The Hamilton Collection.”. In a sadly familiar tale, Geppi purchased a collection of rare figurines, comics, posters and original art assembled or produced by Hamilton in 2006, but by 2008 had stopped making payments on the debt.
Defendants made a payment in the amount of $30,625 on or about July 24, 2008, which represented the installment and rental payments due January 1, 2008, and a payment in the amount of $30,625 on or about February 16, 2009, which represented the installment and rental payments due February 1, 2008.
Like the other lawsuits mentioned above — all of which have been settled against Geppi — this one was settled in January with the court ordering Geppi to pay the $3,000,000 due for the collection.
We’ve alluded to these cases before as an incredible real life Wimbledon Green — an elite group of rich collectors who went around buying each other’s accumulated flotsam. Unfortunately, value tends to be based on scarcity — in buying these huge collection Geppi was in a way undercutting himself — the only way to get back the value would be to sell them off, thereby flooding the market.
Other Geppi bad deals were based on the real estate bubble – in that he’s hardly alone.
The question, as always when we report on Geppi’s financial matters, is where does this leave Diamond? Every Diamond employee we’ve ever spoken to has assured us that there is a financial firewall between Geppi’s personal business like the Museum and the galleries, and Diamond Comics Distributors.
Notably, Diamond is not named in any of these lawsuits, which does show that some kind firewall must exist. Still, it also means that Diamond must sink or swim on its own.
Although the much vaunted Olive Branch facility that Diamond occupies was just sold for $21.25 million, to AREA Property Partners, a New York-based real estate investment firm, Diamond was not the seller — rather American Fund U.S. Investments and Real Estate Capital Partners seem to have been the previous owners, according to the above link. Diamondmaintains a long-term lease on the facilities, however; it was built to suit Diamond’s needs and a retailer tour in 2009 impressed. They continue to rent it out.
Diamond also recently changed banks, although that could have been to simply get a better deal. As Diamond’s consistent sales figures show, while comics sales are stagnating, sales in toys, games and t-shirts are up, so they aren’t resting on any one business plan. It’s a resilient company.
Still, you just wouldn’t want to be Steve Geppi today — although he possesses some of the greatest collectibles in the whole Comics world, it’s looking more and more likely that a bank is the actual owner.