"RISE & FALL OF BLACK SPORTS & ENTERTAINMENT (CMX) MOGUL: (TONY "TYCOON" BROWN)
A. Demetrius "Tony" Brown (above, tuxedo) stood behind promoter Don King during a press conference at Madison Square Garden last April to announce a dud of a heavyweight show that was dying at the box office. Brown was wearing a black tux and holding a cigar as big as a battleship. He was playing the part of a mogul - or as he billed himself - "The Tycoon."
King called Brown "the black Bill Gates" because Brown had used the Internet to amass millions of dollars by trading metal commodities and was willing to spend money as if he had an endless supply. Brown had a $10 million sponsorship deal with King and he bought $2 million worth of tickets to a show that was headlined by WBA heavyweight champion John Ruiz and Fres Oquendo.
Brown wanted to make a big splash in the sports and entertainment industry. For a year he did, acquiring production studios in Las Vegas with the thought of producing records and videos for the music artists he wanted to sign; jet-setting around the country on three private jets to boxing events; renting blocks of rooms at expensive hotels for his entourage during fight week and sponsoring a weekly boxing show broadcast on the Internet with Las Vegas-based promoters Guilty Boxing.
The unbridled spending soon spiraled out of control. Brown stopped making the payroll for the 10 employees at the CMX Sports and Entertainment companies in Las Vegas last July - the first sign that "The Tycoon" was in trouble.
A year later the splash has created a wave that has swamped Brown. CMX Sports and Entertainment is out of business. People who were in business with Brown are now saying the "Tycoon" is a deadbeat, General Motors is suing Brown claiming that he has failed to pay on millions of dollars of aluminum orders he received from the automaker, and he is going through a divorce.
"He came, he spent, he's gone," says Sanford L. Beard, the former COO of Commodities Management Exchange, Brown's Internet metal trading company.
Things reached a low point on Friday when Fred Sternburg, a Denver-based publicist who worked for Brown when he sponsored the Guilty Boxing weekly series, e-mailed a letter to the media that he had written to Brown seeking payment of a $15,000 bill that was over 200 days delinquent.
Efforts to reach Brown on cell phone numbers provided by former employees and friends were unsuccessful. The telephone number listed on the company's Web site for the office in Northfield, Ill., is no longer in service.
Interviews with those who worked for the 43-year-old Brown and are still owed money by him paint a picture of a well-meaning man whose financial reach exceeded his grasp. An Internet Icarus, who flew high very fast, and crashed just as quickly.
"I think he's a decent guy," King said. "I talked to him (recently) and he told me that he's on his way back. I think he'll be able to get himself out of this."
King got all his money up front, so he can remain upbeat and optimistic about Brown's future financial prospects. But King is in the minority.
Veteran referee Richard Steele shut down a boxing gym he had run for nine years to start another gym in a building Brown wanted to buy in Las Vegas.
"He came to me through people that I trusted, reliable people," Steele says. "I thought for sure I was getting into something good. It has been a year-long nightmare. I'm still paying for it."
Brown made an $80,000 down payment on the building and Steele closed his gym and spent $4,000 moving into the new building. Brown never made another payment on the building and Steele was evicted eight months later. Steele had to play another $4,000 to move his things out and store them until he could find another gym.
"He said he wanted to have tutoring and life skills classes for the kids," Steele says. "I had that at my other gym. I ended up losing my program that I had worked 10 years to build. I also lost funding from United Way and local investors because I didn't have a gym anymore."
Steele has since moved into another gym, but he is out $8,000 for the two moves and another $2,000 that was charged to his American Express card for hotels in New York that Brown promised to pay for while Steele was on recruiting trips to sign boxers to a promotion company Brown wanted to start. Not to mention the $6,000 a month that Brown and his brother, Eric, promised to pay him.
Pete Allman, a TV producer who worked at the CMX Studios in Las Vegas, says Brown owes him $12,000, but he is not angry with either of the Browns.
"I produced TV shows for them, which were supposed to be stock-piled interviews and profiles with celebrities," Allman says. "I think people took advantage of them financially. They're very nice, religious people. But they owe me money and they have a responsibility to take care of the people they owe."
The lawsuit that GM filed against Brown and his companies in Lake County, Ill. last June paints Brown as a deadbeat that diverted the money he made selling the surplus aluminum he received from GM rather than pay the company. The Detroit-based automaker, which has been doing business with Brown since 1990, claims Brown diverted the money to his other companies and to his and his wife's personal accounts. GM claims Brown made no effort to pay for the aluminum even though he re-sold it.
