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A Hollywood executive was arrested today on charges that he misused federal small business loan funds to pay his personal expenses.
The U.S. Attorney for the Central District of California is charging William Sadleir, the former head of Aviron Pictures, with fraudulently applying for a $1.7 million loan from the federal Paycheck Protection Program (PPP), which was designed to help small businesses affected by coronavirus pay their employees.
According to the U.S. Attorney's office, Sadleir allegedly used the loan on personal non-business expenses, including car payments and credit card bills.
Thom Mrozek, a spokesman for the U.S. Attorney's Central District of California, called the allegations "brazen."
"We believe that rose to the level of criminal conduct," he said.
Sadleir is the latest Hollywood figure to be charged with abusing the PPP. Earlier this month, Maurice Fayne, who stars in Love & Hip Hop Atlanta, was charged with federal bank fraud for spending a $2 million PPP loan on jewelry and child support.
Meanwhile, small businesses around the country have reported difficulty accessing Paycheck Protection Program funds, and expressed frustration that much of the initial round of funding went to large companies.
THE HONOR SYSTEM
In April, Sadleir applied for three PPP loans through JP Morgan Chase on behalf of Aviron, whose past films include "Serenity" and "A Private War."
Each application claimed the company had 33 employees and monthly expenses of over $200,000.
As part of the application, Sadleir certified that the loan money would be used to pay workers, make utility and mortgage payments, and cover other basic expenses.
The Small Business Administration allowed PPP applicants to self-certify that their business has been affected by the coronavirus, and that they will use the loan for its intended purpose, in order to expedite the distribution of the money.
But many observers have pointed out that these self-certifications, which are essentially an honor system, could easily be falsified — which, according to the criminal complaint, is exactly what Sadleir did.
Aviron did not have 33 employees, according to the complaint. And Sadleir did not work currently at Aviron: he left in January 2020 not long after Aviron's lender, BlackRock, filed a lawsuit in the Supreme Court of New York accusing him of fraud and fraudulent concealment.
CREDIT CARDS AND CAR PAYMENTS
After receiving his $1.7 million PPP loan, on May 1, Sadleir transferred much of the money into his nearly empty personal bank account at JP Morgan Chase, according to the criminal complaint. He used that money to pay off two personal credit cards, where he'd charged purchases at the Arclight Hollywood, the wine and liquor store Wally's, and the restaurant Spago, among other places. He also attempted to make a $40,000 payment on a car loan.
Around May 5, J.P. Morgan Chase put a hold on Sadleir's bank accounts, and on May 21, the U.S. Attorney for the Central District of California charged him with fraud and making false statements to the Small Business Administration and to J.P. Morgan Chase.
"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," said United States Attorney Nick Hanna in a press release.
Sadleir was released on a $100,000 bond. He was also charged with additional fraud today by the U.S. Attorney's Office for the Southern District of New York.
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