The Adelson method
Mitchell E. Adelson, 48, of Fort Myers, died unexpectedly September 6, 2005. He was a retired owner of an automobile dealership in Massachusetts, member and dedicated sponsor of the AA family, which he loved, and an avid game fisherman. Mitchell is survived by his wife Lynn, [and three] sons ... father, Sheldon Adelson; brother, Gary Adelson; sister, Shelley Adelson; and his beloved dog, Sherman. He was preceded in death by his mother, Sandra Adelson."
This obituary notice appeared in the Fort Myers, Florida News-Press on September 14, 2005, eight days after Mitchell Adelson's death. But the tragic death of the son of the world's sixth-richest man (estimated worth: $26.5 billion) raised a number of questions - not the least of which is why he had filed a huge lawsuit against his father, which had been thrown out by a U.S. court half a year beforehand. The answer lies in a particularly painful human story, which is here being made public for the first time.
Mitchell Adelson was a drug addict and died of an overdose. His brother, Gary, is also an addict. This information was confirmed by Dr. Miriam Adelson, in reply to a question from Haaretz. "Sheldon's son died of an overdose three years ago," she says in a telephone interview from California, and adds, "He used heroin and cocaine from an early age."
What is his brother Gary's condition?
Miriam Adelson: "We don't know. He lives his life and is not in touch with us. As far as I know, he is still addicted. Sheldon has a daughter, who is perfectly all right, and the relations between them are exceptional."
Did you treat Sheldon's son?
"I spoke with him but I was not his professional therapist. There was a period when he lived without drugs, and there were periods when he lived with the drug substitute, methadone."
So you met Sheldon Adelson through his sons?
"Sheldon was active in the subject of addictions long before I met him. He is a very generous person in many areas, who helped, contributed to and was even a member of an association that assists drug victims. What is true is that when we met, on a blind date, we had a subject in common to talk about - but forget it, the subject is very painful for him. I am saying all this only to convey the message that drug addiction is an illness which, like all illnesses, strikes all people. As my mother used to say: 'Life is not a bed of roses.' All of us have all kinds of ups and downs, so one has to show appreciation for people who were down, because their way up is so much steeper."
How does Miriam Adelson, who was born in Israel, maneuver between a life of wealth on an incomprehensible scale and day-to-day contact with the disturbing margins of society? Between highly publicized visits to casinos, and blood tests for addicts? According to journalist Nurit Arad, an old friend of Adelson's, "Miri works for people who are addicted to drugs like someone who took a mortgage and has to work to pay it off. Despite her vast wealth, Miri remains the same person she was 30 years ago, when we met."
Dan Raviv, another old friend, who is now an adviser to Sheldon Adelson, adds, "Imagine the Kadoorie family's Peninsula Hotel in Hong Kong, the presidential suite with picture windows overlooking the marvelous bay and the luxury boats. Now imagine how, for the whole morning, Dr. Miriam Adelson sits in a simple medical smock at the big dining table, with her back to the fantastic view, as she goes over the results of her patients' blood and urine tests, e-mailed to her overnight from clinics in Las Vegas and Tel Aviv."
Adelson encountered drug addicts firsthand in the 1980s, when she worked in the emergency room of the Hadassah municipal hospital in Tel Aviv. "I was especially fascinated by prostitutes whom our unit treated for overdoses, and as soon as they recovered begged for narcotics. Some of them impressed me: How did girls who looked as though they came from good families end up working in prostitution? As a physician, I also wondered about the illness that made them take drugs and sell their bodies to get them."
In 1986, when she went to the United States to look for a research subject, an Israeli friend suggested that Adelson work with Prof. Mary Jeanne Kreek, from the Rockefeller University in Manhattan, who was studying the biology of addictive diseases.