Beard, who began working for Brown in 1999 at his original metals trading company, Fuci Metals USA, says Brown ran a very profitable company before his rapid expansion into the sports and entertainment industry in the last two years.
In its 1996 profile of companies, Black Enterprise magazine listed Fuci Metals USA on its BE 100 Industrial/Services list. With $61 million in gross sales the company was the highest ranked newcomer on the list that year. In explaining how the company made money, the Black Enterprise profile said "the trading component is set at one price and sells for another. Fuci makes money on the difference." Brown did most of his business with the giant automakers in the U.S.
In 2000, Brown began trading the metals on the Internet and changed the name of the company to Commodities Management Exchange (CMXchange).
About two years ago, Brown decided that he wanted to expand into the sports and entertainment field and he formed CMX Sports and Entertainment, a spinoff of his commodities company. Brown even signed the remaining members of B2K, above, (after they broke up) to a management deal but nothing ever came of it.
Brown also hosted "CMX" sponsored parties in Hollywood, attended by numerous black celebrities.
Brown has a sports background. He was an athlete growing up in Chicago and played on the same Indiana University basketball team as Knicks GM Isaiah Thomas. After graduating from Indiana with a degree in public environmental affairs he was drafted by the Pacers, but didn't make the team.
He went to Italy to play basketball and in the offseason Brown worked as a sales agent for Nuova Fucinati, an Italian company that produced alloyed metal for the auto industry. After convincing the company to open a branch in the U.S., Brown bought out Nuova Fucinati's interest in the American company in 1988 and started Fuci Metals USA.
Even though the company was financially successful, apparently Brown never lost his interest in being a sports and entertainment mogul. And he wanted to start with boxing.
"You can speculate that he wanted to take over the Don King empire," Beard says. "But that's impossible because Don King is always going to be Don King."
Brown's brother, Eric, had worked for King as a driver for years. How much Eric Brown knew about the boxing business is questionable. Tony Brown might not have known much more, but King gave him a quick and expensive lesson, selling him a $10-million sponsorship, which allowed Brown to have the CMX logo on ring mats and stand behind King at press conferences and in the ring before and after boxing matches. On at least two occasions - the show at the Garden and another one in Miami - King publicly acknowledged that Brown bought $2 million worth of tickets. Both shows were box-off bombs.
Brown didn't make much headway in the boxing business with King. He decided that he would sponsor a weekly boxing series with Guilty Boxing Promotions in Las Vegas. The shows were broadcast on the Internet. After a couple of months, Brown stopped footing the bills for the Guilty Boxing series.
Meanwhile, Brown bought two recording and TV production studios in Las Vegas and began flying celebrities into Vegas for sitdown interviews and laying the groundwork to recruit athletes and singers to sign to management agreements to his newly formed company.
"When I saw him buying all those companies I told him to slow down," King says. "I think he just got caught up in the wine of success."
It must have gotten to be too intoxicating, because Brown seemed to lose the sensibilities that had helped him turn his metal trading company into a multi-million dollar venture.
Beard says Brown's spending was beginning to tax his original company, Commodities Management Exchange.
"At the rate he was spending money there was no business that could support it," Beard says. "He was operating three private jets. He was renting hundreds of rooms in New York for his entire entourage. It was just crazy."
The middle of last year Beard and some of the longtime executives from Commodities Management Exchange tried to stem the tide of losses.
"It became apparent that Mr. Brown's wild spending was putting us in a bad financial position," Beard says. "A couple of us tried to sell off some of the companies' assets. Mr. Brown wouldn't cooperate. He wouldn't consent to any kind of sale of assets."
Beard left the company last October. At that point no one had been paid for three months.
There is word that several of the former CMX employees in Las Vegas are preparing to sue Brown for back pay. Some of the workers in Northfield, the home office of Commodities Management Exchange, have filed actions against Brown with the Illinois Department of Labor over not being paid.
No one is sure whether they ever will be paid. But apparently the metal trading company is still making money. Hoover OnLine, an Internet financial analyst that tracks companies and industries, listed the 2005 revenue for Commodities Management Exchange at $8.5 million.
Sternburg, the publicist who sent out the deadbeat e-mail, says it is the first time that he had ever been stiffed by one of his boxing clients since he started his PR business in 2002.
"He said he wanted to make a splash in the boxing business, but when he jumped in I guess he found out that there was no water," Sternburg says. "Unfortunately me and the other people that he owes are the ones with the headache."
Source: Tim Smith (Daily News Staff Writer)