We cant forget QBID
Q Television Network is currently not airing on any cable carriers and is mulling over bankruptcy.
Was the short-lived Q Television Networka victim of bungled management? Or was it merely a front for a much larger fraud?
BY DAN CULLINANE
Flashy, splashy, and loaded with marquee names like Steve Kmetko, Sandra Bernhard, Jack E. Jett, Reichen Lehmkuhl, and Honey Labrador, Q Television Network rose to prominence in the summer of 2005 with live original programming targeting the gay and lesbian population, broadcast in approximately 100 cities. Viewed as more original and cutting-edge than either Logo or here!, QTN was a scrappy underdog headed for top-dog status.
“It was exciting to be a part of an independent gay network,” recalls Jack E Jett, the host of QTN’s Queer Edge. “After having worked in entertainment for 25 years, I felt like was being allowed to be a part of GLBT history.”
But on May 3, 2006, less than a year after the launch, the staff received an e-mail terminating their employment due to the network’s inability to pay salaries. For the next two weeks, behind-the-scenes attempts to revive QTN continued, but the May 3 memo proved to be the last word. The story of QTN is a story of incompetence, greed, and possible criminal fraud, resulting in what some are calling the “gay Enron.” At the center of it is a man named Frank Olsen, a former Seattle bar owner with a shady past whom one associate referred to as “the Jabba the Hutt of gay media.”
A Sense of Community
In the autumn of 2005, the future looked bright.
“We were doing something cool, something special,” recalls a QTN staff member who asked not to be named for this story. “We had a sense of community. We were all in one building, and each show would hand off to the next.”
Drag queens mingled with go-go boys and porn stars as wild-eyed news staffers dodged through them with tapes for the live news feed, and sweet granny-types arrived for the knitting program taped in the rented studio next door. It was like “backstage at a gay Ed Sullivan Show,” the staffer says, laughing. “The only thing missing was a dancing bear, and in our case it would have been a fat hairy guy in a jockstrap.”
But according to sources inside QTN, mismanagement was rampant from the beginning. Decisions were made no more than 24 hours in advance to broadcast live from pride events or Halloween events, resulting in producers’ paying double or even triple to rent equipment and live trucks. Scores of attractive 20-somethings chattered busily on headsets as they were shuffled from job to job within the network, in search of something they could not screw up.
“People were promoted up,” Jett says. “They were hired to produce, and they were unable to produce, so they were made executives. There were people on the payroll who I never had any idea what they did.”
One QTN investor, who also asked not to be named, laughs as he talks about two of the network’s executives, vice president Scott Withers and senior executive vice president Alexis Fish: “Scott Withers was a store manager at Blockbuster before Frank Olsen hired him, and Alexis Fish ran errands on The Apprentice.” He pauses to check a memo on salaries. “Withers was making $29,300 a month, and Fish was making $11,300 a month.”
Olsen kept spending, and why not? The money was pouring in. From 2004 until the beginning of 2006, over 350 billion shares in Triangle Multi-Media (“QBID”) were on the market as penny stocks. Little is known about exactly how much money was generated, since financial statements for Triangle Multi-Media have never been released; the stock’s rapid dilution and infinitesimal share price (an average of $0.0003 per share throughout its life span) make calculations difficult. However, at the very beginning of the ride Triangle Multi-Media stated it had nine billion outstanding shares; the stock would go on to reach a high-water mark at $0.03. Any way the math is done, there was an amazing amount of money at stake—some estimate $100 million or more.
When an audit due on November 22 failed to materialize, investors grew nervous. While most people inside the walls of QTN were unaware of what was happening, Frank Olsen’s past was catching up with him.
A Shady Character
On investor message boards, word of Olsen’s felony-theft conviction in Washington state in 1986 was making the rounds, along with copies of his arrest report and conviction record. At the QTN studios, producers were hearing from vendors and it was clear that something was going wrong. A memo dated December 2005 detailed over $2.5 million in unpaid bills.
In December, Firestone—the production and uplink facility in Dallas which QTN had used prior to their move to Burbank—filed a $3 million lawsuit against Frank Olsen and QTN alleging fraud and breach of contract. According to the suit, Olsen had contracted with Firestone to use their production facilities for a raft of new shows, in exchange for Firestone’s assistance in securing distribution for the network. Payment to Firestone was to be in the form of 500 million shares of QTN stock, which would have granted them 50% ownership in the company. The suit alleges that once Firestone had secured the promised distribution for QTN, Olsen packed up operations and moved out of Texas without warning.
A week after the Firestone suit landed, Rodney Omanoff, an entertainment consultant hired by Olsen in April 2005, filed a $5 million lawsuit against QTN for nonpayment.
Nonetheless, Olsen steamrolled ahead, bringing on Sandra Bernhard as a cohost for Jack E. Jett at a salary of $20,000 a month, and spending a reported $100,000 to broadcast live from the Sundance Film Festival in late January.