"I was enthusiastic, because of the connection with the story of the prostitutes," Adelson relates. "And on top of that, the professor welcomed me warmly, and since then we have been friends. Her research was on the endorphin system: endogenous morphine, which is a natural hormone secreted by the body, and exogenous morphine, consisting of similar but external substances, such as opium, heroin, Valium, methadone and others. My secondary subject was the influence of the exogenous substances - the various drugs - on the immune system. During the period in which the AIDS epidemic in the United States was at its peak, we investigated whether the use of narcotic substances accelerates the contracting of the disease or aggravates it. It was fascinating."
At Rockefeller, Adelson examined thousands of blood samples of addicts from the streets of New York, including a rare collection of frozen samples from a study Prof. Kreek had conducted in the late 1960s. They found that the immune mechanism of heroin users deteriorated, but were astonished to discover that the immune system of individuals who had taken methadone for more than 10 years was unharmed. In the wake of the study, Adelson became the leading advocate of methadone use for substance abusers who could not be cured of their addiction.
Methadone is a synthetic substance that relaxes drug addicts and stabilizes their functionality. However, one of its disadvantages is that the overwhelming majority of its users will need it for the rest of their lives - in contrast to heroin, from which a user can experience total withdrawal. Adelson, who established the largest and most professional clinic in Israel for methadone treatment, on Dafna Street in Tel Aviv, bridles at this criticism: "Heroin users get up in the morning and feel the withdrawal syndrome, and the only thing that allows them to feel good is to inject more heroin, and to do so after a few hours again, and then again. These are the symptoms of the physical disease alone, because at the same time dramatic changes occur in the brain. The scientific community showed that two to four years of narcotics use causes the endorphin system irreversible damage. The endogenous sources decay and the body needs a greater quantity of those sources, which requires the lifelong use of heroin or methadone, exactly like a diabetic who is dependent on insulin."
But we know today that many addicts have broken the habit completely.
"Barely 10 percent succeed in staying clean more than a year, and they too suffer from physical illnesses and emotional distress. They function well in prison and in the therapeutic community, but one significant stressful experience outside and they are back on heroin. On top of that, the 90 percent who succumbed to the drug also have to be treated. As a physician I opted to help them, because I have a weakness for weak people. In medicine one also considers what is less harmful: If we do not give them methadone, they will continue to inject heroin with dirty needles, and will become infected and infect others with AIDS and hepatitis, and the hospitals will be flooded. Of course, to obtain heroin they lure others into drug use, commit crimes, destroy families, cause mental as well as property damage, and block up the therapy and enforcement systems."
Adelson adds that methadone also enables total withdrawal: "In the Israeli clinic I treat only the hard cases, but in Las Vegas I treat children, and with them we are talking about total withdrawal, because they have been addicted for only a short time and the endorphin system can still be salvaged. Because I advocate slow and gradual withdrawal, so that the patient will have no reason to go back on the street, I put them on methadone and pay attention to what the body 'reports.'"
From Haifa to Vegas
Miriam Adelson was born in Tel Aviv in 1945 as Miriam Farbstein, to parents from Poland and Hungary. Her father, Simcha, was a member of the left-wing Mapam party and close to its leadership. In the 1950s the family moved to Haifa, where Simcha bought two movie theaters and managed three others. Miriam did her army service as an officer in the biological research laboratories in Nes Tziona, and afterward studied microbiology and genetics at the Hebrew University of Jerusalem. She then attended medical school at Tel Aviv University, graduating summa cum laude, and did a residency in internal medicine at Ichilov Hospital in Tel Aviv. She married a Tel Aviv physician, Dr. Ariel Ochshorn, with whom she had two daughters.
Around this time she met Dan Raviv, then a reporter for Israel TV, who would later become the PR man in charge of the worldwide positioning of the Adelson Group. "Dan planned to do a Friday consumer program with me," recalls Nurit Arad, a friend of the two, and mother of the strategic consultant Eyal Arad and the Olympic medalist Yael Arad. "Ochshorn was invited to film a pilot. He was in our high school class in Tel Aviv and afterward became a top gynecologist. He arrived with Miri, and since then, for 30 years, we have been close friends."
