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The hiring requirement attached to the state and city money was also a headache, he claimed. The new hires in Florida "weren't ready to walk in and start doing Star Wars-caliber work," Textor explained. The cost of training these workers offset some of the government largess.
By May of 2012, the stock was looking like anything but a sure bet. Textor — who received $791,000 in base compensation in 2011, along with a $400,000 bonus and stock options valued at more than $5 million — wrote in a news release that the company had made "significant progress," including "the first product of our Virtual Performance business, a virtual Tupac Shakur who performed at the Coachella music festival [and] launched an entirely new form of entertainment."
But one analyst on the website SeekingAlpha.com saw through the nifty illusion, writing, "One of the biggest misconceptions in the world of investing is that being a 'cool idea' firm instantly makes a company profitable and worthy of investment." The analyst cited declining revenue and iffy prospects for profits from the new school.
The analyst continued, "Domain Media has managed to weasel its way into the hearts of Florida politicians, receiving approximately $135 million in cash grants, land grants, low-interest financing, and tax incentives. I think this is merely going to kick Domain Media's can down the road until the road ends at the edge of a cliff."
In September 2012, the cliff appeared. Not only had Textor borrowed money to prop up the stock price, but also the company had taken out a $35 million loan from investors, led by Tenor Capital, that required it to keep more than $7.5 million of cash on hand. When it didn't meet that requirement, the directors defaulted on the loan, and now the amount owed jumped to $51 million, with no clear way to pay it back. Bankruptcy loomed. With these embarrassing revelations, on September 4, the stock price fell to around a dollar per share.
The collapse was quick and painful. On September 6, the company announced that it was laying off all but 20 of its nearly 400 Port St. Lucie employees and that Textor had resigned as CEO. On September 11, Digital Domain Media Group filed for bankruptcy, and the New York Stock Exchange announced it was delisting the stock, which by now was virtually worthless.
The next day, the Palm Beach Post reported the Digital Domain Institute had suspended its continuing-education classes. Tembo lay half-finished in the brand-new, but now shuttered, studio building. The West Palm Beach school building — which was supposed to be a majestic, cantilevered glass building — never got further than architectural renderings.
John Textor lives in a sprawling white $3 million house on Hobe Sound. It's not the kind of place where people just stop by. So he was not happy when he opened the thick wooden door on a recent Wednesday afternoon to be asked to comment for this story. He was wearing a faded green polo shirt, khaki slacks, and sandals. A small dog barked in another room.
"I lost my job too," Textor said defensively. "It's been a witch hunt. Please do not come back here ever again."
Indeed, the onetime savior of Digital Domain has been feeling like a hunted man lately. In July, anonymous commenters who identified themselves as investors began posting nasty notes to Textor on the Yahoo! Finance page for Digital Domain's stock, even insulting his wife.
In August, Textor filed a cyberstalking claim in domestic violence court to get the comments removed. A judge granted the injunction.
In bankruptcy court, creditors claim they are owed about $200 million. The old special-effects division of Digital Domain was sold to a pair of Chinese and Indian competitors for $30.2 million.
The fate of the Port St. Lucie studio is uncertain; the city is seeking a new tenant but is unlikely to recoup the $7.8 million grant. Some employees involved with Tembo hope to get the film finished somehow.
Hundreds of talented former employees are looking for work. They include Ronn Brown, a Star Wars industry veteran who also taught a class on digital background painting at the new school. "I taught the first round of classes but stopped working for them because they didn't pay me," Brown says. "I used to work at ILM. I worked there nine years and left to try to get experience from other places. I had no idea I would never have a real job again." In a class-action lawsuit, employees are fighting for final paychecks and unused vacation pay.
The lawsuits against Textor have piled up. Stork has sued him for fraud. One of Textor's friends, Sean Heyniger, has also filed suit, alleging Textor and his wife owe $986,707 on a personal loan. Legendary Pictures has sued too, claiming that it loaned Domain Media $3 million and that Textor personally guaranteed the loan.
The City of West Palm Beach had to hire bankruptcy lawyers, at the discounted rate of $375 per hour, and eventually reclaimed its downtown piece of land.
Thanks to a system of benchmarks that the city imposed on the $10 million it was prepared to give Digital Domain, only $2 million was paid out. That money was contingent upon Digital Domain attracting FSU and establishing the four-year degree program. FSU has said it will continue running its film school; for now, it is still operating out of temporary classrooms above the CityPlace mall.