In the early days of his new job as Sackler’s attorney, Michael Sonnenreich worked from an office at 15 East 62nd Street, the address where the Sacklers had listed more than a dozen companies since the 1950s. Sonnenreich used his talent as a fast study to learn everything possible about the brothers and their businesses.1
Before he left the Justice Department, Sonnenreich had met Bill Frohlich (“smart, he wanted me to be his lawyer”) and Félix Martí-Ibáñez (“I found him a waste of time”). The Sacklers realized that if their new in-house attorney was going to be useful, they had to be honest with him. They filled him in on the secret deals that gave Arthur a stake in MD Publications and that he “basically owned the Frohlich Agency.”2
In conversations with the brothers Sonnenreich realized there was an underlying friction between them that would likely worsen over time. Marietta had noticed their bickering for several years. It had started after their mother, Sophie, died from lung cancer at the age of sixty-nine in June 1963. She was the only one from whom, according to Marietta, Arthur “preferred to keep his distance, fearing her control.”3
“The brothers remained close during their mother’s illness,” Marietta later recalled, “but their relationship began to decline after her death. It seemed to me that her strong, matriarchal force had maintained the vision of family togetherness. When she was gone, that vision began to dissolve.”
The reasons behind the family tension seemed evident to Sonnenreich.
“Arthur basically got them through high school, college, medical schools in Edinburgh, and their medical residencies. He was the one that got them where they were, the one who put them into Purdue, the one who set everything up. And as older brothers tend to do, he wanted them to constantly kiss the ring. That’s fine if you’re in your twenties, maybe even if you are in your thirties. Then they reached a point where they didn’t want to kiss the ring and then Arthur began getting very angry. They had big fights sometimes and would stop talking to each other for a while or talk about dividing things up. Then they would cool down and move on.”4
It was not only Mortimer and Raymond with whom Arthur fought. “Arthur saw Else [his divorced first wife] every week, because they had kids, but he also liked her,” recalled Sonnenreich. “That used to really aggravate Marietta.”5
Notwithstanding the bickering, the Sacklers remained a tight-knit group wary of any outsiders. Sonnenreich earned their trust, especially Arthur’s. The two had a special bond and were so similar that they sometimes clashed with each other.6 The make-or-break moment for Sonnenreich with Arthur was not, however, about common traits. It was instead a challenge that Sonnenreich put to Arthur only a few months after becoming his attorney.
“You don’t know how to run your business,” Sonnenreich announced unexpectedly one morning. “You don’t need a lawyer, you need someone to run your businesses.”
“You think you can do it?”
“Arthur, I could lie on the floor and spit into the air and do better than you’re doing.”
“Okay, show me. Do it.”7
Sackler had opened the door to bold proposals in an earlier conversation. “Arthur said to me once that when people look in a mirror they don’t look to see what’s on the other side. They only see their own reflection, they are not open to new ideas.” Sonnenreich thought Sackler was “an advertising genius.” However, he also recognized his limitations. Arthur was industrious at setting up a web of different enterprises but quickly lost interest and moved on to something else before finishing his last project. It was why some companies incorporated decades earlier were still inactive. Sonnenreich saw that the network of businesses Arthur had created was profitable, but he thought it was not realizing its full potential. He had reviewed the Sackler mini-empire and had marked the top targets.
Arthur had hired Sonnenreich with the understanding that he could do other work in the pharma field, so long as he always put the Sacklers first. Sonnenreich had accepted the president’s job at the National Coordinating Council on Drug Education, the nation’s largest nonprofit, private drug education network.8 He testified before congressional committees looking into drug and alcohol abuse.9 And he had some clients besides the Sacklers, most prominently Dr. Sheldon Gilgore, then president of the pharmaceutical division of Sackler’s biggest ad client, Pfizer (Sonnenreich negotiated the lucrative deal a decade later when Gilgore left Pfizer to become Searle’s CEO).10
Sonnenreich assured the Sacklers that their businesses and personal affairs would always be his top priority. Arthur had confidence in the thirty-five-year-old, giving him a green light to first reorganize Medical Tribune. Sonnenreich streamlined some of the operations and impressed the brothers by reducing costs while boosting profits. He had a good eye for identifying unnecessary expenses and was unsentimental about eliminating them. That turned out to be a necessary trait when Arthur later decided to dismantle the union at Medical Tribune. Although Sackler had largely abandoned his youthful left-wing political passions, he had a soft spot for the former blacklisted journalists to whom he had provided safe-haven jobs during the height of the Cold War Red Scare. Because most of them had worked at daily newspapers under the Newspaper Guild of America, they asked Arthur to provide them with the protection of the union. As a result, Medical Tribune was the only unionized medical journal in the U.S. At first, Arthur did not want to do anything to change it, at least not while any of the former Red journalists worked there.11
There was only one left by the time Sonnenreich had started working for Arthur: Melvin Barnet, the copy editor dismissed by The New York Times in the mid-1950s for refusing to testify before Congress about his Communist Party past. He was the Medical Tribune’s associate editor. By then, Barnet was legally blind, but Sackler, “in kindness, kept him on long after he could see well enough to do the work.” When Barnet retired in another year, Arthur allowed the hiring of freelance writers to “bust the union.” Nine employees judged as too strongly aligned with the Newspaper Guild were dismissed. There was even an effort to induce students at the Columbia School of Journalism to submit articles for credit only.12 The Guild called a strike. Sackler did not waver although Sonnenreich admits it “was a very difficult time” for Arthur. The union was finally broken at all the Sackler publications.13
