Later this month, the longtime president of Nylon magazine, Don Hellinger, and its current chief financial officer, Jami Pearlman, will report to court for trial readiness. In February, US Attorneys charged them with money laundering and operating an illegal gambling business. They seek $44 million in forfeiture.
Judging from its pages, downtown New York is central to Nylon’s DNA. Its name was an amalgam of New York and London, and the magazine has operated out of a Greene Street loft since it launched in 1999. A September issue spread was shot at the city’s latest hipster enclave, Rockaway Beach. But the trial will take place in Philadelphia, Pa., where the crew of suits who cut its waifish writers’ checks have been devising scams and having run-ins with the Federal Trade Commission since before most Nylon readers were even born.
Launched in 1999, Nylon catapulted to influence on the reputation of its well-regarded founders. West Coast magazine power couple Marvin and Jaclyn Jarrett sold their stake in the influential yet illegible culture magazine Ray-Gun and formed a company called Pop Media. They decamped to Soho, picking up supermodel Helena Christiansen on the way and making her the magazine’s creative director. Nylon aimed to subvert the conventions of typical fashion magazines: It cast overweight or odd-looking models, consulted goth pop star Shirley Manson, of Garbage, for beauty advice, and hired Jason Lee’s wife to shoot the photos for his profile. The Observer dubbed it a New Yorker for the supermodel set, and in its second year, Nylon was nominated for a National Magazine Award for General Excellence, up against Harper’s, the longest running monthly magazine in America.
As many magazine editors know all too well, there’s no equity in an Ellie. During its first few years, Nylon ran up enormous debt, according to sources familiar with the company’s management. Around 2003, Larry Rosenblum was hired as a consulting chief financial officer, and he eventually became magazine president. Mr. Rosenblum reached out to an old friend, Don Hellinger, with whom he’d grown up in Philadelphia. Mr. Hellinger, who’d begun his business career working in his family’s kosher catering company, had gone on to establish a number of small consumer financial services firms and telemarketing companies. He opened his wallet, and in 2005 established Nylon Holding, Inc., to operate the company’s financials out of Langhorne, Pa., alongside his other companies.
The Nylon rescue mission was the first success in what became pattern of investments and acquisitions that would eventually establish Mr. Hellinger’s unlikely foothold in New York media.
Mr. Rosenblum developed an ambitious plan to run a consortium of niche titles that could share publishing resources, over which he would rule as the “Jason Binn of downtown magazines,” according to a Mediabistro article. In 2006, he bought the stylish Japanese ex-pat magazine Tokion from its founder Andrew Glickman for a reported $2 million. In 2007, he added the high brow tattoo quarterly Inked to his portfolio, which he gave the name Downtown Media Group.
One evening later that year, Mr. Rosenblum sat in the back of Tom and Jerry’s—the media-heavy watering hole on Elizabeth Street where he knew the bartenders by name—celebrating the acquisition of Animal, an underground magazine edited and published by media troublemaker Bucky Turco. Mr. Rosenblum mused about purchasing the New York Press. He picked up the drinks that night, but soon after, he stopped returning Mr. Turco’s calls and neither deal was consummated.
By then the recession was real, advertisers were disappearing, and the business of magazine publishing had begun to feel less like a game of Monopoly and more like hot potato. Mr. Rosenblum never even got one issue of Inked out before he sold it to Mr. Hellinger, who formed the company Pinchazo Media. In early 2009, Mr. Rosenblum sold him Tokion; like millions of American homes, it was in foreclosure. Having fled the publishing business, Mr. Rosenblum spent a year operating a NASCAR track in Virginia and then moved back to Philadelphia, where he now owns a popular Montreal-style bagel shop.
In May of that year, Mr. Hellinger made a solo media play, for the San Francisco–based shelter title Surface. He then branded his design-centric quartet (Nylon, Inked, Tokion and Surface) Quadra Media, LLC.
For the most part, Mr. Hellinger stayed out editorial operations, according to former editors. One exception was a clash with Inked’s editor in chief Jason Buhrmaster. A career journalist, Mr. Buhrmaster aspired to create a tattoo magazine with editorial content of a quality that would fit in with the rest of Quadra’s design-centric portfolio. Mr. Hellinger was less discerning, Mr. Buhrmaster said, urging the editor to take meetings with every reality television producer or tattooed freelancer he came across.
That may sound like a typical editor-publisher dispute. But more troubling signs of Mr. Hellinger’s business strategies soon began to reveal themselves. In April 2009, in what appeared to be a cost-cutting measure at Nylon, Mr. Hellinger sent an e-mail to the magazine’s subscribers, trumpeting a new fulfillment policy—digital editions.