While Farbstein-Ochshorn was studying and launching her career, her father's movie theaters enjoyed roaring success, which gradually petered out as movie attendance declined; he died in 1980. Her two brothers, Avi and David, continued to run the theaters for a time and lived for a while in the United States. Today they are well- established businessmen who stay out of the limelight. She maintains close relations with them, and her young nephews and nieces frequent the Adelsons' hotels in Las Vegas on their vacations.
Ten years ago, the Farbstein family found itself in the headlines when Boaz Farbstein, David's son, then a high school senior of 18, drove his father's white Mercedes sports car at 120 kilometers an hour in the streets of Haifa, lost control of the vehicle on a steep curve and collided head-on with a car carrying Anat and Doron Raveh, the parents of four children, killing them both. After four years of court proceedings, in which the Farbsteins were represented by Prof. David Libai, a former justice minister, Boaz was convicted of causing death by negligence and sentenced to perform six months of community service. On appeal, the Supreme Court found him guilty of manslaughter, and he was sentenced to 18 months in prison. Libai said he had no contact with Dr. Miriam Adelson during the judicial proceedings: "It was only in retrospect that I understood she is a member of their family."
Revolution in Macao
Miriam Farbstein-Ochshorn was divorced in the early 1980s, and in 1986 moved to the United States with her daughters. Three years later she met Sheldon Adelson in New York. He was a widower in his fifties - his wife had died from a terminal disease - and a new millionaire. Their love was instant and intense, and they shared much interest and involvement in each other's professional affairs. They were married in 1991, obtaining a special permit to hold the ceremony in the Knesset building. Four years later, for her 50th birthday, her husband sent a private plane to fly over hundreds of guests from Israel, including childhood friends from Haifa and former friends from medical school, to a party he gave in her honor in Las Vegas.
Sheldon Adelson was born in 1933 - he will turn 75 this August - to a poor Jewish family in Boston's Dorchester neighborhood. His Lithuanian-born father was a taxi driver and an ad salesman. According to his official biography, Sheldon left school at 16 and sold newspapers on Boston street corners. He then established an agency to sell newspaper ads and to create booths at wandering fairs. From the 1970s he lived in Massachusetts with his wife, Sandra, and their three adopted children, Mitchell, Gary and Shelley.
His big business breakthrough came when he created Interface, which held the controlling interest in COMDEX, the producer of the word's first computer trade shows. The COMDEX events drew hundreds of thousands of visitors, who purchased items worth hundreds of millions of dollars. Adelson channeled part of the profits from Interface to purchase the legendary Sands Hotel in Las Vegas, which was associated in the public mind with Frank Sinatra and the Rat Pack. In April 1995, he sold COMDEX to a Japanese company for some $900 million and was left with Interface and the Sands. Inspired by the honeymoon he and Miriam spent in Venice, Adelson demolished the Sands in a live television broadcast and on its ruins built the Venetian Hotel Resort Casino, inspired by the Italian city and planned together with Miriam, which opened in 1999.
Adelson stated that he spent $2.2 billion on the project, contrary to the advice of his gambling-tycoon friends. The hotel, which has only suites (more than 4,000 of them) and a super- luxurious casino, takes in hundreds of millions of dollars a year. But the Adelsons were not content with Las Vegas: They built a far larger and far more opulent version of the Venetian in Macau, the former Portuguese colony off the coast of China.
Adelson's company won a Chinese government tender to build a world tourist center there. It opened in 2004, and three years later came the Venetian Macao Resort Hotel (3,000 suites), the first of three towers in a compound which is also reminiscent of the original Venice and includes a 15,000-seat stadium and a 2,000-seat theater.
