The Heidi Chronicles

Forget Sherry Lansing. Forget Barbra Streisand. The most powerful woman in Hollywood today is Heidi Fleiss, a 27-year-old pediatrician's daughter who was charged last week with allegedly running the most exclusive call-girl ring in Los Angeles and is now threatening to name names. As summer entertainment, The Heidi Chronicles--or "Pretty Woman, Part II"--are even more riveting than watching "Fugitive" Richard Kimble hunt the one-armed man.

What started as a buzz in early June when Fleiss was arrested while taking out the trash from her $1.6 million Benedict Canyon home--once owned by Michael Douglas--has become the town's only topic of conversation. Among the juiciest allegations: some of the entertainment industry's leading men and moguls were her patrons, and some trysts were financed with studio checks. The scandal threatens to destroy careers and marriages. Police announced last Friday that they wouldn't go after her alleged customers or release their names. But Fleiss, who faces arraignment this week on charges of felony pimping, pandering and trafficking in cocaine, has threatened to tell all--if not in court, then to any publisher willing to meet her price of $1 million. Even mere speculation about what might spill from her Gucci date book has any number of top executives uneasy, and others atwitter. As one producer who is a self-confessed client of madams and prostitutes told NEWSWEEK, "Jeez, it's like the Nixon enemies list. I hope I'm on it. If I'm not, it means I must not be big enough for people to gossip about me."

So far the talk has raged along two distinct axes: a wild litany of names and places coursing through the gossip miff, but for the record, little save shadowy, blind allegations. Last week, in a stunning pre-emptive strike, Columbia Pictures' number-two man Michael Nathanson issued a statement that he had not been a Fleiss client and had not "done anything that should cause any concern" to Columbia--including, by implication, spending studio cash for prostitutes. It was stunning because he'd never been publicly accused. Two days later, after L.A. police arrested Fleiss's ex-boyfriend, film producer Ivan Nagy, and his alleged partner, Julie Conaster, on charges of pandering, another top studio name emerged. Nagy released to New York's Daily News what he reportedly claims are three days' worth of Fleiss's 1992 diary, allegedly listing the first names of call girls and their clients. One page, reprinted in the News, bore the handwritten entry "Barry" and a scribbled phone number-the office number of Barry Josephson, a vice president of production at Columbia. Josephson has not returned NEWSWEEK'S calls.

"God, whatever mistakes I've made, I certainly didn't expect my life to turn out this way," Fleiss told the Los Angeles Times. In theory, it shouldn't have. The daughter of an elementary-school teacher and a Beverly Hills pediatrician who has treated such prestigious patients as Joan Collins's kids, Fleiss grew up fast-track and wealthy in Los Feliz. She was pretty and smart, but impatient and spoiled. "After a while, I hardly went to school at all," she told the L.A. Times. "I'd cut class and go to the beach or the racetrack."

The turning point, according to family members, was a 1984 auto accident in which Fleiss was driving and her sister nearly lost an arm. The guilt, they said, sent her into a tailspin. More pivotal may have been the time, the following year, when she met high-flying financier Bernie Cornfeld, legendary for his 1980s Beverly Hills bacchanals. When their relationship broke up four years later, she moved on to yet another man nearly twice her age--this time Ivan Nagy. Fleiss claims Nagy got her started in her career, introducing her to an older, legendary madam; Nagy denies this. By 1990 Fleiss reportedly had built a thriving business. "Everyone used Heidi's service," says one leading movie producer.

Even without being formally a part of the movie industry, Fleiss became something of a Hollywood celebrity. She's good for a choice table at voraciously trendy restaurants like Morton's and the Monkey Bar, where Jack Nicholson is a partner. She's friends with Victoria Sellers--the daughter of the late actor Peter Sellers and a sometime roommate--and musicians like Billy Idol and Mick Jagger. And the parties she throws in her Benedict Canyon home are notorious. "There was one party for Mick Jagger," Sellers has said, "and the house just got trashed--there were women climbing up the side of the hill to get in." Together, Fleiss and Sellers were regulars on the nightclub scene. Among their haunts: the trendy Babylon and Roxbury and On the Box, one of the more notorious stops on the club circuit (box). Police claim Fleiss would target models and pretty college girls she met at the clubs, sometimes inviting them to parties for movie stars and arranging for them to have sex with the men without revealing, until the next day, that it was sex for money. If the girls didn't object, police say, they were invited back.

Like Hollywood's more famous industry, Fleiss reportedly built her business on beauty and hope. Some girls wanted to be actresses. (At least one current box-office sensation got her start as a call girl.) Some were models or made extra money posing for Hustler and Penthouse. Some went on to marry the movie executives. The women were hired to work birthday parties and bachelor parties. The tab: from $200 for a quick hit to $1,500 for an entire night. Fleiss reportedly kept 40 percent. The action, Nagy told the Daily News, was deemed nearly respectable. "It's more like a date with sure sex at the end."

