The U.S. Department of Justice, the Security and Exchange Committee, and the U.S Attorney's Office for the Southern District of New York announced fraud charges against former Hollywood executive producer William Sadleir on Friday. Sadlier allegedly stole $1.7 million in funds meant for coronavirus relief and swindled $25 million from an investor.
Sadleir, the founder and former chairman of Los Angeles-based film production company Aviron Pictures, reportedly lied on applications to get $1.7 million in Paycheck Protection Program funds from the federal government, according to the Department of Justice.
Sadleir obtained PPP loans in April through three Aviron entities; each said to have 33 employees. However, the entities had been removed from Aviron months earlier, and all but a handful of employees had been let go in January.
The PPP funds were part of the Coronavirus Aid, Relief, and Economic Security Act to provide small businesses with loans to stay afloat during the COVID-19 pandemic. Sadleir used the coronavirus money to pay his and his wife's American Express bills, and to make a $40,000 car payment.
"This film producer allegedly made a series of misrepresentations to a bank and the Small Business Administration to illegally secure taxpayer money that he then used to fund his nearly empty personal bank account," U.S. Attorney Nick Hanna said. "The Paycheck Protection Program was implemented to help small businesses stay afloat during the financial crisis, and we will act swiftly against those who abuse the program for their own personal gain."
"This defendant allegedly used Paycheck Protection Program loans to pay off his personal credit card debts and other personal expenses, rather than using the funds for legitimate business needs," Assistant Attorney General Brian A. Benczkowski of the Justice Department's Criminal Division said. "As the department has made clear, those who defraud the PPP to line their own pockets at the expense of the American people will be brought to justice."
Sadleir, 66, also reportedly embezzled $25 million from a publicly traded investment fund. The SEC alleges that Sadleir created a fake company to mislead investment management company BlackRock Multi-Sector Income Trust. Sadleir also reportedly created a fake person named "Amanda Stevens" to defraud the company.
According to the SEC complaint, BlackRock invested $75 million in the fake company. Sadleir reportedly transferred more than $25 million from the company under the guise of using the money for prepaid media credits. But in reality, he used the money for personal expenses, including buying a $14 million mansion in Beverly Hills.
The SEC alleges that in addition to buying the home in Beverly Hills, Sadlier used $3 million of the misappropriated funds to remodel Aviron's offices. Another $350,000 went to pay himself and his wife, and $254,000 was used to settle a legal dispute, according to the SEC. Sadleir also bought a Tesla for $127,000 and used $109,000 to pay for home furnishings and remodeling, according to the SEC.
Sadleir was charged with criminal wire fraud, bank fraud, making false statements to a financial institution, making false statements to the SBA, and aggravated identity theft. All of the charges carry a possible penalty of up to 82 years in federal prison, prosecutors said.
Sadleir was arrested on May 22 at his Beverly Hills home and taken into custody without incident.