Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a Complaint in Manhattan federal court charging WILLIAM SADLEIR, the former chairman and chief executive officer of Aviron Pictures, LLC, a movie production and distribution company based in Los Angeles, California, with engaging in multiple fraudulent schemes relating to investments made by a New York-based investment fund (the “Fund”) in Aviron Pictures, LLC and its affiliated entities (collectively, “Aviron”).
SADLEIR is expected to be presented lbefore U.S. Magistrate Judge Alexander F. MacKinnon in Los Angeles federal court.
United States Attorney Geoffrey S. Berman said: “As alleged, William Sadleir orchestrated a massive fraud, embezzling approximately $14 million of investor funds from his film company to pay for a Beverly Hills estate, among other fraudulent acts. Thanks to the dedicated work of our law enforcement partners at the FBI, Sadleir will be held accountable for his behind-the-scenes misdeeds.”
FBI Assistant Director William F. Sweeney Jr. said: “William Sadlier, the chairman and CEO of Aviron Pictures, is charged today for his alleged role in a nearly $30 million fraud scheme. He allegedly even went so far as to pose as a female employee of the sham New-York based company he created to further his illegal activity. Today’s arrest serves as a reminder of the FBI’s dedication to holding people accountable for egregious financial crimes of this nature.”
According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court:
The Fund is a publicly traded, closed-end investment fund. Shares in the Fund trade on the New York Stock Exchange. As of in or about December 2019, the Fund had approximately $649.1 million in assets.
WILLIAM SADLEIR was the chairman and chief executive officer of Aviron, and oversaw its operations from in or about 2015 until in or about December 2019. Aviron participated in the distribution of a number of films in the United States, including My All American (2015), Kidnap (2017), The Strangers: Prey at Night (2018), A Private War (2018), Destination Wedding (2018), Serenity (2019), and After (2019).
SADLEIR engaged in two fraudulent schemes relating to an approximately $75 million investment made by the Fund in Aviron.
In one of the schemes (the “Advertising Scheme”), SADLEIR misappropriated millions of dollars in funds from Aviron that had been invested in Aviron by the Fund. SADLEIR represented to the Fund that this money had been invested by Aviron in pre-paid media credits with the advertising placement company MediaCom Worldwide, LLC (“MediaCom”), which is a subsidiary of the advertising and media agency GroupM Worldwide Inc. (“GroupM Worldwide”). Instead, SADLEIR, using the bank account for a sham entity he had created, illicitly transferred out of Aviron over $25 million of those funds. Specifically, SADLEIR created a sham New York-based company called GroupM Media Services, LLC (the “Sham GroupM LLC”) designed to appear as if it was the legitimate entity, GroupM Worldwide, and a corresponding bank account in the name of that sham entity. SADLEIR then used a significant portion of those illicitly transferred funds for his personal benefit, including to purchase a private residence in Beverly Hills for approximately $14 million. SADLEIR then falsely represented to the Fund that Aviron had purchased an approximately $27 million balance in pre-paid media credits with MediaCom that were available to promote future Aviron films, and pledged a portion of those credits to the Fund as collateral for additional loans, when in fact the claimed credits did not exist due to SADLEIR’s misappropriation. As part of these false representations, SADLEIR also created a fake identity of a purported New York-based female employee of the Sham GroupM LLC named “Amanda Stevens” who corresponded with a representative of the Fund, ensuring the Fund that Aviron had an approximately $27 million balance in pre-paid media credits with the Sham GroupM LLC. In fact, SADLEIR himself posed as Amanda Stevens when engaging in email exchanges with a representative from the Fund.
In the other scheme (the “UCC Scheme”), SADLEIR engineered the illicit and fraudulent sale and refinancing of assets worth an estimated $3 million that secured the Fund’s loans to Aviron. The Fund had secured its investment in Aviron by, among other means, obtaining UCC liens in 2017 and 2018 on certain intellectual property and other assets relating to Aviron’s films. In 2019, SADLEIR used the forged signature of one of the Fund’s portfolio managers on releases to remove the Fund’s UCC liens on certain of these secured assets in order to sell or refinance them without the Fund’s consent, thus depriving the Fund of its collateral on outstanding loans, loans on which Aviron ultimately defaulted.
SADLEIR, 66, of Beverly Hills, California, was charged in the Complaint with two counts of wire fraud and one count of aggravated identity theft. The wire fraud charges each carry a maximum prison term of 20 years. The aggravated identify theft charge carries a mandatory sentence of two years in prison.
The maximum and minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence will be determined by the judge.
Mr. Berman praised the investigative work of the FBI. Mr. Berman also thanked the SEC Division of Enforcement, which brought a separate civil action.
The charges are just the latest in a string of prosecutions by this Office – unrelated to today’s – of individuals either in the entertainment industry or victimizing individuals or entities in the entertainment industry, or both. The Office successfully prosecuted former radio host Craig Carton, musician Daniel Hernandez (aka “Tekashi 6ix 9ine”), musician and actor Earl Simmons (aka “DMX”), hacker Christian Erazo (for theft of intellectual property from recording artists), and fraudster concert impresario William McFarland. The Office also has pending charges against Behzad Mesri, an Iranian national who had previously hacked computer systems for the Iranian military (for allegedly infiltrating HBO’s systems and stealing proprietary data, including scripts and plot summaries for unaired “Game of Thrones” episodes), and against nine leaders, members, and associates of the Tehran-based Mabna Institute (for a massive hacking campaign that allegedly included among its victims two major U.S. media and entertainment companies).
The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