Hollywood and prostitution have had a long and spirited relationship. Great L.A. "cathouses" go back at least to the 1920s, showing up in the fiction of Raymond Chandler, Dashiell Hammett and Cornell Woolrich, among others. Darryl Zanuck, cofounder of Twentieth Century Fox, was known for his afternoon "siestas"; other industry leaders were famous for their daily "auditions." Legendary are the madams who served Hollywood well. In the 1970s there was China Doll. in the 1980s there was Madam Alex. A onetime florist whose real name is Elizabeth Adams, Alex got her start in 1971 when she bought a client list and a stable of 25 women for $5,000 and began to groom her talent. Over the next decade, she says, she became "the Henry Higgins of call girls, running the Neiman Marcus of [sex]." Police say Madam Alex told them that Fleiss started out working for her--and she charges that when she was arrested in 1988 Fleiss and Nagy stole her client book and went into business for themselves. Alex has just finished her memoir, "Madam 90210," for which Random House paid her a mid-six-figure advance. Although the book was originally scheduled for release this winter, the publisher is trying to rush 100,000 copies into stores in the next two months. But don't expect Madam Alex to kiss and tell. "If I did name names...they'd stop being stars," she writes. "Instead, they'd be sick men who paid to have sex."

In a town built on fast money, long hours, uncertain futures and frail but huge egos, prostitution has become an institution of convenience. An overworked exec can leave his office for a "lunch" meeting, arrange for a prostitute by car phone and be back at work within an hour. As one producer put it, "It's like, have cash, will travel. What could be better than that?" Even in a postfeminist era, prostitutes remain key to doing business. One independent producer allegedly kept three hotel rooms and three women on call every day-for himself, his pals and the actors he was trying to cut deals with.

Why would film stars--the sort of men who fill women's fantasies--pay for what they could presumably get free? Quite simply, professionals offer the Hollywood version of safe sex--they're unlikely to file a paternity suit or run to the National Enquirer. And they don't turn away if a client has something unusual in mind-like the producer who allegedly paid a little extra for a woman who'd go shopping with him for lingerie on Rodeo Drive and then dress him up in it. But most of all, for men on a busy schedule, prostitutes are convenient. "It's in and out, over and out," says one movie producer. "Do you think some big-time producer or actor is going to go to the clubs and hustle?"

As Hollywood salaries have skyrocketed, so have the finances of the prostitution industry. One former call girl who reportedly worked for Heidi said it was common to make $10,000 a month, and that one month she made $50,000. But Fleiss's fortunes went sour June 9, when, police say, a Japanese businessman who drove a red Ferrari Testarossa called Heidi to Place an order: he wanted some cocaine and three girls to join him for the night at the Beverly Hilton Hotel. The businessman was an undercover cop, and the women were arrested; later that night police arrested Fleiss at her estate on Tower Grove Road, down the street from neighbors Jack Lemmon and Jay Leno. Within a week major producers reportedly called to lend support or sent word through intermediaries. But Heidi--and Hollywood's callgirl industry--went into hiding. "The good news is, the rates have dropped," jokes a source. "None of the girls are working."

So far, the biggest fallout has been Nathanson's public statement of noninvolvement. His bosses at Columbia and parent company Sony Corp. were said to have been flabbergasted that he hired an outside private investigator and outside lawyer to take it public. "It wasn't a matter of someone was going to print his name," attorney Howard Weitzman insists. "The rumor mill is enough to do tremendous harm."

His revelation added fuel to the ongoing speculation, printed earlier this year in Variety, that Nathanson would be replaced by Lisa Henson. Daughter of the late Jim Henson, she and Columbia head Mark Canton were colleagues when both worked at Warner Brothers. There were no official announcements, but last weekend Columbia's top brass, including studio chief Canton, Nathanson, Henson and Josephson, repaired to a retreat in Santa Barbara to map damage control, among other things. If the Henson-for-Nathanson maneuver works, it's a master stroke: Canton gets Henson, whom he'd always wanted for the job, and Nathanson gets bumped upstairs. And the studio puts a cap on an otherwise mushrooming scandal.

For now, that leaves the scandal crashing down on Heidi's head. The Los Angeles chapter of the National Organization for Women called upon police Friday to "put as much energy and effort into the arrest of the "johns"' as they did into nabbing Fleiss. The cops say they aren't interested. Pandering is a felony; going to prostitutes, only a misdemeanor. There's no evidence Fleiss is going to let Hollywood off so easy. She's been talking to Penthouse, possibly about selling her story. And according to the L.A. Times, one night shortly after her arrest she got into a fight in the Monkey Bar with a female patron who was taunting her. Defiant to the end, Heidi shouted to a roomful of diners: "That's right ladies and gentlemen. I am an alleged madam and that is a $25 whore!" Then she threw the first punch. Hollywood better duck.