The Rage Offstage at Marvel

"I was set-up as the fall guy," Paul tells a reporter by phone. "But if the legal process works as it should...I will be vindicated."

Lawsuits against Marvel, Lee and Bill and Hillary are pressing Paul's claims that a dot-com he started with Stan Lee in 1998 was undone by the actions of the former president, short-sellers and Stan Lee himself. In a Manhattan federal district court, some of Paul's associates argue that the bankrupt dot-com, Stan Lee Media, still owns rights to Marvel characters like Spider-Man and The X-Men. On behalf of the former dot-com, they want half the profits that Marvel (MVL) is piling up, now that it's producing its own films like the smash hit Iron Man and the just-opened The Incredible Hulk.

The Clintons, Marvel and 85-year-old Stan Lee all vehemently reject Paul's claims and duly note his many felony convictions. He's got the electronic bracelet because he's awaiting sentencing for his manipulation of shares of Stan Lee Media. Paul's criminal record opens the door to impeachment of anything he alleges. But that doesn't mean he's wrong about everything. The securities filings for Marvel and Stan Lee Media contain seemingly contradictory assignments by Stan Lee of his rights in the superhero characters he helped create in the 1960s. And Lee's assertions in a 2002 lawsuit against Marvel don't appear to track with what he says now.

So even if the folks pressing Peter Paul's claims aren't likely to win half of Marvel's profits, they've raised factual questions about Marvel's title to its billion-dollar character franchises.

Marvel's profits are worth brawling over. The New York company's stock trades for $33, after its earnings more than doubled last year to $140 million, or $1.70 a share, on revenues of $486 million. Since 2000, 13 PG-13-rated films based on Marvel characters have averaged more than $400 million in sales. This is the first year the company will produce its films, taking all profits, not just license fees.

Marvel's made a huge comeback since its bankruptcy in the late '90s, after years of poor performance under financier Ronald Perelman. In 1998, the new controlling shareholder Isaac Perlmutter used bankruptcy procedures to reject Marvel's $1 million-a-year lifetime-employment contract with Lee. That voided Lee's exclusive assignment to Marvel of his rights in characters like Spider-Man.

IT ALSO FREED HIM TO start a new company with his friend Peter Paul, which they called Stan Lee Media. Paul put in $500,000, while Lee assigned the company all his intellectual property. Calling itself an Internet animation studio, the dot-com rode the bubble market.

Flush with success, Paul underwrote a gala Hollywood fundraiser in August 2000 for Hillary Clinton's U.S. Senate campaign. He had begun negotiating with representatives of Bill Clinton for the departing president to become Stan Lee Media's ambassador of goodwill.

Just days later, newspapers reported that Paul had served time on two felony convictions: the first, for taking millions of dollars from the Cuban government for a shipment of coffee he never delivered; the second, for cocaine possession. The Clintons cut themselves off from Paul.

Paul had been manipulating the stock since 1999, and now tried to keep the shares and company afloat — covering payroll with borrowings from his margin account. After the Securities and Exchange Commission began reviewing his stock dealings, Paul fled to Brazil. Arrested there, he had to await extradition in a prison he says was like a dungeon.