Images of the Adelsons in hard hats, giving orders to thousands of engineers and foremen, were seen on television stations across Asia and America. More than 1,000 journalists from around the world were flown in for the opening at the expense of the project's PR budget. According to reports by the Las Vegas Sands Corp., more than 26 million tourists have already visited Macau this year. But there is more to come: Israeli-born architect Moshe Safdie is planning a tourism and gambling center in Singapore for the Adelsons on a scale similar to Macau, and the work is already under way. Similar activities in Asia are taking place in other sites, such as India, where Miriam Adelson visited in late January on business for the Adelson Group.
Adelson vs. Adelson
In September 2005, the idyll of the couple's dizzying success in Las Vegas and celebrations of the Macau opening was brutally shattered by Mitchell's death. The Adelsons had spared no means to help Mitchell and Gary get clean - including active participation in their treatment.
When Sheldon Adelson realized that the two were unfit for future management of his empire, he offered to buy out their shares in Interface, which he had given them as a gift five years earlier. The amount he paid them was based on a company value of $430 million - but four months later the two learned that their father had sold the COMDEX subsidiary alone for $900 million immediately afterward.
In September 1997 Mitchell and Gary filed suit in a Massachusetts court, seeking to annul their sale of the shares to their father. The suit was rejected and they appealed to the Superior Court, which upheld the decision of the lower court. The ruling - details of which are here being published for the first time - reveals an unusual series of events and a rare glimpse inside the world's richest Jewish family.
Sheldon Adelson held the controlling interest in Interface, with 50.1 percent of the shares. The remaining shares were held by three businessmen: Theodore Cutler, Irwin Chafetz and Jordan Shapiro. They and Adelson are referred to in the suit as the "older generation shareholders." In 1988, Interface acquired the Sands Hotel in Las Vegas, and as part of the transaction, restrictions were placed on the sale of Interface shares and on the distribution of dividends.
In June 1989, Interface transferred 15,000 shares to the 11 children of the older generation shareholders. Adelson's three children each received 2,500 shares, which were then worth about $265 each. Under the Sands transaction restrictions, the shares could not be sold and were attached to Interface for 10 years. The members of the younger generation of shareholders established a trust fund, headed by Charles Forman, the vice president of Interface, in which the shares were deposited.
"In the fall of 1994," the Superior Court judgment states, "holding serious concerns about Mitchell's ability to earn a living, Sheldon offered to buy Mitchell's shares of Interface stock ... for an amount between $3,000,000 and $5,000,000." On November 10, 1994, Mitchell, Gary and Shelley came to Forman's office and signed documents selling their shares. According to the judgment, Mitchell sold his shares for just under $5.3 million, of which $2.3 million was paid in the form of a 10-year promissory note of Interface, while $1.8 million went toward paying off Mitchell's debts.
The sale of COMDEX four months later pushed up the value of Mitchell's former shares in Interface to $15.5 million. The suit alleged that Adelson and Forman (who was also a defendant in the case) "misrepresented or failed to disclose material information pertaining to the sale of [Mitchell's] shares in Interface to Sheldon for the purpose of inducing him [Mitchell] to sell his stock for less than its fair value." The jury, however, found that "neither Sheldon nor Forman had misrepresented or failed to disclose to Mitchell any material fact in respect to Sheldon's purchase of his stock ... and the jury also found that neither Sheldon nor Forman was in breach of any fiduciary duty owed to Mitchell."
The two sons appealed, but Gary then backed down. "Mitchell, a college graduate with an advanced degree, professed ignorance as to the most basic information concerning his stock," the Superior Court found. "That is, he did not know the number of shares that he held nor did he have any idea of the value of his shares ... Mitchell acknowledged ... that he did not ask Sheldon or any other knowledgeable corporate insiders for information about the value of his shares or the financial condition of Interface, its earnings, indebtedness, or any offers to purchase it ... There was nothing in the evidence to show a likelihood that Sheldon would sell the company at any time in the foreseeable future ... nor is there evidence to show that Sheldon was in breach of his duty of utmost good faith and loyalty ... Rather, the evidence presented shows a personal transaction between a father and his adult son, who was free to ask corporate insiders, and anyone else for that matter, for information bearing upon the value of his stock."