“No more waiting for your new issues to come in the mail!” the email said. “We will email each new issue of Nylon to you the day our editors sign off on it.”
In an understated postscript, the email noted that if the magazine’s paid subscribers wanted to continue receiving hard copies of the magazine, all they had to do was ask.
“P.S. If for some reason you would prefer to receive the print edition of NYLON instead of the digital edition, simply call 1-866-639-8133.”
Publisher Jaclyn Jarrett later told WWD that the e-mail had only been sent to those who had picked up free gift subscriptions, but reports of financial instability at Quadra became routine. Later that month, rumors circulated that Quadra was foreclosing on Surface magazine. In June, the magazine’s staff moved out of its offices and began bunking with the parent company.
Nonetheless, Mr. Hellinger was enthusiastic about the business. He traveled constantly between Philadelphia, Miami, and New York, picking up all the local magazines along the way and showing them to his editors. He got Nylon prime spots at the ends of the racks at airport newsstands. He was new to magazine publishing, but he was a skilled marketer and hustler.
Indeed, before Mr. Hellinger got into the magazine business, he’d acquired something of a rap sheet. In 1989, he was convicted of tax evasion and mail fraud in connection with a phony coupon scheme and fined $30,000. In 1995, the Federal Trade Commission accused him of deceptively promoting credit cards via 1-900 numbers that charged as much as $24 a call (he settled). In the late ‘90s and early aughts, Mr. Hellinger and a cohort of suburban Philadelphia partners oversaw a suite of payment processing companies that helped a number of telemarketing companies dupe and defraud the elderly, according to court documents.
Telemarketers affiliated with Mr. Hellinger’s companies would inform their marks that they qualified for $6,000 government grant, less a $259 processing fee. Senior citizens provided their bank information, but instead of a deposit, they received a pamphlet providing more information about government grants.
Mr. Hellinger’s company Netchex used the bank information to print checks without the senior citizen’s signature; another company sold the names and numbers of those who had fallen for telemarketing schemes to other telemarketers. Among his partners were Ronald Hellinger, Donald’s twin brother, and Michelle Quigley, who had previously run various consumer fraud schemes under the name Madame Arielle DuPont.
Mr. Hellinger and the gang reportedly sold those businesses in 2004 for $3.83 million plus contingency payments of up to $5 million, and founded something called the Payment Processing Company.
In 2007, a disabled grandmother living on pension checks who had been fooled not once but twice by one of Mr. Hellinger’s companies filed a class-action lawsuit against Wachovia Bank for serving as the telemarketer’s financial conduit. Wachovia paid $144 million in restitution, but since PPC had been shut down by a federal judge a year earlier, for enabling fraud, nothing happened to Mr. Hellinger.
Now US Attorneys have assembled a case against Mr. Hellinger and his associates directly, involving money laundering and illegal online gambling operations that PPC ran in 2005, including sportsbetting.com and betonsports.com. PPC allegedly accepted tens of millions of dollars from overseas gambling companies and distributed it to bettors in small checks cut from anonymous sounding companies like DTX Cubepay and UC Safetex. The indictment calls for Mr. Hellinger and his associates to forfeit $44 million to the government.
“I have no comment on the case or my role in any business that I am currently involved in or may have been involved with in the past,” Mr. Hellinger wrote the Observer.
Jami Pearlman and Jaclyn Jarrett did not return calls from the Observer. Mr. Hellinger still describes himself as Nylon’s publisher and Nylon Holdings’ president on Twitter, though he is not on the masthead, and the tweets are mostly about Inked.
Former Nylon employees say the New York editorial office has virtually no contact with the Philadelphia office, except following up on behalf of the occasional freelancer fighting for his or her check. But with the business office several hours away, an improbably functional office culture has developed, sources say. Founder and editor in chief Marvin Scott Jarrett has receded to more of a figurehead role, distracted by side projects like the short-lived Nylon records and Nylon films. According to former employees, months go by with him out of the office, although Ms. Jarrett has taken on more of an editorial role than is typical of publishers.
Meanwhile, a small and young staff carries the torch of New York independent fashion, a little bit glossier and safer than the pre-recession days. New international editions published in Mexico and Japan are said to be major moneymakers for the company, with low editorial costs. Even the US additions are pretty thick for a scrappy independent fashion magazine. Despite its rocky start, at some point publisher Jaclyn Jarrett seems to have figured out how to run a magazine business, now she just has to hope her one-time savior Don Hellinger doesn’t drag it down with him.