by Brian Mahany
A Hollywood star arrested for drunk driving, showing up in divorce court or having a meltdown, is front page news. What rarely becomes news are the many agents, producers, accountants and even lawyers who often pray on Hollywood’s biggest stars. Within the last several years we have represented two well known celebrities who sadly lost money to their agents – it goes on more than most people think.
In a story released by the L.A. Times last month, the writers, stars and directors of the hit 2004 movie “Crash” were defrauded by the movie’s producer. According to press reports, producer Bob Yari used “creative accounting” to defraud director Paul Haggis, star Brendan Fraser and writer Bobby Moresco.
Many times, actors and others involved in a film receive part of their compensation as a percentage of the profits made by the film. The better the movie does at the box office, the more monies are available for distribution. Since the distribution is typically made from the movie’s profits, the producer is entitled to deduct legitimate production costs. That’s where Yari went wrong according to the complaint. Apparently the judge agreed.
Los Angeles Superior Court Judge Daniel Buckley ruled that Yari incorrectly calculated the profits available for distribution:
“Defendants breached the contracts with the plaintiffs by diverting funds to third parties; adopting bogus contractual interpretations; refusing to correct accounting errors in a timely manner; adopting inappropriate accounting procedures that were contrary to industry standards; and, ultimately, using all of these to avoid paying plaintiffs money due under contracts.”
While this sounds like legal mumbo jumbo, the victims say that it represents real money – they say $5 million.
Part of the ruling centers on several companies that Yari controlled that performed services for the distribution of the film. Because Yari controlled those companies, the court determined that the prices charged by these firms were suspect. It’s much like the president of a company paying his girlfriend $1,000,000 in salary to be his personal assistant. Shareholders would have a right to question such an expense.
Yari has been sued before. It is unknown on whether he will appeal the decision in this case, however he has maintained his innocence throughout the case.
Insider frauds are often difficult to detect and prosecute. Frauds can range from pure embezzlement to cases in which agents and accountants pay themselves excessive fees or divert monies to businesses owned by them or their friends.
If you are the victim of embezzlement or fraud, we can help. Our fraud lawyers have helped people across the country and beyond get back their hard earned money. For a completely confidential consultation, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl, LLC – America’s Tax & Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services performed anywhere in the United States.