In a footnote to the judgment, the court added: "We note the abundance of evidence concerning Sheldon's generosity over the years to Mitchell, Gary and Shelley ... We note that in addition to the $210,000 annual income received by Mitchell on Sheldon's promissory note, there was also evidence that Mitchell was also receiving annual rental income of somewhere between $100,000 and $125,000, from a trust arrangement, sponsored by Sheldon, involving an office building located in Needham. If and when the building is eventually sold, Mitchell can reasonably expect to net $6,000,000. The same holds true as to Gary and Shelley."
The cup flows over
In California and Las Vegas, far from the bustle of their business and philanthropic activity, the Adelsons are raising two young children, 9 and 12 years old, from whom they draw their radiant happiness, evident at all the important functions they attend around the world. Miriam Adelson's older daughter, Yasmin, returned to Israel in order to do military service as an officer in the Israel Air Force. Afterward she stayed on, concluding cum laude a first degree in law and business administration at Tel Aviv University. She obtained an MBA at Berkeley and is now a high-ranking executive at the Las Vegas Sands Corp. worldwide, which includes Israel. Her younger sister, Sivan, studied astrophysics and business administration in the U.S. Shelley Adelson, Sheldon's daughter, lives in Massachusetts and is not employed in the group.
Adelson is also very fond of political involvement, particularly when it comes to promoting Israel's cause in Congress. Last year he brought bipartisan Congressional delegations to Israel. The Adelsons are declared donors to President George Bush, and the door of his office is always open to them. Bush invites Miriam to the White House for events related to her medical concerns. She, for her part, encourages decision-makers to visit her clinics. Cabinet ministers, senators, Knesset members, judges, mayors, even the chancellor of Germany - all are happy to visit. "I try to educate them," she explains.
In recent years, Sheldon Adelson has tried to wield greater influence in internal Israeli politics. His insistence on investing in the local media via Yisrael Hayom (Israel Today, a free daily paper), has piqued curiosity about his future intentions. Many point to the Adelsons' close relations with Likud leader Benjamin Netanyahu, who in the 1970s studied business administration in Massachusetts, was ambassador to the United Nations in the 1980s, and has become a close friend of the couple. Netanyahu, reportedly, was also the middleman between Adelson and another friend of his, Shlomo Ben Zvi, in the failed partnership that produced the now-defunct freebie Yisraeli. Senior sources of the Adelson Group in Israel say that "Adelson is friends with people from across the Israeli political spectrum."
For the past two years, the couple has appeared regularly at charitable events in Israel and made lavish donations. In October 2006, they gave $25 million to Yad Vashem, the Holocaust memorial foundation in Jerusalem, where a museum of Holocaust art is already named after Miriam Adelson's parents as well as the members of their families who perished in the Holocaust. The huge donation, the largest ever given by an individual, is intended to finance the institution's ongoing activity - not for a building bearing the Adelson name. A year later, the Adelsons announced that they would increase their support for Taglit-Birthright, a project that brings young Jews to Israel, to $60 million.
Last year, they visited the Museum of Independence in Tel Aviv, and upon noticing a stained carpet immediately announced a donation to renovate the institution. During the Second Lebanon War they donated funds to renovate and maintain hospitals in northern Israel, and for an academic training center for former members of the air force. In conjunction with their growing philanthropic activity, they created the Adelson Foundation, which will henceforth operate on a budget of about $200 million a year.
Overall, since marrying Miriam, when he was less known in Israel, Adelson has considerably stepped up his presence in the country. She established the methadone treatment center in Tel Aviv in 1993, and since then has channeled millions of shekels into maintaining it and into research efforts in that sphere; she was also awarded an honorary doctorate last year from Tel Aviv University.
