William Sadleir, former CEO and founder of Aviron Pictures, has been arrested for allegedly creating a fake company in a nearly $30 million scheme to fraudulently divert and misappropriate funds provided by the BlackRock Multi-Sector Income Trust fund, which had invested—and lost—$75 million in the Aviron film company.
According to charges filed against Sadleir in the Southern District of New York and by the SEC, he allegedly used $14 million of the ill-gotten funds to purchase a mansion in Beverly Hills, $3 million to remodel Aviron’s offices, over $350,000 to pay himself and his wife, $254,000 to settle a legal dispute, $127,000 to buy a Tesla automobile, and about $109,000 on home furnishings and remodeling.
The Justice Department alleges Sadleir represented to the BlackRock fund that its money had been invested by Aviron in pre-paid media credits with the advertising placement company MediaCom Worldwide LLC , a subsidiary of advertising and media agency GroupM Worldwide Inc.
Sadleir allegedly created a sham New York-based company called GroupM Media Services LLC that was intended to appear as if it was a legitimate entity that was part of GroupM Worldwide. Sadleir allegedly transferred out of Aviron over $25 million of the funds provided by BlackRock using a bank account for the fake company.
According to the allegations, Sadleir went so far as to fabricate an employee of GroupM LLC named Amanda Stevens, and even posed as Stevens in email exchanges with a representative of the BlackRock fund to ensure that Aviron had a $27 million balance in pre-paid media credits.
Sadleir also allegedly forged the signature of one of the fund’s portfolio managers on releases to remove the fund’s Uniform Commercial Code liens on certain assets in order to sell or refinance them without the fund’s consent. This deprived BlackRock of its collateral on outstanding loans, which Aviron eventually defaulted on.
The $75 million investment from BlackRock represented an unusually large portion of the Multi-Sector Income Trust fund, which had approximately $649.1 million in assets as of December.
According to a Feb. 28 article in The Wall Street Journal, the BlackRock fund said the $75 million loan wasn’t worth anything by late 2019, and in December filed a lawsuit against Aviron and Sadleir. BlackRock said in a statement that its fund was “a victim of fraud perpetrated by Aviron and its principal.” The investment firm also fired the fund’s manager, Randy Robertson, after it learned that he agreed to release $10 million in financing for the 2019 Aviron film “After” in exchange for his daughter being given a speaking role in the movie.
Sadleir was officially charged with two counts of wire fraud and one count of aggravated identity theft. The wire fraud charges carry a maximum prison term of 20 years each, while the aggravated identify theft charge carries a mandatory sentence of two years in prison. The SEC has charged Sadleir with violating the antifraud provisions of the Securities Act and is seeking disgorgement of ill-gotten gains plus interest, civil penalties, and injunctive relief.