While the shakeup at Medical Tribune was under way, Sonnenreich focused on unresolved matters left over from Frohlich’s death. To ensure that Sackler’s investments in Frohlich’s advertising agency were protected, Louis Goldburt, Arthur’s longtime accountant became one of the company’s three directors. He brought with him another accountant from his firm, Lawrence Effman. Sackler had utilized both a decade earlier as donors at the Metropolitan Museum of Art and Effman had been selected to help Frohlich buy some independent radio stations on the West Coast. Shortly after the two accountants took control of the board, Frohlich’s longtime president resigned, complaining the board was engaging in “subterfuge” and “deceit” and that it was “foolhardiness” to appoint an accountant who did not understand the agency’s business. J. Walter Thompson, one of Madison Avenue’s largest advertising agencies, appeared ready to purchase L. W. Frohlich International but client conflicts scuttled the deal.14 It would be hard to hold the ad agency together without Frohlich at the helm. Three top executives had left a year after his death and formed their own ad firm, Lavey/Wolff/Swift.15 A dozen division chiefs defected in 1973 to large agencies, all of which hoped to develop specialized subsidiaries for promoting pharmaceuticals and health care products.16 The roster of Medicine Avenue expanded in the 1970s as L. W. Frohlich disintegrated.17
Sonnenreich at least succeeded in getting some of Frohlich’s larger accounts, including Ciba’s multimillion-dollar Vioform-Hydrocortisone campaign, switched to Sackler’s McAdams.18 Sonnenreich and Sackler not only susequently helped the Frohlich agency merge with a small medical ad firm, Sudler & Hennessey, they were instrumental in its sale to Young & Rubicam.19
Another pressing issue left from Frohlich’s death were questions about a large bequest in his last will and testament. He had directed that Mortimer and Raymond were to get 85 percent of the proceeds from the 1.85 million shares he owned in IMS, whenever that company went public. Sonnenreich had learned that while “there was no paperwork for IMS,” its start-up had been “all Arthur’s money.” To avoid any appearance of a conflict of interest, Arthur had stayed away, “but he put Mortie and Ray into it to watch over their investment.”20 Although Mortimer and Raymond were the only Sacklers named in the will, they intended to cut Arthur in on whatever payout they got.21
IMS began planning for an IPO a year after Frohlich’s death.22 No one could then have imagined that what seemed like a straightforward probate matter would turn into a quarter century of convoluted stock maneuvering, power plays on the IMS board of directors, and ploys that were masked as hostile takeovers.I23 When there was eventually an IPO, the price was set at $25 per share. After deducting the underwriter’s fee, Frohlich’s estate, represented by his sister, Sophie, received $6.25 million. She was not happy that Mortimer and Raymond, with their 85 percent of her brother’s shares, each received $37 million.24II Today IMS is valued at $20 billion, the world’s leading firm in collecting and selling medical data.
It was not just business where Arthur Sackler and Michael Sonnenreich found common interests. The young attorney also had for more than a decade been buying art. Sackler had made it clear that was the one subject on which he did not want any advice. Sonnenreich concentrated on pre-Columbian and African art, staying far away from Sackler’s interests. “I did not want to be told that I was doing something wrong,” he recalled.25
What Sonnenreich had noticed about Arthur’s collecting was that “he had done very little to publicly display his collections.” Arthur was so focused on acquiring new pieces that he had little time to show his collections.
Sonnenreich knew that the Sacklers had given some of their early grants with their names attached to the gifts. Did they want that to continue? They said yes. That was important for Sonnenreich, who believed “strongly that if you put your name on something it is not charity, it’s philanthropy. You get something for it. If you want your name on it, it’s a business deal.”26
The Sacklers wanted Sonnenreich to handle the business side of their art bequests and gifts. When he was not working on their businesses, Sonnenreich urged the brothers to become major donors at the country’s top museums.
“One day Marietta called me,” Sonnenreich recalled. “She began excoriating me. ‘You are worse than a mistress! He spends all his time with you!’ ”
“He’s running a business, Marietta.”
“He should be retiring,” she replied.
When Arthur learned about Marietta’s outburst, he smiled. That his wife was mad at Sonnenreich, he said, was a good sign that his new attorney and advisor was earning his pay.27
I. Sonnenreich had promised Arthur: “You are going to buy back IMS.” The author discovered that Sonnenreich arranged for Arthur to initially buy 10 percent of IMS and then doubled that to 20 percent. “Then I went to Dubow [the IMS president],” Sonnenreich said, “and told him we wanted two directors for our 20 percent share.” One was Bob Begondi, one of Sonnenreich’s Harvard Law School classmates. The other was Robert Louis Dreyfus, heir to the eponymously named merchant banking dynasty. In 1998, Dreyfus oversaw the sale of IMS for $1.7 billion.
II. Arthur was deceased by the time of that IPO, and Mortimer and Raymond had evidently forgotten about their assurances they would take care of their older brother. Arthur’s children challenged the will, contending that “on a handshake with Bill Frohlich… he [Arthur] was entitled to one fourth.” Mortimer and Raymond said they knew nothing about that, and the court rejected the argument put forth by Arthur’s children since there was no written documentation to support the “handshake agreement.”