Before entering Hollywood, Keith Barish became notorious in financial circles through Gramco, an offshore mutual-fund venture he launched in 1967 while still in his twenties. The enterprise was structured through a Panamanian holding company, GRAMCO International S.A., with a Bahamian trust company selling shares to customers outside the United States. That arrangement helped Gramco avoid direct oversight by the U.S. Securities and Exchange Commission, while its unusual fee structure allegedly allowed Barish and his associates to retain between 17 and 18 percent of investors’ contributions. Gramco cultivated an aura of respectability by recruiting figures associated with the Kennedy administration, including former presidential press secretary Pierre Salinger as a director, and by presenting itself as a socially responsible financial system rather than merely a profit-making operation.
The fund initially appeared spectacularly successful: its assets reached approximately $278 million and its shares rose from their $10 offering price to $38. In August 1970, Barish confidently told Der Spiegel that it was almost inconceivable that Gramco could encounter serious trouble. Soon afterward, however, the shares collapsed to about $1.50. The decline was attributed to a cash drain connected to Gramco’s unorthodox financial practices, a sales ban in West Germany, and a broader loss of confidence in offshore funds. On October 8, 1970, Gramco halted both redemptions and new sales, effectively freezing the holdings of roughly 23,000 shareholders whose investments averaged around $12,000. Management continued charging fees while the assets were immobilized. A $40 million class-action lawsuit filed in 1973 alleged that the Panamanian structure had been created to conceal Barish’s and his associates’ fees and commissions, although the case was dismissed in 1975 for lack of subject-matter jurisdiction. Shareholders eventually regained access to their stock after Gramco was absorbed by Arlen Realty and Development Corporation, but the shares were worth only a small fraction of their original value.
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