On February 1, 2006, QTN failed to make payroll. It was a Wednesday afternoon, and Frank Olsen gathered the staff and told them there had been a mix-up at the bank, and that they would be paid on Monday, February 5. On Friday, February 3, Scott Withers told staff that production was halted. When Monday came they were told not to come to work. Vice president of sales and marketing Carol Hinnant, who initially agreed to talk on record for this story but who failed to return repeated phone calls, issued a statement saying that the network was on “hiatus” until February 13, but that staff was still being paid.
In actuality, on the 13th, a skeleton crew of 20 (out of over 100 former employees) was brought back in, given back pay, and assigned the arduous task of pulling together five hours of live programming.
On the 15th, QTN missed payroll again.
“We were close to walking out,” a QTN staffer recalls, “but we were told by Scott Withers and Alexis Fish that this guy Lloyd was going to push Frank out and take over. We had no idea who Lloyd was, and Frank was nowhere to be seen and no one could get him on the phone. We were told if we walked out we would screw the channel, so we worked five days without getting paid.”
An Attempted Turn-Around
On Monday, February 27, in a chummy press release full of excited burbling about the future, QTN announced that Lloyd Fan had been named interim president, while Frank Olsen remained chairman and CEO.
On March 7, a much more tersely worded press release noted that Olsen and all officers and board of directors had resigned, and that Fan was now chairman and CEO. A week later Carol Hinnant was promoted to president.
“Lloyd Fan had been an investor all along,” says the QTN staff member. “He’s given them several million dollars, and all of a sudden they can’t make payroll, and he says, ‘Hey, what about all the money I gave you?’ So he comes in and tries to recoup his investment before the network goes under.”
Fan’s first order of business was to quell investor anxiety that was approaching hysteria. He adopted a strategy of transparency and released the long-overdue 2005 financial records of QTN, which revealed total revenue of $9,000 against expenses of $7 million. This did little to allay investor concerns.
His next step was to release the financial statements of QTN’s parent company, Triangle Multi-Media, which hopefully would explain where some of the money had gone. This was where things went finally wrong.
Few records had been kept to explain where all of the investor money had gone, and those that were found pointed in a disturbing direction. According to two independent sources, expenses uncovered so far have reportedly included:
—100 82” plasma-screen TVs purchased at a cost of $20,000 apiece. Fan and Hinnant were able to locate five of them. The rest have vanished, although delivery records revealed that two had been delivered to Scott Withers’ house and two had been delivered to Alexis Fish’s.
—Titles to three cars that had been given to young men who were not employed by QTN.
—A 1099 report detailing payments of $1 million to Frank Olsen’s boyfriend, for unnamed services.
On April 5, 2006, QTN issued its last press release, announcing the failure to release financial statements of Triangle Multi-Media. The last line of the press release reads, “Despite the challenges presented by the continuing investigation into the financial situation, Mr. Fan remains optimistic about the viability of the network.”
A Grim Legacy
That optimism is now gone, and Lloyd Fan has returned to Taiwan. The question that remains is, did QTN fall victim to bad management and the gluttony of an aging gay man who used it to pay for a playground filled with young sex workers? Or was it just the latest scheme by Frank Olsen and his partners to bilk investors out of millions? QTN’s balance sheets for the six months after the fiscal year ending in June 2005 reveal an additional $8 million in expenses, giving the network a $15 million operating deficit by the time 2005 was over. But compared to the potential amount of money that was sunk into the company as investors clambered over penny stocks—and even to the $31 million declared on QTN’s balance sheet in loans from Triangle Multi-Media and other unnamed sources—millions upon millions of dollars are still unaccounted for. Was Frank Olsen’s extravagance an elaborate front to paint a picture of mismanagement in order to obscure a larger fraud?
“I don’t care what kind of village idiot you are,” says a QTV staff member, “you don’t see that you are $2 million in the hole and then rent three condos in Sundance and fly people there. I don’t know how he conned people into this, but he would always talk about the betterment of the gay community and then turn around and steal all this money.”
“In my opinion Frank knew how much he could make,” says an investor. “He has been doing this since 1999. He won’t get away with it. People will follow him. He will be hounded. I know people who can’t pay their mortgage because of him.”
“I’m relieved to know it’s finally over,” says Reichen Lehmkuhl, who struggled to the end to keep The Reichen Show alive, but the news of its demise filled him with “utter sadness.” “I lost my job,” he says. “I lost my show. I lost something I had been working toward with my heart and soul for over a year.”
“It was very sad,” concurs Jack E. Jett. “I so wanted to see the concept of independent gay television become a reality, and I wanted to be a part of it. On the other hand, the network had become the Terry Schiavo of gay television, and it was just lingering and leaving so many people in limbo.”
QTN terminated its signal on May 25.