Hurting them hurts her
Adelson's Tel Aviv clinic treats about 330 people. The monthly cost of treatment is NIS 1,100, of which the patient pays a third.
"In the past, methadone was distributed here for payment and without supervision," Adelson says. "But the worst thing is that it was done at a garbage dump, at Hiriya. Aren't these people human beings? It hurt me very much to see patients hurt like that. And why isn't methadone in the 'health basket'? Because these people don't have politician friends? I am drawn to help groups like this, because I like to help weak people who can't help themselves."
In the center of the elegant, quiet clinic, the director gives instructions in the tone of a base commander. In fact, Ze'ev Balas is a retired lieutenant colonel from the Medical Corps. He was chosen by Adelson for the job five years ago.
"A patient who is carrying pills or street drugs, or is dealing in them, will be sent off to a distant place, without compromises," Balas asserts, "not necessarily as a punishment, but as a therapeutic act for him and for his friends."
Is that also a humane act?
Balas: "Imprisonment also has an inhumane aspect. Should we throw them into the street? Fine them? We have a few dozen 'exiles' a year - and it's always the same people."
Adelson: "A violent patient or a drug dealer has to leave, but then we start to pity them and say, 'We should have kicked you out, but go freely and rest a little in a different city and then come back.' I don't like the term 'exile'; it's like the Babylonian exile. We are reviewing the issue. To eject them is terrible - the person will suddenly find himself without methadone?"
Dr. Haim Mal, head of the rehabilitation unit in the Israel Anti-Drug Authority, describes a comparative study, the first of its kind anywhere, that the IADA is conducting in cooperation with Adelson's clinics at Rockefeller University and in Las Vegas and Tel Aviv: "We are investigating whether there are genetic differences between addicts who have been clean for 10 years or more, and patients on methadone. The idea is to use a person's genetic structure to predict the probability that he will become addicted, but also the prospects of withdrawal and the appropriate method."
Relations with the Tel Aviv-Jaffa Municipality are not so smooth. Adelson: "When we established the clinic we drew up a 10-year contract, under which I would finance the clinic's establishment and its activity for the first five years, and then the municipality and the Health Ministry would step in. After five years, the Health Ministry transferred its share, but the municipality balked. They then claimed I had enlarged the clinic and that there were too many patients. I considered suing them, and we sent a lawyer's letter, but I dropped the matter, knowing how much time I would have to devote to the trial. After all, I was born in Tel Aviv."
In the meantime, Tel Aviv is stuck with the building on Finn Street, where drugs are sold openly.
Adelson: "There are always buildings like that and there is always societal rejection - people say that these are criminals who will infect us. In fact, it is a minimal expenditure in the face of such vast damage. I offered to finance the establishment of more clinics around the country, but I want partners - I want to see that there are also others who care."
The director of the municipal anti-drug authority in Tel Aviv, Benny Avrahami: "There was a disagreement about the amount of the funding, but in the end the municipality paid its share. The contract with Adelson expired in 2004, and the understanding was that she would continue to keep the center operating. The municipality decided to invest more in addicts who kicked the habit, and is operating five centers that are assisting them to return to normal life. Methadone distribution throughout the country is done by the Health Ministry, not by local governments."
Adelson: "Benny Avrahami came to me and asked if I would be ready to establish another clinic in Tel Aviv. When I said yes, he told me to call the mayor and set up an appointment. I said: 'Excuse me? Let the mayor pick up the phone.'"
Avrahami also suggested giving out heroin to addicts on Finn Street.
"That is utter nonsense. It would be like giving them poison that will kill them. He threw out a bomb that reached the Internet, and I received phone calls from all kinds of scientists around the world who said, 'Miri, what's going on? Have they lost their minds in the Tel Aviv municipality? They don't have money to treat addicts with methadone, so they want to give them heroin?'"W